Aydin Senkut: How I Scaled from a $4M Angel Fund to $900M AUM | 20VC #890

1. 0:00 – 4:00

   The Founding of Felicis

   1. HSHarry Stebbings0:00

      (reversing beeps) Three, two, one, zero. You have now arrived at your destination. Aydin, this is such a joy to do. I cannot believe it's been so long since our last episode. So thank you so much for joining me, first.

   2. ASAydin Senkut0:16

      Thanks, Harry, I really appreciate it. It's a privilege to be here for a second time and I'm really, really proud of, uh, how far the show came and your incredible audience and your grit. Uh, so v- very excited to be here on the show with you.

   3. HSHarry Stebbings0:29

      I mean, uh, when we last spoke, I was actually young Aydin, so, uh, sadly some things have changed. But, uh, I do wanna start, and for those that missed our first episode, how did you make your way into the world of venture? And talk to me about the founding of Felicis and how that came together, in a brief two to three minutes. (laughs)

   4. ASAydin Senkut0:45

      Yeah. I, I mean, I'll just touch on the highlights. I mean, I, I think, look, uh, uh, w- we were, we were, um... Just to mention it, this is something I always dreamt of doing. My, both my parents were entrepreneurs. Um, I just think that it's one of the coolest things one can do to start a company. It is, it is an arduous journey, but it is a very fun one. Um, I feel like everything that I've done in my life, um, until the point that I started Felicis, was really designed, uh, for me to be a great venture investor. So, the, the, the turning point really, for me, was when I left Google, where I was for roughly six years, um, a little bit as a product manager and then, uh, a strategic sales manager. And I realized when I went with the company from 30 to 3,000 people, that was getting too big for me, let alone the 100,000 plus that it is today. Um, and I wanted to do something again that is a little bit more entrepreneurial, something from scratch, also. Um, Google was Larry and Sergey's company. And after much, um, deliberation, I realized, hey, listen, this is kind of the way of Silicon Valley, right? Like, after being an operator, um, it's kind of nice to consider, you know, getting into angel investing and then, uh, I leveraged that to become a full-fledged VC. Um, most importantly, I thought, hey, I always wanted to be an investor when I was a little kid, but, you know, we didn't have the concept of venture capital when I was growing up in Istanbul. You know, it was more like being in 100% plus inflation country where, like, every night, my parents and I are like, "Okay, where are we gonna invest now? German marks? French francs?" You know? Like, "Are we gonna do something else?" Um, and then I used to read my parents' magazines. We didn't have iPads, maybe for the better. Um, you know, I would read Fortune, Time, and BusinessWeek, and I would read these articles with CEOs. I'm like, "I wanna be like that one day, and I wanna be, like, an investor one day." Um, and little did I realize that I could actually, like, combine all the things that I aspire, uh, in this little fledgling thing that started as an angel investment activity and turned into a venture firm, and, um, just really exciting. Also, um, just a really good excuse, uh, to practice something different. As a complete outsider to venture, uh, I thought, hey, uh, there is an opportunity to do something new in it. And then the last interesting thing in terms of the most important part of the founder story is, I actually was thinking maybe I should work at a firm first and learn the ropes before I started, but, um, I didn't really have a typical background and nobody really wanted to give me a job. So, it ended up being the best thing that happened to me, 'cause I literally burned the bridges, turned my, you know, back to the wall, and the only thing I could do was start and make it great.

   5. HSHarry Stebbings3:27

      Don't worry, Aydin. No, no one hired me either. I, I remember getting the rejections. It was brutal. Fuck you, firms. (laughs)

   6. ASAydin Senkut3:34

      (laughs)

   7. HSHarry Stebbings3:34

      Uh, but I totally get you there. I do wanna ask you, I look at my angel investing, Aydin, and honestly, wasn't that great. Um, and then I started fund investing, and it, the world got a lot, lot better.

   8. ASAydin Senkut3:46

      (laughs)

   9. HSHarry Stebbings3:46

      I'm trying to figure out why and what happened in that change. But my question to you is, you know, Josh at First Round said before on the show that he became more conservative when he moved to being a VC. How did you change your mindset when you moved from angel to investor with

2. 4:00 – 7:45

   How did your mindset change when moving from Angel to VC?

   1. HSHarry Stebbings4:00

      Other People's Capital with Felicis?

   2. ASAydin Senkut4:02

      Yeah. I mean, I think it was a different journey for me. Um, I s- made a switch from angel investing to VC for two main reasons. Number one, I wanted to do it with a team and I truly wanted to build a team and a firm, uh, a f- a real franchise. I think the second thing is, I always had a broad strategy in mind, maybe because, you know, I mean, I worked in four different continents in the world, I speak five languages, I worked in probably, like, tens of different countries. You know, I've done every single discipline known to man. Um, and so I always had a broad purview. It wasn't like, "Oh, we're only gonna do, like, seed deals, like in enterprise only in Silicon Valley or something like that." I always thought there is one universe of great companies, and I wanna have the highest share of those companies as possible. And I realized that it was very difficult to do that as an angel investor, because you're limited by capital, you're limited by time, you're limited by resources. So for me, actually going from angel to VC was like, kind of, you know, opening the gates, you know, u- unleashing this like, hey, listen, now we gotta know if the strategy is really gonna work or not. Um, so it's a really interesting journey. I don't know if you know, but the very first fund we had was only 41 million, and we invested in Brovio in Finland from that. The whole round was bigger than our whole firm. Shopify's A round and Fitbit's B round, whereas all my colleagues and peers like Josh is like, "We're gonna be the best seed investors. You know, we're gonna be the first money." And I'm like, "That's really crowded. A lot of people trying to do the same thing." So, I always had this crazy thought of, "I'm gonna do things exactly the opposite or exactly outside of the orthodox way," and that's the only way I know how to get to success. You cannot copy and paste, um, to the top of, uh, competition.

   3. HSHarry Stebbings5:51

      Man, did that make fundraising hard for that first fund? 'Cause you're not in the early bucket, you're not in the West Coast bucket, you're in no bucket for

   4. ASAydin Senkut5:58

      ... I'm in no bucket at all.

   5. HSHarry Stebbings5:59

      Yeah.

   6. ASAydin Senkut5:59

      I mean, I just tell people, like, it's a little bit like a Jamaican bobsled. I don't know Turkish V- There aren't a lot of Turkish VCs-

   7. HSHarry Stebbings6:05

      (laughs)

   8. ASAydin Senkut6:05

      ... or people that have not had certain check marks. I mean, in some ways, I'm really grateful for that, because listen-... I have a huge appreciation empathy for our founders because I've been in their shoes. Similar to you getting nos, like not only did I get a lot of nos in, like, the job offers in VC, I also got a lot of nos in first LP conversations, for good reason. I mean, I don't blame them. Um, I did have a really ambitious strategy, but it was unorthodox and I didn't have any experience to prove that it was gonna work other than a lot of hustle. Um, but some people did take a chance on me and, you know, and we, we, we were able to close that first fund with some incredible LPs. Tho- Those LPs have done really well. Um, so all I can say is, um, it was a really great learning and growth experience. And I think, you know, for people that get into VC and they'd never seen that side of it, like some people never see the VC fundraising and I feel it's a very necessary part of it. Like, it's a very necessary part of franchise and firm building.

   9. HSHarry Stebbings7:07

      I, I think actually kind of knowing how hard it is to get a firm off the ground and fundraise fundamentally impacts how you think about deployment. I see a lot of, like, 30-year-olds who come in-

   10. ASAydin Senkut7:17

       (laughs)

   11. HSHarry Stebbings7:17

       ... want to deploy, deploy, deploy as principals or junior partners. Do you have any idea how fucking hard it is to get cash in the door? (laughs) It's really hard.

   12. ASAydin Senkut7:26

       I know. Totally.

   13. HSHarry Stebbings7:26

       So I, I totally agree. Uh, can I ask, when we look at the markets today, we said about kind of the deployment pace there. Uh, I'm seeing 20, 30, 40 pre, so pre-launch. I didn't... Bill Gurley called me Okay Boomer when I said this to him. So, you know, be warned. But, like, how do you analyze the early stage markets today when we

3. 7:45 – 11:00

   How do you analyze early stage in current state of the market?

   1. HSHarry Stebbings7:45

      see this kind of craziness that I just... I, I, I don't know what to do.

   2. ASAydin Senkut7:50

      Yeah. I mean, listen, um, I think the, the most important thing to say is I was actually running this calculation last night. Even if you said regular inflation is anywhere from 3% to 5%, it's been roughly 16 years since I started, we end up anywhere, um, roughly around, like, 2X. So every number that you look at today, uh, we are comparing to, like, what it was like 10 years ago. But really, like, let's say, like, 20 million of today is 10 million of, like, 10 plus years ago, and 40 million is really 20 plus of 10 years ago. On top of that, when you look at, you know, where we are, like, in London and Silicon Valley, and you look at things like house prices, car prices, you know, that number is really more like 4X realistically. So I just wanted to put this in perspective because we look at the numbers and we freak out, and I'm like, "I don't think people have done the math." You know, like, nobody's very good with compounding. Like, these numbers are actually not that different than when we started. It's just the absolute amount scares us sometimes. And the second thing is, listen, um, math is math. So what happens is the markets change and unfortunately we have to adapt if we wanna be in the market. And, you know, essentially you have three options. You know, price is double, so you're gonna do half the deals, you're gonna do the same amount of deals at half the ownership, um, or I don't know. Like, so there is not much you can do or you g- you know. So what you need to do with that then is say, "Okay, well, out of all those things, what is the one thing that matters?" Um, or you're gonna do things at h- half the valuation you used to do, none of which are really great options. I think what we decided as a firm is the only thing that matters for us is to be in the world's best companies because out of all the things that you can optimize for, unlimited upside is the single most important one, right? Like, basically, like, if you're trying to optimize around valuation and ownership, that's, like, one thing you can do at entry. And then, like, let's say that, hey, it's, like, a 50% difference, but what I've seen with all the great companies we add, whether it be like Shopify or Canva or Adyen, it ended up being, like, 20 to, 10 to 20 times bigger than what we expected. Maybe some of them we got a great deal, some of them we paid a very high price. Let's say that we even paid, like, 2 to 4X, you know, on the entry, but if the company ended up being 10 to 20X bigger and you managed to get into the best company, it makes it a moot point. So what I basically am trying to say is, listen, there are only so many things you can manage, and out of those things, I realized that I would rather sexif- sacrifice valuation, ownership, but I would absolutely not sacrifice being in the world's best companies at, at the time when we make the decision, right? Like, that's kind of, like, a little bit of the magic and the art of investing. So that's kind of, like, what we optimize around for.

   3. HSHarry Stebbings10:39

      I mean, th- this is where kind of me and you are the same in, in, in some respects, which is like, you know, we can double down over time, and so, like, ownership for me on first check isn't actually what's crucial. What's crucial is getting into the best companies in the world and then being-

   4. ASAydin Senkut10:52

      Yeah.

   5. HSHarry Stebbings10:52

      ... able to concentrate capital. For your seed funds, it's not the same. They have-

   6. ASAydin Senkut10:55

      Yeah.

   7. HSHarry Stebbings10:56

      ... to get their ownership on f- So how important is ownership on first check for you,

4. 11:00 – 13:00

   How important is ownership % with the first check?

   1. HSHarry Stebbings11:00

      and at what point does it not make sense? This is something I'm struggling with 'cause even a 50K check could make-

   2. ASAydin Senkut11:07

      Right.

   3. HSHarry Stebbings11:07

      ... sense as a customer acquisition cost for me to put 5 million in at the A or the B.

   4. ASAydin Senkut11:12

      Yeah, I mean, listen, I think it's very strongly correlated to fund size. Again, you know, w- we need to go back to math, and math, you know, the one beautiful thing about math is it's always the truth. So I, I think it... W- What is really important is how you manage it. I think we manage it to a range because at every fund size, we have a model that comes with it where we're like, "Listen, we need to have a deployment model." That's also how we address pace, other things. Um, so the most important thing is I feel like, um, actually ownership in the first check is important, um, a- a- you know, a- as much as we can, but sometimes the only way to get into a company is a small check, and then we need to, like, double down, triple down after we show more value, after we convince the founders it's worth it. So similar to what I said, I think having a flexible strategy allows us to really focus on getting into the best deals, and we have multiple scenarios. Obviously, i- ideal scenario is to get in at high ownership, but we also have scenarios where what w- we call strategic and we can get in lower ownership, but then, you know, gradually build up our stake, and that has served us extremely well.... um, over our, over our tenure, over our history. And some of our best companies, like, we came in and, you know, built up our ownership over time after we demonstrated value for the founders. It's also been extremely helpful for the team because especially, you know, again, when you're a firm, you're trying to prove yourself, um, one of the few advantages you have is your flexibility and moving fast and just making it delightful, uh, to work with the founders.

   5. HSHarry Stebbings12:49

      I, I, I totally agree with you in terms of the flexibility of moving faster. You mentioned deployment pace. This is something that's changed a lot from 10 years ago when, you know, Felicis was started, what, Felicis was 2008, so

5. 13:00 – 15:30

   Deployment Pace

   1. HSHarry Stebbings13:00

      little bit longer. But, you know, when you think about the deployment pace then, it was three years, four years even. A- and that's kind of what I was always brought up on. Now it's 12 months, sometimes even less. How do you think about deployment pace and, uh, what do you make of the compression that we've seen?

   2. ASAydin Senkut13:15

      Yeah, I mean, I think this is why I'm looking forward a little bit, but one o- one of the most formative books that I read was, you know, Antifragile. Um, I think you need to be ready for anything in the world. I mean, we are kind of in our comfort zone and we think things are not gonna change, and lo and behold, they do. Um, I think in that, the best feedback we got was actually from our LP board. Like, one of the things that I will say that I really benefited from, probably the only people that really helped me in my career was our board of LP, the, the LPs who are on our board. And they're like, "Listen, no matter what happens, obviously stay in the market, stay active, but, you know, don't forget about vintage diversification." So, you know, getting beyond the 12 months, right? I mean, there is, like... You can always say, like, there's so many great companies, our buy- bar is really high. But I think, like, being able to exceed that 12-month threshold, and you can manage it, like, especially when you're at our size and scale, like, you essentially change the stage mix and all of a sudden, you know, you can, you can still not give up on speed. Um, but changing the stage mix because of check sizes, you can make the fund last a little bit longer. And I think what they're, what they're basically saying is, listen, I think in success, one of the most important things is to have multiple lines of diversification, right? We always care about sector diver- diversification. This is, by the way, completely opposite of some great strategies, right? Like, we are the exact opposite of concentrated. I really do think that in venture, the ideal size is around 40, 50 companies and not 20. It's impossible to only choose two, two companies a year. Um, so the number of companies, shots on goal, um, sector diversification, geographical diversification, and a little bit of vintage diversification. So trying to get it more than just one vintage year, um, definitely helps in terms of, um, both the LPs but also, like, um, as a manager-

   3. HSHarry Stebbings15:07

      I mean-

   4. ASAydin Senkut15:07

      ... fund manager.

   5. HSHarry Stebbings15:08

      ... I, I'm, I'm totally, uh... I, I, you know, when you mentioned 20 to 40, I'm, I'm very much with you, uh, in many ways. The f- the challenge there is, like, if you're leading rounds and you're doing 40 to 50, I mean, you know, like, board seats and the interaction-

   6. ASAydin Senkut15:24

      Right.

   7. HSHarry Stebbings15:24

      ... and the help across 40 to 50, oh, I don't... I'm old already. Like, I don't

6. 15:30 – 17:50

   How do you think about portfolio growth at scale when you're a lead?

   1. HSHarry Stebbings15:30

      need this.

   2. ASAydin Senkut15:31

      I know.

   3. HSHarry Stebbings15:31

      H- so how do you think about, like, portfolio growth at scale when you're a lead?

   4. ASAydin Senkut15:36

      Well, I mean, welcome to the brave new world. Uh, sorry I didn't have something as creative as an old boomer, but, uh, listen-

   5. HSHarry Stebbings15:43

      (laughs)

   6. ASAydin Senkut15:43

      ... I think what it comes down to is, um, I think just like in anything else, in order to... Uh, th- there are many different ways, but one way you can deal is if the market is growing and booming, you have to grow and boom yourself and, like, with the firm. Right? I mean, I, I don't think it was a coincidence that we went from 41 million to 900 million and now as a fund family. Um, it is, it is very high growth, but that allowed us to transcend stages, uh, that allows us to go from participating investor to lead investor. I mean, you just have to do the math. Once you do the math in a fund model and you're like, "We wanna do minimum X number of deals," even if you're not intending to lead all of them, you as- basically arrive at a fund size. And by the way, that fund size can become old and incorrect, uh, in a matter of months. So you might wanna put a little buffer on it. But what I have seen is that's why it's really important that each one of our funds is driven by a model and by a plan, and that's why- how we calculate fund size. It's not like, "Oh, this is a good number, this is a bad number, this is how much our LPs have thrown at us." Um, and I think that number is also strongly a factor in whether you are able to lead, you know, rounds or not. Like, people might love you, "Hey," like, "Garry, I really wanna work with you. I wanna have you on my board." But if you don't have the fund base to be able to say, "Listen, I can make, write at least this many checks and this many of them I can lead," even when the round sizes are going up by 50% to 150%. I mean, we've seen the extreme in 2021. We had a great plan with the new fund, and all of a sudden, all the round sizes and valuations ended up like 50% to 150% higher than we expected. So we had to adapt very fast. Luckily, with a larger fund size, you have more flexibility. But with a smaller fund size, it's tough, tough. You have to make really, uh, hard decisions.

   7. HSHarry Stebbings17:34

      Class, speaking of making hard decisions with concentrated pools of capital, and on the other end of that spectrum, we've had the crossover funds make their entry. Like, with the market crashing in the way that it has done, you know, SoftBank, I think... Or, sorry, Tiger posted

7. 17:50 – 21:45

   What to expect from Tiger in this market crash?

   1. HSHarry Stebbings17:50

      34% down publicly. Um, like, what should we expect from them in this kind of market crash potential correction? Where will they move to, do you think?

   2. ASAydin Senkut17:59

      Yeah, I mean, I think, listen, um, in some ways, uh, this is very Darwinian for them because you're seeing, like, how difficult it is (clears throat) to be successful in the public markets. Um, let me, let me attempt at simplifying the last 10 years. There was one l- alpha strategy, and that is long tech.... right? Like, when Shopify went- Like, same thing happened to me when Google went public. All my Wall Street friends are like, "Don't be, like, too optimistic." And Google grew, like, beyond, like, 40, 50 X even from the point it went public. You know, you look at Shopify, it went public at 20, went all the way up to 200. Maybe now it's like in the 60s, 70s. It's still in multiples of where it, where it was as a public company. So, um, I, I think, like, we forget sometimes that, hey listen, um, the most important thing is to understand and, like, catch that growth. Um, but so when you look at the crossover funds and the hedge funds, what they're realizing is, listen, um, in public markets I'm limited. If I wanna be in the world's best companies, and some of them are in private, I, by necessity, have to move into privates. And they're gonna have to keep doing that until they feel like they have the right portfolio size or they have the right balance within the portfolio. Um, what I think is really hard is when you're coming from that angle. And unlike our angle, which is like, "Hey, we- we are operators, and we're coming from, like, the seed," um, I think the earlier stage that you go, you need to be an original and you need to be able to make decisions with very little signal. And these people are used to making decisions with a lot of signal, like public markets. Everything's on a Bloomberg terminal. Good luck getting that with a seed or series A check. Um, so I think they are very good at fast following. Like, once they see, like, either investors with very high signal or companies with very high signal, they double down. The earlier you get, it becomes really difficult, and the numbers game kind of can backfire on you when you have higher casualties. So it's hard to say exactly what they're gonna do, but I think, look, everybody's trying to find, um, a place in the market where they have edge. Um, where the crossover and hedge funds are coming, they have so much capital, they can spend money on consultants and research and people. And I think our advantage is, you know, you could have an original strategy. Um, all of those things are not a panacea for seeing world, world is gonna go, and make bets before it's obvious to everybody else. I think that has been one of the main factors that contributed to our success, is that we, as a team, have always thought about where the world is gonna go, pick the markets and sectors right. That has been a really, really core component of our success. And I have to say, I don't think there are that many people or firms that have really excelled at that.

   3. HSHarry Stebbings20:48

      So, I think what worries me is, like, I think where cash goes to die today is your 250 to $1 billion rounds with minimal revenue, where it's-

   4. ASAydin Senkut20:57

      Yeah.

   5. HSHarry Stebbings20:57

      ... it's just completely out of way. And I think the trouble is, Aydin, I think they're seeing that too. Um, uh, and so what happens then, I think, is they move earlier into the A-

   6. ASAydin Senkut21:06

      Right.

   7. HSHarry Stebbings21:06

      ... and the early B, but the A, and suddenly, they jack up the prices there, because you've suddenly got this access demand for the, you know, constrained supply of great companies. And I think we're gonna see this real push on series A firms now-

   8. ASAydin Senkut21:22

      Yeah.

   9. HSHarry Stebbings21:22

      ... from the crossovers who are coming earlier and earlier. And I actually, Aydin, I- The data that they have, like CO2, fuck, I mean, they were in London companies before me. (laughs) I mean, I joke with Maz about it, but it's impressive.

   10. ASAydin Senkut21:37

       Mm-hmm.

   11. HSHarry Stebbings21:37

       And so I, I guess my question is just, like, I don't know how it impacts us on the early, but I think suddenly

8. 21:45 – 24:44

   Are we going to see price inflation in early stage?

   1. HSHarry Stebbings21:45

      we're gonna see a lot more price inflation early because of their entry. Do you agree or do you think I'm negative?

   2. ASAydin Senkut21:51

      I mean, I think, look, I know where you're coming from. We're all in the same market. We're all seeing the same things. I think for each one of these things, you can also make a counterpoint. You can also say, "Listen, all these people have been 99% focused on enterprise software."

   3. HSHarry Stebbings22:06

      Mm.

   4. ASAydin Senkut22:06

      "So any other vertical, you don't have as much impact, because they're not investing in everything. They're primarily investing in enterprise software, and it, it might grow from there." I think they're also gonna only invest in things where they have data. So, I think the earlier you go, again, it's very hard to find that data. I mean, how do you track when it's just two founders, like, starting a stealth company, right? I'm sure there's, like, ways to find it. But what I'm gonna come back down to, like, listen, all these people are friends, and everybody has some strengths and everybody has some weakness. And I think original thinking and knowing where the mark- market's gonna go and what markets are really important, it's still an art. And I don't think data is necessarily gonna tell you that. There is some, like, creative liberty that you need to take of where the world is gonna go, and I think that's just priceless, number one. Number two, um, you can always throw high valuation at founders and win deals, but the founders are now also realizing that it's kind of a double-edged sword, because you take that valuation and all of a sudden now you have to grow into it. And obviously, it's very friendly to work with these firms, but early on you need more coaching, more strategy, you know, more help of people helping you see around the corners. And larger funds and tons of data doesn't necessarily get you that, right? So, like, early on, like, one of the things I wanted to mention is like, "Hey, I had an amazing experience at Google and seen one of the world's most valuable companies getting built, but I've also seen terrible things at Silicon Graphics, where I've seen one of the world's greatest companies crash and disappear out of history." Right? So that kind of experience is invaluable. And unfortunately, it's not something you can buy with, like, mega fund size. Um, you know, having seen all operational disciplines, sometimes people come in like, "All I need is more engineers." I'm like, "Let me tell you, even at Google, it wasn't only the engineers." Like, we also then ended up eventually getting the world's best salespeople, the west- best finance people, the best HR people. You know, like, it's not just one thing, right? So, all I'm trying to say here is that it's- it's not simple to build a great company and scale it, and there's so many moving pieces. And so, um, I think founders also sometimes say, "Listen, I don't necessarily need the highest valuation, but I need, like, also the, the firm that I'm gonna partner with, even if it's not the highest price, where they can see me around the corners, they can really help me with strategy and all out." So, I don't think the battle is lost yet, and I think there is chances actually to win the battle, um, if you're playing at our scale and more boutique and, you know, more nimble and more niche players.

   5. HSHarry Stebbings24:38

      Oh, no, I totally agree with you. Um, I absolutely still have (laughs) confidence in what we do, don't worry.

9. 24:44 – 27:40

   What do you know now that you wish you'd know when you founded Felicis?

   1. HSHarry Stebbings24:44

      Uh, I- I- I do wanna ask that, you know, when you look at, um, uh, th- I mean, bonding, you know, the- the incredible time that you've had now building Felicis over, you know, the last 13, 14 years, what do you know now that you wish you'd known at the beginning?

   2. ASAydin Senkut24:57

      Yeah, I mean, I think, uh, if you ask me, a- actually, I hope this is applicable to all founders, so I feel like there are three main stages in the history, or- or, you know, in the lifecycle of a venture firm, or probably, like, any company. Like, you go from basically a solo operator, so I feel like first is just you, right? Like, I think one of the things that helped me as an angel investor is, actually I had 12 exits, so I knew that my strategy wasn't just, you know, pipe smoke. Like, when you see the money return that you know that it's real. And I think that's one thing that, that validation is something that's lacking. Luckily in my time, it was happening really fast. Um, so then you go from solo operator to a team. Uh, not obvious. And then you go from team to a team of teams. That's literally the most important stages I think. And, um, when you're creating a team, uh, there are some things that are not obvious to me, I think. Listen, that was probably where most of my learning has happened is that you look at people and like, "Wow, these people are really smart, they're incredibly talented, incredible experience. For sure it's gonna work out great." And now, like, I realize that, you know, culture and cultural fit is equally important. Mindset is very important. I mean, my religion is growth mindset, and I realized that I- I can only really work with people that have an extreme growth mindset. You can be e- e- extremely talented, extremely, uh, high potential, but if you don't have high, you know, uh, if you don't have growth mindset, I think it's gonna be very tough to be successful at Felicis or for me to work with that person. Um, so I think those nuances were not necessarily obvious to me, um, and to be honest with you, like, we think that picking companies is hard. I think picking people is, like, a hundred times harder.

   3. HSHarry Stebbings26:39

      Mm-hmm.

   4. ASAydin Senkut26:39

      Right? And like, you do need those people to be really successful, and I have to say today, I really lucked out with the amazing people we have, but by no means that the people that I see today that are heroes at Felicis was obvious. All it came down to is, like, the same way, like, being brave picking companies when nobody believes that they can be great, I think you also need to take chance with people when it's not obvious, y- you know, n- you know, their backgrounds are not screaming like, "This person is gonna be amazing venture investor or amazing contributor." I did the same thing I did on myself and took chances on people that I thought that had real talent and this extreme growth mindset and were incredible cultural fit, and what they were able to do w- was even, like, wild beyond my dreams. And so that's the thing that I didn't realize I was gonna get into, like, and it took me 10 years to get there, but now when I look back, I'm really extremely proud of it because it's not just me, it's this amazing team that we have built and what we've been able to do together.

   5. HSHarry Stebbings27:37

      Doug Leone said on the show, you know, "Sequoia are

10. 27:40 – 29:40

    What is the guiding principle at Felicis?

    1. HSHarry Stebbings27:40

       not a family. We are a team-"

    2. ASAydin Senkut27:42

       Mm-hmm.

    3. HSHarry Stebbings27:42

       "... and performance is number one." And that embodies everything about Sequoia.

    4. ASAydin Senkut27:47

       Yes.

    5. HSHarry Stebbings27:47

       If you were to have a guiding principle like that about Felicis, what would- what would you say it is?

    6. ASAydin Senkut27:52

       I- I mean, w- our guiding principle is success with empathy. Now, empathy doesn't mean that it's all Kumbaya. But I- I think, like, I had this theory when I wanted to start Felicis is that when I looked around, basically it was an environment where everything else was sacrificed to performance! And I'm like, "Listen, can't there be a world where you have great performance, but you can do it with empathy?" Like, maybe you- you don't have the largest fund in the world. Maybe you don't have the largest team in the world. Maybe you don't do every deal in the world, but you can still be successful, right? Like, um, and I think that experiment is still running today. Luckily, we are, uh, doing well in performance, so LPs, uh, continue supporting us. Uh, that's the real answer, right? So I can be telling you anything, but unless LPs come and say, "Listen, you're doing something great. We're gonna give you money," doesn't matter. Has zero meaning whatsoever. So, um, and I think that was really important for me because I feel like in every strategy there is something you sacrifice, and what I saw in the performance-at-all-costs strategy is that sometimes, like, things are lost in internal dynamics, people fight each other and energy is dissipated, right? And I want all the energy to go into finding great companies. For better or worse, in our strategy, maybe it's closer to a family, but, you know, I'm seeing that you can still be successful with empathy! And that's probably the most rewarding thing is because when you try to do something that nobody thought, like, was possible or could be done, like those two things can't coexist, lo and behold, uh, some crazy outsider founder comes and says, "No, actually, it can," and, you know, um, goes ahead to do it.

    7. HSHarry Stebbings29:28

       Can I ask, you mentioned the challenge e- expanding from team of- to team of teams being a big one. I haven't actually thought about that as kind of the next kind of vertical to expand to, but I did think a lot about your product expansion,

11. 29:40 – 32:43

    How do you think about new products?

    1. HSHarry Stebbings29:40

       'cause you've expanded-

    2. ASAydin Senkut29:41

       Yeah.

    3. HSHarry Stebbings29:41

       ... kind of the product suite that you have, so to speak. I wanted to know, like, how do you think about new products? What are the considerations? And, you know, when you're sitting at the table with, you know, Sandeep and the team that you have, what does that discussion look like on new products and whether to do them?

    4. ASAydin Senkut29:56

       Yeah, I mean, I think, Harry, I understand where you're coming. I think for me, because our strategy has always been global, like, it's never been limited by stage, it's never been limited by geo, and it's just access to great companies, I don't really see it as product expansion, as product scaling, right? Like, when you look at it, when I was an angel investor, I had such limited funds, I could only really do C deals, maybe a lucky A if, you know, if it worked. And then I realized that, listen, it essentially limited shots on goal I could take. Like, let's say that we're, like, uh, in Liverpool Stadium or Arsenal or something and there is a soccer game, and somebody tells you, "Where..." Like, "This is the only place in this stadium you can take a shot from." Even if you're talented, it's gonna suck, and you're like, "Listen, I wanna take the shot wherever I care to take it from," right? Like, how different is that? So that's exactly how I'm thinking is that, listen, with fund size and team, um, what we gain is essentially to be able to take the shot from wherever we want on the playing field, and honestly, like, to take more shots. Um, that's basically what it comes down to. And then, I think the one area of the, uh, firm expansion that was really great for us was kind of the fund of funds effort, and what I realized, two things. Number one, if we wanna get into more companies, we can't considerably manage all of them, so we- we'd love to, like, work with people, like...... I would, at some point, like, i- if, if you look at our plans, like, "Wow, like you can hire a hundred people," and I'm like, "It's not gonna be the same firm." So, what we realize is, listen, like, we just wanna support our friends where, like, we have complementary, um, strategies, complementary activity, uh, uh, activities. And, you know, they have networks that they're gonna have. We just cannot buy that, but we can certainly help them. And the other thing is, like, coming to mentorship, I'm gonna be honest, like, I had, like, zero mentorship other than our board that I think guided us well. So, what I wanted to do was something that I didn't have, maybe like an orphan. Like, I wanted to pay it forward. Like, there are other people out there. If I can be helpful to them, if I can support them and make their lives a little bit easier, maybe share some of the few things that I learned that was really hard and very costly for me, will make a difference. And it is. You know, like, it's been really amazing to see some of these funds, um, grow from when we first supported them. And we got, like, really great, uh, investments as a result of that, and we have some great GPs that, hey, like, I'm not gonna, like, go ahead and, like, say I'm, like, their mentor, but I think we have had nice nudges and a nice impact on their journey, and that's kind of makes me really happy.

    5. HSHarry Stebbings32:26

       I, I, I totally agree. Listen, Aydin, you've always been there for me, and you know how much I appreciate our relationship, so I, I think you can absolutely say that. Can I also... I, I always, like, think you, you learn a lot from mistakes that have been made.

    6. ASAydin Senkut32:38

       Yeah.

    7. HSHarry Stebbings32:38

       And it's easy to look back and, like, from the outside, bluntly, it just looks like hit after hit.

12. 32:43 – 36:00

    What mistakes have you made and were the lessons learned?

    1. HSHarry Stebbings32:43

       When you think about mistakes that you've made in building Felicis and, like, mentoring me building a firm many chapters before you, what mistakes did you make and what were some big lessons from them?

    2. ASAydin Senkut32:54

       I mean, to be honest with you, let me maybe start with this. Honestly, I, I am really proud of where we are today. And it's easy to look at only the successes and the highlights to say that was it, but nobody really t- likes to talk about it, but the mistakes and the side turns we took were just as much part of it, right? Like, so for instance, my personal biggest exit was Adyen. And I remember, like, I found Adyen because I was just so frustrated of, like, having missed Airbnb and Uber. I mean, I still have an email from 2008 from Brian Chesky. "Aydin, we really like you. Are you sure you don't want to invest at, like, $2.5 million cap?" Right? Like, I all- I just overthought the risk. Um, and look, every investor has these. I don't want to spend too much time on it. But then what's really curious is what you do after. Like, I would say at least half the investments of Felicis either came back from the dead or we lost the deal in one round, did the next round, and, like, it always came from difficulty, from nothing. We had, like, 1% odds. Like, people are like, "No way you can invest in Rovio. No way inve- you can invest in Shopify." It's in Ottawa. I flew to Ottawa, I flew to Helsinki in the middle of winter, you know, like convince founders. They're like, "How big is your fund size? Like, what investments have you made?" Like, I'm like, "Oh, my God, they're totally gonna shoot us down." But they saw something of, like, this spark, like, listen, these people will hustle and help us with anything. And somehow we made it (coughs) to the syndicate. So, what I wanted to say is, I'm really glad that (coughs) we made some mistakes because it pushed us on some extremes, right? Like, when I missed on, uh, Airbnb and Uber, I'm like, there is still a way to play that and that is, hey, there has to be, like, maybe something like a international payments company, and that's how I found Adyen. Um, and, uh, besides that, I think my biggest regret that is not obvious in this business, everybody thinks, um, you know, uh, it's all about the companies you say yes, but it's really about the companies you say no. You know? Like, I think you cannot build a great franchise just turning down companies. You have to say yes to some great companies. Otherwise, there is no way. You know, like everybody talks about, "We're so selective, you know, um, we meet 1,000 companies and we only say to 10." Absolutely doesn't matter at all. The only thing that matters is whether that 10 or whatever companies you invested has some great ones in it. And so what I have seen time and time again is that... And maybe this comes back a little bit to Joshua's point, is that, you know, with LPs, sometimes we do get, you know, conservative and we wanna be right and we wanna be responsible, but this is a positive outlier business, so the biggest mistakes are the ones that you should have said yes but you didn't. Um, so I'm always like, how can we do fund construction where we can say yes to, like, five more companies, six more companies? Because you never know that those companies where things are a little bit more uncertain or unusual also tend to be the ones that surprise you the most later in the future.

    3. HSHarry Stebbings35:51

       I, I'm, I'm totally with you there. Um, so, so in terms of, like, getting five or six more, can I ask, the ones when you look back in hindsight, the ones that I've

13. 36:00 – 38:18

    Biggest Misses

    1. HSHarry Stebbings36:00

       missed that are big have been me being like, "Hell no, I would never do that." Do you find the same where it's like they were never close? Or are the misses the ones that were so close to being done and you were on the edge?

    2. ASAydin Senkut36:12

       Look, let me, let me answer it in a different way so it's not repetitive, because it's very important that hopefully, like, some of the things we cover in this podcast are, are vastly different than any of the others that you've done. Uh, I think, you know, people in this business think a little bit too much about market prices and the yeses and nos. Look, at the end, it comes down to process. And it comes down to process at the time you make the decision. You can always say in hindsight, "Oh, that was obvious, it should have been a yes or no." Um, so if you ask me, e- everybody who's spending too much time on the market and those other things, they're playing the C game or the B game. The A game is like, what are you gonna do about it and how are you gonna differentiate? And honestly, the one thing that we can manage 100% is portfolio strategy and construction and then your process. So, every time I look at... I'm like, even when we have losses or we regret things, the first thing I do is listen. Is there something we could have done different in our network? Is there somebody we should have known but we didn't know? Um, is there some factor we overlooked? I- Is there some factor we overestimated? Like, Airbnb is a good example. Even though I came from one of the highest scaling companies, I think we never truly faced existential legal risk, and I thought Airbnb had, like, big legal risk, and little did I know that Community was gonna help manage it. Now, those things did indeed happen, but Airbnb was at such a large scale that they could weather it, right? So, these things, in hindsight, like, could have been different. But listen, it's also like at that point, there was, like, nothing to prove that it's gonna take off, but what I'm realizing is sometimes you have to make the bet of, how big can this company get if things go right? Very few people do that. It's very, like... It might be, like, literally one in a million, one in 10,000 scenario.... but it literally does scenarios that end up, like, making you a great investor, because if you don't get that 100X or 1,000X type of bets, you know, like, this is not a business that's gonna scale with, like, just 2, 3X type of investments, if you know what I mean.

    3. HSHarry Stebbings38:13

       And a- so totally, I get you, that upside maximization thinking. My question to you is, well, you know, your

14. 38:18 – 41:50

    When do you take cash off the table?

    1. HSHarry Stebbings38:18

       Shopifys, your Adians, there's many great public companies that you have. When we think about, bluntly, taking positions off the table and providing cash back to LPs, is there any advice that you give to me, any lessons that you have from your time, about when the right time to sell is, when the right time is to take cash off the table, how much to take off the table? I haven't been through this, Aydin.

    2. ASAydin Senkut38:40

       Yeah. I mean, listen, I think what I'm gonna tell you is just as applicable when you're making investments. I think we basically do a probabilistic analysis of risk/reward. Like, first of all, is there any chance that if everything goes right, this company could be very big, right? Like, so there is a reason why there are certain markets we don't touch. Um, there are certain, like, areas where it's niche, even though we like it personally, we don't invest in them. So first of all, there has to be a high upside scenario. I think the second thing is managing probabilities. Like, one of the biggest things that I learned from, for instance, um, a stock like Fitbit and a stock like Shopify, in, you know, one of the things we mentioned, in a recurring revenue, like, you basically next year are guaranteed to make this year's revenue, assuming churn is very low, so you just have to build on top of it so growth is a little bit easier. Um, when you're in different markets, let's say Fitbit, like, you're essentially selling this beautiful, like, quantified fitness tracker, and to double sales next year, you literally have to find twice the number of new people that are gonna buy your watch or have a new watch, so the ones that bought the old one, like, is going to go back and, like, start buying a new one again. And you realize, like, how difficult it is. So, like, huge respect for Apple. Like, I don't know how they keep scaling. They have to introduce new products. It's much, much harder to do so, and that's why everybody's going, "Hey, software is a lot easier. You don't have inventory, you know, like recurring revenue." That's why there's a religious focus on that area. Um, so what I would say is when you're looking at public stocks, you look at, hey, um, how predictable is the future revenue growth? And that is a great factor. The second thing is, sometimes when you're really torn, you can just distribute the stock, right? Some people wanna sell the stock right away and some people wanna keep the stock. You can't make everybody happy. But instead of distributing cash, you can just give back the stock. So, um, again, I'm not saying that, "Hey, this is the answer end be all." And it's very tough. Let me tell you, like, there has been times when we, like, distributed stock and I go back and I'm like, "Why did we do that? If we waited couple more years on it, the stock would have doubled or tripled." Then I realize that our responsibility to our LPs is not managing their public stock. It's to be in great companies, and that's why we like to give them the stock, because listen, maybe for some, the right context is to sell the stock right then and there and that return is good enough, 'cause maybe they have scholarships to sponsor or other things they have to do, charitable causes. You know, I can't be the arbiter of that, so there has to be the right balance. Um, you know, I know that, you know, we hear from Sequoia and even myself, like, I think about the very first house that I bought. Oh my God, what would that Google stock be valued at today? (laughs) And it's an insane number. But when I look at the first home that I bought, you know, that's where I got married, that's where my kids were born, and some of these things are priceless. So, just keep that in mind. So don't, like, kill yourself, but just be pragmatic about how you make that decision.

    3. HSHarry Stebbings41:32

       Yeah. No, I totally get you. And I think it's lovely to hear about the house with the kids and getting married and yeah, it's, nothing replaces that. Um, I- I'm mushy and British at heart, you know that, Aydin, um, but, uh, I do want to move to my favorite, which is a quick fire round. So, you know, I say a short statement, you give me your immediate thoughts. Are you ready to rock and roll?

15. 41:50 – 42:30

    Favourite book?

    1. HSHarry Stebbings41:50

    2. ASAydin Senkut41:50

       Let's rock and roll.

    3. HSHarry Stebbings41:51

       Okay. So what's your favorite book and why?

    4. ASAydin Senkut41:54

       I think my favorite book, all time favorite book, was Antifragile, and maybe that book is worth re-reading again now, um, because it was all about the black swans and how there are all these things we're not thinking about, and I think all the things that are happening in the world right now, I don't know if people were thinking US is gonna go back to a high inflation country, we're gonna have war in Europe, as unfortunate and awful it is to watch. Um, you know, like, a lot of the things that is happening in the world today, a lot of people thought some of the climate change things is just, like, hokey and, you know, we are seeing that some of this stuff is real.

16. 42:30 – 43:07

    What have you recently changed your mind on?

    1. ASAydin Senkut42:30

       So-

    2. HSHarry Stebbings42:30

       What have you re- what have you recently changed your mind on, Aydin?

    3. ASAydin Senkut42:34

       Um, I think one of the biggest things that I changed my, my mind on, like early on I thought validation from other people was kind of like something that was really important to me, like when we were making investments. But then I realized that, listen, you need to make your decisions independently. If even 100 people are screaming at your face that's terrible, it's absolutely wrong, uh, being an independent thinker is really, really difficult. So, I think one of the things that I am really fortunate is, hey, with experience and track record, I think you can be much more of an independent thinker.

17. 43:07 – 44:00

    Most overlooked quality for success in Venture?

    1. ASAydin Senkut43:08

    2. HSHarry Stebbings43:08

       What's the most overlooked quality for success in venture?

    3. ASAydin Senkut43:13

       Um, I think, listen, um, it's kind of related to what I said before. I think everybody thinks, hey, like, making a great investment is really important in venture, but, listen, if there are like 100 other investors and, you know, ten- tens of rounds, your returns get diluted. So, not only do you have to be right, but you have to be right in, like, the absolute minority. Um, it's very, it's very difficult. And people still think, um, that it's a, it's a math game, it's a numbers game. They don't understand that it's as much of an EQ game. I think one of the biggest things that I learned is that, hey, being able to relate people, having very strong EQs is as much of a strong factor as IQ. So I would say that's often overlooked, and maybe that's why people looked at me and, like, they didn't really figure out that I could be a

18. 44:00 – 45:00

    Who's your mentor?

    1. ASAydin Senkut44:00

       great investor.

    2. HSHarry Stebbings44:01

       You mentioned earlier being a mentor to many. You've been a fantastic advisor to me in many ways. Uh, who's your mentor, Aydin, and what have you taken from them?

    3. ASAydin Senkut44:09

       You know, I didn't have a mentor, as I mentioned, but we did benefit a lot from our first LP board that taught us a lot about, like, "Hey, how should we think about reserves, you know, recycling, um, vintage diversification," you know, what we talked about. Um, I think one of the things that we did that was really different, because I didn't have any mentors, um, we didn't construct a board with all the LPs that were just, like, in our favor and just kept telling us we're doing a good job. We put the most skeptical ones on our board, the toughest ones. You know, like imagine you're at the uni and you're saying, "Hey, I'm gonna take the classes with only, like, the toughest professors," 'cause I'm like, "Listen, the whole point of this is we wanna learn, we wanna grow, and we wanna be the best." Um, and that was really helpful. I think there was a lot of our, our aspect and operations they helped us improve and gave us kind of their perspective of having seen firms being built over

19. 45:00 – 45:27

    If Felicis could do one thing better, what would it be?

    1. ASAydin Senkut45:00

       decades.

    2. HSHarry Stebbings45:01

       If Felicis could do one thing better today, what would it be?

    3. ASAydin Senkut45:04

       If I had a magic wand, uh, I wish, you know, we could infinitely scale what we do for our founders. I think the most important part of this job is not writing the check but actually making a difference for our founders. We're trying, we're working very hard. We have some amazing people, um, but I-I think what keeps me up at night is how we can do more for them and we can make a bigger difference.

20. 45:27 – 46:16

    Biggest insecurity?

    1. ASAydin Senkut45:27

    2. HSHarry Stebbings45:27

       What's your biggest insecurity as an investor today, Aydin?

    3. ASAydin Senkut45:31

       I mean, I think my biggest insecurity as an investor, like, I told you about one which is, you know, I think in the beginning when I didn't really have the track record, I craved validation. Now I'm not really worried about it as much. I think the biggest thing is, like, what I told you, is listen, um, the insecurity is like the ones that you have to say no, especially where you know the founders or you can really feel for the company, where you're really on the fence. And everything in your body is, like, screaming like, "No, like, that should really be a yes and not a no." Um, and then you're saying, "Listen, like, we have a process. If I break the process, then how can I ask people to follow that process?" I think that's probably the hardest. Like, in my mind, I, I would love to say yes to a lot more founders than I am today. It's probably one of the toughest

21. 46:16 – 47:22

    Most memorable first founder meeting?

    1. ASAydin Senkut46:16

       part of the job.

    2. HSHarry Stebbings46:17

       What's your most memorable first founder meeting?

    3. ASAydin Senkut46:21

       Uh, I think there are so many of them, depending on how you look at it. Maybe the answer changes with a few more mojitos.

    4. HSHarry Stebbings46:27

       (laughs)

    5. ASAydin Senkut46:27

       Um, but definitely the Shopify meeting was very memorable. I mean, I've had, like, crazy founders walk into my office. Actually, I had a meeting with Marlin, uh, Moxie Spike, and he's one of the most unique founders I ever met. Uh, but I think the one with Shopify really stood out because when I'd started talking to Tobi and Harley, I literally thought, like, "Hey, they must be related to Larry and Sergey or something," because, like, the way they, like, talked about the company and the future and how many things they said no and what unique things they were doing, it, it reminded me very much of that phase at Google when we had, like, less than 50 people and we made some very unobvious and hard decisions and strategy moves. Uh, and, and it was literally seeing a glimpse of that, and I'm like, "I am pretty confident this company is gonna go to places," and, you know, luckily that is what exactly what happened.

    6. HSHarry Stebbings47:19

       That is hilarious. No, I, I'm sure. Uh, tell me, the most

22. 47:22 – 48:18

    Most recent publicly announced investment?

    1. HSHarry Stebbings47:22

       fi- final one, the most recent publicly announced investment and why you said yes and got so excited.

    2. ASAydin Senkut47:27

       Yeah, so one of the latest investments that just got public is this company called Living Carbon. Um, so I think this area is gonna be increasingly more interesting. Um, and we said yes because, uh, this is an amazing company that managed to biologically enhance trees to capture more carbon, um, from the atmosphere, and they also changed the chemistry of the tree bark so the trees become more resilient to things like fire and other external circumstances. So, when I saw this, "I can't believe somebody figured out how to do it." We have to support this company, and Nadi, the CEO, is amazing. So, uh, it was, it was a very excited no, uh, uh, very excited yes for that one.

    3. HSHarry Stebbings48:09

       Aydin, as I said, I so appreciate all you've done for me. Uh, it's been fantastic to have you on. So thank you so much for joining me today.

    4. ASAydin Senkut48:15

       Thanks again for the opportunity, Harry. It's really great chatting with you.

Episode duration: 48:19