"Cursor is Dead" is Total BS: Here is Why | Miles Clements

1. 0:00 – 0:59

   Intro

   1. MCMiles Clements0:00

      Sometimes getting overly fixated on the financial metrics in this environment can leave you with an unsatisfying taste in your mouth. Growth can obscure and blind you to a lot of underlying ills in the business

   2. HSHarry Stebbings0:11

      Now today I'm thrilled to welcome Miles Clements to the show. Miles helps lead Accel's growth investing practice, where he's backed some of the best in the business, including Atlassian, Linear, Cursor, and many more

   3. MCMiles Clements0:22

      You can actually be successful in this market investing in consensus. Investing is an art and a science. The science is understanding how to properly value a company, and the art is understanding when to break the rules. Focus on hitting singles and doubles and let the home runs take care of themselves. And what he means by that-

   4. HSHarry Stebbings0:37

      Ready to go? [upbeat music] Miles, we are in person. I love it when you're in town. It's so lovely to see you, man, and it makes it so much more special doing it in person. So thank you for joining me.

   5. MCMiles Clements0:57

      Yeah, thanks for having me. It's, uh, always fun being

2. 0:59 – 2:39

   Where is True Alpha and Value in a World of AI

   1. MCMiles Clements0:59

      here.

   2. HSHarry Stebbings0:59

      Now, I wanna start with the core question that I think every investor's thinking about, which is w- how do we ascertain true value in an AI world where technology seems so transient and revenue seems so endurable?

   3. MCMiles Clements1:13

      I think in terms of evaluating these AI categories and companies, there's a pretty useful framework, which is basically trying to understand a company's time to value and then the durability of that value. And so I think that a number of these companies sort of shine on, on different dimensions. If I were to look at, um, you know, legal AI, uh, accounting AI, a company like Basis that we just invested in, I actually think these companies don't have immediately quick time to value. And so when you look at, like, you know, the deployment cycle and, and getting lawyers and, and getting accountants sort of sold on the technology, that can take a little while. But once it is hooked, the durability of that value is, like, transformational to these firms. On the other end in the spectrum, I would take some of, like, the very early vibe coding companies, right? Very quick time to value. Like, you start vibe coding, all of a sudden you have a weekend warrior pickleball app ready to go overnight. Like, you can start using something very quickly, but the bottom just fell out for a lot of these apps because there was no durability of value. The reason that I think coding has become, like, the vertical in AI is because it shines on both dimensions. Like, you can start using Cursor in an afternoon and by that evening, like, you're ten times more productive. The, the time to value is very short, and then the durability of that value compounds as the team starts using it. So Claude Code, Cursor, all of the great products out there, like, I think this is why coding has become the vertical that is the battleground in AI today.

3. 2:39 – 7:03

   Why it is Total BS that Cursor is Dead

   1. HSHarry Stebbings2:39

      Jerry Murdoch on the show said from Insight the other day, uh, not me, but, like, overheard from my portfolio, um, no one's using Cursor anymore. Everyone's using Claude Code. We just saw Chamath tweet last night, "We're gonna have to move off Cursor 'cause it's just simply too expensive." Um, and the Twitter sphere seems to have turned against Cursor with the Cursor is dead meme. But then they hit two billion in ARR. I'm trying to understand-

   2. MCMiles Clements3:06

      Yeah

   3. HSHarry Stebbings3:06

      ... what is going on here.

   4. MCMiles Clements3:07

      I think there's a couple of things at play. And I watched the-- You know, I, I saw the Chamath tweet. I, I listened to the Jerry Murdoch show. Um, with all due respect to those, to those guys, I think there's a few things at play. First of all, this market is growing enormously, and I don't think a lot of these companies are actually experiencing success at the expense of the others. So take Claude Code as an example. First of all, what an amazing product. And, like, how lucky are we to live in this technology cycle where we have all of these tools at our disposal? Claude Code has absolutely captured the imagination, in part driven by Opus four point five, Opus four point six. Like, I think the success of Claude Code is also very much tethered to the success of the underlying model. So it has captured the zeitgeist, like, that's unmistakable. With that said, I think these things are so market expansionary that it's not necessarily coming at Cursor's expense. And I think they're market expansionary on two dimensions. First of all, they're bringing so many new cohorts of users online, so people who would not have been software developers a year ago today can be software developers with these tools. They're also expanding the market in terms of consumption. So when you look at, like, you know, you hear the ARR growth leaked for both companies. A lot of that ARR is not, like, net new companies paying per seat pricing. A lot of that ARR is consumption, which is off the charts for both tools.

   5. HSHarry Stebbings4:24

      Mm-hmm.

   6. MCMiles Clements4:25

      So I think that's one thing that's going on. I think another is this sort of misunderstanding about Cursor being tied to the IDE. In some ways, Cursor is a victim of its own success. Like, they were so disruptive and so innovative around the IDE, like, a year ago that people can't help but over-make the assumption. What is happening, though, very clearly is, like, the world is moving to agents. No one has been more vocal and thoughtful about that than Michael Truog from Cursor. So I just sort of look at the numbers. According to, like, Michael's post, which was public on Twitter a few weeks ago, there are two times more people using agents in Cursor than using the tab feature. Um, ninety percent of Cursor users are daily active users of the agent product. The agent product grew fifteen X last year. You know, the cloud agent product, which was new as of like October thirtieth, so it's only been in market for three months, is now responsible for thirty-five percent of merged PRs in Cursor. Those are happening by cloud agents. So, you know, the perspective that, like, all, all due respect to, to Jerry Murdoch, I think he said, like, "Well, you know, I thought about this metrics-- these metrics, and this company needs to pivot." Like, all due respect, I thought about playing in the NFL, but instead I walked onto a college football team and was the fifth string inside linebacker. Like, you're not looking at any real metrics. Like, who are, who are these people to make these judgments? So, um, I get a little bit spun up about it. The thing that's so cool about the team is, like, they are focused, they are unfazed, and they're just building.

   7. HSHarry Stebbings5:50

      Do you think they are fundamentally challenged because of their reliance on bluntly Anthropic in their models and what that does in terms of cost inflation for end users of Cursor?

   8. MCMiles Clements6:01

      I don't think so. I mean, I think in a number of dimensions, like the beauty of Cursor is their ability to be multi-model. I think it's valuable for a couple of reasons. First of all, we put this survey into the market. You'll have to have me back on the show to like give you the full readout because it's only 90% of the way complete. We just wanted ground truth on like what's going on with the mindset of developers today, and, and one of the things that we're learning is, um, like 50% of developers switch model families on a daily basis, and 95% of developers switch models on a daily basis. I, I think the world wants to be multi-model, and that experience is fundamentally enabled by Cursor. The other thing that comes from being multi-model is you basically become like an index of AI innovation because you get this compounding product benefit where every new feature, every new enhancement that the Cursor team makes, that obviously improves the product experience, but every improvement with the underlying models also improve the capabilities of Cursor, and so you get this like compounding product flywheel that's very unique.

4. 7:03 – 7:43

   Why Cursor Were Not Wrong to Build Their Own Models

   1. HSHarry Stebbings7:03

      Was Cursor wrong to focus on building their own models?

   2. MCMiles Clements7:07

      I don't think so. I think what they're gonna be able to achieve is incredible. I also think we need to frame in the right context what their aspirations are with these models. So I think generally speaking, like there are generalists and there are specialists. Cursor's going to build specialized coding models that are gonna serve specialized coding tasks, especially for a lot of enterprise users. Like, they don't need for their models to be good at poetry or teach you how to make an apple pie. Like, their models are there for professional coders to do professional work, and I think that like that's very powerful and can- will continue to make the product experience really differentiated.

5. 7:43 – 14:11

   What is the Upside When Investing in Cursor at $27BN?

   1. HSHarry Stebbings7:43

      Can I ask you, when you were investing at... What was the first round price?

   2. MCMiles Clements7:49

      9.5.

   3. HSHarry Stebbings7:50

      Okay, 9.5. When we're doing like a 9.5 and a 27, what are we underwriting it to? Now if I was your partner, I'd be like, "Totally get it, and this is super exciting," but like what's the upside here? How, how did you think about that?

   4. MCMiles Clements8:02

      Yeah. I, I think that there's a couple of ways to frame the upside. One is that you think about like platform companies that are publicly traded that own their domains. There's very few of them out there. So Salesforce historically has been like the go-to-market platform company. You know, CrowdStrike and maybe Palo Alto are like the platform cybersecurity companies. There has never been a platform company for engineering as a vertical. And engineers are like, I mean, this is the fastest-growing, most dynamic vertical there is, and no one has ever owned that. Now, you've had companies that have built tremendous value biting off pieces of the stack. You know, Atlassian, hugely value company, the hugely valuable company that, that we love, um, began around issue tracking, Datadog around monitoring. These have been like 50 to 100 billion dollar companies built over time addressing like one portion of the engineering product stack. No one has built the platform company to own it all, and we think they have that aspiration, so that's one thing. The other is like we were also joking before the show that I think sometimes getting overly fixated on the financial metrics in this environment can leave you just like with an unsatisfying taste in your mouth. Actually, this company is growing so quickly that on a multiples basis, you know, our first investment was at like, um, four times, five times year-end ARR.

   5. HSHarry Stebbings9:24

      Right.

   6. MCMiles Clements9:25

      I mean, that wasn't like anything that we talked about or part of the underwrite, but-

   7. HSHarry Stebbings9:28

      Because now it's at 2 billion, and you did it at 9 essentially.

   8. MCMiles Clements9:31

      The company said, I think, a week ago, or it was leaked, that they passed 2 billion.

   9. HSHarry Stebbings9:35

      Okay.

   10. MCMiles Clements9:35

       So yeah, that's a fair assumption.

   11. HSHarry Stebbings9:36

       Yeah. Yeah, totally get you. Kind of what was it when you did it? Just 'cause you need to have that mental plasticity, give or take.

   12. MCMiles Clements9:42

       You know, we had a, um, we had a conversation with Michael where we sort of said, "Where is the business today commercially?" And he told us, and it was... I don't, I don't... I'm not evading the answer. I don't specifically remember, but maybe it was like 100 of ARR.

   13. HSHarry Stebbings9:54

       Give or take, yeah.

   14. MCMiles Clements9:55

       You know, we said, "What do you think, um, what do you think is realistic for the end of the year?" He said, um, "You know, I think maybe like our aspiration is, you know, if these assumptions go right and these are the products we're gonna launch, then we can get to 500." And Andrew Braccia, who I was working with, um, you know, Andrew and I sort of looked at each other and we were like, "I think we should haircut it and call it 300." Like, getting from 100 to 300 would be extraordinary for this kind of a company. And, um, you know, they ended last year somewhere in the billions, I think has been reported. But it really, you know, it really never was about and, and still is not about financial metrics. The financials of this company, to me, are purely a reflection of the product market fit, and it's unlike anything I've ever seen.

   15. HSHarry Stebbings10:34

       When you are so off in your ability to predict revenue at year-end, how does that change your go-forward investor mindset? Do you just place no value on, like, revenue predictions? How do you think about that?

   16. MCMiles Clements10:48

       I, I think revenue predictions are important in that they sort of encode a lot of business assumptions. You know, like if, if we get this product right, if our pricing here is correct, if our penetration of this customer segment works out, we should be at this rough revenue scale. But, you know, the idea of having a budget so that you can go hold the founder's feet to the fire quarter after quarter and... is just not really relevant. Um, so to me, the less important thing is if a company finishes, you know, 10% below plan, 10% above plan, like w- we're not public market investors. We're not managing to earnings calls. We care a lot about the inputs that go into the assumptions, but, like, the output is a little bit less important.

   17. HSHarry Stebbings11:33

       When we think about that and the revenue numbers that you see there, it makes other things seem quite boring. It does. Like, I mean, this is the sad case. Are we in a world where triple, triple, double, double's dead when you can have a company like Cursor going from 100 to a billion?

   18. MCMiles Clements11:53

       Absolutely not. I mean, send me all of your triple, triple, double, double companies that you're not interested in investing in. Like-

   19. HSHarry Stebbings11:58

       I don't think... I, I... So I was thinking this last night. Everyone says this on the show. I guarantee you'd be like, "Fuck no."

   20. MCMiles Clements12:05

       No, no, no. Here, here's why. I, I think you can actually...Be successful in this market investing in consensus and I think you can actually do really well investing in like non-consensus. I think you get hammered sitting in the middle. So you know, a company that's not growing 15X year over year, that's fine. There's all these other really important inputs that go into it that I think can make for like a really interesting investment outcome.

   21. HSHarry Stebbings12:32

       I- I'm, I'm sorry. I, I still don't quite understand. If you have a pot of money and you can put it in companies that are growing 15X, to then put it in companies that are growing 3X, 3X, 2X, 2X, the opportunity cost of your cash is real. As your partner, I'd be saying, "Why are we doing that?"

   22. MCMiles Clements12:49

       Yeah, but th- this is where, you know, we're ignoring like all of the other important inputs, right? Like quality of the founder, what market are they in, what ownership are you getting in the investment, you know, all of these other things factor in too. So I, I think one thing that's happened in our market is like investors have tended to just flock to the extremes, either like we're AI maximalists, we're gonna buy the basket, ownership valuation be damned, we want everything, or like we hate the valuations, they make no sense. We're gonna sit on our hands and wait until things cool off a little bit. The reality is like the best funds in the world, the best investors in the world embrace the nuance. The, the, the right answer is always somewhere in the middle. And like construing a, you know, constructing a basket of companies where maybe some, they were undisputed breakout leaders and you didn't get the ownership that you wanted, but you, you wanted to be a part of that company and you wanted to be partnered with that founder, there's room for that in a portfolio. But there's also bootstrap companies in Little Rock, Arkansas, where you can have a different ownership pr- threshold and work with a really special founder and build the company in a different way and, um, you can do very well that way too. We don't really run from the nuance, like we embrace the nuance and, and there's a lot of benefit to being a multi-stage, multi-strategy firm.

   23. HSHarry Stebbings14:07

       That's wonderful, but your funds are too big to embrace nuance, dude.

   24. MCMiles Clements14:10

       How

6. 14:11 – 16:04

   Do Sub $10BN Outcomes Even Matter to a Fund the Size of Accel?

   1. MCMiles Clements14:11

      so?

   2. HSHarry Stebbings14:11

      I'm sorry, you need to have $50 billion plus companies to return your fund sizes.

   3. MCMiles Clements14:16

      I think we will. I mean, think about this, like a decade ago, how many trillion dollar companies were there in the world?

   4. HSHarry Stebbings14:22

      Um, no, and, and you're right. I use this stat too in like the expansion of outcome sizes, but like, dude, they're very, very rare, and they take 17 to 20 years when you look at the majority of them.

   5. MCMiles Clements14:32

      But this is the cycle repeating itself, and like to answer my own rhetorical, which nobody asked me to do-

   6. HSHarry Stebbings14:37

      [laughs]

   7. MCMiles Clements14:37

      ... you know, a decade ago, there were zero companies worth a trillion dollars. Five years later, there were six public companies worth a trillion dollars. Today, there's a dozen companies worth a trillion dollars in the public market, plus you have the labs, you have SpaceX and, you know, companies in the private market. So the sizes of the outcomes are enormously bigger, and I absolutely think that comp- that, you know, firms can re- make, you know, substantial returns in the late stage business given those outcomes, and I will say it's really hard if that's the only thing you do. If all you're doing is buying late stage momentum companies, I do think that's hard. There are people that do it well, but it's hard. I think being a multi-stage, multi-strategy fund where you also have a really focused early stage effort and a growth effort, I think you can absolutely continue to support companies at every phase of growth and make a lot of money.

   8. HSHarry Stebbings15:28

      Okay, but can you do vertical SaaS growing triple, triple, double, double?

   9. MCMiles Clements15:33

      Yeah, I think again with, with the right valuation metrics and, um, you know, I, I wouldn't, I wouldn't exclude, I wouldn't write off a company purely because that's the growth profile. Now, I see the point. You have to focus on large outcomes, and I agree with you there. Like-

   10. HSHarry Stebbings15:49

       Like I, I w- I'm like to the team, we need to do two things. One, we need to replace seats. We're replacing labor. Uh, and then two, I need to see a billion in revenue. Like before it was like 100 million and we, we can sell it for a billion or IPO. A billion dollars, it doesn't, doesn't do shit

7. 16:04 – 19:55

   Losing ServiceTitan: Investing Lesson Learned…

   1. HSHarry Stebbings16:04

      for us now.

   2. MCMiles Clements16:04

      Yeah. I, I agree with you. As much as I enjoy sparring with you, I agree with you on this point. Like if you can't articulate the big outcome, and if the founder can't articulate the big outcome, that is probably a sign that you don't wanna be asso- you know, involved with the company. Um, but I think that, you know, what you're describing is basically the mistake that we made on a company like ServiceTitan. So you know, w- we were, we, we had fallen in love with our envie. We were chasing this round. It was gonna happen in the 250 or $300 million range, and you know, we had these rigid rules about like, you definitely can't pay more than six time, six to eight times forward for vertical SaaS, and you definitely can't pay more than 10 times forward for vertical SaaS. And, you know, we, we lost it, uh, because we sort of got cued on price, and then that went on to be a $9 billion company. And, um, if you really understood the depth of the market, and if you really understood what they were disrupting in that era, like you would've done it even though it was a vertical SaaS where you, you know, might have otherwise historically thought it was constrained.

   3. HSHarry Stebbings17:09

      When, when we said about Cursor, y- I liked your description of like the platform company for engineers, and I see it and I see that ground play, but then it kind of goes against something that we kind of noted down before you said, "Who will win as a narrow-minded framing of the market?" Are they not paradoxical? Like if you think about Cursor being that engineering platform company, totally get that, and I believe in that view of the world, but I don't believe the who will win is narrow-minded view.

   4. MCMiles Clements17:37

      I, I think that, um, I think Cursor will win. I think there's huge value to being the winner in these markets, but the reason I think the conversation is like the, the framing is overly simplified is, you know, people forget w- we don't operate monopoly markets in this country. Like the forces of capitalism don't permit it, and if they did, then the federal government wouldn't permit it. So like I think the best software company in the world is AWS. AWS has like 35% market share. So you know, everyone aspires to win and you, you, you get into business with these founders because you believe that they can win. But I also think the way that a number of these verticals are gonna play out in a number of the AI categories, there's gonna be a couple of really big companies in several of them.

   5. HSHarry Stebbings18:23

      Do you not think we do legitimately operate in monopoly markets? I mean, let's look at, like, Nvidia. Let's look at Apple for consumer hardware. Let's-- I mean, some, you know, Salesforce for CRM. You know, Salesforce is a $250 billion business.

   6. MCMiles Clements18:37

      Yeah, but I, I think it's different when you get into, like, the mega cap companies. Like, there are monopoly conversations, and that is, you know, what the federal government is there for, some would argue. I would not argue, but that's what the federal government tends to do these days. Um, you know, I think in the private markets at the scale of companies that we're talking about, I, I just don't think so. And, like, I'll give you one framing for, like, the Winning conversation. Um, we've talked about, and you talk on the show a lot about Deel. People say, like, "Deel has won the market. Alex is phenomenal. Deel has won." You know, we're not investors in the company. I think it was published that they passed, like, a billion dollars of ARR.

   7. HSHarry Stebbings19:10

      Yeah.

   8. MCMiles Clements19:10

      It's incredible. It's like, welcome to the big leagues. ADP has $20 billion of ARR. Like, you are one-twentieth the size of ADP. And by the way, in this market, you've got, like, Paychex is a $60 billion company, and Paycom, and Paylocity. And, you know, so, like, I think the venture framing of this Company One is, is not always, you know... I think it can be a little bit oversimplified.

   9. HSHarry Stebbings19:34

      Do you reflect on those two? You're not in Deel or, or Rippling.

   10. MCMiles Clements19:40

       Separate conversations. We're not in Deel 'cause we're in Remote, and I'm thrilled that we're in Remote. I think Yoav and Marcelo are, like, very special. I think their product vision is very different and unique. Um-

   11. HSHarry Stebbings19:49

       I'm in both. Welcome to [laughs] 2026.

   12. MCMiles Clements19:50

       Yeah. Yeah. Ex- exactly.

   13. HSHarry Stebbings19:52

       [laughs]

   14. MCMiles Clements19:52

       I'm sure we'll talk about conflict somewhere in the conversation.

   15. HSHarry Stebbings19:54

       You

8. 19:55 – 29:12

   Missing Rippling: What We Learned

   1. HSHarry Stebbings19:55

      know, it's fine. We don't embrace conflict. [laughs]

   2. MCMiles Clements19:57

      So the Deel conversation is separate 'cause I'm very thrilled that we're investors in, um, in Remote. The Rippling one, yeah, I think about this one a lot. I mean, this one stings. Um-

   3. HSHarry Stebbings20:07

      Why?

   4. MCMiles Clements20:08

      I think a lot about, like, the physics of these businesses and, like, the product mechanics behind a lot of these companies. And what I mean by that is I think a lot of investors tend to look at, like, what's the product, what's the growth rate, et cetera, et cetera. No one really has an appropriate appreciation for, for what I think of as, like, the marginal ease of ARR accumulation, right? Like, what are the downstream levers that you're putting into place that you can pull on in the future that will allow you to grow, you know, at these su- these crazy growth rates in year four, five, six, seven? And, you know, how do you build this growth mechanism that is better than, like, I put in a marketing dollar and I get out a dollar and 20 cents of revenue? And I think nobody in the world does that better, uh, than Parker Conrad. And so the, you know, the first time he, he sort of out- outlined the vision, I was like, "This is, this is really compelling." And, um, I think that's what he does. He has, like, he has this innate sense for pockets of margin that other people wouldn't go build companies around, like laptop provisioning and, and physical IT leasing. That would be a tough standalone business, but, like, as a revenue line item for a company like Deel-- or sorry, Rippling, I think it's really interesting. I just think that, um, you know, Parker is a generational founder, and, um, we don't get it right all the time, but he's certainly someone I wish we were in business with.

   5. HSHarry Stebbings21:32

      Why are you not? Was it because of the Remote situation, or price, or...?

   6. MCMiles Clements21:36

      I think it was a couple of things. Parker previously had a reputation.

   7. HSHarry Stebbings21:41

      Yeah. That happens.

   8. MCMiles Clements21:42

      And I'm not gonna opine on whether it was deserved or not, but he had a reputation that I like to think he's now totally overcome. Um, that just came up in the conversation, and in a market where, like, Mamoon was moving very quickly and other people were moving quickly, like, it probably made us a step slow. Um, you know, I think this is also one where, like, we stuck to our knitting on the investment framework, the ownership thresholds. The opportunity to get involved was gonna be at a high valuation and maybe there was... I don't remember the specifics, but there was, like, a mechanism where you could invest more over time and, um, it would've required us to break a lot of rules. And I, I think, like, I don't, I don't regret not breaking the rules in general, but, you know, this would've been a time when it could've been worthwhile.

   9. HSHarry Stebbings22:27

      I'm, I'm slightly confused right now as to whether we should break the rules on series As. The prices have gone from 20 on 100 to 20 to 40 on 200 to 400, and I'm forced every day to question should we break the r- rules on ownership for these incredibly fast-growing hot AI companies. And we go back and forth on it. We're friends sitting in a coffee shop. What would you say to me if I was debating that?

   10. MCMiles Clements22:54

       Yeah, I'm chuckling 'cause there's this funny quote that comes to mind. Um, I've been very lucky at Accel to learn from a lot of really great people. One of them is Jim Breyer. Jim used to say this thing, which I think he was paraphrasing from somebody else, but it was basically that, like, investing is an art and a science. The science is understanding how to properly value a company, and the art is understanding when to break the rules. I just think in this market, like, you gotta do that constantly. And, um, generally speaking, sticking to your rules is a good place to be. Now, I do think, you know, the vocabulary around what a series A is in this market is just very different, and so I would actually... You know, I think there's, like, multiple subcategories of investing that goes on in series A land, and you just have to decide what you wanna participate in and, and what you don't. It's okay to say no. Like, you don't have to be in every single round. And, um, so I think that, like, breaking the rules is something you should do very, very rarely.

   11. HSHarry Stebbings23:48

       You said that kind of, the, uh, brilliantly wanky phrase, the marginal ease of ARR accumulation. I'm gonna give you five tequilas and then ask you to say that again.

   12. MCMiles Clements23:59

       [laughs]

   13. HSHarry Stebbings23:59

       Um, sounds wonderful. Where did you think there was marginal ease of ARR accumulation where there maybe wasn't? Um, and what did you not see?

   14. MCMiles Clements24:10

       I think as the market has gotten more competitive, the pressure to be right, to pick correctly, has never been greater, and it causes you to extrapolate. You have to extrapolate from early data points. There have been investments where, you know, a company went from, they had a million dollars of ARR, and then in the period that, um-You know, before they fundraise, they had like a $4 million quarter, and it's like they've got it. Like the product market fit snapped. Like they-- this is it. This is the time to forward invest, and you can extrapolate these trends. And then it turns out sometimes they just had an anomaly quarter.

   15. HSHarry Stebbings24:49

       Mm.

   16. MCMiles Clements24:49

       And, um, I have fallen into that trap before.

   17. HSHarry Stebbings24:53

       Do you have that more and more now when we see companies being maimed by others so significantly?

   18. MCMiles Clements24:59

       Yeah. Yeah, definitely. I agree with this. I mean, I think this is why, you know, the benchmarks that used to give us all comfort are largely obsolete now. And so, like, you have to be really clued into the usage intensity of your product and really understand how people are using it because y-yeah, I mean, growth can obscure and blind you to a lot of underlying ills in the business. And, um, so I do think that being clued into, like, how people are engaging with the product, whether you're an enterprise company or a consumer app, is more important than ever.

   19. HSHarry Stebbings25:31

       Do you find it hard, the binary nature of this world? Like honestly, we come into work sometimes and we're like, "What the fuck are we doing?"

   20. MCMiles Clements25:38

       [laughs]

   21. HSHarry Stebbings25:38

       No, I'm being serious. Like, you know, I was talking to my dear friend Jason Lemkin the other day, and he's like, "Fuck this. I've had enough of this. I just wanna do an Anthropic SPV and go home. I don't wanna pick the winner-

   22. MCMiles Clements25:50

       Well, yeah

   23. HSHarry Stebbings25:50

       ... in a SaaS company that... Oh my God." Like w-we feel so unimportant.

   24. MCMiles Clements25:56

       Yeah. I have to be honest with you. No. Like-

   25. HSHarry Stebbings26:00

       [laughs]

   26. MCMiles Clements26:00

       ... like I fucking love it, to be really honest. Like I'm so lucky to be in this industry, and the competitive thrill o-of chasing down these founders and chasing these deals, it's awesome. Like, like how lucky are we to get to do this? So, um, no. Like I understand, you know, where you're coming from, but I love it.

   27. HSHarry Stebbings26:20

       When we look at the big exits this year, you've got Databricks, you've got Anthropic, you've got OpenAI, and you've got SpaceX. As a partnership, do you guys lament that you're not in them?

   28. MCMiles Clements26:31

       Oh, of course. I mean, w-we, we-

   29. HSHarry Stebbings26:33

       Like what, what's, what's the internal narrative on that?

   30. MCMiles Clements26:34

       We, we are in some of those companies, but we, um... Yeah, absolutely. N-nobody is harder on, on us than we are. Um, nobody has a perfect track record, and we wanna understand where we went wrong at every company that we're... Every breakout company that we're not a part of, we wanna know where we went wrong. Um, w-we also though, we do that in the interest of getting it right going forward. And when we look to the future, um, there's a lot of things that we're really excited about, a lot of companies where we are sort of the investor of record. We intersected them very early, continued to buy up all the way, you know, through the growth stages and, um, we're excited about those. But absolutely, we, we hold ourselves accountable when, you know, we miss companies.
9. 29:12 – 31:59

   What is Accel's Win Rate

   1. MCMiles Clements29:12

      be better.

   2. HSHarry Stebbings29:12

      What is your win rate today?

   3. MCMiles Clements29:16

      How would you measure it?

   4. HSHarry Stebbings29:18

      When you go for a deal with a term sheet put down.

   5. MCMiles Clements29:20

      Mine individually or as a firm?

   6. HSHarry Stebbings29:22

      As a firm. But, but it's that term sheet put down.

   7. MCMiles Clements29:26

      I don't... I'm not evading the question.

   8. HSHarry Stebbings29:28

      Mm.

   9. MCMiles Clements29:28

      I don't know the answer, so I'll speculate. I think a healthy win rate would be like 80%.

   10. HSHarry Stebbings29:35

       Mm.

   11. MCMiles Clements29:36

       And the reason it's not 100% is because-

   12. HSHarry Stebbings29:38

       See, no one's gonna have 100%.

   13. MCMiles Clements29:39

       Some people have come on this show and said that they have 100% win rate, and I-

   14. HSHarry Stebbings29:43

       Aneesh did at, at Andreessen.

   15. MCMiles Clements29:44

       Well, I wasn't trying to call him out specifically, but I've just heard it said before.

   16. HSHarry Stebbings29:47

       Well, no, no, fair. If, if, if I said I had never lost a deal, I'd be happy if someone said it. [laughs]

   17. MCMiles Clements29:52

       Yeah. My... I don't mean to be combative about it. I think my like, my g- my polite and professional response would be, I think if you're not putting yourself out there and losing sometimes, you're not chasing competitive enough things. I really like sticking my nose in compet- in a competitive fight, like that I have no right to win. I really like doing that. But I also really find a lot of joy in finding these founders who are just doing things a little bit differently. Maybe they've bootstrapped the company. Maybe they're located in some geography that's like far away from Silicon Valley. And having these non-consensus ideas that other people might think are silly or they might not really have their heads wrapped around, it's like I think that's great too. But part of the-

   18. HSHarry Stebbings30:34

       Is that kind of growth equity like technology venture not inherently the most fucked in this AI world?

   19. MCMiles Clements30:41

       I think that business has gotten harder.

   20. HSHarry Stebbings30:43

       Yeah.

   21. MCMiles Clements30:43

       And I think that was like, frankly, that was the core of our early growth strategy. So this was-

   22. HSHarry Stebbings30:48

       Unbelievable. Like the bootstrap, like one password Qualtrics.

   23. MCMiles Clements30:52

       Totally. Mike and Scott.

   24. HSHarry Stebbings30:53

       From bumfuck nowhere. Amazing. I love this.

   25. MCMiles Clements30:55

       A- absolutely. And that is still out there, and we still do a lot of it, and we aspire to be the best in the world at it.

   26. HSHarry Stebbings31:01

       Is it still out there in the world today?

   27. MCMiles Clements31:02

       It is.

   28. HSHarry Stebbings31:02

       Yeah.

   29. MCMiles Clements31:03

       It is. This is the funniest thing. Every time we have an off-sider strategy conversation, we keep saying, like, "There's no more bootstrap. There's no more bootstrap." And then, like, you find a Laravel. Like, they are still there. They're really hard to find, and I think we're, like, the best in the world at finding them.

   30. HSHarry Stebbings31:20

       Interesting. And it makes sense from opportunity cost of capital to put your money there versus just putting another hundred million into Cursor.
10. 31:59 – 37:21

    How VCs Approach Ownership Has Changed

    1. HSHarry Stebbings31:59

       in the same way?

    2. MCMiles Clements31:59

       In many ways, the market today is like what the venture market was in 2000 but inverted. So the idea was like, I'll do my series A, I'll get 30% ownership, I'll take a bunch of dilution, and when the company goes public, I'll own 20% of it. That was like roughly the math. Today, you have to back into 20% in the other way. Like, you do what the market will allow in the earliest possible investment. You sponsor a tender, you do a growth round, you do an IPO round, and you can ladder your way up to 20% ownership.

    3. HSHarry Stebbings32:28

       Or-

    4. MCMiles Clements32:28

       You have to be a multi-stage fund to do that.

    5. HSHarry Stebbings32:30

       Or you hope and pray that the expansion or, like, the multiple or the size of the exit, sorry, is so much bigger than it was.

    6. MCMiles Clements32:38

       Totally.

    7. HSHarry Stebbings32:38

       It's not a billion to five billion, it's 50 to 100.

    8. MCMiles Clements32:41

       Sure.

    9. HSHarry Stebbings32:41

       That actually having 5% is actually just as meaningful as having 20% of the prior.

    10. MCMiles Clements32:46

        Sure. I think you won't be surprised to find that, like, I don't think hoping and praying is a great strategy.

    11. HSHarry Stebbings32:50

        Dude, we are all fucking hoping and praying right now.

    12. MCMiles Clements32:53

        [laughs]

    13. HSHarry Stebbings32:53

        I'm sorry. That is a absolute... Like, uh, uh, Figma is an $11 billion company.

    14. MCMiles Clements32:57

        But, but this is-

    15. HSHarry Stebbings32:58

        The, the, the, the unbelievable, unwaveringly brilliant founder of Dylan, and this was-

    16. MCMiles Clements33:04

        Totally

    17. HSHarry Stebbings33:04

        ... the swan song of software is 11 billion, which is incredible, and incredible, and incredible.

    18. MCMiles Clements33:09

        Totally.

    19. HSHarry Stebbings33:09

        But you know, it doesn't return your growth fund-

    20. MCMiles Clements33:12

        But we're, we're arguing-

    21. HSHarry Stebbings33:13

        ... with 10%

    22. MCMiles Clements33:13

        ... two separate points, and I agree with you on the Figma case study and all these, like, fundamentally incredible businesses out there that have gotten beat up. That's a separate point that we should circle back to. The other point is, like, do you have to swing for the fences? You know, I go back to Arthur Patterson, co-founder of Excel, always says this thing, "Focus on hitting singles and doubles and let the home runs take care of themselves." And what he means by that is if you're just constantly stepping to the, the plate and trying to, you know... I can see at the Series A that this is gonna be a hundred billion dollar exit. You will just overswing, and you will fail.

    23. HSHarry Stebbings33:48

        No, but isn't that what I'm, I'm deliberately being... No, I'm not actually. I'm actually just fundamentally disagreeing with that. That is, like, not what venture is about, especially at the Series A. You wanna have a diversified portfolio enough that you have one or two of them hit, but you want 30 swing the fuck out of this, and it could be 100 billion. We're not here to do the singles and doubles.

    24. MCMiles Clements34:10

        T- I think different ways to practice the craft. I do think the market has evolved a little bit, and a single and double today might look different than it did, you know, in the year 2000.

    25. HSHarry Stebbings34:19

        Yeah.

    26. MCMiles Clements34:19

        But, um, I think what he means is, like, know what you're good at, focus on founder relationships, you know, stick to whatever your particular strategy is and just try to do that really well. You know, don't just go sling it into things that are momentum-chasing opportunities where you're not gonna be any better than the next investor. I think that advice is fair.

    27. HSHarry Stebbings34:46

        Do you not think we're all momentum chasing? I mean, like, yeah, if we look at the AI entry for you guys and then the defense entry with Helsing, like we're all slightly momentum chasing. Like-

    28. MCMiles Clements34:56

        A- again, I think, you know, I would go back to nuance, subtlety, portfolio theory. Like, there are absolutely companies where it is justified to chase momentum. We don't like to use that vocabulary, but, um, you know, w- we see a company like Anthropic and how valuable they are as a technology partner to, like, every other company in our portfolio. The momentum is very obvious, but the business logic and sort of the, the business intrinsics are also very obvious. So, you know, does it make sense to have a relationship with Anthropic? Absolutely. So guilty of that.

    29. HSHarry Stebbings35:30

        You did the 180 round?

    30. MCMiles Clements35:32

        We're at... We've, we've invested in a few rounds of Anthropic.
11. 37:21 – 39:33

    Does Miles Feel Happier or Sadder to be an Anthropic Investor Post Pentagon Debacle

    1. HSHarry Stebbings37:22

       You said about Spice, do you feel better or worse [laughs] to be an Anthropic shareholder post Anthropic versus the Pentagon? I could argue both sides.

    2. MCMiles Clements37:32

       Yeah, you were definitely gonna give me some spicy ones. Um-

    3. HSHarry Stebbings37:36

       [laughs]

    4. MCMiles Clements37:36

       I, I think-

    5. HSHarry Stebbings37:37

       I can feel your compliance team just shit themselves as you go on. [laughs]

    6. MCMiles Clements37:43

       So can I. [laughs]

    7. HSHarry Stebbings37:43

       They're just crying. [laughs]

    8. MCMiles Clements37:44

       Look, I, I, um-

    9. HSHarry Stebbings37:47

       Don't want to be here. [laughs]

    10. MCMiles Clements37:48

        How can you... I don't want to answer this question.

    11. HSHarry Stebbings37:50

        [laughs]

    12. MCMiles Clements37:51

        How can you not admire the founders for sticking to their knitting on, and sticking to their conviction, and sticking to their principles? Now, I have no idea how this is going to shake out, right? I mean, like, but I think that, like-

    13. HSHarry Stebbings38:04

        Did you not write Dario's memo for him? [laughs]

    14. MCMiles Clements38:06

        [laughs]

    15. HSHarry Stebbings38:07

        Ghostwritten.

    16. MCMiles Clements38:08

        I'm definitely not intelligent enough to ghostwrite anything for Dario. No, I mean, I, um, I think this is an opportunity for... You know, a lot of these companies, they signal virtue, and they believe in a world where AI is going to be a force for good. And then there are commercial opportunities where that gets put to the test. Can you really blame a founder for saying, "I'm sticking to the mission"? I get it, and I respect it.

    17. HSHarry Stebbings38:38

        Totally get that. And, and I, I mean, we're seeing it bluntly play out for him in terms of loyalty, in terms of talent-

    18. MCMiles Clements38:44

        Totally

    19. HSHarry Stebbings38:44

        ... consumer adoption. Mike Krieger put they're doing a million a day in net new consumer signups.

    20. MCMiles Clements38:49

        Yeah, I mean-

    21. HSHarry Stebbings38:49

        They're amazing

    22. MCMiles Clements38:50

        ... they, they, they passed GPT in the App Store.

    23. HSHarry Stebbings38:52

        Isn't it ironic, though?

    24. MCMiles Clements38:52

        Yeah.

    25. HSHarry Stebbings38:52

        This is what was needed for them to surpass. [laughs]

    26. MCMiles Clements38:55

        No, I don't actually believe that they were doing it for that reason. I don't think they did it as a calculated business move. I, I think this comes down to-

    27. HSHarry Stebbings39:03

        No, I think it was an accidental bit of luck-

    28. MCMiles Clements39:05

        I agree

    29. HSHarry Stebbings39:05

        ... which worked out well.

    30. MCMiles Clements39:06

        I, I think it comes down to, like, ethics and principles. And call me old-fashioned, but if you behave the right way-
12. 39:33 – 41:01

    What Happens to Companies Like Miro and Snyk with High Prices to Live Up To?

    1. HSHarry Stebbings39:33

       What happens? Like, how do you opine and think about businesses like that when you sit in the partnership meeting?

    2. MCMiles Clements39:39

       The, the market has gotten so humbling.

    3. HSHarry Stebbings39:42

       Yeah.

    4. MCMiles Clements39:42

       I mean, the, the greatest companies of three, four, five years ago, many have gotten totally beat up in the public markets. I believe many are oversold, but, you know, that's a separate conversation. I think this is where it comes back to this being a human business. Who is the founder that you've gone into business with? What is that founder gonna do when their back is against the wall? How will-

    5. HSHarry Stebbings40:03

       But, like, if you look at a Snyk, I'm in Guy's new company, but he-

    6. MCMiles Clements40:07

       Right

    7. HSHarry Stebbings40:08

       ... ain't there. What do you do? It's 300 million ARR growing 15%, and its last price was seven.

    8. MCMiles Clements40:16

       I think this is, in some regards, like, as the founder of the company, we lose sight of this. That's not a great setup for people who might have invested at $17 billion, but it's a great business with a great product, with a great customer base. You know, there will be an outcome for that company.

    9. HSHarry Stebbings40:31

       Mm.

    10. MCMiles Clements40:32

        It, it is humbling relative to, you know, the valuations of the 2021 era. But again, you know, who, who are, who is the team that you're in business with, and, and how are they behaving, and how are you behaving, more importantly, as an investor, you know, when the team's back is collectively against the wall? You know, I, I think that is the best reflection of... You know, I, I think, um-

    11. HSHarry Stebbings40:55

        What happens? Is it-- Do these businesses go public? Do they get taken out by M&A? What do you think is the route for

13. 41:01 – 41:39

    Why it is a Great Time to Be Thoma Bravo and Vista

    1. HSHarry Stebbings41:01

       them?

    2. MCMiles Clements41:02

       I think it's probably a good time to be in the, um, the LBO business. I think it's probably a good time to be in the Thoma Bravo, Vista, Blackstone, KKR business. There will be homes for a lot of those companies, you know, who get themselves to a sustainable place, and they will find homes. These homes for a lot of companies will be different than what the aspiration was when the founder started the company. That's just a reality of this market.

    3. HSHarry Stebbings41:27

       I totally agree. Are you with me in the camp of when the founder goes, my conviction goes? Now, when Andrej's at Miro, I'm like, "Andrej's still batting." Like, if Andrej's still batting, I'm still there.

14. 41:39 – 44:43

    Why Founder-Led Companies Are Always Better

    1. MCMiles Clements41:39

       There is unmistakably something special about a founder-led company.

    2. HSHarry Stebbings41:43

       Mike being at Atlassian, when I interview him, I'm like... I still feel that you've-- And his passion is still there.

    3. MCMiles Clements41:48

       Never bet against Mike Cannon-Brookes. Absolutely not.

    4. HSHarry Stebbings41:50

       But when the CEO's there, I'm like...

    5. MCMiles Clements41:54

       It, it's not that it can't work.

    6. HSHarry Stebbings41:55

       Yeah.

    7. MCMiles Clements41:56

       There, there are incredible professional CEOs. Like, if I could have-

    8. HSHarry Stebbings41:59

       There is now

    9. MCMiles Clements41:59

       ... if I could have Frank Slootman come be the CEO of a number of companies I work with, I bet the founders would say, "Yeah, that's a great trade." I mean, there are incredible professional CEOs.

    10. HSHarry Stebbings42:09

        What have you changed your mind on most in the last 12 months as an investor?

    11. MCMiles Clements42:13

        I believed this thing a year ago that in hindsight I feel very stupid for having said. I, I believe that, like, all of the generational investments in AI had been made. You know, I looked at my partner Dan Levine incubating Scale AI, building a relationship with Alex Wang in 2016 in making that investment. You know, the early investments in the labs. I sort of thoughtListen, the bets were made eight years ago, and it's too late, and now we're all sort of fighting for what's left over. So that was a really stupid thing to say, and I no longer believe it. Um, that's probably the thing that I've, you know, fundamentally changed my mind on both because those companies will be bigger than the outcomes that I probably envisioned a year ago, and there is still time to be a part of some of them and because, like, the innovation flywheel is just getting started. We are barely scratching the surface.

    12. HSHarry Stebbings43:05

        When you had the scale exit, for context, fourteen point nine billion dollars, amazing exit. Dan was, like, unwaveringly the first investor there from, like, you know, the, the dorm room style moment. Epic. When you had that, so the company's got an offer for fourteen point nine billion. Is there, like, a, like, high fives, and this is awesome around the table?

    13. MCMiles Clements43:29

        No, no. I mean, you know, there's a v- there's a, um, an appropriate congratulations and acknowledgement to Dan. There is a huge, loud, full-throated thank you to Alex, and then everybody gets the fuck back to work, you know. And, and, like, it's a humbling industry, and you are only as good as the next thing that you do.

    14. HSHarry Stebbings43:51

        How do you analyze that market space? There's one that I, I really struggle to get my head around in a way that not, not cynically, not paranoid, I, I just don't know. There's so many different providers that are all at very meaningful revenue scales.

    15. MCMiles Clements44:04

        Yeah. The scale Mercor market?

    16. HSHarry Stebbings44:05

        Yeah. W- as we said, with your Mercors, with your Turing's, with your-

    17. MCMiles Clements44:09

        Yeah

    18. HSHarry Stebbings44:09

        ... I mean, there's, there's ten or twelve of them. MicroOnes and-

    19. MCMiles Clements44:12

        I probably struggle with services, businesses in general getting valued on, like, extreme, extreme ARR multiples, but, um, there's no disputing the strategic value of it.

    20. HSHarry Stebbings44:22

        Totally get that. Y- you said about kind of the value of different revenue multiples it... and we've spoken a lot about, you know, Mike at Atlassian before. There are clearly things that Mike is not able to do because he's public that private company founders like the Collisons are able to do. How do you think about the benefits of public versus private today?

15. 44:43 – 47:14

    Why Would Any Founder Go Public Today

    1. HSHarry Stebbings44:43

       And given the liquidity so inherent within secondary markets, like we're seeing with even as early as your Linears where you're doing tenders for them, Clay has tenders, and then Stripes on bigger scales has obviously much-

    2. MCMiles Clements44:53

       Right

    3. HSHarry Stebbings44:53

       ... more liquid markets. Why would anyone go public?

    4. MCMiles Clements44:56

       Well, the reverse is true too. There are things that Mike can do as a public CEO and that public companies can do that private companies cannot. But I think you're asking the right question. I mean, I think there's a reason a lot of these founders are staying private longer. Um, what are the things that you typically needed to access the public markets in order to do? Um, liquidity for employees. You can certainly do that now as a private company. M&A currency and just increasing your valuation benchmarks or your valuation mark, you can totally do that as a private company. So, um, I think that is all true. With that said, I think that applies to, like, the ten best private companies in the world. Like, Databricks can do those things. Stripe can do those things. There's a lot of companies that just do need to get public.

    5. HSHarry Stebbings45:42

       Totally get that. Um, the trouble is those companies need to get public, but they're in the, like, two to ten billion dollar range. Uh, does anyone care about the two to ten billion dollar range anymore?

    6. MCMiles Clements45:54

       I think you've seen this phenomenon where I would actually peg the range a little bit lower. These companies that have gotten public in the, like, two to four, five billion dollar range, and then they never really break out. I think that's a difficult-- that has been a difficult threshold for a lot of these companies to break through. Um, and I do think this is why you see a lot of good companies waiting. You know, people say, "Oh, it's because the investors will be underwater." I don't think that's actually the reason. I think it's because generally speaking, you wanna go public, and you wanna be able to have, like, fairly clear line of sight to hitting the five billion dollar threshold and trading beyond that 'cause it's, it's murky below that.

    7. HSHarry Stebbings46:31

       Is the SaaSpocalypse an overreaction, or is it actually the fact that we were just bluntly valuing them far too highly on actually relatively mediocre eighteen to twenty percent growth rates, and this is a realization of that?

    8. MCMiles Clements46:43

       Fundamentally, people are valuing the future cash flows and the future terminal value of these companies differently, and I don't think that's wrong, but I do think this has been an over-rotation.

    9. HSHarry Stebbings46:54

       What is the most oversold stock?

    10. MCMiles Clements46:57

        We are not a part of Figma, but have a lot of respect for that company. But I know that Dylan is a generational founder, and it's a very important company with an incredible financial profile, and it just feels for a lot of ways, for a lot of reasons, oversold.

16. 47:14 – 49:57

    When is the Right Time to Take Chips Off The Table?

    1. HSHarry Stebbings47:14

       We, we mentioned the liquidity inherent within kind of companies now as it goes later and later stage. How do you think about when's the right time to take chips off the table?

    2. MCMiles Clements47:22

       I think you have to operate from the first principle of what is best for the company. Now, if, if the company is saying, "Hey, we're gonna do a big tender and a secondary round, and it's okay if investors wanna sell," then I think in those circumstances it's generally wise to diversify. Um, but I think that, like, it's gotta be the right thing for the company and for the founders first and foremost.

    3. HSHarry Stebbings47:44

       Can I ask you-- I'm sorry to be so annoying. I used to be so nice. You should have done the show five years ago when I was a sweet little boy. Um, you know, that's just not true. Like, when you look at, say, a WeWork, Benchmark were fantastically smart to get out of it. When you look at a, a Lightspeed and Jeremy Liew selling with Snap, um, they were very wise to get out of it. You know, we're seeing prices so far ahead of company traction now. It's not in their interest for the investor to sell, but Jesus, we're paying four years ahead of time.

    4. MCMiles Clements48:13

       Totally. Totally.

    5. HSHarry Stebbings48:13

       It's in our interest. So, um, yeah.

    6. MCMiles Clements48:15

       But it, but it's so situational. So, like, as a principle, do I think it's good to get liquidity back when it's available? I do, but it's so situational. So, um, you used the WeWork example. Like, we were not a part of WeWork, but had I been a shareholder in that company when it was worth, like, fifty billion dollars, I don't know a whole lot about the commercial real estate market and the office, the office space market, but I probably would've been seeking liquidity. Like, that just feels rational. But, you know-

    7. HSHarry Stebbings48:43

       But does it not see- seem rational to seek liquidity at Miro at seventeen billion? Like-

    8. MCMiles Clements48:48

       I think that was, you know, we didn't take liquidity out of Miro at 17 billion, but again, what was Andre doing? What was the founder doing? What did he, you know, what was the, the course that he wanted for the company? And that's like the only thing that matters. The example I would point to is, you know, CrowdStrike. Samir Gandhi and John Locke intersected CrowdStrike when it was, you know, there was like a million dollars of software revenue, and there was a nine million dollar, um, consulting business and, like, that was the company, and I think they invested in, uh, 2011 at 160 post. Now, there have been nonstop opportunities to diversify and, and sell CrowdStrike stock. It's a public company. You could do that today. But Samir and John led the next round, they led the next round, they bought in the IPO and, you know, it's a hundred billion dollar company today. We're sure glad we didn't take chips off the table.

    9. HSHarry Stebbings49:37

       Question there of, like, you mentioned obviously buying into the IPO and kind of the decision to hold thereafter. You know, obviously, Sequoia have the evergreen vehicle, which I think, one, there's been a lot of talk about. Do you think that venture firms should have the responsibility of managing the book into the pub- publics, or do you think it should be a distribute to LPs and it's discussed from there?

17. 49:57 – 54:53

    Should VC Firms Have Evergreen Funds and Be Responsible for Public Positions

    1. MCMiles Clements49:57

       Yeah, I, I think fundamentally we're in the business of identifying outlier founders. And, um, if you're a multi-stage fund that gives you the flexibility to stick with some of those founders for the long run, you should definitely do it. I think in the George Kurtz case, absolutely worth doing. In the Mike Cannon-Brookes, Scott Farquhar case, absolutely worth doing. But not every company has the mechanics to compound for a long time. You can't just do it as a blanket rule.

    2. HSHarry Stebbings50:26

       I don't like public markets right now.

    3. MCMiles Clements50:30

       [laughs]

    4. HSHarry Stebbings50:30

       And I think it's... No, it's just a bad place to be, 'cause you're seeing the casinoization of public markets, where a, a Citrini report can wipe-

    5. MCMiles Clements50:38

       Yeah

    6. HSHarry Stebbings50:38

       ... billions of dollars off. Anthropic doing a security release impacts CrowdStrike?

    7. MCMiles Clements50:44

       Right.

    8. HSHarry Stebbings50:44

       Are, are you high? Like-

    9. MCMiles Clements50:46

       I, I think the, the public markets-

    10. HSHarry Stebbings50:48

        Are no longer rational.

    11. MCMiles Clements50:50

        Yeah. To me, it's not good or bad, it's just different asset class, and it's stick to what you're good at. And I don't think we would be excellent stock pickers, but I think we're pretty good at what we do in terms of early stage technology investing. So I just think it's an asset class that I, I'm never going to be best in the world at understanding public stocks, and I think that's okay.

    12. HSHarry Stebbings51:09

        Who's the best sourcer inside Accel? Sourcer is finding great companies.

    13. MCMiles Clements51:15

        Christine Esserman. Really, really good eye for companies and she is, um, she is relentless in getting in front of founders. She's great.

    14. HSHarry Stebbings51:24

        Who's the best picker? Like, s- picking nos?

    15. MCMiles Clements51:29

        Andrew Braccia by far. Andrew is wise. Andrew has seen success at incredible scale. Um, he is, uh, he's our best picker.

    16. HSHarry Stebbings51:40

        When it comes to winning, core part that we don't talk about enough, I don't think, who's the one you're like, "Okay, we need to win the deal. We need to bring in "

    17. MCMiles Clements51:49

        I think Samir Gandhi is incredibly compelling and hits it off with founders in a very special way.

    18. HSHarry Stebbings51:55

        Do you think the best founders need your help? I was going through the pillars of venture there-

    19. MCMiles Clements51:59

        Yeah

    20. HSHarry Stebbings51:59

        ... in terms of sourcing, selecting, securing, and servicing, and I was like, do you think the best founders actually need your help?

    21. MCMiles Clements52:07

        I think need our help is an overstatement. I, I think of the role of a good investor as being like, there's basically these, like, bumper decisions that come up a couple of times a year. Like, if you're a founder, your life is a bunch of little decisions and then a couple really big decisions. The little decisions are like, you know, design decisions about the product and, um, pricing and should we dial up CAC and should we make this higher? Like, you don't need an investor micromanaging you through all the little decisions. I do think every year there's probably a couple of, like, big decisions, where having a good sounding board can be really useful. Should we do this partnership? Should we make this acquisition? Um, do we need to pivot? And there, yeah, I think having a good investor or just a good partner to the business can be really useful. But, um, it's all about striking the right balance.

    22. HSHarry Stebbings53:01

        Do you like being a board member?

    23. MCMiles Clements53:02

        Yeah, I love it. You-

    24. HSHarry Stebbings53:03

        Who's the best board member you sit on a board with?

    25. MCMiles Clements53:08

        The best board member I've ever seen in action, my friend Ravi at Sequoia is a very good board member. He was at Sequoia, now he's doing his own company. Um-

    26. HSHarry Stebbings53:16

        Why?

    27. MCMiles Clements53:17

        R- Ravi has both... He's done a lot of different things. He's been an operator, he's been a buyout guy, he's been a growth equity investor. But I think it's more about his demeanor and the humility with which he delivers feedback. He has this way of sort of saying, "Let me politely make an observation, and you can sort of choose to accept it or reject it." And, um, there's just sort of like wisdom and humility in how he communicates, which I appreciate.

    28. HSHarry Stebbings53:45

        If you're a founder listening to this, what advice would you give them on how to observe for potentially not helpful behavior from a board?

    29. MCMiles Clements53:57

        I think there's generally an inverse correlation between how vocal somebody is and how helpful they actually are.

    30. HSHarry Stebbings54:03

        Mm-hmm.
18. 54:53 – 1:03:42

    You Can Pick Any VC to Join Accel, Who Does Miles Choose…

    1. HSHarry Stebbings54:53

       of course.

    2. MCMiles Clements54:53

       Seed fundI really like, um, the guys at Liquid 2, Nate and Matt Mulvey. Those guys are prolific. They have an incredible network. They have great taste in companies, and they are kind, enjoyable people to work with. So when they send me something, I take it very seriously.

    3. HSHarry Stebbings55:12

       Good. I like them too. Series A?

    4. MCMiles Clements55:14

       The vocabulary on what a Series A is these days has evolved, so I'm not sure how you would bucket these guys. I really like the team at Meritech.

    5. HSHarry Stebbings55:24

       Mm.

    6. MCMiles Clements55:24

       I think they have very good taste in companies. They do some Series B-

    7. HSHarry Stebbings55:26

       Yeah

    8. MCMiles Clements55:27

       ... and later stage things also, but great taste in companies, and they are gritty, and they hustle. Um, I would say it's not coincidental that Max and Alex were also trained at Summit Partners. I really respict- respect that part of their pedigree. Um, but I really like those guys.

    9. HSHarry Stebbings55:43

       Growth?

    10. MCMiles Clements55:43

        How can you not acknowledge how successful Josh has been at Thrive? I really admire the way that they have scaled a business, um, that not only can initiate investments and in- invest across funds, but, like, really reflect their conviction at the late stages. Um, so, you know, we compete with them fiercely. We also work with them. I've gotten to work with Miles Grimshaw through the Cursor board, which has been a great experience.

    11. HSHarry Stebbings56:08

        Miles is amazing.

    12. MCMiles Clements56:09

        He's great. He, he is my much more articulate, intelligent VC alter ego, the other Miles. Um, but we have a lot of competitive respect for those guys.

    13. HSHarry Stebbings56:18

        He's also, like, a marathon runner in, like, two hours, 10 minutes.

    14. MCMiles Clements56:20

        Yeah.

    15. HSHarry Stebbings56:20

        Like, this guy is like a hu-

    16. MCMiles Clements56:22

        Yeah, no, I mean, I could-

    17. HSHarry Stebbings56:23

        ... just specimen of a human being

    18. MCMiles Clements56:23

        ... I could finish a marathon in two hours and 10 minutes, like, on a motorcycle, but it's different.

    19. HSHarry Stebbings56:27

        Yeah. [laughs]

    20. MCMiles Clements56:27

        Different, different strengths.

    21. HSHarry Stebbings56:27

        Honestly, I see Miles, I'm like, "Ugh, I need to be better as a human being."

    22. MCMiles Clements56:31

        Different strengths.

    23. HSHarry Stebbings56:32

        Yeah. [laughs] I totally agree with you.

    24. MCMiles Clements56:33

        I could, I could win in an arm wrestling match.

    25. HSHarry Stebbings56:35

        If you could add one person to your team, who would you add? It, uh, this can be completely hypothetical. It can be Pat Brady. It can be Josh Kushner. It can be Elad Gil. But you're like, "They are going to most move the needle in our ability to win."

    26. MCMiles Clements56:50

        I'd probably try my very hardest to talk Mike Cannon-Brooks into retiring from operating into being an investor. He would never do it. But if I could, if I could, like, go to war side by side every day with somebody, like, it would be Mike. Never, never bet against Mike.

    27. HSHarry Stebbings57:06

        What about other VCs? I agree with you. I think Mike would be amazing. I'll probably take Neil Mater. I don't know anyone who has the investor breadth that Neil has. From doing Windsurf's first round and sticking with them throughout many pivots to-

    28. MCMiles Clements57:18

        Yeah

    29. HSHarry Stebbings57:18

        ... doing Carvana in the public markets and having that breadth of aperture.

    30. MCMiles Clements57:22

        I might... This is actually a really fucking good question.

Episode duration: 1:03:53