Hussein Kanji, Founder @Hoxton Ventures: Why AI Means London Can Compete with the US | E1248

1. 0:00 – 0:55

   Intro

   1. HKHussein Kanji0:00

      There is a correlation between how much money goes in to a company and what the probability of success is. The average is about, like, 300 million to get to a unicorn status. And your best path to scale, from a financing perspective, is America. The rounds are bigger. Do not do a fundraise for a size of the fund. Do a fundraise for time of the fund. Give yourself 90 days. Whatever you get, go start investing.

   2. HSHarry Stebbings0:22

      ... are saying, "Dude, we did this nine years ago. It was a webcam on Skype," which is aging both of us. Thank you so much for joining me today.

   3. HKHussein Kanji0:43

      Yeah. I think I remember. I was like, I had my laptop on a pillow in my bedroom, staring up, and was like, "Who's this Harry kid, like, interviewing me?"

   4. HSHarry Stebbings0:51

      (laughs) I think everyone was thinking, "Who the fuck is this Harry kid? Why won't he leave us alone?"

2. 0:55 – 2:59

   What Is Hoxton's Right to Exist?

   1. HSHarry Stebbings0:55

      Um, listen, I want to dive right in. I remember Keith Rabois telling me in a show, "Every fund needs, like, a right to exist." When we think about Hoxton, how do you think about your answer for what our right to exist is?

   2. HKHussein Kanji1:08

      Yeah, it's a good question. Um, I mean, when we, when we first... By the way, I think the venture world does not need yet another fund. Like, we have a lot of them, right? They're coming down in numbers, but the, the world, we have a lot of V- like, a lot of people playing VCs. 11, 13 years ago when we first started, we were 11 years old, but we started fundraising a little bit before then. The world did not have that many VCs in Europe. Had a lot of them in the US, had a lot of them in China, had a lot of them in India, but nobody was here in Europe. In fact, the seed funds of record here, you won't even remember the names. There were Eden and Pond. They're like a bygone, right? The people raised money in the dot-com boom, mismanaged their capital all the way through the collapse, and kinda left. And so the world really needed a venture player in Europe. And that was the thesis of Hoxton. And then if you look at where we are today, the world now has quite a bit of venture funds i- in Europe. But there are not that many old-fashioned venture funds left in this industry. I think most of us become momentum investors in this industry. We write the check largely to get the next markup, not to build the long-term, durable, big company of tomorrow. And I don't think there are that many people in Europe who do those kinds of things.

   3. HSHarry Stebbings2:13

      Why do you think that is? Why have we shifted to this heavy momentum?

   4. HKHussein Kanji2:17

      Well, we went into a market where money was effectively free. And the way you get promoted inside of most firms... Remember, we are, we're, we're, we're exceptions to the rule, right? 'Cause we own our own firms. Like, these are our businesses. So we think like business owners, not like employees. If you're the general employee, you optimize for getting to the next career ladder. And how do you show that you can get to the next career ladder? You do a deal, and then General Catalyst or Index or Kleiner or Sequoia or, or Andreessen, I mean, there are so many of these great firms, mark it up at a significant premium. And then someone else, Tiger, et cetera, marks it up after that. And all of a sudden, doesn't make a difference if you've not made any money. You look like you've picked a hot company.

3. 2:59 – 6:02

   Does Having Tier One Investors Really Matter in Fundraising?

   1. HKHussein Kanji2:59

   2. HSHarry Stebbings2:59

      But I would actually argue even for us and for those that own their firms, if you have to fundraise, it makes life considerably easier. People are like, "Oh, you know, DPI's all that matters today." It's not true. If you can show a cohort of companies that have great tier one investors following on, it is meaningful to LPs.

   3. HKHussein Kanji3:14

      Yeah, I would say even for us, we have a challenge when it comes to LPs. And this is, like, not us specific, us in the general.

   4. HSHarry Stebbings3:20

      Yeah.

   5. HKHussein Kanji3:21

      Which is the entire industry looks at what the next markup is. Who's following your deal? Who's marking it up? Is the company well capitalized for the future? And really, is it a signal of quality when a Sequoia ends up writing the check? Like, have you picked a really good company? I think that's true in the general, but the problem is the venture world is not a general type kind of industry, right? The averages and the medians are very deceptive in our industry. That's not where the returns are. So weirdly enough, we're in this weird predicament in the industry where you kinda have to do things that are a little bit off-piste. You kinda have to build for the big, the big outcome, and you have to be a little bit contrarian. And then very quickly, about a year or two later, you have, the world has to recognize that you're right in order for you to really get credit.

   6. HSHarry Stebbings4:04

      What does it mean to do things that are off-piste today, though? Because, uh, you know, vertical SaaS, you think in a world of, like, AI and agents. Shit, vertical SaaS has never been hotter. We just did a, bluntly, very boring vertical SaaS company, had 13 term sheets.

   7. HKHussein Kanji4:17

      Yeah, so I, I think the whole industry is like, is massively grown. So there's a lot of money to be made. But if you think about the big iconic... You know, the, the household name companies, the Googles, the Facebooks, the Ubers, the Netflixes, they were all mostly brand new category creators. That, that category didn't exist. There wasn't an Uber before there was an Uber. There wasn't a Netflix before there was a Netflix. There wasn't, there was a search, there were a bunch of search engines, but no one, ne- none of them really succeeded. And, and Google kind of became this thing. There, there was also Friendster before, before Meta, but it never really succeeded. So these were, these were kind of inventing new categories. And I remember, even at... Facebook went public when we were fundraising for Fund I. And when it went public, people really were skeptical about how it was gonna make money, right?

   8. HSHarry Stebbings5:01

      A hundred... The transition to mobile was hugely questionable.

   9. HKHussein Kanji5:03

      And Facebook, and Facebook hadn't done the transition to mobile yet, right? And, and how does Facebook really make money? It captures all your attention on the mobile phone, and then as a result, has the right to be able to serve you ads, and that's, that's kind of their durable moat. But that wasn't clear even all the way up to the IPO. So these new categories, they're really fuzzy up until they're not. And then when they're not, you see realist- like, really big outcomes. And I don't think people in Europe...... think in that kind of way. I think people in Europe are largely trained in private equity and they think about, "How do I minimize my downside? I will do the vertical SaaS company because I know I can't lose money on it. The metrics are really good. I can understand them, I can characterize them."

   10. HSHarry Stebbings5:40

       With the pref stat where it is, I only need to clear 1,215-

   11. HKHussein Kanji5:43

       And h-

   12. HSHarry Stebbings5:43

       ... and there's upside to 750, great.

   13. HKHussein Kanji5:45

       Yeah. And how many, how many investors have you, have come on who think in this kind of language? Like, "I will worry about my downside and the upside will take care of itself"? But the venture industry is all about the power law, all about the outliers, all about those kinds of outcomes that I was talking about. And Europe doesn't have them.

4. 6:02 – 7:27

   Does Hoxton Do Outcome Scenario Planning

   1. HKHussein Kanji6:02

   2. HSHarry Stebbings6:02

      Do you do outcome scenario planning?

   3. HKHussein Kanji6:03

      We think about all the range. Like, w- like, if this company falls into trouble... Like, we had a, we have a, a strategy in the fund which is if, if the company or the founder gets hit by a bus ... We had an incident in one of our companies where the founder got diagnosed with bipolar syndrome late in life. You're like, "Oh, that explains a lot abo- about the founder."

   4. HSHarry Stebbings6:19

      (laughs)

   5. HKHussein Kanji6:19

      Like, but you know, he had taken himself out of commission and, and was getting medicated. It's like, if something like that happens, a, a, like, a, a weird externa- like, externality type of event, what do we do with the company? And so every, every quarter we have, like, an immediate shopping list, which is if this company falls into trouble, I'm picking up the phone, I'm calling this person at this buyer in this level of the organization who wants this kind of product, technology, technology team, and I can, I can, I can kind of grease the wheels to get an acquisition done. I hope I never make that call, uh, but I'm, I'm, like, mentally prepared for making that call. All of us are in this firm.

   6. HSHarry Stebbings6:54

      So you will prepare a list of three to five names of people who would buy in the case of X happening?

   7. HKHussein Kanji6:59

      Yeah. And, and not even just a company. Like, who's the buyer, what's the division, who's the person? Who's gonna be that protagonist?

   8. HSHarry Stebbings7:05

      What if you can't identify them? I will quite often sit with a team and I'm like, "Here, I totally see who the buyer is. Here, I don't know. It's a bit fuzzy." What if you can't? Is that a red flag?

   9. HKHussein Kanji7:14

      So we don't do that from an investment perspective, but we do it once we're actually involved in the company. So, like, the nice thing about being a seed investor is these companies have a little bit of life, 12 to 18 months-

   10. HSHarry Stebbings7:23

       Mm-hmm.

   11. HKHussein Kanji7:23

       ... before they have to worry about kind of this crisis mode. But then at that point, we start building

5. 7:27 – 10:46

   How Long Took To Raise Fund One

   1. HKHussein Kanji7:27

      in this resilience.

   2. HSHarry Stebbings7:28

      Got you. Okay. And so when we think about, um, (laughs) there's so many different places I could go with this. When we think about Fund One, how long did that take to raise?

   3. HKHussein Kanji7:36

      Oh, Fund One was a bear. Fund One was 39 months for us to get, to get going. Like, three nine, like over three years. And you, you mentally think at 24 months, that's-

   4. HSHarry Stebbings7:46

      Did you have an anchor?

   5. HKHussein Kanji7:47

      No. Uh, uh, we had lot of friends in Phil- 'cause we had two buckets of people. We went to American fu- American people, like mostly individuals, who were like, "We don't really understand this Europe thing. It doesn't make any sense to us, we don't understand why you want to be in Europe, but we like you and we'll write you a small enough ticket," which, you know, turns out to be a decent-sized ticket, but a small enough ticket where if you lose all this money, and we're mentally prepared that we're- you're gonna lose all this money, we'll still invite you around for dinner every once in a while. Like, so that was our mer-... And we got to about eight million on, on, on the basis of that. And then we had a lot more (laughs) to go. We had to get to at least 25 for the first fund to make it viable.

   6. HSHarry Stebbings8:20

      Okay. So 39 months, we have eight from that. How did the rest come together?

   7. HKHussein Kanji8:24

      And then it was like a grind for, like, the next, like, two, two and a half... Yeah, the early money was easy and it was, like, two, two and a half years. And then finally we got, we found a family who believed, who then ended up writing a check to us. And then about a couple of years later, they wrote a check to l- uh, Isomer.

   8. HSHarry Stebbings8:37

      What was the biggest check that you had in that fund?

   9. HKHussein Kanji8:39

      10.

   10. HSHarry Stebbings8:40

       10 was the-

   11. HKHussein Kanji8:40

       No, sorry, 15. 15 out of, uh, 15 and they split it between 10 for Isomer and five for us. Uh, five from the family, 10 from them. Uh-

   12. HSHarry Stebbings8:47

       Wow. Okay.

   13. HKHussein Kanji8:48

       Or five from the family, 10 from Isomer.

   14. HSHarry Stebbings8:50

       That's a big check in a small fund.

   15. HKHussein Kanji8:51

       Yeah, yeah. I mean, that, that, that basically made our, that made our fund. We would not have a fund without them.

   16. HSHarry Stebbings8:55

       Is there anything you'd do differently on that fundraise when you look back now?

   17. HKHussein Kanji8:58

       Oh, yeah. So I got this advice from Mike Maples, who, who said, "Do not do a fundraise for a size of the fund. Do a fundraise for time of the fund." So in other words, give yourself 90 days. Whatever you get, go start investing. You're a smart guy. You can figure out how to do portfolio construction with a smaller amount of money or a bigger amount of money. Go deploy it, go put points up on the board, go prove that those investments are actually really good, and then go back into the market to go raise more capital. Now again, m- Floodgate had four big LPs. Princeton, Yale, Horsley, and I forget who the... And I think Notre Dame was the fourth. And no, it was a $75 million first time fund. So to me it was like, this is great advice, but it's like kind of luxury advice, right? (laughs) 'Cause look at your LP base and look at the size of your fund. So I, I ignored it. But the advice I give every emerging manager is Mike's advice, which is that's what you ought to do. Like, give yourself a finite amount of time. Do not do what we did. 39 months to basically do nothing with your life-

   18. HSHarry Stebbings9:53

       Yeah.

   19. HKHussein Kanji9:54

       ... other than beg, which is what you're doing, is (laughs) a lot of time wasted.

   20. HSHarry Stebbings9:58

       Were you terrible at fundraising?

   21. HKHussein Kanji9:59

       Oh, awful. (laughs) I we-

   22. HSHarry Stebbings10:01

       (laughs) Why?

   23. HKHussein Kanji10:02

       I mean, I think we were selling a story that nobody believed in, right? U- Europe is gonna produce really good outcomes. Prove it to me. Well, there's no data. Like, you look in the rears, there are no outcomes. And, and now 15 years later, 13 years later, it's obvious that there are outcomes here. So it's much easier to tell that story. Now people shop for this product. But you're basically selling a product that nobody's designed to buy.

   24. HSHarry Stebbings10:23

       Did you come out of the gate fast? Often when it takes a long time to raise, it's like, "Woo-hoo, we have cash now." Did you deploy fast?

   25. HKHussein Kanji10:30

       No, we were pretty methodical in, like, all the way through. The only time we probably maybe sped up was, like, 2021. But I think the whole industry was speeding up at that point. And then we slowed down intentionally in '22. So we do, we used to do about four to six a year.

   26. HSHarry Stebbings10:42

       Okay.

   27. HKHussein Kanji10:43

       Which is pretty small for a seed fund. Like, pretty concentrated.

   28. HSHarry Stebbings10:45

       Totally.

6. 10:46 – 14:11

   The Best Investment From the First Fund

   1. HSHarry Stebbings10:46

      In terms of, um, first funds, what was the best investment from that fund?

   2. HKHussein Kanji10:51

      The best investment on paper was... I mean, not paper, like, realized was Deliveroo. It was about 34X on the first, uh, on the, on the, on the first check. Uh, first and, and whatever we, we deployed out of the fund, so including reserves.

   3. HSHarry Stebbings11:01

      So how much did you put in?

   4. HKHussein Kanji11:03

      We put in just around a million of that first round. Uh, the first round was an ei-... So it was weird because Will came to me when he was still a grad student and doing his MBA, and I tried to talk him out of it. And, you know, most of the founders that we end up writing a check to are very missionary. Like, this is the pr-... They're not worried about money or fame or status. The, what they're trying to do is solve a problem that they think is really broken, and then that's what they want to double... Like, that's what they want to bet their career and their life on. And that kind of becomes their project. And f- Will was a distressed debt guy.... and I was like, "You're gonna make a lot more money in London working for a hedge fund or working for a bank. Like, why do you want to get on a bicycle or m- or a scooter and, like, do these delivery drops?" Like, you know, you realize there's no way you doing the deliveries in the early days as a startup. Like, you're gonna be taking food from a restaurant and schlepping it to someone's house. A- and he was like, "It's broken." He's like, "It pisses me off that I can't get food delivered." And, and that's what he did. And, and we tried to talk, I tried to talk him out of it when he was a, when I was an MBA student. He came to the summer, he was like, "I'm gonna do this round." We were in the middle of our closing for, for Fund I, so we couldn't do it. And then he launched... And to be fair, I was somewhat skeptical. I was like, "The world doesn't need this problem." Like, this is a top 1% problem, like high income earners who have lots of disposable cash wanna get food from restaurants and have a driver kinda come drop it off. I'm not so sure this is a mainstream product. And then there were lots of other delivery companies back then. And then about four or five months later, it was very clear that he was the most methodical and thoughtful about the operations of the business, which is kinda the core. He built an Android stack that kinda tracked all the drivers. Like, there was, like, real technology in it. And, uh, and he was, he was growing 5, 7% week on week. And we came in and we said we'd do the, we'd, we'd write the first check. And then Index came in gazumped us, which-

   5. HSHarry Stebbings12:47

      What do you mean they gazumped you?

   6. HKHussein Kanji12:49

      So the round was supposed to be, like, a million, million and a half, and it became a three million pound round. And three million pounds is like, it's $5 million back then. That was, like, big enough for, like, the, the small seed funds, so, like, uh, like, which we were really the only seed fund really interested in this. Couldn't really write that check, right? Couldn't match. So, you know, they, they ended up winning the deal, and then Will fought and, and, and we ended up kind of co- co-investing with Index.

   7. HSHarry Stebbings13:12

      Okay. And so you have that first million, it returns the fund great.

   8. HKHussein Kanji13:15

      Yeah.

   9. HSHarry Stebbings13:16

      When we think about, like, preserving ownership, how did the preservation of ownership look like in that?

   10. HKHussein Kanji13:21

       So we followed, but, you know, as a $28 million first fund, which is what we were, it's hard to follow your capital. And then we had a weird scenario in that particular company, where our pro rata rights got taken away from us. And in the legal documents, they changed the definition of who would get the pro rata to bas- I mean, basically singling us out. There weren't that many other seed investors that owned above that bar and below the number that they set. And they forgot that we bought common stock from angels, so we kind of politely didn't comment on the legals. And then the next round, we said, "We're gonna exercise our pro rata," and then we were told, "You can't." And I was like, "Yes, we can." Like, uh, you know, and then they realized the mistake and then they changed it. So, like, we did our pro rata in the... The seed round was called an A, so the, th- it was, and it was n- it was named by the letter A. So we did the B and the C, and then we didn't do the D, which is when DST

7. 14:11 – 16:10

   Approaching Reserves in Venture Investing

   1. HKHussein Kanji14:11

      came in.

   2. HSHarry Stebbings14:11

      How do you think about reserves? Because there is the, the theory that, hey, a company will never be as cheap as it is today, and so just buy up as much early as possible. And then there's also the theory that actually you see your winners evolve over time, and you should double down and concentrate capital effectively. How do you think about which camp to be in?

   3. HKHussein Kanji14:28

      So we've gone from a $28 million fund to an $89 million fund to a $214 million fund, and we haven't really changed all that much in the way of portfolio construction, what we do. But we are now super aggressive about doubling down. So if we see early traction in any one of our companies, we will figure out a way to put more capital in. And these days, for our best companies, and our best companies are much higher concentrations than our, than our, than our average company, we're getting closer to like 15, 20% ownership pretty consistently

   4. HSHarry Stebbings14:55

      Over time or on first check?

   5. HKHussein Kanji14:56

      First, the first check is the first check, but we put a second check in, and sometimes it's by the third check. So it's between the, it's, it's between the first and the second check that we're really getting these kinds of ownerships.

   6. HSHarry Stebbings15:06

      And those second checks, you're kind of making the round happen. You'll proactively going to them saying, "Hey, just take three more in a note."

   7. HKHussein Kanji15:12

      We're finding ways to take... I, we can, we don't wanna screw up the downstream investors who have to then write the check, and we don't wanna be cherry-picking our best companies, but we find ways to get more capital into these things. And sometimes it's as easy as, "Look, whatever you're doing the next time around, we wanna do more than our pro rata." And, and it's a handshake agreement. In other cases, you know, we'll do a SAFE on top of our first check. Like, we'll find a way to put more capital to work when ownership is still really inexpensive in the grand scheme of things, and build up the ownership.

   8. HSHarry Stebbings15:43

      Will you ever do an uncapped note?

   9. HKHussein Kanji15:45

      No. Uh, not an uncapped note.

   10. HSHarry Stebbings15:47

       (laughs) Will you ever do common not prefs? I'm seeing this more and more.

   11. HKHussein Kanji15:51

       Weir- weirdly, no, because I think in the UK, it's very easy to convert common, if you buy common as, like, secondary into preferred, and then generally speaking... Like, we're o- we're old-fashioned. Like, we, we think that the preference matters, even in these large outcomes, because there could be volatility downstream. And yet, so I don't think we've ever really

8. 16:10 – 19:46

   When To Sell an Investment

   1. HKHussein Kanji16:10

      bought common.

   2. HSHarry Stebbings16:10

      The other really challenging element, when do you sell and how do you manage that? So like with a Deliveroo or an IPO, do you just sell then? How do you think about that?

   3. HKHussein Kanji16:19

      Yeah, so we've learned this the hard way. So in the case of Darktrace, which we also took public, Darktrace went public at £2.50, traded up to 4.00, and by the time lockup was expired, it was around 6.00, and we did not sell. And had we sold-

   4. HSHarry Stebbings16:34

      Didn't sell anything?

   5. HKHussein Kanji16:35

      No, because I, I was a super long-term, and, and was all the way until the end. And to be fair, I was somewhat-

   6. HSHarry Stebbings16:40

      How much did you have in that?

   7. HKHussein Kanji16:41

      We, that would've been a, we would've been a 10X net fund, uh, on, on, on Darktrace at the, at, at its peak.

   8. HSHarry Stebbings16:47

      A 10X net? (laughs)

   9. HKHussein Kanji16:48

      Yeah, so like, our numbers for Darktrace are way higher than our Deliveroo numbers. But we, we mistimed it, and then, you know, you get pressure when you don't sell at the top. And to be fair, like, this was also, like, in '21, where everyone... You know, the market was just euphoric i- in general.

   10. HSHarry Stebbings17:02

       When did you sell?

   11. HKHussein Kanji17:03

       We sold it about a year later, 'cause we were coming up to the end of the life of the fund, and we sold it around £4 a share. So we left, we le- Or maybe not even 4.00, I think closer to like 3.00, 3.50. And then I, and we distributed in specie, and so I got a bunch of stock from, from Darktrace. And then I held all the way until the Thoma Bravo acquisition, which is roughly around, roughly around, like, £6.00 again.

   12. HSHarry Stebbings17:23

       But that like forest's the fun though.

   13. HKHussein Kanji17:25

       Yeah, yeah, yeah. We, we made a lot of money on, on Darktrace, but, but we, you know, we, we should have probably programmatically sold. And so I think the formula that we now have is at the time of the IPO, as soon as you're out of lockup, a third of it you sell-... a third of it you sell six months later, and then a third of it you sell s- another six to 12 months after that. Just make it a formula, because I think there's too much human error in this. Like, and by the way, long term, like, m- m- I was right, but the markets and what you think long term don't always, like, they don't always map one to one.

   14. HSHarry Stebbings17:56

       Did you do a third, a third, a third on Deliveroo?

   15. HKHussein Kanji17:58

       No. No. We, we sold out of Deliveroo at the IPO. We thought it was a... We thought it was, like, very fairly valued at the time. And so there, we took a view was, w- we, we took human judgment, right? We, we were gonna sell. It was at three pounds a share. It, it went public at around three. I- it was supposed to go public at three pounds 90, it went public at three pounds a share. I'm sorry, after lock-in it was three pounds a share, and then it came down to about one pound a share. So we looked really smart for, for selling Deliveroo on the, on the eve of the lock-up.

   16. HSHarry Stebbings18:23

       Were LPs grateful?

   17. HKHussein Kanji18:25

       But it's... Yes. I, I think distri- I mean, we have real distributions in the first fund. Like, it's distributed multiples back of the fund. So like, you know, DPI right now is a real topic, but a $28 million fund, even if you multiply it by multiples, doesn't turn out to be that much money for the LPs.

   18. HSHarry Stebbings18:40

       Do you invest differently when you've delivered real DPI? And what I mean by that is, bluntly, you're not downside protection thinking, you are not thinking, "Oh shit, I've got to put numbers on the board." You are able to see greatness kind of more easily having proven yourself.

   19. HKHussein Kanji18:54

       Yeah. So we, we just had our AGM yesterday, and we have told most of our investors, "Do not pay attention to TVPI for the time being," because what we have been doing is proactively finding ways to put more money to work inside of our best companies. We know what the best companies are. It's about a third of the portfolio. And the second fund, that's now shifted to a little bit over 50% of our capital is in the top third of the fund, and in the third fund, it's getting closer to about 60, 65% of the top. Like, the, the, the, the money's going into the best companies. And so when that happens, you're obviously putting money to work at, like, slightly depressed prices, right? You're not sending them out to get ridiculous markups because you don't want ridiculous markups on those companies. I mean, if the founder wants it, then we're along for the ride. But if you can find a way to not get the ridiculous markup and put more money to work, you're buying more ownership, and if you're right, three, five years later, that will make a material difference in DPI.

9. 19:46 – 25:03

   Missing out on making $400M in Darktrace

   1. HKHussein Kanji19:46

   2. HSHarry Stebbings19:46

      When you review the best companies, are the best companies the hottest companies early on?

   3. HKHussein Kanji19:51

      Mm, no, not necessarily. So I think Darktrace was not a hot company for a good chunk of its existence. In fact, I know that they talked to a bunch of the good and the great, and people were skeptical about them. And as a result, there were buying opportunities for us. The, the biggest regret we had in our fund one was at the series C. We brought KKR into the cap table of, of Darktrace. We introduced KKR and kind of brokered the introduction. There was a little bit of a, a, a, a mis- a miscommunication at one point, and we kind of put some social capital in to kind of smooth things over. And the company wanted us to put... N- it was KKR put 40... It was a $40 million round at 400 million post, on a company that was doing about four million a month in revenue and scaling. So, I would argue, a pretty fair price.

   4. HSHarry Stebbings20:33

      Yeah.

   5. HKHussein Kanji20:34

      And the company said, "We will give you 10 of that 40. Go raise it as an SPV from your investors. We think you will not get rich enough off of Darktrace. And you guys are doing so much work behind the scenes helping us, that we want you to have more skin in the game." And this is a weird scenario to, by the way, have, right, as a small fund. And so we went around. And I remember, I go... It was super returns, February, cold, early-

   6. HSHarry Stebbings20:55

      (laughs)

   7. HKHussein Kanji20:55

      ... and I'm, like, going around to all these family offices, and like... And we couldn't obviously say KKR is leading this, right, 'cause it, the term sheet was there, but this was confidential. It was like a, a major investor that you would know, a household name, is, is, is seriously looking at this. Um, and we raised zero. Out of the 400 million post, it got privatized at 5.3 billion. So this is all dollars, so 400 to 5.3. It would have been a net 10X net of fees. Like, we left money on the table, and it was painful.

   8. HSHarry Stebbings21:21

      (laughs)

   9. HKHussein Kanji21:22

      Like, uh, it, it was really painful. We have another... I think our best company right now in our second fund, it's an AI drug discovery company. We wrote the first million dollar check. Nobody believed. This is a time where people did not understand tech bio. It was before the term tech bio was coined. Brand new market creation, right? We were convinced. We put the chief scientist at Merck on the phone with the company, and we were pretty convinced that these guys were onto something. And worst case, the six-person team would get acquired for the technology chops they kind of had. It would be an acquirer. So there wasn't that much downside in our, in our case, and then all the data started lining up the right way after us, the, the check after us, less than a year later, it was 40 million bucks from SM- uh, Bessemer and F Prime. We used to own 18% of this company. It's in an $89 million fund. That's a sev- to do pro rata, that's like a seven to eight million dollar check. It's a big check to write out of that 89. And you can't really go to LPs at the series A and be like, "I think this is the next big thing," because it's like, super early, right? And it's, you have the company and all it's done is raise, raise another round on the basis of some data. And so we, we, we ended up coming down in our ownership. We own about 13, 14% of the business as opposed to 18%. That's gonna... If that company goes where I think it's gonna go, like, I think in this company, it could be like the iconic company of tomorrow, like, that, that five percent's going to be really big.

   10. HSHarry Stebbings22:39

       Have you done many SPVs?

   11. HKHussein Kanji22:40

       We have nowadays. So in the run-up to the Darktrace IPO, we did a bunch of SPVs with our investors. We put more money to work in Darktrace than the fund size of fund one. But we, and we think the lowest performing IRR for us was net 66%. This is all realized, by the way, net 66%, and the best performing was net 154%.

   12. HSHarry Stebbings22:59

       So you did over 28 million in SPVs in that case?

   13. HKHussein Kanji23:01

       I think we did like 40, uh, 35 or 40, something like that.

   14. HSHarry Stebbings23:05

       Whoa.

   15. HKHussein Kanji23:05

       Yeah.

   16. HSHarry Stebbings23:06

       What was your blended entry on those?

   17. HKHussein Kanji23:08

       Like, you mean what was the price point-

   18. HSHarry Stebbings23:09

       Yeah.

   19. HKHussein Kanji23:09

       ... so we came in? I, I think generally we made somewhere between one-and-a-half to 3X net for our investors in a year to two. Hence, why I, I... That's why I looked at the IRR numbers. The IRR number is a lot more indicative because it was like there were very short holds. Like, we were... Like I said, I've been bullish, right? I've been a lo- I've, I mean, I've been very bullish on Darktrace ever since I wrote the very first check, uh, 'cause I saw the numbers. And I think this is the, this is the delta, right? When you see inside information, like, you're close to the company, you know how it's doing, and you see the buying opportunities, and you see that they're fair, they're fair prices. These weren't like not overly inflated prices.

   20. HSHarry Stebbings23:43

       How do you think about two things? One is bias. Uh, let's start with bias. You love the founder. The numbers look good, but you just really like the founder. E- they're messaging you late at night, great ideas, and you're like, you have a connection with them that you don't have with someone new.

   21. HKHussein Kanji23:57

       ... so we have a fairly trained growth investor on our team who is not in these companies, who can look at the data, just on a pure databases and take and give a view. So we, we basically assemble a different team other than the person leading the investment, saying, "Take a look at this. Figure it out." And, but, you know, going back to that Darktrace round that KKR did, four million a month, so 48 million annualized, $400 million post, not pre, post. That's a pretty average-

   22. HSHarry Stebbings24:22

       Four million a month, so it's doing basically 50 a year?

   23. HKHussein Kanji24:25

       ... 50 a year, 400 million post, that's a pretty fair price for a SaaS business.

   24. HSHarry Stebbings24:30

       No, dude, that's ridiculous.

   25. HKHussein Kanji24:32

       Yeah, yeah, yeah.

   26. HSHarry Stebbings24:32

       You never see that says. It's nine X. It's nine X.

   27. HKHussein Kanji24:33

       I'm sorry. I'm like- I'm like- I'm understated, right? So yeah.

   28. HSHarry Stebbings24:35

       Yeah, that's like a pub-

   29. HKHussein Kanji24:36

       It's a- it's like a deal.

   30. HSHarry Stebbings24:37

       It's a great deal.
10. 25:03 – 27:51

    Doubled Down on a Reserve That Didn't Work

    1. HKHussein Kanji25:03

       like 10K.

    2. HSHarry Stebbings25:04

       Have you ever had a reserve check where you'd really doubled down extensively and it hasn't worked out?

    3. HKHussein Kanji25:10

       You know, we've learned a couple of things along the way. People don't really need much from your investors when things are going well. They just mu- need money and kind of get out of the way. Whenever there's a hiccup, usually end up picking up the phone and call your investor and we're usually the ones working it. I think this is a big transition right now in th- in the seed world. Sometimes when those calls are being made, it's not the series A guys or the multi-stage funds that are doing the work. There used to be a time where you wrote the check as the seed firm, then the big boys came in, you exited politely, and the big boys ran the business and they did the board stuff, they did the hiring/firing if the- ev- if thing- things had to happen, they did the acquisitions. But these days with the growth of those guys, it's all call options for them, right? They will invest into something and see how it plays out so they can write the 30, $50 million check where it starts to get meaningful. Whereas for us, it's always meaningful, so we end up usually doing all of this heavy lifting. And as a result, there's a bias that comes into this, which you then think you can fix a lot of stuff. So we, we had a company that hit a, hit a stumbling block. We, we, we doubled down, like not with a lot of capital. We doubled down, like rolled up the sleeves, started working. The other investor with us was another big venture fund in with us o- on this company, wrote it off. Weirdly enough, still turned them to the board so they wouldn't give up their board seat, so they wouldn't get recapped, so they defended themselves, but they wrote zero additional check. And the company needed about two million to turn itself around, and we were able to put a million and we assumed if we did the first million, someone else would come in and do the other million and we'd kind of get it there. And ended up raising like 1.3 out of the two, ran out of cash, business had turned around, someone else ... It went into insolvency. Someone picked it up and has been flying with it since then, right? 'Cause all the heavy lifting got done. I got a call about two months ago saying, "I he-" And this is weird. "I heard that you were such a good board member for this company. I wanna give you stock options and have you back in the company on the board and I'm giving it to you for free."

    4. HSHarry Stebbings27:10

       Can you say the company?

    5. HKHussein Kanji27:11

       I g- I can't 'cause we haven't ... It hasn't closed. We're in the middle of legals. There's a lot of back and forth and like-

    6. HSHarry Stebbings27:16

       (laughs)

    7. HKHussein Kanji27:16

       ... I don't even know how we do this, right? So basically, I'm in being invited ... The, the company went ... My company went bust, someone else picked it up, is now starting to fly with it, heard from the company how much work I did, and has called me back up saying, "I want you on my cap table." And I realize you're- you're tapped out, like your fund has no more money for this. You- you tried as hard as you possibly could to rescue it and then you ran out of capital. But the lesson for us is that this one feels like it might actually work out. The lesson for us is like, this hard work stuff, you need to be well capitalized to be able to do and some- sometimes it's not our place. Like even if we could do the work, we don't have the capital base to be able to do these things.

11. 27:51 – 31:56

    Has Series A Product Quality Declined?

    1. HKHussein Kanji27:51

    2. HSHarry Stebbings27:51

       Has the series A product worsened over the last three years?

    3. HKHussein Kanji27:54

       I don't know if it's worsened, but I think we've gone to an era where, where people are writing like checks and then letting things play out. There's a great transcript oral history. I- I do a lot of reading, right? So like there's a, there's an oral history that the Computer History Museum does in, in California, and they've gone back and interviewed all of the good and the great in our industry, like top 35, like the founders of our industry, like the early venture capitalists. And they, they did as oral histories or like eight to 12 page like PDFs that you can kind of read. And if you read those transcripts, the way venture looked in the '60s and '70s and '80s and '90s looked really different than it does in like 2024. Like these folks ... I'll give you another story. Like back in the day, Dave Marquardt was the only investor. He was at August. He was the only investor in Microsoft. Very few people know this. In the early days of Microsoft, Microsoft was structured as a partnership, not an inc. It was not a company, it was a partnership. And there was weird tension between Bill and Paul. Uh, and so they needed a third party to come in and clean it up. And his firm complained that he was spending a lot of time helping these two kids out. They're all in their 20s at this point. The industry was really young, like, like it even as it is today, helping these kids out. And he did that work for about a year before he got invited into Microsoft. He ended up owning 10% of Microsoft. I don't know ... And I got a lecture from my COO when I did this with another one of our companies where we did a next generation AI law firm that runs as a law firm. And obviously if you're running as a law firm, there's a whole bunch of stuff that you have to do beyond the tech. And I was giving this free advice to the founder. We own 20% of this business. Company's on fire. It's doing really well. Uh, but I spent like a year like problem solving, troubleshooting, getting on the whiteboard. Every time he had an issue, come over to the office and we'd like sit down and do it. And my, my COO is like, "What are you doing? Like your time is really valuable. We got a whole portfolio that you're supposed to be working on and you're like, you're like brainstorming with this guy. It's fun," but like ... A- and sometimes you have to do those kinds of things in order to buy the goodwill to actually be able to write the check. We end up coming into that deal at nine. The company's on a million pound run rate right now, o- a month.

    4. HSHarry Stebbings29:59

       Wow.

    5. HKHussein Kanji30:00

       Um, so, like, i- i- it pays, you know, this, this work pays itself back. But I think the industry did all of these things in the '80s and '90s, and we've gotten so much bigger now, where, like, honestly, is it worth the time, like, to do this for, like, a million, two million, three million, 10 million? Like, you're much better off raising a five, six, seven billion dollar fund and putting 50 to work and, and-

    6. HSHarry Stebbings30:24

       Is this good for founders, though? They got a 10 to $15 million check from a Series A player who's got a billion to four billion, five billion even, um, and, yeah, you're a total cool option. "We're gonna give you 10 million, 15, and just get it out of the way, see if you are interesting, and we'll come back and give you 50 if you are interesting." Is that good or bad for founders, actually?

    7. HKHussein Kanji30:42

       So if you'd asked me this question in '21, I would've said it was good because if the market's on the way up, if everything is pulling you up, all you need is money from the investors. You don't need all that much more, right? It's nice if they invite you to things, but, like, you don't really need very much out of them. If the market stumbles, the market stumbled in '22, there's a whole bunch of companies out there... By the way, if you look at the public markets today and you go look at all the SaaS companies, between the 1st decile all the way up to the 10th decile, if you break it up, everything other than the 1st decile is both growing and profitable. Both. Not either/or, both. Which means that if you're $100 million vertical SaaS company that's private today, and you're at that kind of stage, and you're not one or the other... Sor- you are one or the other, but not both, you have a long way to go before you can go public. And those companies need to be... Like, work needs to go into them, and you probably need, even if it's just a sounding board, someone to sit down and have that conversation with, and that's probably your venture person. And if you're in a call option business, it's not worth the venture fund's time to do all that stuff. So, I think it depends if you're in bull cycles or bear cycles or kind of in between cycles, and I think we're kind of sort of in between because we're bull on AI and then kind of bearish on, on a lot of other

12. 31:56 – 34:36

    Do the Best Founders Really Not Need Help?

    1. HKHussein Kanji31:56

       stuff.

    2. HSHarry Stebbings31:56

       So, like, Keith Rabois, who's a friend and been on the show a couple of times, he always says, like, "The best founders don't need your help. Simple." Do you agree?

    3. HKHussein Kanji32:04

       Yes, until there's a hiccup. And there are hiccups. Like, m- you, people forget, like, even some of the massive outcomes in our industry have had hiccups. Some of them d- did not. Google did not have any hiccups. Maybe now it has a hiccup with some regulatory challenges, but did not have a hiccup. Facebook had hiccups. Like, that was not easy to raise some of the rounds at Facebook. Like, there's a reason why Microsoft ended up on the cap table. Like, companies, they, they don't have a linear path from like zero to success. It looks like that because you, you, you stretch out the curve and you miss all the volatility. It's like your glucose monitor. You see ups and downs on your glucose monitor, and then you see the trend line, and the trend line, you know, when you eat, starts going up, but you do see ups and downs. You, you forget about the ups and downs with history, but it's in the ups and downs where you actually need someone around to have the call... And maybe not on the ups, but definitely on the downs.

    4. HSHarry Stebbings32:54

       You said about the downs there, a- another thing that Jason Lemkins taught me is that honestly, giving founders true feedback on why you're passing, don't bother. Like, they will just argue. They'll just think you're a shit. Just don't bother. It's not worth it.

    5. HKHussein Kanji33:05

       Yeah, I'm, I'm kind of in the same camp. There's no upside from, like, arguing with people. I mean, argue with your founders who are, like, in your, like, they're in your family, right? You're an investor. You're along. But, like, there's the outside world. And, and by the way, the, one, one of my founders says, like, "Your single biggest flaw right now is you, you just have a overactive..." And, and one of our LPs says the same thing, "overactive Twitter, X.com." Like, why are you even on this thing, like?

    6. HSHarry Stebbings33:27

       Do you give a shit what people think, dude?

    7. HKHussein Kanji33:30

       Yeah. (laughs)

    8. HSHarry Stebbings33:30

       'Cause (laughs) , 'cause you tweet... Do you know what? I was g- I was in the gym the other day, and you tweeted that some, uh, kitchen utensil company had, like, blocked you.

    9. HKHussein Kanji33:38

       (laughs)

    10. HSHarry Stebbings33:38

        And I was gonna respond to you. You know I love you. But I was gonna respond to you, like, "Even the kitchen utensil company doesn't work with you." (laughs)

    11. HKHussein Kanji33:46

        (laughs)

    12. HSHarry Stebbings33:46

        I was like, that is too good.

    13. HKHussein Kanji33:47

        Yeah, I got blocked.

    14. HSHarry Stebbings33:48

        Yeah.

    15. HKHussein Kanji33:48

        I got blocked from buying frying pans.

    16. HSHarry Stebbings33:51

        (laughs)

    17. HKHussein Kanji33:51

        (laughs)

    18. HSHarry Stebbings33:53

        What did you do?

    19. HKHussein Kanji33:54

        I, I bought a frying pan last, two s- two, two holidays ago for my wife, and it never turned up. And I complained, and then it eventually turned up, and apparently the response because I complained has been to blacklist me.

    20. HSHarry Stebbings34:07

        (laughs)

    21. HKHussein Kanji34:07

        I'm not allowed to ever buy a frying pan from this company again.

    22. HSHarry Stebbings34:10

        But does it affect, like, does it upset you? Like, I, I think you know the truth, which is that you're not the most popular dude. (laughs)

    23. HKHussein Kanji34:15

        Yeah, I mean, I, I don't know if we're shooting for the popularity contest.

    24. HSHarry Stebbings34:19

        Does it ever have a materially adverse impact on funds?

    25. HKHussein Kanji34:22

        If you're too straight?

    26. HSHarry Stebbings34:23

        Uh, if you're too controversial, unpopular.

    27. HKHussein Kanji34:26

        Yeah, I mean, I, I think who, who wants to work with people who are too controversial or, or too unpopular? I mean, you want, and, like, especially when things are going up, right? You w- you want people who are gonna be cheerleading as

13. 34:36 – 36:45

    How Long Took To Raise Fund Two

    1. HKHussein Kanji34:36

       much as possible.

    2. HSHarry Stebbings34:36

       So fund one, 39 months. How long, how long did fund two take? It's gotta be better, right? 'Cause we've got Darktrace and Deliveroo, so it's, it's gonna be great.

    3. HKHussein Kanji34:43

       It's, it's better, but marginally better. It was 28 months. So we went on the, we went on to fundraise. We've, we've, we finished up fund one. It was a 2013 fund, somewhere around '17, '18. We went back out into the market to go raise.

    4. HSHarry Stebbings34:55

       And you're going from 27 to 89?

    5. HKHussein Kanji34:57

       We were trying to get to, back to a hun- we were trying to get to 100. We thought 100 was the right number for a seed fund back then. We, we now think the closer number is like 150 to 250, but back then it was about 100. And if you're gonna play this game well, that's about the size that you need to be, so we went out for 100. We got a commitment from the European Investment Fund. It's a long process with the EIF, and they're like the anchor LP of record in, in Europe, especially in that era. And we asked them about Brexit, and they said, "We don't... There's no such thing. Article 50 hasn't been invoked." We got to the final, we got to terms. We hadn't gone into legals. We were doing the jurisdiction work, and Article 50 got invoked. And everyone who had a check or a commitment from EIF at that point felt it. Seed Camp got one of the first calls. They tore up the document. And all of us lost EIF commitment because they were no longer able to invest in the UK. And then we had another big in- insurance company who was like the co-investor, the co-anchor basically. We lost the insurance company in this process, so we basically reset back to zero to go do the fundraise, started from scratch again in '18, and then kinda got our way to a closing in '19.

    6. HSHarry Stebbings35:59

       What was the big breakthrough moment there?

    7. HKHussein Kanji36:01

       ... um-

    8. HSHarry Stebbings36:01

       One or two big commits?

    9. HKHussein Kanji36:02

       Yeah. We got, we got British Pension Capital, which is BBB. So we, uh, so instead of EIF, we got BBB. And BBB was, like, a good chunk of the fund, like 40% of the fund. Uh, and like-

    10. HSHarry Stebbings36:12

        40%?

    11. HKHussein Kanji36:13

        Yeah. I don't think we'd have a fund-

    12. HSHarry Stebbings36:15

        Like, do you want ...

    13. HKHussein Kanji36:16

        ... without BPC.

    14. HSHarry Stebbings36:16

        But, but we're always told, and I know this is an incredibly luxurious position to be in-

    15. HKHussein Kanji36:19

        Yeah.

    16. HSHarry Stebbings36:19

        ... but I'm always told, like, "Don't have anyone over 10% of your fund. You don't wanna be too concentrated, blah, blah, blah."

    17. HKHussein Kanji36:24

        You got, you gotta get a fund. Like, you got ... And you gotta get the ... I would argue, you have to get the right size fund. And you know, nowadays, we don't have this issue.

    18. HSHarry Stebbings36:32

        Is it better to get the right size fund with imbalance of LPs, or is it better to get the wrong size fund with the right (laughs) balance?

    19. HKHussein Kanji36:39

        If you're, if you're gonna deliver a ton of returns for your investors, get to the right size

14. 36:45 – 43:01

    Should Governments Be Funding Venture?

    1. HKHussein Kanji36:45

       fund.

    2. HSHarry Stebbings36:45

       You mentioned that obviously, you know, BBB or BPC. Uh, should governments be funding venture?

    3. HKHussein Kanji36:51

       I think in Europe, they've had to. But I have a controversial take on this, which is the worry about government's funding, especially at those kinds of concentrations, is you end up with governments having market power. And I am a big believer in capitalism, I'm a big believer in the markets. I think if you have someone like the EIF, where there's 30% of the aggregate capital of the LP commits, it's too big. What you should really have is what happened with, with, with, uh, with AT&T in the US, where they broke it down into the bells. M- you had five different bells kind of competing with each other in telecom. You probably need five EIFs competing with each other in the market. If, if the government's gonna step in to help, you don't want it concentrated in one big power, because then you end up with weird terms, like you said, that may not be market, and it's really hard for the market to then function the way it needs to function. So if you're gonna do it, do it in a competitive way.

    4. HSHarry Stebbings37:45

       Yes, or it could actually force the hand of pension funds, who sit on the side in the UK and do absolutely nothing, which is a disgrace.

    5. HKHussein Kanji37:54

       So I looked this up. So the pension funds in the UK, so the defined contribution scheme, about 10% of the capital in the pension funds is invested in the top tech names in America, 10%. And about 5% of the pension funds is invested in UK equities. So they're actually pretty long tech as far as pension funds go. They are not in venture. I have a genuine worry. It is really hard to be a VC. It is real hard to be a founder. It is, I think, also reasonably hard to be a LP. Like, if you're coming in from scratch, eh, with no knowledge, I don't know if you really know what you're doing. It takes money and time to train a VC. I think it takes money and time to train an LP.

    6. HSHarry Stebbings38:32

       Super hot.

    7. HKHussein Kanji38:33

       So okay, pension funds now decide to allocate capital to, to venture. Who's gonna do it? Where's the talent base in the UK of L- experienced LPs, who know how venture works, who know what kind of funds to bet on?

    8. HSHarry Stebbings38:45

       There are none.

    9. HKHussein Kanji38:46

       Yeah. So you're gonna ... There's gonna be a problem.

    10. HSHarry Stebbings38:49

        There's gonna be a problem.

    11. HKHussein Kanji38:49

        No one's ... By the way, no one is talking about this.

    12. HSHarry Stebbings38:51

        And also, by the way, and I'm kind of arguing with myself here, say we add across a couple of pension funds another billion a year to European venture, that is bad. Like, we already have a fucking way too much cash in Europe.

    13. HKHussein Kanji39:03

        Yeah. This is, this is the other problem that I think we've had ever since '21. We have had a number of people enter the industry. We used to have, like, 10,000 people doing kind of this tech investing, venture, et cetera. It's gone up to, like, 35,000. It's come back down to the historic norm, but there are a lot of people doing this stuff. And I don't know if people know how to allocate capital to who's good, who's exceptional, who's average.

    14. HSHarry Stebbings39:25

        My lesson is actually ... So w- we have a lot of data on managers through the shows and everything, um, and a lot of LPs come to me, and they say, "Hey, here's my book. Tell me how I should right-size it," and they talk to me about their annual budgets. And the annual budget is generally about 3 to 500 million for US endowments. 3 to 500 million annually in venture is almost impossible and if you want to do great returns, because you're gonna get 20 in your top names-

    15. HKHussein Kanji39:49

        Yeah.

    16. HSHarry Stebbings39:49

        ... and there's probably three to four top names. Okay, so we've got 80 out. Where are you going to put 220?

    17. HKHussein Kanji39:53

        Yeah, I mean, it's a, it's a, it's a real question. Then you have to bet on the right emerging managers, or you have to play the index and say-

    18. HSHarry Stebbings39:58

        You can't even do that. You do five emerging managers at 10. Great, now you've got another 50 out. You've got-

    19. HKHussein Kanji40:03

        Mm-hmm.

    20. HSHarry Stebbings40:04

        ... 170 left-

    21. HKHussein Kanji40:05

        Yeah.

    22. HSHarry Stebbings40:05

        ... on the small side. So then you've got to do 40 into Andreessen, because like, where the fuck else am I going to put it?

    23. HKHussein Kanji40:09

        I, I thought the Tiger playbook was actually really fascinating in '21, which is, let me just go ... Let me, let me not sell a product that's designed for returns. This is how I viewed Tiger at the time. I will sell a product for a capital deployment, and I'll just buy the index as mu- and I'll, I'll hoover up not $50 million commits, but $200 million commits, who have to deploy into tech, and I'll just buy the index. Uh, it didn't work, right, because I think they were overpaying on the market. But I could understand that the appeal to the LP base, which is, look, where am I going to put this money? I've got a group that's going to take not a little bit of money, a lot of money, and be able to play the market for me.

    24. HSHarry Stebbings40:46

        I think the thing that's so challenging with that strategy is you assume that the outcomes are equiprobable independent of how much cash goes in. And what I mean by that is like, they're like, "Okay, we'll pay up, but it'll still go to 3X. It may not be a 5X."

    25. HKHussein Kanji40:58

        And that was the mistake. But I, but I do think, like, I looked at the data on this. There, there is a correlation between how much money goes in to a company and what the probability of success is. And this is the one, this is why I think if you're gonna be contrarian, and we take pride in being contrarian, you have to make sure your companies get capitalized, because if they don't, they don't have it. The me- the average is about like 300 million to get to, to unicorn status, and then like, the, there are some companies that do it for like 200 million. But you have to raise that kind of quantum of capital. And the biggest structural problem that we have in the UK and Europe, the conversion rate between series A ... between seed and series A, series A to series B, series B to series C, is basically these days on par with the US. But the capitalization of our companies from seed to series A, series A to series B, is way under what happens in the US. And there is a statistical, like, correlation between if a seed round raises like 100K, the probability of it becoming an outlier is very, very, very, very small. Kind of makes sense. If that seed round goes up to like 10 million, the odds between 5 million and 10 million, and if the seed is 5 versus the seed in 10, basically double.... so, getting companies well-

    26. HSHarry Stebbings42:06

        I think it doubles between five and 10 'cause I would always, in my head, assume that actually, like, say three to five is the optimal, but 10 actually it becomes, uh, uh, deg- how do you say it? A dem-

    27. HKHussein Kanji42:15

        Detrimental.

    28. HSHarry Stebbings42:16

        Yeah.

    29. HKHussein Kanji42:16

        Detrimi- yeah, yeah. So, but, but I do th- but there is, there is a reason for companies to raise the right amount of capital at the stage you're in. Then too much capital, I think, becomes too much of a wash. But the big problem that we have in Europe is we raise, but we raise small rounds. So, people will take the risk, but they'll, they'll, they'll mitigate the risk by writing a small check. And, and it's weird 'cause the inverse should be if you believe in this thing, like, if you believe as a seed investor at a million, and you have the fund size to be able to do this, you should believe at three, you should believe at four. I- it doesn't make sense to believe at 30. Like, but i- i- but there is a number where you're freeing up the capacity of the founder and of the company in order to try and achieve greatness, and you're shooting for greatness as fast as possible. And I don't think people grok this fully in the European

15. 43:01 – 45:29

    Is Hoxton Price Sensitive?

    1. HKHussein Kanji43:01

       venture ecosystem.

    2. HSHarry Stebbings43:02

       Are you price sensitive?

    3. HKHussein Kanji43:04

       Yes, because we care about ownership, but no when it comes to the check. Like, we often have this debate where if s- um, most of our deals, like I said, are contrarian, and there's contrariness even within the table. So like, we don't get it, like, the rest of the group doesn't get it. We don't see an obvious reason not to do it, but like, we don't see it. And some of our best deals are, are, are usually like this. And so, instead of then downsizing the commitment, we're like, "Okay, we don't really get it, but they're raising three and a half. Like, if they're gonna really try and make a run at this, maybe they should have like four or five. Maybe they should go in there and buy like an extra few points of equity for that money." And I think that's the right way, like if you're in this power law world, that's the right way to play the power law. But that requires a fund size that's bigger than the 100 that we initially wer- were thinking a few years ago.

    4. HSHarry Stebbings43:51

       We- we're gonna get to that. So, but like, contrarian even in the partnership, we're partners, "Dude, I wanna do this deal, you really don't, you think I'm nuts. Can I do this?"

    5. HKHussein Kanji44:01

       So, we do it on the basis of is there a, is there a red line? Like, is there some flag, I mean, red line's the wrong word, right? Is there a flag that we can throw down that says it doesn't make sense? Which is I looked at the cohorts, I looked at the early cohorts, and, and, you know, all of those cohorts are deteriorating. So, you thought it was really good, it's growing exponentially, but the data suggests that maybe that's not the case. By the way, that's a real world scenario. I got super excited about a company in Portugal, and one of my partners looked at it and was like, "Hussain, like, you missed a trick here." And, and by the way, this is why I love working in partnerships. Like, I think partnerships are way better than solo GPs 'cause you get this error correction mechanism from other smart people. But if the error correction mechanism is they're blocking you for no good reason, like, as in they're just running interference on you, then it's really a, it's obnoxious.

    6. HSHarry Stebbings44:48

       Do you not think there's always a reason to say no to a company? Like, there's always a cohort that's off. There's always a, a conversion rate that's not there. There's always a retention metric that's down. I can, I could throw down a red flag.

    7. HKHussein Kanji44:58

       Cor- cor- correct. Which is why we look at, like, on the aggregate, like if all the cohorts... L- like, if you've missed something and someone flags it, we generally have a lot of humility inside the firm to be like, "Yeah, I didn't catch that piece." Like, "I get it. I, I don't know if I really wanna do it." But most of our cases go down to the following: "I don't think that person's gonna be hire- is gonna be able to hire very well." It's like, okay, that's like super gray zone, right? How do, how the heck do you disprove, like, that there's no null hypothesis to prove. A- and in those kinds of cases, we give each other

16. 45:29 – 48:45

    Why $150M to $250M is the Optimal Seed Fund Size?

    1. HKHussein Kanji45:29

       the rope.

    2. HSHarry Stebbings45:29

       So, you said 150 to 250 is where you may be naturally thinking optimal seed fund size is. That's bigger than most people would suggest. I'm, by the way, in your camp. Our, our new fund is 125 for seed, so b- ballpark. Um, why do you think 150 to 250?

    3. HKHussein Kanji45:46

       So, I think if you're gonna try and do 20 of these, your check sizes are gonna be three, four, five, and then sometimes these jumbo seeds are now up to 10. Like, Ed Sim has been able to done a bunch of, like, work on this showing, like, what the path is o- of these jum- And they're more and more common, by the way. The jumbo seeds, like up six to seven times in volume than they were a couple of years ago. And the seed rounds that are five million plus are a fifth of the industry right now.

    4. HSHarry Stebbings46:09

       Do you do those jumbo seeds, the inception rounds?

    5. HKHussein Kanji46:11

       We did one. We did one A- and, and you have to sometimes in AI.

    6. HSHarry Stebbings46:13

       I saw this. It was like a 10 million round, no?

    7. HKHussein Kanji46:15

       So it was a, it was a $30 million round where we took it off the table at 10. We locked it down. We set the price. We took the board seat.

    8. HSHarry Stebbings46:23

       You put, you put in 10?

    9. HKHussein Kanji46:24

       We put in 10. It was an AI company, foundational model, didn't necessarily need all the money on compute. So, 10 in, in, in a foundational model, and 10 is a really large number, but 10 in foundational model land is still a, is still a small number. We took it off the table, and then everyone wanted in, and then we selectively let a few funds in. Northstone came in, Lightspeed came in, et cetera, and the round became 30.

    10. HSHarry Stebbings46:45

        10 million is a big, big bat.

    11. HKHussein Kanji46:48

        Not out of a $200 million fund. Th- this is the d- this is why you have to be a decent-sized fund. If you're $100 million fund, that's 10% of your fund right there. You know, 5% of the fund is very different than 10% of your fund. And I would argue maybe that number should be like 200 to 300 if you're gonna double down proactively. If you're just gonna... If you're just gonna, if you have, you have another vehicle, so you can double down out of another vehicle. But if you're not able to have another vehicle, the- and you're gonna do it out of the same fund, you probably need to be closer, a little bit higher than your 125.

    12. HSHarry Stebbings47:17

        What is your c- capital concentration limits per company?

    13. HKHussein Kanji47:20

        Ten.

    14. HSHarry Stebbings47:20

        How do you think about that?

    15. HKHussein Kanji47:21

        10%.

    16. HSHarry Stebbings47:22

        10%.

    17. HKHussein Kanji47:22

        Mm-hmm.

    18. HSHarry Stebbings47:23

        Okay, so you say have another 5% for this company over time.

    19. HKHussein Kanji47:26

        Yeah. And, but E- I think in this case, we think AI on the foundational model is somewhat binary. It either works or it doesn't. Because if it works, and you've seen this with a bunch of AI companies-

    20. HSHarry Stebbings47:36

        Are you happy you wrote that check?

    21. HKHussein Kanji47:37

        Yes. I, I don't know if it's gonna make us money just yet. It's, like, premature to say that. The company was funded in... We took the term, the term sheet was March. I think the wire went in June. We're, we're sitting in December. It'd be, like, foolish for me to say anything like about how it's doing.

    22. HSHarry Stebbings47:50

        (laughs) Well, I don't know. I think we've seen the commoditization of different model providers very quickly over time, and actually-

    23. HKHussein Kanji47:55

        So, it's not a generic model. It's a model for material science. It builds a, it, it, it's a foundational model that's bespoke. There's a piece of Microsoft research came out two years ago that proves that this kind of stuff can work. It's basically the AI building the next generation of materials using AI. It's a very different type of foundational model.

    24. HSHarry Stebbings48:12

        Okay, I get you. So, sorry, going back to it. So we have 20 companies then in the portfolio. We got a pretty good picker at 20, by the way. Uh-

    25. HKHussein Kanji48:19

        Yeah, so the probability at seed of picking something that becomes a unicorn is 3%. Done it a few times. (laughs)

    26. HSHarry Stebbings48:27

        Yeah. Tw- so 20 is not a huge amount, and so just walk me through that. If you got 150, you're doing 20, take $5 million checks, minus fees, you-

    27. HKHussein Kanji48:35

        Plus reserves.

    28. HSHarry Stebbings48:37

        Plus reserves, sure.

    29. HKHussein Kanji48:38

        So hence 200.

    30. HSHarry Stebbings48:39

        And that's-
17. 48:45 – 52:45

    The Problem with $75M Seed Funds

    1. HKHussein Kanji48:45

       mental way to do it.

    2. HSHarry Stebbings48:45

       What do you think of all these seed funds that are $75 million?

    3. HKHussein Kanji48:49

       I'm worried. Like, I think in a bull market where you're writing the first ticket and someone else is then carrying the slack and picking it up, you know, it's easy to be the feeder fund for those folks and write the small checks. I think we have too many of them right now in the industry. I think right now the real opportunity in Europe is there are a handful of really good venture funds at the top, you know. We, we know who they are, right? Index, Accel, Sequoia, et cetera, like, all very active in Europe.

    4. HSHarry Stebbings49:13

       Which do you think... Sorry, do you think there's actually a handful? I think there's Index, Accel, and Sequoia.

    5. HKHussein Kanji49:17

       I'm being... I, I think it's slightly more broad than that. I mean, I think Random would feel really annoyed if you weren't, if you didn't put them on the list. I think that's true of a bunch of other funds, but what-

    6. HSHarry Stebbings49:25

       No, but Random are a seed fund.

    7. HKHussein Kanji49:26

       I think they're a series A fund. But, okay, fine, nomenclature. There are a handful of funds that are bigger and, like, like aiming for big outcomes in Europe. But the market here has grown 30-fold. Like when we first started, there was about a billion that went into, into Europe in venture. These days, about 30 billion that goes into Europe in venture. And weirdly enough, people seem to think, like, markets that get more liquid and more competitive are bad. I think markets that get more liquid and more competitive are good 'cause the market's actually working. Like even when the market goes up 30-fold, even if there's more competition, I'd much rather play in the bigger market than the smaller market. But I think there's a chance now for f- a few more funds to be on that list. I think you have that ambition. I have that ambition.

    8. HSHarry Stebbings50:06

       Ophelia does.

    9. HKHussein Kanji50:06

       I know Ophelia has that ambition at Blossom, and, and some of us are gonna make it. I don't know if the world right now needs yet another emerging manager, yet another microcap fund. I think what we need is like five to ten dominant superstar venture funds in Europe, kinda the way in the Bay Area there are like 10 or 15 of those.

    10. HSHarry Stebbings50:25

        Yeah, but we don't have the supply of entrepreneurs.

    11. HKHussein Kanji50:28

        We will do a lot of first-time founders, 'cause I think a lot of people in Europe won't back someone if they look like they're first-time founders. But I think a lot of the interesting outcomes in our industry, and you can think about this anecdotally-

    12. HSHarry Stebbings50:38

        Do you prefer younger founders?

    13. HKHussein Kanji50:40

        Doesn't matter younger or older. I think people who are doing their life's work, usually if the company captures their life's work, that's kinda the only thing they do with their career.

    14. HSHarry Stebbings50:49

        But we had Nick on the show from Revolut, and he said that actually when they look at the work they do with Quantum Lite and analyzing founder age, 25 to 35 is actually the optimal time they find best performance.

    15. HKHussein Kanji50:59

        Yeah, because I think if you're saddled with a family, it's harder 'cause you have dual, dual interests and you end up in this, like, solo, like one mindset, right, which is build my company. And that's much harder to do when you're, like, raising your family. And I think if you're like 15, 20, unless you're like a superstar and really precocious, you probably don't have the accumulated wisdom to learn lessons. And I think there's a, like that 25 to probably 35 age or 25 to 40, like you can grind and you have enough experience to know what to do.

    16. HSHarry Stebbings51:28

        Do you think there is enough high-quality seed companies graduating out of London and out of Europe for the multi-stage funds to do?

    17. HKHussein Kanji51:37

        For s- I mean, and, and I mean, I don't know about the general market, but in our portfolio, for, for sure. And that's, that's why we've ended up concentrating our capital.

    18. HSHarry Stebbings51:44

        'Cause you are seeing the US players come in with large amounts of cash and spend.

    19. HKHussein Kanji51:50

        Yeah, yeah. I mean, I, I think, again, the challenge in Europe is most of these companies need a little bit of tinkering versus like being... You c- you can't just fully, fully leave them alone. It's like you have to think of Europe the way venture was in the '80s or '90s in the US, where these companies, if they didn't have a strong partner on board helping them build, and you read these, like, oral histories, you will see what I mean by, like, companies, like, actually being, like getting guidance on, on what to build. We're in that mode, and I think the industry has shifted in the US to be like, "You know what? The, the market takes care of that stuff. I just have to deploy capital." And in Europe, the market doesn't take care of itself.

    20. HSHarry Stebbings52:27

        Do you think founders are aware of that? They read Founder Mode from Paul Graham, and they read the US articles, and they read everything that the US founders consume, and then it's maybe operating in a different environment.

    21. HKHussein Kanji52:37

        Yeah, I don't, I don't, I don't know if this necessarily always resonates, but the minute there's a hiccup and you have these hard conversation with founders, people grok

18. 52:45 – 1:01:10

    Is the Criticism of Europe’s Venture Scene Fair?

    1. HKHussein Kanji52:45

       it.

    2. HSHarry Stebbings52:45

       Do you think the criticism levied towards Europe today, which we both see on Twitter like never before-

    3. HKHussein Kanji52:50

       Yeah, yeah.

    4. HSHarry Stebbings52:51

       ... do you think that's fair or completely unfair?

    5. HKHussein Kanji52:53

       I mean, I don't know. I mean, I don't... From a macro perspective, that's not what I do, right? I, I mean, but I, I think of this as, like, underlying fundamentals for my business. We're living in a world of AI. I think this is the big seismic shift. For like the next like 10 years, this is where we're gonna... This is where the next wave of wealth creation is gonna be. I'm looking at the conditions on the ground. We used to produce really interesting gaming companies when I was at Accel. Like, we were really strong in Europe. Today, in A- and that was probably the only thing we were really strong at, and then the government, like, lowered the regulation in, in, in fi- in finance. And so we were really good at building, like, fintech companies here, Monzo, Revolut, exactly, and-

    6. HSHarry Stebbings53:29

       100%, I remember that.

    7. HKHussein Kanji53:30

       And, and-

    8. HSHarry Stebbings53:30

       And this was the place to build fintechs.

    9. HKHussein Kanji53:32

       Exactly, and, and the FCA really made it easy from a sandbox perspective. When you look at this new big... And but those who are niche, they're big niches, but they're niches, like in the tech industry. AI is much more horizontal. When you look at what's happening in AI, you got DeepMind down the road in London. You got Meta running its AI stuff in Paris. Like, we are, for the first time ever in European history, on par from the company creation or technology creation as the US in not a niche field, but in an hor- horizontal field. I, I cannot interpret that in any other way than there's gonna be opportunity in this stuff. Yes, I'm really terrified that the German car industry is gonna get wiped out by China, like b- by the EVs in China. I think they're asleep at the wheel.

    10. HSHarry Stebbings54:14

        What happens then?

    11. HKHussein Kanji54:15

        I don't know, and I don't know what's gonna happen to energy prices in Germany. I am worried and petrified about UK growth stagnating.... and, you know, quality of life here are deteriorating. But from a company creation, investing perspective, these two things, or these things are not at all related to what we do as an industry. And then I would argue-

    12. HSHarry Stebbings54:34

        Well, are they not? Because actually, if you consistently saying you're Keir Starmer and Rachel Reeves, we consistently will not have growth for the next three years. You are not putting up a banner for great entrepreneurs to say, "Hey, come build here." And so there is a correlational effect.

    13. HKHussein Kanji54:46

        I don't- I don't know if entrepreneurs or engineers and techies are thinking about macro when they're thinking about doing something that is a problem. And then the question is like, how do you scale the company? And I do worry that if you're scaling the company, your best path to scale from a financing perspective is America. The rounds are bigger. Your chances of success are correlated with bigger round sizes, experience that is bigger in the US, the market is bigger in the US. The- the- the trajectory of travel... And by the way, there's always been a thesis at Oxton. Like Darktrace's made more money in America than it did in the UK from the very early days. They had more staff in America than it did in the UK. Our directory of trave- direction of travel is find the best here and be the bridge to America and take them over there. From my perspective, I- I feel fine regardless of what's happening in macro. As someone who's living here though, I'm terrified about macro because I think there's real quality of life repercussions if policy makers here do not get this stuff right. But I find that the policy makers here are focused on the wrong problem. Everyone here is talking about the London Stock Exchange. I just told you, the pension funds in the UK, defined contribution schemes are investing 10% into the big tech names in the US. It is not hard on a Bloomberg terminal to put a few extra characters and to buy a share on a New York exchange or a NASDAQ exchange as it is on the LSE exchange. It just doesn't matter. The world is global these days, you know. And if you live in a global world, why do you wanna-

    14. HSHarry Stebbings56:11

        I'm sorry, I still don't understand why the LSE doesn't matter or is misuse of time. Like we need to have good, strong local liquidity markets, which we don't have.

    15. HKHussein Kanji56:19

        Why? Why don't you just take the companies public in the US?

    16. HSHarry Stebbings56:23

        And have no local liquidity markets?

    17. HKHussein Kanji56:24

        What does a local liquidity market matter? If the pension funds, if the pension funds here were like they were 20, 30 years ago where they had to invest locally, it matters, because the pensioners are being screwed. The pensioners can inv- the pension funds can invest globally. The only people who realistically get screwed are the service providers around the company. If you low- if you list on the LSE, Goldman in London gets to, gets the- the mandate, Lazard in London gets the mandate, you know, Ernst & Young gets the mandate in London, you create more jobs around the industry. But the company is fine. The corporate tax is still a UK company, it's-

    18. HSHarry Stebbings56:56

        Well, I think you'd argue then that it only allows for the top 1% to flourish. And what I mean by that is only if you are Spotify or Revolut.

    19. HKHussein Kanji57:04

        I'm sorry, the... If you're not going public these days, unless you're a top 1% gone are-

    20. HSHarry Stebbings57:08

        No, no, I'm saying the top 1% of IPOs, which is, you know, a R- a Revolut or a Spotify, which can go to the US if you-

    21. HKHussein Kanji57:14

        So- so we looked at the data, the bar for an IPO today in the US is north of 200 to 300 million. Gone are the days where you could take a company public, where you could raise... Like, I remember when I was, when I was growing up in the industry, like 10, 15 years ago, an IPO is like 100 million of revenue or an IPO candidate. Doesn't exist anymore. That world has shifted. That was a 20... That was a 10-year-old world. There used to be a time, by the way, like remember Yahoo? When Yahoo went public, Yahoo went public on like 10, 20 million of revenue, et cetera, and like it was- was worth billions in the, in the market. Tho- those days are gone. We now have very deep, very liquid, very large markets across the industry.

    22. HSHarry Stebbings57:51

        Mm-hmm.

    23. HKHussein Kanji57:51

        I mean, the other thing is the private markets are so big now that there are non-way... There- there are other ways than going public of getting liquidity. There are private equity firms that would, that would probably want to buy LAD Bible or take it out.

    24. HSHarry Stebbings58:04

        I don't disagree with you though.

    25. HKHussein Kanji58:05

        So I- I just don't know if this is that much... I mean, why are you solving a problem that is A, really hard to solve, and- and I would argue really probably doesn't matter. You- you... If the path to a New York Stock Exchange listing was closed from here, and our best companies here couldn't go public, fair, we have a real problem. If, and if our pensioners couldn't access that, we... fair, we have a real problem. If-

    26. HSHarry Stebbings58:26

        Can we access NASDAQ and US markets en masse? Not the one or two, but like hundreds?

    27. HKHussein Kanji58:31

        We have to go build those companies, get those companies to 200... We have a company in our portfolio, it's about two years away from IPO, it's appointing bankers right now, 150 million net, 160 million net revenue right now on a, on a run rate basis. We'll easily get to 250 of revenue, which is I think where the bar is to be able to go public, New York Stock Exchange. By the way, the first two big tech IPOs in the L- LSE that were supposed to reinvent, repower the LSE were ours, Deliveroo and Darktrace. We know that.

    28. HSHarry Stebbings58:57

        Deliveroo's on the LSE.

    29. HKHussein Kanji58:58

        Deliveroo's LSE, Darktrace was LSE, and then right after that, Tophat went public with Wise on the LSE, and I tried to talk him out of it.

    30. HSHarry Stebbings59:04

        (laughs)
19. 1:01:10 – 1:04:17

    An Advice For Keir Starmer

    1. HKHussein Kanji1:01:10

    2. HSHarry Stebbings1:01:10

       You are advising Keir Starmer.

    3. HKHussein Kanji1:01:11

       I am not. I've never been called.

    4. HSHarry Stebbings1:01:13

       You are.

    5. HKHussein Kanji1:01:13

       I was. I was... Oh, uh, in a hypothetical.

    6. HSHarry Stebbings1:01:16

       In, in a hypothetical. (laughs) Uh, what would you advise him?

    7. HKHussein Kanji1:01:19

       That's a good question. I would not have tinkered around with the tax rates. Like, I just, I, I just don't know what... I feel like th- there was enough own goal negative.

    8. HSHarry Stebbings1:01:29

       The non-dom removal is bullshit.

    9. HKHussein Kanji1:01:32

       Yeah, and I, and I don't say... I mean, I've passed my non-dom, so I'm in, I'm in the camp. I've said it publicly on X. Like, I have no problems paying income tax on carried interest. Like, I think it's d- I, I think it's income, right? I mean, it's not, it's not my capital at work doing it, it's 'cause I'm doing my job. So, like, I have no problems with this. But I think tinkering around with stuff, and tinkering and then changing it, like, frequently... And the worry that I have is, okay, capital gains has now gone up. We're in the UK fine. Are they gonna tinker it next year? Like, I want stability, right? I want, I want these infrastructure things long-term, stable, consistent, so I can focus on the really hard things of, like, building these companies. If they start tinkering with the stuff that I think I'm taking for granted, like, my l- like, the light, it's just... It becomes infinitely harder for me to actually, like, figure out how to adjust to that and build these companies up, or have the founders kind of navigate it.

    10. HSHarry Stebbings1:02:20

        So, it'd be, hey, stick to a strategy.

    11. HKHussein Kanji1:02:22

        Boring is good (laughs) for, for pol- for, for governments.

    12. HSHarry Stebbings1:02:25

        Yeah.

    13. HKHussein Kanji1:02:25

        But that's not the world that we're in, especially in an amplified social media, where being a little bit more exciting is more fun, and also gets you more credit and more, more kudos and more attention.

    14. HSHarry Stebbings1:02:35

        We mentioned that, like, oh, well, you know what? Actually, in terms of liquidity markets, we need to go to the US, or not at all. We have P, we have different players. The extended window of privatization or, like, you know, private capital, is so real. You've got Stripe, you've got Databricks, you've got SpaceX, you've got Starlink, you've got all these companies, which, bloody, they don't need to go pri- uh, public for the foreseeable. I mean, the space at its demand right now is off the fucking charts. (laughs)

    15. HKHussein Kanji1:02:59

        And, and I don't think most people realize this. Like, once you get to that kind of size, you end up having to comply with all the SEC stuff. So you may not be publicly traded, but you're complying and doing... You have all the infrastructure to actually go public at any time that you want, 'cause you've had to build that, 'cause you've got too many shareholders at that point.

    16. HSHarry Stebbings1:03:15

        So is this extended window a problem? Is this good? Is this bad? Like, how, how do you think about it?

    17. HKHussein Kanji1:03:20

        It's too hard for me to know. Like, I, I do... It... I think, like I said, we live in a very different world in 2024 than we did even 10 years ago, and definitely, like, 20, 30 years ago. The markets have just evolved in such a different way, and they're so much bigger, that I don't know, I don't know, I don't know how this is all gonna play out, I don't know if they're gonna be good things or bad things. For me, I'm just a realist, right? This is just the way it is, this is the world I play in, this is how it's gonna be. I don't see it going back anytime soon to the way it was in the '90s, and I'm just gonna adjust to, uh, you know, to adapt to this new reality.

Episode duration: 1:16:31