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Saam Motamedi: Why Series B Won’t Make Money & Why $1M ARR is a BS Milestone for Series A | E1177

Saam Motamedi is a General Partner at Greylock, where he has led investments in Abnormal Security (incubated at Greylock), Apiiro Security and Opal Security, as well as AI companies like Adept, Braintrst, Cresta, Predibase, Snorkel, and more. Before Greylock, Saam founded Guru Labs, a machine learning-driven fintech startup, and worked in product management at RelateIQ, one of the first applied AI software companies. ----------------------------------------------- Timestamps: (00:00) Intro (01:06) The Lasting Impact of Childhood (02:20) Is Hyper Competition for the Young? (03:16) Are We in an AI Bubble? (07:58) Differentiating in a Crowded AI Market (10:30) Can OpenAI Updates Threaten AI Application Businesses? (12:38) Venture Opportunities in the Foundational Model Layer (16:03) Is SaaS Ending? The Shift to Custom-Built Software (23:24) Rationality in Seed & Series A Pricing (30:54) Maintaining High Standards with Irrelevant Check Sizes (33:00) The Impact of Signaling in VC (38:07) Saam’s Approaches to Managing Investment Reserves (39:01) Rethinking ARR as a Series A Filter (45:43) Great Founder, Poor Market: Would You Invest? (51:07) Lessons from Investing in Great Founders, Poor Markets (54:18) Mastering Sourcing, Selecting, and Servicing (59:29) Quick-Fire Round ----------------------------------------------- In Today’s Conversation We Discuss: 1. Seed Today is Frothier than 2021: How does Saam evaluate the seed market today? With seed pricing being so high, how does he reflect on his own price sensitivity? When does he say too much and does not do it? Despite seed pricing being higher than ever before, why does Saam believe it is rational? How has the competition at seed changed in the last few years? 2. Series B and Growth are not a Viable Asset Class Today: Why does Saam believe that you cannot make money at Series B today? Why has pricing gone through the roof? Who is the new competition? When does it make sense to “play the game on the field” vs say this is BS and do something else? What would need to happen in the public markets for Series B to be a viable asset class again? 3. Markets vs Founders: The Billion Dollar Mistake and Lessons: How does Saam prioritise between founder vs market? What have been Saam’s biggest lessons when it comes to market sizing and timing? What is Saam’s biggest miss? How did it change his approach and company evaluation? Which other VC would Saam most like to swap portfolios with? Why them? 4. Saam Motamedi: AMA: What does Saam know now that he wishes he had known when he got into VC? Saam has had a meteoric rise in Greylock, what advice does Saam have for those younger investors look to really scale within a firm? Sourcing, selecting and servicing: Where is he best? Where is he worst? Why does Saam believe that most VCs do not add value? ----------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on Twitter: https://twitter.com/HarryStebbings Follow Saam Motamedi on Twitter: https://twitter.com/saammotamedi Follow 20VC on Instagram: https://www.instagram.com/20vchq Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com Subscribe to our Newsletter: https://www.thetwentyminutevc.com/contact ----------------------------------------------- #20vc #harrystebbings #podcast #saammotamedi #greylockpartners #venturecapital #founder #startup #fintech

Saam MotamediguestHarry Stebbingshost
Jul 14, 20241h 7mWatch on YouTube ↗

At a glance

WHAT IT’S REALLY ABOUT

AI Bubble, Overpriced Series B, And Why $1M ARR Misleads Investors

  1. Greylock partner Saam Motamedi argues that today’s AI and Series B markets are in an even more distorted bubble than 2021, driven by irrational buyers and exuberant valuation multiples disconnected from public comparables.
  2. He explains why classic heuristics like “$1M ARR for Series A” are flawed, emphasizing founder quality, market size, and product defensibility over early revenue milestones.
  3. Across stages, he outlines how Greylock underwrites expensive seeds, thinks about ownership vs. price, and when they will or won’t lead follow-on rounds—challenging notions like signaling risk and “playing the game on the field.”
  4. Saam also discusses why now is a uniquely good time to build horizontal SaaS platforms in the AI era, how he evaluates foundation models vs. applications, and what younger investors should actually optimize for in their careers.

IDEAS WORTH REMEMBERING

5 ideas

Today’s AI and Series B markets are more dislocated than 2021.

Seed and growth-stage AI companies are raising at 100–200x revenue while best-in-class public software trades at 15–20x, implying most investors are assuming unrealistically persistent growth or ignoring eventual public market benchmarks.

Valuation matters less than ownership and power-law outcomes at seed.

Debating $20M vs. $30M post-money at seed is largely irrelevant if the company becomes a true outlier; what matters is being in the very few companies that can reach hundreds of millions of ARR, not optimizing minor entry deltas on middling outcomes.

$1M ARR as a Series A milestone is a misleading heuristic.

Many companies get to $1–2M ARR and then stall; investors should start with founder quality and market dynamics, using ARR only as a secondary, partial signal of product–market fit—not a gate for writing a check.

Great SaaS opportunities emerge when data model, delivery model, and interface all shift.

Generative AI is changing how data is structured/queried (less rigid schemas), how software is priced (hybrid seat + work-based models), and how users interact (agents instead of static UIs), reopening the chance to build new Salesforces, Workdays, and ServiceNows.

Application-layer AI investing is more similar to traditional SaaS than many think.

Despite discourse about “wrappers,” Saam evaluates AI apps on the same fundamentals as SaaS: deep workflow integration, stickiness, pricing power, and distribution advantages—not on novel model tricks alone.

WORDS WORTH SAVING

5 quotes

We are in an exuberant AI bubble, and we may not even fully appreciate how big of a bubble we’re in.

— Saam Motamedi

I really wonder if the Series B asset class as a whole is positioned to make money this vintage.

— Saam Motamedi

It drives me crazy when I hear, ‘Your checklist for the Series A: number one, a million dollars of ARR.’

— Saam Motamedi

Most people in venture capital are not helpful.

— Saam Motamedi

I sincerely believe it is the best time in a long time to be building SaaS companies and investing in SaaS.

— Saam Motamedi

Current AI investing environment and bubble dynamicsSeed and Series A pricing, ownership, and risk-reward tradeoffsWhy $1M ARR is a poor Series A filter and how to really evaluate companiesSeries B/growth market froth, irrational capital, and vintage returnsApplication-layer AI vs. foundation models and defensibilityReinventing SaaS systems of record through data, delivery, and interface shiftsVenture firm strategy: reserves, signaling, incubation, and junior investor careers

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