Greylock’s Saam Motamedi on How Venture Firms Endure | Ep. 37

1. 0:00 – 1:32

   Intro

   1. SMSaam Motamedi0:00

      Palo Alto and Workday both started at Greylock at the same year in the same office, two thousand and five San Mateo office. And Aneel obviously, and Dave Duffield started Workday, Nir Zuk started, uh, Palo Alto. Ashim, you know, wrote the first check, has been on- was on the board for eighteen years.

   2. JAJack Altman0:15

      Yeah.

   3. SMSaam Motamedi0:15

      I think he just rolled off recently.

   4. JAJack Altman0:17

      And these are fifty to hundred billion dollar companies?

   5. SMSaam Motamedi0:18

      I think Palo Alto is like a hundred forty billion dollar company-

   6. JAJack Altman0:21

      Hundred and forty.

   7. SMSaam Motamedi0:21

      Workday's, I, I don't know, between fifty and a hundred.

   8. JAJack Altman0:23

      Yeah, big.

   9. SMSaam Motamedi0:23

      Right? These are big businesses.

   10. JAJack Altman0:25

       Crazy.

   11. SMSaam Motamedi0:25

       Right? And by the way, we've started-

   12. JAJack Altman0:26

       Now there's Abnormal.

   13. SMSaam Motamedi0:27

       Been part of starting Abnormal, Sumo Logic, which went public.

   14. JAJack Altman0:29

       Yeah.

   15. SMSaam Motamedi0:30

       Uh, several companies-

   16. JAJack Altman0:31

       Okay, so Greylock's good. But before we get to Greylock being good, like, why is this [laughing] ? [upbeat music] All right, Saam, I'm happy to be here with you. This will be hard to stay serious, but we'll find our way. You and I talk a lot. We text many times a day.

   17. SMSaam Motamedi0:42

       I think we're in, like, what? Twelve different text groups.

   18. JAJack Altman0:44

       There was a joke, um, my wife and I had when we were sitting at dinner one time, and I was like... I, I was realizing, I feel like I have so many friends. It turned out that it was the same configuration of, like, three people, nine times, and they're all you.

   19. SMSaam Motamedi0:56

       But isn't that- doesn't that make you happy?

   20. JAJack Altman0:57

       Yeah. Before we start, by the way, do you have any products you want to plug or things you need to get off your chest?

   21. SMSaam Motamedi1:02

       I just got this new standing desk- [chuckles]

   22. JAJack Altman1:04

       Okay. [chuckles]

   23. SMSaam Motamedi1:04

       -from Design Within Reach. First of all, it's a standing desk that actually looks good. I don't know if the videos can see these, but these are-

   24. JAJack Altman1:11

       These aren't what we want.

   25. SMSaam Motamedi1:11

       These aren't what we want.

   26. JAJack Altman1:12

       By the way, mine already... Mine just arrived.

   27. SMSaam Motamedi1:14

       Yeah, mine arrived Friday. [laughing]

   28. JAJack Altman1:16

       Okay. It is really good, though.

   29. SMSaam Motamedi1:17

       But the middle is leather, and so I think the mouse just glides beautifully.

   30. JAJack Altman1:19

       We do have a memetic product thing going with our friends, where everything that one person buys, everybody ends up with.
2. 1:32 – 4:11

   Greylock turning 60 this year

   1. SMSaam Motamedi1:32

      it warm.

   2. JAJack Altman1:32

      I'm gonna start with a serious topic. I didn't realize this before, but when I did research prepping for, for you, Greylock started in nineteen sixty-five. Sixty years. I can understand, like, a firm being successful since twenty fifteen and evolving. I kinda get, like, even coming from the nineties, although that seems still, like, a lot to navigate. But in nineteen sixty-five, there wasn't the internet. Like, there wasn't like a TI-83. There wasn't, like, anything. So, like, what was happening in nineteen sixty-five?

   3. SMSaam Motamedi1:58

      It's interesting. Greylock turns sixty years old this year. Um, our understanding, and, like, no one keeps an official record of this, is we're the oldest venture firm in the US to have started with multiple limited partners, and we sort of pioneered the GP-LP relationship that underpins-

   4. JAJack Altman2:11

      Everybody else was, like, a family office or something.

   5. SMSaam Motamedi2:13

      The, the firms at the time were typically managing capital on behalf of a single family.

   6. JAJack Altman2:16

      Yeah.

   7. SMSaam Motamedi2:16

      Greylock starts as an East Coast firm. Uh, it actually moved to the West Coast in the two thousands, and it's gone through generations of, of partners and generations of investing. And one of the things that's interesting about the firm is, like, we've navigated completely different sectors. So, like, if you rewind... B- by the way, it's interesting, we have some of the original partner group is still alive-

   8. JAJack Altman2:34

      Wow

   9. SMSaam Motamedi2:34

      ... and comes to our limited partner meetings.

   10. JAJack Altman2:36

       And they're ninety?

   11. SMSaam Motamedi2:37

       In their nine- in their nineties.

   12. JAJack Altman2:38

       Yeah.

   13. SMSaam Motamedi2:39

       And so I talked to them about, like, how was venture in the sixties and the seventies? Well, the first thing is, like, there's no internet.

   14. JAJack Altman2:43

       Yeah.

   15. SMSaam Motamedi2:44

       So how do you find companies?

   16. JAJack Altman2:44

       Yeah.

   17. SMSaam Motamedi2:45

       It turns out, they would buy newspapers of different cities, look in the classified sections for job postings, because that was an indication that a company was emerging and hiring, and then they'd fly to the city, show up at the office, and meet the entrepreneur. You know, decisions today move pretty quickly.

   18. JAJack Altman3:01

       Yeah.

   19. SMSaam Motamedi3:01

       You know, term sheets happen in days.

   20. JAJack Altman3:03

       They had, like, a year.

   21. SMSaam Motamedi3:03

       Six months.

   22. JAJack Altman3:04

       Yeah.

   23. SMSaam Motamedi3:04

       And by the way, what was the investment size they were contemplating?

   24. JAJack Altman3:06

       A million dollars.

   25. SMSaam Motamedi3:07

       Two hundred thousand.

   26. JAJack Altman3:08

       Yeah, that's crazy.

   27. SMSaam Motamedi3:09

       So you take six months to make a two hundred thousand dollar investment decision.

   28. JAJack Altman3:11

       How big was the first Greylock fund, do you know?

   29. SMSaam Motamedi3:13

       I don't know.

   30. JAJack Altman3:13

       Like, small?
3. 4:11 – 8:59

   What’s persisted since 1965

   1. SMSaam Motamedi4:11

      software.

   2. JAJack Altman4:11

      So what I'm curious about is, like, we were talking about this a little bit yesterday, but like, venture firms, for the most part, have like a run, and then they mostly don't make it.

   3. SMSaam Motamedi4:20

      Yeah. Yeah.

   4. JAJack Altman4:20

      There's a small number-

   5. SMSaam Motamedi4:21

      Yeah

   6. JAJack Altman4:21

      ... that do.

   7. SMSaam Motamedi4:22

      Yeah.

   8. JAJack Altman4:22

      Greylock's obviously-

   9. SMSaam Motamedi4:23

      Yeah

   10. JAJack Altman4:23

       ... like, I think, like, the oldest I can think of, basically.

   11. SMSaam Motamedi4:25

       Yeah.

   12. JAJack Altman4:25

       What is consistent from nineteen sixty-five till now? Do you think there is a thread that stuck, or is it just constant reinvention, and it's like the whole thing's different at this point?

   13. SMSaam Motamedi4:35

       There are some core dimensions that have persisted since 'sixty-five, and then I think critically, the firm has continued to reinvent itself, and I think absent both those things being true-

   14. JAJack Altman4:44

       Mm-hmm

   15. SMSaam Motamedi4:44

       ... like, Greylock-

   16. JAJack Altman4:45

       Yeah

   17. SMSaam Motamedi4:45

       ... wouldn't be Greylock in twenty twenty-five.

   18. JAJack Altman4:46

       So what do you think stuck? Like, what sticks?

   19. SMSaam Motamedi4:48

       I think the number one thing is just the core values and ethos of the firm, right? And this is a firm that was founded on a service mindset. Actually, like, there's this really interesting letter one of the original partners wrote to the partnership that I found, like, a few years ago, and I read it. And he was... I think he wrote it as he was, like, leaving, you know, sort of graduating. It was sort of a reminder to the partners of what the core ethos of Greylock is, and in it, there's a line I love, which is, "That the ambition of every Greylock partner should be to win the Oscar for the best supporting actor to the entrepreneur." And in that is the ethos of the firm, which is, we're a service-oriented firm. We're a people-oriented firm. We don't- we're not the stars of the show. We do very little press. We do very little marketing. But we wanna be the person who is in the founder's corner in the first call when something's going wrong. And that core ethos of, like, "This is a service job," has persisted throughout the generations and decades, and that people orientation has also persisted. Many other things have evolved.

   20. JAJack Altman5:41

       Yeah.

   21. SMSaam Motamedi5:41

       Like, the sectors we invest in. We're now a Bay Area, a Bay Area-based firm. We used to be an East Coast-based firm, right? The things we look for in partners-

   22. JAJack Altman5:49

       Mm-hmm

   23. SMSaam Motamedi5:49

       ... the speed at which we operate, like, all of this has been very fluid, and we've reinvented ourselves. But I think that core ethos and guiding north star has not changed.

   24. JAJack Altman5:56

       Is being not loud and external and brand and press, is that core, or is that a evolving thing?

   25. SMSaam Motamedi6:04

       It is our core ethos, and we will never be the loudest. Um, but I think if you put- if you built, like, a spectrum, right?

   26. JAJack Altman6:10

       Yeah.

   27. SMSaam Motamedi6:10

       And a one was like, you know, there's no website-... and there's no pers- you know, there's no firm-related marketing ever, and a ten is the firm's a marketing machine-

   28. JAJack Altman6:18

       Yeah

   29. SMSaam Motamedi6:18

       ... and it, it has an investment arm appended onto it. I think you have to question, like, in the current environment, can you stay at a one, or do you need to go to, like, a three or four?

   30. JAJack Altman6:25

       Right.
4. 8:59 – 11:34

   Apprenticeship

   1. SMSaam Motamedi8:59

      sort of developed.

   2. JAJack Altman8:59

      I feel like one of the dynamics that has to happen is the senior partners have to have... or the, by senior, I mean, older partners have to have, like, a generous mindset to the younger partners. Like, if you're not willing to say, "I know this company's really good, but I'm actually not gonna bear hug it, I'm going to let my younger partner take a lot of that relationship on," like, it won't work, right?

   3. SMSaam Motamedi9:20

      Exactly. This all comes back to even, like, how we run the firm, right? So, for example, like, you know, many firms, when they think about, uh, investments and attribution, they think a lot about who sourced the opportunity.

   4. JAJack Altman9:28

      Mm-hmm.

   5. SMSaam Motamedi9:28

      Right? And the person who sourced it is the one who does it and the one who gets the credit, and if you're a young person, the way you progress in the firm is you source amazing opportunities. We don't use that language at Greylock. We use the language: Were you causally impactful to a successful investment? That could mean you sourced it. It could mean you built a prepared mind, which enabled us to make a quick decision. It could mean you helped us win the opportunity. It could mean after we got into the opportunity, you, you know, were on the board and-

   6. JAJack Altman9:51

      Yeah

   7. SMSaam Motamedi9:51

      ... and did a bunch of great work. Everyone strives to be causally impactful on successful investments, and what that does is it creates the right set of incentives and orientation. Literally, like, if you were in our partner meetings, right, when a senior or more tenured partner intersects an opportunity, their first reflex is: Can I get one of my younger partners into this opportunity as the primary alongside me? Because at the end of the day, like, that's what's gonna make that person successful, which is what's gonna make the firm successful.

   8. JAJack Altman10:16

      Does it require, like, a big enough gap then? Like, I feel like one of the things that can be hard is, like, if somebody's only X number of years in, it's hard for people to hand things off to somebody who's just, like, a little click below. Like, it's almost easier when you have these partners that are wildly successful already, who have been doing it for a long time. Like, does that... Is that part of the way you think about it? Is it easier to hand it off to somebody twenty years younger than five years younger?

   9. SMSaam Motamedi10:37

      I don't think so. Like, I, I think the, the orientation for us is... Well, first is, should, should we make the investment? That's the number one question. Independent of any individual dynamics, like, should Greylock try to be- earn this founder's trust and right to invest? And then the second question is: What does the founder want, right? And, like, in everything, that's how we approach, you know, uh, sponsorship, if you will, which is, if you're the founder, we're like, "Hey, Jack, what do you want? And here's, here's what we think the different people can offer, but, like, you should make that decision." But then let's put those two aside, and now let's say, "Okay, those two things check out." Our orientation is always, like, at any moment in time, who on the team is best suited to take on this project? And it's not about, like, is the gap, you know, ten years or five years. It's like, hey, if, if this person has more capacity and has the time to go dedicate to this company and work in service of this company, and they didn't source the opportunity, great, like, let's have them go do it. If this person is the one who built a prepared mind on this market area and, you know, happened that this other partner sourced the opportunity, it makes more sense-

   10. JAJack Altman11:31

       Mm-hmm

   11. SMSaam Motamedi11:31

       ... for the person who actually understands the space to go sponsor the investment.

5. 11:34 – 16:29

   What's durable in venture

   1. JAJack Altman11:34

      When you think about, like, a venture firm persisting over, let's forget sixty years, let's just take, like, a decade. When you think about that, what do you think are the actual components that are, like, durable? Like, what are the things that hang on through teams and from fund to fund? Like, what persists in a venture firm?

   2. SMSaam Motamedi11:52

      So I think a couple of things. One is what I- we started with, which is: What are the core values and ethos of the firm? I think that gets embedded in the DNA and persists, and part of that is also: What's the approach to the job?

   3. JAJack Altman12:02

      Mm-hmm.

   4. SMSaam Motamedi12:03

      What does it mean to be a venture capitalist? What does it mean to be a board member? And that gets trained in the new generation of people, and that does get passed on.

   5. JAJack Altman12:10

      Mm-hmm.

   6. SMSaam Motamedi12:10

      So that's one dimension.

   7. JAJack Altman12:11

      Yep.

   8. SMSaam Motamedi12:12

      The second dimension is the firm's brand, right? And at some level, my mental model on firm's brand is the following, which is, you're a new company, nobody knows who you are. You come raise money from Greylock. We stake our credibility on you.

   9. JAJack Altman12:22

      Yep.

   10. SMSaam Motamedi12:23

       ... you now go to customers, and, and now cust- you're like, "Hey, I'm Greylock-backed." Now, the CIO of this enterprise company is like: "Great, I'll take a risk, because last time I took a risk on a Greylock-backed startup, it worked for me." The engineer is like: "Oh, I'll take a risk, because look at all these other great companies this firm has been in."

   11. JAJack Altman12:35

       For sure.

   12. SMSaam Motamedi12:36

       And eventually, your brand becomes bigger than Greylock's, and it accrues back to the firm.

   13. JAJack Altman12:40

       Yep.

   14. SMSaam Motamedi12:40

       And now the firm goes and stakes that on the new entrepreneur.

   15. JAJack Altman12:43

       Yep.

   16. SMSaam Motamedi12:43

       That flywheel, I think, persists. It can erode if you don't keep making terrific investments-

   17. JAJack Altman12:47

       Yeah, but it has some amount of time.

   18. SMSaam Motamedi12:49

       But it has some time, a- amount of time.

   19. JAJack Altman12:50

       Yep.

   20. SMSaam Motamedi12:50

       And then the third is the network, and there's a two-sided network. There's the sort of industry network-

   21. JAJack Altman12:56

       Mm-hmm

   22. SMSaam Motamedi12:56

       ... the companies you're a part of, and I, I'll come back to that in a moment, and then there's the limited partner relationships. It's so interesting how much compounding there is in the network and what we do, right?

   23. JAJack Altman13:04

       Yeah.

   24. SMSaam Motamedi13:04

       And there's so many, like, stories I could tell you, Jack, but I'll, I'll tell you one that I think is interesting. You know, rewind the clock, Greylock moves to the Bay Ar- you know, to be Bay Area-based in the mid-two thousands.

   25. JAJack Altman13:13

       Yep.

   26. SMSaam Motamedi13:13

       Okay? We're in San Mateo. It's two thousand and seven, okay?

   27. JAJack Altman13:16

       Okay.

   28. SMSaam Motamedi13:17

       There's a star product manager at Google named Josh McFarland. We... This predates me, but we reach out to him to try to recruit him onto the investment team at Greylock. He's like: "Hey, you know, spent a bunch of time. I don't wanna be investor, but I'm really glad I met you guys because I wanna start a company." So we're like: "Great. Leave Google, come be in the IR office, and start a company." He leaves Google, comes and sits at the Greylock office, initiates a company at Greylock called Teleport. It's an ad tech company leveraging, you know, ML techniques for different ad tech use cases. He hires a young engineer from Google named Sanjay as one of his founding engineers, and kind of a few years in, business is progressing. He acqui-hires a small company called AdStack, and has two co-founders, a founder named Evan Ryser and a founder named Thanos Baskos, okay? A few years goes by, this company gets acquired by Twitter. Uh, it's like five hundred million dollar acquisition, largest acquisition Twitter did, you know, pre, uh, you know, becoming X. The head of engineering at the company is a guy named Wade Chambers, who leaves and comes and becomes an EIR at Greylock, an exec in residence. He then introduces Greylock to Sanjay, that founding engineer, and Evan, that initial product manager-

   29. JAJack Altman14:16

       Yep

   30. SMSaam Motamedi14:16

       ... who were ending their time at Twitter and beginning to think about what's next. We start working with them nights and weekends and conceive a new company that becomes Abnormal AI. We fund that company in twenty eighteen. That company is now, you know, second fastest-growing security company of all time, you know, late-stage private, you know, could be a public company.
6. 16:29 – 19:33

   Greylock’s ethos

   1. SMSaam Motamedi16:29

      effect.

   2. JAJack Altman16:29

      Okay, I wanna come back to the depth thing and put it in contrast to another thing I know you care about a lot, which is, like, seeing enough of the market.

   3. SMSaam Motamedi16:36

      Yeah.

   4. JAJack Altman16:36

      And I just wanna pull that open, but before we do, the first thing you mentioned was, like, the values and ethos and that, like, that's persistent. Can you describe what it is in Greylock's case specifically? Like, I'm a new hire. I just joined. I'm your Padawan. What are you trying to teach me on the brand and ethos?

   5. SMSaam Motamedi16:52

      I think there's, like, five or six dimensions. The first, which I, I don't mean this to be trite, is, like, we are in the customer service business, and our cu- we have two sets of customers, entrepreneurs and LPs, but if we do right by the entrepreneurs, we do right by the LPs, so really, we're focused on the entrepreneur. I think you have to have that mindset, and it's a hard mindset to teach.

   6. JAJack Altman17:08

      Do you think not the majority of people in venture do?

   7. SMSaam Motamedi17:11

      I think everybody in the abstract can say they have the mindset. I think in Christmas twenty twenty-four, you know, when we're on six hours of Zooms, helping a, a company navigate a last-minute financing, like, that really tests do you understand what it means to be in the service mindset? And our, our view is, like, if the entrepreneurs we're in business with aren't working, we're working, and, like, if they need our help, we're on Zoom, independent of where we are. That's, like, hard to actually do day in and day out.

   8. JAJack Altman17:34

      And you're saying it's a level that is different than the median venture investor?

   9. SMSaam Motamedi17:38

      I am consistently disappointed with what I see, uh, from the median venture. Uh, put aside the median, I'm consistently disappointed by what I see from venture investors at firms we would consider top-tier firms.

   10. JAJack Altman17:49

       And you think that it's a lack of effort, or you think it's a lack of understanding what needs to be done?

   11. SMSaam Motamedi17:53

       It's an incentive problem, right? And the model is fault, right? And sorry, now we're, like, ov- o- overlooking the topic.

   12. JAJack Altman18:00

       No, it's good.

   13. SMSaam Motamedi18:00

       But look, I think fundamentally, for any venture capitalist, you have to have clarity or on what's your core economic engine. Are you in the carry business, or are you in the fee business? And if you're in the carry business, then the only way you do well is if your entrepreneurs do well, right? If you're in the fee business, actually, your success is... It's not completely orthogonal, but it's, it's less tightly coupled. What's happened to a lot of, I'd say, firms that historically would- we, we would have viewed as our competitors, is they've become scaled asset managers that are running very large portfolios.

   14. JAJack Altman18:28

       Yeah.

   15. SMSaam Motamedi18:28

       And by the way, they're not-- it's not a dumb economic strategy, like I-

   16. JAJack Altman18:31

       No, because the best way for them to make money is to deploy money.

   17. SMSaam Motamedi18:33

       Correct, and by the way, they can build an index of companies, and then they can track those companies, and they can see the top ones, and they can double down and concentrate a lot of capital into those companies. But-... what it means is now when you're the, the partner on the team, and you have, I'm just making up a number, twenty-five company relationships, and maybe two of them are of consequence in the way that you think about the world, it, it may actually be irresponsible for you to jump on the phone, you know, with the entrepreneur on, like, the company number seven on your- in your portfolio and help them navigate, you know, a h- a financing that's hard to pull together, when, like, instead, you could be focused on the next thing to go deploy twenty million dollars to. So it's not that you're not working hard-

   18. JAJack Altman19:09

       Yeah.

   19. SMSaam Motamedi19:09

       -it's just, like, the incentives have, have, have changed.

   20. JAJack Altman19:12

       There's also an incentive problem if you don't think you're gonna stay somewhere for fifteen years. So you gave this example of, like, how one thing flows to the next, flows to the next, but those all stayed under the Greylock umbrella-

   21. SMSaam Motamedi19:22

       Yes

   22. JAJack Altman19:22

       ... more than the per- I mean, you're, probably the person's relationship-

   23. SMSaam Motamedi19:25

       Yes

   24. JAJack Altman19:25

       -was a thing.

   25. SMSaam Motamedi19:26

       Yes.

   26. JAJack Altman19:26

       You know, like, you met with this person to try to convince them to join. You know, you could have probably not been at Greylock-

   27. SMSaam Motamedi19:30

       Yes

   28. JAJack Altman19:30

       ... and that would still exist. But, like, you know, a lot of it endures

7. 19:33 – 24:44

   Incentive misalignments

   1. JAJack Altman19:33

      with the brand. If you're at one of these firms, and you're coming up as, like, a junior partner or something like that, and you don't think you're gonna be there in seven years, your incentives are to just find a winner more than to help an existing company.

   2. SMSaam Motamedi19:44

      Totally, and, and there are m- many examples now of people, basically... There's, like, this principal-agent problem, where the new young partner is like: "I just wanna put as many shots on goal as I can, because if I hit one thing-

   3. JAJack Altman19:55

      Yeah, I'll just get-

   4. SMSaam Motamedi19:56

      -and then I'll just switch firms."

   5. JAJack Altman19:57

      Totally.

   6. SMSaam Motamedi19:58

      "I'll switch firms. I'll, I'll wipe the slate clean. I'll come in in a more senior level, and I'll start from scratch."

   7. JAJack Altman20:02

      "And I'll have been an investor in X, and that's all that matters."

   8. SMSaam Motamedi20:04

      Yeah, and, I mean, we all know tons of people who are doing this, right?

   9. JAJack Altman20:08

      Yeah.

   10. SMSaam Motamedi20:08

       And it's cr- and it, by the way, it's really bad for founders. Like, we were talking about this before the show, right? But, like, you know, I've had a few- we both have had a bunch of companies raise follow-on rounds recently, right?

   11. JAJack Altman20:16

       Yeah.

   12. SMSaam Motamedi20:16

       And, you know, these companies get multiple term sheets, and then, you know, you get in a room, and you're like-

   13. JAJack Altman20:19

       Yeah

   14. SMSaam Motamedi20:19

       ... "Okay, what do, what do you wanna optimize for?" It's the first time this year where I've been like: "Guys, the number one thing we need to optimize for is, is the person who's joining the board of the company likely to still be at their firm in five years?" To me, that's more important than, like, brand, you know, experience, track record, 'cause fundamentally, it's a people business.

   15. JAJack Altman20:35

       It's so disruptive when it happens.

   16. SMSaam Motamedi20:36

       And it's so disruptive, and it happens so frequently now.

   17. JAJack Altman20:38

       And the person who comes on next doesn't care in the same way, 'cause they're never gonna get credit for it, so they're never gonna care in the same way.

   18. SMSaam Motamedi20:43

       Well, not only that, like, you have... Like, I think one thing that founders don't fully appreciate is, like, you go into a business with a firm. Do you really understand how decisions at that firm get made? You have your partner, but is your partner a decision-maker? Are they trusted by the decision-makers? Do they have influence? Are they gonna be there? Because, as you know, like, these journeys are not all up and to the right. Like, many of... By the way, it's really interesting. We were looking at the data recently. Many of our biggest successes had years where the businesses were in complete turmoil, like, flat years, financings that couldn't come together, and so the question is, who's going to step up when that happens? And the problem is, already, if you're a board member, you don't really understand the company as well, like, super well at all, 'cause all the context is inside the organization. But now, if you're the board member, and I'm your partner, and we're two partners in a firm, I really don't understand what's going on.

   19. JAJack Altman21:27

       Yeah.

   20. SMSaam Motamedi21:27

       And so if you're somebody who's not high trust inside the organization, isn't a real decision-maker, and isn't there, now the company's in a really jeopardized position-

   21. JAJack Altman21:36

       Mm-hmm

   22. SMSaam Motamedi21:36

       ... because one of their major insiders is not really supporting them in the way they need. And we see this happen time and time again in, in our companies when we work with other firms.

   23. JAJack Altman21:44

       As firms get bigger, which they obviously are, does that naturally lead to more turnover? Like, are those two things, like, inextricably linked?

   24. SMSaam Motamedi21:51

       I think it depends on the strategy of the firm. Like, I think you could imagine firms that get larger but maintain a s- a very concentrated approach, a small set of relationships.

   25. JAJack Altman22:01

       So what about a large partnership?

   26. SMSaam Motamedi22:03

       Absolutely, yeah.

   27. JAJack Altman22:04

       Okay.

   28. SMSaam Motamedi22:04

       And I, I think empirically, that's what the data would show. Like, the turnover in venture today is much more dramatic. A- and let's just take, whatever, top eight, top ten, top fifteen firms-

   29. JAJack Altman22:12

       Yep

   30. SMSaam Motamedi22:13

       ... the turnover at the partner level is much higher than it's ever been.
8. 24:44 – 29:28

   Breadth vs depth in venture

   1. JAJack Altman24:44

      Okay, I wanna talk about breadth and depth in venture.

   2. SMSaam Motamedi24:47

      Yeah.

   3. JAJack Altman24:47

      And everything you've talked about so far is sort of an, um-... you know, you advocating for depth in a sense, and you're talking about these examples where the close relationship with the company leads to more, the small team, which, you know, sort of implies a small portfolio and all these other things. But I also know from knowing you well, that you care a lot about seeing a lot of the market, and about not sort of missing out on kind of like what's happening and having a pulse. And I'm just curious how you think about those two, 'cause they seem at odds.

   4. SMSaam Motamedi25:16

      Yeah. So taking a step back, like at, you know, at Greylock, what, what do we care about? We care about being meaningful partners to the most meaningful companies in every vintage, right? And we don't need to be in every company, right? In a given fund, we'll do something like twenty to thirty core relationships, and the math would suggest that if three to seven of those go on to become really important companies, we'll have very successful funds. So by definition, we don't need to be in every company. That said, we have to be extremely paranoid about are we seeing the best entrepreneurs and seeing the best opportunities? And so that's why despite the, let's say, focus and depth of relationship, we care a lot about our capital competing against the opportunity set in the marketplace. And so, for example, one of the things we were talking about before is like, we every single week tr- like, there's six core sectors we invest in at Greylock. For all of those sectors, we have a list of the competitors we most admire, firms and individuals, and every week we track all the financings that have gone and done by those groups, and we ask ourselves the question: Did we see or have the right to do that financing? Not like, did the... You know, did we meet it with eight hours to go before a decision got made?

   5. JAJack Altman26:27

      Yep.

   6. SMSaam Motamedi26:27

      But were we there, you know, ten days before a decision got made?

   7. JAJack Altman26:30

      In position.

   8. SMSaam Motamedi26:30

      In position, real shot to win the opportunity. And if that number is, like, not seventy to seventy-five percent, like, that's a big problem, right? 'Cause we, we respect our competitors in the business. If we're fundamentally making investments in a set without seeing the things that they're seeing, it's really arrogant to assume that we're seeing the best opportunities. And so you, you need to see that cross-set, but then you have to remind yourself, and it's [chuckles] really hard, but you have to remind yourself that so few companies matter, so few founders are truly-

   9. JAJack Altman27:00

      Yeah

   10. SMSaam Motamedi27:00

       ... iconic.

   11. JAJack Altman27:01

       Yeah.

   12. SMSaam Motamedi27:01

       So few markets can support and have the characteristics to support these outliers. And so most things that top-tier venture capital fund will not go to successful outcomes.

   13. JAJack Altman27:10

       So I get sort of like, logically-

   14. SMSaam Motamedi27:12

       Yeah

   15. JAJack Altman27:13

       ... but, like, emotionally-

   16. SMSaam Motamedi27:14

       Yeah

   17. JAJack Altman27:15

       ... it seems like a very different head space. How do you avoid the FOMO chasing of deals where, you know, you heard Benchmark's looking at something, so we should be looking at something 'cause Benchmark's smart, but, like, we really should, like, continue working quietly on this, you know, new company we're initiating with this person we've had a relationship for six years, and going and spinning our wheels this week on something just 'cause we heard some top tier is chasing. Like, how do you not get lost?

   18. SMSaam Motamedi27:41

       By having real clarity in what you're looking for, and then the ability to process and make decisions very quickly. So, you know, it's interesting, like, over my tenure at Greylock, I've been at the firm for nine years, there's this pendulum that swings on, like, everything, right? 'Cause we're constantly reinventing ourselves. So there's periods when we wrote these really long investment memos, these, like, fifteen-page memos, all this, like, work, right? And then, like, there's periods where we have, like, no investment memo, and, like, it's two paragraphs and, like, you know, y- you know, like, the Midwit take would be like: "Oh, well, investment memos are more rigorous. Like, if you write an investment memo, you're making a better investment decision." But it's like, not really, 'cause, like, we're primarily doing first check investing, right?

   19. JAJack Altman28:16

       Yeah. You're betting on people.

   20. SMSaam Motamedi28:18

       We only care about two things. One is, who's the person?

   21. JAJack Altman28:20

       Yeah.

   22. SMSaam Motamedi28:21

       And the second is, what's the general area in which they're building in? And, like, if those two things are bright green, we're ready to invest, and we've made decisions in hours. And if those two things are not bright green, like, yeah, we can go call a bunch of customers and, like, call the design partners and, like, you know, learn some stuff about, you know-

   23. JAJack Altman28:35

       Yeah

   24. SMSaam Motamedi28:35

       ... what they're building, [chuckles] but, like, we're not gonna get to a yes on the decision. And so I think a big thing for us over the last few years has been continually refining what is it that we're looking for, and then if we, if we intersect an entrepreneur who's in market and, you know, gonna get seven or eight term sheets, we wanna process that opportunity. But, but we wanna spend a few hours with the entrepreneur. We wanna talk to a few people who know him or her. We wanna understand the area they're building in, and if those things are really bright green, then we'll run really hard to earn their trust and right to win, and if not, we ha- we don't have the FOMO of passing and knowing that one of our top-tier competitors is gonna do the deal.

   25. JAJack Altman29:05

       How do you sort of manage people to this? Like, I think performance management and venture is just, like, probably way under-discussed, under-thought about. Like, it's thought about much more in operating companies, I think. Some of it's because it's really hard. You know, it's like, on some level, the only thing that matters is, like, what were the returns? But that takes forever. There's luck involved. There's, like, all this complicating stuff. So, like, how do you understand if somebody's doing a good job?

   26. SMSaam Motamedi29:27

       It's really

9. 29:28 – 34:00

   Managing the team on inputs

   1. SMSaam Motamedi29:28

      hard. We, in the last several years, have adopted what we call, like, an inputs-based approach to performance management. So we got together as a full partnership. It was right after COVID, so I wanna say in, like, twenty twenty-one, and we sat together in Napa for two days and we said: "Let's build a set of inputs that we would all agree. If we hired a new partner, Sally, tomorrow, and she excelled on all these inputs, she's highly likely to have strong outputs over time." Will it be in five years, three years, ten years? Hard to predict. There's luck. Because at the end of the day, what's a partnership? You and I are pooling together and saying, "Hey, we wanna share in each other's investment interests," right? And so if w- we need to agree on what it means to be a good investor, and then if we agree on that and someone's performing on those things, we can take a long-term view on people, and hopefully people get lucky early on, but if they don't and they keep executing the inputs, we'll take the bet that, you know, luck will come their way and the outputs will follow.

   2. JAJack Altman30:20

      What are the inputs?

   3. SMSaam Motamedi30:20

      So we have a document that has eighteen inputs, and it's across the dimensions of the job. So it's across, uh, C-

   4. JAJack Altman30:27

      [chuckles] Eighteen's a lot.

   5. SMSaam Motamedi30:29

      Eighteen's a lot, but, um, we want these things to be-

   6. JAJack Altman30:32

      Is it bucketed?

   7. SMSaam Motamedi30:33

      Yeah, it's bucketed.

   8. JAJack Altman30:33

      Okay.

   9. SMSaam Motamedi30:33

      So there's the four components of the job, which is, uh, uh, C, decide, when, build.

   10. JAJack Altman30:39

       Yep.

   11. SMSaam Motamedi30:40

       And then there's internal partnership.

   12. JAJack Altman30:41

       Mm-hmm.

   13. SMSaam Motamedi30:41

       Right? And so, for example, like, on C, one of the, um, uh, dimensions is, is did you see seventy-five percent?... of the seed and Series A opportunities that were done by your competitors in the sector that you're responsible for?

   14. JAJack Altman30:53

       At the indi- this is getting a little, maybe a little too, like, fine-tooth comb, but, like, at the individual level, do you care that they saw a certain percentage or that they were doing the inputs that led to, that would lead to seed?

   15. SMSaam Motamedi31:03

       I think a bit of- like, I think what you're asking is, like, okay, well, if someone's going and, like, pounding the pavement and hosting great events-

   16. JAJack Altman31:08

       Yeah, exactly.

   17. SMSaam Motamedi31:08

       - and, and outbounding to entrepreneurs, is that what matters, or is it the seventy-five percent number that matters? W- we measure the se- we, we measure the number, but then there's a qualitative sense of, like, are you doing the right set of activities?

   18. JAJack Altman31:18

       And if it's going wrong, you kinda dig into the inputs-

   19. SMSaam Motamedi31:20

       Correct

   20. JAJack Altman31:20

       ... to that output.

   21. SMSaam Motamedi31:21

       Correct.

   22. JAJack Altman31:21

       Yeah, yeah, yeah.

   23. SMSaam Motamedi31:21

       Correct. Another one that's, like, really basic is, like, we have a, um, a responsiveness SLA, because if you're in a service job, you've gotta be incredibly responsive. And so we literally measure each other on how long does it take to us to respond, both to, uh, the entrepreneurs we're in business with and internally.

   24. JAJack Altman31:35

       How can you measure that? You're not, like, going through someone's phone, so I'm like, okay...

   25. SMSaam Motamedi31:38

       Well, we're not going through someone's phone, but we collect feedback from the CEOs that people partner with, and then we also, uh, internally have a sense of this. And so what we do is we score each other one to five on these dimensions. So it's not like, you know, I know, "Hey, you're six hours-"

   26. JAJack Altman31:49

       Oh, god, there's, like, a three sixty going on.

   27. SMSaam Motamedi31:50

       Yeah, exactly.

   28. JAJack Altman31:51

       Yeah.

   29. SMSaam Motamedi31:51

       There's another one around domain leadership, right? Which is, are you... We do a lot of- internally at Greylock, we do these things called sector reviews.

   30. JAJack Altman31:58

       Mm.
10. 34:00 – 43:22

    Why incubations are so hard

    1. SMSaam Motamedi34:00

       Yeah.

    2. JAJack Altman34:00

       Okay, I wanna ask you a little bit about incubations, which I know you call initiations, but, like, Greylock is extremely good at starting companies. We were talking before about this, but, like, you've had, like, several that are really big, you know, like Palo Alto Networks, Workday. Like, people maybe don't realize that those were, like, started, like... I don't know if they were started in your offices or with your partners, but, like, they were, like, Greylock incubations, more or less. Can you talk about, first, like, why is it so hard? 'Cause, like, so many VCs do try to do them, and there's not that many good examples of them working, even though there's lots of attempts. So why are they hard?

    3. SMSaam Motamedi34:34

       Yeah, by the way, as you were speaking, I was reminded that, uh, Palo Alto and Workday both started at Greylock at the same year in the same office, two thousand and five, San Mateo office. And Anil, obviously, and Dave Duffield started Workday. Nir Zuk started, uh, Palo Alto. Ashim, you know, wrote the first check, has been on- was on the board for eighteen years.

    4. JAJack Altman34:52

       Yeah.

    5. SMSaam Motamedi34:53

       I think he just rolled off recently.

    6. JAJack Altman34:54

       And these are fifty to hundred billion dollar companies.

    7. SMSaam Motamedi34:55

       I think Pa- Palo Alto is, like, a hundred and forty billion dollar company.

    8. JAJack Altman34:58

       Hundred and forty.

    9. SMSaam Motamedi34:58

       Workday's, I, I don't know, between fifty and hundred-

    10. JAJack Altman35:00

        Fifty plus

    11. SMSaam Motamedi35:00

        ... right? These are big businesses.

    12. JAJack Altman35:02

        It's crazy.

    13. SMSaam Motamedi35:02

        Right? And by the way, we've started, we've been part of-

    14. JAJack Altman35:05

        And other abnormal

    15. SMSaam Motamedi35:05

        ... starting other- A- Abnormal, Sumo Logic, which went public.

    16. JAJack Altman35:07

        Yeah.

    17. SMSaam Motamedi35:08

        Uh, several companies. You made the joke of, like, we don't use the word incubate, but w- but we actually don't like that word, right? And, and the reason is, like, it comes back to: who is the core of the company? Is it the founder, or is it the VC firm?

    18. JAJack Altman35:21

        It's the VC firm, obviously. [chuckles] Cut. [chuckles] Go ahead.

    19. SMSaam Motamedi35:29

        And, and, like, our view is, to state the obvious, it's the founder. And like, and, like, uh, really, the way I think about it is there's a spectrum, okay? And on one bookend, you have, like, a company that's in momentum, you know, at five million of ARR, raising a Series A or Series B. And on the other bookend, you have, like, a person with no idea, right? And what we wanna do is we wanna intersect people as close to this left bookend as possible. Now, in some cases, they literally have no idea, and we co-develop the idea together. There are cases where they have an idea, but there's no team. There are cases where they have a team but no product.

    20. JAJack Altman35:57

        Mm-hmm.

    21. SMSaam Motamedi35:58

        And I was checking this over the weekend. In our current fund, billion-dollar vehicle, we're about eighty, eighty-five percent allocated. Ninety-three percent of our dollars are in companies where we back them at that stage, like, we were the first institutional capital in the company.

    22. JAJack Altman36:12

        Hmm.

    23. SMSaam Motamedi36:12

        And then our approach does not necessarily vary a lot based on whether or not we developed the idea or we just partnered with someone post-idea and, like, really helped support them, right? So, like, I think that's the s- the kinda area we're focused on. And then I would say the founder is the core, and then we're very focused on taking out the market risk before the company starts. And so, like, we think about things in... Uh, and actually, this is a model Ashim, I think, has perfected in his investing career, and I and others have learned from, which is sort of when you think about a company, you could think of two broad vectors of risk. There's market risk, and there's execution risk. And what we wanna do is pick opportunities where there's zero market risk and actually a lot of execution risk.

    24. JAJack Altman36:50

        Hmm.

    25. SMSaam Motamedi36:50

        Because in the execution risk, you build your moat.... product's hard to build, there's real technical IP, it's hard to take to market. So like, if you believe that the founders you back and the peop- the teams that are built around them are gonna be the es- best executing, it's actually good for there to be execution.

    26. JAJack Altman37:05

        All you need to believe is that they can do this hard thing.

    27. SMSaam Motamedi37:07

        Correct.

    28. JAJack Altman37:07

        But you don't have to wonder if it's done, whether it'll be valuable.

    29. SMSaam Motamedi37:10

        Correct. And, and not just like, will it be valuable, but like, then there's a lot of nuance. Like, okay, who's the end customer you're selling it to? Can, can that customer base be serviced by a go-to-market motion that's sort of unit economic attractive? How secular is the area? What are... Like, there's a lot that goes into, like, no market risk.

    30. JAJack Altman37:25

        Mm-hmm.
11. 43:22 – 52:38

    Finding alpha

    1. SMSaam Motamedi43:22

       very, very important.

    2. JAJack Altman43:23

       As you look around twenty twenty-six, and, you know, next year, and you think about where there's alpha in venture right now, you know, we've got obviously all the dynamics with AI behind us. We've got, you know, firms getting really large, we've got some that have chosen to stay small. You've got new entrants, you've got some of the big platforms that seem as dominant as ever. Like, what do you think are the strategies that you bet behind? Like, let's say you're an LP.

    3. SMSaam Motamedi43:46

       Yeah.

    4. JAJack Altman43:46

       Like, what, what strategies do you believe in right now, or-

    5. SMSaam Motamedi43:49

       Um

    6. JAJack Altman43:49

       ... setups do you believe in?

    7. SMSaam Motamedi43:50

       Yeah. So I'll give you a couple frames that I think about. One is, are you a market maker or are you a market taker, right? And by the way, market maker doesn't mean you create something, but it just means, did you create some proprietary opportunity or are you part of an auction process? And I'd say if you're a market maker, there's structurally more alpha than if you're a market taker.

    8. JAJack Altman44:08

       Yeah.

    9. SMSaam Motamedi44:08

       And like we talk about this in our friend group, uh, you know, we have this, like, first money and last money.

    10. JAJack Altman44:12

        The barbell.

    11. SMSaam Motamedi44:13

        The barbell.

    12. JAJack Altman44:14

        Let's talk about the... What- Tell, so what's the barbell?

    13. SMSaam Motamedi44:15

        But I think there's truth to that-

    14. JAJack Altman44:16

        Yeah, yeah

    15. SMSaam Motamedi44:16

        ... which is like, where are there real market makers in the current era of venture? One is the people who are investing at the start, and it doesn't mean you initiate, but you invest at the start.

    16. JAJack Altman44:25

        Yeah.

    17. SMSaam Motamedi44:25

        There's nothing there. You stake a lot of capital behind the person.

    18. JAJack Altman44:28

        I think there's also something that at the, at that front of the barbell, where you take something that's really raw, and you make it un-raw-

    19. SMSaam Motamedi44:36

        Exactly

    20. JAJack Altman44:36

        ... And the first person to sort of turn those ingredients into something that looks like a meal-

    21. SMSaam Motamedi44:40

        Yes

    22. JAJack Altman44:41

        ... there's a huge jump that happens-

    23. SMSaam Motamedi44:43

        Yeah

    24. JAJack Altman44:43

        ... from there.

    25. SMSaam Motamedi44:43

        Actually, a friend of mine gave me this analogy to venture, uh, like that part of venture connected to, like, movie production, right? And it's like, okay, you know, there's the founder, there's the talent, there's the customer.

    26. JAJack Altman44:51

        Yeah.

    27. SMSaam Motamedi44:51

        Right? There's the capital.

    28. JAJack Altman44:52

        Yeah.

    29. SMSaam Motamedi44:52

        And there's, like, that- that whole thing has got to sync.

    30. JAJack Altman44:54

        And when they're all disconnected, the whole price on that situation is way lower.
12. 52:38 – 59:18

    Greylock’s approach to portfolio services

    1. SMSaam Motamedi52:38

       been a part of.

    2. JAJack Altman52:38

       Okay, I want to talk a little bit about, um, some other aspects of the firm. So, um, I asked you this morning about portfolio services. I said: "Do you think that most portfolio, you know, services at venture firms work?" "Nah, not really." "Do Greylock's work?" "Yes." So can you explain to me why? First of all, like, why do you think they don't work that well?

    3. SMSaam Motamedi52:55

       Yeah.

    4. JAJack Altman52:56

       What do you do to make them work? 'Cause I agree. I mean, I take the view, uh, it's rare that they work, is my perception.

    5. SMSaam Motamedi53:02

       Well, you didn't work with Greylock.

    6. JAJack Altman53:03

       I haven't worked with Greylock. I would, I... It's a mis- it's a mistake.

    7. SMSaam Motamedi53:05

       It, it would've been special to work together.

    8. JAJack Altman53:06

       Maybe it's not too late, yeah.

    9. SMSaam Motamedi53:08

       Um, are you gonna start another company?

    10. JAJack Altman53:09

        Yeah, you can be, uh, on the board of AltCap.

    11. SMSaam Motamedi53:12

        I'd love that. I won't name the firm, but one of the major firms that invest a lot in portfolio services once asked me a question, like we... I was catching with someone there, and they're like: "Do you view portfolio services as in service of the company or in service of marketing for the firm?"

    12. JAJack Altman53:23

        Yeah, exactly.

    13. SMSaam Motamedi53:24

        I was like, "Obviously, the former." And they, they were like: "You're thinking about it absolutely wrong. It's, it's, it's only marketing."

    14. JAJack Altman53:31

        Mm-hmm.

    15. SMSaam Motamedi53:31

        "Like, if I do all these-- if I have all these people running around and doing these services, I'm doing them because I wanna convince the next entrepreneur that, like, I will be able to help them."

    16. JAJack Altman53:39

        By the way, it's also I wanna convince my LPs that we are scaling, and it's appropriate.

    17. SMSaam Motamedi53:44

        E- exactly.

    18. JAJack Altman53:44

        It's both.

    19. SMSaam Motamedi53:44

        I think, again, it comes back to, [chuckles] like, what's the ethos, and, like, do you view it as marketing, or do you view it as, like, I'm gonna go w- create value for the founders I'm in business with?

    20. JAJack Altman53:52

        Yeah.

    21. SMSaam Motamedi53:52

        And I'd say, for us, we view it as the latter, not the former, and that changes everything about how you approach it. Like, I'll give you a couple of examples about how we do it, right? One is, we call them specialist teams. They're not portfolio services. They're specialists because they're, like, extremely good at what they do. Like, uh, uh, like Glenn Evans, who runs our engineering recruiting, ran all of recruiting for Slack and before that, infrastructure recruiting for Meta in the heyday, right? He's got a team of, like, amazing recruiters, right? We have the same in exec. And so we treat people like first-class citizens. They sit in our weekly partner meetings. They're, like, a key part of every firm decision we make.

    22. JAJack Altman54:22

        Hmm.

    23. SMSaam Motamedi54:22

        And so there isn't this first-class, second-class culture. I tell them... I, I, I tell our team that, like, w- I would not be successful as an investor if I did not have the specialist support I have across, you know, recruiting, customer development, marketing, and the rest. So that's one dimension, which is just, like, how do you actually approach them? How integrated are they into the firm?

    24. JAJack Altman54:39

        Mm-hmm. Mm-hmm.

    25. SMSaam Motamedi54:40

        And then the second is, like, what's the impact they go have, and how intimate is the relationship they go build? And so, for example, like, um, and I don't wanna create a commercial for our, our, uh-

    26. JAJack Altman54:49

        Yeah

    27. SMSaam Motamedi54:49

        ... our specialist team.

    28. JAJack Altman54:49

        Let's pause this.

    29. SMSaam Motamedi54:50

        Although I'd, I'd be happy to if, if, if you- [chuckles]

    30. JAJack Altman54:52

        We'll chop this in post.
13. 59:18 – 1:08:10

    Assessing wild revenue ramps

    1. JAJack Altman59:18

       How do you read these companies that are, you know, having these wild revenue ramps, and, like, you know, obviously, those, like, correlate with this river, but, like, you also see just, like, forget the capital. You see these companies going, like, zero to a hundred in, like, no time. I know you've never... None of us have ever seen this before. What is sort of your, like, uh, zoomed-out sort of assessment of this situation?

    2. SMSaam Motamedi59:36

       I, I, I think that you have to, like, really decompose these businesses into, like, their underlying components and then measure their revenue and, and, like, think about their revenue in that context. So, for example, one misnomer that I see happening a ton is people are like: "Oh, this company is going zero to one hundred. We've never seen that happen before."

    3. JAJack Altman59:52

       Mm-hmm.

    4. SMSaam Motamedi59:53

       And it's like, that's true if you think about it as an enterprise company. What if you think about it as a consumer subscription company? There are many consumer a, uh, you know, apps, and s- like, when Facebook Marketplace got started in the App Store went live, there were many consumer utilities that went like, I don't know about zero to a hundred, but zero to, like, tens of millions of, quote unquote, "ARR"-

    5. JAJack Altman1:00:09

       Yep

    6. SMSaam Motamedi1:00:09

       ... very, very quickly. But they were not ARR businesses. They were, like, monthly, monthly recurring businesses. They had very low gross reten-- you know, l- low gross retention. The very reason they were able to grow so fast also was, like, an underlying weakness in the business, which is, like, low switching cost, very easy to adopt. You can swipe your credit card on a monthly deal. Like, it's a low price point. And so when I look at a l- lot of the companies that are growing on these really terrific revenue ramps, I think there's a lot to be excited about. And to be clear, I think some of those companies are going to go on to be exceptional.

    7. JAJack Altman1:00:37

       Of course.

    8. SMSaam Motamedi1:00:38

       Right? But I also think you have to, like, look at it with a lens of, is it that, like, the very reason why you're growing so fast actually implies that you don't really have long-term stickiness, product depth, high net dollar retention?

    9. JAJack Altman1:00:51

       Mm-hmm.

    10. SMSaam Motamedi1:00:51

        And I think for some of these companies, that's going to be the case. And the reason why I, I, I, I, I'm trying to, like, get this message out is I don't want us as an ecosystem to warp our perception of success. I'll talk to candidates, right, who are interviewing at one of our portfolio companies, enterprise portfolio company, that's going from, like, you know, four million to forty million or four- or, like, let's say four million to thirty million, and they're like: "Oh, but, like, this other thing went zero to one hundred. Is, like, four to thirty strong?" Like, the candidate's asking me this, and I'm like-

    11. JAJack Altman1:01:16

        Yeah, four to thirty is, like, unbelievable.

    12. SMSaam Motamedi1:01:18

        It's, it, it... And by the way, this is like, you know, you're selling to enterprise, high gross margin. We didn't even talk about gross margin. A lot of those businesses don't have healthy margins today. High gross margin, high net dollar retention, it's amazing. It doesn't mean necessarily that the zero to one hundred is not also amazing. They're just- they're different businesses. They have different shapes. And so-... I would suspect when we look back in a decade from now, and we look at the mega winners in, let's say, in the AI application category-

    13. JAJack Altman1:01:40

        Mm-hmm.

    14. SMSaam Motamedi1:01:40

        -there will be some that will have been these, like, zero to hundred to billion dollars kind of things. Some of those will also peter out very quickly, right? But there will be many, like, the modal outcome, if you will, will be things that, like, let's say in the past, like, when you were building Lattice, like, I don't know, a great ramp was, like, one to four to-

    15. JAJack Altman1:01:57

        Twelve

    16. SMSaam Motamedi1:01:57

        -twelve-

    17. JAJack Altman1:01:58

        Yeah.

    18. SMSaam Motamedi1:01:58

        -to twenty-five.

    19. JAJack Altman1:01:59

        Yeah.

    20. SMSaam Motamedi1:01:59

        Like, maybe that's now one to ten to thirty to seventy-five. That's w-way stronger. If you play out that curve, that business is worth a lot more.

    21. JAJack Altman1:02:06

        Yeah.

    22. SMSaam Motamedi1:02:06

        But it still looks like the laws of physics still apply to it.

    23. JAJack Altman1:02:10

        It's gonna be kind of interesting because I... You know, like, a couple years ago, there were, like, a bunch of these AI apps where you're like, "These things are promising," but not that many things have made it to ten. Then it became, not that many made it to fifty, you know, and like-

    24. SMSaam Motamedi1:02:20

        Yeah

    25. JAJack Altman1:02:20

        ... it's moving up. It'll be interesting to see how many of these actually make it to five hundred or a billion and are still growing at these rates. I suspect it will be a lot more than they've ever been in the past. It's just gonna be a new, interesting thing.

    26. SMSaam Motamedi1:02:30

        Um, I also have the positive view, but I'll give you the counter for a second, and I'll come back to the positive view. So what's the mistake we all made in twenty twenty-one?

    27. JAJack Altman1:02:37

        Many.

    28. SMSaam Motamedi1:02:38

        Many. [laughing]

    29. JAJack Altman1:02:40

        [laughing] Ah.

    30. SMSaam Motamedi1:02:42

        So one mistake-
14. 1:08:10 – 1:11:34

    Horizontal vs vertical SaaS

    1. SMSaam Motamedi1:08:10

       concepts emerge. It's interesting, so Aneel Bhusri is the founder and CEO of Workday, and also is a very successful partner at Greylock. He came to a partner meeting in twenty seventeen, a year after I joined the firm, and he said sort of tritely, like: "Guys, why are we looking at horizontal software?"

    2. JAJack Altman1:08:23

       Hmm.

    3. SMSaam Motamedi1:08:23

       "Like, there's, there's no paradigm shift that will allow us to go take on the incumbents. We'd be better off just buying the, like, public stocks of the horizontal SaaS companies, and we should actually go do vertical software-

    4. JAJack Altman1:08:33

       Hmm.

    5. SMSaam Motamedi1:08:34

       -right? Because that's where, as a VC firm, there's, there's low-hanging fruit." And I remember there was, like, debate and skepticism, and a lot of horizontal software companies got founded. But by the way, fast-forward the clock, you would've been better off buying Salesforce, ServiceNow, Workday, Palo Alto, CrowdStrike in the public markets. That basket would have done better than any horizontal, uh, startup SaaS basket at the time.

    6. JAJack Altman1:08:53

       Yeah.

    7. SMSaam Motamedi1:08:53

       'Cause it turned out that, like, either people were building things for SMB, they were building niche add-ons, but no one really could go build a, a disruptive kind of core company. Now, fast-forward, I was with Aneel at a Warriors game, spring of twenty twenty-three, and he was like... H- his advice to me and Greylock was, "Now's the time to go do new horizontal things." And why is it the time? Because it's the first time since two thousand and five, two thousand and five, Peloton and Workday get started at the start of the cloud boom, where you have the confluence of three things that need to be true in order to build new, disruptive, horizontal companies. One is there's a new pricing model, right? You went from on, uh, licensed to SaaS to now, you know, outcome-based pricing. The second is there's a new abstraction or unit of value for work, 'cause now you can actually complete end-to-end tasks, so you're selling something very different than workflow software that's used by people to complete tasks. And then the third is the data model's different, right? When you went from on-prem to SaaS, you had this multi-tenant elastic architecture that could support new use cases. In a, in an AI world, why does the entrenchment of the system of record even matter? Like, Salesforce has this whole schema that they think about customer objects with. The whole world is standardized on that schema, and I'd argue that gives them a lot of defensibility. Why do you need that anymore? Like, why should you, as a CEO, go hound your reps to, like, update their, you know, account information in Salesforce?

    8. JAJack Altman1:10:06

       Yeah.

    9. SMSaam Motamedi1:10:06

       I should have an AI system that integrates into email, into my granola, into... Like, there's a recorder in the sales conversation.

    10. JAJack Altman1:10:12

        Yeah.

    11. SMSaam Motamedi1:10:12

        And it's just implicitly on the fly, creating the data schema that I exactly need to power the use case I want. If I want to do a pipeline forecast, w- wouldn't it make more sense for that to be substantiated based on the texture of the actual customer conversation than what my Salesforce instance says?

    12. JAJack Altman1:10:25

        Yeah, I mean, the data needs to live somewhere, but it doesn't have to be in a-

    13. SMSaam Motamedi1:10:29

        In a structured schema. It's... I would argue-

    14. JAJack Altman1:10:31

        Yeah, it doesn't have to be structured.

    15. SMSaam Motamedi1:10:31

        Exactly. It, it-

    16. JAJack Altman1:10:32

        But it needs to exist.

    17. SMSaam Motamedi1:10:33

        It needs to exist, but I would say that a lot of what makes these systems of record that we look at today defensible is they have defined the ontology, and they have done the structuring.

    18. JAJack Altman1:10:41

        Yeah, exactly, and then if you wanna plug in and you wanna integrate with this thing, you have to match it.

    19. SMSaam Motamedi1:10:45

        Correct, and that's why a whole ecosystem has been built around that. And by the way, you, you as a rep, have learned how to use Salesforce.

    20. JAJack Altman1:10:50

        Yeah.

    21. SMSaam Motamedi1:10:50

        And what I would argue t- now in AI is it's all dynamic, it's all generative, and so all of that work that you've done is no longer needed. So the confluence of those three, three, three things, it means you can go after CRM, you can go after service management, you can go after observability. By the way, there were, like, head fakes. I mean, you remember when mobile started, right? There were these mobile CRMs, but none of them became large 'cause mobile was just a UI on top of the existing model. There's no change in pricing, no change in data model, no change in atomic unit of work. I think with generative AI, that's all changed, and I think we're gonna see, like, really, really large horizontal companies get found- that, like, we'll look back in a decade that were founded in twenty twenty-five, twenty twenty-six, that went after these large markets, sold to everyone in the world, and that's how you'll build ten, twenty, thirty billion dollar revenue businesses and multi-hundred billion dollar market cap application

15. 1:11:34 – 1:16:26

    Friendships and work

    1. SMSaam Motamedi1:11:34

       businesses.

    2. JAJack Altman1:11:35

       To sort of, like, wrap up, I thought it'd be fun to go into, like, some other not exact venture topics. I think one, like, I think our friend group is, like, a very big part of our lives, and hopefully I'll get everybody to come on at some point. We already had our boy Greg Rosen. We'll get everybody. But, like, how have you thought about that? Like, obviously there's, you know, ninety-nine percent of it is about, like, the personal joy of the friendships, but, you know, many of us are in venture, we're all in tech. Like, how do you, like, think about how it plays into your professional life, if at all, and, like, has it surprised you in any ways, or, like, what has it sort of been like for you?

    3. SMSaam Motamedi1:12:10

       It's funny, right? 'Cause, like, we... You know, there's this whole concept of, like, venture friends, which are not friends at all-

    4. JAJack Altman1:12:14

       Yeah

    5. SMSaam Motamedi1:12:14

       ... or, like, you know-

    6. JAJack Altman1:12:15

       Yeah

    7. SMSaam Motamedi1:12:15

       ... like, these, like, kind of transactional relationships.

    8. JAJack Altman1:12:17

       It's like acquaintances you like-

    9. SMSaam Motamedi1:12:18

       Yeah

    10. JAJack Altman1:12:18

        ... and you have some. You see them periodically, but it's not like-

    11. SMSaam Motamedi1:12:20

        Ex- exact- and, I mean, that, that's the thing about the venture business is, like, social and professional are so overlapping.

    12. JAJack Altman1:12:25

        Yeah.

    13. SMSaam Motamedi1:12:25

        And the thing that I find so remarkable about our friend group is, like, it didn't start at all around a work pretext. It started purely around, like, just personal joy and, and, uh, u- of spending time together. Coincidentally, most of the friend group i- i- is investors, and we're all very different, like, in the way we practice the business.

    14. JAJack Altman1:12:42

        Yes.

    15. SMSaam Motamedi1:12:42

        But... And then we spend too much time together, [chuckles] right? Um, and for me, like, I think one of the things that I really appreciate about it is it's really rare in life to have people who have high context on your work but truly want to see you win. Like, there are people who truly want to see you win but don't really understand, like, the true nuances of your work. There are people who truly understand the nuances of your work, but, like, they don't necess- they might not want you to lose, but they don't really care if you become the best version of yourself. I think what's so special about our crew is, like, we all know each other super well, we make fun of each other continually-

    16. JAJack Altman1:13:15

        Yeah

    17. SMSaam Motamedi1:13:15

        ... and we push each other to be, like, the best version of ourselves. And I'd say f- I, I can certainly point to moments where I've made decisions because, like, you or Greg or Brett has pushed me to, like, be more ambitious or, or, or to expect more of myself, and I feel like vice versa. I think that's true for you.

    18. JAJack Altman1:13:29

        Totally.

    19. SMSaam Motamedi1:13:30

        And that's a very, very special thing.

    20. JAJack Altman1:13:31

        Yeah, totally.

    21. SMSaam Motamedi1:13:32

        And I... And by the way, I- that is a little bit how old school venture worked.

    22. JAJack Altman1:13:35

        Mm-hmm.

    23. SMSaam Motamedi1:13:36

        I think if you rewind the clock to, like, the early two thousands, there was a lot more friendship and collaboration in the venture business.

    24. JAJack Altman1:13:41

        Yeah.

    25. SMSaam Motamedi1:13:41

        And there were pockets of true friends. They would work together, they would push each other, they'd play golf together.

    26. JAJack Altman1:13:46

        Got a little bit of that. Yeah.

    27. SMSaam Motamedi1:13:47

        Yeah.

    28. JAJack Altman1:13:47

        We got a little bit of that going. Well, it's funny because there's like, you know, there's this group that we spend, like, an inordinate amount of time with, and then I do think there's this, like... You know, there are venture relationships where, I think Greg made this point when we did the podcast, where he was like: You know, it got really hard to have any sort of relationships at like, you know, the peak of COVID, and now you're back to a zone where you can kind of have these, like-... relationships up the stack. Like, if you're a Series A investor, you know, you've got, like, these kind of, like, preferred relationships, Series B-

    29. SMSaam Motamedi1:14:15

        Yeah

    30. JAJack Altman1:14:15

        ... and so on, and some of that exists. But it's still, there's this different thing, which is very lucky to get in adulthood, where it's like, if you have people who are thinking about your own life, like, you know, it's like they care about it like, like your family or something like that.
16. 1:16:26 – 1:22:31

    Saam's biological age

    1. JAJack Altman1:16:26

       Another topic, just more about your life, that I wanted to get into is your health routine. You have a biological age in the teens.

    2. SMSaam Motamedi1:16:34

       Seventeen point six.

    3. JAJack Altman1:16:35

       But you never exercise. [laughing] And I'm just curious how... Like, listen, do you wanna, do you wanna say anything?

    4. SMSaam Motamedi1:16:44

       Yeah, yeah.

    5. JAJack Altman1:16:44

       I think Ashim wanted me to ask you about this.

    6. SMSaam Motamedi1:16:46

       Yeah, yeah, yeah. For me, like, it all starts with diet. The number one thing, and, uh, Jack, I'm being very serious, you're laughing, is-

    7. JAJack Altman1:16:54

       Go ahead.

    8. SMSaam Motamedi1:16:54

       I source food from as close to the farm-

    9. JAJack Altman1:16:57

       Oh

    10. SMSaam Motamedi1:16:58

        ... as is humanly possible.

    11. JAJack Altman1:16:59

        Here's a good bit. Saam recently said, "I bought these unbelievable, this unbelievable [chuckles] produce from the farm this morning." I go: "Where did you buy it?" Turned out it was a grocery store, and they sourced it [chuckles] from the farm.

    12. SMSaam Motamedi1:17:09

        It was a farmers' market. But, but, you know, I think in all... Like, my couple tips, and Jack, I think you've learned from this, is eat whole foods, exercise daily.

    13. JAJack Altman1:17:18

        You don't do-

    14. SMSaam Motamedi1:17:19

        I like to swim.

    15. JAJack Altman1:17:19

        You don't [chuckles]

    16. SMSaam Motamedi1:17:20

        [chuckles] And, and make sure you get eight hours of sleep.

    17. JAJack Altman1:17:23

        Okay, that's good.

    18. SMSaam Motamedi1:17:24

        What's your biological age?

    19. JAJack Altman1:17:26

        It was, like, twenty-six.

    20. SMSaam Motamedi1:17:27

        Yeah, okay, so I'm nine years younger than you.

    21. JAJack Altman1:17:29

        Okay. Anything else in the daily routine and stuff that we should talk about?

    22. SMSaam Motamedi1:17:31

        Yeah, actually, one thing that I, I, I've learned from Ashim, I think you do this, I actually think a number of, like, people who've had longevity in venture, uh, do this, is making sure you have a lot of unscheduled time on your calendar. I try to keep, uh, one day a week completely unscheduled, and then I try to keep my mornings unscheduled until, like, eleven. Because once you have a portfolio and a team, like, at some point in the day, your day becomes entirely reactive, and so you have to be incredibly intentional about scheduling time to do, like, long-term thinking, long-term work, um, and also to give yourself the energy to sprint. Like, because I think this jo... Like, a lot of being good at this job, in my opinion, is very quickly being able to detect when you need to go a hundred ten miles an hour-

    23. JAJack Altman1:18:14

        Yeah

    24. SMSaam Motamedi1:18:14

        ... and then getting to a hundred and ten miles an hour really fast. And if you do that every single day, you're not, you're not truly at a hundred ten miles an hour.

    25. JAJack Altman1:18:21

        It's also really, uh, ke- keeping the open day or the open mornings is so hard, 'cause there's always, like, the, "Hey, I'm in town for these-

    26. SMSaam Motamedi1:18:27

        Exactly

    27. JAJack Altman1:18:27

        ... three days. Are you free?" It's like, well, yeah, I am.

    28. SMSaam Motamedi1:18:29

        Yeah.

    29. JAJack Altman1:18:29

        But that was supposed to be a quiet time.

    30. SMSaam Motamedi1:18:31

        A hundred percent.

Episode duration: 1:22:31