State of VC in 2022

TODAY. I HOPE YOU GUYS ARE ENJOYING YOURSELF SO FAR. WE STILL HAVE AN AMAZING DAY AHEAD. RIGHT NOW WE WILL GET INTO THE WORLD OF VENTURE CAPITAL. WHO HERE IS LOOKING TO RAISE MONEY RIGHT NOW AS WE SPEAK? OKAY. A LOT OF YOU. THAT'S GOOD NEWS, BECAUSE THERE IS A LOT OF CAPITAL OUT THERE TO BE HAD. PLEASE WELCOME TO THE STAGE FROM GENERAL CATALYST NIKO BOW >> THERE IS ALWAYS NEW TRENDS RESHAPING THE INDUSTRY. ONE THAT I WANTED TO START OFF WITH TODAY IS THIS BIG YEARS-LONG TREND WHICH IS KIND OF THIS BLURRING OF WHAT A VENTURE FIRM EVEN MEANS ANYMORE. I THINK IT'S SO INTERESTING. CARYN, YOU STARTED THIS HEDGE FUND INVEST ANYTHING PUBLICLY TRADED COMPANIES. IT THATS A GROWTH ARM, VENTURE ARM. NIKO, YOU WORKED FOR GENERAL CATALYST, WHICH STARTED AS THIS SMALL VENTURE FIRM IN BOSTON AND EXPANDED INTO WHAT IS NOW A REGISTERED INVESTMENT ADVISER

MANAGING BILLIONS OF DOLLARS. NIKO, MAYBE I CAN ASK YOU FIRST, WHAT IS THE OUTCOME WHEN EVERYONE IS DOING EVERYTHING? >> WELL, NOT EVERYONE HAS EARNED THE RIGHT TO DO EVERYTHING. WE ARE TALKING ABOUT VERY FEW FIRMS. IT'S 10, 12 FIRMS THAT HAVE BEEN CAPABLE OF DOING EVERYTHING. IN OUR CASE WE STARTED FROM BEING EARLY STAGE TPEUFRPL. EARLY STAGE CONTINUES TO BE OUR CORE. THEY WANT TO BUILD COMPANIES AND STAY PRIVATE FOR LONGER. AS A RESULT, WE FELT LIKE RAISING GROWTH FUNDS WAS SOMETHING THAT COULD MEET THEIR DEMANDS. AND WE DID THAT. AND OVER TIME WE DECIDED TO BECOME A REGISTERED INVESTMENT ADVISER AS WELL BECAUSE IT MADE SENSE FOR OUR BUSINESS. BECAUSE COMPANIES STAY PRIVATE FOR LONGER. THEY WANT TO GO PUBLIC AND COULD GROW VERY WELL IN THE PUBLIC MARKET. AND WE COULD CONTINUE TO BE IN THE JOURNEY FOR A LONGER PERIOD OF TIME INSTEAD OF US EXITING AS WE HAVE DONE IN PREVIOUS TIMES.

WE ARE PRODUCTS OF THE TIMES WE OPERATE IN. THIS HAS BEEN THE STORY OF THE LAST DECADE. WE'RE AMBITIOUS. WE DO CARE ABOUT BUILDING OUR OWN BUSINESS. >> IS — THERE ARE 10 OR 12 OF YOU. DO YOU THINK THERE'S A LIMIT TO HOW MANY FIRMS WILL BE DOING THIS? I GUESS, IS THE MODEL SUSTAINABLE? IS THIS THE NEW NEW? >> I'M GOING TO DATE MYSELF. I'VE BEEN IN THIS INDUSTRY FOR A LONG TIME. NOT IN THE VENTURE INDUSTRY BUT THE TECH INDUSTRY. TO JUST TO, LIKE, LITERALLY DATE THIS, I STARTED WORKING WITH MARK BENIOFF WHEN HE WAS STARTING SALESFORCE FROM HIS APARTMENT IN THE TOWER. IT WAS SMALL. HE WAS WEARING SWEATS ALL THE TIME. HE HAD HIS CO-FOUNDER NEXT DOOR CODING. THEY HAD A BEAUTIFUL VIEW. THIS WAS A LONG TIME AGO. AT THE TIME MARK BENIOFF COULD NOT GET FUNDING BECAUSE IT WAS A

NEW MODEL AND THE TRADITIONAL VCs SAID I DON'T UNDERSTAND THE TAM, THE MARKET SIZE. THEY SAID I DON'T UNDERSTAND WHAT THE METRICS ARE. SO ONE VERY FAMOUS VC SAID TO BE IF YOU GO ON PREM, WE WILL FIND YOU. AND HE WAS LIKE, OKAY, YOU TOTALLY DON'T GET WHAT I DO. THAT WAS A VERY TRADITIONAL MODEL. IT WAS LIKE WE DO THIS. YOU FAST FORWARD AND I WORKED FOR FACEBOOK FOR MANY YEARS. AND I THINK PEOPLE FORGET FACEBOOK HAD A DOWN ROUND. THEY STAYED PRIVATE FOR A — I SAY WE. THEY, NOW META, STAYED PRIVATE FOR A VERY LONG TIME, AND PEOPLE DIDN'T KNOW WHAT TO DO WITH A GROWTH COMPANY OF THAT SIZE SO THEY DID A DOWN ROUND. IT DOESN'T MATTER NOW. BUT IT IS AN INTERESTING MOMENT IN TIME. PEOPLE DIDN'T KNOW WHAT TO DO WITH A COMPANY THAT STAEUFD PRIVATE. FOR YEARS AND YEARS AND YEARS, WE HAD NO CHANGE IN THE VENTURE WORLD. IT WAS THESE VERY STATUS QUO

WAYS OF OPERATING. AND I FEEL LIKE WE'RE NOW IN THIS PLACE OF,, LIKE, PRETTY INTERESTING CHANGE. YOU TALKED ABOUT MICRO VCs AND NICHE. WE ARE ALL MOVING TO MEET THE NEEDS OF THE FOUNDERS AND THE LPs WHO TRUST US WITH THEIR MONEY THAT WE NEED TO, LIKE, BE MORE CREATIVE. I THINK THE THING — AND WE ALL GO TO WHERE THE NEEDS ARE AND THE ENVIRONMENT IS. AND I THINK THE THING THAT STAYED THE SAME IS THE VC VEST, PATAGONIA. EVERYTHING ELSE IS CHANGING. IS THAT TRUE? I WAS HAPPY YOU WEREN'T WEARING ONE. >> I NEVER WORE ONE. PATAGONIA IS NO LONGER PRODUCING THE VEST, RIGHT? >> SORRY, THIS IS OFF TOPIC. >> NO, THAT'S OKAY. I WAS GOING TO SAY THERE IS SO MUCH FLUIDITY. YOUR LPs WANT A BIGGER STAKE IN YOUR COMPANIES. I WAS READING YESTERDAY AND THERE WAS AN INTERVIEW WITH CEO OF STANFORD MANAGEMENT COMPANY, ITS ENDOWMENT.

AND HE WAS SAYING HE BASIC LIVE CAN'T PUT ENOUGH MONEY INTO TOP FIRMS. IT'S FRUSTRATING BECAUSE HE CAN'T SCALE FAST ENOUGH. AT THE SAME TIME, THEY BENEFITED HUGELY FROM BEING PART OF THESE COMPANIES. NOW THEIR RETURNS ARE SORT OF ABYSS MAL. I WONDER IF IT'S IN PART BECAUSE THEY HAVE STAKES FROM ALL OF YOU IN THE SAME COMPANIES. YOU KNOW, WHEN YOU ARE ALL CONVERGING ON THE SAME — I MEAN, IS THAT SOMETHING THAT LPs SHOULD BE CONCERNED ABOUT GOING FORWARD BECAUSE YOU ARE KIND OF ALL IN EACH OTHER'S LANES SO TO SPEAK? . >> I DON'T SEE HOW THIS IS DIFFERENT THAN IT USED TO BE? IF YOU HAVE AN ENDOWMENT TODAY, YOU WANT A PIECE OF THE TOP 20 TECH COMPANIES EVERY YEAR. THAT COULD BECOME THE NEXT BIG THING. SO THIS WAS THE SAME BACK THEN. NOW THE OUTCOMES IN MORE RECENT YEARS HAVE BEEN MUCH LARGER THAN EVER BEFORE. ALSO, SOME OF THE COMPANIES ARE NO LONGER GETTING STARTED IN

SILICON VALLEY. THEY ARE STARTING IN EUROPE, MOVE TO EUROPE, OPEN — MOVE TO NEW YORK, OPEN AN OFFICE THERE. THE PREVIOUS DECADE, TERRIFIC OUTCOMES FOR LIMITED PARTNERS. WE WILL SEE WHAT HAPPENS MOVING FORWARD. BUT THAT'S WHAT THEY WANT. THEY WANT TO INVEST IN SOME TOP FIRMS AND GET AS MUCH OF STAKE IN THE COMPANIES THAT CAN CREATE $100 BILLION MARKET CAP OUTCOMES. >> RIGHT. >> WHAT LPs HAVE TO DO AS HAS BEEN THE CASE THE LAST DECADE, IS TO INVEST IN DIFFERENT POOLS OF CAPITAL THAT THE VC FIRMS GIVE THEM ALLOCATION TO. HISTORICALLY, IT IS INVESTING IN THE EARLY STAGE FUND. NOW YOU CAN INVEST IN MANY DIFFERENT VEHICLES >> WE WERE TALKING BACKSTAGE ABOUT SOME OF THE PAIN THAT COULD BE COMING DOWN THE PIKE FOR STARTUPS. I ALSO WONDER FOR VENTURE FIRMS. I MEAN, OBVIOUSLY, FIRMS HAVE SMARTLY BEEN RAISING LOTS OF FUNDING. AGAIN, LP WANTS TO PUT AS MUCH MONEY IN TO WORK AS THEY CAN.

DO YOU THINK WE WILL SEE A RIGHT SIZING OF THE INDUSTRY GOING INTO NEXT YEAR? SO IF I THINK ABOUT IT, I BELIEVE THAT PEOPLE ARE FUNDAMENTALLY RATIONAL AND INTELLIGENT. IF WE TAKE IT FROM THAT BASIS. IF YOU ARE A FOUNDER, YOU NEED TO FIGURE OUT, OKAY, WHERE AM I GIVEN THIS GLOBAL ECONOMIC ENVIRONMENT AND WHAT DO I NEED TO DO TO ENSURE THE BEST OUTCOME FOR MY COMPANY. SO IT'S LIKE, OKAY, WE'RE GOING TO SEE UPS AND DOWNS IN THE PUBLIC MARKET. WE'RE GOING TO SEE UPS AND DOWNS IN IPOs. WE WILL SEE POSSIBLE CHANGES IN THE LANDSCAPE. BUT WHAT DOES THAT MEAN TO YOU AS A FOUNDER? AND I THINK OF IT IN QUADRANTS. THERE'S FOUR QUADRANTS THAT A COMPANY FITS INTO AND DICTATES WHAT YOU CAN DO. AND THE ACCESS IS HOW MUCH MONEY HAVE YOU RAISED OR RUN WAY YOU HAVE, AND MARKET FIT. IF YOU HAVE RAISED AND YOU HAVE A LOT OF RUN WAY AND HAVE FOUND PRODUCT MARKET FIT, YOU ARE A HEALTHY COMPANY, UPPER

RIGHT-HAND QUADRANT. YOU CAN ASK YOURSELF, SHOULD I HIRE IN THIS ENVIRONMENT? YES. IF YOU'RE IN THIS QUADRANT, I WOULD SAY THIS IS A GREAT OPPORTUNITY TO GROW AND SCALE AND TAKE ADVANTAGE. IF YOU ARE VERY LITTLE MONEY BUT PRODUCT MARKET FIT, I WOULD CALL THE COMPANY SURVIVORS. YOU HAVE A PRODUCT YOU KNOW WORKS BUT YOU FOUND YOURSELF IN A TRICKY POINT IN TIME. TAKE HEART AMAZON WAS ONE OF THOSE COMPANIES. BUT IT DOES MEAN GETTING CREATIVE WITH COST CUTTING, HOW YOU WILL FUND THIS. THAT BECOMES VERY INTERESTING AND IMPORTANT. YOU HAVE TO DO EVERYTHING YOU CAN. YOU KNOW THIS PRODUCT WORKS TO MAKE SURE YOUR PRODUCT AND YOUR COMPANY SURVIVES. SAY YOU HAVE A LOT OF MONEY AND YOU DON'T YET HAVE PRODUCT MARKET FIT. I CALL THEM EXPLORERS. BOTTOM RIGHT. THESE PEOPLE ARE LIKE A TYPICAL SERIES A COMPANY. THE IMPORTANT THING IS TO KEEP

IN MIND THAT YOU DON'T HAVE PRODUCT MARKET FIT YET. CO CONNIE'S POINT, WE DON'T KNOW QUITE WHERE THE MARKETS ARE GOING TO GO AND HOW MUCH LIQUIDITY AND CAPITAL IS MORE EXPENSIVE. IT USED TO BE SOMEWHAT FREE. NOW IT'S MORE EXPENSIVE. I WOULD SAY STAY LEE AND UNDERSTAND WHERE YOU ARE IN THE PRODUCT MARKET FIT JOURNEY. LASTLY, THE DANGER ZONE ARE THE ONES THAT DON'T HAVE PRODUCT 345 FIT AND DON'T HAVE CAPITAL. YOU MAY HAVE TO PIVOT OR RETHINK. . >> I JUST MEAN ALSO, THOUGH, IN TERMS OF VENTURE CAPITAL FIRMS AS WELL, WILL WE SEE THEM SHRINKING, BREAKING UP OR GOING FORWARD? . >> I THINK THEY LOOK DIFFERENT NOW. YOU WERE TALKING ABOUT THE NEARBY ONES. YOU ARE GETTING REALLY SPECIFIC. >> YEAH. ACTUALLY, TO THAT POINT, I WAS GOING TO SAY WHAT WE WERE TALKING ABOUT THERE'S A — I

DON'T KNOW HOW BIG A TREND IT IS. >> IT IS INTERESTING. >> WE HAVE SEEN FUNDS FOCUSING ON ORAL CARE AND WILDFIRES. >> I THOUGHT THAT WAS FASCINATING. >> HOW SPECIFIC CAN YOU BE WHEN YOU HAVE GIANTS COVERING EVERYTHING? MAYBE THAT'S THE ONLY SPACE TO GROW UP IN. I WAS WONDERING IS THAT GOING TO BECOME A THING? >> IT'S ALWAYS A VERY DYNAMIC ECOSYSTEM. LIKE WHAT'S HAPPENING WITH OTHER VC FIRMS. THEY WILL HAVE TO GO THROUGH THE NATURAL SELECTION CYCLE. HISTORICALLY THEY HAD TO GO THROUGH ATTRITION, WHICH IS A PAINFUL ACTIVITY FOR ANYONE WHO HAS GONE THROUGH THAT STUFF. WE HAVE HUNDREDS IN SAN FRANCISCO ALONE OF VERY SMALL PHONES, MICRO VCs. SOME WILL MERGE AND BUILD A UNDER ENDEARING FRANCHISE. SOME WILL SAY I TRIED IT. VC AS AN OPTION IS NOT FOR ME. WE WILL HAVE TO TRY SOMETHING AFTERWARDS. THEY WILL EITHER STAY SMALL OR

WHEN SOMEWHERE PARTNERS DECIDE TO RETIRE, THEY WILL HAVE TO FIGURE OUT WHAT THE NEXT DAY IS GOING TO LOOK LIKE. WE ARE ALL PRODUCTS OF THE MARKET AND THE TIMES WE OPERATE IN. THAT'S GREAT. . >> YOU HAVE TO EARN THE RIGHT TO SURVIVE. I THINK IT WAS LIKE, OH, OKAY, THERE WAS SOME PATH. AND THEN YOU DID INVESTMENTS AND MADE MONEY. IT'S LIKE, NO. WE'VE GOT TO EARN THE RIGHT. AND NOT EVERYBODY WILL EARN THAT RIGHT. >> ALSO I THINK A LOT OF PEOPLE — NOT HAVING BEEN IN THE INDUSTRY LONG ENOUGH, HAD ONLY SEEN GOOD TIMES. IT LED TO WHAT I WANT TO TALK TO NEXT, WHICH IS WHAT HAPPENED WITH FOUNDER TERMS? THE INDUSTRY, AS WE'VE TALKED ABOUT, IS VERY CYCLICAL. EVERY FIVE YEARS, TYPICALLY THINGS SWING MUCH IN THE FAVOR OF FOUNDERS OR INVESTORS. AND IT'S BEEN VERY FOUNDER FRIENDLY FOR SO LONG. BUT, I MEAN, TO AN ASTONISHING

DEGREE, I MEAN, I WAS THINKING ABOUT HOPPING SPECIFICALLY, IT WAS FOUNDED IN 2019. AND ACCORDING TO THE FINANCIAL TIMES, THE FOUNDER WAS ABLE TO CASH OUT $200 MILLION WORTH OF SHARES AND STILL OWNS 40% OF THE COMPANY, WHICH I FIND MIND BLOWING. I'M JUST WONDERING WHAT HAPPENED? WHAT HAPPENED THE THAT WE GOT TO THIS POINT? . >> WELL, WE'RE ONE OF THE INVESTORS. >> YOU BOTH ARE, ACTUALLY? >> YEAH. YEAH. FOR A PERIOD OF TIME THIS WAS THE FASTEST GROWING COMPANY OF ALL TIME. VERY PROFITABLE BUSINESS. ALSO, COVID HAPPENED. AND THEY HAD THE PERFECT PRODUCT AT THE PERFECT TIME FOR THE ENTIRE WORLD. BACK THEN ZOOM WAS DOING REALLY WELL AS A COMPANY. AND IT WAS THE BEGINNING OF, LIKE, THE CRAZY VC FUNDING ACCELERATION PERIOD THAT GOT STARTED IN THE SECOND HALF OF 2020.

SO A LOT OF US GOT INTRIGUED BECAUSE THE PRODUCT LOOKED PERFECT, THE MARKET OPPORTUNITIES SEEMED PRETTY SIZABLE, AND THE COMPANY IS NOT EXHUMING ANY CASH. AND WHEN YOU HAVE VERY COMPETITIVE MARKET SITUATION WHERE YOU HAVE, LIKE, A FOUNDER WHO RECEIVES, LEAK, 10 DIFFERENT OFFERS, SOME OFFERS NEED TO SWEETEN THE DEAL A LITTLE BIT TO MAKE IT MORE CONVINCING. >> WHICH, YOU KNOW — >> THAT'S HOW I THINK IT HAPPENED. >> WELL, NOTHING AGAINST FOUNDERS. I FEEL THE PEOPLE WHO LEFT THAT FIRM READING THAT STORY OR WAS LAID OFF MUST HAVE BEEN SEETHING. IT JUST DOESN'T SEEM JUST. WHAT HAPPENS FORWARD? ANY LESSONS LEARNED, OR WILL THE SAME THING HAPPEN AGAIN BECAUSE THAT'S THE WAY IT WORKS. WHEN YOU MEET THE DEMAND YOU MEET THE TERMS THAT ARE DEMANDED? >> I THINK YOU HAVE A LOT OF DIFFERENT PLAYS. AND IT WAS INTERESTING BECAUSE EVERYONE AT A CERTAIN POINT IN

TIME WAS, LIKE, IF I LEAVE A COMPANY AND I START A COMPANY, I AM GOING TO GET FUNDING AND I'M GOING TO BE SUCCESSFUL. AND IT JUST FELT LIKE AND THAT IS THE PATH. WE ALL KNOW THAT CAN'T BE THE PATH. AND I THINK THE PEOPLE WHO START COMPANIES NOW ARE NO LONGER UNDER THAT, LIKE, HAZE OF EVERYTHING GOES UP AND TO THE RIGHT. AND I THINK THE GENERATION OF PEOPLE THAT START NOW ON BOTH SIDES WILL BE FAR MORE WIDE — IS IT EYES WIDE OPEN? CLEAR EYED. THAT'S IT. AND I ALSO THINK THERE WAS A SENSE OF I WANT MONEY WITH NO STRINGS ATTACHED. AND WE LIKE TO BE INVOLVED IN COMPANIES. I SAT ON BOARDS. WHEN THE COMPANIES WE WORK WITH, WE GET VERY INVOLVED. AND I THINK THERE WAS A PERIOD OF TIME WHERE EVERY FOUNDER WAS LIKE I DON'T THINK I NEED ANY HELP. THAT HAS DRAMATICALLY CHANGED WITH HAVE YOU SEEN ANY OF THIS BEFORE BECAUSE I COULD USE SOME

HELP. >> FOR SURE. >> IN THAT SENSE, TOO, THIS IDEA OF LET'S HELP AND BE INVOLVED AND THAT'S SOMETHING I'VE ALWAYS WANTED TO DO. I KNOW YOU DO. >> YEAH. ABSOLUTELY. THE MARKET CONDITIONS HAVE CHANGED. IF YOU'RE RAISING ONE TODAY AND YOU'RE NOT EXCEEDING YOUR PLAN DRAMATICALLY IT'S PROBABLY HARDER. THEY GO OPEN UP KHR CTHEIR CHAR SCHWAB ACCOUNT AND SEE WHAT THE TERMS ARE. IN A PRIVATE COMPANY, YOU CAN'T DO THAT. IT IS A FUNCTION OF HOW MANY FUNDS ARE OUT THERE THAT ARE EAGER TO WRITE CHECKS, HOW MUCH CAPITAL THEY HAVE RAISED. AT THE SEED STAGE WE HAVEN'T SEEN MUCH ON OF A DIFFERENCE YET. ESPECIALLY FOR FIRST CHECKS. THE SEED COMPANY THAT RAISED LAST YEAR OR THE YEAR BEFORE AND YOU HAVEN'T MADE ENOUGH PROGRESS TO EARN THE RIGHT, THEN IT'S A LITTLE BIT HARDER. PREVIOUS YEARS, IT COULD RAISE A

SEED TWO, THREE, FOUR FROM ALL THE FIRMS TO INVEST. NOW THAT'S NOT HAPPENING. SERIES A IS A LITTLE BIT LIKE RETURN TO THE BASICS. INVEST IN TECHNICAL THEMES WITH HIGH MARGINS. A CAPITAL INTENSIVE BUSINESS WILL BE MUCH HARDER. ARE YOU BUILDING A BUSINESS OUT OF GEO? IT WILL BE EASIER. >> THE GEO IS INTERESTING. I THOUGHT ZOOM WAS THE GREAT EQUALIZER. EVERYONE IS LIKE WE'RE INVESTING EVERYWHERE IN THE WORLD NOW. IT'S GREAT. AND I SUBSEQUENTLY TALKED TO INVESTORS WHO SAY — I HAVE ONE IN THE MIDWEST WHO SAID ACTUALLY EVERYBODY IS RETRENDING. WHAT ARE YOU SEEING? ARE YOU KIND OF — WHAT PERCENTAGE OF YOUR RESPECTIVE FIRMS ARE YOU FOCUSED ON? LIKE THE BIG HUBS VERSUS EVERYONE ELSE IN THE COUNTRY. >> WE JUST OPENED AN OFFICE IN EUROPE. THAT IS NEW FOR US. I DID A SEED DEAL FROM A GROUP IN SINGAPORE RECENTLY. I DON'T KNOW IF I COULD HAVE

DONE THAT BEFORE COVID. SO I'M VERY HOPEFUL TO HAVE YES AND. BECAUSE A GREAT ABILITY TO MEET MORE COMPANIES IN A MORE EFFICIENT WAY. BUT I THINK THEN, YOU KNOW, YOU'RE NOT JUST GOING GOING TO HAVE ONE ZOOM. IT'S GOING TO BE FAR MORE. AND I THINK THERE IS MORE TRAVEL AND THERE IS MORE. BUT I AM HOPEFUL THAT IT STAYS BROADER THAN JUST SILICON VALLEY IS MY HOPE. BUT I DON'T KNOW. WHAT DO YOU THINK? >> YEAH. TALENT IS UNIVERSAL. OPPORTUNITY IS NOT. FIRMS LIKE OURS WANT TO BE INVESTED IN CATEGORY LEADERS. WE DON'T CHECK PASSPORTS. IT WILL BE THRILLED TO HAVE A QUICK 30-MINUTE ZOOM CONVERSATION AND SEE WHERE THE JOURNEY TAKES US. 70% OF THE CAPITAL WE RAISED FROM OUR AWESOME LIMITED PARTNERS INVESTED IN THE U.S. WE ALSO HAVE AN OFFICE IN LONDON. WE ARE GETTING MORE EXCITED ABOUT INDIA AND WE ARE INVESTING

OVERSEAS. I THINK ZOOMEN VESTING WILL GO AWAY — >> YOU DON'T? . >> I DON'T THINK SO. ESPECIALLY LEAK THE FIRST MEETING ON BOTH SIDES. IT'S GREAT. YOU WANT TO HAVE A QUICK CONVERSATION, SEE IF THE INVESTOR GETS IT. SEE IF IT MAKES SENSE FOR THE IN SRFTOR TO SPEND TIME WITH THE PARTICULAR TEAM AND CONCENTRATE ON THREE, FOUR, FIVE FIRMS THAT YOU WANT TO RAISE CAPITAL FROM. THIS IS VERY TPEURBLT ACTIVITY RIGHT NOW. IT'S NOT GOING TO GO AWAY. I HAVE DONE A STORY ON BOARD MEETINGS NOT HAPPENING AS MUCH. >> LIKE THE BOARD MEETINGS ARE NOT HAPPENING? >> THEY'RE NOT HAPPENING? >> MY BOARD MEETINGS ARE HAPPENING. >> OKAY, GOOD. I THINK FOUNDERS ARE PERFECTLY HAPPY TO BE LIKE IT'S FINE. IF YOU WANT TO SKIP IT, THAT'S OKAY WITH ME. >> DON'T SKIP THE BOARD MEETING. >> SERIOUSLY, DON'T SKIP IT.

>> NO, DON'T SKIP THE BOARD MEETING. >> IT'S A GREAT WAY FOR FOUNDERS TO USE THEIR INVESTORS TO ORGANIZE AND RALLY EVERYBODY IN THE COMPANY TO GET IT DONE. >> A DEADLINE IS — IT'S LIKE DO NOT MISS THE OPPORTUNITY TO HAVE A DEADLINE FOR YOUR TEAM. >> RIGHT. >> IT'S SUCH A WAY OF HELPING. YOUR BOARD CAN HELP YOU HOLD YOUR TEAMS ACCOUNTABLE. IT'S A WONDERFUL OPPORTUNITY. >> AND IT GIVES THE TEAM USEFUL TIME IN FRONT OF THE INVESTORS. >> ABSOLUTELY. IN LOOK, IT'S A LOT OF WORK. . >> IT'S A LOT OF WORK. THIS GOES WITHOUT QUESTION. AND OFTEN, YOU KNOW, PEOPLE IN COMPANIES FEEL LIKE, OH, MY GOD, WE HAVE TO DO THIS. IT IS PAINFUL. BUT WHAT WHOLE IDEA OF HOLDING YOURSELF ACCOUNTABLE IN FRONT OF A GROUP OF INDIVIDUALS AND FIRMS THAT INVESTED IN YOUR COMPANY, IT'S A VERY USEFUL IDEA. >> IT IS SUCH GOOD HEIGHT. . >> I ALSO WANTED TO ASK FOR THE FOUNDERS IN THE AUDIENCE JUST

ABOUT WHAT TERMS LOOK LIKE RIGHT NOW. SO YOU KIND OF TOUCHED ON THIS A LITTLE BIT, NIKO. AT THE LATER STAGES WE HAVE BEEN HEARING OF MORE AND MORE STRUCTURE. TO SORT OF REPLACE THE DOWN ROUND. WE WILL TAKE A BIGGER PIECE WHEN YOU COME OUT OF THIS. ARE YOU SEEING THAT YET IN THE EARLIER STAGE COMPANIES? I ASSUME THAT'S GOT TO HAPPEN EVENTUALLY OR YOU'LL JUST LET THEM WITHER? >> RIGHT NOW IT'S A BIT OF GAME OF CHICKEN GOING ON. SO WE ARE MEETING ACTIVITY AT AN ALL-TIME HIGH PRETTY MUCH. SINCE LATE AUGUST. WE WILL KNOW BY OCTOBER HOW MANY OF THESE WILL RESULT IN TRANSACTIONS. TO THE BEST OF MY KNOWLEDGE, I HAVEN'T SEEN COMPANIES WITH SERIES A WITH REALLY NASTY TERMS. BUT WE HAVE SEEN THIS PROCESS TAKE LONGER THAN BEFORE. WE HAVE SEEN SOME COMPANIES DECIDE TO RAISE LIKE A BRIDGE ROUND IF THEY CAN GET TO THE SERIES A IN THE SHORT PERIOD OF

TIME TO COME. NEXT YEAR OR THE YEAR AFTER, IF MARKET CONDITIONS DO NOT IMPROVE. THANKS TO THE MEDIA AND ALL OF US GETTING PREPARED, A TON OF FOUNDERS MADE THE RIGHT CALL IN Q1 AND Q2 TO DOWNSIZE. SO EVERYBODY BOUGHT THEMSELVES TIME. MOST OF THE COMPANY RAISED A LOT OF CAPITAL IN PREVIOUS YEARS. YOU WOULD RAISE FOR 18 TO 24 MONTHS. THE BULK OF THE PAIN, UNLESS THERE IS A CRAZY STRONG RECOVERY, IS TO COME UP. AT THE EARLY STAGE I HAVEN'T SEEN ANY BAD TERMS. . >> AND I THINK WE ALL AS PEOPLE WANT TO CONTROL OUR OWN DESTINY. THIS IDEA IS HOW DO I DO THAT, HOW DO I HAVE AS MUCH CONTROL OUTSIDE OF WHATEVER IS GOING TO HAPPEN IN THE MARKET. USUALLY YOU NEEDED 12 MONTHS OF RUN WAY. THEN IT'S, NO, YOU NEED 24. NOW TWO IS THE NEW ONE. THREE IS THE NEW TWO. SAME TERMS, JUST A EXTENSION ROUNDS. OKAY, I'M GOING TO UNDERSTAND

HOW DO I MAINTAIN MY FLEXIBILITY. AND THE WHOLE GOAL IS TO HAVE THAT FLEXIBILITY SO YOU CAN EXPERIMENT AND UNDERSTAND WHAT DOES THIS NEED TO EXIST IN THE WORLD. THIS IS NOT EVERYBODY NEEDS TO GO AND GET PROFITABLE. I THINK THAT'S REALLY GOING TO MAKE A BUNCH OF COMPANIES DO THE WRONG THING. BUT IT'S UNDERSTANDABLE WHAT DOES TRACTION AND HOW ARE YOU GOING TO BE ABLE TO REALLY KNOW IF YOU'RE PROVIDING VALUE. LIKE WHAT IS THAT? WHAT IS THAT MEASUREMENT TO YOU? THAT'S NOT ONE SIZE FITS ALL. >> IT HAS TO BE HARD TO INNOVATE WHEN YOU ARE CONSTANTLY FOCUSED ON — >> YEAH. IT COULD LEAD TO WEIRD DECISIONS THAT YOU WANT TO BE CAREFUL OF. >> IT'S ALSO NOT FUN. IF YOU ARE A MEMBER OF A TEAM THAT YOU HAVE TO BUDGET ALL THE TIMES, YOU ARE NOT THE FOUNDER OR EXECUTIVE AND YOU ARE TECHNICAL. YOU ARE THINKING WHAT AM I PASSIONATE ABOUT TO MOONLIGHT ON TO GET GOING.

LIKE THIS IS HAPPENING. >> IT USED TO BE THE ANSWER WHEN CAPITAL WAS CHEAP, WAS LIKE GROW AND DO IT ALL. AND NOW THIS ABILITY TO SEQUENCE THE STEPS IS INCREDIBLY IMPORTANT BECAUSE THE RESOURCES AND THE NEED TO SEQUENCE VERSUS DO ALL THE THINGS HAS PROBABLY BECOME ONE OF THE FOUNDER'S GREATEST SKILLS. IT USED TO BE HOW CAN YOU HIRE, ATTRACT AND BUILD. NOW IT IS HOW CAN YOU SUSTAIN, SEQUENCE AND CONTINUE THE MOMENTUM. SO I THINK THAT'S A BIG SHIFT IN THE FOUNDER'S JOB. . >> GUYS, I GUESS THE BIGGER QUESTION, TOO, WHAT ARE WE GOING TO DO WITH ALL THESE COMPANIES, MANY, MANY COMPANIES THAT HAVE GOTTEN FUNDED AND HAVE NOWHERE TO GO RIGHT NOW? THE EXIT MARKET IS COOKED. I DON'T KNOW IF SPACs WILL COME BACK. OBVIOUSLY, A LOT OF COMPANIES WENT PUBLIC THAT WAY LAST YEAR. SOMETHING LIKE 14 COMPANIES HAVE CHOSEN — IT WAS INTERESTING THAT WASN'T MORE WIDELY DEVELOPED.

WE HAVE A PROBLEM >> THERE ARE SO MANY TECH COMPANIES THAT ARE DOING REALLY, REALLY WELL. THEY HAVE A LOT OF CASH ON THE BALANCE SHEET. HOPEFULLY AT SOME POINT, NOW THE EVASION NEEDS TO BE MORE RATIONALIZED THEY WILL NEED TO DEVELOP THROUGH M&A. THIS LIKELY WILL HAPPEN. SPECIFICALLY THE LARGE FIRMS LIKE YOURS, WE WANT TO SEE SMALLER EXITS. IT'S ABOUT THE ENDEARING COMPANIES THAT REALLY CAN GO THE DISTANCE AND PRODUCE 100 X RETURN AND PAY FOR THE WHOLE PORTFOLIO. IT'S AN INTERESTING TIME WHAT'S GOING ON RIGHT NOW IN THE EXIT LANDSCAPE. WITH THE TERMS RATIONALIZING I WOULD ASSUME TO SEE MORE M&A. IT'S GOING TO COME UP. >> SEEMS INEVITABLE. >> CARYN, YOU WORKED FOR MARK ZUCKERBERG 10, 15 YEARS. >> YES. >> HE'S VERY FOCUSED ON THE METAVERSE, OBVIOUSLY. WEB 3, I KNOW COATUE HAS DONE SOME CRYPTO. IS THAT A BIGGER AREA OF FOCUS?

IT WAS SOMETHING THAT WAS VERY MUCH IN THE HEADLINES FROM I'D SAY FEBRUARY THROUGH JUNE. I FEEL LIKE I'M HEARING THAT TERM LESS AND LESS. >> SO I DID WORK FOR MARK ZUCKERBERG FOR MANY, MANY YEARS. BEST BOSS I HAVE EVER HAD. HE'S A TREMENDOUS LEADER. AND I LEARNED A TON. I THINK WHEN YOU — SO I WORK AT C COATUE. MY FOCUS IS AI, OPEN SOURCE, A LOT OF INTER — ENTERPRISE. CRYPTO IS IN TERMS OF PAYMENTS. THAT'S HOW WE THINK ABOUT IT. OUR FOCUS AREAS ARE KWRAEU, CLIMATE, HEALTH, ENTERPRISE, AI. >> I REMEMBER WHEN MARK SPOKE HERE. DO YOU REMEMBER THAT? WITH HE MANY INTERESTING — WERE WE AT THE FERRY BUILDING? WHERE IT WAS LIKE — >> IT WAS VERY COLD. >> OH, IT WAS REALLY COLD. OKAY. THERE ARE MANY STORIES. I DON'T KNOW. A PRO TIP IS WE WENT PUBLIC. IT'S VERY EASY TO REMEMBER. WHEN FACEBOOK WENT PUBLIC IT HAD ZERO IN MOBILE REVENUE.

IT'S GOOD TO UNDERSTAND, EVEN THOUGH WE STAYED PRIVATE, WHEN WE DID GO PUBLIC IT WAS THIS WHOLE THING. WE HAD NO MOBILE REVENUE. WE HAD TO REWRITE OUR MOBILE APPS AND GET THAT RIGHT AND THEN OUR BUSINESS MODEL. >> I REMEMBER THAT. >> THE MORAL IS AS A FOUNDER, EVEN SUPER SUCCESSFUL COMPANIES LOOK LIKE THEY GO UP AND TO THE RIGHT. FROM BEING INSIDE, IT ALWAYS FEELS LIKE THIS THIS. IT'S LIKE A JOURNEY. >> RIGHT, RIGHT, RIGHT. ABSOLUTELY. GUYS, THANK YOU SO MUCH. WE'RE OUT OF TIME, WHICH STINKS. I WOULD LOVE TO TALK TO YOU FURTHER. THANK YOU ALL OF YOU FOR JOINING US AS WELL. . >> THANK YOU. >> APPRECIATE