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This Week in Startups

Is investing REALLY the hardest job in tech? A TWIST VC Roundtable (ft. Deedy Das and Jay Eum) | E2204

83 min episode · 2 min read
·
Deedy Das

Episode

83 min

Read time

2 min

Topics

Career Growth, Productivity, Investing

AI-Generated Summary

Key Takeaways

  • Venture succession planning: Sequoia maintains decade-long leadership transitions where outgoing stewards deliberately reduce office presence to force decision-making toward new leaders. Roelof Botha delivered over 50 billion dollars to LPs with a 21x fund return, never losing money across seventeen funds spanning fifty years of operations.
  • Pre-seed funding bar elevation: Median valuations normalized to 2021 levels, but companies now demonstrate actual revenue traction before raising. Investors routinely see profitable companies at 1 million ARR raising at sub-20 million post-money valuations, making zero-revenue deals unnecessary when validated alternatives exist with five-times growth rates.
  • AI revenue acceleration patterns: Companies like Higgs Field grew 60x in six months from 1 million to over 70 million ARR. Anthropic tracks as fastest-growing software company ever, projecting 10 billion ARR after starting the year at 1 billion, consistently undershooting their own projections every single year.
  • Payment willingness transformation: Businesses readily pay for multiple AI tools monthly because decades of positive SaaS experiences created spending comfort. Enterprises choose productivity tools over hiring additional staff, making 200 dollar per seat subscriptions for developer tools like Cursor and Copilot easy approval decisions for management.
  • Deal velocity compression: Founders receive term sheets before completing data rooms or uploading financials. Investors skip traditional diligence to avoid missing deals, with some firms finding investors through AI chatbots and conducting entire fundraising processes through automated tools, fundamentally changing how capital gets deployed.

What It Covers

Venture capitalists Jason Calacanis, Didi Das, and Jay Eum discuss Sequoia's leadership transition with Roelof Botha stepping back, rising pre-seed expectations, AI company valuations reaching extremes, and how revenue growth fundamentally changed startup funding dynamics.

Key Questions Answered

  • Venture succession planning: Sequoia maintains decade-long leadership transitions where outgoing stewards deliberately reduce office presence to force decision-making toward new leaders. Roelof Botha delivered over 50 billion dollars to LPs with a 21x fund return, never losing money across seventeen funds spanning fifty years of operations.
  • Pre-seed funding bar elevation: Median valuations normalized to 2021 levels, but companies now demonstrate actual revenue traction before raising. Investors routinely see profitable companies at 1 million ARR raising at sub-20 million post-money valuations, making zero-revenue deals unnecessary when validated alternatives exist with five-times growth rates.
  • AI revenue acceleration patterns: Companies like Higgs Field grew 60x in six months from 1 million to over 70 million ARR. Anthropic tracks as fastest-growing software company ever, projecting 10 billion ARR after starting the year at 1 billion, consistently undershooting their own projections every single year.
  • Payment willingness transformation: Businesses readily pay for multiple AI tools monthly because decades of positive SaaS experiences created spending comfort. Enterprises choose productivity tools over hiring additional staff, making 200 dollar per seat subscriptions for developer tools like Cursor and Copilot easy approval decisions for management.
  • Deal velocity compression: Founders receive term sheets before completing data rooms or uploading financials. Investors skip traditional diligence to avoid missing deals, with some firms finding investors through AI chatbots and conducting entire fundraising processes through automated tools, fundamentally changing how capital gets deployed.

Notable Moment

Jay Eum describes investors chasing high-growth founders through airport security lines and appearing unannounced at doorsteps with term sheets, indicating FOMO levels approaching bubble territory as everyone attempts to avoid missing the next OpenAI or Anthropic-scale outcome.

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Episode Transcript

Didi, you, were promoted recently from principal to partner, I believe. I know you probably can't tell us all of Mindlow's long term plans for succession, but I am curious how often you think about your upper trajectory at the the firm and, if there is more headroom for you to grow into. Do you want to become one of its core leaders down the road? Is that a possibility? Tell me what it's like from your hot seat. Honestly, I I I'm very thankful that they brought me in as somebody who had, you know, no real experience in venture. Like, I was really a person who just studied the craft from a distance. Right? I I write online. I read everything I can. I was a part of a start up, Glean, that went really well from the very beginning to to about the time I left, and it's still doing fantastically. I just don't have that approach to how I see Menlo. I mean, I I joined this fantastic team, very much to work as a team together and, and reinvigorate what the firm, stood for. I mean, we've been around for fifty years. We're on our seventeenth fund. So we'll a part of the old guard, really, in terms of how storied the firm is, but, you know, with any time, I think there is a time for resurgence and rebuilding of a firm. And, I don't know what the future lies, but I think every day about how what we could be doing differently to be, different in venture. And if you look at, like, the last four people that we've sort of hired at Menlo, you have Tim Tully, who's the CTO of Splunk. You have Joff Redfern, who is the CTO of Atlassian. You have Matt Kraning, who, did a PhD from Stanford and sold a unicorn cybersecurity company. You have me. Like, these are people who've operated businesses. And so one of the things that we are trying really hard to do is sort of marry this set of people who have been in the weeds and sort of seen, like, the brutality of what it takes to run a good company, with investors who get the finances, who understand the long term vision as well. And and we're very early on that arc. Who knows what that future holds. But right now, my main focus is, hey. Let's focus on getting things right as Affirm. How do we invest? What are our principles? What do we stand for? And how do we get in, and and partner with the best founders, to be honest? This Week in Startups is brought to you by AWS Activate. AWS Activate helps startups bring their ideas to life. As you build and scale your business, Activate credits grow with you to support your changing needs. Apply to AWS Activate today and receive up to $100,000 in credits. Visit aws.amazon.com/startups. Northwest Registered Agent. Starting your business …

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Books, tools, and gear mentioned in this episode

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Tools

  • Enterprises choose productivity tools over hiring additional staff, making 200 dollar per seat subscriptions for developer tools like Cursor and Copilot easy approval decisions for management.
  • Enterprises choose productivity tools over hiring additional staff, making 200 dollar per seat subscriptions for developer tools like Cursor and Copilot easy approval decisions for management.

company

  • Jay Eum describes investors chasing high-growth founders through airport security lines and appearing unannounced at doorsteps with term sheets, indicating FOMO levels approaching bubble territory as everyone attempts to avoid missing the next OpenAI or Anthropic-scale outcome.
  • Anthropic tracks as fastest-growing software company ever, projecting 10 billion ARR after starting the year at 1 billion.
  • Venture capitalists Jason Calacanis, Didi Das, and Jay Eum discuss Sequoia's leadership transition with Roelof Botha stepping back.

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