Invest Like the Best with Patrick O'Shaughnessy - Neil Mehta - Finding Future S&P 500 Companies - [Invest Like the Best, EP.419]

Episode Date: April 15, 2025

Today's guest is Neil Mehta, founder of Greenoaks Capital. In 2012, aged 27, Neil left D.E. Shaw to start Greenoaks with his friend Benny Peretz. One of their first investments was in Coupang, a South Korean e-commerce company led by founder Bom Kim. Neil was so convinced of Coupang's potential that he invested 40% of their initial $50 million fund into the company—a bet that eventually returned about $8 billion. Over its first 13 years, Greenoaks has backed legendary companies like Figma, Wiz, Carvana, Stripe, Discord, Rippling, and Toast—generating over $13 billion in gross profits with a 33% net IRR. Henry Kravis, one of Neil's early investors, describes him as "extremely disciplined" with "exceptional timing" who has "gone against the tide many times." Greenoaks operates with remarkable concentration: just 55 core companies across nearly $15 billion in assets, managed by only nine investment professionals. Their approach reflects their singular pursuit: finding companies that will become a meaningful part of the S&P 500. In our wide-ranging conversation, Neil shares this mission along with his framework for identifying exceptional founders, his concept of "jaw-dropping customer experiences," and how his grandfather's gun shop in India shaped his appreciation for builders of all kinds. Please enjoy my excellent conversation with Neil Mehta. Neil Mehta's Profile in Colossus Review. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus. – This episode is brought to you by Ridgeline. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Head to ridgelineapps.com to learn more about the platform. –  This episode is brought to you by AlphaSense. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Invest Like the Best listeners can get a free trial now at Alpha-Sense.com/Invest and experience firsthand how AlphaSense and Tegus help you make smarter decisions faster. ----- Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: (00:00:00) Welcome to Invest Like the Best (00:06:32) Connecting Craftsmanship to Career (00:07:45) The Concept of Jaw Dropping Customer Experience (JDCE) (00:09:48) Building a Successful Business: The Coupang Case Study (00:17:26) The Importance of Founders & Business Models (00:30:05) Greenoaks' Unique Approach to Venture Capital (00:37:54) A Memorable Encounter with Henry Kravis (00:40:52) Early Career and Lessons from Hong Kong (00:44:53) The Partnership with Benny (00:50:28) Navigating the Competitive Landscape (00:59:14) High Conviction Investments: TripActions, Rippling, and Carvana (01:07:00) Investment Strategy and Company Evaluation (01:13:23) Adventures in Emerging Markets (01:17:09) Challenges and Lessons Learned (01:26:16) Personal Values and Community Impact (01:32:16) The Kindest Thing Anyone Has Ever Done For Neil

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To see what happens when you eliminate the busy work, check out Ramp.com slash Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus Review, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus review along with all of our podcasts at join colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions. expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion

of positive sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of positive sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. Today is a special episode. My guest is Neil Mehta, founder of Greenoaks Capital. In 2012, at age 27, Neil left D.E. Shaw to start Green Oaks with his friend, Benny Peretz. One of their first investments was in Kupong, a South Korean e-commerce company led by founder, Baum Kim. Neil was so convinced of coupons potential that he invested 40% of their initial $50 million fund into that one company, a bet that eventually returned about $8 billion. Over its first 13 years, Green Oaks has backed

legendary companies like Figma, Wiz, Carvana, Stripe, Discord, Rippling, and Toast, generating over $13 billion in profits with a 33% net IRA to LPs. Henry Kraviss, one of Neal's early investors, describes him as extremely disciplined, with exceptional timing who has gone against the tide many times. Green Oaks operates with remarkable concentration, just 55 core companies across nearly $15 billion in assets, managed by only nine investment professionals. Their approach reflects their singular pursuit, finding companies that will become a meaningful part of the S&P 500. In our wide-ranging conversation, Neil shares this mission along with his framework for identifying exceptional founders, his concept of jaw-dropping

customer experiences, and how his grandfather's gun shop in India shaped his appreciation for builders of all kinds. Once you've heard directly from Neil, I highly recommend you read our in-depth profile of him. Neil gave our editor-in-chief, Jeremy Stern, unprecedented access to his life, investment philosophy, and the work that has made him one of the most successful and unique figures in modern investing. The outcome is a brilliant profile about a phenomenal investor. Find the profile on our website. Join Colossus.com. and in the show notes of this episode. Now, please enjoy my excellent conversation with Neil Maydow.

I think I have to ask about your grandfather first. Yeah. Whoever taught you the artisan craftsmanship of gun making. Can you start that story? Yeah, my parents moved here in the 70s. My grandparents are both from India. Both sets of my grandparents are from India. I was particularly close to my dad's side, my grandfather in particular.

My dad was busy, traveled a decent amount. He and my mom would tell you that my grandfather, raised me just as much as they did, especially when I went young. My dad was hardworking. He's my best friend. He's an amazing influence in my life. He's still considered my best friend. My grandfather was the opposite of my dad. He was very calm. He meditated for an hour plus every day. The culture I grew up in is Jane, which is a subset of the various Indian cultures or Indian religions. Janeism, a little bit like Buddhism has a lot of tenets around meditation. He has the most peaceful, calm guy. And so when I was growing up, I just knew him to be this very

calm, straightforward, deep equanimity. And it was only when I was eight or nine years old. I learned that he owned a gun shop, which was sort of counterintuitive to the guy he was. And we would go back to India, to Bombay, Mumbai, every year, at least once a year, sometimes even twice a year. And when we got there, his house was tiny. It was one or two bedrooms, a kitchen, and then literally just a hole in the ground for the toilet. It was a pretty run-down piece of property, dirt everywhere, very little flooring. But what he did have in that house was an amazing gun collection. It was astonishing. And it came from these stores that he used to have.

And it was not really, you think about Gabaspro shop as a gun store. It was not bad. It was really collector's items that he had found his way to collecting and selling over the course of many decades. I'd hang out of the shop all the time. And the people that would come in would be everybody from English gentry that were looking for a place to hunt in India. And they'd know him well. His name was Darachind. And they'd say, Darachin, what about this?

gun versus that gun, and he'd sit there and he'd opine for 10 minutes on which gun was better than the other gun. And it wouldn't be the millimeter casings or the pullback. It would be about the design and the craftsmanship that went in to each parcel on the gun. It was of an appreciation for the artistic craftsmanship that went into this beautifully designed piece. It was a little bit like talking about art. In fact, there was almost no relevance to what the capability of that gun would do. I would just spend hours with him in the shop. And that passion he had for it, was deeply infectious. I mean, my brother and I would spend all the time studying every gun, asking every question. By the end of the summer, I could usually run down whatever was in that

shop and tell whoever was in there. Can you tie the feeling of that appreciation for the craftsmanship to what you do now? Is there a direct line? Do you think that had you not seen those guns, was it that impactful, that early appreciation for craftsmanship, or would you have come to it a different way? It's hard for me to know the difference if I had an experience. If I had an experienced that, what I might have been like. But having experienced it, there's no question in my mind that there was an appreciation for humans creating beautiful work for other humans in particular that I really appreciated. And if you think about the business I'm in today is evaluating founders, building what we think are generational companies and being a partner to them.

And I do think there's an artistic form to it. I mean, we oftentimes internally at Green Oaks describe a company as an artist painting a painting. I tell a lot of our, you know, young team. If you're in the business of evaluating painters, you've got to study the types of tapestry you can use, you know, paints they use, different forms. You study all the great artists of every generation through history. You talk to artists all the time. And companies are just really founders painting in many ways. I think there's an appreciation I certainly got from that of what quality can look like on a comparative basis to something that's not as good quality. Could you describe this acronym JDCE that I know is a key part of the early Green Oak story and

is something I'm sure you still think about a lot, and maybe pick an example and go as far down as you can on what made for a JDCE and a company or product that you were evaluating. Yeah, JDCE stands for jaw-dropping customer experience. If you put five drinks into everybody at Green Oaks on a Friday night and you're just like, tell me about you're like, they just talk about jaw-dropping customer experiences and JDCs. It's like we have a tattooed on her arm. And if you step back, there's a fundamental tenant at Green Oaks, which is, A very small number of the world's founders are going to produce a significant proportion

of the value that humans enjoy. And they're going to move the world forward through the products they build and the companies they build. And everything else is just kind of a shell game along the way. And there's some tenants around building those remarkable businesses at scale that we think are really important. One of them is building a jaw-dropping customer experience. It's really hard in the world of capitalism to build something that delights humans at a

differential rate, what anybody else on Earth can do. Think about when you pick up your iPhone or the first time you might have used an Uber, if you're a developer, the first time you use Stripe for payments or if you're a trader, maybe you open the Robin Hood. Capitalism is basically full of a sea of businesses that are not really doing anything that difficult. They're just kind of Me Too products that are swimming in the river of beta, if you will. And I think the steps to creating a JDCE, a jaw-dropping customer experience, it usually starts with breaking tradeoffs. It usually starts with doing something very difficult, either technically or operationally, that would usually give competitors nightmares. You have to do something that was borderline impossible or perceived to be

impossible before. You have to do it from a customer-centric perspective. You have to really figure out what the customer pain points are. You could ask some customers, but usually customers can't even articulate all the pain points they're facing. They just know they're frustrated or this experience is suboptimal. We're lucky at Green Oaks. Over the last 12, 13 years, we've been lucky enough to partner with a number of companies that had built jaw-dropping customer experiences. I'll tell you where we created the word. I created the word after spending a lot of time with coupon right at the beginning of Green Oaks. And in the case of coupon, so Baum started a business that was just starting to sell products like any other online site would sell products. It was

really a marketplace. And he made the decision in 2013, 2014, that he started to transition that to building one P capability, meaning that he could pick, pack ship, and deliver a wide variety of skews, everything from soap to tissue paper, to golf clubs, to fresh groceries over time. And the early days of that, if you asked people around Korea, they would tell you, we don't need faster delivery. Everything shows up here in two and a half to four days. It's great. It's totally fine. And his view was actually it's consistent, reliable fast delivery. You get the stuff you ordered on time, usually within 12 to 24 hours. And that sounds obvious today. You order something 12 hours later or 24 hours later, it shows up at your door. Now it's called

the rocket experience at coupon. But at the time, building that, it sounds easy. Open a warehouse, put a bunch of stuff into that warehouse, hire a bunch of drivers, work with those drivers to fill up their trucks, deliver it to the door, take it off. Now, there's a bunch of stuff that breaks when you actually try to build that experience step by step. First thing is the unit economics completely break. Second, to actually drive throughput through these, do you buy for manufacturers, how much do you buy for manufacturers? What do you do about your inventory terms? how you surface the right stuff on a website. It is extraordinarily hard to go build all that stuff. And it took years, it took two to four years to really start to build that flywheel so it worked.

And what did it entail to build a job dropping customer experience? It took new technology. Goupong built not just a new warehouse management system from what the consumer touches on a website all the way down to new routing software. FedEx famously never wants a driver to take the left turn as it takes a little bit more time. It was like that kind of optimization. It was infrastructure. It was building warehouses that were the size of football fields in place that doesn't have a lot of space, by the way, in Korea. It was building delivery camps and it was building localized distribution points where that you have thousands of apartments to be able to make sure you could have even people run up and down the apartment to deliver something. It was making sure that you had the right

packaging so that didn't get stuck with lots and lots of boxes. It came down to where do you leave it outside someone's door so you don't wake them up when you deliver it at 6 a.m. Make sure it's safe. When you add all those things together, actually the way we came up with the term is bomb would show us, you'd see in the cohort behavior, average retention in pre-1P delivery was probably in the 30s, overall for the market, not for coupons specifically. Coupong for Brockett, which was eventually called Rocket Through 1P capability, was in the 60s on a core retention basis. So it was clearly working. But that wasn't the coolest part about it. The coolest part is when we would ask customers about their experience.

We do these video recordings and coupon will do them as well. I remember multiple of the videos, the woman was crying. The mom of the house was crying because the diapers were showing up the morning of and she didn't have to carry these giant boxes home from the store. She's like, if you took this away from me, I don't know what I would do. Please don't take this away from me. That is not an MPS score of nine. That is a jaw-dropping customer experience.

That is incredible. When you think about Baum and a person like that that you met early, I think you led five of the eight rounds in coupon. Maybe tell the investment side of that story. So that's what Baum is doing for one aspect to create this incredible, loyal customer and fan base. Meanwhile, you're doing something very differently through Green Oaks, which is typically a company like yours would invest, maybe lead the Series A and participate in the rest of the rounds on 5% or something at IPO. The way that you've always done it is very different. You're very, very concentrated. Maybe just talk about. a step-by-step the five of the eight that you led. So how much did you end up owning? Talk us through the numbers and the position. And this has an investment case study. Obviously, it's an important one for Green Oaks, but it's indicative also of the kind of investing that you do and how it's

different from other firms of your type. We think of ourselves as very long-term investors. And if you really want to understand how long, I've been on the board for about 15 years. And this is public information just last quarter, we were buying more shares. Yeah. It tells you. It tells you. More than just five of eight rounds. Yes, exactly. We're still actively. investing and helping where we can in the company. I consider Baum's development of coupon and the development of Green Oaks that I've had is they're intertwined. I mean, it was one of the first investments we made. And I joined the board pretty quickly. And it was a seed investment. Green Oaks is probably

best known for its growth investments. We'd like to lead growth rounds in companies that we think will be a meaningful part of the S&P 500 over time. When we invested in coupon, green oaks barely existed. When I was telling Bond that it was Green Oaks, he's like, I've never heard of Green Oaks. Don't worry, nobody's served green o' me. This is what you're hearing about for the first time, And I just made it up. And he was kind enough to bring us in as an investor. And it's hard to start anywhere but the founder, which is in this case, Baum. And Baum, I would say there's a bunch, it's a lot of the tenants we look for in any great founder, Baum possessed right away. It starts with focus. Baum had this unique ability early on to identify what was the most important

thing in the company and focus all his time on that at the exclusion of everything else. wouldn't be unusual if you looked at Baum's calendar on a Sunday night, everything the next week, Monday, Tuesday, Wednesday, Thursday, Friday, it would just be blocked out with one single thing he was trying to con. If it was negotiating cost of goods sold in the diapers division in mid-2014, there'd just be two weeks blocked out for diapers. To just do that for six hours a day, fires, and he would just assemble a team and go deep on that and let everything else burn if needed. that kind of focus is just extremely unusual. People like to say they're focused. They don't really understand what focus means. Focus means saying no to everything else, everything else at the cost of doing what the single most important thing is. There's two parts of that. It's the ability to

prioritize what is most important. You have to practice it to be able to intuitively grok what is most valuable and most important. And then the ability to maniacally do that at the cost of everything else is an intestinal fortitude that just not a lot of people have. Second, just the ambition. There was a lot of clarity reasonably early on that by building this 1P capability, Baum could build the best e-commerce experience in the world. Not the best in Korea, not the best in Asia, the best in the world. Better than Amazon, better than anywhere else on Earth. He has done that today. But at the time, that didn't just ring hollow. There's a lot of people that say that. You meet founders all the time that have very lofty ambitions, but there's a credible aggression to

it, that you're sort of able to validate along the way. I've never met a founder that doesn't want to climb the tallest mountain. Of course I want to climb the mountain. It's the ability to demonstrate that they've mapped out their route. They've shown you how they're going to rash your materials. They're going to show you what tradeoffs they might have to make along the way. They'll tell you how they built a team to make sure they get there. They'll tell you the steps of what's going to happen along the way. They've maybe even tried a few paths and come back and said, okay, now I'm going to go this way. There's a credible aggression to it that I think is unique to just pure aggression. Many of the rounds we led in the company were a result of Baum attacking this mountain. The building of

coupon was over 10, 15 years to where it is today. And there's beds in every delivery cam. Bob was sleeping on the floor. I mean, there are points where I talked to Baum more than most anybody else in my life. I mean, Benny and my wife, Flash. Oh, yeah, still. To this day, I still talk to him a tremendous amount. Back then, I don't think there was an hour a day where I hadn't talk to him, 2 a.m. in the morning, 3 a.m. in the morning, 3 p.m. in the afternoon, 10 a.m. in the morning. His cycle times were 24 hours. There were points of enormous exhaustion for him and the team. So if you think about those rounds that you led, I always struggle with you a little bit of trying to understand, and I guess the answer is both, if you're a more founder-centric investor or a more

business model-centric investor. But I'm sure at different stages of those eight rounds, you were investing for different reasons. Is that often the case that at some point you might be backing really just a founder and what they're capable of at other points? Really focused on the unit of economics. is every single investment idiosyncratic in that sense? Because I don't remember a conversation with you about a company that didn't include pretty hardcore quantitative's angle. But so much of, I think, what's made you successful is you back some of the best founders. And so Elplice Square, like, what matters when?

I have a controversial statement, which is, I don't think there are many truly amazing founders that are building bad businesses. And maybe rented to one or two, but they figured out pretty quickly. I think that truly remarkable founders think in terms of jaw-dropping customer experiences. They think in terms of competitive moats. They think in terms of scale, you know, getting to large Tams. So every once in a while, I run to a founder that hasn't figured that all out yet, but usually they're very young and the learning curve is very steep.

It always starts with founders for us. Now, I'm going to come to business models in a second, but if you believe what Green Oaks believes, which is, I don't know, there's been 100 billion people on Earth that have lived and something between the number of 10,000 to 100,000 have affected the technological progress of humankind. Our job of Green Oaks is to find a few hundred more. I can join the pantheon of great humans that have driven humanity forward. Then we're squarely focused on that first. I think that where we could generate alpha, where we're sometimes differentially great partners, is by having a deep understanding of the business model. So in the case of coupon, in the case of

most of the businesses we invested, we need multiple rounds in. It's never up into the right. oftentimes in internet and technology, good businesses are hidden in bad P&Ls. Not everything works right away, but things are going really fast. And people sometimes think Green Oaks is looking for momentum or forward progress. Actually, we're happy with volatility. It's kind of counterintuitive. Volatility is something like we're very open to. And we're open to it because when there's moments of high volatility, it's a lot harder

to understand what's happening to a business, what's happening to a market. And so we will follow great founders into their businesses, and there'll be moments where the businesses do not feel all that great. There's been, I think, without exception, most of the businesses we've been invested in for more than five years have gone through a rough patch or two, where the fundamental premise of the business and the quality of the business is being questioned. And I think if you could see through it, sometimes that's right to be questioned. We were wrong. But every once in a while, you could sort of see through that and see the other side that this is just one step along the way of building a great business. So in coupons, just to close out that case study,

Over how many years, I guess, from the first one through to today, so the whole time, did you invest? But how much did you invest in each round? How much did you end up owning of the business? Bring some meat to it. We invested a little bit under a billion in total capital across 10 years. Led five VAT rounds. We invested almost every other year, if not every year, in the company for 10 years until it went public. And then since it's gotten public, we've bought more shares, maybe two or three of the years. I want to get into your deep belief in growth, not just from an investment standpoint,

but from an almost deeper economic or even philosophical standpoint, why do you care so much about the concept of growth? It seems like that is the thing underpinning all of your behavior. We're big believers in capitalism. The microphones were in, the chairs were in, the view outside. It's all built with capitalism. As far as I'm concerned, this has been the greatest invention humans I've ever had. I believe it is our job to further our journey as humans within the framework of capitalism. When we started Green Oaks, we described ourselves as a growth. We actually never used the term growth, we just said we'd like to invest in great businesses that are going to be a meaningful part of the S&P 500. To this day, I still have a list of the S&P 500 companies on my desk.

It's a certain list all the time. And I just try to figure out what companies are not on that list today and will be on that list tomorrow and how they work tirelessly become the single most important partner they have. To be honest with you, I've been surprised that people think there's other large-scale ways to invest besides growth. I think this is by far the most interesting way to invest. And a couple reasons why. I mean, you could go back to the 60s, and you could talk about companies like AMD and Intel that were around in the 60s.

You could go to the 70s where you had Apple and Microsoft. You could go to the 80s where you had Dell, ASML. You could go to the 90s where you, of course, have Google, 2000s, you have Facebook. A small number of companies, I think 1% of the S&P 500 make up 90% of the value. And most of those were growth. All of those were really growth companies.

They were companies that over the course of many, decades, reappropriated free cash flow away from these legacy incumbents, moved it into their impoverview and became a staple for how consumers' enterprises work in the world. And to me, that is such an enjoyable way to spend your time to find founders that are hell-bent on trying to create one of those S&P 500 companies that delight customers at scale. It's also the most rewarding financially. I think the companies that we invest in will capture a lion's share of new economic value in the world. Everything else is just a shell game around it. I have lots of friends that figure out what's happening, quarterly with Netflix, doesn't matter me at all. I'm much more interested in figuring out

is Netflix a great compounder that is going to grow over 20, 30 years. It seems like one of those things like, oh, high is good? When is it not? Just riff on the hidden costs of really high growth. There's going to be a lot of people that disagree. Growth is an output, not an input. And growth for growth sake makes no sense. But one of the unique things about our industry and about great companies, if you historically look at the growth rate of many great technology companies, they were very high for a long time. They had a lot of growth persistence as well, or growth endurance is another way to put it. The net Next year, was it in the 80s or 90% of the previous year?

The best companies have extraordinarily high growth persistence or growth endurance. I am a believer. There's this meme that's come out, which is too high of growth, like, destroys company. I think very high growth is very good for companies. I think like a reasonably high growth is very good for companies. And Mario And Dreddy quote, where it's like if everything's under control, you're not going fast enough. I think. It is healthy in my mind.

In the businesses I've been involved in, it's healthy to let a few things break here or there in order to keep pushing. And that results in high growth. especially for software companies or bits companies rather than Adams companies, I think it's good. Do you have a favorite anecdote or story of a company growing really fast from the history of Green Oaks that like kind of makes that point? A lot. Yeah. And by the way, you know, what's interesting is almost every company on portfolio that's been successful has had many 100 plus year over year growth rates. Whiz is a great example. When the war started more recently, when Amos attacked Israel and some disproportionate share of the people involved in WIS and the go-to-market team and the engineering team. went to go serve for their country. Of course, our natural reaction, I think it was like Q3 or, it was October, of course.

So we were like, ah, this is the right thing. And of course, we should just absolve the company of any expectations for November and December. Just forget even reporting. Just worry about your people and worry about the country. I think they have like one of their best quarters. They're just like, that doesn't mean we're going to slow it down. We're going to keep going. Having unreasonable expectations is a competitive advantage.

Another example of this is, Tom, Kim, who grew the business incredibly fast. at coupon for a long time. And oftentimes when you have strong product market fit, it is like your moral obligation to drive it as fast as possible. But things break along the way, especially if you're in the Adams business too. And at points, we had stockouts and were constrained by what we could offer consumers. We had to hire more drivers. We had to build more warehouses. We had a year that was like 18% year over year growth. And there were people involved in the company that were telling bomb, oh, that's good. You don't need to take it back up. Just leave it. You know, Amazon never grew more than 30% year over a year. That's fine.

good. Just get back to 30. I remember having this conversation with Bomb and I said, I think one of the hardest things you'll ever have to do is convincing everybody at the company to be a high growth company again, to try to take that growth rate well above 30 and end and start to bring a growth mindset of agriculture back to the organization. He commented to me many years later. So he was one of the hardest things we did. I'm so glad we did. I'm so glad we became a high growth from again. I want to come back and really talk in detail about this process. I like the way you framed it, which is this search for the next potential S&P 500. company and that everything else is a footnote. And there's all those famous studies about

whatever, 4% of the company is delivering 95% of the returns through equity history. It just seems like that's just always been the case and probably always will. How does that impact how you run a first meeting with a company? What are the sorts of things going through your head when you're wondering from the start, can this be a company that everyone in the world has heard of and used? Because these things all start small. How do you evaluate that question, even at the series B or C or whatever, versus if you were just saying, is this company going to make me a nice return? But maybe it's never going to end up in that list. I think it starts well before a first meeting.

I think it starts with figuring out why you want to meet someone. Why are you differentially great for that person to meet? What do you understand about that business? What do you understand about that opportunity? For a vast majority of what happens in our market, we and I are not the right person to have that first meeting with. But there's a select number. Yeah, I don't know how many meetings happen in our markets is tens of thousands at this point. there's probably 200 that happen a year where we think we would be a differentially great partner to that person and we know it well in advance. And so we prepare an incredible amount before that first meeting. I don't mean like go on the website and use the product a little bit. Our first meeting should feel more like a fifth or sixth meeting that founder rather than a first meeting. It allows us to go much deeper. And that the things I'm looking for, if someone just asked me, I'm going to give you a tangential side. Usually I like to visit a company rather than them come to us, which is also counterintuitive because you can do less meetings if that's the case. So I

I love to go visit. And I'll give you a battery of things I'm looking for. But if you put a gun to my head, and you said, there's only one thing you could have asked this company and people at this company. And I never actually ask it, but I always think about it right away is when I visit a company and I watch people and I meet people, I'm trying to evaluate just one thing, which is if you pulled everybody at this company and you asked them, are your best days ahead of you or behind you, what would the proportion of people say? And especially the most important people. It's not year-over-year growth. It's not margins. It's not strong-form competitive advantage. It's not JDC. All of those things matter.

But if I picked one thing, very early on, even in the startup, you could tell if the energy is not there, if I'm more excited about the future. I mean, I just was in Europe a couple weeks ago. A vast majority of people, it seems like 40 years, I believe the best years are behind them, not a head of them.

If you were running a company, that's the one stat you should care about more than anything else in the world. When I spend time with the founder and I'm talking to them about their business, I'm trying to figure out, are they high focused, high ambition, determined, do they have divergent thinking that allows them to see something in the world and in their business that other people would vehemently disagree with but is right? So it starts with the founder, personality of that

founder. And I haven't been able to sit down and write on a piece of paper. I think every great founder looks approximately the same. Every bad founder looks different. There's some quote about happening. Yeah, the dot-sash people. Yeah, that's exactly. This is controversial. I do believe there's an archetype for a great founder, and I think that once you see it and learn it, it's a repeatable process. And I think some of the things I mentioned are part of that. I think that you're looking for usually someone that's built a jaw-dropping customer experience. That's why we invest at the stage we invest in. Because it takes some time.

It takes some time to get that experience right, especially in things like infrastructure SaaS. We're at the beginning, the infrastructure process is not that good. It just takes time to get the product into a performance level where it can actually delight customers. Consumers a little bit different. You could feel it right away. We're looking about for defensibility in that. what technical or operational tradeoffs have you broken that allow you to have the early signs of a moat. We're looking for competitive advantage. You have network effects, shared skill

economies, counter positioning, quartered resources. These are just adjectives we use to describe the characteristics of a business that allow it to produce unfair amounts of free cash flow over a sustained period of time. I tell us to our team all the time. I think with Buffett, you could sell 30 points of IQ and still be great. I think with us, you could sell like 40 to 50 points of IQ. It is not complicated. It is the discipline of only looking for those types of businesses and those types of founders. There is no secret sauce. It's just consistency of doing that over and over and over again across thousands of communities. Is it true that you are doing pretty much the first meetings almost every time with these founders? Yeah. That is strikingly different than the industrial

complex of private grossage investing that has emerged around you in the time that Green Oaks has been alive as a firm. Maybe highlight all the other ways in which you feel you and your process is the most different from what has emerged as the norm way of investing for your peers, let's say. I think what's happened over the last 10 years in particular, but it's been happening for a while is when I grew up in the industry and you drove down Sand Hill, there's like six firms. And the way the process worked is you'd walk into someone's office, usually someone was famous, you'd be a no-name entrepreneur, you'd tell them your idea, they kick it around for a while, they do three more meetings or maybe four more meetings. There's this great Elon Musk quote,

which is every manufacturing process is wrong, every production process is wrong, every design. Yeah, I won't get it exactly right. Every design process is wrong. It's just a question of how wrong. Because the likelihood we could have envisioned all the available capabilities that we have today when we design that process is zero.

Like, you know, so many things have changed. I think our industry is a little bit like that. You're going from this process where people would take a little bit of time. They wouldn't really know your company when you walk through the door to now we've gone from a cottage industry into a large-scale asset class at this point. And I think there are a lot of firms correctly so that believe venture at-scale venture with lots of capital, lots of companies, lots of coverage, lots of AUM, lots of people is the right way to prosecute it. And I think they're right because I'll get to why we're doing it differently. But I think they're right because why should people have earned 35 net IRAs for the course of many decades? That's too high for any asset classes. It should be in the teens. And usually you could deploy a lot more capital and a lot more people and bring down to the teens and still have lots of people excited about the way you invest. I think that has resulted in essentially the

private equidization of our industry. I think of a lot of our brethren. And these are friends of mine. I really like them. I think they're doing a great job. But they essentially have like a matrix. They have industries on the top and, I don't know, maybe geographies or stage on whatever their matrix is. Something comes into their firm. They serve it to that part of the matrix, that little box of people goes and chases after it. And what they've done is they've said, listen, everybody has a slide, which says, what are the series A's or series Bs or series Cs that happen this quarter and what percentage coverage did we have? What they're explicitly telling you is they're saying, we are optimizing for coverage. There's too much happening. There's too many ways to make money. The world's

a big place. We have five offices and all these great people, and we are a factory that's able to produce it. Now, I think that's actually the right end state for a vast majority of our industry. I think 90-something plus percent of our industry should work that way. I think for 10 to 15 best founders each year, that's precisely the wrong way to work. What you should definitely not do is meet someone in that little matrix, have it elevated to a senior partner at the firm, or maybe most of these firms are not found a run anymore anyway, but have it elevated to someone at the firm. And then they chase it all down and bring some people in and try to like win it and you become one of 35 or 40 investments they make that year. I think it reduces the purpose of venture capital, which is a little

bit of validation, a little bit of actual company building and partnership, a little bit of speed and velocity. And so I think if you're one of the 10 to 15 best founders, people like us should be able to find you before anybody else finds you. You shouldn't have to explain what you do all that much. We can understand from the outside and better than most anybody else from Earth. And you should get all of green hooks, not a little bit of green else, all of us. And because we know that there's not more than 10 to 15 people we want to really meet each year, we don't need to bifurcate or firm into multiple layers and have investment committees or any of that, which would be laser focused on the vital few

and basically leave alone, the trivial many. One of the coolest things about Green Oaks, I've seen the reports, I've talked to you about companies, and so I've seen it firsthand and know that it's true, is that sheer amount of information, like you said, that you gather on a company, even before you meet them. How has that process evolved? Talk us through that machinery,

because it's very distinctive relative to other firms that I've encountered. When I call you, you tend to know more about the company than anyone else that I talked to about the company, which sounds very non-scalable in some way. If your customer is one of these 10 people each year, it sounds like one of the guns in your grandfather's store, not mass manufactured Smith & Wesson or something. So how do you do both of those things? How can you have so much information about these companies and still have it feel to them like artisanal or something or high touch?

Or it's you in the meeting. It's not some junior associate. Like the two seem a little bit at odds, but I've seen the work. I don't think there's any secret to it. I think it's highly replicable. I think that one thing to know is we started growing up. It was a long way. We have no beach houses. We like being in the office 80 hours a week. We like working with each other. We're extremely high performing. And we love understanding companies. There's nothing else. We're not on Twitter. We like basketball. We don't have to go to any games. By just being ultra focused on this at the exclusion of anything else, surprising how much you could get done. In this process, are there a in negative things that you hear about people that actually excite you? Yeah. Oh, man, what a great question. Tons. It's funny, we learned the hard way on this, too. Early on, we're building Green Oaks. It's like GCO-1. We had heard some amazing things about

Elon Musk and Elon Musk at SpaceX, and Elon Muskett Tesla. He was already the guy. But we had some mentors, some people in the venture capital industry. It's actually the biggest mistake we've ever made a green oaks. This is a mistake I'm about to tell you. Which is we had heard, he fires people quickly. He's hyper aggressive. He manages down to the F layer. He micromanages people like crazy. He disappears for large swaths of time, come back in and changes everything. And we're like, wow, this guy sounds like he's doing too much. And we had mentors and friends of ours are like, he's not applicable. Like, oh, well, I guess we kept back. And we didn't do the primary work ourselves. We actually outsourced that work. This is one of our big learnings.

And if you looked at the feedback we got, it read like it was much worse than it actually was. I'll never let that happen again. Some of those characteristics are exactly what we look for in a founder. We like micromanagers. We like people that are in the weeds. We like people that fire fast. There's oftentimes we read about founders who have such divergent thinking. Their team thinks one thing, and they are hell-bent on going another way.

And they have some data to back it up, but they're hell-bent on going another way. What have been the hardest moments in building Green Oaks, the firm itself? You said before, none of these companies are up and to the right. There's always these existential moments. Have you had truly existential scary moments in Green Oaks's history? The thing about our business is the barriers to entry are very low, but the barriers to excellence are really high. You hear a lot about being excellent in Green Oaks. And so I think a lot of the challenges, anybody who starts a business has tons of challenges. They haven't always felt like that because we have a lot of fun with the way we do things, but I could give you in order to a number.

I was just looking out the window, and Benny and I first came out here. We didn't have a seed deal, or we didn't have anybody that was going to back us when we left Deshaun, and we had to go do it all on our own. And we raised our first 50 million of capital. I remember we came out here. We stayed at the double tree on Lexington. I don't know if it's still there, but they gave you the cookies. And we stayed in one room with two double beds. And I don't know if it's still there, but Blackstone used to be across the street. And we had friends, we were too cheap to go to Kinkos and print out the deck. So we'd have our friends at Blockzone print out all our Green Oaks decks in the printing room and then we staple them together and we go up and down here. And we have some

amazing investors who joined us. Who was in that 50? Oh, gosh. Henry Kravis was one of our first investors. What an amazing. I should talk about a couple of them because you always hope to get to a point in your life where you get to pay it forward. One of our first ones was Henry Kravis and Henry, we went to go see him at his old office at KKR. And we walked in. We didn't know we were supposed to wear ties. I maybe wore a suit jacket, but I was just probably something like this, I wear every day for 15 years. And we walk in and Henry's in a tie and he walks into his conference from his breakfast and he looks at us. He's like, nobody told you about the dress code. He felt him terrible. He was a legend to us already. And he sat down and he listened to every word.

He asked incredible questions at the end of it. It's like, I'm in. Committed. I'm going to invest with you at Green Oaks. And then he offered a number of other introductions, which will come to in a second. But not only that, about six months later, he came out to Green Oaks. He came to our office just for our team to meet Henry Kravis. I remember he came into our bullpen and he's like, I hope you guys are making me some money and walked away. Just to do that for a young team, a young fledging organization that looked up to someone like Henry. By the way, the best part about that story, I'm not the only one that has that story. I think there's a few thousand people that have that story about Henry, which is just incredible. What was your pitch to him? What was the original

Green Oaks pitch? Yeah, I'd have to get back to some of the hard things we've gone through. That was one of the good things. So when you're 27 years old, there's two ways. You can walk into a meeting like that. You could walk, well, maybe on the spectrum. One of the spectrum is, I'm 27. I'm really smart. I don't know what I'm going to do, but just trust me, I'm going to figure it all out to make a lot of money. The other way is I have a set of ideas, and these are ideas that I think are really interesting. Some portion of the money you give me is going to go into these ideas, and the rest is going to go into ideas like this. I was very much in the latter camp. I was describing what we were seeing at companies like Palantir, which is one of our first

investment's a tiny amount, flip cart, kind of called Oyo Rooms, coupon. I was starting to say, look, these are the kinds of ideas we're seeing. This is what I like to be investing in. Invested the minimum sum of money in these businesses today. I'd like to invest a lot more tomorrow. It was driven by really three things. It was driven by the teams. It was driven by the quality of the businesses that I thought those companies were building. And it was driven by returns math. And my view was, this is the beginning of a 20 year, 30 year opportunity ahead of us. And I articulated that over the course of maybe 30, 40 minutes. And how much of that was the legendary internet businesses are being built and we're going to back them. Did it feel that simple at the time? I want you to tell

the D.E. Shaw 10-cent story at some point there is like a key moment of realization, I think, for you in your history. But was that the gist of the story that this new enabling layer of technology is getting digested by the global market and that's going to take 20 years and we're going to back that? Yeah, it was. At that point, we were at well over a billion smartphones being shipped. Facebook was already a big company. Alibaba was a big company. This was like 2011, 2012 kind of thing. cloud and mobile were obviously going to be pretty large. And so somewhere in that presentation were penetration curves of cloud and penetration curves of mobile and how there's 10 to 15 plus years opportunity here.

There's nothing about AI. There's a little bit about FinTech, what we were seeing in China and FinTech and how that might be irrelevant for other parts of the world. I think Brazil and India and Europe were in that context. But it was really across consumer internet, FinTech and application infrastructure software and the opportunity to build new platforms that would become future S&P companies. Is it true at that time that you deleted your personal email? Yes.

I do not, to this day, have a personal email, which probably is a compliance issue somewhere. But yes, I just have a Green Oaks email. I really felt at the time, and I feel this today, that this is what I wanted to do for the rest of my life. I was lucky enough to figure out pretty early, and nothing was going to stop me from doing it. Just to set the initial fertile soil or whatever, tell the story of being with D.E. Shaw and encountering Tencent. And in that episode taught you?

So I was at Kane Anderson in L.A. buying software companies. And I had a great mentor, and I think about him as a great boss named Adam Fisher, who was at Disha. He ran a small group there, which was financed by a parent company called OPG. It's in New York, and then I moved out to Hong Kong. And when I got out to Hong Kong, this is like 2007. And you moved there on a whim. I moved there on a whim. This is a great story.

Adam called me, and he's like, hey, you know, I wanted you to come join me. I was like, great. You know, I'm happy to do it. Rapping up here, probably another six months. And we could start to talk about it. I said, no, no, I mean, Monday. And I was like, well, I probably need to figure out all out. but I guess I could just be in the office in New York on Monday. He's like, well, I need you. I'm in Hong Kong on Monday.

And I was like, wow, that's fast. And I got out there. And it was like, we were looking for office space. It was not well organized. We were figuring it all out from scratch. And it was an amazing time to be out there. And at 24 or something like that to be out there was an incredible experience. And China was taking off. I spent my time doing all sorts of. It was a special situations group. So I actually spent none of my time on internet companies. I spent all my time looking at Macau real estate, Chinese real estate, India real estate. Distressed debt came later. I'll give the most favorable interpretation. If Adam was sitting here, he would describe it as I was a benevolent but negligent boss and I let Neil go spend time on things that were interesting to him at the cost of spending time on things that were important to me. I'm very grateful to this day for him allowing me to do that. I remember going out to Guangzhou to look at real estate. It's like 2007. And I'd get out there. Guangzhou was nothing at the time. I was a couple buildings. There's no Google Maps out there at the time. So you'd land and say, Hey, I have to go through this apartment building.

I have to look, potentially buying this new high-rise apartment building that's just coming up. Built by a spec developer, I get to buy it and then rent it out. The yields might be in the 12 to 15 range. Pretty good yields. Get out there. Nobody would know how to get to this apartment building because the road didn't exist six months ago. So you'd have to pay some guy on a motorcycle to take you out there. They'd take you out there to the high-rise.

You'd sit down in a chair and they'd auction off the apartment building. I'd be sitting there competing with a guy that was wearing a wife-beater smoking three cigarettes, I'm like, who is this guy? You know, I represent a multi-stratt, $30 billion plus investment manager. Who is this guy? There's moments you get in life where you realize there's the top. And this was one of them where this guy just had 100% LTV financing from some bank that would eventually have to wash the NPL through their balance sheet.

But at the time, I was blown away. I was like, wow, this is a pretty crazy world. But they would take out their phones or using their phone for things. And I had the BlackBerry at the time, 2007. The iPhone came out in March of 2007, I think the App Store in 2008. So it hadn't really got to China in anyway. whatsoever. And I remember the Beijing Olympics, 2008. And so I went out to Beijing, and it was really at the Beijing Olympics where I started to flip into what can be happening in technology, where Michael

Phelps win all those medals at the Beijing Olympics, and the lights would go down into cube, and they would spotlight the swimmers. And the first time they did that, nobody's phones were out. The last time they did it, everybody had the little glow on their face. And the BlockBerry just didn't have that same glow. I would look over and ask my friends, like, what are you guys are using? And I'm like, oh, we're using QQ, which was the predecessor to WeChat. And I remember going home and being like QQ, QQ, what is this thing? And then look it up, study as much of it as I could. And I remember finding a stat, which was QQQ was adding something like 30 million subscribers

a month, which is still a crazy number, by the way. But at that time, that was unheard of, would eventually turn in a Wii chat. At the time, Adam was asking me to look at distrust banks in Europe that had been around 150 years and had 30 million total deposit holders. And this company was adding 30 million people a month. And I was like, I want to spend all my time on 10 cent. I don't want to spend any of my time on some distressed bank in Europe. This isn't interesting to me. And much to his chagrin, frankly, thanks to his support, I ended up being able to do a little bit of that there. I left at the end of 2010 beginning in 2011 and moved back

to San Francisco to start Greed Oaks purely because this is all I wanted to do. Can you tell me everything about Benny? Oh, sure. Yeah. I don't know if you ever could tell you a lot about Benny. Someone asked me a couple days ago, they were starting a firm, asked me, how do I find someone like Benny? It's like, how do you marry well? Yeah, it's like an impossible statement. I wish upon anybody in their life to have a partner and a partnership like what I have with Benny. I think if Green Oaks was an object failure and we screwed everything up, I would still be grateful for the journey I had with Benny. And by the way, I should highlight Benny is my true partner. I talked to him more than I talked to my wife, Josh, actually by a fairly

large margin. Josh would agree with that. So would Cheryl, Benny's wife. It has been 20 plus years. where I don't think there's been a single day. We fight all the time. There's never been a single day where we've actually been frustrated with one another. I met Benny. We were both still in college. He was kind of between freshman and sophomore year. I was in my junior to senior year.

And I was working in investment bank. And as an intern, I was working on a financial transaction. It's actually a really interesting financial transaction. It had to do with cruise lines ships. And the way you would finance some of these cruise lines ships is you would find a country that was willing to give you 100% LTV financing. In Germany, they're called like a KD or KG structure. In Korea, they're called.

something else, but these countries would do it in order to give you jobs to give their local citizens, you know, the shipyards would be full, and they'd make it very tax-efficient for doctors and dentists in these countries to invest. You have to really be steeped in strange financing structures in your late teens to be interested in this stuff. So I was telling my brother, my younger brother was at Penn, and he was a freshman. It was during like spring fling. I was telling my brother about this financing structure. My brother couldn't care less. Like this is not what he is interesting. And Benny, who was his roommate, was sitting on the couch and I was like, oh, Katie or KG financing structures. And I was like, this kid knows. I was one of these older brothers who thought all their

younger brothers' friends were like goons. There's not serious people. And I parked up as who is this. It was love at first sight. Benny and I became close friends. Right away, I knew Benny's zero to one clock speed is the fastest I've ever seen to this day. I've never seen someone look at a business or look at a model or think about a situation and so quickly get to the jugular. He's astonishing. The second thing I'd probably tell you about him that's unique is he's able to extend our time horizon as a firm pretty consistently. Sometimes when things are moving really fast and you're in fog of war, you can find yourself constraining your time horizon. You're trying to make decisions that are optimal in the short term. Just to make sure that's the corner you could

see around. And Benny is so good at stepping back and reminding everybody, including myself, especially myself, what we're trying to optimize for over the fullness of time. I mean, really, really astonishing. He is the most clear and concise thinker one could have as a partner. So often, I describe a situation that I'm thinking through. We talk about everything at Green Oaks, down to when you walk in what the lighting is in our office. We are micromanagers to the max. And when we talk about investments, Green Oaks, it's not atypical for us to sit around as a team and talk for three, four hours about a single company. And then we go home, we put our kids to bed, and then I'll call Benny and we'll talk from 9 p.m. to 1 a.m.

in the morning. We almost do that every night. I've talked to Benny already four times this morning. How do you process AI? Do you sit with Benny and team and think through. okay, you talked about yesterday, the genetics of the model companies just like weren't good when you first encountered them. How do you do that on an updated basis to make sure that whatever opportunities emerge because of this technology, like you're most on top of? Do you form some

core view on? Are you obsessively looking at the benchmarks when deep seek R1 comes out? Is that the sort of thing that you're doing? We do do a lot of that. If you just sit back for AI, we're invested in a bunch of different companies across a bunch of different industries. What is the common thread. And there's this great, I forget the name of the book, but it was about the Wright Brothers figuring out how to get a plane in the air. And there's all these people chasing, trying to be the first one to flight. Of course, you look at a bird and they flap their wings. I've got to replicate that. And the Wright brothers are like, wait a second. The laws of aerodynamics are the laws of aerodynamics. You're not going to change the laws of aerodynamics.

You just have to figure out how to make fixed wing flight work. And of course, they make it work. And I think business is the same, which is like the laws of great businesses are the laws of great businesses. We know how this works. Did you delight customers? Do you break tradeoffs to create something, operation are technically really great? Do you have a competitive advantage? Is it a large market? Whenever we've screwed up at Green Oaks, it's usually been because we ignore the laws of like crypto. No, no, you don't need a board in crypto. Don't worry about it. No, you don't need an auditor. It's not a thing that you need. You don't need to delight customers. It has nothing to do with customers.

That's something to do with price movement and fun flows. It makes sense to me. I guess the laws are different this time. They never are. And so we absolutely look at eval an R1 benchmark and figure out, wow, deep seek figure out a way to deploy a model at the 35x reduction for input output tokens on a comparative basis to open AIs reasoning models. Like, that's a pretty impressive feat. What are the takeaways in terms of competitive advantage for opening eyes model on comparative basis to others? That's a really interesting question. But what we try not to do at Green Oaks is get excited about that development and then deploy

our time and effort, eventually invest a lot of capital just based on that. we try to bring the abstraction level back up to what does this mean for customers. And then we work backwards from that. So when we talk about the model companies, our reaction has been like these large cap-ex spends. My feeling has been, and by the way, I've been wrong. If you look at the valuations of these businesses, the investment that you have to make versus the payoff you get, and then the fact that you have to make that investment 12 months later, and there seems to be like a pretty fast catch-up. It just didn't strike me as in the laws of business is a great business model.

Of course, Chachy BT has proven that you can build a consumer business on top of it. I'm curious how you would characterize the changing nature of competition. So you're not the only person looking for these 10 outstanding people every year. There's other really talented players in this game and on this playing field. When they meet one of these 10, I'm sure lots of them move heaven on earth to try to be the partner of choice. Early on, you probably faced less competition. There were less industrialized this industry. How has that changed over time?

what have you had to do to have your win rates stayed as high when you want to win? If they have, what have you had to do to keep the win rates as high? I used to think about this a lot, especially when we were starting, because in our first many funds, people would ask us. They'd have a list of other firms they'd ask us about me. What about these guys? What about these guys? I found that, first of all, if we're going to screw it up or lose, it's usually something we're going to do internally. It's almost always we've internally messed something up that has led us astray. And just getting this stuff right internally, that's hard enough. So I don't spend that much time anymore thinking about the competitive dynamic

in our industry. I would actually argue has become much less competitive. It's counterintuitive. Think about what we're doing. We're scaring the world for founders that we think are going to build future S&P 500 companies at the exclusion of everything else. But if you think about the job to be done in our industry, it's been layered. People that have injected complexity in ways that are so counterintuitive. They're firms whose only job is to do fintech in Brazil. They're firms who are that their only job is to do everything that comes out of Y Combinator. Their only job is to do New York City consumer startups. It's become this specialization of our industry. That goal I mentioned that's Green Oak's goal. Of course, I don't think everybody would agree that that may be their

end state goal, but they have maybe a different job to be done on a day-to-day basis. Our industry is more like, I think this is investing generally. Investing, it's a game of reducing complexity. It's a game of reducing noise. There's too much noise. And I find the people, that are willing to have the intestinal fortitude to dramatically reduce the noise and make their job extremely simple and have the temperament to allow it to be so simple, to know that you only need 110 points of IQ to do this, the number of people that I feel we compete with on that is very, very low. I want to get as far into this as you possibly can. Again, I want to name specific firms or names or anything, but really, really, really drill into why it's less competitive today.

because naively I would say it's different. The supply demand. If I just think about, okay, there's a unit of transaction here. Some cash is going into a business for equity in that business. The supply demand dynamics of how much supply of cash there is for limited amount of equity in great businesses has gotten way out of whack relative to when you started. There's way more cash. These are 100 times.

I think it's $2 billion when Don Valentine did Nvidia and now it's $200 billion, something like. So naively, you might. say it's way more competitive. And the expected returns to your point used to be 35, doesn't need to be 35. Now it's 15 and all this cash is driving down that return. So really walk me through in lots of details, why the nature of firms who's leading them, the partner at those firms, all the dynamics that happen to make it possible for your statement to be true that it's less competitive today for you than it was 10 years ago. Two things are allowed to be true at the same time, which is our space has too much capital

and it's actually less competitive for great companies. And I'll try to explain those, the economy. A lot more companies are getting fun. Thousands of companies will get funded by really great investors. And if you look at the matrix we just described, you divide by sector industry or whatever, it's geography stage, by and large people are doing investing.

It sort of looks like painting with numbers or something like that. You're looking for certain types of characteristics around growth rate. And by the way, venture capital to invent this. Summit and TA have been doing on the growth side for a long time. Inside's pretty good at it. On the private equity side,

the entire industry works this way. If it's a 21 IRA, you do it. It's a bulk of racket private equity. If it's 21 IRA, you do it. And if it's an 18 or 17 unlevered, you don't. Maybe that's even changed. But like those are kind of the numbers.

I think the mistake people are making is this is not the private equitization of our industry. These are founders building companies. Now, with private equity, goes to the highest bidder. Every company essentially goes to the highest credible bidder that could move fast and straightforward. In our industry, I can't think of a single company

in our portfolio, not one. Tell me if you can think of one in yours that took the highest valuation only. They took some combination of the partner, brand, speed, the understanding, the capability of that firm, and valuation. Now, that doesn't mean you could be the lowest valuation.

That's certainly not what I would claim. In fact, I think in some cases, we are the highest valuation too. But we have differentiated insight on why we are willing to pay that without sacrificing returns. That comes from understand. And if you are driving for coverage, if your job is to make sure you don't ever miss a Series A and are doing that by hiring a very large number of people, then what you're sacrificing is fidelity and insight. It's impossible. You can't scale that with an entire organization to like a simple individuals. I've never met a firm that's had more than a few good investors. It's so hard. So you end up just doing a lot more. And it's

not clear to me that any firm is that good at figuring out what's good and what's truly exceptional immediately. Figure out over time. I was looking back at a lot of our series Bs that we've invested in most of what we do our series B is in ours. I was looking back at every round that we had done for a better part of 13 years. Every single one of those had some other company that traded in its sphere of competition that traded in approximately the same turn within the same 12 months. Isn't that crazy? The best companies and the worst companies at the Series B or series, they trade at approximately the same altars. There's exceptions here and there, but by and large, very few people could actually tell the difference between the two. Now, if you and I were evaluating Coca-Cola,

you might know 10 times more than I know about Coca-Cola. If we both had to figure out what earnings per share were in 10 years, we wouldn't be that far apart. It doesn't matter that much. But in our industry, at the Series B, we can both look at two companies, kind of competitive, both doing 30 million in ARA or growing 100% a year. There's a chance that the one you invest in is worth many billions in enterprise value in the future, and the one that I invest in is part of line in five years. There's a huge spread, but yet it's most likely that at the Series B's, those trade approximately the same multi-same term. And so I think having a system that allows you to build differentiated insight in a targeted way can yield better. I can't promise it. But it's also just a much more fun

way to live life. I think when you talk to founders, now again, for the 3,000 founders that will get funding, the matrix large scale, I'm glad our industry is going from a cottage industry to becoming this large asset class. It's going to help so many people get so much more. It's actually great for Green Oaks of the later rounds too. There's some of those companies that might be very interested in this down the road. But for the 10 to 15 best founders that care about that relationship, They care about speed, they care about fidelity, and they care about price, I think we are a much better experience. Do you care about the enterprise value of Green Oaks? No, not at all. Zero.

Zero. It doesn't matter me. I have no plans to sell my painting. I have no plans to. Yeah, I have no other hobbies. This is it. This is all I want to do for the rest of the amount. I mean, as long as I can, and investors allow me to, and the founders we work with allow me to, yeah.

If you think about the ways most recently that you've improved your craft, what comes to mind? even today versus two years ago. What are you doing better today than you were two years ago in this craft of finding and courting the 10 best each year? At the highest bid order, we have got much better, not a little better, much better at separating the vital few from the trivial many. There's a version of Green Oaks two or three years ago where not just me, everybody at Green Oaks would do 12, 15, 20, 30 meetings a week.

We used to show this slide to our investors. Here's how much soon as these happened and we had 92% coverage. aren't we great? We'll never leave a stone and turn. It's the way I grew up. I grew up believing that the way you generate great returns, the way you find undiscovered opportunities, there are really only a few ways to make money in the world. One is speed, you just go faster than everybody else. Citadel may be a version of that. That's really interesting. Our favorite combination is when you have the same speed and the same information, but you have differential insight. I think what we've become much better at Green Oaks is increasing the speed and

velocity in our information asymmetry and being able to generate differential insight that matters to long-term enterprise value. Putting those things together with a small team and building a flywheel for doing it over and over and over and over again every day. That has been a sea change in the last couple years. The ability to write a $500 million check, maybe we should tell the Carvana story at this point or something, move really fast in real huge size on something that you're not going to have a full written memo about. You have to act quickly. it seems like that's a great answer to your earlier point about it being less competitive because you could probably rattle off the other investors that could do that same thing today

without an investment committee meeting or without this that or the other thing. I remember the Robin Hood story that Mickey Malco from Rivett told me, which rings like a similar you know, it's like a guy making a couple calls to make something happen. Maybe talk a little bit more about that. Carvana could be the example here, but pick a different one if you'd prefer. I'd love an example of weird, high conviction fast that we're. would be impossible in a committee structure. I'll give you three.

Great. It's two more. So let me start with Navon, which is formerly called Trip Actions. Trip Actions, for those that know, it is a travel management company. It does your corporate travel and expense management end to end. It's a company I had been following for a little while. And COVID came. And as a travel management company, this is not a good thing to happen to your business.

And so Trip Actions, which is what it was called at the time, revenue went from $100 million down to zero. It happened overnight. Remember Trump, first version. went on TV and shut down all the flights from Europe. And it felt like Lehman Tuesday or Wednesday or whatever, but I think it was a different day. But they felt like, oh, this is not good. This is real. I called them a week later.

And I was like, I know your revenue just went to zero. But I have conviction that you are the right end state solution for this market. And I think instead of battering down the hatches and preserving all the capital you have, I think you should be aggressive in capturing flow share and we'll write sort of unlimited number up to 500 million. It ends up being less than that. But up to 500 million for you to go do that. And it took us four days or something like that.

and shabactions dramatically accelerated its market share leadership. Over the course of COVID, over those two years, it went from number four or five in the industry, maybe even number eight in the industry, I think, to top two in the industry, and was able to be aggressive at a time when other people were nervous. Another example is SVB weekend with Parker and Rippling. We've been investing in the business for a long time. It has always helped us to have a prepared mind,

and when we have these moments of volatility, it doesn't change the end state all that much. So SVB weekend you remember, it was Wednesday and Thursday, it started to have some trouble. Friday morning, Parker called and said SVB looks like it might go into insolvency or be taken over by the Treasury or by the Fed. And people make this mistake. People think that Rippling was having financial troubles. It was the opposite. Rippling used SVB for essentially plumbing, essentially at the pooling of capital that would be then dispersed to employees for customers of theirs. And so it was just like Rails that was using. And by the way, credit to Parker.

There's a lot that's been said about Parker from his previous company. And I have to say, he's one of the most high integrity people I've ever met in the world. Just to talk about customer centricity, the reason he called me on Friday morning wasn't because Riplin was in trouble. He called me because he wanted to make sure that on Monday morning, his customers weren't in trouble. All of his customers got money. There were other payroll companies that were planning to send an email out on a Monday that was like, sorry, you know what's happening with the U.S. financial system right now, payment to your employees will get delayed. That was not an okay solution for Parker. So Parker called me on Friday morning. It took us about 30 minutes to agree to

$500 million. Credit to his team, by the way, spent the entire weekend day and night. It wasn't 18 hours. It was 24-hour, two blocks, 40 hours of straight work. And by the way, Sunday, another credit to Parker. Sunday looked like everything was going to be okay. And Parker's like, just in case, this is the right thing to do. We're going to do this. We hand shook on a deal. We're doing the deal. What an amazing partner to have in Parker. Monday morning, every Rippling customer got their money on time at that schedule. Crisna is a funny one because it was public. Carvana is a company we had been following for a long time, never took venture financing, you know earning a little bit. He was out in Phoenix. He was building a customer experience that we always thought very highly of.

Whenever you talk to customers about Carvana, they would talk about how much they liked Carvana at a differential rate to CarMax. It makes sense. You could buy in Siliccar easily. You get delivered to your door. There's much larger selection. It's like the bomb Kim story a little bit. It rhymes with it. Yeah, a little bit of hard work operationally, hard work technically, doing it out in the middle of nowhere on behalf of customers that you want to serve differentially well. Similar dynamic. In Carvana's case, you have all these local competitors that have a limited selection. Usually they're wearing leather jackets. It's not a great experience to buy from them. Carvana was making that a much better experience. Only got to know Ernie when COVID came,

The stock was maybe a $100 stock. During COVID, it went down to the 30s. I called Ernie. Now is the time to take some money from us. He's like, great, love to do it. We got very close. For Green Oaks reasons, we ended up not proceeding and investing. I think it was going to be about $500 million in the business at the time. It would have been a great investment. I would have talked about as one of our big mistakes. It went from maybe $35, $40 a share, up to $300 a share, whatever it was over 2020 and 2021. We have these moments at Green Oaks, really like, ah, now it is well recognized as this amazing used car experience. It's going to be dominant. People understand it's the Amazon of cars, and it was maybe at 450,000 units being sold each year. And Ernie did this big acquisition,

which is Adessa, ramping up. He used quite a bit of debt to do that. I think he financed all of it with debt. And so added a bunch of debt to the college sheet. When things started to slow in 22, everybody's excitement about the fact that he was building infrastructure to go to a million or two million cars went the other way. People became very nervous about the business surviving and the stock went from $300 a share or $3.32, eventually went down to five. How many companies can you name that went from $70 billion market cap to one and weren't like a fraud? Zero. After you and I had this conversation, we actually looked at up.

The answer is none. As it started to go from $70 billion or $300 plus a share down to $50 a share, actually, in $100 a share, we started to become very interested in it. And there was two questions. The first question was the market was getting killed. I think he was one of the largest peak to trough drops and used cars in the last 30, 40 years. Was this a one-time thing? Was this going to reverse?

The second is his unit economics were terrible. I don't think he mind me saying that. He was losing $3,000 a unit on an EBITDA basis. If that wasn't enough, he had about $2,000 of interest payments per unit. So he had $5,000 per unit of costs. So the question was not if, but when is this company going to go bankrupt? And so the stock went from $100 to $50. We started to buy around then.

of course, we started buy it all the way down to about five. My partner, Ben, it doesn't feel great when you start to buy at 50 and then at 30 and then at 20. And then the 20 goes down to five. Ben has a great line, which is what's the difference between being down 95% and 97 and a half percent? Because tasks. And so that was a tough moment at Reed Oaks.

We invested a substantial amount, became one of our largest investments in our fund. And we had a view. Our view was that Ernie had a decent amount of runway. There was things he could do operationally to fix the business fairly quickly. And we did what any investor might do at the time. We went line in by litem. We said, here's where he needs to cut. Here's what he needs to change. And much to our chagrin at the time, already didn't do any of those things. It stopped going down and he just didn't do it. And it wasn't until later, I'll come to a couple stories, it wasn't until later that I realized

there's certain CEOs that might react immediately in order to placate the market. What he was doing was doing a bunch of A, B, test internally to figure out what were the right things to cut and make sure that he could manage the company through it and grow on the other side. It takes a lot of intestinal fortitude. There's a bunch of really good stories about carbon. As the stock started dropping, we started by more. Not everybody was thrilled with us, but we thought we fundamentally understood that he would be able to reverse the unit economics on a per unit basis.

There are things he could do to not just stave off bankruptcy, but be an ongoing concern with strong capital structure. And then the second part of that is the debt side was really reflexive. If you're right on the first part, you're kind of right on the second part. So it's a two-part investment for us. One was the company won't go bankrupt. Second, is this a business that could go from 400, 500,000 units to 2 million, 3,000, 5 million units over time?

Use cars are about 40 million units a year or something like that. And I remember this is a big debate for us, but it really also comes back to founders. I went out to Phoenix, sat down with them for dinner. I got in the plane. I was reading the papers. And four of the articles were about earning and how terrible earning was. It was like, he's a crook. He's awful.

The company's terrible. They can't pay their bills. It's about to go bankrupt. employees are leaving in droves. It was like left for the dead. I remember. You remember this. And I remember getting out there.

And I remember sitting down with him. We talked about the business. We talked about all the things. But I remember the first thing I did is I said, boy, and the papers a lot nowadays, how does it feel? How do you feel? And he didn't talk at all about himself. He also was like down to tears. He was talking about his team.

He was talking about what it's like for employees of his who have been on the company for a long time to have their kids go to school and hear that their parents' company is going bankrupt. And he was going into enormous detail about this and you can feel the pain. Wasn't on the articles about him. It wasn't even on Billy did manage cuts. It was that he was trying to balance getting through this with making sure that his team felt good about how he got through this. There's very few CEOs. In the fog of war, when things speed up, people start to make snap decisions very quickly. What impressed me most about Ernie at that moment in time was how he just slowed everything down. I remember at the dinner, the waitress came by and she's like, would you like

to use your Marriott gift certificate card. He's like, oh, yeah. He like searched 10 minutes to find his gift certificate card. I was like, wow, you're supposed to be in a hurry, but you really care about this gift certificate points off or something like that. When we went through operational step by operational step, it was so clear to me that there was a spread between where the market thought he was. And that happens all the time in our industry.

It did spread between perception and reality for private businesses, for public companies. It could be quite significant. As you go back to the early days, you had this first fund that was so successful, huge multiple in money. How did you decide how much money to raise in subsequent funds all the way through to today? This is constantly a question for every investor ever that's been really successful. They tend to have the opportunity you certainly did to raise probably as much money as you wanted to raise, given your past results. How did you choose the amount through time?

How would you teach, if you were Kravis giving money to say the next year, what coaching would you give them on how to answer this question? I think you have to decide whether you want to be in the Hall of Fame of Returns or the Hall of Fame of AUM. And by the way, I for YLPS to shut their ears. But that's an okay answer for attending people. The Hall of Fame of AUM is a well-trafficked game with lots of buildings in New York have names of people that have been in the Hall of Fame of AUM. And that's a great way to love life, not to take away from that. And for Benny and I, and maybe it's because we had some success early, we're large investors

in our own fund. It's just a more interesting way to try to be in the Hall of Fame of Returns by partnering with the kinds of companies we like to work with. If that's the case, then you want to reach the right limit where you can invest without reducing returns. And for us, our largest investments are $500 million to a billion, less in size. And we do that with some regularity. We want the founders we work with to call us and say we want $500 million to a billion

dollars. We are thrilled to get that call. And we want to make sure that we could always answer that call and we can be the partner. And that number may move up over time, but that number has served us pretty well of at least a couple times a year we'll get a call for, can we get $500 million to a billion from you? And we want to be able to answer that call. So that's kind of determined how we think about our funds that have gone from the, I guess,

tens of millions to the billions, but it hasn't really been a function of the number of companies for funds has not changed at all. In fact, it's going down. How many is it? How many is it, right? For that 10 to 12. Yeah. That is as high as 15 historically, but our numbers actually come down quite a bit. And we only have 55 companies across 15 billion of AUM, Green Oaks. I could talk to every single one of our founders in half a day and still have tons of time. Have you ever thought about other structures for Green Oaks, like making it some sort of permanent capital base like Berkshire style or all this creativity with Apollo and a theme, like having some sort of insurance. It seems like every great investor reaches the point in their career they want an

insurance company for a permanent capital base for a balance sheet. Have you ever thought about that side, the asset side of the business of where the money comes from how it sits and its structure? Yes, we have. In fact, Reno started with the idea of an alternative capital structure. What was it? It was a holding company that owned insurance businesses. Okay. Frontier and Emerging Market Insurance companies. Benny and I had spent a lot of time at D. DeShaw studying insurance businesses in places like Ping Ann and China, Dongwuing Korea, Qualitas in Mexico, Salinko in SEP in Thailand, Slinco in Sri Lanka, businesses like this. And actually, the cool thing was, if you study these P&C businesses, they all follow the same kind

of curve. You could draw an X, Y axis. You could put GDP per capita on the X axis. And then on the Y axis, you could put insurance penetration as a percentage of GDP. And it follows this S curve. And the S curve is basically rich country has 10% insurance penetration. The exception to this, by the way, the Middle East countries, they get really rich on oil and then don't have insurance penetration. And then the really poor countries are at the bottom. They have very low GDP per capita, and they have low insurance penetration. And our view was, if you believe in a country's GDP per capita growth, a levered investment is to buy the best insurance company, the P&C consumer insurance company. Interesting. So we did this. And it was a phenomenal investment for

Dongbu and Qualitas and SAB. They were really good investments. Sorry, D.E had Green Oaks when we started, we had a traditional fund structure. Our idea was let's start a holding company where we buy anywhere between 51 and 100% of these insurance companies. We suck up those premiums and we can invest them in a wide variety of different assets. It's like phenomenal idea on paper. In fact, we did it right when we started Green Oak. So we went around and raised 150 million of capital from some great investors, many of our longtime investors, and we started a holding company. Now, I don't think one person asked us, have we like been to Africa or Pakistan or any of these places. We did it. And then we took a small team from McKinsey insurance practice, which was known for helping some of these insurance companies. And our idea was you can't buy Ping-N and China. It's too big. But you can buy the frontier and emerging market insurers in places like Pakistan or Rwanda or Nigeria, places like this. So the first thing we did was just get on the plane and go to these places. So we went to Nigeria. I have so many fun stories about this. I love this. Man, it was the craziest thing. So we decided we started a holding company is called GGH. By the way, the punchline here is it like went terrible. This is the single biggest mistake we've made at Green Oaks, I think.

It's a funny story. So we took a team out of Zurich, Switzerland. That was our operating team. We had about 12 people. They were working with local teams. The first trip we made was to Nigeria. Actually, before I got on the plane to Nigeria, I was in London, there's this late night flight. And we had assembled list of businesses that we might potentially want to buy. The list was probably six companies, seven companies. We had a banker that was on the ground that we were working with. That was like only an insurance banker. We had known him for a little while. We'd been studying our approach for maybe six months or so. The flights arrive at 10 p.m. And our bankers, our calls. He's like, hey, I'm so excited about the trip. Can't wait for you guys to get into town. And I'm like, hey, I can't wait to get there. He's like, I got to tell you, I got to skip dinner with you guys tonight, though, when you get in. Why? You know, we're really excited about our dinner. He's like, I had a long night. I was up all night. It was kind of crazy. And we're like, oh, what happened? I had a guy from London here last night. He flew in. I was going to do with you guys. He stays at the same hotel, dropped off his bags, took him out to dinner. And we went out to this great dinner, had a bunch of drinks.

He goes back to his hotel. And he proceeds. He sees. and tell us the following story, which is this English banker goes up into his room. It checks into his room. There's a guy sleeping in his bed. And then the English banker's like, what is going on here? And the close of the door, goes downstairs, tells the person at the check-in desk, there's someone sleeping in my bed. You must have double-booked the room.

This is a huge problem. The guys, no, no, no, that's like not possible. I'm sure. Reissues him the key. This is your room number. Go on. Goes in. Guy still sleeping in his bed.

Banker goes downstairs, goes to the front desk counter and says, you've got to come up with me. this is crazy. There's a guy sleeping in my room. I just want a different room. The front desk check-in person goes. Sure enough, there's a guy still sleeping in his bed. The front desk person goes and checks his pulse. It's cold. Dead guy in the bed. And the bankers is telling us this story. We're like, listen to him. Like, where is this going to go? And the banker is furious. He's like, this is crazy. I just want to go to sleep. It's like 2 a.m. in the morning. I got a big corpse. I don't know what's going on. But just like figure this. And the front desk check-in person's

like, I don't think you understand. I got to call the police. There's a dead guy. in the bed. You gotta stay right here. And the police come. Sure enough, dead guy in the bed. And the banker's furious. It's now 3 a.m. in the morning. He's like, this is crazy. You've got to get me. The police are like, no, no, you're a suspect now. We kind of like take you to the police station. And he's freaking out. He's like, what do you mean? I don't know who this guy is. I don't know what happened. I just waiting in my room. There's cameras. You can check. Nope, we're taking you to a police station. And they put him in the back of the car. They tell him he can make a call. Takes out his phone calls our banker. His name was Balaji.

And Bellaghi's like, oh, this happens. Don't worry. How much money do you have on you? He's like, I got $1,000 on me. He's like, that's not enough. You probably need $10,000. Can you get a wire to them in the morning? And I don't even know how to get a wire.

He's like, don't worry, I'll take care of it. I'll get you out by 5 a.m. Belagie's up all night figuring it out. Banker gets out at 5 or 6 a.m. Gets back on a plane back to London right away. So Belagie's like, so I was up all night figuring this out. And we're like, this is where we're flying in like an hour. This is terrifying.

And so that was the first time we went out there was hearing this story. It was incredibly fun. We bought 75 to 100% of an insurer out there. We bought 75% of insure in Pakistan, which Benny's Jewish. I'm Indian. We're both American. This is the first time I'd have gone out to Karachi. Beni's like, I'm not going.

You got to go. And so I was going out there. We were about to close this transaction. And my mom, who's from India, she's crying. She's calling my wife. She's like, he can't go to Karachi. It's like too dangerous. And it was a phenomenal experience.

And we had an amazing partner. in Pakistan. He did a fabulous job with the business. I have nothing but incredible things to say about him, about the country, about their business there. This is a great story about Rwanda. We bought the leading PNC insurer. We're also one of the largest real estate owners because of the insured owned all this real estate. So we're in Kagali. We buy this business. We're growing yet. None of these businesses had great solvency law. I mean, this is like very early in the life cycle of how insurance work in these countries. But our view was, if you read about Rwanda, it's like the Singapore of Africa. We get on the ground. Our insurance team's there. This business is

terrible. For every dollar or premium we get, we lose a $1.80, which in the insurance business, you can't make that up with investment returns. You're in a bad position. And we were the best of all of them. Why is not everyone else bankrupt? And like, well, it's a funny thing. Nobody really audits these companies. And as long as you continue to write more premiums the next year, you can make it work. I'm like, well, that's not going to work for us. So we decide we might not want to be in this business. As we make that decision, we get a claim. And the claim is from a wealthy family that has some political connections. And it turns out that someone that we insured died in a car accident.

There's a terrible thing. Now, there's a pretty systematic way to think about PNC insurance globally. There's a table for how to think about life. I hate to put it that crudely, but that's kind of how it works. And I fly out of Kagali, we've got to take care of this claim. It's a big claim. And I'm like, well, we have to prosecute the claim because that's too much. That's outside of the table for how to think about the value of this accident.

So we go to court. The guy that shows up as the defendant and the claim, it's not the lawyer for the claimant. It's the claimant that died in the car accident. I mean, case closed. The guy's right there. This is all done. And lo and behold, there's this performative jury that's like, ah, you know, this is out of bizarro world. This is crazy.

And so we're like, this is not a country who wanted to be operating. So it took that experience of building this insurance company. We're like, there's no winning here. It taught us a lot about the. kinds of founders we want to partner with, the kind of markets we want to be in, the way we want to spend our time. It costs us real time and money in years. We haven't lost that zeal of wanting to build something really special. I'm so freaking glad I asked about the whole good good thing. You're in one of these positions where if you wanted to, you could just do

this with your own capital. I think you're the largest LP in the funds. You've had the success that all the investors chase. Why still have outside partners? We've made that choice, obviously. what is it about working with great LPs? I know your LP base is super concentrated to. Very consistent theme in your life that you're really concentrated. But having achieved the level of success, it could just be your balance sheet, could be the holding company in the Berkshire and make the marginal investments. How do you think about that tradeoff, that choice?

I have friends that sometimes complain about their LPs or the updates they have to do or the conversations they have to have. You just love this stuff too much. And they might make different decisions if they didn't. If they have structured our lives in such a way where I really enjoy the people that we spend. I have a WhatsApp chat with my Alpack. I mean, I talk to them a decent amount. I talk to some of my investors.

They're like friends of mine. I get to do this with people I really love and admire and respect. They've oftentimes our best ones have given us courage when we might have even lacked a little bit of it. I think about them as partners and shareholders in our business. And I think there's three reasons why. I think the first is I enjoy them. That's like the most obvious one. I really do.

If they never invested another dollar with Green Oaks, I'd still be good friends with most all of them. And that's becoming increasingly true every year at Green Oaks. The second is we're competitive, we're deeply competitive. And it really bothers us if we're not amongst the best returning investment opportunities for our LPs. Remember, there's a table that came out in 2021 and it had the endowments by return. And I was really proud of the fact that, like, for the three or four top ones, we drove some real performance for them. But that matters to me. If I were to do a great, complete,

anonymous, ubiquitous survey about you and Green Oaks, and I were to find the critics to the extent that they exist, what do you think they would say? I'm sure we have tons of critics. I actively try to seek it out, so I think I could apply on some of it. Yeah, although you feel free to add in. I just had a dinner where I met a bunch of young people.

I asked them this specific question. I said, what are the most negative things you can say about Green Oaks? And I'll give you each comment because I thought all of them were valid. Yeah. So the first was Green Oaks, wildly successful, early, but as of late, what have they done? And I think that's such a healthy attitude, frankly, you're only as good as your next day. And my pushback was, it takes time. The stuff you're judging us on 10 years ago, there's stuff you would judge us on in another 10 years that we did

today, but it just doesn't show. So that would be the first. The second would be some higher-priced rounds that look like really crazy on the outside. They don't make any logical sense. Why did you them? We have some logic for why we did them, but we could be wrong. Benny and I has found We've pushed our organization really hard. One of the other pieces of feedback might be like, are you pushing too hard? We can't always hire while. We can fire fast. We run a very tight team.

We're reasonably intense in the way we run that team. You can make an argument that you should not run at this intensity level. You could run at 70% of this intensity level and things would be just fine. I just don't think we'd be that happy if we did it. So it probably is the right feedback, but I don't value that much. What do you think the greatest of all time is? I'm going to have a controversial answer. I think it's Yuri Milner.

The easy answer is Masa. Most people, I think the Mike Moritz is and phenomenal. Peter Fenton's phenomenal investors. It's hard to argue against Masa. I will in a second. Have you spent time with Masa? He gets made fun of a lot. He is incredible. First of all, set back for a second.

This guy came from Japan when he was in his teens. He didn't speak a word of English. It was ostracized for not speaking a word of English. It studied his butt off. It goes back to Japan. creates one of the largest enterprise value companies in Japan over the course of 20 plus years. Along the way decides to become an accidental investor. At one point, he was the richest man in the world.

One thing I think is underrated is Silicon Valley is a fairly insular culture and has never really been that nice to monster. They make fun of his PowerPoint slides. They make fun of his PowerPoint slides. They make fun of the investments he makes. There's almost like a twinge of, I don't call racism, but xenophobia to him of like, what is this guy doing coming out of nowhere? The guy's multiple times made $100 billion returns. I remember when he invested in Arm, I got a lot of respect for Mosset.

I don't think Green Oak should emulate the way they invest. I think he costs. But when he invested in Arm, I had a friend of mine who runs a large investment bank call and say, could you believe how stupid this guy is? I can't believe he bought Arm. That thing is tanking. It's never going to work.

This guy had his semi-conductors analyst on a call with me. And semiconductor analyst runs out a list of reasons on why this investment's never going to be. going to work. Moss and another entrepreneur. And I decided I'm going to give all the reasons. I'm like, here are all the reasons the semi-analysts from one of the big investment banks thinks you're going to fail on our business. One, two, three, four, five, six, seven, eight, nine, ten. Listen to him. He's like, ah, but he fails to realize that the market's growing. And he was right. I've seen him multiple times. And by the way, underrated for how great he is with entrepreneurs

at times. He's come up and stepped up to the plate. Sometimes you can measure investors, not by figuring out where the momentum's going. But when the going gets tough, how they stand up for entrepreneurs. And I've seen him three or four times step up to the plate in a meaningful way, whether it's Tony at Dorcas with the bomb a coupon, pay off most times. Not all the time. Most times. I think that's really remarkable.

The reason I say, Yuri, is when I was at T. Shaw and Yuri made the investment in Facebook, I didn't know you were allowed to make investments like that. I remember going to my boss and saying, are we allowed to invest in like money losing internet companies at $10 billion in enterprise value that are still private? I know the growth investing of buying things at four times revenue. that's a software company and adding a couple boltons. That to me was growth investing and private equity in growth companies. Yuri broke that mental model for me.

And he was the first one I remember, making a large scale category defining investment and a category defining company that was so obviously going to change the world. The way he built TST, the number of correct decisions he's made compared to the number of bad decisions he's made, it really is a remarkable ratio. I can't name, I think the total impairment in all of DST is like very low. The quantum of money they've made as a firm and then also with his personal investing in things like Bightance and Chauhamee, you just take one of those and that's all of the firm's returns. By the way, who do you think is best? Well, I'll tell you the answer that most people give, which is Moritz.

Yeah. I've only got to know Mike a little bit better recently. And not a lot of people would know this. I don't know if he would describe us as a competitor when we were coming up, but I certainly think about them. I think they're an amazing firm. And Mike recently retired. When I was going through all the San Francisco stuff, when politicians were holding my face on a picket, Mike emailed me. And I was like, can I help you a little?

Any help what you got? And he recommended that I write an op-ed. And he's like, I know you don't want to do anything publicly. I know you wouldn't like this, but I think it's the right thing to do. You should be transparent and direct with what you're doing. And I was like, sure, I'll try doing it. He helped me. And he was on the phone with me helping me.

Outside of this conversation, it would have gone unsaid. What a remarkable thing to do for a young kid that he doesn't need to help in any way whatsoever. He's a really amazing human being. So it's right at the end of a long session. I'm curious to hear a little bit about where your instincts for understanding the world have brought you outside of investing. Are there other places that you apply the same instinct where your curiosity pulls you into a world where you're not investing huge sums of money? I think the thing, if you were with us at Green Oaks and you just sat with Benny and I for like a day, I think the thing you'd probably be most surprised about is, how much we care about beauty.

Like, we love spending time on a P&L, but the reason we like this so much is we like beautiful businesses, we love beautiful relationships, we care about beauty in the world. We want to make the world a little bit better tomorrow than it is today, and we think Reno's could be driving enormous impact doing that. That's why we invest in the companies we invest in. That's why we don't care about finding a software company in Minnesota

and buying it three times revenue and flipping it five times. Don't care about that at all. It's probably a better business than when we're in. We're okay leaving that on the cutting room floor. I manifest in a bunch of different ways. I'm born and raised in San Francisco, so I dedicated a reasonable amount of money to try to fix just my street in San Francisco.

How if that's true. Oh, gosh. It's not a story I expected to have come out or ever talk about, frankly. I mean, maybe you and I talked about off-the-cuff. We did, yeah, yeah, yeah, yeah. But I was just quietly doing it, and I did it as a non-profit because it's a terrible financial investment.

I mean, just to walk through the financial math, I'm buying buildings in one street called Fillmore Street, it's in Pacific Heights's a street I grew up on, and I'm buying stuff at like a five and a quarter cap, which treasuries were five in a quarter when I was buying this stuff. And I'm buying like illiquid, small rundown commercial real estate. That usually has no tenant or the tenant's leaving, which is why the person's selling me the building.

And then I'm putting in like a mom-and-pom restaurant in a three-cap, which barely pays its rent and I have to do all the TI. It's like a terrible financial investment. So we were like, oh, you're so good for doing this. No, it makes no sense to do it any way of the way besides a nonprofit. So I started a nonprofit with a good friend of mine named Cody Allen. You came out to San Francisco during COVID. I think San Francisco is a really important city.

I think it's important for America. I think it's important because it's ground zero for a lot of the most interesting people all over the world to come and build their version of the future. It's different to New York and it's different to the finance and the real estate and other industries, which are a little bit more, I don't know, rent-seeking is maybe the right word I want to use, but I think there's something about tech and the aspirational nature of company building that San Francisco harnesses uniquely well. I don't think there's anywhere else on Earth that's anywhere like it. Tel Aviv maybe getting close, but it's really San Francisco. I think losing that,

and we've tried really hard to kill it. We're anti-business, or anti-growth, or high taxes, we're anti-family. A lot of things going in the wrong direction. My view was these were imminently fixable, and if we fixed them, it could make San Francisco great for a long town. And I don't think you could take these things for granted. I mean, you go back to like the 1920s, even earlier, the Hungarian physicists in Budapest, and you had all these great, the von Neumens of the world, all living there in Budapest,

and World War II came along, and Hitler came along and wiped them a lot, and they all dispersed to different parts. That group of physicists, they were the foundation for modern physics for like 100 years, string theory, all the atomic weapon work that came out.

It was all from that small group in Budapest. And so I think losing San Francisco to some of the progressive causes that have plagued the city would be pretty bad. And so this was one part of my little corner of the world starting to invest and make it better. but it came from a place of wanting to make that street beautiful. And if we can make that one street beautiful,

then you could maybe do that across other parts of the city and you can make the city livable for families and have people still there. I started on that process about a year ago. I was just doing it quietly because what was there to share? Yeah. San Francisco has this funny, progressive bend, which is we'd rather have empty buildings

than have someone own them that they seem to be too wealthy tone. Mysterious investor. Yeah, and there was a guy, Aaron Peskin, is the guy's name. He was a politician. He's out of office now. He had picket signs with my face on them, you know, marching down the street, billionaire taking over city. And I wasn't doing any of that. I think they thought I was trying to develop the city. They never reached out or called or talked about it. But I was just trying to preserve that street and make them restaurants. And I think what I take a lot of joy from is it has a very similar field of Green Oaks, which is I'm backing other people that are building great restaurants, being in a new theater. There's a bunch of cool stuff happening on the street. There's like, it's three or four blocks now. It's really remarkable what we've done on that. that street. But I'm enabling other entrepreneurs to go build something that will delight people. This is at a little smaller scale than when we do at Green Oaks, but it's been so much fun. I don't spend all that much time with it. I have a great team that runs it on a day-to-day basis, but I was just on the street

yesterday, and it was so fun to walk down and be like, oh, this is where this coffee shop's going in, and we're doing an all-day diner and rebuilding the theater with a great partner, and it'll be really fun. You said you don't like any of the attention. Is there any kind of attention you do like? You've walked to the walk here, by the way. I'm so excited to do this with you, but something tells me, this is going to be the one you do and then I'll see you again in 10 years or something. You've walked this walk of focusing on the work, which makes me curious. I think it can be distracting. I think that maybe one of the flaws I have at Green Oaks and Green Oaks has in general is we find that when we make it not about the work, when we talk about the work, it can diminish our ability to do our jobs well.

Give me an example, we write letters. And historically, I would write letters where I talk about an investment we made or something I was excited about. And the moment I wrote it down, it became a perspective that I had to defend. One of the flaws maybe at Green Oaks is I changed my mind all the time. I'm willing to try on an opinion like a scorecode. And if it doesn't work, I'll throw it off. And I have no pride in authorship or ownership. And so the ability to move opinions around as we talk about things without any touchstone of it must be true.

It's helped me. I find whenever you start to say things publicly, then it becomes part of who you are. And we haven't felt the need to do that. I think that's actually a really interesting and compelling place to wind down. I love that, that you don't want to get attached to things that fundamentally what you've done at Green Oaks is always search for the next person, even if that person's bomb over and over and over again, which is so cool to have these special relationships. You know the last question I asked everybody. What is the kindest thing anyone's ever done for you? A defining moment was I went to public school and then I went to a private high school. I was a pretty cocky, 14 year old that came in and I had a great mentor. named Joe Rosenthal, who took me under his wing. I just liked me and was like, you know, I'm going to just get to know you. He was an administrator at the school.

And he would come to watch my soccer games every now and then. And one of the soccer games we had, I scored a goal. And I did what any 14-year-old hooligan, I put my shirt over my head. I spread out my arms. I started flying around down the field. I celebrated like we just won a championship. I think we actually lost the game, by the way. It was like really embarrassing.

And then after the game, Joe pulled me aside. I said, don't ever do that again. What do you mean? I scored a goal. I'm going to do that every time I score a goal. Don't ever do that again. Have some class. Know that you have teammates that helped you score that goal.

Though you have people that passed, know that you've a coach that trained you. You're better than that. Don't ever let that happen. I never did anything like that again. And it sticks with me to this day. I think about with kids. It was the kindest thing. Man, it stuck with me forever.

Neil, thanks so much for your time. If you enjoyed this episode, visit join colossus.com where you'll find every episode of this podcast complete with hand edited transcripts. You can also subscribe to Colossus Review, our quarterly print, digital, and private audio publication featuring in-depth profiles of the founders, investors, and companies that we admire most. Learn more at join colossus.com slash subscribe.