Dave Munichiello of GV on investing across all stages at YC, the GitLab story (passed on Series B, backed it after), and Google as a permanent LP

Boomer. Anyway, thank you so much for stopping by. Good to see you boys. We got some big news. A new investment from you coming onward tomorrow. Yeah, we'll see you back days. Welcome to the demo day stream 2025. Good to meet you. How are you doing? I'm John. Nice to meet you, Dave. Dave Munillo.

Is it Did you photograph us out there or was that somebody else? Oh, I didn't photograph you. What? Who was photographing? Your buddies. Uh, someone else at GV. Han. Okay. He took a picture. Okay. Oh, yeah. We love the paparazzi. Can you introduce yourself for the stream? Yeah. So, uh, Dave Municello, Google Ventures.

I'm a managing partner there. Been there about 13 years, investing in AI and enterprise software from the early days. Done a ton of stuff here. I was just standing in a room downstairs hanging with a bunch of folks and uh, Gary came in and said, "Hey, you got to go do this. " So, amazing. Thanks for coming on. I'm here.

Excited to hang. Yeah. Uh, what what what trends are you following? What are you seeing that you like? What's interesting? Well, first break break YC into chapters for us from your point of view.

I'm sure you've invested in companies at this point, maybe not on right around demo day, but in every I was in Cambridge in the early days in grad school when like Paul Graham and those folks were in Cambridge doing their thing. And so, at that point in time, YC was like the cool place to be connected to, right?

And I think you know a lot of us I met uh you know partner of mine that now runs our life sciences team and I co-lead our our digital team here at GV. We met in Cambridge and we used to like get really excited about any Cambridge YC events.

So the place has totally evolved totally right chapters totally uh was fortunate enough to do GitLab in the early days. So like new Dol from day one and like Sid has always shared his enthusiasm. Patrick Collison as a portfolio founder comes in and talks to the batch and then we hear the cool stuff from him.

Um, how what was the perception around GitLab at the time? I I I feel like I remember it and it was kind of like discounted because it was open source and GitHub was already such a such a success. It was like how are they going to do anything when there's already this winner?

I literally just stepped out before this stepped out to do the earnings call with the you know CEO and the CFO to like do the investor call back because we're public market shareholders of course the company. Oh wow. Um, so we invested just after the Series B. We actually passed on the Series B. Oh, no.

And we had a bunch of concerns. And if I look at those concerns, they were uh Hold the mic a little bit closer. Just angle it. So they were one of the first companies to be remote only. WordPress and GitLab. We're like this remote seems strange. How the hell are they going to run a company like this?

Sid is extremely technical and I think remote only works really well for him because of the way that he shows up as a human, but he writes everything down. And so um that works for a subset of people in in society.

I mean we talked constantly like like passing out a company is just like it's just like this stage isn't right for us but we want to continue to talk to you over time. Right. What's your approach to demo day now? You I'm assuming you don't have a lot of FOMO. You guys write bigger checks.

We've met something like 30 companies so far. You are you are writing checks even at this early stage. We write checks into YC companies. We love YC companies.

So even though we're multi-stage like hundred million dollars into a public company as we were just talking about we also do seed and everything in between A is our sweet spot A's and B's great um we do a like an event a few weeks before demo day every year with all the YC founders and um and then we know all the group partners right so they like constantly ping us with ideas that's great what what is the integration with Google like now we're entirely separate entire separate yeah so we raise capital from Google our sole LP it's an LP relationship Yeah, because it's such a it's such an interesting dynamic because on the one on the one hand like that could be incredible value ad if it's like hey we'll we'll introduce you can sell into Google.

The incredible thing is we have a stable LP that's there forever permanent capital essentially plenty of capital and an appetite for risk. So we have a great LP that we have a half an hour conversation with every couple years. Yep. And and plenty of capital. Wow.

We don't spend any time pontificating about where we think the market is. That's why I had to call our comms people before I came on here is like we don't we don't usually do, you know, marketing or like like comms events or podcasts or stuff like this. Excited to talk to you guys, of course.

Um, but yeah, I think we're we're unique in that we spend all of our time with founders. Yeah. So, I shared the like it's such such a hack.

I mean, I I think you're the envy of every, no matter how successful our GP friends and the GPS on the show, having a dynamic where a hundred people could call you on a Saturday at 5:00 p. m. and you kind of owe them your time to some degree and that's like that LP, you know, dynamic.

I mean, I talked to obviously tons of friends in uh at the GP level across different firms. It does keep them sharp. Like they get a lot of pressure from LPS, constant questions, deal flow, connectivity.

I think that's really positive, but we don't have to deal with a lot of that stuff and so we spend time connecting with founders and other GPS. Yeah. What do you think the nature of those questions usually are? Is it just like trying to understand markets and trends and how the function?

Yeah, I I I haven't really sat on that one. I've been to like one or two LPA days for big fun. What's this transformer thing about? I didn't want to say it, but I think that's kind of the I've seen the movie, but hilarious.

I I mentioned this idea of like we invested in, you know, GitLab in the early days and then now they're a public company.

Like hedge funds invest in the stock, they call us to ask us for our perspective on the company and they're thinking about like what happens in two weeks and I imagine LPs are like slightly farther out. It's like 90 days maybe to like you know what's what's happening today? What's hot today? Are you in the right deals?

That sort of things. Uh our LP doesn't care about any of that stuff, right? So we don't have that conversation about like what what we're in, what we're not in, etc. It's like do you have a second generational founders?

Do you have a particular understanding of how the startup landscape is interfacing with the mag seven the big tech companies right now? We're in interesting time.

The big tech companies they all kind of like went from a 100red billion in market cap to a trillion very easily and it was kind of like it was kind of like the easiest 10x of their entire career you know in kind of some sort of unexpected way. You would think that would be the hardest one but a lot of them just did it.

Uh at the same time um it feels like there's more opportunity for startups than ever but the big big companies have more resources than ever. What are you talking to founders now?

I mean specifically around AI we're wondering constantly like is AI going to make incumbents stronger sustaining innovation totally and yet I'm talking to companies that are doing millions of dollars in ARR over two days. That's right. That's right.

And and I think the question for us is you know does each incumbent each big SAS company do they bolt on AI? Do they aqua hire acquire? Yeah, we're seeing this with the Windsor 49% every big tech company% investment. It's a new hot structure. Yeah, it's the new M&A investment. I'll take 49 and all your best people.

Yeah, I could do this valuation or double it and you get half. It's like the same number. But I think having uh loads of capital right now in in a time when like the seats are shifting in tech is quite interesting. The Mag 7 might be the Mag 70 in the next 10 years, right? Add a zero to it.

I would like I would like more big tech companies. We're on the side of big tech and so we we we want there to be as much this is actually little tech. The 70 little tech we're we're fans of all of it. All of it. Just tech. Yeah. Yeah. Totally.

Um yeah, I I I think this idea that like people want to make people want to say AI is good for big tech or it's an extending innovation, but it can be good for both, right? It could be so transformative like the internet was good for some big companies that adapted well to it.

It was good for a bunch of completely novel ideas and so we don't have to like pick one and pick a side. It can be an extending innovation and it can also enable all of this. Yeah.

I I think we're in this exciting place where like the most uh high agency humans in our lives that we're all connected to, they're empowered not just to have like the underlying cloud be present for them, but intelligence be present for them. Yeah.

And so now they're they're building, you know, I met a company out there that was like one person, no engineers, already have tons of revenue. Like I think they, you know, he he told me he's going to be the first billion dollar company, right?

I always get I always get hung up on that because it's like if you attach if you attach a vanity metric. It's a van it's a total I mean it'll be amazing when it happens, but a total vanity metric that can like guide you towards bad decisionm but it feels like it might like happen accidentally if it happens.

shouldn't be something that's maybe or the way to do it is extra billion and then lay off every other person but yourself. Yeah. Yeah. The private equity guys are really going to be the ones that do it. They're going to be like that's not how we build.

We bought a 1000 person company and we fired everyone except for one person. There are a few VC companies right now looking at VC firms that are looking at you know the PE rollup like something that has massive distribution. Have you looked at any? We have looked at them. We have passed on a lot of them.

It's it feels like a PE play where you're trying to like get multiple to change as a result of the industry that you're going after. question.

I just look at it, it's like a lot of the founders that are running that strategy, they just should change the structure and just say like we're going to run a PE playbook here and we're going to be two and 20.

We're going to be two and 20 because it's if you if you can if you can raise 20 million on a 100 for the strategy and keep like a lot of the economics, sure, it's great for the team, but it should probably be like the basically the the comp incentive structure should be look more like private equity. Totally.

Totally fair. You guys are friends with a buddy of mine, Sean Magcguire's been on here a couple times. Sean introduced me to a founder on Friday night at like 9:00 over text. And I respond back and the guy's like, "Do you want to meet tonight? " Nice. Do you want to meet tomorrow morning? Like I'll I'll come to you.

I live like an hour away. I'll drive to you. I'm like that that kind of high agency human can be empowered by, you know, an entire set of tools, a whole software suite. Uh you know, AI AI will be the thing that powers all of these incredible humans that we're sort of meeting today. For sure. Yeah.

Yeah, the thing I'm I I hope we get some more of these companies on.

We've had a lot of developer tool uh uh teams on uh I I think this idea of like business automation is being heavily explored around agents but we were talking with Dylan Patel last week and he says like the the next category besides consumer tech you know with like LLMs like you know chat GBT then you have uh you know codegen as like big revenue categories and like this third category of of of just actual like business automation.

And so like how do you just make the machine work?

And everybody's thinking about it in the concept of like agents which is like kind of a I think like almost a simplistic way to view these things and like what what is the next what is the next iteration of that where it's like actually like an autonomous system that that doesn't have to interact like a regular employee.

It's sort of um so we'll see. Yeah. I mean we're seeing it across an organization like a Sierra or a Decagon. Uh you know Harvey is a legal AI company that we're invested in. There's some medical AI companies. So like every vertical has AI but it looks a lot like a human. It's like replacement of a human.

It's replacement of a human. But how do you replace 20 humans at once? Whole functional across across cross functionally. Yeah. Um how do you worry uh when a YC deal that you're looking at gets gets hot? Do you worry? Do you think it's a Oh, we don't worry at all.

No, you know, but I mean historically, you know, if I think if you do look at the data, a lot of these companies that some of the hotter companies at demo day don't end up, you know, always I mean, we're investing in super hot companies at the A and the B and the the most sought after companies get marked up incredibly, right?

So, it's a sign of the heat is a sign of enthusiasm from great people, opportunity. Totally. Totally. And so like you you have to if you're if you're choosing to get exposed to that asset class, you have to be willing to pay the prices to enter that asset class and play in that asset class.

Um here the challenge is that you have like three months of data. Yeah. And so you're talking like the company that grows revenue the fastest in two weeks or 3 months whenever they actually launch is not necessarily the company that's going to grow revenue the fastest over two years, three years.

We've seen that a bunch of times where we invest in a YC company and then after demo day it kind of it kind of chills out a little bit and then it reacelerates. There's a founder in this batch. Yeah, totally founder in this batch that raised I think like almost $8 million of uncapped convertible notes, right?

And so it's just like humans dog absolute dog in the incredible founders, incredible team and like I understand why people are are sort of leaning in to working with them. U but that makes pretty difficult. Yeah. Yeah.

you're thinking about that next that next call in a year or two with Google being like you know trying to explain like you know entering a party round on an uncapped note it's it's it's easy to literally has no visibility into but for us the thing that we care about is we want to be your lifelong partner like the thing that we think about for founders is how can we be for that them there for them over every round and into the future what's your messaging around signal risk because I think there's this like if If you're truly a multi-stage fund, you could do an early round and you could say, you know, we're we're good with our ownership right now and like we're going to help you raise this round, but we actually like I think this concept of of like signaling risk is like totally possible for you to want to invest in a company today and three years from now.

So like just because you don't do the in between rounds or orific conversation I was having when Gary walked up and said, "Hey, talk to these guys. " So, I was talking to uh uh Nirage from General Catalyst. Oh, yeah. And we were chatting about like do you play when the price gets to an uncomfortable place?

Uh what signal does that send? Like you're you're essentially sending a signal to the market that your firm is excited about this company. They have a separate seed program. Um so they can kind of categorize this as like this is a seed bet. We're going to put a million dollars in this company. We'll see how it goes.

We don't have a separate seed program. When we do an early stage bet, we we use similar criteria to what we use in the A.

Obviously they don't yet have a metrics but the question is like if they had a metrics would we lead the A in this company so there is a big signal when we do it so it makes it harder for us to do like 30 or 40 companies we've talked to 30 or 40 we might do a handful. Yeah makes sense.