Aydin Senkut on Felicis Ventures: early Google, 53 unicorns, and why generalists beat experts in VC

multiasset investing, industryleading yields, and they're trusted by millions. Jordy Hayes, what would you like to do next? Let's bring in our next guest. Aiden Senka, welcome to the stream. There he is. You look fantastic. How are you doing? Hey, Jordy and John. Uh, happy Halloween. Wait, wait, wait.

What are you drinking? What is What is next to you? Wow, that's Do you recognize this drink? Of course, I recognize that drink. That is Andrew Huberman's Matina Yerba Mate. We refer to it as a podcast in a can. It's hard to drink this on my end. [laughter] The fake beard is getting into getting into the drink.

But, uh, it's great to see you. You're looking sharp. Do you wear a suit often? You look very natural in it. You know what? I used to wear a uniform in high school. Uh it's coming back to me and I'm a huge Formula 1 fan.

So I feel like I'm already wearing like this is the cap you normally get uh when you're on the podium with kind of the readath. So I feel very good taste here. Championship championship hat. Uh how did you actually get into venture? It's a good story.

uh um I was Google's first product manager and then first international sales manager um always wanted to start something both my parents were entrepreneurs and I felt it's just kind of the way of the valley you go from being an operator to being an investor but interestingly uh originally I thought hey maybe like the right way to do it is like go get a stint at a venture firm and the five firms that I talked to not only told me I wouldn't make a good VC they told me I wouldn't even make a VC I just did not have the wherewithal So I'm sure many people also told you that your idea would not run.

Yeah. What like did they have any good reasons? Did you agree with them on anything? Obviously they were wrong but it's so funny like I wasn't an engineer. I wasn't senior enough at Google. Uh I never had done anything in venture.

Like again maybe on paper it makes sense but to be honest with you it's the best thing that happened because I always feel rejection. I call it rocket fuel.

And it was such a such a simple situation where I had to burn the bridges and the only way to prove the skeptics wrong to actually get into the business and do well. And even after 20 years, I'm like, hm, 10 IPOs is still not enough. 100 exits, I think it should be 200 exits and maybe then the point will sink in.

Hit that gong. Oh yeah, great hit. Uh, how big was your how big was your first fund? The first fund uh actually I started as a solo LP and solo GP which was only 4 and a. 5 million um and then our first institutional fund in 2010 was only 41 million modest amounts.

What uh modest amount what story did folks tell at Google about the funding of Google that helped you kind of understand how venture works? I've heard this story about uh you know Sequoia invested that was probably more like a traditional round.

There's also this maybe apocryphal story about somebody going to their car and writing a check before the company was even founded. Like what was your introduction to just a flyer? Yeah. Yeah. Yeah.

What what stories did you draw on where you were like this worked out for this particular person really well in the Google story that I felt and experienced and I want to go and recreate that? I mean look I I I I was there like right after the sequen um client round.

First of all, the biggest thing about Google is that what people sometimes misunderstand about this business is all about outliers, positive outliers. And the best training for that is to actually be at an outlier.

And I think more than the VC story to me, it was my experience working for Larry Paige because every single thing that I've done at that in that first year for Larry, like he would like see it and I'm like, hm, this is kind of 1% of what I'm expecting.

like you need to do things 10x faster like 10x more and then it's like you know what maybe humans are not meant to do that and my joke is like one of my projects was to launch Google in international languages because I wasn't an engineer I spoke six languages so and I'm like look you know what I can do for Google is make sure it's launched in non-English languages and he was frustrated with that and so I always tell people I'm an occasional and accidental uh father or grandfather of Google translate because they're like from now on Anything that's internationalization or translation, let's make sure machines do it and not humans.

[laughter] That makes sense. What What was your first uh what was your first true home run in venture? So the first true home run in venture, you can define it in many different ways.

My first billiond dollar exit was Moroi uh which started as a Wi-Fi project in Mountain View uh with Google and I was one of three ex Googlers that in invested in it and the first IPO was Shopify um and that was amazing like showing up to NICE not for Google's IPO but you know as an investor that hey like you know early believer and the company was great and what was crazy is like $2.

7 billion valuation at IPO for Shopify and today there are like 150 like another 50x from that. Google was similar like it went 40x from the IPO and that like in in a nutshell is like positive outliers and I can't imagine better examples of outliers. Yeah, that's remarkable completely.

What about what about more recently? Uh you've done Merur, Superbase, and and others. Maybe we start with Meror. We just had uh Brendan on earlier this week to talk about the new financing. You guys have been in a couple rounds now. Is that is that right? Two rounds. Two rounds.

We are huge fans of uh Brandon and and his co-founders. Um look, I think it's another great example. When I started like right after Google, we thought going 0 to 100 million in 10 years was a great achievement. Maybe 8 to 10 years. You know, I had companies like Shopify go IPO in six years.

But Merkore is a new breed of company. They went zero to 100 million in gross revenues in 11 months. They're essentially um have built this great platform where they can essentially find any type of talent or discipline in the world, find the people, have AI interview them and generate expertise and data based on that.

And it's just like again like it's what's so exciting about the AI age is these companies you never thought like would be at this kind of scale are able to deliver these things because it it's just that age and that that opportunity. We're very lucky to be part of it.

You know we're huge fans of Brandon and team um and then Superbase is another great example like we are like listen some of the most valuable tech companies were database companies and somebody's going to build a developer friendly backend.

At that time there was a front-end company but no real backend company and it was crazy because when we invested in Superbase uh we did a almost a growth round valuation and the traction was not even close to a million in ARR and since then the company has grown 50 70 80x plus um in just a few years and that makes me think like what you're doing is really special because the private companies are growing 500 to,000% and public companies are growing at 20%.

%. So it's a 50x delta. So in case anybody's wondering why it's interesting and exciting uh to be in venture or to be involved with private companies, the very best are doing an insane job and I think those are the stories that need to be out there and that's why I love my job. Uh I feel like it's the best job.

So they they announced their series A in October October 28th of 2021. I'm assuming you guys did the deal like you know some late summer or something like that.

um at the time was that a deal that you think maybe other pe people p would have passed on because of the price like it just looked crazy so we did the series B and it was really interesting not only did multiple other VCs passed on price but they went and then invested in competitors because they could get in at like half the valuation but we never compromise what we believe is you know our belief in the founders and the company and look I mean at the end this business is all about early belief and as all the founders would get to participate in their journeys and superb is a prime example.

uh they had all the initial signs that things could be really great. Like I said, you know, traction was really low. They were starting to like essentially like take off among developers and it was built on Postgress.

It was very technical and people are like no nothing could be worth that valuation at that stage with only that much signal.

And I think that's kind of the magic of Felicas is that when we back these incredible founders, you know, the success is far uh from obvious, but then after we invest like these companies go through these insane hockey stick growth curves and Superb is a prime example of that as is Merkor.

How do you think about what is different about this boom, this moment from previous cycles? Uh the top things that poke out that have have really changed in the last two years that justify more investment that change the job of the venture capitalist are, you know, we're seeing higher growth rates.

We're also seeing higher capex requirements for some tech companies than before. We're seeing uh just more potential new markets because you could be going after a labor pool instead of uh a different like an existing market. There's entirely net new markets.

Uh there's questions about enterprise adoption, churn, like what in your mind is is different this time around from the mobile wave, the the cloud wave or anything else that informs how you're underwriting deals this year? Yeah, I mean look, uh I have seen the internet wave as well as the mobile wave.

There are a couple things that are really different. So one is the point that we were getting at is that venture game at is like very basic is essentially uh it's it's a growth game.

If you find a company that is growing 50x faster than public companies it's going to end up in a good place and even if you're off by 10x on price if you're in one of those companies things are going to work out for you.

Also, interestingly, 20 years ago, like when I first got into business, a lot of people would worry about distribution. But the reality is today, like everybody's watching YouTube, everybody has a mobile device. Distribution is no longer a problem.

But what is really interesting that is different is the AI age normally before with software first the budget was limited. I don't think any company is going to spend more than 10% of their budget on software.

Also the value creation was different like software yes it is helping you but still people are working with it you have to put data in it and then to get value out of it you have to look at the results and say okay now I'm going to do something based on what the software is telling me and the software is like streamlining it a little bit in AI age what's really stunning is like you now have can have a full closed loop without humans where everything is being done by AI so the data entry is automatic the data output is automatic um I sometimes think of a turbo engine in a car like one of the like interesting technologies is you take the exhaust gas and then if you channel it into the engine the car can accelerate a lot faster.

So in some ways like what is happening with AI uh there is growth vectors in so many different areas. I had to make an engine example since I'm wearing a formula one like hat.

Um but first of all there is so much more value creation and now you're going after labor which depending on the sectors you look at is like 40 50 60 70% of a company's budget. So the dollars at stake is so much larger.

How how much more important is it now to think about terminal market structure because I'm I I completely agree with you. The growth rates are insane. The risk I feel like is is not that the growth isn't real.

It's just that there's you you pick a market and there's one company that goes from one to 10 million in ARR to 100 million in ARR and they and the and you project that out and you're like, well, the market's 50 billion. They're going to get there really fast.

But if the market can support 50 companies that all grow really fast and they all take 2% of the market, then you will see some sort of scurve in the growth rate at some point.

And I feel like there's some markets that will probably be perfectly competitive, some that will be highly monopolistic and everything in between. And it feels like as a venture capitalist, it's going to pay to be the type of person that can clock how markets play out.

Does that map with what you're thinking, what you're trying to do? Look, I think you're getting at a very important point, which is it is not just enough to have high growth, but you need to have durable growth. And we use the examples of Google, Shopify, even like more recently we had companies like Canva.

And I think one of the things that people sometimes really underestimate is that that kind of high growth compounded will generate stunning results. And one of the things that I learned from both Google and Shopify is that if if and when you choose the right markets, you will probably get the sizing wrong.

But if you choose a mega mega market, even like at what we think success, there is still so much of the market left. Like one of the things that I never realized is even when Shopify went IPO it was less than 1% of that market and that's what helped it like get a 40x growth after that.

Same thing happened to Google and the very best companies can also expand the market. So to your question though one of the things that we really pay attention is what are the modes of these companies is not just that they have the chance of high growth but how durable will it be.

A lot of times as the founders a lot of times it's also different elements. For instance, we very frequently talk about data modes at Felicis, right?

Like one of the things that helps you differentiate is if you have data that nobody else has, since data is the new oil, that's going to be a huge differentiator because at the end of the day, there's a lot of AI tech and that's more pervasive.

But if you have data that nobody else has, that's going to be tremendous value. And if you start doing something where you basically become a key part of the process, people are not going to rip you off.

of we just recently won a term sheet of a healthcare AI company and what was interesting is through AI they've been able to service a part of the um patient uh market that here too was not possible to be served at a positive uh uh return and the moment they fix that part of the market hospitals are like why am I only going to give you 35% of the market you know what the rest of the market there are 19 players but I'm just going to come straight to you is too much work.

You guys can take 100% of our referrals. So, it's a yet another good example of if you do a really great job with the hardest part of the market, you can essentially have a much larger portion of the market. Nobody wants like is interested in like somebody who's only going to win 1 to 2%.

They want people that can do everything together and not just one part of it. And again, that's kind of also the big leap from software is maybe only solving one part of the problem and they want like a full solution.

I want like a full turnkey, not just like hey the software can get you the numbers or analyze things or be the system of record. Now everything is about system of action and AI can enable that.

And if you have a data mode on top of it, obviously that drastically increases the chances that not only are you going to have high growth but the high growth is going to stick with you. Did uh did the venture industry learn its lesson in 2021? Things got a little bit crazy. There was a lot of top signals.

We had a crash, but at the same time you did companies like Superbase at what was then a crazy valuation and then now it looks like, you know, you bought it. Uh it looks like you stole it.

Um [laughter] uh now this time around it feels like you know that we we were I I remember in 2022 it felt like we were going to go into like a VC apocalypse. Uh it certainly doesn't feel that way now. Do you think do you think we learned any key lessons or are we going to kind of relearn them in the future?

Let me tell you an interesting lesson or maybe like a key secret is that venture business is you you have to be consistent. You cannot you cannot sprint and pause sprint and pause. If you're not growing in this business you're essentially losing stagnating. There is no such thing as cruise control or like steady state.

And I think the mistake that happens with a lot of VCs, if their conviction is not deep and they're essentially playing the market game, there are a lot of followers and not a lot of original thinkers. What happens is the moment the market gets risky and things look dire, people pause and like, oh, you know what?

Like, I'm going to stop making investment. And one thing I'm really proud is even in the 21 2021 vintage and 22 when things were really expensive, we still kept on making investments and we never slowed down. And you know like we were basically like steady growth.

And part of that is because look this is not public markets where if there is 20% growth and your entity price is wrong you're going to lose a lot of money. But if you find the right companies and you do have 50 to 100x growth ahead of you even if you overpaid for them you're still going to do well.

In fact the only way you're going to do well is to have these positive outliers that are fund makers.

And so I think the biggest lesson is like a lot of VCs like spend too much time of like this valuation high and low and this trend and that the reality is you got to be a surfer that can surf any wave in any season and not just one like you can't just go to the beach and call it quits.

you need to go back out and you know I know uh Jordan lives in Malibu so he he's he's he's going to like the surfer analogy but the part of the other thing also is that you have to find the companies where there is going to be so much growth that even if you got the price slightly wrong it's not going to slow down.

So anybody who's like, oh, like we're going to be in this business and it's all about the price, they're misunderstanding it. It's all about like being early and understanding that incredible growth that's going to follow. That's going to basically give you the long-term success.

Um, and so I feel there is definitely a delta between the VCs that are original thinkers that still had the conviction and the the the courage to make those bets and not just like Superbase for us but also companies like NAN that was a sleeper company in Berlin and all of a sudden in fall like multiple VCs have woke up that they're doing great job in uh Aentic AI after that's a company interestingly enough I saw it on getting uh people started making videos about it on Instagram which I I look at as much more mainstream before I saw anything about it on on X, which is I think a good sign.

It means that it actually has traction outside of our little Silicon Valley bubble. How do you uh how do you think about um your your philosophy on expertise versus like being a generalist? Yeah, there's a lot of expertise on like a category versus like judgment around Yeah. human.

But take me through like advice for a venture capitalist who's joining your firm, advice for someone who's graduating high school and thinking about how to pursue like what is your philosophy on on generalism versus becoming an expert in something? I mean, look, I think journalism in general, it's a really good thing.

But I I think look, there are there are a couple really interesting uh secrets or insights.

Number one, um just to give you real data to make this point is that when I started in venture, the other thing that people underestimated is like they're like, listen, all these sectors you're going to invest in, you're not an expert in any of any one of them, and you're not going to be able to make a good investment.

I think people what people misunderstand is if you're an expert in a sector, you're going to look at a company and you're only going to look at the orthodox way of doing things.

And when somebody comes in as an outsider and like I want to do something the way it's never been done before, you're going to say that's never going to work. And so like the paradox here is the expertise, right?

like the experts are supposed to know the field really well but that also anchors them in the way that things are done traditionally versus a generalist is going to be first principles and say you know what there's actually a new way of doing things and if this thing works it's going to be amazing and at Feliz is like the most interesting stat that I'm most proud of is that we made early investments in companies 53 of them that exceeded a billion dollar in valuation not a single one of them was led by an expert it's amazing And so like that's the thing like when you guys when you guys started you were not media experts or like proven like media people and you had a great idea.

I would tell you the funny thing is in our case like I've been working in and around advertising my entire career. John had been an expert on on like content production but we certainly were not experts on hosting a show.

And I know and if you would asked us even literally months ago if you had asked us like would you be hosting would could you ever see yourself hosting like a daily show we would have been like uh like I always love that Paul Graham formulation which is like most co-founders like if you look at the co-founding teams it's usually like two or three people where each of them are are somewhat experts in like two or three disciplines.

So you have someone who knows like marketing and finance and operations and then someone who knows like front end and backend and technical design and architecture and also some of the tradeoffs about how the product design works.

And so you wind up with like you know some level of expertise in 10 different categories bundled up in two to three people uh on a specific team that seems to work really well. But yes, they're not like pure play experts, which is what we think of, at least what I think of when I think of expertise. 100%.

Look, I'm gonna add two more things, which is I think what one of the other elements of being successful, whether you're a founder or investor, especially as a VC is all about the people. And I've actually done sales at Google. And you would say, how is that related to being a venture? At the end, it's a people's game.

the founders are not you know taking money based on numbers but if they can trust who you are and so like being good with people and being able to relate to them is really important.

So these days when people are starting in the business uh whether they're a founder or a future VC or emerging VC I'm like look your biggest asset is your network and the people that you know u but the second thing is especially for venture you need to be exposed to outliers right like I feel like my training at Google you know every single thing that Google has done in the six years that I was there not a single thing was standard every single thing we've did we did a completely different way that it's been ever done before and the results were stunning.

So if you've never been at a company where the founders and the firm was crazy enough to do things completely differently and you kind of understand that culture that mindset right like we did talk about being journalists but it is also important to have been exposed to some of these things and then you're like okay you know what now that I have seen it it's in my DNA it's in my blood I can kind of like see other um signs of that.

So the being good with people, being able to understand outliers, at least being exposed to them, I think are key ingredients uh at least in venture. Um so those are things that nobody ever told me like hey this is going to be really important for you.

But now after 20 years of doing it I can tell you that it is very important and like journalists like I worked in every discipline across four continents. I've done finance, sales, marketing, product that was also really great.

I didn't have to be the deep deep expert in all of these things, but being able to understand so you can like see around the corners and find little things.

You know, just enough to make sure that you're not going to make a stupid move, but you don't know too much that you would be too anchored in it and you would be skeptical of a brand new way of doing things. Well said. I just can't get over how good your outfit looks and your frame looks.

Yeah, you're ready to co-host with us. Yeah. Thank you. Like honestly like I'm I'm down to that. I love this hat and I'm enjoying my yoga mate. [laughter] Yeah. Are you in SF? Uh we are in Menlo Park actually. We do have an SF office. Okay.

Um but we are in in in the Bay Area right now right in the heart of soon in person. Yeah, let's let's hang out soon. Are you going to be at F1 Vegas? Uh I'm I'm I'm thinking about it. So my older son is in varsity football. If there is no conflict with his game, I'm definitely going to be there. Okay, cool. Let us know.

We'll let us let us know if you are. We will we'll look quite different so you can watch some older footage to to recognize us over there. Uh thank you for hanging out and I'm impressed with how that you were able to to do a normal interview when we look uh so ridiculous.

But uh it was really fun chatting with you and thank you for sharing. That was a blast. Should I say Mark and Ilia? Uh but very well done. A great impersonation and uh Jordy and John. It's such a such a pleasure. Let's do this again. And the audio team is appreciative as well. You're looking absolutely crisp.

Everyone's a fan. Everyone loves it. Great stuff. Awesome. Talk to you soon. Have a great uh have a great rest of your Friday. Have a good day. Bye. You too. How'd you sleep last night, Jordy? [applause] I got a 92 on eight. You can go to eightsleep. com. Get a pod five code tbp 32 minutes. 93. 93.

Oh, you beat me by one. Very good