Mamoon Hashmid and Ilya Fusman of Kleiner Perkins are now involved in “more than 80 percent” of pitches.
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Last week, I attended a StrictlyVCWe sat down to talk with Mamoon and Ilya, two VCs who have been around for a long time, at the event in San Francisco. Whose paths crossed first as children in Frankfurt, Germany and who were brought into the legendary venture firm to reboot it Kleiner PerkinsAbout six years ago, it was a little over six years.
They’ve seemingly accomplished their mission to burnish the brand. Among Kleiner’s bets in recent years: Rippling, the workforce management company founded by serial entrepreneur Parker Conrad that was valued at more than $11 billionLoom was a video messaging outfit that was introduced last year Recently acquiredAtlassian bought Figma for just under one billion dollars. This closes to being acquired by Adobe for $20 billion – and that Fushman and Hamid argue is now happily charting a course as an independent company.
Perhaps unsurprisingly, team Kleiner is also leaning heavily into AI investments, and it’s these about which we spent the most time talking. You can watch the video at the bottom of the page. In addition, we have included a few excerpts, which were edited for clarity and length.
We last sat together in person four years ago at an earlier StrictlyVC conference. SoftBank dominated at the time. It has since retrenched. What do you think the impact was on industry?
IF: We’re coming off of three to four years of just incredible amounts of capital going into venture, and that’s not just SoftBank – that’s a lot of folks who’ve had growth funds, crossover funds. And this flood of capital did a few different things. It created many large companies. Two, a few of those companies [became]Some of them are overfunded, and they have to rationalize the outcome. When we were here four year ago, our contrarian approach was to focus on early-stage funding and go back to basics. [startups] primarily, where we said, ‘Hey, we’re just gonna have a venture fund and a very small team.’ We’ve always thought this is much more a boutique business than some of these larger players.
Your company appears to be bigger than it was when we last met. You have now attracted investors, specialists and advisors of the old guard [at KP]Bing Gordon, John Doerr and others.
MH: I believe we may be smaller than when we last met. I think we have a total of about 50 employees.
Does ‘everything AI’ change anything? Can you do more using less people, or do you need more to chase after all these AI scientists who are leaving Google to start their own companies?
MH: It’s incredible to have this tidal wave of technology innovation. I moved to Silicon Valley in 1987 during the height of the internet bubble. To be able to experience another boom in my lifetime is a dream. So I think there’s no better time to be alive than today and to invest in startups because to your point, there is going to be a step-function change in how we all get to live and experience life, as well as how we work. It will come in the form of productivity that we will all gain through AI, and I think we’re already seeing that in the kinds of businesses that we’re backing – whether it’s like in legal or in healthcare or for software developers. AI is supercharging those highest-paid employees. They get more done in less time.
Are VCs actively reaching out to these large companies and offering them stakes in light of all these AI engineers? Have you done this before?
I think that’s definitely happening but the pull factor of AI – the wow factor – has actually pulled folks out of these companies themselves. These opportunities become more apparent and accessible as these tools and data become more accessible. The biggest thing we wanted to understand with the first wave of people trying to start these companies is: do they really know how to do it? We rely on the founders. [help with these questions]We look for people who have a pedigree and know how things work.
If you think back to the last 10 years in venture, there are these waves where technical talent becomes the scarcest resource, and we’re seeing that right now.
How are your portfolio company’s tackling this challenge in terms hiring? Meta, Google and OpenAI offer multimillion-dollar packages to keep this talent.
If: We have companies who like HarveyThe legal profession is undergoing a transformation. We have companies such as AmbienceThis is a list of companies that are transforming health care. We have companies such as VizThat are doing automated stroke diagnosis and medical diagnostics. The mission definitely resonates with the people who are joining those companies; that’s a huge component. Second, platform companies are building some incredible infrastructure. However, when you look at real-world applications and enter niches which become very popular over time, it becomes apparent that you will need to tweak these models and possibly create your own models.
From the outside, it’s hard to understand how these startups build moats — or how strong these moats can be given how quickly everything is changing.
It depends on the firm. Moats and overall market size are the most difficult things to figure out as an investor; they’re typically the things you get wrong the most.
One thing we’ve learned over our history is that we always undervalue our biggest winners. The companies that perform the best grow faster. They expand or create their market in a way that no one could have imagined. We look at some intangibles. One of them is the level of engagement that customers show. It is difficult to remove a product that has become a part your daily life.
The more obvious piece of the moat is the piece of the market that you’re in. A lot of the companies that we’re backing, especially in AI, they’re taking a big problem space that a company can and should own. Enterprise assistant, for example, that’s a big space, and the people who figure that out first are going to be the people who move the fastest. If you look at AI, unless you’ve built an incredible product that’s just flying off the shelves, you don’t get distribution for free the way you did with mobile. AI requires data and distribution to improve the product’s experience. Therefore, the first movers in defining a category are likely to be able run faster than others.
How many AI-related pitches do you see on a weekly basis or monthly?
MH: From a percentage standpoint, I’d say more than 80%. To be fair, if you were building a company in 1996 and you didn’t mention the internet, you’d be out of your mind, right? In the same vein a missed opportunity would be not mentioning AI.
How active are your efforts in this area, if you can call it that?
MH: If you looked like last year from Q1 to Q3, it was the slowest year we’d had in 13, 14, 15 years. December, on the other hand, was an excellent month.
IF: It’s running a platform and set of services for people who want to run their own models. It’s a bit of in some ways an orthogonal bet to sort of the oligopoly [centered on OpenAI, Microsoft and Google] who provide infrastructure, but it’s a company with incredible customers, really strong growth, and a phenomenal nominal team, and the numbers speak for themselves.Again, we’re building vertical experiences — in healthcare, legal, software, engineering, science — and there will be fine tuning and [proprietary]It is exciting to think about the modeling that could be required for certain use cases.
I understand you’ve also invested in a wearable that would make VCs salivate. Tell us more.
MH: I’m not sure I can tell you more today. I don’t think they would like that. Next time.
Do you think that one AI wearable device will win based on what you have seen? Will we use one wearable device, just as we carry one phone?
I think we ask ourselves this question: What is the computing platform that goes beyond the mobile phone? Some people wear Oura ring, others Fitbits. I’m wearing a Whoop. These are pretty basic wearables. They’re not all that smart.
What’s capturing the imagination of all of us is what is the next computing wearable that we’re all going to adopt that doesn’t look like a cell phone. There’s the Rabbit, there’s the Humane AI pin and soon you’ll see the Vision Pro vision. There’s exciting stuff happening. But as you know, it’s very difficult to get consumers to adopt a new form factor and a new way of doing things. It takes some incredible design and a low cost product and beautiful interfaces, and I think we’re excited to see all these things.
Figma, the Series B round of which you led in 2018 just Half of its valueAdobe has reduced the price of the software from $20 billion to $10 billion. What’s next?
Figma is a once-in-a decade kind of company, from the team to the product, from the love of its community to the revenue profile and profitability. It’s is the venture capitalists’ dream. So it’s not sad that it is charting its own independent course. It was bittersweet for everyone to agree to sell their company in September 2022. So I think we’re very energized about the future and the company continues to perform incredibly well.