This week on the Newcomer Podcast, we're joined by a very special guest: Danny Rimer, seasoned investor and longtime partner at Index Ventures, for a timely conversation around Figma’s highly anticipated IPO.
Danny takes us behind the scenes of Index’s early bet on Figma and its visionary CEO Dylan Field, sharing how the deal came together and what made the design platform stand out in a crowded startup landscape. From there, we zoom out to talk about the current venture capital climate — what’s changed, what’s stayed the same, and what the smartest investors are watching right now.
We also dig into AI’s evolving role in the startup ecosystem, the tension between hype and real value, and where Danny sees the next big opportunities emerging. Whether you're a founder, investor, or just love a good origin story, this is an episode you won’t want to miss.
Timecodes:
00:00 Introduction to Danny Rimer
02:29 How Rimer met Figma and the beginnings of design as a category
16:42 Figma's failed Adobe deal and comeback
25:39 How Index approaches AI deals
31:00 AI's iPhone moment and looking beyond the chatbot
39:10 Shifts in the venture capital industry
00:00:00
Hey, everybody. It's Tom Doughton here.
00:00:02
Welcome to this week's episode of the Newcomer podcast, shortly
00:00:06
known as Newcomer. I'm joined here by Eric,
00:00:08
Newcomer, Madeline Renberger and our special guest, Danny Rhymer
00:00:12
of Index Ventures. Welcome to the show, Danny.
00:00:15
Thank you very much. Nice to be here.
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Are you, by the way, in the San Francisco Index Ventures office?
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Are you? Where are we right now?
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Thank you for asking. I'm actually in our New York
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office. That makes.
00:00:26
Sense. That makes sense.
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What is happening this week? Figma is going public and you
00:00:31
are on the board. So I imagine it's a good week to
00:00:33
be in New York. Indeed, it is a good week.
00:00:36
It's always a good week to be in New York, but definitely this is
00:00:40
a momentous week. Is it a New York Stock Exchange
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or is it NASDAQ? New York Stock Exchange.
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You get to go. You get to go do the whole the
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whole place. Circumstance exactly.
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Do a little ringing. Exactly right.
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Yeah. I mean, we'll go deeply into
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Figma in a second here, but this is not your first IPO here.
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Have you done the bell ringing before?
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Have you been on the floor as one of your companies was was
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out there? I've been to the NYC and NASDAQ
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for my companies. I'm very privileged, but my
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policy is actually not to ring the bell because I feel like,
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you know, it's really about the team and the founders and their
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family. And so it, it's not something
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that I think makes sense for for us to do.
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Skulk in the background, you know.
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Yeah, exactly. That's really.
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From the sidelines, happy to be there.
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That's. Right.
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The floor is dangerous, though, because reporters hang out
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there. I know the one time I ever did a
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Stock Exchange debut thing, I was like really snaking around
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the floor trying to find the investors in that company.
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So that's very bold of you to hang out there.
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Yeah. Thank you.
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Yeah, yeah. I did the Uber one and I'll
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always remember, you know, Travis Kalanick was up in the
00:01:53
balcony because sort of like, couldn't be in the fray with
00:01:56
Dara and everybody. So it was a sort of funny
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dynamic, that one. I mean, you know, Ubers done
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well, but that was a reminder like, oh, the day itself can be
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painful because I think the markets are just not good.
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And so it was a hard one. Yeah.
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Anyway, we are recording this on a Wednesday and this will come
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out on Friday after Figma story. For you guys, I mean, you were
00:02:32
one of the first, maybe the 1st VC investor in, in Figma.
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So you, you and Dylan Fields go go way back.
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What's the origin story? Yeah, we were indeed.
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So the origin story is is quite a long one.
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I mean it's it's sort of interesting right in this
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industry. I was just reflecting, you know,
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for other investments that we've made, that I've made, that I've
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gone public and also that have had liquidity events.
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It's not always a long journey, but this has been 13 years.
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You know, he was 19 when I when I first invested or when, when
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index first invested. So it's definitely been a
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journey with ups and downs and with chapters.
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And so there's something really gratifying of being able to
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remember and reflect on on this journey.
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Sorry, that was a long winded even preamble to your question,
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Tom, but I was just, you know, I was, I was getting a little
00:03:23
philosophical about it. Well, the length I think is key
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to this, both that Figma raises sort of pre traction and some of
00:03:31
your bet. Your bet is like before they
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really had sort of the viral take off and then obviously
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before. They had a URLI think, right?
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They didn't even know what part of.
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The URL, that's right. And then down the line, there's
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the acquisition that wasn't of Adobe trying to buy it for $20
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billion. Yeah, there's there's precede
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and then there's pre URL. Yeah.
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Exactly. To answer your question, so
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first met Dylan when he was an intern at another company that I
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was on the board of called Flipboard, which was this really
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sensational company in its time where Mike McHugh, who was the
00:04:05
founder of Tellme, which was another company that we had
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invested in actually that I wrote his first check ever in
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that one that sold to Microsoft. And, and Dylan was an intern and
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at the time just really remember his enthusiasm and his amazing
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ability to communicate information with enthusiasm, but
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also with detail and then lost touch with him because he was an
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intern. I've taken a note that I should
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do a better job on tracking interns and then resurfaced
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after I was having a conversation with, with Jeff
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Weiner from LinkedIn, who's, who's a good friend.
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And I was telling him about this thesis that we had on who's
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going to inherit the mantle of the most important business
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franchises out there like Microsoft Office and Adobe
00:04:57
Studio. And, and he said, well, you
00:04:59
should talk to this intern that I can't get to stay at LinkedIn
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called Dylan Fields because he wants to do something around the
00:05:06
area of design. And I think you'll really enjoy
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the conversation. So that was that was How I Met
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him again. He came to to pitch what was not
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Figma at the time, but to pitch his idea with Evan, his Co
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founder. Well, and so much about Figma,
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you know, you mentioned, you know, it's about design, but
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essentially the customers for it are UX designers, people that
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are trying to kind of mock up what a product is going to look
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like, like what a, you know, a digital experience is going to
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look like. I mean, that industry has
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changed a lot in the 13 years or so since you first made that
00:05:42
investment. I mean, can you kind of situate
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to us like a bit in time like how Figma has evolved to a point
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where, you know, they are a company that's going public, but
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also one that probably is facing more competition and and threats
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than they have, you know, well, very different kind of
00:05:59
competition and threat than they did, you know, in their earliest
00:06:01
days. I mean, how have they evolved?
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Yeah. I mean, you know, just to give
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you context, when we invested in Figma, the concept that we were
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interested in is at the time, most of the startups that we
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were working with used Sketch and Dropbox.
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So Sketch for design internally and Dropbox for transferring
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those files between people because.
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You were an investor in Dropbox. In Dropbox and and reached out
00:06:30
to Sketch, but Sketch did not want to take investment at the
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time. And so it was quite, you know,
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Sketch was a good product, but it was quite complicated for for
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versioning reasons and for sharing reasons.
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And then and then Figma came up with this concept of multiplayer
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from the get go. And so that felt like all of of
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these headaches around designing and sharing, we're going to go
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away by this new means of designing and sharing
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immediately. That's really what led to the
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interest that we had in Sigma. It's.
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Like there was this thing called cloud and they could serve the
00:07:10
designs. It's amazing what a different
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era it was. Yeah.
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I was like, oh, there's new careers that were being created
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in the types of designers. There are new ways of file
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storage. There are new types of software
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that can be developed. And then I think, you know,
00:07:24
jumping to today, you know, there's the this sort of will
00:07:29
designers and product managers be coders?
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And you know, Figma has come out with four new products this
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year. I mean, some are targeted
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marketers and so there are lots of categories they're trying to
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go after. But I'm curious like
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specifically on this, like design is the beginning of code.
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Do you see that as like it's more just sort of like the mock
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up or do you think designers will be like real coders or
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what's sort of your sense of how these sort of like make tools
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are going to develop? Yeah.
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It, it feels as though, you know, fundamentally the
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relevance and the core of design has only become more significant
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since our investment. I mean, it already was becoming
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slightly more significant. Like I, I remember that Facebook
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at the time would offer more money if you're an employee at
00:08:23
Facebook and had given a reference that was hired and it
00:08:27
came from you. So you'd get paid more as a
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reference check for a designer than for an engineer at
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Facebook. That was back then in the day
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and sort of highlighted the fact that the importance of designers
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is increasing just merely from what the market was going to
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command. And I think that that design
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relevance has only increased over time and that the lines
00:08:51
between who's a developer, who's a product manager, who's a
00:08:55
designer has really blurred. And with all of this AI
00:09:01
technology that is enabling, you know, with, with vibe coding and
00:09:06
the the notion of being able to instantaneously create software,
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the role of design as the primary differentiator seems to
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me more relevant than it ever has been.
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Are you bullish on vibe coding as being sort of an essential
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way that stuff gets created? You know, that's a really good
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question. I, I think that the notion of
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ease in actually manifesting something, but whether it's
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through being in a mode, in a vibe mode or being very
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deliberate on what you want to code, irrespective that's
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happening, that trend is more core.
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Now the question is, you know, what is the result of that mode
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that you're in? And design is going to be
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central in whatever mode that you're in.
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So I don't know if that's helpful.
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I, I think it's premature to know whether there is indeed
00:10:08
this mode. You know, the way that I'm
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thinking about it, Eric, and maybe this is not a good
00:10:13
parallel is if you think of jazz, I'm a huge fan of jazz.
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You know, jazz is a vibe concept.
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Like the vibe of improvisation is what creates the genius of
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jazz. Whether that translates to
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something like coding, I don't know.
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I think the jury's out. Irrespective, the layer of
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design is going to be critical. The jazz parallel is an
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interesting one because it's also, you know, the
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improvisational aspect. I understand the parallel there.
00:10:45
But jazz is also highly technical.
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You have to be like a very skilled musician to be able to
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really have the fundamentals to to to, you know, mess around in
00:10:55
the way that people do in jazz. Whereas vibe coding to me sort
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of lowers the bar of entry. Yeah, people who are not
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typically software developers can at least, you know, put
00:11:04
together a website rather than, you know, having an expert need
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to do it. We're talking about a lot of
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worlds that I'm I'm I'm an amateur and an aficionado.
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Isn't it? It's a VC job?
00:11:15
Yeah, exactly. You cover it.
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Exactly. Exactly.
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But no. Yeah.
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But you know, there are some, there are some musicians who can
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read and write and are really technical, and there are some
00:11:27
musicians who never learn. Go all by ear, yeah.
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Yeah, so they don't compose anything, but it's off ear and
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then and then they're phenomenal musicians.
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I don't know what's going to happen there, but what's clear
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is that again, this notion of there are all these tools at
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your disposal. It's probably never been as easy
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to create music as today, but at the end of the day there is this
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layer that happens where you have to take whatever your
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output is and really work on it to make it resonate.
00:12:00
I mean, you know, I interviewed Dylan at Cereal Valley AI Summit
00:12:04
London not too long ago and we had a great conversation.
00:12:08
Obviously I played with a lot of big Mas products before that.
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You know, I'm pretty bullish on Figma.
00:12:14
Like the design tool, I get the story of like extending it to
00:12:19
sort of like different categories, like you're doing a
00:12:21
business plan, you're a marketer or whatever.
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To me, the make and the sort of like vibe coding thing is, I
00:12:27
don't think it's like existential necessarily to
00:12:29
lovable. I mean, sorry.
00:12:31
Well, lovable existential to Figma and the threat of lovable
00:12:36
is clearly there. But like I do think there's like
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is make sort of quintessentially Figma or not to me is like this
00:12:44
sort of interesting question because in some ways like design
00:12:48
and Figma are so like intentional and you have like
00:12:50
these rules and you're like, OK, these are our design principles
00:12:53
and we like stick to them. And in some ways, like these
00:12:57
vibe coding efforts are so like hacky, you know, and obviously
00:13:01
we're going to try to sort of bring those two worlds together.
00:13:04
And I I guess I can't tell yet whether I really think they they
00:13:07
meld well or or not. Yeah.
00:13:10
I mean, I we'll have to see. I mean, I'm super excited about
00:13:14
Figma Make obviously, because I think that the notion of having
00:13:21
all these tools at your disposal to mean that the entry point for
00:13:27
you to start making things is lowered and then there are all
00:13:33
these tools at your disposal to make the output much more
00:13:38
sophisticated. That whole journey is really
00:13:41
enabled through Figma Make and I suspect that that's going to
00:13:46
mean that what we're going to see out there, AI and the trend
00:13:51
of AI is undeniable, right? Like as bearish as we were about
00:13:54
crypto is as bullish as we are about AI, so.
00:13:57
Index was bearish on crypto. Yeah, I didn't know that you you
00:14:00
could have dropped that one in there.
00:14:01
Danny, what's that about? Oh no, no, we were we were just
00:14:04
just, you know, like not Bitcoin, but like the the whole,
00:14:07
you know, the web 3 concept of crypto.
00:14:10
You know, this is fundamentally web 3, right, like AI is web 3
00:14:14
for sure. And so the concept of what Figma
00:14:17
make can do in terms of getting more and more people to actually
00:14:23
create things and then have all of these tools at your disposal
00:14:28
to really refine what your output is going to be is super
00:14:33
exciting. I mean, Eric's sort of maybe in
00:14:35
a Freudian sense dropped lovable in there.
00:14:39
It's the elephant. It's the tiny elephant in the
00:14:41
room though. High valuation, but yeah.
00:14:43
What's your take on them? And the reason I want to ask you
00:14:45
specifically beyond just the Figma side of things is that
00:14:48
when I think Index, I really think you guys are maybe the
00:14:51
most, you know, the one of the largest, most aggressive players
00:14:54
in the European tech market. And lovable is if they can
00:14:59
really, you know, hit their numbers and achieve what a lot
00:15:02
of people are expecting could be one of the bigger breakout hits
00:15:05
from Europe in a while. I mean, have you had a chance to
00:15:07
to look at them and. You know, not, not a ton.
00:15:10
I mean the reality is I mean as you know, we look, we, we do
00:15:13
focus on few geos, right, Like we focus on on the US, on
00:15:18
Europe, on Israel and that really is our core like across
00:15:21
the board, that's our core. I mean Figba is 85% of its users
00:15:25
are international. So we see it as a as a global
00:15:29
phenomenon. There are a number of really
00:15:31
exciting new players, lovable being one of them.
00:15:34
But you know, beyond that, don't don't have much of.
00:15:37
A thing you're saying you can't hammer us about one European
00:15:40
startup we want to hit all the best all over the world, or I'm
00:15:42
trying to understand the global point.
00:15:45
No. So in other words, you know, the
00:15:47
the global point is when we look at companies, we look at the the
00:15:51
geos that we think we have a good enough understanding in
00:15:56
picking what we think will be the best teams to go after.
00:16:00
So we don't sort of view ourselves as primarily European
00:16:04
or primarily US or primarily Israel and then we try to find
00:16:08
global winners. So my point is, you know, if it
00:16:11
has global appeal as it does with Figma that that ticks the
00:16:16
box of what we're looking. For I see, but not because like,
00:16:19
oh, Europe is our turf and we need to yeah, I.
00:16:22
See, no, no, no, no, no, no. So you know, like, so for
00:16:25
instance, we looked at Stripe and Audien and we thought, you
00:16:28
know, for a lot of reasons, Audien made enormous sense for
00:16:31
us. Jan my partner who who was
00:16:34
behind that, you know, looked at the space and thought Audien was
00:16:37
a phenomenal opportunity, which it ended up to be, right?
00:16:42
I covered Adobe when I was at the Wall Street Journal, and I
00:16:45
had the blessed experience of writing about the Adobe Figma
00:16:50
deal falling apart. My predecessor on the beat was
00:16:53
the one who wrote the story about the Adobe Figma deal
00:16:55
happening. It's a weird situation where I
00:16:58
imagine when the, you know, acquisition first gets
00:17:01
announced, that comes off as like a big victory.
00:17:03
It's an exit. It's, you know, one of the
00:17:06
things you hope for when you back a company 10 years before
00:17:09
that. Explain to me what was going
00:17:11
through your mind when the deal first happened and whether you
00:17:13
were optimistic it would actually go through.
00:17:15
You know, the reality is we really look to invest in
00:17:20
entrepreneurs who want to build a stand alone business because
00:17:24
it's just impossible to assume that a company is going to get
00:17:29
acquired and that that's a really great exit strategy.
00:17:34
Maybe things will change over time, but certainly it's proven
00:17:38
to be a terrible idea. It also is a means of of
00:17:43
separating folks who are there for the economic return of
00:17:47
starting a company versus those who are on like a mission like
00:17:51
Dylan and Evan were to democratize designs through this
00:17:54
platform. So really we always assumed that
00:18:00
Figma was going to be an independent company.
00:18:03
In addition to that, in most of the cases, just from a return
00:18:08
standpoint as AVC, the returns are much greater if the company
00:18:14
is an acquirer rather than acquirer, right?
00:18:17
Like if you are a public company, you're much more likely
00:18:22
to become the one that acquires rather than be acquired.
00:18:25
So there are a lot of economic reasons why being a stand alone
00:18:29
company makes a lot more sense with a few exceptions.
00:18:33
So if you go back there, the first point would be we were
00:18:37
very happy for Figma to stay independent.
00:18:40
Were you against the deal when it first was being discussed?
00:18:43
What I was going to say, on the other hand, you know, we always
00:18:46
respect what the founders want to do, right?
00:18:49
Like at the end of the day, we are privileged to be on this.
00:18:53
Ryan will be as helpful as possible, but they're running
00:18:55
this, they're running the show. So if the team thought that it
00:19:00
made economic as well as structural sense to be acquired,
00:19:05
then we weren't going to vote against it.
00:19:07
I. Mean, it was clearly a huge
00:19:08
valuation, right? I mean, it was $20 billion
00:19:11
three. Years.
00:19:12
Exactly. Right.
00:19:13
I mean, analysts hated the deal. Adobe analyst Adobe.
00:19:17
Yeah, exactly. So it's like clearly from a
00:19:19
fiduciary point of view, it seemed like a good deal for.
00:19:22
No, that's right. That's right.
00:19:24
And just like just like Wiz is a good deal, you know, I mean the
00:19:28
Google Wiz acquisition makes makes a lot of sense.
00:19:32
So if it makes economic sense, if it it makes structural sense,
00:19:36
if it's what the company wants to do, we're obviously going to
00:19:39
play ball and be supportive of it.
00:19:41
Then there's the question of like all the regulatory
00:19:44
approvals that are necessary and how much of A hurdle that's
00:19:48
going to be. And so we never high 5 ourselves
00:19:51
when when a deal gets announced because we know that the journey
00:19:55
is going to be so long. Can you talk about the company
00:19:58
resilience point of view? I mean, just being an, you know,
00:20:02
tiny entrepreneur, I can imagine you think.
00:20:04
I think you have the exit. You're like, OK, we we've made
00:20:07
it to a certain like, you know, goal post.
00:20:10
And it's easy to lose steam. And certainly lots of companies
00:20:13
sell and then do lose steam. You know, what did it take for
00:20:17
Figma to to stay strong, to get to this point of going public
00:20:21
after sort of seemingly almost hitting a sort of goal post?
00:20:25
Yeah, that's such a good question.
00:20:27
And I, I actually must say that if I were the, maybe that's part
00:20:33
of the reason why I'm not an entrepreneur, right?
00:20:36
Like I would find the just the the morale issue, but also just
00:20:43
the the schizophrenia involved of thinking that you're going to
00:20:47
be part of a company, thinking that you have to be independent.
00:20:50
Now they're the great enemy. Adobe's our friend.
00:20:52
We love them. Now they're archrival.
00:20:55
And this goes on in and out for 12 months.
00:20:58
That is really challenging. It was amazing to see how from
00:21:02
one day to the next, I think, you know, having finality,
00:21:07
having clarity and also and just like always having the drive to
00:21:14
build a stand alone business. Back to your point on value,
00:21:17
like the it's very clear this was not out of necessity from a
00:21:21
Figma standpoint, right? Like they had a great business,
00:21:25
but from one day to the next, they turn the page, they offer
00:21:29
this awesome severance package for anyone, no harm, no foul who
00:21:34
wanted to leave less than 5% as I think 4% of the employees
00:21:39
decide to leave and take that huge package.
00:21:42
And then the rest from one day to the next, like we are just
00:21:45
going to build the most awesome independent company.
00:21:49
We're so excited about this and they just went for it.
00:21:52
And to your point, Eric, you know, I mean, they announced in
00:21:55
in the Bay Area and in London, you know, they came out with as
00:21:58
many products in a year as they had in the whole history of
00:22:04
Figma prior. So you can just imagine how much
00:22:07
of A driving force it was to show the world, to show
00:22:12
themselves what they could do. Yeah, my, my sense as a reporter
00:22:17
covering them or met with them during that time was like
00:22:20
extreme compartmentalization on Figma's part.
00:22:23
Like, I went to their offices and obviously this was a
00:22:27
regulatory matter, but they just couldn't talk about Adobe.
00:22:30
It was as if the deal didn't exist as it went through, and
00:22:34
they were just trying to run things business as usual.
00:22:37
And then, you know, when the deal eventually falls apart,
00:22:40
there was an interesting kind of media push I saw from the
00:22:42
company's part to sort of talk to the press and say, like,
00:22:46
things are good. You know, we all have it in
00:22:48
line. This all worked out.
00:22:49
And Figma, you know, is in a good position despite the fact
00:22:53
that, you know, they've been in this purgatory for the last 12
00:22:56
months. This is a benefit that that not
00:23:00
all companies have is that Figma truly has a community right like
00:23:05
they they do not have sort of uninterested customers.
00:23:11
What they're doing, I know when I was doing prep for the Dylan
00:23:14
thing, I went on Reddit like you can read all the like.
00:23:17
Everybody has strong opinions about what they should do.
00:23:19
It's a very invested customer base.
00:23:21
And not only that, they were an invested customer base that did
00:23:24
not like the Adobe deal because they were worried that Adobe was
00:23:27
going to fuck. Up the product.
00:23:28
Exactly, I'm using this product, right?
00:23:30
Yeah. Yeah.
00:23:31
I mean, I would have said, I would have said it was sort of
00:23:33
mixed. Like there were some, there were
00:23:34
definitely members of the community that could see the
00:23:37
benefit of not of like having one suite where they would pay
00:23:40
for everything etcetera. But yeah, I mean, the reality is
00:23:44
the the community is vested in the company feels like and
00:23:49
correctly feels as though, you know, it's thanks to them in a
00:23:53
lot of ways that the company is successful that they've given so
00:23:57
much input and they've bought the subscription.
00:24:00
And so I think that in the back of all the all the fig mates
00:24:05
minds was like we, we got to deliver for our community here.
00:24:09
Yeah. You obviously have really
00:24:11
conflicted feelings about this since as you were saying, you
00:24:14
would have preferred them to remain an independent company.
00:24:17
They did. The return will end up probably
00:24:19
being better because of that over time.
00:24:21
That's still to be seen. Yeah, right.
00:24:24
Well, they have the opportunity, at least now it's.
00:24:26
Money in the hand several years ago, but, you know, like you're
00:24:29
saying you want to be an acquirer.
00:24:31
If they continue to grow, there's upside, you know?
00:24:33
Yeah. Well, but so, but here's here's
00:24:34
my question though. I mean, did you think the
00:24:37
regulatory intervention here was good or bad?
00:24:41
Was it overreach? I mean, was there a strong case
00:24:43
that this was some anti competitive move by Adobe?
00:24:47
And you know, like where do you stand on that?
00:24:50
Because it obviously has implications for your other
00:24:52
companies, you know, whether regulators are going to be more
00:24:55
accepting of deals. I mean looking back on it, like
00:24:58
what's this the right call? Like is, are we in like an
00:25:01
overly austere regulatory environment?
00:25:03
Yeah. I was going to ask just to
00:25:04
clarify like what do you have, has this changed like any
00:25:07
perspective you give to your other portfolio companies about
00:25:09
whether they should pursue, you know, M and AR IPO, even if IPO
00:25:13
is always the goal? You know, there's, there's only
00:25:16
so much I'm going to say here folks.
00:25:18
I would say that regulatory bodies just need more fluency
00:25:21
when they are going to come up against a potential acquisition.
00:25:27
And that's what I wished had been the case in the Adobe Figma
00:25:32
situation. And we'll see what happens with
00:25:35
with other situations. I can't really comment more on
00:25:38
that. I wanted to talk about, you
00:25:40
know, venture broadly and sort of move sort of beyond the Figma
00:25:44
story. I'm curious, you know, how much
00:25:46
is every index deal right now an AI deal or how do you think
00:25:50
about like the pervasiveness of AII mean, you know what
00:25:55
Anthropic is now, I guess raising it at $170 billion
00:25:59
valuation. I feel like we we're obsessed
00:26:02
about vibe coding. Clearly, I think people are
00:26:04
worried about unit economics of some of these companies like
00:26:07
cursor. I don't know like where are
00:26:09
where are you on this or like everything needs to be AI right
00:26:12
now in terms of like indexes, focus.
00:26:15
That's sort of what I was trying to allude to when when I was
00:26:18
saying bearish and bullish. I mean, so we have an equal
00:26:21
partnership, everyone's got to vote.
00:26:23
And we really look forward to one of our partners having
00:26:27
conviction behind behind something because we want to
00:26:31
back their enthusiasm. In the case of the last crypto
00:26:35
wave or the the first solar wave, like there was no one
00:26:40
around the table who was excited about it, right?
00:26:43
In the case of AI, we're all super excited about it.
00:26:47
And it does really feel like a monumental shift, you know, like
00:26:52
there was the Internet and there was mobile and there's AI and
00:26:58
it's undeniable and it's super exciting.
00:27:01
And it has implications across the board, including how quickly
00:27:07
companies get started, what the PNL looks like, what it looks
00:27:12
like over time, what the characteristics of an
00:27:15
entrepreneur are that are going to be well equipped to go after
00:27:19
it in this chapter of AI, what it will be in future chapters of
00:27:24
AI. How much is business to business
00:27:27
AI today? When will the business to
00:27:29
consumer wave happen? Right?
00:27:32
What will it look like? You can.
00:27:33
Answer all these questions. These are all great questions.
00:27:35
I mean, Mark Zuckerberg literally this week, Yeah.
00:27:39
You know, like, oh, I just asked questions.
00:27:41
Yeah. I don't have to answer them.
00:27:43
The no. I mean, Mark, Mark Zuckerberg
00:27:45
was saying like this week, I think, you know, today when
00:27:49
we're recording it that, you know, they want to be sort of
00:27:51
the consumer approach to AI that I think there are a lot of
00:27:55
people focused on productivity, but you know, their teams can
00:27:58
really figure out how can you use this to sort of self
00:28:02
actualize and get everything out of your life that you want.
00:28:05
I mean, the question in the topic is sort of consumer in AI
00:28:10
and obviously you've done consumer investing and thought
00:28:13
about it this a lot. I mean, there's a certain
00:28:15
argument that like consumer and AI is just like catchy BT and
00:28:19
that the great consumer investment, just like you needed
00:28:21
to hit Facebook, you needed to hit open AI and that's like the
00:28:24
consumer investment. So that would say, oh, there's
00:28:27
no like consumer wave to come. It's sort of like there was one
00:28:29
big company and and that's it. Yeah, I don't know.
00:28:32
What do you think about that notion and where?
00:28:34
Where do you see opportunity for a consumer wave?
00:28:37
Well, I guess I'll be out of a job, Eric, if that happens.
00:28:40
I know you. And I think we will be very
00:28:43
unhappy that scale we let's Alex join meta if that if that was
00:28:48
the case as well, right? No, I think.
00:28:51
You are a big investor in scale, which he you know, had this big
00:28:54
deal and then you're not a big you're not an investor in
00:28:57
opening eye right just. Correct, Correct.
00:28:59
Right. Sorry.
00:28:59
Yeah, just translating that for people who aren't like deep in
00:29:02
it. Sorry about that.
00:29:03
Yeah, I just assumed everyone was fascinated.
00:29:06
But even I, Senator, like OK, I think I know which investments
00:29:10
you have, sorry. No, I think that the business to
00:29:13
consumer area of AI will not be one company or two companies
00:29:18
that, you know, it's really challenging to build a core
00:29:23
competency to the level of sophistication necessary to get
00:29:29
millions of users, hundreds of millions of users to leverage
00:29:34
products. And so history would serve us
00:29:37
well to assume that there's not going to be 1 beneficiary or
00:29:42
even 5 beneficiaries of a specific sector, but hundreds of
00:29:49
beneficiaries. That's true with all the sectors
00:29:51
that we've invested in. You know, when I mean, we've
00:29:54
been investors in, in the gaming industry for a long time, right?
00:29:58
And when when we looked at it, you could have said like, you
00:30:01
know, there's Activision and there's EA and Epic, but you
00:30:05
know, like King got sold to Activision and Supercell.
00:30:09
And then we have this Turkish company Dream Games that's doing
00:30:12
super well with this game called Broil Match, which there's no
00:30:16
way that you haven't seen ads for.
00:30:19
Yeah, I think I've seen ads. I've not played it.
00:30:21
OK. So, so my point is that you will
00:30:25
always have these entrepreneurs that have such passion and
00:30:30
knowledge on specific sub areas that they're going to be able to
00:30:35
build these phenomenal companies as a result of that.
00:30:39
And I don't see why that would not be true for AI.
00:30:43
In fact, I suspect that it will be more true because the scale
00:30:47
of these companies is going to be so much greater, so much
00:30:51
faster, which is what you're seeing with the likes of of Open
00:30:55
AI and Anthropic of Cursor and a bunch of other companies.
00:31:00
Kind of in the weeds, but do you think that, you know, to have
00:31:02
all of these winners, we'll need sort of like the iPhone moment
00:31:05
for apps beyond Chachi PT like to have this consumer
00:31:09
application like, you know, the birth of the iPhone allowed, you
00:31:12
know, Airbnb and all of these great and Uber to come exist,
00:31:15
right? And so we're so early in this AI
00:31:18
paradigm shift like where could this be headed?
00:31:20
Is it just too early to tell where the next big, you know,
00:31:23
companies that could win on top of this next layer are beyond
00:31:26
the chat bot? I'm surprised at how early we
00:31:29
are that this is not, you know, it's the companies are being
00:31:34
formed today. It's still surprising to me on
00:31:38
how few consumer AI opportunities we see in relative
00:31:45
terms to business happening. Consumer deals to index that's
00:31:48
what you're you're like thank you get building.
00:31:52
Founders, where are you? Come out, come out.
00:31:56
Listen, every founder wants an excuse.
00:31:57
I heard you on a podcast. You asked for this company.
00:32:00
You better meet with me now. So watch what you we will get
00:32:03
what you wish. For so we will.
00:32:05
I promise that we will. I mean, Madeline, your question
00:32:09
was really just the in the iPhone moment is that there's
00:32:11
going to be like a transformational piece of
00:32:13
hardware. I imagine that like allows all
00:32:16
of these apps to be, you know, consumed on a on a, you know,
00:32:20
per person basis. And I mean, we're, you know,
00:32:22
we're recording this. I think the day that, you know,
00:32:25
Meta has their earnings and Zoc talked about how he views, you
00:32:29
know, their AI bet is one that is predicated at least partly on
00:32:32
these like wearables and and glasses and obviously we've
00:32:35
seen. I need to get some Raven.
00:32:37
Yeah, they've been obviously putting tons into wearables.
00:32:40
Yeah, you need to get the the Raven meta glasses.
00:32:42
Do you need to, I don't know. I mean, well, I don't know, I
00:32:46
guess we'll get to a point of social acceptance.
00:32:47
Every time I see Zuckerberg on a podcast wearing those things, I
00:32:50
really, really don't like it and, and him and him with it.
00:32:54
So maybe I'll just be late to the party.
00:32:56
Why he insists on being the spokesman for these like We're
00:32:59
Human videos, but you know. Yeah, I know him going on Theo
00:33:03
Von wearing the glasses and talking about how he doesn't
00:33:05
drink coffee was not a great moment of like human interaction
00:33:09
for him. But but and, you know, I mean,
00:33:11
to be fair, we also have, you know, the true GOAT of, of
00:33:14
hardware with Johnny. I've, you know, being part of
00:33:17
open AI and that's a big part of Sam Altman's belief that, you
00:33:20
know, this is going to be a trillion dollar product at some
00:33:23
point. I mean, where where are you on
00:33:25
the hardware stuff? Do you meet with hardware
00:33:27
companies? Do you believe there is
00:33:28
something that's going to be kind of a unifying force with
00:33:31
all of these AI applications? We definitely meet with hardware
00:33:35
companies all the time. I would say I'm not sure I would
00:33:37
have put Johnny I've as the true GOAT, I think.
00:33:40
I think his boss, Steve Jobs, gets that title.
00:33:43
But I'm with you. I'm with you.
00:33:44
Well. Someone's here at your torch,
00:33:46
Yeah. You get to tell your story if
00:33:48
you're still alive. So yeah.
00:33:51
You can't libel the dead so. OK, OK.
00:33:54
But yeah, I mean, I think hardware is also, I mean, we'll
00:33:58
see. I mean, these tariff things, I
00:34:00
don't even know how to think about this.
00:34:02
I don't live in the US, So I'm trying to digest that and what
00:34:07
the implications would be for the supply chain and what the
00:34:10
implications would be on creating the type of hardware
00:34:14
that you're talking about. Do I think that you need a
00:34:18
fundamentally new platform in order for AI consumer services
00:34:25
to be of paramount importance? I'm not convinced of that.
00:34:31
I think that mobile devices take us a long way.
00:34:35
Does that mean that there won't be some new hardware devices
00:34:39
that could transform the way that we interact with
00:34:42
technology? No, I think that will happen.
00:34:45
But I don't think that they're mutually exclusive.
00:34:48
And, you know, the, the challenge with hardware, it's
00:34:51
sort of interesting. Like hardware used to be really
00:34:55
challenging. Like when we invested in Sonos,
00:34:58
that was a big bet. And I think part of it was our
00:35:02
love of music because it took a long way, took a long time for
00:35:06
that company to be successful. And it's still, you know, a
00:35:09
challenging space, but hardware was difficult at the time
00:35:13
because of all the inventory that you have to buy upfront in
00:35:16
order to to sell it and you only have very small windows of
00:35:20
selling. So hardware investment maybe for
00:35:22
other firms, we have difficulty with it.
00:35:24
Then it became a lot easier because of just like the
00:35:29
seamlessness of the world is flat and you know, the supply
00:35:33
chain, all of those components working really well and a global
00:35:38
audience. And now it's a new environment.
00:35:41
I have no idea how hardware is, you know, can you build truly
00:35:47
mass scale hardware devices in one single country?
00:35:52
I don't know if that's possible or not right?
00:35:54
I. Mean, I think a related question
00:35:56
is just when we move to mobile, there was like a new
00:36:00
distribution channel. So even forget like that it was
00:36:03
a new device. It was just like, OK, there was
00:36:05
the App Store and even cloud. It's like, OK, you can easily
00:36:09
sort of embrace new things. It creates new like consumption
00:36:12
patterns. So there's a new distribution
00:36:14
model. It feels like the AI like
00:36:17
platform shift. There's a new technological
00:36:20
capacity, which to some degrees, I think as a technology investor
00:36:23
is probably the most exciting part.
00:36:25
It's like you can literally create new things that you
00:36:28
couldn't before, but there isn't that straightforward.
00:36:30
Like I'm a new business. I'm going to dominate this new
00:36:33
channel, and that's how I'm going to grow.
00:36:35
Like, do you see that Channel coming into being or it's still
00:36:38
like this? This paradigm is sort of the old
00:36:40
channels. Yeah, I think that for the
00:36:42
moment the the paradigm are the old channels.
00:36:46
I think they will be really interesting to see what the new
00:36:48
channels are, whether you need new channels.
00:36:52
It is also a concept like fundamentally there's a means of
00:36:57
actually distributing things that are in bits and bytes.
00:37:00
So effectively, right now I'm not sure that you need that
00:37:04
intermediary anymore. How much better could it get?
00:37:07
Because we have the cloud and mobile revolutions behind us,
00:37:10
like we have all of this in our pockets right now.
00:37:12
That's right. When you think about the cost
00:37:14
structure for for some of these companies and yeah, I, you know,
00:37:18
we were talking a little bit about coding apps before.
00:37:20
I'm particularly obsessed with this space right now.
00:37:23
Like there's a ton of do you, are you guys in any of them, by
00:37:25
the way? Yes, we are.
00:37:27
We are in augment. OK.
00:37:29
There's an interesting dynamic playing out where these
00:37:32
companies like Augment, like Cursor, raising a lot of money,
00:37:35
big valuations. There's no question in my mind
00:37:37
that AI coding is transformational.
00:37:40
There's probably no going back for that.
00:37:42
But who will end up being the big winners here?
00:37:44
Like we've seen anthropics, Claude, code really to me out of
00:37:48
nowhere become incredibly popular and dominant in the
00:37:51
space. They obviously have a lot of
00:37:53
money, keep raising more to be able to maybe burn on what could
00:37:57
be a money losing product. Like are you bullish on non
00:38:01
foundation model companies? To what layer does the value
00:38:04
accrue? That's yeah.
00:38:06
Who's going to win the models, make the money or do the
00:38:07
applications? Yes.
00:38:10
Everyone, everyone makes the money.
00:38:13
Yeah. Encoding it can go, I mean
00:38:15
brown. I, I think, I think the, the
00:38:18
business models are not clear, but given the growth that is
00:38:25
being experienced, one has to assume that the business model
00:38:30
can make sense over time. And I am bullish on that.
00:38:34
I don't think that they've been figured out.
00:38:36
And I think that both on the application layer and on the
00:38:39
infrastructure layer, there are great businesses that can be
00:38:43
built, but I don't think there's a clear model yet that is out
00:38:49
there. But if you would talk to
00:38:52
investors across the board where you can witness just
00:38:57
extraordinary growth, unprecedented growth, their
00:39:01
perspective that you're likely going to be able to build a very
00:39:05
strong business model that supports this type of growth is
00:39:09
very likely. I wanted to take the last couple
00:39:12
of minutes and talk about venture capital and just like
00:39:16
where the VC business is today, I guess temperature in the air
00:39:20
like our, our sort of continued point of view honestly has been,
00:39:24
there would have been this terrible downturn except for AI.
00:39:28
And so like telling the temperature story of venture has
00:39:31
been very hard because it's like, well, obviously they're
00:39:34
very enthusiastic AI valuations, but there's been some limited
00:39:39
partner pessimism. Or how do you make sense of
00:39:42
where we are in the venture capital industry right now?
00:39:45
You know, Eric, I'm, I'm relatively old, let's face it.
00:39:49
So I'm a student of history and I tend to say the more things
00:39:54
change, the more they stay the same.
00:39:56
So there's the cyclicality of what happens within the market
00:40:03
and then there's the. Unconditional, unwavering
00:40:08
adoption of technology across the globe that continues to
00:40:14
grow. And so I'm not sure that we
00:40:17
would have had a massive correction if AI hadn't
00:40:19
happened. I actually think a lot of the
00:40:21
fundamental fundamentals of a lot of SAS businesses are really
00:40:26
strong. It's just that they're not, you
00:40:29
know, back to this growth concept that we were talking
00:40:31
about, They're not growing in the same vicinity of what you're
00:40:35
seeing with a lot of AI companies.
00:40:37
And then there are companies that are on that juncture of,
00:40:41
you know, are they SAS businesses, are they AI
00:40:43
businesses? Are they a combination?
00:40:46
You know, I think that's sort of what is playing out with the
00:40:48
Figma IPO this week. And so my view is that, yeah,
00:40:53
the more things change, the more they say the same.
00:40:55
I don't think that the venture business has fundamentally
00:40:58
changed that much in terms of the craft of investors looking
00:41:05
to assist entrepreneurs that have global ambition to
00:41:10
transform the world and make it a better place through whatever
00:41:14
they're working on. However, there are a lot of
00:41:18
elements that make the scale of what's going on very different
00:41:24
and enables a lot of folks who aren't necessarily coming in for
00:41:31
the same level of clarity to participate.
00:41:36
In other words, there are a lot of tourists that are involved
00:41:39
both on the investment side and on the entrepreneurial side.
00:41:43
But the fundamentals of company creation, company formation and
00:41:49
venture capital trying to help fuel the best businesses has not
00:41:54
changed. Helps to have the Wiz exit.
00:41:56
Now you have Figma, you're like, we're, we're doing fine.
00:41:59
I, I feel like there are a lot of venture firms that, you know,
00:42:02
just have a lot of companies that were marked up a ton in
00:42:05
2021 and I don't know, are not as optimistic about sort of the
00:42:10
SAS companies making it to the next level.
00:42:12
Or you must have some unicorpses or, or you, you don't see any
00:42:18
hangover from that 2021 no period.
00:42:20
I. Mean certainly, Eric, but if you
00:42:23
had talked to us in the history of index, right, we've been
00:42:26
doing this for 20 plus years. That has always been the case.
00:42:29
There have been always companies that and cycles where companies
00:42:34
that we thought were doing phenomenally well have hit
00:42:37
serious roadblocks, stumbling blocks.
00:42:39
And then companies that we didn't expect to do well have
00:42:44
hit a cord, have the right management team and are
00:42:47
experiencing explosive growth. That hasn't changed.
00:42:51
I mean, if you're talking about the the industry of venture, you
00:42:55
know it from our perspective, it's really maintaining the
00:42:59
discipline index today is really not that different from what it
00:43:03
was. We have multiple partners all
00:43:06
doing their work, all contributing in making the
00:43:12
overall funds successful. That that hasn't changed.
00:43:16
And the IPO itself for you, I mean you're we're recording this
00:43:19
on the precipice of there actually having been one.
00:43:22
What's your sense on, on where that's going to be like?
00:43:24
Is this an indication of things to come?
00:43:27
Can we actually expect more of them this year?
00:43:28
Yeah. So I think definitely, I mean, I
00:43:31
think look, there are two things that I would say.
00:43:34
The first is the best companies can go public in any market,
00:43:37
right. You've seen that so many times
00:43:40
before. Google, Facebook, irrespective
00:43:43
of market, great companies go public.
00:43:45
That being said, there's no question that there are a lot of
00:43:50
reasons why the IPO conditions are really good right now for a
00:43:56
number of companies that have been developing real businesses
00:44:00
over the last years. And there's an enormous amount
00:44:04
of appetite from the buy side. And there are retail platforms
00:44:08
like Robin Hood that are also showing quite a bit of
00:44:12
sophistication from the from the retail investor.
00:44:15
So I think that's going to continue to happen and we're
00:44:18
seeing it across our portfolio. You know, I mean, yeah, Fardul
00:44:23
is the partner involved with Wiz and we have Marta is involved
00:44:27
with Revolute. You know, Mike was involved with
00:44:29
Scale. Like we have a number of really
00:44:32
exciting companies out there. Great.
00:44:34
Well, thank you so much for coming on.
00:44:36
I think the last thing just to sort of end on a piece of
00:44:40
advice. I mean, if you were to give a
00:44:42
piece of advice to a startup founder right now, like whether
00:44:45
they're looking for a category or just starting a business,
00:44:49
like what would be your, yeah, core piece of advice for them?
00:44:52
Come and visit index. All right, what?
00:44:57
This is the consumer. This is the call for consumer AI
00:44:59
companies again. There's a call that we're we're
00:45:02
open for business across the board.
00:45:04
Please, Tom, also businesses business to business.
00:45:07
No, I think, I mean the biggest piece of advice that I would
00:45:10
give, and I'm not, I wouldn't be surprised if you would give the
00:45:14
same advice, is that there's so much ebullience in the market.
00:45:19
There's probably a better word than that, but that's the one
00:45:22
that came up. You know, there's just so much
00:45:24
froth that everyone wants to be in this environment, whether
00:45:29
it's AI or entrepreneurialism or venture, like there's so much
00:45:35
froth around it that I think people forget how freaking tough
00:45:40
it is. You know, we were talking about
00:45:43
like the reason that I keep on cutting back, like Figmas took
00:45:45
thirteen years and there are a lot of ups and downs along the
00:45:49
way. And it wasn't evident that Dylan
00:45:51
was going to be CEO throughout the way.
00:45:53
You know, he'll tell that to you himself.
00:45:55
So, so I think that you really have to be passionate about what
00:45:59
you're doing and see the purpose in it rather than think that
00:46:04
this is going to be just a sensational, you know, job that
00:46:08
is going to pay off well and is and is worth sort of entering
00:46:11
the game. Yeah, there are a lot of people
00:46:13
who see dollars right now, but it's like you have to.
00:46:15
It's like, oh, that's an interesting idea.
00:46:17
Like go find someone to actually build that, like build the
00:46:20
product. And then then maybe, you know,
00:46:23
you'll have the start of something.
00:46:25
In some ways, I feel like the AI story that it's like, oh, it's
00:46:28
so easy to build a product now, has created this proliferation
00:46:32
of like company ideas. Right.
00:46:35
And maybe to bring it back to Figma design could be a
00:46:38
differentiator for your company actually functioning well if
00:46:41
you're vibe coding a company if the design is not good, doesn't
00:46:45
come through. So we need Figma main to bring
00:46:47
us all there. Thank you so much.
00:46:50
Danny Rymer, thanks so much for joining us.
00:46:52
Thanks so much folks. Take care.
00:46:54
Bye bye.