¶ Intro / Opening
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¶ Introduction to Byron Deeter
When you have people pushing their agenda or their pet things or trying to help and you can just see the CEO's head exploding in the meeting. It's I think also important to to draw a line and and and pull back because life's too short and these companies are running so fast.
Byron Dieter has spent more than two decades investing in some of the world's most innovative companies, from Anthropic to Waymo to California.
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Don't find things that are doing okay and go into fix them so that you go from you know good to great. Go find the teams in the business that's already great and make them excellent or help them just stay excellent if they're already there so that the slope align stays bigger.
This is Masters of I'm your host, Jeff Berman. This week on the show, Byron Dieter. After founding and exiting a pioneering company in the early days of cloud software, Byron moved on to become an iconic. He spent 20 years at Bessemer Venture partners with an incredible portfolio that includes 26 companies.
Each worth.
Byron, welcome to Masters of Scale.
Great to be here.
¶ Founding Trigo: Early Cloud Challenges
I'm thrilled to have you. You are an investor who started as an operator. So I'd like to start with your operating days. How did you become a founder?
I fumbled my way into it. I've always wanted to be an entrepreneur starting from uh invention idea books in my elementary school days to ideating in my McKinsey days with colleagues trying to think of startup ideas. When I got my first pass at venture, I did a lot of brainstorming time on the side and found my two co-founders in that journey, diving into the early world of cloud computing over the winter break of 1999 to 2000. walked in in early January and quit my first venture job to dive in.
I'm not sure that everyone knows there was cloud computing in in the late nineteen nineties, early two thousands. What was the world like back then?
So Salesforce and Net Suite had been founded within a few months of that. It was highly controversial because download speed, browser capability, et cetera, were still real bottlenecks. But My CTO, ultimately co-founder, convinced me that there was this other way to do things. But it was a big bet. And I'll tell you, nine and a half out of ten venture capital meetings when I went pitching threw me out essentially after the first few pages.
Why is that?
refused to accept that the cloud business model deserved to exist. This this idea of forward cost and backloading revenue made no sense to most folks and and it was highly controversial for many years.
Your conviction come from in the face of all those notes?
Customer experience first. And we were convinced that maintaining all these back versions and multiple ports to different software stacks and things was a waste of innovation and drove to a lot of shelfware and misuse. And so We did believe that the answer was there, that that fundamentally it was better for customers and that the business model would follow. But I mean we went through layoffs, we went through the dot com collapse, we had tough financing rounds. It was a tough journey.
¶ Customer-Led Growth Amidst Turmoil
And and what was the inflection point for Trigo?
So some of those early enterprise customers who would go on stage and and speak about it. I'll remember Staples and Marie Keene, a lot of credit, our early sponsor there. This is going back over a decade and a half. But she s she said this is real. Like I'll go talk about it. I'll tell others this is a better way and I'll I'll share it. The first real customers who are hard on us.
They were leaders and once we got through their qualifications, they would go tell others that it worked. That for us was really the the inflection point to transition.
It's pretty unusual for a customer to call and say, I really want to get on stage and give you a testimonial. How did that come to happen?
So one of the things I carry through now as an investor trying to coach our companies is it's somewhat counterintuitive, but you actually want to seek out the hardest, smartest customers. And have them beat the crap out of you because others will follow. Their peers in the industry know how good they are and learn from them. So take on the hard first. and work with them as design partners go through it. Feedback's a gift.
And when you don't get hard feedback is when you actually need war. It was all about we need you to make a great product and the expectation is then that you will share it. This is non-proprietary, it's it's important but not proprietary, a and go talk about it. And so setting those rules of engagement up front.
And one of the things that, you know, we ask our sales execs now across our portfolio, if you can't get a reference out of that customer, you know, what are the issues? And among the early contract terms, that's something front and center because We do believe that it's one of the lowest cost customer acquisition methods when employed correctly.
Did that change things for for investors with you?
It did, although often the macro will trump the micro. And so we executed well, but the market went through turmoil. And so we had, you know, one of the biggest market pullbacks of our lifetime going into that, which created some real headwinds. And Fortunately, having been in Venture before, I I knew enough to raise early and have buffer, so we never had a true extinction level event, but we we had to do some layoffs because
We weren't gonna have s cheap access to capital. We had to pull back by some time. We went through gyrations. We went through customer churn at various points because of their bankruptcies and chaos. And so I think entrepreneurs need to expect to go through several cycles in your journey. and you need to reserve enough flexibility, capital, et cetera, so that the macro can't sink your ship.
¶ Trigo's Acquisition and Founder Decisions
Just to complete the trigo journey, ultimately sold the company. How big was the company from a revenue and and people perspective at the time you sold it?
Yeah, we were up to about fifty million in run rate revenue. Importantly, another inflection point, we brought on Tom Riley as CEO and I stayed on the board and ran business development and partnerships and all of that. But another inflection point, he's excellent and a longtime lifelong friend from that.
And why did you bring him in?
I was twenty-six and uh we were building an enterprise business and wanted some more executive air cover. And I disclosed that up front to our investors that at some point we'd want to bring in a CEO. It was my first time in operating role. And interestingly, I think it was the right decision for us, but I also think it's the wrong decision for the majority of our faculty.
Oh say more.
And I I actually look to invest in founders who are are more interested in going a l longer into the journey. And that's because I think that the the founder product insight is irreplaceable. And so much of these businesses today are product led that we wanna back founders who are unique and differentiated there.
And we want them bought in for the journey. And tapping out and hiring a replacement is hard. It's destabilizing and it reduces risk. If they have someone identified, we're gonna do it together, then then that's okay early on, but we wanna do it jointly. Or i if it's if it's the only option.
And you know, w as we talk about more current days, we we've had a lot of CEOs tap out over the last few years because it's been really hard to be a CEO right now and that's okay. Like we'll go on it together, but we don't want to usually start with that with planning.
So it's more to use the overused example, Mark finding his Cheryl that you're talking about when you're talking about scaling up the organization and yeah.
Absolutely. I think that's the where you unlock the superpowers. Design the founder role that is their best and highest use. As in a board meeting yesterday, we were talking about this exact exact thing. As a founding CEO, you've got the luxury of designing your exec team. Do it however you want.
Like what things do you enjoy doing? What are you best at? You know, what's gonna give you energy and what's gonna give you most impact? And then we'll hire everyone around you. Yeah. And again, there are some cases where the founder just says, Hey, I wanna run product and I don't like this business stuff at all.
Let's go get someone. But I'd much rather do that up front or really have some people identified than get into something and then a year later the founder's just like, I'm out. And and then you're taking a bunch of risk and and you lose that founder magic.
¶ Qualities of Effective, Coachable Leaders
It still takes a lot of good ego to acknowledge where you're not strong, to bring in people who are incredibly capable things you are not, whether you are replacing yourself as CEO or building out your your leadership team. What's the signal that you're looking for from founders when you're considering investing as to whether they they have that trait?
Yeah. And coachability. And the way that they're aud at odds is you want someone who when they will listen, gather all the facts, take input from their team, including us, but we're just one voice on a service provider ultimately. And then make decisive action, but also be willing to revisit it and carry it on. And so one of the signals that that I think turns us off is when when tension builds, people turn inward.
And they try to they force themselves to come up with the answers and they they shut off communication, they shut off input, et cetera.
I think the best leaders are the ones who are brilliant, who are convicted, and yet they're reaching outbound when intensity mounts and they need more input and they seek it out and then they make a more informed decision. And I think that's the the mark of a mature confident leader who's going to work through problems and wrong answers to get to the best answers.
Why did you decide to sell the company?
IBM was our biggest single partner. They were the right distribution platform.
And
Yeah, back then hundreds of millions of dollars was real money. It was the biggest enterprise software outcome of the vintage at the time. Uh we need to remember how much things have changed. Yep. But they paid forward value and our team was felt it was the right fit. And so
We were profitable, we were global, we were starting to think about an IPO. I ironically, my first IPO as an investor, Cornerstone On Demand was actually around the same scale and they traded up to billions. And so, you know, I've I've thought back about the playbook and the decision many times.
But you know, never regret a a a good outcome in the sense of not just financially, but fit and team. That team half that team still exists over there. I mean our I our type A executives all all you know left pretty quickly. But the team, the product, it's still in use years later and that's pretty cool.
¶ Post-Exit Experience at IBM
How long did you stay at IBM?
One year and one day.
Yeah, not that anyone's keeping track.
I always like to overdeliver. I I said, What's the bare minimum where you will feel good about this? And they said one year. And I said, Okay. And I left the day. You know, I I told them I will st I'll commit on my my year. I stayed one extra day very purposefully and then jumped out.
What was that one year like for you?
Tough. IBM is a great big company and a great big company. And there were meeting after meeting after meeting that overlapped. I could have been meetings all day and interestingly I could have ignored all the meetings and no one would have noticed'cause they would have assumed I was in another meeting. And that was just so painful for me. I at
i in as a type A person who's aggressive who wants to get there and do it, like the the idea of resting, investing for me was was just mind numbing. And my senior execs felt the same way. And so I I loved IBM. I wanted them to be happy. I wanted this to carry through. But I I need it out.
¶ Becoming a Bessemer Venture Partner
Okay. So one year, one day hits, you walk out the door of IBM, what do you go do next?
I went straight to Bessemer. So I'd worked in Venture before, not with Bessemer, but with another great firm T associates back when they still did Venture. And we're fortunate to have a number of A tier firms around our cap table with Trigo, raised some great folks. Bessemer was our anchor investor, but more importantly, the the firm that I felt best about, their product, their service, their delivery.
And I was fortunate to have a number of offers to go join various venture firms and hands down Bessemer was my
And you didn't want to go operate again. You didn't want to go build something all over again.
I didn't at the point. One of the things that was intoxicating to me about Venture was the potential to to be involved early stage and seed things and incubate things. and yet satisfy my ADD and doing a bunch of things. I'll confess that I've done much less of the incubation and creation than I thought I would because I've been so excited by other people's ideas and other teams.
And so I've only done a little bit of that in my best summer time and the vast majority of what I do i is find great teams that are already executing better than I could have, would have or would found and and, you know, begging my way in to work with them.
What were some of the big early lessons when you when you went back to venture, when you went to Bessemer?
Don't try to be the operator. And that manifests itself in a few ways, but one of them from the investing side is Don't find things that are doing okay and go into fix them so that you go from you know good to great.
Go find the teams in the business that's already great and make them excellent or help them just stay excellent if they're already there so that the slope align stays bigger. And that carries through to board interactions, like Hippocratic oath of venture, do no harm, like stay the hell out of the way when things are working and send them customers, send them candidates.
But like
Get out of the road if if they're executing well and going. Don't try to give product input, you know, out of cycle or sitting in a board meeting. Like, you know, there's a process and a way to do it. But back great teams and let them run and then just re-
¶ The Value of Proactive Investor Support
resource then. Yeah, there's like a double edged sword to having venture investors who've been operators, right? How are you framing the value that you bring with that background as an operator and now the years as an investor?
Yeah, so I I think it's a balance, which is I mean, we have a large global firm, 20 billion capital, eight offices around the world, you know, over 100 people in our platform team to support our companies. So we want to help. We want to engage. But the mentality and the approach is very different. You know, Besselmer is a low bravado firm. We're not putting our firm first. We're not out there, you know, pushing things.
It it's all what do you want? And so my interactions with my CEOs, which are almost daily with almost every one of them, but it's it's it's sending quick texts, it's sending emails, it's forward things around. It's you know, it's after hours calls and obviously structured board meetings and things, but much more of it is the quick little hits. You know, hey.
Saw this great candidate, you know, think they're interesting for your VP of X role, or just met with this interesting partner, is it worth your time? And if it's a trusted relationship, Eight out of ten of those is like, is essentially no, which is eight, you know, thanks, not interesting, or hey, could you buy some time or run interference or whatever? And then two of those like, oh yeah, I want that immediately, send it over, make it happen.
But that's if it's high frequency, low risk, and very trusted, then it's just it's high velocity. And my CEOs will say, Without a doubt, I can I'm on the phone within 90 minutes when needed. I've been woken up countless times with, you know, chaos moments and and crises, and I love it.
There are a few things I want to tease out of this. One, critically. It's double opt-in. Which I'm I I'm so grateful to hear. It's like you're not just saying like, Hey, I'm connecting with so and so. You're asking like even if you might be pushing hard, like I think this one's really high value, this job candidate, this prospective client, whatever it might be.
I don't think enough people fully appreciate the value of the double opt-in. Well, and that leads directly into the second tease out, which is Time is our most valuable asset and not everything has to be a thirty minute phone call, but that quick hit of like, Hey, just flagging this for you could be of interest, let me know, whatever. I mean, tha that is invaluable to an operator where every minute really counts in their day.
I have a different modality of communication for you know, most of my CEOs. Like I literally have WhatsApp, Slack, Signal, text, email, FaceTime by preference. Like I c I'm not gonna name it, but I could tell you which CEO I communicate with in which way. I have blocks of time. for fixed things, board meetings, new company discussions, conversations like this, but half my time is interrupt driven and I'd say evenings and weekends are are
almost always interrupt driven. And so I don't do a lot of long form things. I don't sit down and read a book. I don't sit down and do like long duration things. Most of my interactions are are
prioritized kind of tier one a and working through that. And for me it's very much the back and forth uh uh I I'm constantly seeking out experts on every topic a and having the discussions going back and forth and then all attempt to synthesize that and then go back to you know the CEO or or the team member and go through and like by the way we are
totally transparent with our diligence issues and concerns and we don't dance like we'll literally share it after the investment. Like here's the readout, here's what we heard, here's, you know, here are the really red flags.
I was on Capitol Hill early in my career and one of my mentors said to me before I started there, most Fridays your boss will go back to his state and a lot of your colleagues will take a three hour lunch.
And I'm just letting you know that by virtue of where you work, you can call almost anyone in the country and they'll wanna talk to you. And the number one thing most people want to talk about more than anything else is themselves. And they will think you are really smart if all you do is ask them questions.
Hallelujah.
Right. And and so I but just I I love that you're in this position where you can call people who are true subject matter experts and give them the privilege of making you smarter, right? On uh on something that may well make you and your LPs a ton of money. And they feel great about being able to do that.
Especially in these deep science fields where nuclear physicists and theorists have wanted to commercialize this technology for decades. and are looking for avenues to do that. And so they wanna talk. And by the way, like there's also ways for them to hopefully make a lot of money in the process by like we'll bring people on a as, you know, paid advisors in times and certainly our consultants were paid. But
most scientists, most computer scientists enter this because of love of tech and love of what could be. And more than anything, they want to see success and they want to see it happen. And we're aligned there.
Yeah, and I think we underestimate how much people want to help. And and and especially when they've spent years acquiring subject matter knowledge and they can now deploy it to someone who genuinely cares about what they're doing. And yes, if I can make money doing it all the better, but sometimes asking is all you all you have to do to get what you need.
And I think that's great advice to the listeners that you to reach out. Yeah.
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Still ahead, Byron Dieter on his anti-portfolio and what he learns from the ones that got away.
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than you realize. I'm Liz Hoffman. Yeah.
the forces behind this revolution.
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We'll dig into everything from hospitality companies
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¶ Learning From the Anti-Portfolio
Welcome back to Masters of Scale. You can find and much more on our YouTube channel and be sure to check out in our show notes to subscribe to our newsletter.
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What were some of the most important lessons from your early days at Pessimer?
The big swings like the the the the crimes of omission are the ones that hurt more. So it's so easy to talk yourself out of investing. And unfortunately, just by its nature, we say no ninety-nine point nine percent of the time anyway, but there are there are so many ways things can fail. And especially the most bold entrepreneurs and the most bold visions have a lot of ways to fail spectacularly. And
I keep pushing myself to think about the what can be, what can go right, w what can really work with this. And Quite sincerely, the things that I I regret the most are the the ones that I pulled back on because I I could see the big vision and just saw all the probabilities of of the what can go wrong and and just couldn't quite get there. And I regret those the most.
And how how is that informed how you're investing in this era?
To start with the reverse and to to think back on how could the world change to accept this and and what's possible in a multi horizon way. Great businesses often start with a line of sight to cash flow positive and controlling our own destiny. Uh like I think that's important. But but the multi-horizon view is critical. And so if you look at a business like like Shopify,
that may partner Jeremy Levine funded or Procore or Service Titan or some of these vertical SaaS businesses. You could look at you could look at Service Titan and say that's it it's software for plumbers. How big can that be, et cetera? if you step back and say, it's actually multivertical, it's actually, you know, payments relevant. It's actually a great AI use case. You know, they're at ten billion already and and sky's the limit in terms of where that can go.
And then by the way, often the tiebreaker comes down to just bluntly what teams do you want to work with and where can you change the world. We have our our growth fund is called a century fund because it's it's anchored on this idea of what are gonna be the iconic companies of the next century.
Yeah. Like when our when the books are written, our kids talk about it, who are the companies that dented the space-time continuum? And there's a lot of ways to make money in venture. It is a it's a great asset class, it's a great time. So when I can only do two deals a year, the tiebreaker comes down to the the biggest swings and the teams I ru really want to work with for a decade plus. We just ran the math. Our average hold period's like fourteen years, longer even than I thought.
These are long journeys if you're doing really big things. And so like the qualitative does matter too.
Do you all have conviction that there are going to be great companies built now that will last a century? Or are you more looking on a ten to twenty year horizon for where that value will be created and you don't worry about it beyond that?
Uh we don't think tech's going away. We don't think software is disappearing despite the current narrative. when you look at, you know, a rocket lab and space on our frontier tech side or you look at anthropic and the foundation models or you look at a number of our vertical SaaS companies where infrastructure, you know, a maintainer Clickhouse or some of these. We absolutely believe these can all be$100 billion plus businesses and that they are the new foundation for the new economy.
One of the things that you all are known for is the anti portfolio. Could could you share a little bit about what it is and how it came to be?
Yes, so uh on our website, in addition to the portfolio, which we're very proud of.
Which every venture firm has.
Yes, that I think the portfolio needs to look good to be able to do this, but uh we have a page which I'd encourage you all to go to th which is the anti portfolio and it it's all about those crimes of omission that I alluded to before. It it's the missed deals. It's not the companies we invest in that fail. We have a lot of those. We don't want to single out entrepreneurs in that and like we want to continue to fail in that way because that means you're taking big risks.
But these are the ones that ended up being great companies that we had a front row seat and an opportunity to invest in and blew. And and those are the ones that are most important to learn from. And so, you know, for me, it it it's companies like Tesla early on and Atlassian and the software side, and you know, on and on like this where massive respect for the entrepreneur, belief in the vision, and just couldn't quite get there.
And and we need to keep asking ourselves in those ways, what what did we miss and what can we learn so we don't make that mistake twice in a row because that hurts? And then part of the reason to to keep it out there not only to remind ourselves, but also For those 99.9% of entrepreneurs that we say no to, it's like we're still rooting for you, like we're fans of tech.
We love innovation. We love that you're doing this. And like if you can't make it onto our portfolio page, which we certainly hope you do, we we actually hope you make it onto the anti-portfolio and we learn from that. So that next time on your next company, hopefully if you're nice enough to give us another shot or for the next entrepreneur like you. We say yes that time.
¶ Investing in Anthropic and Ethical AI
I'd love to spend a minute on Anthropic. Could you tell the story of how you all made the decision to invest there?
Yeah, so we were very close to Cloud Wave One, saw the hyperscaler a market playout, which really wasn't a venture capital game. Obviously the winners of Amazon, Microsoft, Google. There could have been a case that one of the independent challengers emerged there, but th there was no one that was willing to fund the capital for those on the private markets and we all missed it. We didn't want to miss that again.
Our belief is that the foundation models are going to be the new hyperscalers. And we don't do competitive investments, so we could only make one bet. And so we were very much looking for who do we think was going to pull ahead several years out. But the beta an anthropic was that they would be one of those companies and that they had the chance to compete at the one slot, which we very much still think they do.
And credit to to co investors there, uh Matt Murphy at Menlo and Ravi at Lightspeed and some folks that were coming into the same round. and we're great collaborators and thought partners and and there's less of that venture these days, but we would not have gotten there and and without the ability to actually, you know, lock arms with a syndicate there and and have real discussions.
And I'm thrilled we did and very appreciative of Dario and Daniela and that team for being so bold to go all in and do it the right way with ethical AI and have the enterprise vision that was very non obvious at the time and and very contrarian.
What gave you conviction that Anthropic could get to that number one slot?
This was the a little bit the tortoise and the hare. But very much their bet early on the enterprise side. Like Claude is their consumer front end. It would have been great if that also won, and it may still, but fundamentally the the better model approach. and the the business mindset that they were bringing to this and the API approach and the the focus early on verticals like software, as well as the team's mindset
and value system that was a magnet for AI talent. And right now, that is the fuel, that is the lifeblood of these businesses. And it was true then, it's still true today. If you look at the heat maps and you look at the talent maps, Dario is a magnet for the world's best.
And the world's best wanna work with him and do great things. And the combination of of a world class product, the right strategy, but just the the talent coming into that center of gravity, wanting to have the impact there, plotted the line that we said, you know, the slope is steeper.
give it time and this will pass. The hyperscalers will will need to work with them, which has played out and that was also non obvious at the time. And the unit economics, it was a gross margin negative, you know, totally unproven business at the time. If you believe that they're driving value, all the numbers will take care of themselves. Like don't get caught up in the details.
Which is
Terrifying given the the size of the investment. It was one of our largest checks and now is is our largest check ever. But you you had to look over multi-years in a horizon of the of the what could be, and that was incredibly exciting.
How did their commitment to ethical AI inform the investment decision?
It was a big part of it because as you think about first the people the people element, the the talent attraction we spoke about before, but also the geopolitical. And the uncertainties around AI and the impact and and I'm gonna answer it first just from the business side, which is y you want to know that your customers are gonna go on a journey with you, that enterprise are gonna trust you.
And so there's an ROI to it. But I'll also say just back to the qualitative and the life's too short and the human side of it, like if we just we want to work with great people and we want to do great things.
And so, you know, our our dinner with Dario closing the deal, like he previewed a lot of the healthcare stuff that they're just now releasing. And that was so cool to think about. And you read his, you know, Machines of Loving Grace that came out after that, but he'd also he previewed with us. And the the impact on humanity for uh this will save lives. This will change outcomes when you apply AI technology to healthcare or education or some of these fields.
And they're deeply, authentically committed to that. They're giving away the vast majority of their economics. They've said that. Like they're doing it the right way in some ways, like I think of Melanie and Cliff at Canva who set some of these principles. And so do you know, they're gonna do great things, they're gonna make th this world a ton of money, but they're gonna make this world better. And I think that's that's a cocktail for success.
¶ CEOs as Athletes: Peak Performance
We have a executive health, wellness, and mindfulness program that we've launched at Bessemer. The STRIVE acronym refers to categories, so sleep training regimen, et cetera, around taking principles of peak performance for athletes. and applying them to our CEOs. And when you think about it, these athletes are, you know, tens of millions or hundreds of millions of dollars of value impacting billions of dollars. So are our CEOs.
And yet our CEOs often treat their bodies like crap. They don't sleep well. They don't eat. They're underperforming. And statistically, it's often the same as driving drunk or running a company drunk when you're sleep deprived and underperforming. And we have now great science. We have great resources. We have great, you know, tools to monitor and track and and supplements and all sorts of things.
that hasn't been s in many ways socially accepted in entrepreneurial circles. And in fact it's been the opposite, this bravado around, oh, I barely slept last night and I'm working so hard and whatever. And so part of this was bring into a safe space the experts. And so we mixed it. We have a lot of pro athletes and Hall of Famers who also work with us and invest with us. And so we brought the communities together.
and did an event at the Niners Stadium with our CEOs and a number of NFL players and said, let's talk about this and like, let's go through it. And it was so empowering to have, you know, Eric Armstead, who won the Walter Payton Man of the Year Award, this huge human, talk about his psychology.
and say in a safe space like I need this when I I was in a slump and like to be able to talk through the mental thing. Like if Eric Armstead, a physically, you know, uh unbeatable human needs this, then like you tech CEO could really benefit from it. And sleep is one of the most powerful levers. We focused on that as one of the first things, like just doing some of the fundamentals around if you can't sleep longer, at least sleep better.
So how can you get, you know, the using cold, using light, using caffeine, using stimulants, like there's all these things that are now best practices that you can do. And so you see our CEOs, we gave them all whoops and you'll see aura rings or eight sleeps and all these things now that are part of it. And and I I have gotten more positive feedback from this than any of the single programs we've launched.
Beejol, our CEO of Guild Health, will say like she'd never run more than, you know, three miles and she wanted to work on sleep. And so it was awesome. And she shared this on LinkedIn so I'm not breaching any trust or confidentiality. But She participated in the 10K and she is she has this whole sleep program. And so and I've got notes from her team saying, thank you. Bee just so much better to work with and such a better CEO because like she's happy, she's got in her, she's she's engaged.
And like these are 10 year journeys and and I sincerely like every CEO I work with and like I want them to be better parents and better like friends in addition to be selfishly being great CEOs. Like this is part of it. And so it's on our website. We've got a lot of the materials there. For our CEOs, we do deeper stuff and events and things like that. But for the public, we put it out there and and we've just pulled together the best practices in each of those categories.
And then the last one I'd highlight the the emotional health. The mental health part is a really big part of this right now. Year and a half ago, I had three COs in the same year tap out, including one that had that had to go away and needed real time.
Just the stress on our operators right now is unprecedented. And they need help. They need outlets. They need it needs to be safe. It needs to be open. And so just trying to surround them with resources to get ahead of it and to treat the mental health part. a as you would other executive skills i is essential.
I mean it it also just strikes me that one right thing to do by by people you care about Two, right thing to do by your LPs and and the the the teams you've invested in. That's a it's good better business. And three, it's gotta be competitive advantage that this is something that I'm sure the founders are talking about among themselves and saying When best more invests, they really get behind you beyond as a business, they get behind you personally.
uh the pull of what our founders are wanting. But I th I I think you're right. And I do believe there's a real ROI. If you make them better we're shareholders, it'll carry through. And and I do hope that part of just the partnership that would be great if it also has marketing benefit.
We haven't done a lot externally about it. We we hope that people find the content, but we don't want anyone to think that there is like uh that we're trying to market them and that's why I was conf the example I gave with with Beijle, I know she's posted on LinkedIn, so I I feel comfortable sharing that.
But this gets pretty personal. Yeah. And these relationships with our COs are are really personal if it's trusted, if you know, if you're in the right spot and we want them on that vision piece. to be comfortable sharing what their goals are. And we we have an outside coach with Exos, one of our partners who does a lot of stuff with the NFL and others.
who they they share the goal with them. So they don't need to share it with us. Like you've got an independent outside expert, but a lot of them do choose to share it with us and, you know, a WhatsApp group with folks who are they go through. So I think part of them being their best
and helping them be their best is just making these available. And I do hope hope other venture firms will follow. This isn't something that we want to be proprietary. We we make the content available and hope other firms follow because it hasn't been thought of as a role of of support. When I was a CEO, Bestmer did everything they could, but when I finished up my company, I had 13 cavities.
I went in five years after renting this thing and I brushed my teeth every day, but I lived on power bars. Never occurred to me. I, you know, these things are like the sugar just sitting on your teeth. So I'd I'd have five power bars in the day because I had no time to eat and I was sleeping like crap. And no one knew any better. And so we just beated ourselves up in the service of this great, you know, tech economy. And so I'm trying to help our entrepreneurs have it better.
¶ Navigating Economic Cycles and Future Trends
We spoke earlier about the dot com bust and what happens when winter really comes. As we sit here in the first quarter of 2026, what are you telling your portfolio companies about how to prepare, how to manage their capital, how to manage their teams? for what may be a sustained bust ahead as we as we we've been in a boom cycle for a minute here.
Yeah, we we are in the most volatile time but for COVID, you know, of the last two decades. and the uncertainty is through the roof. And as bullish as you are on your company and the prospects, you just can't run out of money full stop. And so whether that means raising or earlier, being a little more thoughtful on capital, et cetera, you've got to be balanced.
Now our entrepreneurs have huge ambitions and are gonna need a ton of capital in many cases for their vision. And so that generally means raise earlier and just have buffer to weather some some short term chaos. Part of why we've scaled up as a firm though is also
to be able to insulate a bit through the rounds. And and of course, like we need to be economically rational. If valuations go down, like there may be a down round or maybe something, but generally we reserve in a way like where we can be the the you know a provider of capital. But we we never want to do that. Like our goal isn't to jam you or do a down round. We would much rather we we get ahead of it, we raise, we've got the balance sheet to go for this.
But I also think because these are smaller companies that can do more with less, these outcomes are playing out much faster. There will be higher skew. But great things will be created in shorter windows with more leverage. And then you you'll know it and the downstream capital will be cheaper set up the other way at higher valuations and more readily available. And and we are seeing that separation.
where gen one cloud companies who are not adopting are getting pounded and that capital's leaving that category and going over to the AI natives who the bet is they're gonna be the disruptors. Yeah.
We talked about how there are ten person companies that will reach billion dollar valuation. Roy Bahat from Bloomberg is the first person who I heard talk about a one person billion dollar company. If I tell you that Bloomberg is reporting that there's a one person billion dollar company and I ask you, what is the over-under and the date that that report happens? What's what's the prediction?
Well, I'm gonna cheat because in some ways it happened last year when when, you know, some of these founders went and said, Hey, I'm gonna start a you know, a new foundation model and could raise it north of a billion. So I think there's difference of financing value for for an individual versus what I think you're implying is a business that on its merits is worth that with one person team.
very soon would be my answer. And and in my mind I'm thinking a year and I'm holding off whether that means thirteen month whether it's a calendar year or through to end of January. But I think it's that
Why don't we call it one year and one day? Because you have really good history with one year and one day.
And then I can take the under.
Right, perfect. Thank you so much for being with us.
A true pleasure.
Thanks again to Byron Dieter for joining us. He shared so many invaluable insights and I think the one that will stick with me most is his anti-portfolio. It's an important reminder that we can learn essential lessons from the actions we don't take. If we're thoughtful enough to notice and honest enough to own it. I'm Jeff Berman.
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