Inside $17B Index Ventures: Anthropic, Wiz, Datadog & the Future of AI
- Index’s reported cash returns set a demanding benchmark for its next generation of investments. Molly O’Shea cites Bloomberg’s January 2026 figures: 11X DPI for the 2012 fund against a 1.5X industry average, and 5.1X for the $780 million growth fund raised in 2015. Shardul Shah stresses three decades of top-decile performance while warning against “getting high on your own supply.”
- Shah says investors should proceed when their valuation is within roughly 25% of a deal’s price. A 2X disagreement warrants investigating what another investor believes; being “cute on price” has cost Index opportunities, including GitHub. His premise is more capital chasing a finite set of exceptional outcomes: “Prices will get higher. That’s a fact.”
- AI durability increasingly depends on founders’ adaptability. With model improvements arriving every few months, “what could have been retentive yesterday may not be retentive tomorrow.” Shah prizes “duality”: imagination paired with operational excellence, allowing founders to change products and business models as customer value shifts.
- Index’s newest AI bets begin with founder conviction before a settled business thesis. Shah wanted to back Flapping Airplanes’ Ben before either knew what he would build; he is now “pretty confident” its under-23 team will break world records “in the next couple months,” without identifying the record. Separately, he says he has only recently seen a company sell $5–15 million annual contracts within its first commercial year.
- Shah says Adallom’s founders created value by saying no to Google’s first acquisition offer. Separately, when Molly says Gili Ronen thinks Wiz sold too early, Shah says they both believe it. He sees another opening in 7AI: rebuilding security foundations and converging budgets across incumbent categories.
- Higher valuations have become a recruiting advantage that Shah is still learning to accept. Shah’s arithmetic is that employees should prefer lower option prices, yet larger raises and higher prices can attract more candidates through “a luxury product effect.” He remains uncomfortable with the mechanism while adapting his advice.
- Index pairs a 30–35-company venture portfolio with substantial cumulative investment in winners. It invested over $250 million in Wiz across funds. Shah rejects a statistical strategy of thousands of tiny checks and warns that concentration can cut both ways. He calls M&A “really healthy,” but treats IPO timing and sell-versus-stay-independent decisions as judgment calls rather than formulas.
1. Index puts personal judgment at the center of institutional scale
Molly O’Shea cites roughly $17 billion in AUM; Shah emphasizes Index’s growth from three people 30 years ago to 93 today. As venture is “industrializing,” its distinction is “taste.” Successful investments span partners and generations, addressing succession risk where returns otherwise concentrate among a few stars. “We’re no longer an underdog.”
Index backed Wiz on Shah’s birthday, before a business plan or metrics. He had served on the founders’ board 10 years earlier and knew their flaws. His method starts with understanding defining experiences and motivations: “I’m not listening for something.” Filtering thousands of founders through predetermined patterns would be a different business.
At voice-AI company Cartesia, Shah initially urged Karan to shut a successful business line and focus: “Do very few things and do them with excellence.” Karan ignored him and wanted to prove him wrong. Shah changed his view: Karan is an explorer who needs to explore, and “he was completely right.” Disagreement could coexist with support for the founder’s decision.
Investment committees combine 30–45 minutes of founder presentation with 30–45 minutes of deliberation. A $1 million investment might involve three people; $100 million-plus might involve six-plus. Not everyone at Index participates, so pre-briefs, post-briefs and collected perspectives help preserve learning for investors outside the room while creating an intimate experience for founders. Shah connects that mentorship to the breadth of partners contributing to outcomes.
2. Higher prices change both investment decisions and recruiting
Asked about price sensitivity, Shah answers: “I don’t.” He expects more capital to enter still-small private markets, chasing finite exceptional outcomes even as those outcomes grow. “Prices are high. Fact. Prices will get higher. That’s a fact.” In highly competitive markets, he argues, irrational behavior can be rational; the deciding question is whether Index backs the best entrepreneurs.
Molly’s disbelief at a roughly 25% valuation mismatch meets an unequivocal answer: “you should go for it.” A 2X mismatch instead prompts investigation into what another investor believes that Index does not. Shah cites GitHub among missed opportunities caused by “being cute on price”: avoiding a modest premium can exclude the firm from its best outcomes.
Shah’s arithmetic is that employees should prefer lower option prices, lower taxes and greater upside, yet he sees higher valuations and larger raises increasing hiring conversions. He calls it “a luxury product effect”: price implies scarcity, attracting demand. He is “not totally comfortable with” the phenomenon but is learning to recognize it and coach entrepreneurs differently.
Molly presses whether founders really need $200 million and purchased GPUs. Shah’s approach is Socratic: “why do you think you need all that money?” The answer may justify the raise or may not. Compute-heavy and lighter businesses appear across Index’s seed, venture and growth funds, without a strict dividing line.
3. AI’s changing capabilities make adaptability more valuable
Molly describes a “low retention, high testing environment”; Shah offers no retention benchmark. Model improvements have accelerated from annual releases to six-month and then few-month cycles, so “what could have been retentive yesterday may not be retentive tomorrow.” He prizes “duality”: imagination alongside detail orientation and operational excellence, enabling founders to find products or business models that remain valuable.
Asked for the next AI thesis around a portfolio including Anthropic, Shah returns to people. Index has no 26-and-under screen or thematic coverage requirement. It wanted to back Ben before either side knew what he would build; June’s simulations similarly followed belief in the founder. At Parallel, Shah’s conviction preceded the business and rested on Parag’s “character and his competence,” beyond celebrity.
Flapping Airplanes remains a deliberately incomplete preview: Ben, Asher and Aiden lead a vertically integrated business with the “greatest army” of under-23-year-olds. Shah describes substantial industry interest and says he is “pretty confident” they will break world records “in the next couple months.” Molly presses for the record; he refuses: “No hints.”
4. Wiz’s exit leaves Shah convinced the security opportunity is larger
Shah’s lesson is “learning to say no.” His first blog on the subject was directed at the founders of Adallom; years later, they said no once to a Google acquisition offer and did not say no the second time. Shah says that first refusal created substantial value for the founders and shareholders. Separately, when Molly relays fellow investor Gili’s view that Wiz sold too early, Shah says, “I think both he and I believe it.”
His broader admission is that Index “systematically underestimate[s] the size and magnitude of category-defining companies.” Continued belief can justify doubling down and increasing ownership. Until the last six months, Shah says, he had never seen a company sell $5–15 million annual contracts within its first year of commercialization.
Shah thinks publicly traded security companies are approaching $1 trillion in value and sees the category as permanent, while its players will evolve. His example is 7AI, backed alongside Hashim at Greylock: an opportunity to rewrite security’s foundations, challenge multiple incumbents and “converge budgets.” He says that opportunity could not have existed five or 10 years ago.
Molly asks whether one offering beats multiple shifting products. Shah says it depends on the customer: some feel safer with Microsoft or Palo Alto Networks. His preference is a parachute made from “one clean sheet” using the latest material science, rather than stitched-together fabric, while acknowledging that “different folks have different tastes.”
5. Portfolio breadth and cash distributions discipline the growth race
Checks range from $1 million to over $100 million, but Shah rejects a thousand $2 million investments without capacity to help each founder. Venture portfolios contain 30–35 investments; concentration “can cut both ways” when markets turn. Multiple funds support substantial cumulative commitments: Index invested over $250 million in Wiz over time.
Rising industry investment counts and dollars per investment accelerated deployment over the prior 12 months. Shah thinks the former two-and-a-half-year cycle has “probably compressed a bit” and will probably normalize. Index values exposure across vintages rather than optimizing fund duration.
DPI guards against “getting high on your own supply.” Shah calls M&A “really healthy,” including private-to-private transactions; IPO windows cannot be timed. His partners criticized a sale at the IPO price when shares rallied, then offered no thanks after they fell—Molly had initially mistaken them for LPs. Selling or staying independent remains a consequential judgment call “where there is no truth.”
Citing Bloomberg’s January 2026 reporting, Molly gives 11X DPI for Index’s 2012 fund versus a 1.5X industry average, plus 5.1X for the $780 million growth fund raised in 2015. Shah offers no additional figures and says outcomes can reflect an “effervescent” market, cautioning against confusing outcomes with the partnership’s judgment calls. His stated standard is consistent top-decile performance across three decades, sustained for the next 30 years.
Full transcript
Wiz was the fastest-growing company. It was the largest tech M&A of all time.
Index has around $17 billion in AUM. That’s what was last reported by Bloomberg. You had an 11x DPI on Index’s 2012 fund, compared with an industry average of 1.5x.
We’re no longer an underdog. The venture industry is industrializing, and it’s something very different over the last 5 years than the prior 25. We’re in an era of agent-to-agent war, but we’re transforming our business with AI, for sure.
What is Flapping Airplanes?
It’s the greatest army of under-23-year-olds. Sensational technology they’ve built, and I’m pretty confident they’re going to break some world records in the next couple of months.
Of what?
You’ll have to wait and see.
Shardul, welcome to Sorcery.
Thanks very much for having me.
Thank you for having me here in the Index Ventures New York office. We just got back from your San Francisco office last week, which was also beautiful. I know you’ve got a lot of travertine around here, some nice interior design, all the good stuff.
We talked to a couple of your portfolio companies. June from Simili—I was not expecting that. That was a crazy conversation. I thought I was getting my mind read the entire time.
It was actually happening, yes.
Yeah. He said he did a simulation on me beforehand, so he predicted the whole thing. We also talked to Parag from Parallel, and what I think will be really interesting to talk to you about today is the history and evolution of Index, and where it meets today in this era of AI wackiness.
One thing Parag mentioned was that we were so used to triple-triples and double-doubles back then, and what he expected when he was at Twitter and back in the historic tech days. But now he’s expecting 1,000x. The way we measure the venture world and startups has completely changed with the proliferation of AI, so I want to go through that.
I guess to start, Index has around $17 billion in AUM. That’s what was last reported by Bloomberg. I’d love to get your perspective. You joined the firm back in 2008, so give us the state of Index Ventures.
I started at Index as an intern in 2004.
Oh my God.
I don’t think that really counts, although I’m really proud of it.
It does count.
1. A Firm Built On Taste
But I came back in 2008. When we started Index 30 years ago, it was 3 people, and today we’re 93. I spend more time thinking and sweating and dreaming about our people than our AUM. I think it’s actually the most important metric.
How we’ve changed and how we haven’t changed is super interesting. Part of respecting where we came from shouldn’t limit where we need to go. I like that you picked up on the travertine, but I think you’ve also noticed a bunch of the other tastes.
Like pumpkins?
There are pumpkins. There’s eclectic music and eclectic literature. The linen in this room is also fantastic. I think that’s been true for Index from the beginning to today. There’s an enormous attention to taste.
When you think and talk about measurement, I think it’s super interesting. The venture industry is industrializing, and it’s something very different over the last 5 years than the prior 25. In that phase of industrialization, so many people are thinking about patterns, numbers, measurement, and scale that it creates more distinction around how focused Index is on taste.
Let’s go into your portfolio a bit. You have some pretty big-name hits, like Wiz, and I named a couple of the other companies today. What are some of the companies you’ve been most proud to back?
2. An Equal Partnership Of Outliers
I would start by saying what I’m most proud of is the number of different partners at Index who have contributed to success. Usually in venture, there’s the power law that leads to concentration, not only in terms of returns, but also in returns among very few partners. It’s at the root of why succession is really difficult in the venture industry.
You often have a couple of star partners at big-name firms. What’s amazing about Index is that Jan, Marton, Danny, Sahir, Nina, Hannah, and I all have associations with terrific investments, and that’s just the current generation. If I think about prior generations, Neil, Giuseppe, Mike, Dom, and Bernard each contributed to outlier outcomes. That’s really unusual and rare, and I think it’s at the heart of what we’re most proud of.
What are the names in Index’s Hall of Fame?
There are many. Some of our most important investments are Revolut, which is probably the largest technology company ever out of Europe; Datadog, Wiz, Adyen, Robinhood, Figma, ClickHouse, and Roblox. The list goes on.
In terms of evaluating startups today, I want to go back to this because I think it’s really interesting, your point about venture being industrialized. I would assume how you’re evaluating companies today is completely different than ever before. Maybe it always comes back to the founder, but there are many things that go into that analysis. How has that changed, and what are you looking for that’s different?
3. The Founder Comes First
I think it is all about the people, particularly at early stage. Take Wiz as an example. We invested on my birthday, before there was a business plan. There wasn’t a market, there wasn’t a business model, and there weren’t metrics to analyze. It was literally all about the people.
I had an advantage because I served on the board with Asaf, Roy, Ami, and Yinon 10 years prior, so I knew them as human beings. I knew their flaws and their idiosyncrasies, and I still had belief in who they were. I think that’s the craft we’ve been really honing: how to really listen to entrepreneurs and find belief in them, versus looking for phenotypes or specific attributes that we check off a list.
Of course, entrepreneurs have to build durable businesses. Particularly in markets like this, where abundance comes with exuberance, there’s no doubt that sometimes entrepreneurs can confuse revenue with durable business models.
Or they don’t know how to define revenue.
Or, yeah, even more basic. But I think there’s an importance to the fundamentals of building a business, and it all starts with the people.
Let’s get into that. What are the key traits you’re looking for in these founders? What are those indicators?
I don’t really look for specific traits. I don’t have a starting point of “These are the traits that I look for.” I really try to listen to an entrepreneur. I’m not listening for something, and I’m not looking for a pattern.
I understand the utility of patterns. They support industrialization. If I could define 3 patterns, then I could put thousands of entrepreneurs through a filter, make decisions, and play statistics at scale. For some people, that’s really fun and exciting. To me, that’s not a craft.
I’m not saying it’s a dark art, or that it’s just intuition and a gut instinct that no one but us can appreciate. The reality is that we try to really listen to who someone is. What are their defining moments in life that determine their motivation, grit, and ambition?
Sometimes people evolve and change. Just like you’re thinking about how a podcast can generate a business that supports cash flow, so that you can get back to the roots of family office, sometimes the world opens up with more possibilities depending on the path you take. To be a real business partner to someone, it starts with listening versus pre-conceiving who they have to be in order to succeed.
I think Marc Andreessen once said that the only industry left, once AI has taken over, will be venture capital.
Right? It sounds like the mathematicians from a few weeks ago—I know we don’t want to date this—when OpenAI released 700-plus papers, and a number of mathematicians were concerned about the PhDs they’re working on. The last field to be taken over is, of course, ours.
But I think there’s an opportunity around relationships, taste, and judgment that can persist and be durable. We’re transforming our business with AI, for sure.
You mentioned that you guys have invested in a handful of these AI companies. It’s the time and place; you cannot ignore it. It’s a major focus. I’m really curious: from the conversations I’ve had, it seems like these companies are very early on in their behaviors. A lot of the behavior in this early inning is high testing and low retention. I don’t know if you’re seeing that, or what the key takeaways are. Can you deduce any of this down to, “All right, we’re at this point in time, and this is what to expect,” or “Here are the outliers, and that’s what they’re doing”? But it does seem like we’re in a very low-retention, high-testing environment.
I don't know if you're noticing that.
It's a super interesting framework. There is a question of what is durable, and I think the challenge to that question is that the world is moving so fast. As model capabilities emerge every year, then every six months, then every few months, the world is completely changing. What could have been retentive yesterday may not be retentive tomorrow. The evolution is changing in terms of how we assess durable business models as a function of the market environment.
So what doesn't change? We look for entrepreneurs who are really adaptable. An example of what I listen for in entrepreneurs is duality. I look for people who can hold duality with comfort. An example of this is being very imaginative, left-brain creative, as you were—right? Or I should say, as your parents were, and you were born into this creative household—yet having detail orientation and operational excellence. When people have a left brain and a right brain together in one, it's really rare, profound, and powerful. It enables adaptability. When you can feel someone's duality, at least for me, it can inspire belief. That makes them more resilient to a rapidly changing market environment and better able to identify the market, business model, or product that might be more retentive and valuable to an end customer, whoever that is.
4. Conviction Over Price
How do you think about price sensitivity and valuations?
I don't.
You don't?
No, not really. Look, I'm a University of Chicago econ student. I shouldn't say I'm an economist. I believe in supply and demand, like Economics 101. Today, the private markets are still relatively small in terms of total capital and assets in the world. It's one direction. There's only going to be more flow of capital into private markets.
Although I do believe there will be more outcomes that are bigger on average and higher in amplitude, it's still a finite set. So you're going to have more capital chasing relatively few outcomes. That means prices should go up. That's number one. Number two, it's perfectly rational to have irrational behavior in highly competitive markets. So prices are high. Fact. Prices will get higher. That's a fact.
The question is, are you partnering with the best entrepreneurs? It's not meant to be a truism, but we found at Index that one of our sins of omission is being cute on price. Whether it's GitHub or a variety of other mistakes we've made, when we've been cute on price, we haven't exposed ourselves to the best outcomes.
Say more about that.
Sure. When we're 25% off on price, it doesn't matter, right?
Really?
Yeah, absolutely. I think when we're 2X off on price, the question is, what does someone else believe that we do not? And that's a really interesting opportunity for inspection. But it's not losing on price, it's not winning on price; it's a sense of belief in what the opportunity for a company is. When you're within 25%, the answer is you should go for it.
So Index sits in the bucket of mega funds. You guys are very large. As a fund, you're also a bit under the radar. You guys don't do many interviews. The brand is high quality, but it's kind of quiet. How do you think about competition? How are you competing with the likes of these highly marketed funds?
Yeah. Well, thank you. I hope you're going to help us with that. The heart of Index is humble. We really put the emphasis on our founders. They deserve the spotlight. That results in a bit of discomfort with putting the spotlight on ourselves.
In the past, 30 years ago, when we were just getting started as a firm focused on Europe, a market that was underappreciated by great investors on the West Coast, we had an underdog mentality. I think in light of the returns we've generated and the relationships we've forged with great entrepreneurs, we're no longer an underdog. But we need to grow out of the discomfort of playing that role.
We've got more to do in our own way, authentically. It's not at all guided by competition and how others do or don't participate. I think the core of it is to be authentic to ourselves.
If it's not price, what is the hardest part of winning deals in this crazy market right now?
I think it's always conviction. Can you find belief in an entrepreneur? For me, part of that is related to the connection that I feel. Again, at Index we're an equal partnership, so there's very little ego, and there's very little credit for who led what investment. That's why, again, we're so proud of having so many different partners participate in our outcomes.
It's about finding who is going to have the most connection with an entrepreneur to find belief and drive the investment. I'm really idiosyncratic. Not everyone connects with me, nor do I connect with everyone, so finding that connection is the hardest part. Once we have it, we move fast, we move aggressively at the appropriate price, and we can win.
What's a typical partner meeting like?
Hmm. I don't—
Do you have them?
We do have partner meetings. I think you're referring to investment committees, but we have partner meetings as well. What entrepreneurs should expect is that they present to our group for 30 to 45 minutes, and then we deliberate for 30 to 45 minutes and make a decision. Those tend to be conversational. They're highly engaging. We're trying to create an environment that demonstrates to an entrepreneur the intimacy and the relationship they'll have with our entire group.
We manage those committees to have high quality and fast decision-making. For smaller investments, we might have a smaller quorum. For larger investments, we might have a larger quorum. For example, for a $1 million investment, it might be 3 people. For a $100 million-plus investment, it might be 6 or more people. The objective is, again, to create the best experience for the entrepreneur.
What are the biggest challenges that most of your portfolio companies are facing right now? Is it compute? Is it marketing? Is it just testing? Is it getting their product out? What are they facing the most?
If you don't mind, just to go back to your prior question, there's another stakeholder I want to highlight. Some folks listening may want to join Index and be mentored as investors in their careers. So we also think about how to create a learning environment for individuals. That's actually pretty tricky when you're trying to create intimacy for a founder.
Not everyone at Index gets to participate in an investment committee, but we make a great effort to pre-brief, post-brief, and collect perspectives for the entire group. That spirit of mentorship, which we can come back to, is again part and parcel of why we've had so much participation as investors in outcomes. Your question, which I evaded, I apologize. Could you repeat it?
The biggest—what are the biggest challenges or the biggest problems that you're seeing founders face in your portfolio right now? Is it meeting the expectations of this high-growth period? Is it compute? Is it access to that? Is it whether or not they want to decide to become a neocloud or a coding agent or a personal agent and become like Instinct What do you find are the biggest problems they're facing right now in this market?
5. Let Founders Be Themselves
Yeah. I think it's expressing oneself. I'll give you an example: Karan at Cartesia. Cartesia is building a voice AI business. I joined Karan's board about 1.5 years ago, and initially I gave him conventional wisdom, which is, “Do very few things and do them with excellence.”
Then I got to know Karan, and Karan is an explorer. He's an adventurer, and the way for him to express himself is to explore and adventure. Initially, I told him, “You shouldn't run this part of your business. In fact, you should shut it down.”
It’s successful, but burn the boats and focus on this. He ignored me. Actually, I think my perspective lit a fire inside him. He got upset with me and wanted to prove me wrong, and he was completely right.
In some ways, it was really easy with Karan to disagree, give him perspective, and still have total belief in him and support any decision he wanted to make. I think when entrepreneurs are supported and seen for who they are, all the other things take care of themselves: compute, where to focus their business, who to hire and when, or how aggressively to scale into a crowded, difficult, or confusing market.
So over 30 years, I can imagine that Index has seen a few things. The place where founders, people, and entrepreneurs looking to build businesses learn the most is through mistakes and these really challenging moments. What have been some of the defining ones you’ve seen that are really good lessons over and over again?
One of the hardest challenges you encounter is knowing when to say no. This can show up in small places and big places, but learning to say no is an incredible lesson.
The first blog I wrote—I know you say we’ve been under the covers and haven’t written anything—was titled, I think, roughly, “Learning to Say No.” It was directed at Asaf, Roy, Yinon, and Ami when they were running a company called Adallom. Years later, they said no once to an acquisition offer from Google. They didn’t say no the second time. They knew exactly where I stood. But that two-letter word created an enormous amount of value for themselves and for shareholders. So learning to say no is incredibly important.
Number two, at Index, for investors who may want to join us, we systematically underestimate the size and magnitude of category-defining companies. That’s really challenging. Continuing to dream and believe in entrepreneurs, sometimes more than they believe in themselves, can unlock the ability to double down in businesses over time and grow influence and ownership.
6. The Next AI Generation
A lot of people obviously know about Anthropic. That’s one of your portfolio companies. Everyone knows about these huge trillion-dollar companies that are really crushing it. But there’s a next wave of AI that might be humming around on X or in the news. What makes this new wave of AI investments, and what are you guys working on? What’s your thesis there?
We have a lot of domain expertise within Index, whether it’s Jan in fintech or Marton in marketplaces, myself in infrastructure security, Nina in robotics, or Danny in consumer. There’s a lot of domain expertise, so I can appreciate why you might ask about our thesis and thematic approach, but it’s actually all about the people.
When I think about a more recent wave of entrepreneurs, we weren’t targeting founders 26 and under when we decided to invest in Ben and Asher at Flapping Airplanes—and Aiden, excuse me—or June, Michael, and Percy at Simili, or Morrat Stefan at Hone, or Karan at Cartesia. We don’t have a 26-and-under screen. But when all roads pointed to Ben as one of the most special entrepreneurs of his generation, we wanted to invest before we knew what he was working on, and, in fact, before he knew what he was working on. As a consequence, you see a variety of different themes. You talked about mind reading with June—
Yeah.
—with June. I love science fiction, right? Simulation is super fun to think about as a core pillar in most science fiction. But I wasn’t going into a meeting with June thinking, “I want to invest in a simulation company.” I saw him, understood him, felt him, and wanted to get behind him no matter what he was doing.
Parag at Parallel, again, didn’t know the business he was creating, but we had belief in him that went beyond his celebrity. I think that’s one of the reasons he asked me to join the board at the seed stage: I didn’t invest in him because of his celebrity. I invested in him because of my view of his character and competence.
There isn’t really a thematic overlay. We don’t think in terms of coverage. We don’t think about these statistical measures. What we really aim for is to be the largest and most influential investor in category-defining companies. To do that, we try to get involved as early as possible. Sometimes we make mistakes and don’t connect with the entrepreneur. Then we try to get involved as quickly as we can. The idea of domain expertise and diverse perspectives gives us an apparatus to make those catch-ups as quickly as possible, and then we have a great diversity of funds, from a seed fund to a venture fund and growth fund, to execute on the strategy.
What is Flapping Airplanes?
You should definitely talk to Ben, Asher, and Aiden. It’s the greatest army of under-23-year-olds building a vertically integrated business. The technology they’ve built is sensational. The level of interest they have from some of the key players in the industry is astounding, and I’m pretty confident they’re going to break some world records in the next couple of months.
Of what?
You’ll have to wait and see.
No hints?
No hints.
Just some world records.
Just a big world record.
Oh, cool. All right, I’ll be on the lookout. Anybody else breaking records?
There have been records broken. Records are meant to be broken, right? Wiz was the fastest-growing company. It was the largest tech M&A of all time, and then the next year, it was supplanted.
In my zip code of enterprise, I’d never seen a company, until the last six months, sell multimillion-dollar contracts. We’re talking $5 million to $15 million contracts per year within the first year of commercialization. Records are constantly being broken, but Flapping Airplanes is working on something really significant.
By the way, I interviewed Gili Ronen at the start of the year, and he looks back and thinks that Wiz sold too early. They were sold at a... They could’ve been valued a little bit more. He thinks it was a... You know, they got a good deal.
Yeah. Gili is a friend. He and I served on the board of Adallom together, and we both joined the board at the seed round of Wiz. We took really different approaches to that investment from start to finish. I think we’re both super proud of what they accomplished in the period of time, but we have so much belief in the entrepreneurs that it’s very convenient to say that they sold early. The truth is, I think both he and I believe it. I think public-market security companies are approaching a trillion dollars of value. The category is resilient. It’s permanent. It’s why we’ve been focused on it for over a decade. But who the players are will evolve. As one example, 7AI, which is a company we invested in together with Hashim at Greylock, has one of the largest opportunities in security to rewrite the foundations, take on multiple different players, and converge budgets as a type of solution. That could not have been possible five or ten years ago.
You think it’s better to have a singular product and offering rather than multiple things changing all the time?
It depends on the customer. I think some customers—again, we used to talk about it like, “You don’t get fired for using IBM.” Some folks feel safer and more secure as a Microsoft shop. I think there will be an audience that feels safer and more secure as a Palo Alto Networks shop.
Personally, would I prefer a parachute with loosely stitched fabric together, or one clean sheet that has the latest and greatest material science at play? To me, the choice is clear, but different folks have different tastes.
Damn, Shardul. Oh my God. I’m glad we got onto the topic of cybersecurity. This is really good.
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So as we talk about the new investments and the portfolio build-out in this AI era, we didn’t ask about numbers. I know I asked about valuations, but what are the kinds of checks you guys are writing across stages?
Yeah, it can be as little as $1 million or over $100 million.
There’s nothing particularly unique or different about the size of capital. Decision-making is fast. What we think most about is what companies need to be appropriately capitalized and attack a market opportunity.
Let’s break that down further. There are companies that are very compute-intensive, and they need lots of money to cover GPUs or whatever kind of compute they want. How do you demarcate that? How do you separate that type of company from something that’ll need a smaller check?
We have both in our seed funds, our venture funds, and our growth funds. We don’t have a strict demarcation.
The point I’m trying to get at is: for new companies being created today, how do you right-size things or meet with the founders and say, “Hey, you probably don’t need $200 million to start. You don’t need to buy all these GPUs. Maybe you can rent some. Maybe you can do all this other stuff,” versus— I think for a while, people were just going after large checks because they thought they needed to aggregate or consume so much.
Let’s try to separate two parts of it. One is a healthy conversation as a business partner, right? There are different styles. You can be prescriptive—“You don’t need this,” or “You should do that”—which is an approach people often take as investors. They have the credibility and skill to do that because they may have operated a company before.
My style, which isn’t for everyone, is probably a little more Socratic. Why do you think you need all that money? What are you going to do with it? What’s your motivation? Maybe that’s the right answer, or maybe it’s not. But I try to help someone get to the best judgment call and decision for their business without a personal agenda. It’s really about what’s in the best service of a company.
Separately, I think there’s something super interesting happening right now that I find completely counterintuitive, again as a UChicago economist: the higher the price and the more capital raised, the more likely an entrepreneur is to recruit talent. The reason it’s counterintuitive to me is that it defies basic arithmetic. If I were an employee, I’d prefer shares at a lower stock option price because I’d have a lower tax bill and more upside.
But what’s happening in the world today is like a luxury product effect, where a higher price implies scarcity, so there’s actually more demand, which drives conversions. This is a phenomenon I’m not totally comfortable with because, again, it doesn’t fulfill basic arithmetic. But I’m learning to accept it, recognize it, and coach entrepreneurs in a slightly different way.
I see. Maybe this is a trick question, but what’s the largest check you guys can write without risking or hurting fund performance?
I think about our firm’s performance as a function of being the largest, most impactful investor in category-defining companies. If we make a small investment and don’t deliver on being the most impactful investor long term, we’re eroding our performance. So it’s not a function of the dollar size of the investment. It’s a function of how we follow through on an investment.
In other words, we won’t play a statistical game of creating 1,000 $2 million checks to mitigate risk and have diversity in the portfolio. We won’t have the skill or will to follow through on each of those tiny checks with real advice, impact, activity, and engagement with founders to influence their businesses.
The inversion of your question is super interesting: how large an investment can we possibly make? I think it’s an in-vogue question today because certain investors have done so well with concentration. I think concentration can cut both ways. It can feel great when the market is up and to the right, but if the market changes—and eventually it will—concentration can really hurt.
When we look at the statistics of our business, we still have 30 to 35 investments in a venture portfolio, so there’s reasonable diversification, and we’re not taking risk on a single position. Because we invest out of multiple funds over time, with Wiz, for example, we invested over $250 million over time. So there isn’t a constraint on the dollar size of an investment in a company.
Has the fundraising size or cycle increased in this environment? How has that changed? I ask because you—
Yeah.
—you brought up a really good point. We had a conversation with Brian Singerman, who was a longtime GP at Founders Fund, and they focused a lot on concentration—
Yeah.
—to the point where they would bet all the money on a handful of companies. It worked out really well for them. They were like, “All right. If we run out of the fund, we’ll just raise another one.” They just kept doing that, and it worked out phenomenally for them. But I’m curious about your stance: what do you think about that, and how do you think about the cycles and fundraising in this market?
Our LPs, our limited partners, are such an important stakeholder in our business. We never take them for granted. Our belief is that they’re purely rational individuals who will invest in great fund performance, so we try to take that responsibility very seriously.
Over the last 12 months, the number of investments and the dollars per investment across the industry have grown, so pacing for everyone has accelerated. What used to be a 2.5-year cycle has probably compressed a bit just in the last 12 months. Will it return to the normal fund cycle? Probably. But we don’t think about optimizing for time duration. We like diversity of exposure to different vintages.
As we talk about fund cycles and the evolution of venture capital in this market, how has the exit environment changed? I know we’re in an interesting period for IPOs. We’re waiting on some very large ones. This year was supposed to be the year of mega returns, and some of them are getting delayed a bit.
But M&A has changed, too. The floodgates of M&A have opened up, and more people are becoming acquisitive. Even smaller companies are being acquisitive. So how has the exit environment changed?
We think really carefully about DPI, and we also talk about not getting high on your own supply. Making sure we deliver returns to our limited partners is really important. The two drivers of that are IPOs and M&A. IPOs are exactly as you said: folks are waiting for the window to open or close in a given period of time.
Which I’ve learned from the New York Stock Exchange: you can never time it.
You can’t—you cannot time it. But when you’re in the right place at the right time, you have to have the courage to take advantage. The IPO window’s out of our control. M&A has really accelerated. We saw Wiz, we saw Cursor, we saw World Labs. Catalyst is really active in supporting transactions.
Not only are public company incumbents buying private companies, but we’re also seeing private-to-private mergers and transactions of a variety of different scales and magnitudes. The M&A environment is really healthy. The hardest part is when an entrepreneur believes in themselves and has a really interesting offer in front of them. What do they do? Do they stay independent, or do they sell?
The interesting thing is that most entrepreneurs, when you first meet them, will tell you, “I’m on a mission. I’m never going to sell.” It’s deeper and much more nuanced. If you’re the most influential investor, you can make an enormous impact on shareholder value in a judgment call where there is no truth.
I heard you on a podcast before talking about how you sold at the IPO price, and then it skyrocketed. Your investors were calling you up—your LPs—and then it plummeted, and no one called you.
It was not my LPs. They were my partners.
Oh, okay.
My partners called when it looked like we left money on the table. They didn’t thank me when the stock price plummeted.
Oh, God. I can only imagine. I know I asked you what you guys look for in a fund, and you then brought up DPI in this answer. Bloomberg had reported your fund performance. I don’t know what’s most current, but as of January 2026, you had an 11X DPI on Index’s 2012 fund, compared with an industry average of 1.5X. That’s pretty crazy. And then a 5.1X DPI on Index’s $780 million growth fund that was raised in 2015, also reported in January. What other numbers can you tell us?
I believe you. People think I’m very analytical because I am cerebral, but the minute I invest in a company, I don’t remember how much we’ve invested—
Oh, my God.
—or what our ownership is. I know it sounds like total bullshit, but it’s actually true. I don’t remember because I don’t care. It’s all about creating the relationship.
Number two, I wouldn’t confuse outcomes with the judgment calls our partnership makes about whether we’re going to invest, whether we’re going to double down on a company, and how we’re going to influence an entrepreneur.
Outcomes can be a function of how effervescent the market is, right? We’re super proud of our returns across more than a single venture fund or a single growth fund. The consistency of top-decile performance over three decades is something we’re really proud of, and it sets a really high standard for what we need to do for the next 30 years. So I don’t have any other numbers for you, but I’m hard at work to create more.
I love that. That’s great. Because you’re not into the data stuff, I think this question might be good for you. It’s a performance question—
Let’s go.
—but it has nothing to do with data or insights or numbers or whatever.
Better. Thank you.
I take this from a personal perspective. I think performance for individuals is a matter of who you spend the most time with. It could be someone you grew up with, a mentor, a professor, or a book. I believe a core part of an individual’s performance and motivation over time is who you surround yourself with, and I’m curious who those people or that person could be for you.
Yeah. The person I spend the most time with, who also happens to be inspiring and a mentor of mine, is my wife. The amazing thing about Poonam is, well, she’s known me my entire life. We grew up together. We went to middle school and high school. I took her to homecoming. She broke up with me on Valentine’s Day.
Oh.
But now we’re married. We’re very happy. We’ve got 2 kids. She knows me better than I know myself. When I go home and pitch her an idea, she doesn’t listen to the content or the substance. She just listens to how I feel, and she knows exactly when I’m high-conviction and when I’m not. That is the shadow investment committee of Index.
That’s amazing. Wow. Does she have carry?
Well, we’re married, and she owns everything.
Awesome. Okay. As we close out, this was really awesome. Thank you so much for taking the time, Shardul. I know we’re probably at time, and you need to go to your SF office now and speak with anyone. Is there anything you’re looking forward to in the next 12 months?
Oh, you’re the best. Thank you. I do look forward to actually going on a walk with you.
I know.
That was the plan.
By the way, for context, Shardul thought we were going for a walk, and I was like, “Little do you know, there are 3 cameras set up here, and—”
Yeah.
—you’re gonna be interviewed.
Yeah. So I look forward to actually hanging out.
Okay.
I look forward to you checking out our London office, which has as much taste and attention to porosity of stone as this one does. But I’m really looking forward to our team, what they accomplish, what they learn from mistakes that we make, and how we come together as a cohesive group to make judgment calls, all in support of entrepreneurs. So I’m super excited about the next couple of decades, actually.
Awesome. This was so much fun.
Thank you, Molly.
Thank you so much.
Yeah.