5 Ingredients for the Perfect Investment | Jeff Horing Interview

1. Five Ingredients of Perfect Investment

I'm a big fan of the value proposition. I want to hear the entrepreneur explain how they're generating real value for the customer. In fact, when I look at what makes for the perfect investment, I've thought about the 5 ingredients that, to me, are all at zero: perfect investment.

I thought it would be fun to begin with a weird but interesting question, per our past conversations. If you could go back in time and think about the original SoftBank Vision Fund, which was a $100 billion fund—a huge fund—and you were fully in charge of deploying that $100 billion, how would you have approached that problem? It's a lot of money to put out the door in a couple of years. How would you have done it, personally?

First of all, it was an eye-opener to me when it happened. We had a small strategy that I always envisioned could be a big strategy. To go backward, what are the best private-equity and venture deals of all time?

This is a cheat answer. It's not the real answer, but in my own view, probably the cleanest, best example of a return is VMware. Technically, EMC was the private-equity buyer. They spent about $650 million and sold it for $60 billion, so that's a $60 billion gain, plus or minus.

You could argue Instagram: billion to probably a trillion. You could say YouTube is probably a billion to a trillion. It's interesting if you look at some of the M&A that strategic companies have made with some synergy, which probably delivered a portion of that gain. But I would argue a lot of that was going to happen independently. PayPal, independent of eBay, is another good example. Almost no real eBay effect, I think, really drove that.

I thought to myself, we had done a bunch of what we called venture buyouts, and some were growth buyouts. These could have been $100 million investments in which we took control of smaller software companies and made 5, 6, sometimes more times our money.

I always had in my head that I would love to be competing with Microsoft, Palo Alto Networks, or eBay for a deal. Then the entrepreneur would think, “Wow, I could have my cake and eat it too, right? I could sell to Jeff for $1 billion my next Instagram and still retain massive ownership, maybe even get reloaded on the options.”

I'm not 100% sensitive on those sometimes in that kind of a deal. We've done that, and we've had some bigger deals where we bought companies for about $1 billion, and they were still smaller by growth standards. They were not what you would consider classic buyouts, where you have cash flows and debt and all sorts of other things underpinning them. It was really just the markets, the growth, and the entrepreneurs that you're betting on.

I thought, if I had $100 billion, that's what I would do. I would say, “Wow, wouldn't that be interesting?” Because I think you could really differentiate yourself tremendously from the pack.

Interestingly, Masa did one deal like that called ARM, and I think he's made 4 times his money on a really big check, maybe more. I haven't tracked the stock lately. Pushing it to late-stage growth, I thought, was a much harder strategy, both for companies to consume that capital and because of the valuations that you needed to pay to get into those deals to justify that capital.

Obviously, he made that return in Alibaba. He made that return in, I guess, Yahoo. Yahoo Japan was probably more my example, where he bought control of something and turned it into a massive win. Anyway, that was kind of a dream I've always had.

People often ask, how does one scale our industry? Certainly, if you look at those types of outcomes, you'd be like, “Well, I guess there's a chance you could do it.” Could we compete for those deals? I don't know, but it certainly pencils out on paper.

Obviously, Insight has raised some of the largest funds in our industry: $10-plus billion, $20 billion. What size would you set a fund—$100 billion or some other number—if you wanted to do, today in 2025, the thing you just described? How big would it have to get so that you were actually competitive with the Vision Fund?

Today, it's tougher. It's tougher. When I first started thinking about this, it was probably 2016, when the concept of billion-dollar exits as a massive victory for venture was still prevalent. To get Benchmark or Sequoia to sell something for $1 billion probably doesn't get their heart rate up today.

So, the likelihood that they would do those deals again today, knowing what the world looks like and what the upside could be for these types of assets, is pretty small. I think it's just a little bit harder because the scale has changed.

We still look for these sub-$1 billion deals; that's really the sweet spot that we could consider. But to find hyper-growth shareholders willing to exit is still tricky. Most of the deals getting done under that are being bought for really strategic reasons, where the financials can't even be imagined and modeled out. Palo Alto pays $500 million for 30 guys in Israel—that's a different game that we can't really compete with.

And so, if you were to size a fund today—put it a little bit differently—for the best possible risk-adjusted return, where fund size dictates the strategy, where do you think you would size it?

I think we're pretty close.

What's your marginal one?

We're about $12 billion.

Okay.

We're deploying $3-plus billion a year in invested capital across a range of strategies. But I would say we definitely don't feel capital-constrained relative to the opportunity set.

If we were to—and I don't think this is part of our strategy—lean in on some of these big late-stage growth rounds, you could envision a bigger fund. Certainly, others have raised money specifically to target that type of deal flow.

That's not really the thing that we lose sleep over. That's more of a maybe-better version of that Vision Fund, where you're buying into OpenAI or Anthropic in big volume at late-stage prices. But it's not really what we do, and we don't lose sleep over that not being our core strategy.

What do you make of the late-stage private markets today? It's gotten so interesting and crazy relative to when you started Insight. You've had a bunch of folks on this podcast, I've heard, who've talked about the changing private-public-market dynamics.

Databricks is still a private company at this scale, which is sort of unheard of. You could argue OpenAI is still a young company, relatively speaking, given the timing of its revenues. But for reasons that maybe represent just the shifting of capital, companies are staying private longer and doing basically IPO-plus-plus rounds in the private markets.

We look at these like we look at anything else, through a lens of what's the forecast, what's the likely exit value, and what's the return on that capital. Once in a very rare while, you see something at size that prices in a way where you feel like you can make risk-adjusted, venture-like returns.

Maybe a fun thing before we get into Insight's strategy specifically is to talk about your day and your life as an investor. What's interesting and unusual about you is that there's basically nothing available about you on the internet. You don't give interviews like this. You seem to just be a heads-down investor.

You could have long ago retired, and yet my sense from talking to some people on your team and talking to you is that you're working about as hard as you've ever worked. What does a given week look like for you today?

Today—it wasn't always the funnest day. I would say it starts with some internal meetings: investment committee looking at people's new deals, and partners meeting to spend time together and sync. This is a first-day-back kind of day in this case, but that would be a typical Monday.

A big portion of my day is dedicated to prospects. I make a point, as do most of my senior partners, to spend as much time as possible hearing the stories—whether it's in person or by Zoom—of new companies.

Then there'll be a fair amount of portfolio calls. I probably had 3 calls so far today on portfolio companies, hopefully more strategic in nature than just, “What's your latest quarter?” Then some internal meetings on how we're scaling the firm and using AI to do diligence, and all sorts of fun things like that.

So, it's a big blend of where I think I can contribute. What I try to do—and no one's perfect at this—is spend as little time as possible on things I'm not good at, of which there's a pretty long list. Those are areas where I think I can have a meaningful impact and also enjoy it. It's a lot of fun for me to do that.

What would you say is the skill on the prospect side—evaluating a founder, a business, whatever—that you've most improved at over the entirety of Insight's existence? So, you today versus you in 1995–96.

I'll say team broadly, because some of us are much better at this than I am. I think our analysis of what numbers matter has changed a lot.

I remember 6 years ago at an LP meeting telling LPs, “We think we're at, like, 11th-grade math on software.”

The industry is probably at seventh-grade math on software. I think we’re getting closer to college today. It’s still amazing what we continue to learn about the metrics that really are the best predictors for future outcomes, which is really the dream, especially in growth investing.

You have almost enough data to start to predict. We’ve also gotten better, I think, at understanding qualitative TAM issues, and then it’s a never-ending journey on management, right? Every year you learn something new in both the good and bad ways. People are always complicated, but you definitely get better at it as you get more experienced at it.

Can you teach us some of that college-level math and understanding software businesses?

Well, I remember 5 years ago one of my companies was going public, and the rage on Wall Street was net retention. I’m just picking a random one. I was already at my 11th-grade math, so I’m like, “This is one of the least informative numbers I could think of.” And yet, that was the only number that Wall Street asked for.

I said the only number that really—well, 2 numbers really matter. GDR, which is gross dollar retention: How sticky is your customer base? How resilient is that? And, more importantly, how much of that bucket do you have to fill every year?

There are very few software companies with lowish gross retention—low would be low-80s gross retention—that are in the top 20 market-cap businesses. You could probably count on 3 fingers companies with that statistic. The problem is that you get big, and let’s say you’re losing 20% of your business every year on $1 billion of revenue. That’s $200 million of business that you have to go find just to fill the bucket.

And then, of course, you want to grow 30%, 40%, or 50% on top of that. So those become daunting numbers that usually reflect themselves in your average cost of acquisition, right? That would be your net new bookings divided by the spend that you had to get to that. Those numbers really tend to move together because you just have to keep filling more of the bucket with sales reps just to stay even.

I think that was an example of 1. I think another time, years ago, we were starting up our public hedge fund, but I thought a lot about calling ourselves the second derivative because so much more was learned. I think a couple of guys had this right at Facebook, like the early or late billion-dollar guys who came in there, but the change in new business is way more important than the change of the change, right?

I’m growing 100% year over year; my net new bookings—that second derivative—is really powerful. You see a lot of companies with almost zero change in the new business that they add each year off a small number that could still look like a really big growth rate, sometimes as much as 100% or 75%. But you can cap that number if it’s flat.

And that happens a lot, for example, in vertical software, where you quickly saturate the number of decisions made in a given year. All of a sudden, you model out 5 years with a flat new-bookings number, and your exit growth rate is going to be a lot different from what Google was able to do, which was compound 100% for 15 years.

One of the things I think is so interesting about Insight is the ability to just price different numbers. It’s not just, I think, that you’re buying 95-plus-percent gross retention and accelerating top lines or something like that. You’ll buy companies that don’t have those metrics.

To change on that a little bit, we keep learning that you sometimes get fooled into the trap of value, and it is not a great way to make money, in my estimation. People do it, and people are really good at it. I’m not going to say it’s not doable, but buying cheap in technology—there’s certainly not a long list of really rich people who’ve done that, right? Compared with the people who’ve just bought the dream, where there’s a very long list of people who’ve made lots of money on the dream.

So I think making sure those metrics, especially at scale, are right is important. We will not do a low-gross-retention business today unless we really are confident we could change it. We think that metric is really the fundamental driver of all exit values and, ultimately, large companies.

We’ll obviously make exceptions if we think we can fix things, or we think maybe there’s a good story as to why it was—not enough sales capacity, this or that. But if you ask at least half my partners, they would tell you they prefer not to compromise on any of those metrics. Their view is, if you look back in time, 9 out of 10 times those metrics have been the driving metrics for our success.

If I think about gross retention as one avenue of math to go down, and that’s Algebra 1, what’s Algebra 2? If you kept pressing on gross retention as an example of how you then keep digging into the business, how does it work?

Zoom out: the simplest math is LTV divided by CAC, right? That’s all you’re trying to understand: I invest money, and, assuming R&D gets somewhat normalized to levels that are industry standard, that’s really what you’re trying to tease out. GDR is a great predictor of LTV: the less I lose of a customer, the longer it lasts, and the present value of that cash-flow stream is higher. CAC is the other big variable in that.

Then what you’re trying to figure out is the market pull for that. How quickly am I accelerating that number? If I added $10 million of new business this year, can I add $20 million next year and $40 million the year after?

The smaller the company is, the harder it is to tease out whether you’re just rapidly walking into a finite market and saturating that decision-making in that market, or whether it’s deep enough that you could imagine growing for multiple years.

So take Wiz, which is obviously one of our favorite stories in life and a great team. They’ve been able to double or more their net new bookings each year for 6 years. When you do that math, if you start at 10 and double that for 5 years, that’s a really big number of new business added each year, which keeps your growth rate close to 100%. If you literally doubled it every year, you would have a 100% growth rate, you know, ad infinitum.

What qualitative questions do you like to ask on the back end of the quantitative investigations? Let’s say you’ve got a company that has great gross retention. How do you then continue to separate? You have to do qualitative, especially as you get earlier, because a lot of these numbers are still forming, and false precision, I think, could get you in trouble.

I’m a big fan of the value proposition. I want to hear the entrepreneur explain how they’re generating real value for the customer. In fact, I think when I look at what makes for the perfect investment, I’ve thought about the 5 ingredients, to me, of the perfect investment.

A value prop is critical, and that usually could and should translate to selling price, right? Then I distill that and say, well, imagine you’re going after the hospital market. We looked at a likely agentic AI company in that market, and if Epic sells for $10 million a year on average in the hospital market, and you’re selling $500,000 a year in the market, they’re 20 times your size on average selling price.

It’s pretty hard to imagine that you’re going to be as big as Epic, right? You could sort of frame it and say, “Best case, I’m probably 1/20th.” Epic is a dominant player. It’s rare that anyone gets more market share than they do in a given sector. Best case is I’m probably 1/20th the size of Epic.

That’s kind of a good framing of TAM in my mind, as opposed to, “How many customers are there? Can I multiply by this?” The sort of top-down approach, I think, is riddled with errors in thought, whereas if you look at, “What’s my selling price? How does it compare?” you want to see that average selling price and then compare it to companies that are targeting the same customer universe. That gives you at least a ballpark of what could be.

You obviously want to look at the landscape of competitors and say, “What market share am I realistically going to have?” I think the hidden data point for me, especially for early companies, that I’ve been pushing on—and this is where AI is sort of a pretty neat idea—is the time to value.

When you think of a customer making a decision on installing SAP versus using OpenAI, one is, I literally point my cursor to a web page and I’m getting value immediately, and the other could be a 3-year, very expensive journey to change my organization, to get it up and live and productive.

SAP has massive value to that customer base, but it’s a very long time to implement, and that’s going to just inherently slow down, realistically, how fast you can grow—both your own ability to succeed with those customers, but also just the decision-making around those complex decisions.

I think that’s kind of framing a little bit of that. Then I think, obviously, phenomenal CEOs are always the dream. Some of that, I listen to the podcast and I’m like, “Wow, people are really a lot smarter than I am,” because I sometimes write that story after the fact.

I certainly have plenty of phenomenal CEOs that were rejected by a lot of other firms, so it’s not always obvious. But I think you certainly, when you get that ingredient right, whether you’re able to see it or whether you just got it, and then a phenomenal tech team that goes with it, right? Because I think this is a world in the last 10 years where product really drives outcomes.

And you've had folks on your show who talk about happiness and product satisfaction, things of that nature.

Can you list them once more, just so I make sure I have them?

I'm going to go look at my little cheat note because I wrote them down for you. It's big ROI, big ASP, time to value, CEO, and tech.

And the management team that goes behind that tech—that's my five. I think Wiz might have checked all five.

Checked all five.

Yeah, maybe Monday had a bunch of that, too. But it's rare to get the time to value and the ASP. Does it stand to reason that, for an SAP-type company where the benefit of that long install process is typically very sticky on the other side of it, the right time to invest in those kinds of companies is after they've gotten their install base? Is that the better risk-adjusted entry point?

I think for those companies—I don't know why I have this number in my head—but 15 customers that are referenceable is sort of a magic number for inflecting on growth. The challenge with those companies is that those products are very hard to sell. It's a lot of missionary selling early on, and so you can't really scale your sales organization until you have a certain number of referenceable customers that you could lean on.

If every sales guy is pointing to the same reference site, that customer gets a little annoyed after a while. So you're kind of constrained by that. But around 15, not only do you know the product is really pretty solid, but you also have an ability to start to think about supply constraints to scaling, not demand constraints to scaling.

2. One Fund Strategy

Maybe you can walk through the one-fund strategy that you've chosen to pursue at Insight, which is really interesting. I'm especially interested in how, in a fund that's $12 billion, it's worth your time to look at, say, a $10 million investment or something like this. That tension is fascinating to me, and the one-fund strategy is fascinating to me. I know you have strong beliefs about it. So maybe describe why it is this way and the trade-offs.

I'll give you a couple of angles on it, but first, I was lucky enough to get my first job. It was a lot of luck and somebody who believed in me who hired me at Warburg Pincus, which was founded in 1968. Maybe the world was a different world, but it sort of developed a one-fund strategy there that included stage and industry, so they were kind of stage-agnostic and industry-agnostic. Some of that was mapping to LP demand for the biggest of LPs back then: the pension plans.

There are 2 things I think that, if you taught finance in classic portfolio theory, you would be scratching your head and thinking, “Gee, why isn't everybody doing this?” One is risk management. One of the really interesting things about the Vision Fund was its ability to write a $200 million check that was inconsequential to the return of the fund.

So it did give you the ability to do that. Obviously, you could abuse that and take risks that maybe aren't sensible risks, but it was fascinating that you could. Most of us really sweat out those big checks, right? We're really pretty risk-averse. We want to make sure the downside is absolutely locked in. Probably the 2x case is really visible.

There are very few firms out there. The Vision Fund was probably the one exception that could look at that and say, “I could think of that divided by 100 as a $2 million check in a $1 billion fund, where we all could easily say, ‘Of course, I'm not going to get too worked up over a $2 million check. I'll take a flyer.’” So there's a little bit of just risk management. You could do it with check size. You could look at stages slightly differently. You could look at different types of bets differently.

The second advantage a single fund has, in my view, is I think all my peers would admit that the best bet on the table is the double-down bet. In blackjack, we all know that, right? You've got an 11 against a 5, you double down. It's the best bet in the game. Not only do they give you good odds, but you know you have way more information than you had before you got the hand out.

We're not all perfect. Sometimes we fall in love with our babies, but if you went back in time and looked at our double-down checks, they were our best checks. If you looked at that, we've taken $5 million to $10 million positions. We took a $5 million position to a $1 billion position.

We never would have seen the billion-dollar position without getting the relationship with management through a $5 million position. Routinely, some of our biggest exits, from monday.com and [company name unclear], among others, have started with under-$25-million bets that have come up to $200 million over time. We just see secondary opportunities. We see follow-on opportunities.

If you zoom out, you're like, “Isn't that the most rational way to do it? Why would you do anything else?” I know there are some phenomenal firms I've heard on other podcasts that I have a ton of respect for, and they intentionally want to give that bet away. Obviously, the more common approach now is, “I'll have a separate pool of capital for that bet.”

But that has its own constraints, right? Sometimes the charter of that fund, the pitch to the LPs, is a little more nuanced, and you find yourself in tweener bets. I'm sure you could talk to a bunch of early investors that have growth funds that aren't always at their best deals, and you're like, “Well, how'd that happen?”

Sometimes they find a way to do it and it's great, but a lot of times, because the deals get bid up a little earlier than they expect, it doesn't really fit what you would consider to be a typical pitch to a growth fund. But it's clearly not an early-stage bet anymore, and its check size is too big for an early-stage bet. What do I do with it?

We don't have to think about any of those conflicts. We certainly don't have to think about conflicts between the 2 funds, which could be managed, but it's not zero. Am I bailing the company out? Am I really supporting it? How that all looks optically could get funny over time.

What are the biggest downsides of doing it this way? What annoyances does it introduce that maybe you wouldn't have to deal with otherwise?

I think the biggest is you lose a little bit of discipline from third-party pricing. It goes both ways. Sometimes we price deals and we think we get great deals. I'd say more often than not, that's the belief that we have: we make it easy for the founder.

The pitch to the founder is, “You're done. If you want us, you've got us for life. If you want to go out to find another partner, that's okay, too. We've got our position. We're not going to be upset with that. But we're also here to support you the entire journey.”

Up until 2017–2018, that was really common. The world got really competitive starting in 2018, and a lot of those follow-on checks—even if we wanted to, we couldn't get them at the values that we thought were exciting. Or the founders just wanted to get third-party pricing for their own reasons, and we're going to support that.

The downside is you could believe your own BS. You can get a little sloppy with small $2 million kick-save checks: “I've got to keep this. I want to bridge to a sale. I want to do this, that.” I could argue that goes both ways. Plenty of those have actually worked out where we've bridged to a sale. We've recapped the company and gotten some of our original money back. But you could certainly see how you could be chasing good money after bad if you're not careful.

And what about from the LP's perspective? Is the one-fund strategy a feature to them? Is it a bug? Does it depend on the LP?

We don't fit into a bucket. My whole life, I've never fit into a clean bucket, and that's probably the most glaring one. How do you manage? How do you think about that? I'm like, well, it doesn't feel like that at all when you're on the inside. It just feels like a pretty well-oiled process.

But I think from the outside, we look like an N of 1. You go back in time to firms that scaled over the years, and they almost always scaled on check size. One of the reasons Insight exists today is literally because some of the best firms in the world at the time we started it were moving upmarket and putting in rules: “We do $50 million checks. We do $100 million checks,” for the reason you outlined, because those are the checks that will probably move the needle.

Though obviously Sequoia and Benchmark and others will tell you otherwise. They've written plenty of $5 million checks that have been breathtaking in outcome. But I can sort of see the logic: as you get bigger, that's a temptation to put that sort of constraint in place. Our DNA just didn't want that anyway.

Some of this was not fully thought out in the way I've described it, but it in fact holds really well over time. Some of it was just that our DNA was so driven off of sourcing. The history of Insight was sort of based on some experiences where I found some small deals that didn't fit with a bigger firm, and I was like, “I don't want to be that guy again. I don't want capital to dictate my strategy.”

It turns out it doesn't have to. You could get a little bit invested in and find your way to backing up the truck for bigger ownership. As the world changed, it's increasingly hard to come in late. Now I would argue that there are some really good firms that have been around for as long as we have that were the preeminent late-stage funds that, like us, look at some of these later rounds and are like, “That's a pretty tough spreadsheet.”

There are other ways to deploy that capital that seem better risk-reward-adjusted. Again, there are some that are great, but most, I’d say, the spreadsheets start to look like 2 to 3x. You could do much lower-risk buyouts or venture buyouts or other types of deals with the same return curve, with a lot more upside and an ability to control your destiny in a better way. So I think it’s sort of become a bit of a necessity, too, to get on the balance sheet by getting in a little bit earlier.

You mentioned sourcing in the early days of Insight. There’s so much path dependency to all these stories. If you ask people who study this industry to say something about Insight, I think the first thing they’ll say is something about your sourcing strategy.

3. Sourcing Evolution & Strategy

Now would be a great time to hear what it is and how it evolved. Maybe that’ll be a good jumping-off point into whether investing firms have strategies or not as businesses. But let’s start with sourcing.

When I wrote the original business plan, which is not tremendously different from today—which is a longer story—I was leaving Warburg. I loved software, wanted to just do software, and was really interested in doing smaller deals than that firm was set up to do at the time. Nobody would hire me, so I tried to get a job at at least 3 of the leading software companies. Software was tiny then. It was IBM and Microsoft, just to put a setting in the world.

SAP was sort of this mainframe guy coming along. Oracle was probably the coolest cat in town in terms of open systems—whatever you want to call it back then, client-server compute—but it was a really, really small market. You could count on 1 hand, I think, the top 50 software companies. Number 50 was about $10 million. It was tiny.

But I loved it. I thought it was a big growth bucket. I thought specialization had a real edge. We were disadvantaged by being in New York. I guess I could have moved, but I had family and other reasons why I liked New York a lot. Trying to compete on West Coast terms made no sense to me.

Picking an area of specialization where the model was still pretty new to people—and was pretty different from the hardware companies before it, which were really the more typical venture investing—and the DNA of a software sales guy back then and Oracle’s DNA was really different from what most folks were used to. So we thought specialization was absolutely critical to understanding an industry really well, and we picked software. In hindsight, it was probably the best bet I’ve ever made, but it wasn’t because I saw the vision of where it is today by any stretch. So that was kind of the start of it all.

In the early 90s, I was still at Warburg. I went to a conference, and Kevin Landry, who was at the time the founder and managing partner at TA Associates, was presenting to a large crowd. He was walking through his playbook, and it was the classic Vince Lombardi story: “Here it is. I don’t really care. Good luck.” Good luck was his comment. I was 26 years old, and I thought, “All right, that’s pretty cool.”

He was ripping out help-wanted ads from The New York Times or whatever magazine he was reading, and he was calling these companies up. It turned out that back then, it was a really opaque market. Very few companies, other than those in Silicon Valley, were out there raising capital in any professional way. Entrepreneurs were really receptive to just being called up and saying, “Hey, I think you’ve got something cool. Would you be interested in talking to me?”

I started at Warburg. I sourced a bunch of deals that way, which was pretty unusual for what was largely a shake-the-tree partner kind of model. I realized I could find deals all day long, and software especially lent itself to being outside Silicon Valley, especially applications. If you’re building banking software, do you want to be in Silicon Valley or New York City? If you’re building pharma applications, do you want to be in New Jersey or Silicon Valley? I could go down the list of industries that really made sense to be much closer to your customers, which themselves had clusters around the US and even in Europe.

This was a nice addition to the fact that most software companies back then started as consulting projects that got bootstrapped to some degree into a product. So you could actually find these things well after their incubation phase and startup phase, which again was very counter to the West Coast model.

I hear Landry speak. I start doing what he’s doing, and I’m like, “This is working. I could do this.” We start Insight. I had a partner of mine who was sort of a consultant to Warburg. We started up and just started sourcing deals, almost on the phone, calling everybody. We found a bunch of deals before we had a fund, and then we kind of scrapped together a $16 million blind pool of capital from some high-net-worth folks. That was what begot Insight.

But in that thesis was focus, sourcing, and value-add. The focus was going to give you both an ability to source better because you knew where to look, you knew what magazines to read, and you knew what trade shows to go to. All that kind of lent itself to the same. But it also gave you a chance to think about, “How do I add more value to the companies I invest in?”

We were actually the lead investor in almost everything we did. These were kind of bootstrapped businesses that didn’t have partners, and I wanted to be helpful to the founders. Most of the founders were technical by background and didn’t really have that Oracle sales DNA that was really the cutting edge of what B2B software was back then. We started to build a network of people who knew how to do that and ultimately brought some of those folks in-house. One of my first hires as a partner was somebody who was president of one of my companies, who was one of the best sales guys I’d ever met.

So that was kind of the thesis, right? Focus, sourcing, value-add by being the best at what we could be. Obviously, the world’s changed a lot since then, but those core ingredients are still 100% Insight.

If you think about the sourcing platform inside of Insight and chunk it up into chapters, from the mid-90s through today, what are the major chapters?

Chapter 1 is me and my partner calling people. Chapter 2 is I hired 3 associates, 1 out of Summit—Mike Triplett—which was a big decision. Mike brought me concrete, I’ve-been-there, done-it-at-the-best-of-the-best experience, and my partner Jeff Lieberman and 1 other partner started doing it too.

For Mike, it was second nature because he’d been doing it his whole career, which wasn’t very long at the time. He was probably 25, but it was long enough. That kind of elevated us, and we were basically investors doing it ourselves.

Then we made a decision in 1999. We hired a young man out of Dartmouth, which is where Mike went to school, and he became our first official analyst. We decided to go right after the undergrad kids because we realized it’s a really hard job. If you’d actually been working at Goldman Sachs or McKinsey, you kind of get spoiled and you don’t want to go back to picking up a phone and calling somebody up without any context. It’s a lot of work. It’s a lot of effort. That became the first, I guess, 2 chapters, really.

We then just started to operationalize what that young man was doing. We started having classes, then we started going down to the best schools to recruit, then we started to have training programs, and we started to really institutionalize that entire process. That’s really the last 20 years.

Other than technology, I’d say that the hiring and profiling of what we do hasn’t changed tremendously. The class sizes, generally speaking, have gotten bigger as the market’s grown, but we’re just trying to cover everything. Whatever that takes in terms of human resources.

The next chapter for us has probably been the last 5 years: can technology really make an impact on who you focus on? There are a lot of firms like ours, I think, that are trying to do that. I think the human in the loop still matters. That’s our belief.

Entrepreneurs aren’t just going to react to the first email they get from you. So the fact that you think XYZ company is super hot doesn’t mean they’re going to return your phone call. I’ll have analysts give you stories of 25 phone calls, a couple of FedExes, and then landing on somebody’s street corner, begging to take a meeting. It’s hard sometimes to get the attention of somebody who’s successful, especially in today’s world where there are probably 30, 50 more firms reaching out to that individual.

We’ve shifted from a world where capital was a little bit more in power. It wasn’t perfect even in the 90s—it was already shifting—but today, clearly, entrepreneurs have lots of choice. We’re very sensitized to that choice and really want to make sure that we meet it.

If I came in today and saw the current setup, could you describe it in as much detail as possible? How many people are there? How are they given their assignments? Are they just given free rein? Do they have a coverage universe? Just give me the detail of the actual platform today.

First, my management style—which is not very good but can be very effective for the right people—is to throw you in the water and just say, “Swim.”

I think we have a much better training program right now. Thankfully, I have some of the folks who have come through the sourcing program and are still with me. They've been much better at managing than I am and have been able to institutionalize some of the lessons to get people up the curve quickly.

Within a few months, you've learned what you can learn from the system. You're learning from your peers, but at the end of the day, no one tells you, “Go call XYZ industry.” You have to sort this out yourself. You hear, you listen. Maybe the partner that you work with is giving you some advice on industries that they're intrigued by.

But it's a lot of trial and error and learning, and different folks pick it up in different ways. Different folks are better suited for that than other jobs. It's pretty much a self-starter, highly personalized initiative to get going.

We have probably, in aggregate, 60-plus people—depending how you count, 60 to 80 people—that are still heavily engaged. The process has gotten a little more sophisticated because founders also want to meet with more senior folks, and we have mid-level folks who can help direct, manage, and coach. We have a lot more support for these folks to be really good, and they're getting daily coaching from the folks who've been there and done it.

I would say that almost all the partners at Insight, but 1 or 2 at the sort of high investment committee level, started off in that program, right? So we've been mostly homegrown, which we could have a whole other angle on, because I think this is an important story to hear about where the Insight diaspora has wound up. We have largely cultivated our own teams over the years.

What we have done is, we also have a very big practice of McKinsey-like brains that are there to help the portfolio. They come in fairly young, maybe 2 years at McKinsey, and then join Insight. That's another career path for people to get to know investing, but to know it through the operational side. It's a fantastic talent pool, too.

I think one of the core differentiators of Insight—which, again, is a very hard message to get across—is that we have the best, youngest talent by far in the world, as reflected probably in the fact that I think we just counted for this interview, I think we have 16 or 18 funds that were started by Insight alums. I've got 30-plus partners at other firms today that were Insight alums.

I'm going to come back to the people—the alumni effect that you described. It's a lot of funds to have started out of a single place. That's really cool, like a coaching tree in football or something.

That's exactly the analogy. I use the Bill Parcells coaching tree.

Yeah, Bill Parcells's coaching tree. Those 60 people today, how do they relate to one another? What's the incentive structure like? Am I incentivized to compete directly with them? If there's a good deal, do I have my own lane?

You've got lanes, and we've got technology to claim. It's probably a lot like if you were in a good software company and you looked at the BDRs in that software company and sort of looked at the sales folks and thought, “All right, who gets what territory and how?” We're not going to give people territory in the same way, but we're going to give people a chance to claim a deal. Then it sits on their pipe and it has certain rules around how long it can stay in that pipe until it's acted on—

Up for grabs again.

Then it's up for grabs again. It's sort of—you've got the ocean; you can call whatever you want, but once it's on somebody's pipe, it's their deal.

I'd say we try really hard to encourage collegiality. If somebody's looking at a deal that's not getting followed up on in somebody's pipe, please pass it, and we'll work together on it. We tend to overcompensate for cooperation. The general goal is not to have compensation be a reason not to be cooperative.

Obviously, people like their own track records, and it's hard to take Type A people and make them full players on that, but I think we do a pretty good job of that. In general, you're going to step on toes. I think other firms are more delineated by buckets.

You go after infrastructure, you go after AI, and I think what we found was just a lot of misses that way. It could be just a partner's predilection to doing a certain type of deal. This other kind of deal is just as good, but it's technically one partner's bucket and doesn't get acted on. So we try to create a little more openness to what those lanes look like.

But we also know, and the partners at the senior level know, if somebody finds a cyber deal, there are a few of us that do a lot of cyber. Please share it with one of us. What's the point of getting educated? We're all comped the same. So we're not exactly trying to—this is one for all, all for one—to make the firm successful. We try to direct the deals to where they're both going to get won and be focused on.

Is the person incentivized to just get a deal to a certain stage, or to get a deal that gets done? And is it just like a salesperson? Are they sort of paid the equivalent of a commission or something like that on—

They get paid very good salaries, with a bonus on that. At this age, the money is not the driver for these guys. The golden carrot is so big, whether it's at our firm or somewhere else: being a successful investor. By and large, the real motivation is they want to be successful and win deals and have good deals, right?

You don't want to be pushing a partner to do a bad deal and—

Have to put that on your résumé for the rest of your life. I don't think anyone's really doing that just because you got a couple thousand dollars. But we do get deal bonuses for the 23-year-olds who are making the calls.

At what stage does it get handed from them to some other part of the business, some other person, some other diligence process? Presumably, they're not the ones doing the underwriting.

First of all, we now have about 8 teams, which are basically IC members who've been with me, in most cases, 20-plus years. There are 6 or 7 of us together for at least 25 years, and a few for 10 years. Those are the pods that we would basically say are the senior people within that. There might be some other investor MDs, some principals, and VPs.

It kind of bubbles up. It starts with maybe a VP or senior associate working with the analyst who sourced the deal and recognizing all the key signals of what might be an exciting company. It's not as tricky as you might think. Maybe the early stuff is, but most of what we do is pretty clear when something looks interesting.

Then it just keeps bubbling up, and eventually it'll elevate to the IC member on that team and say, “Time to meet the company. Let's get you on a plane.” Sometimes we can't get into the company without that meeting. We know all the external data points point to it being hot. We see that and we're like, “Okay, that founder does not have an interest in taking a call from somebody more junior.”

Those junior people have a lot of influence at my firm. They run my schedule, for sure. The partners will jump on planes, and I've been this year to Estonia, Sweden, and 5 other places.

You've been there? Yeah. I think you told me your calendar is dictated by 24-year-olds.

Totally. They set it up, and today every meeting was set up by the analysts, which is fun. I like it. It's easy also, by the way, because it's really hard to get all these meetings.

Yeah. Well, the partners that work at other firms have a nice thing: their calendar gets filled up by doing deals, so they can't do more deals. It's sort of a nice regulator to deal flow.

Sometimes it can catch us a little bit because it's so much of what we've done. We've kind of systematized that, so it's relatively easy for us to get the meetings, but it also means that they can go on forever if I don't—I can't say I'm too busy. These guys are out there hustling. I want to make sure that they get the attention they deserve. They're working so hard.

4. What Makes a Great Sourcer

What makes a great sourcer? If you think across the probably hundreds of sourcers you've had over the last several decades, what distinguishes the very best of them from the merely good?

It's got a lot of classic sales skills: hunger, winning, and probably a lack of self-awareness—meaning you'll make a phone call to anybody and not care. They have the ability to handle rejection well, but that has to be combined with a lot of content, right? The really good ones are going to get really deep, and those conversations I have with the founders are shocking.

I remember one meeting distinctly in the mid-2000s. The company was in New York, so I just popped over to meet the CEO, and we ended up investing in this company. The first question out of the CEO's mouth was, “Where's the analyst? What's her name?” And I was like, “Oh, you just got me—sorry. She's still in the office.” I didn't really realize you liked her.

So they get really connected. The letters you will see us get from founders about the relationships that the analysts have built, the trust that they've built with these founders, and the hard work they do to generate real value for those founders before we invest is remarkable.

If you think about that skill, that salesmanship, and the ability to do sourcing well, if I were to poll people you've talked to—so many founders—some would say bad things about Insight. What would they say? Would they say it's annoying how much they call me, or that they're trying to pull information out of me that I don't want to give?

Two things. One could be that they get turned off by that model. I think it's unjust, but it is what it is. Some people have a view that they only want to talk to the top. These are good kids who are really working hard, and they're going to get to the top.

Then, obviously, rejection is really tough too. By talking to so many people, we're obviously rejected a lot.

Yeah.

We've tried to be really thoughtful about it, and usually what we're trying to do intentionally is not reject but postpone, because life changes. People's businesses get better, and sometimes things are just not right for us then. The last thing you want to do is damage a relationship with a founder.

In addition to the sourcing, which we talked about in the one-fund concept, another distinguishing feature of Insight is how you've made sequential, typically small-to-begin-with bets in new deal types. If you look today, a huge chunk of your assets are what I would call private-equity-style deals—not venture rounds, not growth rounds, but traditional, sometimes big, private equity rounds.

How did something like that start? What have you learned about bet sizing for new types of deals? Because this is really important.

Go back in time to the ’90s. Software wasn’t big enough to think about buyouts, even unlevered buyouts. It just didn’t exist as an industry. There was also a pretty strong belief broadly in venture capital that giving cash to a founder was a four-letter word. You never do that. That was rule number one.

I bet if you talked to some of the best of the best and asked them what they were like in the ’90s, secondary sales to founders were just not acceptable. I think TA Associates and Summit Partners were kind of breaking that model a little bit in the ’90s.

When we dug into software, we pretty quickly realized that if you built a good software company, the risk was that the founder got demotivated, right? That was the reason you didn’t want to give him cash: “Oh, now he can afford a house. He’s not going to work so hard.”

We just felt like, if we buy it, we can own it and we can manage it. We got a lot more confidence as we did more of these that, if for whatever reason it didn’t work out with the founder—they decided to retire, whatever it was—we were okay running it. We could find a new CEO.

Obviously, that’s a big part of all venture capital jobs: keeping management where you want it, and not everything works out with the original team. Then we saw, I guess, 2 deals where the owners were not typical shareholders.

One was a former founder who had hired a full team, was out, and we bought the company from him, or we bought his shares. We were like, “Well, we don’t have to demotivate him, and we don’t even want him involved in the business.” The other was owned by a large insurance company. The software company we bought is now called Veraphor.

That was the first buyout I’m aware of. I’m not sure—there were probably a few others that were not done by private equity firms—but it was certainly one of the earliest buyouts in private equity, in an unclear year. We started to see the other side of software as it got bigger: when companies started generating cash flow, which, until the mid-2000s, very few got to that scale where you actually saw the profits and cash flow coming in.

That particular buyout was interesting. We were high-fiving with 2 times leverage from a crazy hedge fund that believed in us, and that was considered a highly levered software asset. Today, Veraphor probably has 9 times leverage. It was a very different world, but that was kind of the beginning of software buyouts, and we made a series of bets through the mid-2000s.

We also started looking at just taking control of really high-growth companies. We had a company that was in Australia, and the founders were ready to go surfing. We had a CEO in our pocket who was ready to take over, and we thought, “We’ll take that risk.” It was a $5 million business, but we thought we could transition to the new management team, and we had the tech team sticking around.

The more confidence we got that we could own control of something and not risk the kind of entrepreneurial DNA that went into it—or it was past the point where that was critical—the more we started looking at those types of deals. It’s been a fantastic sector for us. We’ve made a ton of money, especially in what I’d call—or what we call—venture-biased, unlevered 30%–40% growers.

They’re tweeners, right? They’re not growing fast enough for a minority investor to get super excited except at a very big discount, and they’re not big enough TAMs for strategics to go jumping up and down saying, “I need to own this asset.” So what happens to it?

My suspicion is there are tens of thousands of those now, right? They’re good companies. They should belong somewhere.

There are a lot more folks like us now willing to take those bets, so it’s not quite the same market it was a decade ago. But for us, again, it was just—I said this to my LPs, I think, at this last annual meeting—stage is not a strategy to me.

You could argue seed investing is a very different skill set, generally, but I’d say it’s not like we’re incompetent to look at something quite that early. We’re not nearly as good as a lot of the guys out there, and we don’t have quite the same deal flow. Buyouts require a certain transactional skill set, but that’s pretty straightforward to hire for. It’s not like it hasn’t been done before. Not only in software but in tons of other industries, there are plenty of skills to do it.

Then everything else is just a spreadsheet that sits in between, and you’re trying to, as accurately as possible, put that spreadsheet together, risk-adjust it, and then put a price against it and say, “What’s it going to be worth?” There’s a very big range of strategy that sits in that middle. That was sort of a view that we had: Why constrain ourselves?

Up until late 2017, late-stage pre-IPO growth was a really cool market, right? Multiples were expanding, companies were growing really fast, typically larger and faster than you expected. You could actually make 4 or 5 times your money on those pre-IPO rounds, even more if you did the consumer-internet stuff.

Then it started getting really competitive. Hedge funds came in, sovereign wealth came in, and, as I mentioned earlier, some of those rounds are now getting modeled at 2 to 3 times, with a lot of things having to go right. We could model them all. Why can’t we just put risk against that model and try and find the markets that are the most attractive?

The market recently corrected in 2021. There weren’t a lot of things you wanted to touch in growth because a lot of the companies that raised a ton of money didn’t need it, but the ones that needed it, you didn’t necessarily want to invest in. Then this whole middle got neglected again, right?

So we thought, “Let’s lean back in on the middle,” where you’ve got these 30% growers that look really nice, cash flows are good, and there are salmon farms and roller-coaster-ride software and things that nobody’s really putting a lot of mind to. We did a bunch of those deals back in 2023 and 2024.

Now AI is probably re-energizing some of the growth stuff, but I like the idea of being able to move around the markets based on where we think the most value is.

And they change a lot based on capital flows. If you look at the last fund or 2 and you had to break that $12 billion or so down into deal types—between traditional early stage, buyout, venture buyout, however you want to chunk it up—what does it look like?

I think early stage is 10%, call it. Growth is probably 30%. Growth buyout, which is what we call venture buyout, is probably another 30%–40%, and LBOs are probably 20%.

Mhm.

And that moves. The buyout market looked great when interest rates were 0 and multiples were expanding, and you went from 15 times cash flow to 20 times cash flow. That was a pretty interesting time to be leaning in.

It’s a little trickier today, but entry prices are pretty good, rates are higher, multiples aren’t quite as clear, and growth rates are coming down a lot for big-cap software. That’s not a fixed number, and we don’t want it to be a fixed number. It’s a guideline.

We’re never going to get super early as a big number. I just think we feel like once those get to be much bigger checks, they could start at 10% and grow to 20%. If we get back to an environment where we could be the lead investor in the next round, M&A is a huge part of the strategy.

If you think about what you want returns-wise for these funds, how do you even triangulate it given all these different deal types?

Look, I think the buyouts, we’re willing to take 5 points lower than everything else.

Everything else is blended pretty close to the same. 30% is kind of a gross number that you'd say we'd target. We probably miss a little bit more on the early stuff than on the venture buyout. Our hit rates are just super high.

Mm-hmm.

Just because it's a lower-risk profile. So it's sort of a market that's been a little bit better, with very few competitors. It plays perfectly to our sourcing engine, right? How do you find these companies that are selling salmon software to the salmon industry? That's not an easy source, right? That's sort of people jumping on planes and calling up companies in Norway.

So, again, it's not mainstream. They're not showing up at conferences. They're not showing up on venture-capital lists of hot companies to back or things of that nature.

If I look at some of the deals, you mentioned Wiz, talked about Databricks, and mentioned Monday.com. Anthropic came out in the news recently, and you were an investor in this big round. That sounds more like traditional, kind of venture-growth-style investment.

5. AI Applications & Late Stage Deals

Well, I mean, Wiz we backed when it had 0 revenue. So it was a big price, but we loved everything we saw, including the team.

Monday.com was an interesting company, but not the most obvious funded company. It was probably $5 million in size when we backed it, and another public one I'm involved with [name unclear]. It was sort of $4 million or $5 million in size when we got there.

Some of them just grow and have TAMs to support those exits. But it's tempting to always go for the shiny objects, and we fight a lot internally about how you become part of the generational companies.

I'm curious to hear the Anthropic story specifically, just since it's so extremely recent and such an exciting company. That's more along the lines of—

That's a little bit more driven from our public strategy, just to be clear, so it's not in the core fund. That's a good example of one where, had I heard the story 2 years ago, I would have had a much more positive view earlier.

This is a classic case where Darius is a phenomenal CEO, has a very, very thoughtful, articulate view of his business, and the second you hear him, you're like, “Okay, there is a moat, or there might be a moat.” Obviously, the numbers in the last 4 months are incredible, right? So it inflected with coding and the like, but when you think about how he's invested around that, that's not accidental. That was intentional and probably defensible. There's a risk it's not, but I think it's a pretty interesting bet to make.

What do you make of those 16 or 18 funds that have emerged from Insight? One way to think about it is, “Wow, that's incredible—a lot of talent that's been able to be independently successful.” Another way is, “Why didn't you try to keep them there?” or something?

We often do. And one of the biggest ones that came out, I bent over backward to see if we could find a role. But in the end, his entrepreneurial drive overwhelmed what we could possibly do without breaking the system. So sometimes we just can't break our model. And if you're that good and can raise that kind of money on your own, I can't replicate those economics for you.

Yeah.

It's just not doable. And so 1 + 1 = 3 in that case. We couldn't have raised the $1 billion that he was able to raise just on his track record. So it's just inevitable, but I think it's healthy for us.

I'd say 80% of them, we still have a really, really good relationship with these firms. We talk to them all the time. We do deals together. McKinsey, I think, has set a great precedent out there of what could be done if you embrace that network and don't take it as a negative, but take it as a positive.

Obviously, having partners at other firms, I think, is just great for us to see deals. And I'm now a decade or more from being really close to the analyst classes that came out. But I go to their weddings. It's incredible. The pictures I get of the camaraderie of the classes never goes away, because you're in that pit working 10-hour days or more, and in a pretty tough environment.

We try to make it fun, too, but they really connect with each other, and it's become real. I mean, some of the best friends, I think, in the world have probably come out of that.

Why do you think you've been able to graduate so many people? What is it about the training they get at Insight? Certainly, that number is higher than—

This is the Bill Parcells question, right? I actually think this is my favorite question for C-level executives. It's the same question: Who are your best protégés, and where are they now?

I feel good that I can answer that in a pretty good way. And certainly, when you hear these CEOs out there, I have 1 good friend of mine who's retired now, but he's got 12 CEOs of some of the biggest, best companies ever.

Some of that was timing, right? It was the days of Oracle, and Oracle DNA was just awesome. But some of it was him. He obviously built a great hiring system, spotted talent really well, and then cultivated that talent really well. And then he had a system of thinking and approaching, in this case, software, but in our case, investing, that's really valuable.

Ultimately, the training you get at 23 at Insight is like no other job in the industry, because all you're seeing is at-bats. You were seeing more pitches than any other firm out there. You're 23 years old and your brain is a sponge. It's just looking at all those pitches, and you start seeing your own patterns, and inevitably you're going to become a pretty good investor.

Again, it's not the same as the product-driven strategies that other venture funds have, but you just see this, you hear and see and hear and see, and we are a big pattern-recognition business. I think investing is pattern recognition, and everyone can draw their own graphs out of those patterns.

That's fundamentally the core thesis: You could be the smartest guy in the world, but if you don't see the patterns or if you don't see the deals, guess what? Your track record is not going to be that good.

6. Pattern Recognition & Training

I think that culture, and then the culture of just how important sourcing is to being a successful investor, we drill into people at a very young age. I think that just sticks with them in their later life, and it probably makes them look good to the peers that they have who didn't have that culture.

If we're building a Madden player that has points and different attributes for something, and you were to give yourself scores on “see,” “pick,” and “win,” and maybe “support” as well—but I'm especially interested in “see,” “pick,” and “win”—it sounds like on “see,” on sourcing, you'd give yourself, like—

That's a firm differentiator—yeah, a crazy high score. You know, differentiating, we see every pitch. Picking in the middle is awesome, or picking on the edge is okay.

Say more about what that means. When you see something that's really got a little bit of an edge to it on the source, where the numbers are pretty tight and the valuation kind of is not West Coast crazy—

Yeah. We're really good, and we're really good at winning, too. If you really think about what I do for a living, it's: I got to find—and this is what I told my LPs day one—you got to find deals. See everything. You got to win deals. You got to pick them, and you got to make them work. That's it. That's my job.

On the picking, we're really good in that middle zone, and especially some of my partners—better than me, even—really can parse the numbers, look at the trends, and figure out how to get that spreadsheet as accurate as possible. At the edges, it just inherently gets harder.

I think we have some disadvantages on early relative to California because we're not getting all that little, more subtle stuff. The whisper is so strong here; you got to lean in. So there's that whisper deal flow and trends that we won't see.

Then on the buyout side, there are some equally great investors, and it's just a game of a combination of discipline, focus, and operational execution. There are some great firms out there. So I think we're really, really good in our sweet spot.

I think we still could use our sourcing to our advantage on the early stuff, but we have to use the sourcing to get us that edge. If you just lined us up against the best of the best in the Valley, those guys are awesome. I'm not saying we're going to be able to connect the dots that they connect, because they're just using different dots to make what I'd call intangibles work.

Sounds like the winning is quite successful in your sweet spot as well. How do you do that? What are the keys to successfully closing a deal in that sweet spot?

First and foremost, it's showing up hard. Getting on planes, invited or uninvited, showing up to people's doors, and asking them to have a conversation.

We started with just: “Gee, we know software really well. We can introduce you to 5 friends who could help you out, run your sales force, and run your marketing organization,” from 5 people to 130 people—from super-smart McKinsey folks who could do any analytical thinking that you might need, to the best of the best sales-process folks, to marketing-process, to HR-process.

We bought a pretty expensive, large interest in Riviera Partners, which is the largest tech recruiting firm for C-level, or sort of CTO and CPO, talent. They're a really interesting asset, especially in the AI age, where talent is everything. We put a lot of emphasis on talent. We've got 15 people who do nothing but liaise with Fortune 500 companies, which is probably the biggest—if you think, if you're a CEO, first and foremost, give me revenue. If you're a small company, that's the number-one ask. The number-two ask will be, give me people.

So, we've really surrounded those 2 functions with resources that we think could be competitive. We've helped jumpstart companies where we've gotten the first 10 million of revenue. It's a big impact in the journey of some of these companies in terms of getting them started. We really push hard to bring that program to be as big as it can be, and we're constantly innovating on that.

We'll get to the other chapters of Insight, but I think it's all about winning. It's a combination of personal connections, really showing up and caring about the entrepreneurs' problems, and then helping the entrepreneurs. They have choice. We know they have choice. They're the winners. We're just here for the ride.

We've talked before, you and I, about the strategy of investing firms and how, even though all these firms are investing in companies that they hope have a great vision and strategy and roadmap and all this kind of thing, investing firms tend to have that to a lesser extent—either no strategy or not—

Listening to your podcast, I would say the majority struck me as having really good strategies and being really good investors. I think if you really press what I just said, there's only 4 things we do: we find deals, we win deals, we select deals, and we make them work. Then you sort of put that layer on: how do you do that better than everybody else?

Put selection aside, because that's the hardest to institutionalize. How many firms really can articulate that? There are lots of ways to do it. a likely Marc Andreessen was on here; he has an absolutely great strategy, totally different from us, and we could never do what he does. But he's thinking about it every day and using his marketing engine. I think he was recently quoted as basically saying, "I'm a marketing firm with an investment arm." I wanted to be a software company with an investment arm. That was kind of my pitch 10 years ago to LPs. That's how I thought of myself.

People could think of us as knowing so much about software that they could outsource a lot of that know-how, and then we have an investment arm to monetize that. But there's lots of ways to skin the cat. We've just taken 1 approach. Some firms obviously could do it just by sheer presence of being first, and they've made great investments over decades. Other firms might pick different industries. Some firms have done it in the biotech space, where they've used capital combined with expertise to be able to lean in faster and harder.

There are lots of ways to create a moat, but most of us back our way into this life. I started when I was very young, but I think a lot of people come to this after they've had other careers and other things, and this is a nice, fun thing to do. It absolutely is. Putting rigor around that and operationalizing it is important.

We hired one of my good friends years ago as chief operating officer of Insight. He subsequently started his own firm, but he was a mechanical engineer at McKinsey who spent time at Putnam and Lehman. He woke up every day thinking, "How do I make that pencil? How do I do something without a human touching it?" That's how his brain worked, and mine works in a very similar way from a more strategic side.

It's about systematizing what tasks we do that we could have others do better, and then asking how I create a moat to the extent that it's possible. Capital is not a huge moat. It was with the Vision Fund—that was an awesome strategy. I just outraised everybody in a way that allowed me to do deals that no one else could do.

Warburg Pincus had that for a while, too. When I first joined, they were significantly larger than almost anyone else out there. But that's increasingly difficult. I think likely Thoma Bravo could do that today with their scale in the buyout world.

Capital is tougher, though. You just need to think about those 4 disciplines and say, "Well, how am I going to be way better?" Some guys do it by appearing on podcasts, really getting their thoughts and their vision out, and exciting the founding community about how smart they are about an industry. That's a perfectly legitimate way to get deals.

Others have cultivated networks in different ways. Winning could mean, "I'm just going to get on the plane and do it." An individual partner who works their tail off is not very leverable, but it's certainly a good strategy. How do you institutionalize, systematize, and operationalize that? It's not easy.

7. Scaling Judgment Without Breaking

We found that scale was a real opportunity, and I heard a likely Marc Andreessen talk about this, too. Every industry but ours was considered to be better as it got bigger. For some reason, this type of investing—tech investing—was like, "No, we want you to be a cottage industry where the smartest partners just do all the work."

I remember very distinctly sitting down with 1 of my partners in 2015 and saying, "Why do LPs have this allergic reaction to the word scale?" Everywhere else, it seems good. I looked at those 4 buckets of what we do and thought, "Well, clearly sourcing is better with scale. We could see everything." You might have to debate how you pick, but it's great that you get every pitch.

You could certainly see how winning can get better with scale. I've got more resources. I could support every round that you need. I could be your one-stop shop. Obviously, on the operational side, that's the biggest impact scale could have, because now I could really hire the best and the brightest on my team to support your business in whatever way you need.

Selecting was the one where you think, "Okay, how does that scale?" That was a bit of a hard one for us to wrestle with a decade ago.

Most firms that scaled did so in a few dimensions that were understandably scary for an investor. One was, "I'll do bigger deals." How do we know the bigger deals are like the smaller deals? Maybe they're priced differently. Maybe the competitive landscape is different. Maybe the economics are different. There are a lot of reasons why just writing a bigger check may not yield—in fact, often won't yield—better returns.

Scaling by check size was not necessarily, in my view, a clear direction for how to scale. Some might scale with geography. We tried that. That was painful—brutally painful. We're 90% in New York City by headcount and probably 100% by investment commitments. Certainly, the investment committee is all in New York. It's really hard to export judgment.

Yeah.

We had a European team that raised a European fund, and it was the worst of all timing. It was 2000, and I thought, "Okay, that was bad." I was ready to pull my hair out. It was so hard to create consistent thinking and judgment that you could say, "Okay, that judgment reflects the same judgment that we built over the 5 to 10 years before that at Insight."

Geographic scaling is a really common strategy for a lot of folks, but I can see why LPs would be nervous about that.

Lastly, people scale by doing something that they weren't doing before. I'm a great software investor; now I'm going to do healthcare. Now I'm going to do financial services, or now I'm going to do credit, or something maybe outside my core competency. Blackstone and others have done that really successfully, but you could argue it's not easy. Maybe Blackstone did a great job of it, but 2 other firms didn't get those top-quartile funds in the areas where they didn't have a lot of experience while trying to scale. Certainly, there are plenty of examples where firms bought something in a different asset class and struggled to make it work.

We said, "Well, we don't need to do any of those things. Software is just growing. We're barely scratching the surface. Why can't we just do more good deals in the category we love and know?"

And if we put aside all those other ideas and said, "We're not going to just chase bigger deals because they're bigger. We'll do a bigger deal because the world's gotten bigger," that's fine. Databricks, if you just divide everything by 10, looks like a great classic growth deal. There's nothing unique about it other than it just happens to have more zeros in its business model.

OpenAI is even more true. If you just turn 12 billion into 12 million, you're like, "Wow, this is a fast-growing company. Why wouldn't I jump at writing a 10 million check?"

Some of this was just looking at a world that's gotten tremendously bigger than when we first started, where that would be a good reason to write a bigger check. But if we just said, "We're going to keep the same underwriting criteria in the same market and grow with the market," the market's getting bigger, which means there are more good deals out there. We're really good at winning them and finding them.

Why shouldn't we consider them? Why should we just stick to some smaller strategy or artificially constrain what we do? Again, understandably, you want to keep the bar high, and we've definitely, over the years, sometimes been caught up in the moment, if you will. So I think we looked at scale through that lens and said, “This is win-win-win.” We were in the right position to do it because we were organizationally already aligned on sourcing. We were already aligned on management, so we had to really think through the investing side and the selection side.

That was the part that we definitely didn't do perfectly to start. You start with a young kid we hire; they become less young, become a principal, and ultimately a junior partner, and then they're on their own. We had a little bit of, “Partners are underwriting deals, we bring them to the investment committee, and we debate the deals,” which is pretty typical, I'd say, of a lot of firms that have grown. They have senior partners and young partners, but usually they're all doing their own—I call it the tennis match, right? Everybody goes out, plays tennis, compares scores, and says, “Yeah, we won the match,” or “We won the tournament.”

We were trying to be more like a soccer team, but we played tennis for a little while. We realized that the young partner has a deal, comes to me, and it's like, “Mom and Dad, I'm a little busy. Jeff's not really paying attention. He's only hearing one-third of what's coming out of my mouth.” I pitch him the deal, he nods his head, and we do the deal. The deal blows up. Jeff doesn't want to spend time on it because I didn't really take ownership of it, and all of a sudden the young partner is stuck with a deal that's in trouble.

We said, “This isn't working right. We need to think legitimately about how you get the most experience in judgment, as well as the other parts of the operation that were more obvious.” At the time, there were 6 of us who had been here for 20 years. We've all built track records, and we've all been through multiple cycles. Why don't we just use the time we have in the day to meet every company that a team of people who work with us, including young partners, sources? We don't do that many deals a year—except for 2021—but it wasn't an insurmountable number.

It wasn't like I needed to spend 20 hours on another partner's deal. But in 3 hours, I can get a lot of instincts judged, and my instincts may be more on—I'll call it—the intangible sort of excitement around the deal. Other partners are really good at the financial side, and we keep tweaking that a little bit. But that was fundamentally a breakthrough in how we could try and scale judgment without breaking the model.

We said, “Let's just have pods of very experienced partners managing and working with other partners, both operating partners and young, hungry deal partners, and combine that DNA into a more cohesive team approach.” Then make sure that an investment committee member owns every single deal. If somebody leaves, it's on me. If somebody screws up, it's on me, and there's no hiding it. That's what we did.

One thing you hear a lot is—even in firms where there's your level of systematic setup and rigor—that it's really important that leading investors be able to just throw everything out and sometimes make a deal based mostly on the intangibles, based mostly not on the spreadsheet but outside the spreadsheet. Can you talk about your experience with that sort of thing and how you think about that type of deal?

We can mobilize 15 people, from my McKinsey brains to my sales ops team or marketing ops team, you name it, to dive in and really try and uncover as much as we can in that very short time window that we have. I probably am the only one who does what I call concept deals at a big price. Even I'm not doing that right now. I don't feel compelled to do that at the moment.

So I'll do a little bit of those on the smaller side, where I feel like it's a unique team with unique technology and there's not a lot of numbers to support it. But that's going to be an allocated part of the portfolio that's going to be very small. So that's more risk-managed, again, by check size, and we have that benefit. When we start seeing something where our spidey senses are tingling and we're thinking this could be something special, maybe we could use check size to manage it more intelligently. But it's really not a big part of the portfolio. It's not what our DNA is about. We started with growth. I'm not saying we're only in growth, but we try to put some metrics around most of what we do.

One of the spillover effects of 2021 is all these companies that got funded with tremendous amounts of capital that don't really have to die because they had so much money put into them. I think they're starting. Maybe they're starting. One of the weird things is that market prices haven't really caught up to the reality of the underlying businesses. I'm curious to get your perspective on what things are generally worth in terms of a simple multiple or something. Everyone kind of thinks in 10 times—a 10-times multiple or something—for a software business, but I think you think these things are often worth way, way less.

Yeah. By the way, you can see this with the secondary market. It's a little hidden secret, but go look at how some things trade in the secondary market. You're like, “Okay, your marks aren't exactly right.” If you're at 70 cents on the dollar, your marks aren't honest.

We look at GDR and growth rate. Those are the 2 things we're going to look at in valuations. That could be a really disappointing 3 or 4 times revenue for a lot of companies that were backed in that timeframe where they're not growing fast and they have low GDR.

What would those numbers be like? What would an example of 3 times revenue in terms of GDR and growth rate be?

Meaning?

If you're to pay 3 times for something, what GDR and growth rate does that imply?

That might be low-single-digit growth and 80% GDR.

So if you go into the public markets and look at those companies, they're disasters, right?

And few are even public today, right? It was a category of early SaaS companies. A lot of those went public, and ultimately the markets caught up to the unit economics. The public markets, by and large, and private markets at scale are focused on the same thing. The PE guys are looking for, “Okay, long term, this is cash flow.”

To us, GDR is largely what matters. Look, you could have a really good company—which Vista now owns—that has a mid-80s GDR, but its CAC payback is 3 months, which is a very low number in the world of CAC. So you can make a 30% margin business if it's an infinitely sized market with a relatively low CAC.

There's an exception to everything I'm about to say, but if you're in a more normalized enterprise world, you're going to have 12-month CAC, which means it's 1 year upfront to get that customer on board. If they only last for 4 years, you can kind of do the math and say, “Well, that's present value worth maybe 2 to 2.5 times the $1 invested, plus I've got R&D, plus I've got support, plus G&A.” You're not going to make a lot of money.

Those companies tend to be at 10%—maybe squeak out 20%—margin, versus a 100% GDR company, which will have 50% or 60% margins. If you just thought of multiples of cash flow translating to multiples of revenue, that's going to give you a big delta, right? If I'm willing to pay 15 times cash flow for a given growth rate, a 20% margin business is 3 times revenues. A 50% margin business is 7.5 times revenues.

I think the markets more or less eventually will look into that kind of financial model, and they'll figure it out. Some companies could be super-efficient in other ways, so you could still have some of those metrics that I just described being a little bit off but still get yourself to cash flow margins. Ultimately, you're trying to get to cash flow margins, right? That's all that matters: multiples of cash flow, and then predictability of that cash flow in a recession.

How good do you feel in whatever time frame, and what existential risk could come into your model and disrupt it? Those are the frameworks that I think most public investors, and certainly late-stage buyout guys, are thinking about. How resilient is that cash flow? Are you running a core banking system for a bunch of banks? That's not getting ripped out in a recession. You don't really care about a recession.

What's the growth rate of that cash flow? Then what's a reasonable multiple based on that? Some of that will be interest-rate-sensitive. Obviously, you have a different world once you start to get to 100% growth rates, of which there are very few public-company data points. That's when you start to see wonky multiples. You just can't model those out in your exits because they're so rare—rare-air kind of numbers.

One of the things that I'm curious about, just given how the market's evolved, is the Andreessens of the world—the sort of non-software technology companies, some of which have gotten quite big quite quickly—and consumer, too, for us?

And consumer.

Right. I mean, if you look at the biggest exits of the last generation, they were internet and mobile apps.

And we did not really lean in on that because it was sort of outside our understanding and mandate. It also really favored the West Coast.

Almost all those were West Coast-designed.

Yeah. You know, we looked at Uber at a really attractive round. We fought like hell as a partnership over it, and we finally passed. Obviously, a huge mistake, right? It was a great outcome.

We managed to get Twitter over the line. At the time, we got out even before a likely Musk takeover. But I think we've just gotten comfortable that our misses are so high in those categories over the years that we're like, whatever. We can't be everything to everybody, and we can't do it all.

It's obviously hard because you sometimes have to benchmark yourself against folks who do have exposure to the markets that might be the better markets. But sticking to what we know well in enterprise software and sort of flavors of that, it's both massive in opportunity, and the returns could still be incredibly consistent.

When you think about the god-knows-how-many first meetings that you've done with founders across the last 30 years or so, how would you describe the method that you use to run those personally? I'm sure, obviously, different investors on your team will do it differently, but I'm especially curious about your method. How do you like to run a first meeting? What are you after?

I've developed what I'd call a similar line to start with: I love origin stories. What was in your mind? Why did you choose to solve this problem? What were you doing before that made you think about this problem?

Then I love to get to the value problem. I just love hearing how you're making somebody's life different and better, and why customers are going to be excited about buying your solution.

Actually, it's probably why I need partners: I'm probably the least focused on drilling in on the numbers. I like to hear the topline numbers, but entrepreneurs probably aren't always the most forthright about what they give you. They give you a little more happy ears on those, usually, which is where diligence can corroborate or not.

But those are the stories I want to hear: what makes you tick, and what's this passion that you have about what problem and why? Those really range a lot in response. You hear enough people pitch and you're like, that one really resonates. You know, elevator pitch—I got it.

Some you need to double-click, double-click, double-click. I was on a call today with one that I was like, I think I hear you, but this was a little bit in a different language, so it was a little harder for me to process to begin with. But I'm not quite getting that moat. I'm not quite getting that long-term direction of where you're going to be.

It doesn't mean it wasn't there, but this is a 45-minute call. You're not going to nail it exactly. Sometimes the numbers tell you way more than the story, right? You always need to take a look when you see numbers that are exceptional.

When you have the group of partners that you have at the top, who you said have been with you 25 years—sometimes 10 years is like the newbies on the team at the senior level—what do you attribute that to? What is your management style with those people? How do you relate to them? What would they say about you?

I'm pretty forgiving on mistakes. I would think some of my partners would say too forgiving, but I try to see inputs. I have a thing that we institute at Insight. It's changed a little bit from the vision, but I call it the X factor.

Everyone always wants to know where their careers are going. Type-A employees always ask me these tough questions: How do you give somebody really valuable career advice in what we do, because the outputs are so long in coming? There's so much luck. Let's not kid ourselves—there's a lot of luck in what we do.

I sort of start with, well, if I took you out, what would have happened with the deal still open-sourced? Would we have won the deal? Would we have decided to do the deal? How much of those decisions did you play in that process? X is sort of the removal of you. Are you adding X to that equation?

One of my best partners had a really slow start. He just made a lot of mistakes, but I saw his inputs were great. I thought the way he was thinking about things was great, and he was like a sponge, getting better. Now he's probably the best investor in the firm, right? People learn, people get better.

It's a marathon. Obviously, at some point, the marathon ends, but I think that's generally how I try to approach it. I think my style is similar to what we do with the analysts: really to give people an environment where they can be creative and take risks.

I think probably the thing that I still do the best for the firm at large is—there are 2 different approaches, I think, to a senior partner at a firm. One is the one that's constantly holding you back from falling off a cliff, scaring you to take a risk. The other one's shoving you over the cliff and giving you the confidence that it's okay: I'm with you. I've got your back if it doesn't work out.

I'm definitely in the latter camp. My goal is—I call it the tush push, right? I'm there at the 1-yard line. You're at the 1-yard line; you've got one little thing nagging you about the deal. I'm like, it's okay. You've thought about it well. The risk-reward is good. It may not work out. It's not your career on the line if it doesn't.

I think a lot of young folks get really worried about it. If you look at generational firms, the biggest challenge is probably that risk appetite goes down.

Yeah.

Yeah.

Sometimes they get a wacky, successful investor who just re-energizes the firm's risk tolerance, and it goes back up again. But more often than not, it gets consumed by, look, this is a great business. If you don't get fired, you're going to be pretty successful. The impetus to really stick your neck out on the spectrum is really low.

I think people, especially in these bigger organizations, really—I hope they make mistakes. My biggest frustration with one of my partners who left was the things he didn't do. Why didn't we do that deal? That was a really good deal, and he always had 5 reasons not to do it. But in the end, he was very conservative, to the point where we missed a bunch of really good things.

You need the balance. I've got a lot of partners who are holding people back from the cliff, so it's a good yin-yang of some folks that are going to make you feel really scared to stick your neck out, but then hopefully, especially my senior partners, knowing I've got their back always. I am never going to get upset with somebody if they took a calculated risk that didn't go well.

I'm curious how you think about something seismic like AI, both in terms of how it will affect the companies that you already own stakes in or own outright as a disruptive force, how you use it yourself to make Insight work better, and the investment opportunities that it creates, like Anthropic. I mean, there's a lot going on with this nuclear bomb that's gone off, in a good way. How do you process it?

8. AI Impact on Software

I remember a bunch of years ago, even before the ChatGPT aha moment. I'm not the technology wizard in the firm by any stretch, but we were already doing vision deals, and I could see language was next. I was like, imagine if you can automate vision and language in the workforce. I'm like, there are a lot of jobs where that's pretty much what you do.

I started talking about it at some of the LP meetings, and then we were doing the vision stuff, which was not in any way exploding like the language has exploded. I'm not sure why. It never got the buzz. I don't know. But vision, just for whatever reason, was good but not compelling.

You could look at MRI companies, and they're, like, 10 years later, $80 million doing it—maybe the biggest one. What happened to that? I can't explain it.

But for some reason, language took off. We looked at other waves, and it was pretty easy for us to kind of sit on the sidelines. Others on your show are big fans of blockchain. Maybe now it's crypto, because with the blockchain, no one could articulate the use case. When I debated this with people, I was like, “It's 12 years in. Come on.”

Something should be, you know, and there's a whole religion around it. Maybe someday every bank will be on it and whatever. But it's definitely way longer than anyone forecast to be valuable.

I certainly had a funny story someone told me, but it was basically like all the technology guys that love and know the blockchain think the technology is kind of meh, but the finance aspects of it are really cool. And all the finance guys are like, you know, the finance aspects of this aren't so great, but the tech looks really cool. I'm like, huh?

Nobody who's got really the right DNA on both was like, “This is the best database I've ever seen in my life,” you know, who understood database technology. And finance guys are like, “This isn't really how the world in finance is going to work.” We've got reasons.

Anyway, we've kind of looked at other waves of technology and been a lot more sanguine about the potential, whether it was even the self-driving car. That was a big hot spot a decade ago. That was more vision, and this one is different. I mean, both—and I don't know if it was the problems it could solve immediately.

Certainly, the consumer side of this is mind-blowing. I've watched my own family in the last 3 months convert from Google Search to Gemini or ChatGPT and become almost religious about it, right? It was a game changer in so many ways.

We were kind of playing around the edges of it in some ways, and then about a year ago we started to see the application of it where we've really played the most, in the commercial landscape. Now we probably have 25 agentic AI bets that we think could be really profound in the commercial markets. We've been noodling on all sorts of impacts it's going to have, but it's clearly a phenomenal growth engine. It's also sucking a lot of the air out of the traditional software market.

I think the bear case on software is, “Hey, I could just use Claude to build my next SAP.” We're not losing any sleep over that. Quite the opposite.

Why? Why not?

Because that's not what software ever was. It was never a technology barrier; it was always a business-knowledge barrier. Maybe you could literally have AI look at SAP and plagiarize it and try to build something equivalent, but I'm just not worried about that market changing.

First of all, we haven't seen any of it in our companies. The cost of developing software is inching down, but it's not collapsing overnight. I can't explain exactly why, but the idea that a complex application is going to get built just because we have a better productivity tool—we've gone through generations of productivity tools in software development. This is more profound, for sure, but for those who are old enough on this call, the 4GL was a pretty profound tool, too, because back in the day, you just had a database with a screen, right?

Applications weren't all that complicated, and the 4GL was meant to basically make it really easy to build the screens. It was impactful, but it didn't radicalize everything. SAP and all these other companies didn't get displaced because of it.

I think it's taking away a lot of budget, probably. You'll probably be seeing a lot of companies just feeling the pain of, “That's not the cool kid on the block to buy as CRM software today. That's just not my priority. I want to automate something else.” So that matters to growth rates.

I'm not saying there aren't obviously a few companies that are probably more squarely challenged by what it can do, because they're probably working around documents and doing image-recognition things like that, where you go, “Oh, so what's your point of existence now?” But by and large, I don't worry about the usefulness of software so much as the budget being moved away from software to AI.

On the flip side, which is what we're really focused on, it's a massive TAM accelerator. My core software is not as sexy, but now I could go after a whole set of problems that my customers have that I could never automate before.

I'm on the board of a couple of—I won't even pick on the public ones—but CRM-like vertical applications where we're just capturing data, but 95% of a person's day is generating and getting the data. If I could automate a big portion of the 95% of the time that you're getting data into the system, that's hugely valuable.

To me, we've already got maybe a half a dozen or more companies really reaccelerating off of new products that they've launched in very short time frames, creating massive TAM expansion for their businesses. I have no doubt the bigger public companies are working aggressively at the same thing. Microsoft, right? It's an opportunity. Microsoft looks at that and asks, “Could I build a new PowerPoint with it?” Probably. I don't know, maybe. “Can I make PowerPoint, the existing product, way better with a Copilot?” Yeah, you probably can. I think that's way more interesting.

Or Adobe

how much better is Adobe, which has 3% of humans using Photoshop, and now could expand it to 20% because the user interface and learning curve have gone down by an order of magnitude?

My suspicion is this is largely TAM-expanding for the established companies. They will build products as well. I don't think it's a great use of time in most of the legacy apps to be trying to out-engineer them with a new product. There's just more to that market than the actual body of code that runs your core banking. There's a lot more going on, and I think we're still quite a ways away from even getting to the point where the speed at which you could build software is dramatically better.

You said before that you really just like to win, and that's maybe a major driver of all your activity. You seem pretty low-key, and yet your activity and the firm's are quite intense. It's an interesting dichotomy, and I'm curious where the drive to win came from.

9. Drive to Win

I don't care about beating other people so much as just satisfaction in my own success and winning. So it's a different kind of drive than I think other people get.

I have friends who I play golf with. I can't play without betting. They can't have fun or try hard if they don't have something on the line, right? That's how competitive they are. But they're competitive against me. They want to beat me. I just want to get my own score as low as possible.

If you shoot a 65, I'm high-fiving you. I'll buy you a beer. I'll be the happiest guy to give you $20. I don't really care at all if I have a good round.

I think that's just it, and I think the culture of the firm has maybe been modeled after that. I attracted people like that, but I would say the majority of us are much more focused on our own success than on somebody else not being at the other end of that success. That's kind of what gets us a little bit of endorphins for the day.

These conversations always go the same direction, where 98% of the conversation is about buying and almost none of it's about selling. What have you learned about selling—selling well, when to sell?

We've had a good year on that one. We've sold a lot this year. But I think the easy things are the ones that come naturally. An IPO, strategics knocking on your door, people pulling you in—you sell. The harder one is when you have to push it to make it happen.

At one point, we had a 4x on one of our funds in the public markets that we couldn't sell. We were locked up, and by the time we could get off the lockup, it was down to a 1x. These things are quick windows. They come and go, and you learn.

Some of this was also COVID as a piece of it, which was a combination of the demand shift and change. Some ideas that looked great in 2021—virtual conferences looked like a great idea, and it felt like that could really have legs even post-COVID. No, the answer is they had no legs after COVID.

Some of it was just us. Decision-making probably wasn't what we thought it was over Zoom, and we had, like everybody else, a year of remote work. Really, really bad. Never going to do that again.

If you think about the next decade of Insight, how do you think it'll change?

10. Next Decade of Insight

We're feeling like much more of a rinse-and-repeat model. I don't think we have crazy ambitions to expand the business beyond what we're really good at. We'll absorb what we think are great deals, but the bar has never been higher. Since the summer of 2022, we've just really been pretty focused on making as much money as possible for LPs.

I think it's going to be, I'll call it, a little bit more boring. I had, at one time, firm-building ambitions that I still have a little bit of, where we could add assets that were, again, making us the world's best software company. What would make me a great partner for my portfolio? We still have some of that ambition, but it's going to take a different flavor.

Is there anything essential about Insight that you feel like we've messed with?

I think culture is—and others have probably talked about it—but there's definitely a lot of positives in our culture that don't get seen by entrepreneurs. I think it's a combination of not having to be the loudest voice at the table ever. We want to be the most helpful voice at the table, and we don't need credit for that help. We want to stand behind the founders who really do a lot of good work.

Internally, that reflects itself in, as much as you can do in this industry, a really collaborative teamwork approach. We've got a big firm, and there's no doubt you'll always have people stepping on toes, but I think by and large the idea is to really support each other in a meaningful way.

Obviously, we talked about the part of winning, which is a big part of us, but we also just never want to give up. I know some folks have been on your podcast about sticking it out till the bitter end. Maybe to a fault, we do that, too. But we really, really want to be there to the end.

We're leaders. We're not passive investors. Somebody's going to be on top of these companies until the end. It's important for us to do that, even though that's not where you make money. Those are the worst hours of ROI that you can possibly get: taking a deal that's gone sideways and trying to fix it. But A, it's really satisfying on the few times that you can actually turn it around, and B, it just feels like it's the right thing to do.

Well, it's really cool to get the inside view on this. It's a firm you hear a lot about because it's so big. You've made so many great investments over the years, but it's very hard to figure it out from the outside, so thank you for the 2 hours. It's such a fun time to explore it. When I finish these, I always ask the same traditional closing question: What is the kindest thing that anyone's ever done for you?

11. The Kindest Thing

I think that, first, you need to be someone to be kind to you. It's out of the goodness of their heart, not out of their own self-interest. I'm somewhat fortunate not to have that many situations where I've needed that help. But I guess, as others have said, mentoring is one area where I feel like people didn't do it for their own self-interest. Some of it might be broadly self-interested, but most of that is selfless.

I've had 2 examples. My first job at Warburg Pincus, the person I worked for there pulled me out of a hat in terms of my résumé and saw something in me that no one else did. I think I tried getting a job at 100 firms, and he was the only one who was willing to hire me. I learned a lot from that experience as well.

But then I think when I started Insight, we randomly bumped into an individual by the name of Steve Freeman, who was the just-then-retired CEO of Goldman Sachs. I think it was a mutual connection from one of the high-net-worth guys at Goldman who knew one of my partners. Steve, for reasons I still don't know—one of the nicest guys I've ever met—took me under his wing and gave me amazing counsel in the first decade. He ultimately introduced me to his co-CEO, Bob Rubin, who also became part of that mentoring and was such a nice resource for me, since I had no one else to talk to. It's nice to air issues, challenges, and focus.

So, you know, that to me was certainly one of the best things that happened to my career. Incredible. Jeff, thank you so much for your time.

Awesome.