General Catalyst 首次季度回顾｜CEO Hemant Taneja

If you look at NVIDIA adding $1 trillion of market cap in 100 days, when was the last time that was happening? We're going to have companies that are routinely trillion-dollar companies. The natural gravitational pull is that a lot of that scale is going to get concentrated in a handful of companies. At General Catalyst, we don't believe that's ultimately what's going to create the most inclusive, prosperous, sustainable world.

People are saying we're in a bubble again. How do you think about the fund management of that?

When COVID happened, we were the first firm to go to the LPs, and we wrote down our portfolio by 40% proactively for no other reason than saying, “This is not real.”

Why did you write a review? Why did you start this now?

We are in an incredibly fast-moving world. If you look at the pace of innovation in software, which is the core of what our industry has supported for a long time, it's extremely rapid. If you think about geopolitics, it's extremely dynamic. I think we have a system in our industry that is very addicted to provocative tweets and messages in general. A lot of that generally skews us toward taking very polarized views, because the stuff that amplifies in the world tends to be very black or white, and progress gets made in the gray. So we're forcing ourselves to take a step back.

One of the hot topics around Silicon Valley is General Catalyst's potentially rumored IPO. I've heard 2 people pronounce your name completely differently. Is it Hemant or Hemant?

Hemant.

Hemant? Is that right?

The actual pronunciation is Hemant.

Hemant.

Hemant.

Hemant.

Yeah, there we go.

Okay.

You can call me HT. How's that?

Okay. HT, welcome to Sorcery.

Thanks for having me, and congrats on... It was interesting to hear about all the progress you've made in your own business. Congrats.

Thank you. I appreciate that. Well, today we're at the top of the General Catalyst tower in San Francisco.

The sun is glowing at us.

The sun is out and shining. I also heard that you opened up a new New York City office. So what's going on there?

We've been in New York for almost 14 years now, and we've been growing. I think, as you know, one of the teams now at General Catalyst is this company called Percepto that's focused on driving the transformation of enterprises. It was really important for us to colocate all of our teams in the same place. So GC now has a much bigger space in New York, where 1 floor is actually for engineers, and they're building lots of cool stuff. I'm sure we'll talk about that. Then we have our investment team, and it's really designed to be welcoming for founders and to be a builder environment in general.

I want to talk about the state of General Catalyst today. You're now called a company. I know this has been in motion for a bit, and you recently put out—I don't know if this will come out on the day it gets launched—your quarterly review. If you could map out for people who aren't aware of the wide-ranging structure of General Catalyst, can you share all the different buckets and strategies that you cover?

1. The Counter Concentration Thesis

What are we focused on at General Catalyst? If you think about the accelerated role of technology and the way the industry is evolving, one of my most interesting observations coming into this year was: We have to rethink what scale means.

I say that because if you look at Anthropic adding $10 billion of revenue a month, when was the last time our industry was dealing with that? Or if you look at NVIDIA adding $1 trillion of market cap in 100 days, when was the last time that was happening? A trillion dollars. We're going to have companies that are routinely trillion-dollar companies.

I take a step back and think about that level of scale and, frankly, the transformation of the world with AI. If we were driving resilience and abundance, the natural gravitational pull is that a lot of that scale is going to get concentrated in a handful of companies. At General Catalyst, we don't believe that's ultimately what's going to create the most inclusive, prosperous, sustainable world.

You hear about phrases like “techlash” and whatnot. So we ask, “What are we here to do?” We're here to empower founders to create parallel companies that essentially create a counter-concentration architecture for innovation.

When we start to take a step back and think about that, we say, “Okay, what does our company—or really, an ecosystem, which is how I think about it more than even a single company—need to look like to drive the world toward that kind of vision?” When we talk about the different pieces that we have in our business, they all come together toward that true north of meeting founders where they are, helping them build parallel companies, and doing it in a way that creates an inclusive, sustainable world.

So you have a seed—

Yeah.

—strategy.

If you want me to list those out, first of all, at our core, I think of ourselves as the largest seed venture capital fund. Our venture fund is essentially a seed fund. It's run by 3 senior partners: Jure here in the Bay Area, Jeanette in Europe, and Neeraj, who covers India for us. Together, they really shape the arc of our venture capital strategy, with seed at its core.

I think that's a very different way of looking at a commitment to supporting founders at the earliest, most ambiguous stages than organizations of our size. We've committed to saying that's what our core is going to be.

Then we have our creation strategy. You've had Mark on the show, and we've really architected a strategy to build companies and transform companies. I think that gets applied both in the context of global resilience and in the context of transformation with AI.

All the AI roll-ups you've heard of, if you look at some of the moonshots we're doing and some of the manufacturing work we're doing, a lot of the hands-on building work gets done in the creation strategy.

Then we have Customer Value Fund, which is the first investment-grade-rated product in our industry. It's really focused on helping companies figure out how to create hypergrowth once they figure out their businesses.

Those are the 3 core products and, when I think about it, almost a capital solution for founders, so that we can help them increase their odds of becoming a power-law company.

Why did you write a review? Why did you start this now?

We are in an incredibly fast-moving world. If you look at the pace of innovation in software, which is the core of what our industry has supported for a long time, it's extremely rapid. If you think about geopolitics, it's extremely dynamic.

I think we have a system in our industry that is very addicted to short, provocative tweets and messages in general. A lot of that generally skews us toward taking very polarized views, because the stuff that amplifies in the world tends to be very black or white, and progress gets made in the gray.

2. Progress Lives In The Gray

A lot of what I'm forcing myself and we're forcing ourselves to do is take a step back. Don't be too hasty in trying to make sense out of the world. We said, rather than putting out lots of thinking in a regular, high-velocity stream, why don't I take a step back once a quarter and say: What happened? How do I make sense out of this in the context of the progress we're making in society? Where do we think the world needs to go? Are we doing the right things?

Then share that as a more thoughtful way of looking at each quarter, versus just being in this stream that I think our industry and, frankly, we're increasingly addicted to with social media.

Mm.

That tends to be quixotic messages for getting reactions, tweets, and virality, and a lot of times they aren't even views that people really believe. I think those are just ways to get people's attention. We're so starved for attention that we're often saying things that are just not helping us, as an ecosystem, make sense out of where the world is going and how we shape it.

What are the messages that you want to see as headlines?

What I want to see is an understanding of the capabilities of technology and an understanding of how we use them to drive resilience and abundance, and what progress we're making toward that. I want to see early signs of where things could go wrong, so we're going to be intentional about how we shape the arc of adoption of technology.

I want to see us sharing and learning, as opposed to either a doomsday mindset that the world's going to fall apart or the idea that everything's just going to be tremendous. Patrick—I mentioned this in the review—mentions a beneficent singularity, and I do think AI brings a lot of advantages and positivity.

But if it concentrates opportunity in the hands of very few, then it also brings instability in the end, because that's not what society wants. Society's going to reject that.

So I think we need to think about how to really diffuse technology and AI in this next phase in a way that's good for everybody. I want to see us see where that's breaking. I want to see where it's working so we can lean into it more and essentially become a movement there—every one of us is working toward driving that.

I mean, I just think it's chaotic, it's petty, and it's not helping us as an industry to rise up to the occasion of what's at stake. I think we're going to make progress in the next 10 years for centuries to come.

Mm.

I think we should step up to that and really do it right because it's going to be for all the generations that follow us, and it's going to impact them.

So where do you find those signals?

It's a great question. Look, I try to spend time with technologists as much as I can. We are working in the bowels of a hospital, and we are working on transforming other existing businesses. I'm very focused on whether we can learn from what's happening on the ground.

And we mentioned Percepta earlier. I actually sat down with them at the beginning of the year, as I said in this review, to say, “What changed in how we actually develop software?” Literally, this is a team that's been around for 15 months. They're some of the best engineers, and they said literally almost everything.

And for an organization like that, that young, to say they have to fundamentally transform how they think about taking advantage of software to solve problems and help companies drive their AI transformation—that was profound. I was like, “Wow, if they're having such profound changes, think about the rest of the world that needs to get its arms around this technology and how much help they need.”

And so I just think being closer to the mindset of being a builder as opposed to just a capital allocator is something that I'm trying to push myself to, and frankly, all of us at GC, because that's how we're really going to get a feel for what the possibilities are and how to shape them.

Mm. So the review starts out with AI because you can't start anywhere else.

3. The AI Investment Stack

When you think about AI, the big things that are happening—the progress in how fast technology is being developed—are incredible. The progress in the capabilities of AI models is profound. We put out some research from our Percepta team that's in the review as well, where LLMs are just getting a lot smarter. I think it's profound to understand those capabilities evolving.

I think it's important to see the profound adoption you're seeing with Anthropic, for example. The capabilities of these models and how rapidly they're changing is pretty profound. Then it has an impact on the existing software industry, and it's thinking through, “Well, boy, what's going to happen to a lot of the companies that we are supporting, a lot of the founders? How do they take advantage of this, and where is there risk in how we think about the value, both financially and technologically? And what is the new world going to look like?”

I think there are all these conclusions you have to derive on the basis of all the changes that are happening. You obviously have interesting questions like Anthropic dealing with the Pentagon—that happened—and what are the right ways to do this? Mythos sort of got launched. We knew about this several weeks before the models were launched, but what do you do with a technology that does that? What's the right way to bring this to market?

And I just think it's a little ironic because the same people that a few years ago would say we need to be completely open and let technology be diffused fast would say, “Is Anthropic being irresponsible in putting Mythos out?” when they were also accused of being too safety-naïve. And this is my point: people are saying things that are provocative but not really thinking deeply about what's the best way to bring these technologies to market and the intentionality required to do that.

That's all, by the way, in the last 90 days, right? It's just the pace of progress and the complexity of what we have to deal with—societally, technologically, financially—in how we think about creating value. I think our industry has to really build a lot of new skill sets to do it right.

So I want to get into the Anthropic part a little bit later, but in terms of how this is—and even with Percepta—how does this impact your investing decisions? What are the implications from an investing standpoint?

It's been a really interesting 3 years. The thing that is remarkable is that it was completely unclear where the value was going to be very early on. Were the models going to commoditize? Or even if they commoditized, were they going to be really valuable? It wasn't clear when the ChatGPT moment happened in November 2022 how it was going to diffuse in enterprises.

Mm.

It wasn't really clear. What is the role of hyperscalers, and are there going to be AI clouds that emerge? It wasn't really clear. And then how much are the models going to do versus what a big part of Valley startups has traditionally been, which is enterprise infrastructure? Are the models going to gobble up a lot of those capabilities?

I think when you fast-forward, it's a lot clearer. We've been fortunate that we made some investments in the cloud area, so Together AI, as an example of that, is doing very well. Anthropic obviously has been a great company that came from behind but has strong leadership in the market in the categories that it cares about, from a model perspective.

We also did Mistral in Europe because sovereignty does play a role, going back to how technology is going to diffuse and how to really make sure opportunity federates around the world. And then the question is on the applied layer. We've led the wave around these AI rollups, where the thesis was everywhere we offshored for labor productivity, we're now onshoring back with AI.

As mentioned earlier, you've had Mark on the show. I think we've gone and really, industry by industry, thought through where technology will effectively diffuse to create efficiency and also a way to drive abundance for the customer base of these companies, and gone and built a pretty strong portfolio there.

I think it's been a lot of zigging and zagging, a lot of doubt. But where the founders have led us, in the end, is a pretty interesting stack that becomes the next-generation AI-native stack for how we're going to diffuse intelligence and have businesses capture value and turn their secret sauce into economic advantages in the next wave.

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I'm curious how you hold all of these different types of investment strategies together at once. So in Q1, you wrote in here that you invested in 20 seed companies, but you also invested in Anthropic's Series G. How do you hold the weight of those together?

4. A Conviction Led Partnership

Well, I think that's in part cultural. Our laser focus, whether we invest at seed, in the latest round of Anthropic, or anywhere in the middle, is very much about whether these founders are building companies that have the potential to be power-law companies, whether we can bring unfair advantages to them to be highly successful, and whether we believe there is extraordinary compounding opportunity from the point we got in.

Those criteria and the characteristics of those companies don't really change when you go from seed to late stage.

You're still believing that there is incredible appreciation and compounding, and venture returns, from when you're entering. Frankly, the fact that we can say that and write a large check into a company at a multi-hundred billion dollar valuation speaks to the concentration of the opportunity behind certain kinds of companies.

But our ethos is very much about focusing on the best founders and making sure that, as long as our values align, we're going in to build power-law companies. That shouldn't change. We do have people who really dedicate themselves. As I mentioned, we have a team that genuinely cares about making sure our venture capital fund is seed-first.

Seed-first doesn't mean writing lots of $3 million option checks. Seed-first means having the mindset and a commitment to supporting founders at that stage, when they're the most vulnerable and there's a lot of ambiguity, and giving them everything they need to navigate that ambiguity. It really has forced us to rethink how we're going to create the experience for them.

I give Jeanette Forsberg, who's our president, a lot of credit for really pushing that when we brought La Famiglia in, and then Yuri and Neeraj when they brought their firms in. We put together a whole global way to support seed, and they just really lead with those values. Mark and the work we do at Creation are very much that as well.

If the idea is that we're going to essentially be co-founders with a team, pick a thesis that we jointly believe in, and go do a roll-up or hatch a company like Hippocratic AI, which we did in healthcare, we're just going to lock arms and build together. It's a very different mindset, but it's again toward solving some massive problem.

So that common thread is alignment on values and the belief that we're going to build companies that fit in our overall thesis and get to significant scale. That does bring us together. We align economics across all these funds with the whole team. We don't have a U.S. fund, a European fund, and an India fund. We are global in everything we do, and we're one team. Everybody participates equally.

Everybody has a place where they own the responsibility of building out the firm's investment capabilities, and then places where they participate.

You hold a very uncommon title in the world of venture capital. You're the CEO and managing director. How does that lead into decision-making for these investments? Are you the last person? Do you have the check-writing decision-making power for all of these?

Yeah. There's a reason why there are 2 titles. Internally, we're not big on titles. We just want to make sure we back people with the greatest amount of conviction, and we follow their conviction in the way we do our investment work.

The role of a CEO is to orchestrate that ecosystem I described at the beginning of this conversation. But the way we make investment decisions is that, on the seed team, any 2 partners can do a seed. People push each other's conviction, and we have a very lightweight process.

For later-stage investments, we just want to see anybody, regardless of their tenure, tee up ideas with conviction. My job is to make sure people are doing the right level of thinking and addressing questions that others have, so that the conviction passes muster.

If we start making investments only where I believe success will be created, that would be hubris on my part, and there would be lots of missed opportunities. So it really is about giving everybody who has conviction the courage to leap forward, lean in, make an investment, and then own it. That's what I think creates the best returns.

GC is a really interesting ecosystem because, in that venture capital part of our business, we still need to run like a partnership—a conviction-oriented partnership, not a dictatorial partnership. Then we have other parts where we need to run with the rigor of a real company, with OKRs, goals, financial planning, and the keys to an ecosystem architecture.

This is very much a work in progress because I view us as just another startup that's trying to be an important institution in this next phase. We're creating an architecture that allows these entrepreneurial souls to do their best work toward the adoption of AI that we're talking about.

And you've experienced 25 years of Silicon Valley hype cycles. How has your leadership changed throughout the years until now? Before the camera started rolling, we were talking about Anthropic and its hypergrowth, and how it pretty much reached a year's growth in 1 quarter. How do you balance all of that for yourself?

I think I've aged and matured and become sophisticated, but KV here would say I'm still a 22-year-old lunatic founder in a 51-year-old body, so the answer's probably somewhere in the middle.

Look, I've been very fortunate to have Ken Chenault as our chairman. Ken joined in 2018, and he's been deeply involved not only in creating succession in the business, but also in helping us think through architecturally what this ecosystem looks like. He taught me a lot about servant leadership.

That servant leadership is in service of making sure everybody here is successful, but also to make sure GC is in service of the world. Leading with humility, curiosity, and ambition, and trying to create a legacy-defining company, is something that I deeply care about.

I deeply care about values. Those are not just words; we want to live them. I deeply care about making sure we're kind. One of the things I write about in this review is that kindness and ambition are not at odds with each other.

I think in Silicon Valley we try to glorify the asshole symptom among founders, thinking that's almost a necessary ingredient to succeed, and I don't think it has to be that way. We're creating a culture where everybody can feel like they're doing their life's work and can be entrepreneurial in the GC ecosystem.

For somebody like Hersh, or Hersh and Atul, to come and co-found Percepta with me; for Jeanette to drive European transformation on the GC platform; or for Paul Kwan to drive global resilience work on the GC platform—they have to breathe. They have to be able to execute their own vision and values, which obviously has to be consistent overall with where we're going.

My job is to empower them. A lot of my focus is on how everybody here can be the best version of what they can be, to create the change they care about that's aligned with where I want the world to go. So that's the leadership philosophy.

You're one of the most innovative funds or companies, I guess, in Silicon Valley. How do you keep getting buy-in from LPs on these new ideas? How do you get buy-in on buying a hospital? How do these ideas develop, and how do you get the support around them?

It's a great question. The main message I've communicated to LPs, but also to our whole familia, as we call it, is that everything we do is to meet founders where they are and give them powerful advantages.

When we buy a hospital, if you go to Summa today in Akron, Ohio, we have 7 of our companies, the Percepta team, and our own investment team literally there all the time, trying to figure out how to take this community hospital—which, in all likelihood, will go down the path of becoming another bankrupt health system in this country—and turn it into an AI-native hospital.

The goal is to drive abundance and make it economically viable, so that we can take care of that community where it's been for over 100 years. When LPs hear that, what do they see? They see that we're getting on-the-ground experience understanding what the problems are. Our companies are getting enterprise-wide experience deploying AI, and society is getting a potential model for how health assurance—which is what I call this proactive, affordable, accessible care—can be deployed all around the U.S. and, hopefully, at some point, around the world.

If that's not the way to create the best enterprise value in our companies, I don't know what is.

I strongly believe that all the innovation—and frankly, Ken told me in 2018 to write a 3-year strategy, which we'd never done before—has followed our intuition. Now it looks like nothing like what I wrote. He also said to me, “Great strategies are built in hindsight.”

We have our values and our true north, and all these innovations that look crazy at the time end up being consistent with those values. Some experiments will fail, but some are going to be huge enablers for these founders to change the world.

That's the reason they should pick us, and that's the place where I want to invest the revenue we make as a business: to create these advantages for the founders.

When LPs see that, they understand it.

And then how have you thought about fund management through these cycles? People are saying we're in a bubble again, and in the last bubble, and even through ZIRP, funds were selling off to secondaries or just trying to get some liquidity for DPI. When you think about hyperinflated assets or companies, how do you think about managing the fund?

5. Resetting Venture Value

It's a great question. It's a very hard question. I'll tell you, the way this industry has traditionally operated is, "Let's hope a couple of our companies hit the power law. We return the fund a few times over, and the rest will take care of itself." That's been the model. The sophistication to actually learn how to exit companies—most people in this investment business aren't very good at it. Many people on our team are also just learning to do that.

But the problem with thinking that way is that maybe there are a couple of founders that hit the power law and become profound companies in a fund cycle, but what about the other tens? They also are doing important life's work. How do we get them to create enterprise value? How do we get them to endure? And how do we get them to create value? Our innovation philosophy is figuring out how to do that.

What I really push our team on is that every one of us has that responsibility. Writing a check into a company is a privilege for everybody around the table at GC. Creating economic value on the other side, and societal value, is the actual job. That is a cultural transformation and a journey we are on to say we need to be able to help our founders do that. We've built a lot of effort around it.

The last thing I'll say is what happens in bubbles: your companies get incredibly valued, and it screws with your mind as investors because you think you're great because you got paper gains. It screws with LP planning because they have these inflated valuations that impact how they do capital planning. So it's not good for anybody.

When COVID happened, we were the first firm to go to the LPs, and we wrote down our portfolio by 40% proactively for no other reason than saying, "This is not real." We got a lot of credit from LPs when we did that. When the ChatGPT moment happened, we went back company by company and said, "What is the actual reality we believe in?" We're going to course-correct and say, "That's the value of our businesses and the NAV of our portfolios. Now we're going to manage from there."

I think being intellectually honest and rigorous, and making sure we acknowledge that a huge part of the job is to drive economic value, is how you have to manage your funds. I don't think it matters if there's a bubble or not. Bubbles are actually great for us. Without bubbles, you also don't get companies that really make fast progress and generate outsized returns. But this philosophy has to be enduring in how you do the work.

Mm-hmm.

There have been some funds that have notably sold portions of their GP, whether it's Thrive or Insight. Have you thought about that? Is that something that you've done? And maybe for people who don't know what that means, could you explain what selling—

Yeah.

—a portion of your GP is?

So, selling a portion of the GP usually means selling a slice of the fees and carry that you get from funds, and there are many reasons why people do that. You can do that because, when there's a succession, new partners want a mechanism to buy out old partners. Sometimes you need to do that because you need capital to invest in the business. So there are many reasons.

The wrong reason would be to do that to take capital for yourself, because then you're misaligning with your investors. The investors gave you money; carry has some value, and you sell it to a third party to monetize what your investors didn't get. That would be a problem.

We did do this, by the way. We did it in 2018 with Petershill, and the reason we did it was because we had decided around that time that we were going to scale to have the kind of capital needed to build companies in this generation.

I think a few firms went down the path of, "You're going to need platforms." And, by the way, whatever scaling we did seems anemic compared to what these companies need in terms of capital today. But we needed to do that to scale. We also bought that relationship back a couple of years ago once we got through the scaling capital needs.

It's a much more common practice outside of our industry than in venture, but some of the firms that did try to scale did that, and there have been reasons for it.

One of the fun topics you talk through is how the software buyout model is broken. Can you walk through the math around that? So even if a company scales and gets to 50% EBITDA, it could still be a loss to LPs.

Yeah. Look, in private equity, there has been a circulation of assets. A PE firm buys a company on the idea that we're buying it at a certain multiple of EBITDA. We will lever that EBITDA so that the amount of equity we put into that business is, let's say, a third, and two-thirds is debt. We'll double the EBITDA, and then we'll sell the business for, let's say, double the price on the same multiple. If we double the price and pay the debt back, you actually could make a 4 or 5X return on your equity in, let's say, a 5-year period, or however long it took you. Good return. It's probably a little less than that, but let's say it's a good return. Then somebody else buys it.

But this happened because there was an assumption of terminal value on those multiples in these businesses. Now think about the reality today. If you said the multiples of these businesses are going to compress significantly—if the multiples went from 15 times revenue to 3 times revenue—and your business doubled, you're still valuing the business for a lot less than what you paid for it. I give an example of this in the review. Your equity is actually never recovered in that case.

Why? Because the assumption of terminal value is gone. In a world of AI today, where code is self-writing, to say that a piece of software in a company that has been existing for, let's say, 5 years, with the free cash flow on that worth 30 times, means you're going to have 30 years of generating that free cash flow. That's what you're paying for. How can you ever make that assumption when technology is changing so fast, to say these things are that durable?

When you start saying these existing pieces of software are not going to be worth that much, then that exit math of terminal value as the way to make an investment and make money completely goes away. Now, that exit math and terminal value exist in software. They don't exist in a lot of the other non-software industries.

In those industries, you've always looked at a business on a free-cash-flow basis. A business is worth a certain amount on a free-cash-flow multiple, and we're going to create structures to monetize on a free-cash-flow basis, not terminal value. I think software is just now maturing to a state where it's going to have the same dynamic, and there's a one-time, massive reset that's going to happen because of the amount of leverage in the system.

There's a lot of leverage coming due in these PE-backed companies in the next 5 years. Many of those companies, the equity value will certainly not exist. Some of them may not even recover their debt because the compression of multiples is so large. And, by the way, that does not mean those are bad businesses. That just means they were badly priced in the context of where the value really resides in this new reality.

You'll see other opportunities for how to create value in those companies as well. You're already seeing venture capital gobbling up PE businesses. If you look at a lot of what Mark and Madhu and our team are doing in Creation, we're buying some of these things from PE firms. We're buying them for not a lot, and we'll arb them into AI transformation. Maybe there's a way to create alpha.

I think you'll see interesting structures and interesting approaches to take these businesses and figure out how to create value on the other side of this erosion of terminal value.

What do you think about Vista's new software buyout debt fund?

It's small. That was my first observation. It was $250 million. But I think they're probably dipping their toes into the water around this idea. There's a lot of distressed assets, and they get software. They're a great firm; they get software well, and they're probably thinking about how they can design these new structures and start playing.

I bet that could become a larger strategy for them if they figure out how to go from terminal value to creating value on a free-cash-flow basis in these businesses.

One of the very unique things about General Catalyst has been your global growth. There are other funds that like to tout American dynamism, which kind of backs this national interest, but you have global resilience.

So why did you choose global resilience as a strategy?

6. Global Resilience Goes Worldwide

Yeah. I think there are a few things. Global TAM, last I checked, was bigger than the American TAM, so it allows us to play in a bigger market. It comes down to our values. We believe in inclusive prosperity, so if we're going to have AI diffuse, we want to make sure it's captured all around the world. It's genuinely something we care about.

The other thing is, if you think about our 2 trends, global resilience and artificial intelligence, geopolitics is going to force supply chains to shift. Does Europe really want to buy American defense products? Maybe some countries will, but the biggest ones won't.

Mm.

They want to create resilience. Does India really want to rely on Russia or America for its defense? Not really. They want to do it on their own. So our view was, well, defense primes are going to emerge everywhere in the world, okay? And we want to help founders create those everywhere.

We've been invested in Anduril's seed round. We are deeply invested in Helsing's seed round, and that's a project that Jeannette, Daniel Ek, and Paul Kwan have worked on. And then we're invested in Rafa in India, which Neeraj has been working on as well. So our belief is that the opportunity is everywhere, and we want to help founders. We do want to do it globally.

I think we went down the path of leaning into Europe and India when Europe was a complete contrarian bet and India was starting to emerge as a FOMO bet. We just think those regions are going to innovate. There are lots of smart people everywhere and opportunities everywhere, and if we have leaders at GC who care about creating successful innovation ecosystems there, we want to empower them.

Part of that, too, is it sounds like you've been traveling a lot.

Yes.

So—

I flew 650 hours last year.

650 hours. Okay. Not bad.

It's about a month on the plane—and growing.

I think Alex Karp's numbers are that he spent 3 months on a plane—

I believe it. I believe it.

—something crazy like that. So you recently invested $5 billion in India. How did that begin?

It's not a fund. So, again, we invest everywhere through our single funds.

Okay.

The commitment that Neeraj and I made was to invest $5 billion over the next 5 years in India's resilience opportunity. That's where we're working on building a hospital chain in India. We've got defense, and we're working on manufacturing. We're in great companies like Zepto, which is sort of the e-commerce infrastructure.

India's got a tremendous opportunity ahead of it, and given the GDP growth, it's a very entrepreneurial country. I was born there. I think India's tasted success. It's had a bunch of interesting large-scale outcomes now, where parents who have a lot of influence on their kids in India—if you had a good academic trajectory, they used to push you to go work for a multinational—now they've embraced the idea that maybe you should go try to start a company. Build a tech company and build something at scale, because there are role models for that.

So I think the cultural resonance with entrepreneurship is there, and the economic opportunity is massive. We're very excited about this. It's personal to me as well. I care about making sure we make a difference there, and it is personal to Neeraj, our whole team in India, and several others here.

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What do you think this worldview stage has given you, perspective-wise? What are the biggest lessons? I know you've mentioned a few, but we are in San Francisco, so how do you take all of those learnings back here and help the culture build upon that kind of light?

Look, there's that saying: If you want to go fast, go alone. If you want to go far, go together. The AI opportunity is a transformation opportunity, and if you really want to transform the world, you need to bring it along with you.

I think this idea that the rest of the world is dumb and we're just going to replace them is pure hubris. I just don't think it's the way the industries and the world want to do business with us. We talk a lot about techlash, and I think the idea of partnering—being really good at deeply partnering with the world—is a skill that we can do a much better job of. I just think it expands the opportunity.

The irony of how we behave is that we'll say, in the same breath, "I want to build a legacy-defining company," and, "Legacy companies are stupid." Somebody else's legacy from the past is stupid, and your future legacy is important. That's just a disrespectful posture in society.

I think taking these companies that serve a purpose—there are good people who work there and serve an important role in society—and helping them be successful is one of the biggest economic opportunities. I think there's true joy in that. It's hard because you have to deal with the inertia and friction of the world, but you can flow through it if you're actually working with them with good intent and good respect. That's a little bit of what defines the General Catalyst way.

On the techlash, I thought this was interesting, and this was all the way at the end. You said there are 4 forces of techlash. One is social: this ambiguity on social media and in real life, and—

You need to be polarized. Yeah.

Polarization there. Political containment. You have a really good hot take in that one. The genius asshole myth, which you talked about a bit, and then contempt for legacy, which you just covered. So, to go over the topics that we didn't cover, could you cover the social media standpoint?

7. The Four Forces Of Techlash

Well, look, I think we've justified that it's okay to say ridiculous things on social media because it gets you attention, even though that's not how you actually perform in your day-to-day jobs. There's a lot of that because often you see people put out some messages, and that's not really what they would do in the real world. It's just to gain attention.

I think decoupling how you communicate and what you do, and thinking that's okay, doesn't work in the end. It just creates a lot of unrest and confuses people. It's not good leadership. We try not to engage in that. I can say lots of provocative things to get tweets and likes, but I think it's an entirely unproductive exercise if you're focused on the long term. It is a very short-term mindset. All these things are actually reflective of how short-term we've become in our thinking.

Right.

This other point around politics—listen, you know, I think Tony Blair said this: You govern from the middle. On all the complex issues, when you design policy around them, you need to take a view that understands all sides in designing policy, versus being really polarized.

So we took a stance that we're not going to engage in politics, but we want to work with the administration, whichever one is there, in genuine partnership to help them think about how innovation can truly be impactful at scale in our societal systems.

So we launched the General Catalyst Institute. We invested what we would have given to politics toward helping create good policy, and that's a more enduring, long-term way to engage. Even though, in the short term, maybe you could see some disadvantages with that as well, I'll tell you, leaders in D.C. have embraced us because we have come with no agenda and embraced our founders.

We've brought many founders there, and I give our team in D.C., now also supporting Brussels and Delhi, a lot of credit for helping bring good education and good ideas to D.C., and it's been embraced. I just believe that if you create real partnership, people will engage all stakeholders regardless of politics.

That brings us back to Anthropic versus the Department of War. Can you break down a little bit of what happened with that, and then also what brings us to Mythos and how they decided to strategically roll that out with Project Glasswing?

Look, the Anthropic-Pentagon situation was very tricky, and I cannot say the perspectives on either side were wrong. It's just that where you sit and how you think about the world and what's important is really what led to those issues.

But what it shows you is the complexity of what we have to go through. I think you need a culture where you can actually have conversations around this and create productive outcomes, as opposed to taking very binary positions. When I listen to and speak to the folks in D.C., what they think is important for national security is correct. And when I listen to Dario, some of the things he's talking about are also correct. These are just complicated issues.

Instead of judging, just think about the people trying to make these decisions on both sides and the unprecedented complexity of this. We just rile people up, as opposed to taking a step back, thinking hard, and thinking about how we really address this. I'm sympathetic to it. It's a very complex dynamic.

Now, on Mythos, I give Dario a lot of credit for the way he handled it. They've had that model for a while. They did not release it. They thought a lot about it, and what did they do? They gave it to the companies to create an advantage, to essentially eliminate security debt in the existing infrastructure before more and more complex technologies are getting out there, as opposed to not doing that.

This was not to create fear in the ecosystem. I just think it's ridiculous, frankly, to take that stand. I think they've been very responsible. I know some of the CEOs they worked with on exposing them early and making sure they take advantage of this. What else would you do? I thought we were accelerationists in this group, so the same people are now complaining about this. I don't really understand that. I think they actually did it responsibly.

On the other side, it's like, my God, these models are incredibly powerful, and what's to come? Again, from an investment perspective, where do you invest? What else is going to be irrelevant because these models become stronger? The uncertainty of what's durable or not is just stunning right now.

Part of Project Glasswing 4.0 is Nikesh Arora, who you just brought on. How does that work, and congratulations.

Nikesh just joined as a lead director, and he's been—first of all, Nikesh is incredibly brilliant. He's an entrepreneurial soul running a Fortune 500 company, and he's done an incredible job building that. He's also a great investor mind.

As I think about our General Catalyst ecosystem, which is a collection of investors and builders, I just think he'd be a great mentor for all of us. We've had many conversations about where this is going, and every one of those conversations is extremely provocative.

It made sense to lean on him, just like Ian will lean on Ken. I believe in great leaders who are deep thinkers and have seen scale to guide the team here at General Catalyst. That was the purpose, so we're really excited that a lot of us are going to work closely with him.

Amazing. As we close out, just a couple of quick questions. One of the hot topics around Silicon Valley is General Catalyst's potentially rumored IPO. Do you have any comment on this?

We're not going public.

You're not going public? No?

No. I've said it many times.

Why do people think that?

I don't know.

You don't know?

You have to ask them.

Okay. We'll ask you all. Second, on Harry Stebbings' podcast—this is a really difficult question—on his podcast, you said you eat risk for breakfast. What do you eat for lunch?

Look, first of all, why did I say that? I really do leap into new things. I imagine failure. It's just never that bad. I actually want to make sure our entire organization is fearless in how we take risks.

You don't want to take stupid risks; you want to take calculated risks, but you need to be able to do that to make progress. If we can actually have a culture of taking risks and a culture of conviction, which I guess would be my lunch meal, then we would do a great job.

Then what's for dinner?

Those are probably the 2 things I can think of. But curiosity.

Okay.

How about that?

That's pretty good.

Yeah.

Well-rounded diet. Lastly, Julian Fialkow had a burning question. Your early—

Uh-oh.

Yeah, your early days at General Catalyst, you wore a puka shell necklace. What is the story behind the puka shell necklace?

I don't even remember. When I joined General Catalyst, I was 26. I joined as an EIR for 4 months, and I quit this nice job I had after selling my business. My parents were like, "What are you doing? What is this EIR thing?"

But the firm, and David and Joel, the founders, empowered me. I take pride in empowering everybody else at General Catalyst today. I remember my earliest reviews used to be, "We think you're going to be great at this, but you just have to have a little less fun in your mid-20s." I think the puka shell was just a reflection of that phase of life.

That's amazing. Well, thank you so much for such a thoughtful conversation, and also for putting out the first quarterly review. Appreciate it.

Thank you. Thanks for having me.