So just to kind of give you the lay of the land sweet spot is an interesting question. You know, I'd. Broadly speaking the way I would define it is we generally invest in a company when it's post-product market fit. today we have you know, we call it the flagship growth fund internally. We've also recently raised a sister fund, so to speak. It's a, we call it the Velocity Fund.

And so, so they do earlier stage investments, the flagship fund does you know, the bread and butter, which is typically think about a company that is maybe three or four years. Pre i p o is sort of one heuristic to think about it. The other way to think about it is a company that is going from good to great.

And so, you know, the kind of inflection points that we look for, you know, is it going from one product to many, typically, right? Is it going from one geography to, to many other second acts? You know, and are they preparing to join the Pro League? Right? Which in our view is, you know, we see the public markets as that, pro-league equivalent.

And you know, in many cases going public is, is a start for us. 90% of the time we're buying, or we're buying, we're purchasing more a bigger stake in the company when it's going public. Uh, In many of our investments that we've held for many years, we also purchase opportunistically, , stakes in the company when they're public companies.
And so where most traditional venture capital firms will, you know, see going public as, , the sort of, I'm getting outta here. Event, that's sort of like the beginning of the dance first.
I love it. And stay on that for a second. Like how have you guys reacted or what has been sort of the thoughts around seeing a lot more crossover and then have we seen pull back and crossover? Your name is crossover, right?
Yeah. Yeah. TCV stands for Technology Crossover Ventures. So we basically pioneered this, we pioneered the approach. I'd say. traditionally folks that have gone from venture to later stage, and so then they start also, uh, holding companies for a little bit, longer and, sort of, dabbling in the public markets.
, but more recently, , you know, traditional hedge funds, uh, who have, you know, been specialists in the public side, , and have started to come more. To play more on the private side. And so, you know, the crossover, meaning it's now bidirectional, And, , you know, I think given where the market is shaking out, there is a probably and hopefully a filtering function where, you know, some of these, competitors, if you will, start to winnow down a little bit and, you know, the market, doing what the market should do,
Do you think, like when, I mean like Sequoia got all the press, right? When something like Sequoia happens, do you guys, does T C V take a moment and think, should we react to this? Do we need to react to this? Does this change our strategy at all?
You know, it's a good question. , it definitely does. I mean, I will say the one thing that we, our MO in general is to kind of put our heads down that we, you know, we've deployed the same strategy for, for almost three decades. So we, stick with what we know, , you know, these things. , as with anything at all, if you're running a race, you kind of always have one eye on the competitor, right? , but most of the time, winning is about, , making sure you do your best.
But I imagine also there's, you know, even at the early stages where we probably feel a lot less, like Some of your strategy I imagine just changes between 2021 and 2022.
well. I mean, it's interesting, man. I would say. If you zoom out in the fullness of time, I would say 2021 is probably more of an exception. ultimately this happens, when there's too much capital chasing two little things.
and you know, I think, , one of the things that, people don't realize is just how much capital has been pumped into the system, through all kinds of macro circumstances Broadly speaking, with an extended period of zero interest rate policies, that's one,I mean, it was interesting. I was just listening to a podcast, A 16 z I think kind of talking their own book, but they were sort of saying if you threw a rock and hit a dollar, let's say you would hit not a venture dollar, you know, in terms of where investment is, you'd hit a, you know, a buyout dollar, I don't know, a real estate dollar or something.
But it's still, ventures still really tiny as an asset class.
No, I mean that's you're probably right on both fronts. , I guess from a bigger picture, venture capital is still a small percentage of all, you know, investible capital in the world. It's very true. And in our, in our world, it's large, it's huge. And, , it makes sense cuz it's, in my view, the most exciting place to be. It's where most of the value and dollars should and will shift over time.
, but yeah, I think if you really, really zoom out to a 40,000 foot view, , , that is not in.
Your background, you said it's a different mindset, investing in public than private, something like that. , but you came from the hedge fund world, so maybe just talk to me a little bit about how you see, you know, on the face of it sounds sort of similar. They're both late stage companies, you said a couple years pre i p o, but you know, how does your mindset have to change going from one to the other?
Yeah. , so this is, , this is a personal view. , public market investing to me is, is really about exploiting inefficiencies by ultimately, there is sort of like a Darwinian aspect in the role that hedge funds play. And, , what I mean is, is on two funds. The first is, , you know, hedge funds are not long, only, they're long and short, right?
And so in the universe of players in the public space, you have long only funds, which actually are I think the vast majority of capital, but they're also hedge funds. And these hedge funds, this is sort of the background I came from, , are these, you know, creatures that will not only take a positive view on a company, they'll also take a negative view on a company.
, and so what they do is they vote, they vote with their feet. , the Darwinian aspect of this, , in my view is that as a company it almost becomes a forcing function for a company to deliver to shareholders, if you think about the list of like stakeholders and whatnot, that a CEO has to prioritize, , when you are in the public market, that's like shareholders first, right?
, that's what the market's voting on. but 99% of the time it's money that's trading hands, right? So you see these funny, you know, articles on Bloomberg. I always, I, I get, super amused when I read these things and even say, oh gosh, like Mark did this and, you know, and all of a sudden Facebook has lost hundreds of billions of dollars in, in market cap.
if you're reading this in the press, you're like, holy shit, they're in dire straits. but in reality, Facebook didn't actually lose it, right? If Facebook stock is down 10%, whatever, you know, hedge funds and public funds lost money in that sense, unrealized, , or sometimes realized losses.
But Facebook didn't actually lose to cash, it's a vote In private investing. It's, the opposite. In private investing, you know, the vast majority of the time when you're talking about investment, it's primary capital, right? , you're not buying a stock. If you're investing in a company, you are not just buying a stock from someone else.
You are giving the company money, to go build product, to go build the company, to go hire employees, to do all those things that. that are actually true value creation that can be tangible in this world. and so it's a different mindset.
It, it's a lot more about company building, right,
And a lot of times that requires capital. both monetary capital, but also, hey, how do I get some of the smartest minds in the room to help, shepherd the way, the path, the journey to get there. and so, , , I think as a result, , one of the things that I, personally enjoy a lot about private investing as well is this, there is this true long-term.
Alignment, , you know, both from an investor and company perspective. And also, there's a relationship element that sort of compounds over time, whereas public market investing is, definitely less. So
One more question on that, because I, I imagine some of your job is like helping a company get ready for what you call the pro leagues. , I was talking with an, an investor who said, you know, some companies say like, oh, I'd rather stay private. And that's like saying I'd rather stay in the minors.
Like I'm not ready for the majors. Like, who, what pro baseball players like, no, I wanna stay in the minor.
Yeah. That, that is one perspective. I will say, there is also a method to that madness, right? And so what that company is saying generally is business. So this is sort of like the, you know, the downside to being a public market is the scrutiny that you have. You're constantly under the spotlight.
And in the US it's once every quarter. That's, you know, I don't know who set the rules, but that's kind of what it is, right? In, in Europe and in parts of, you know, rest of the world, it's once every two quarters. And a lot of times the standards are very high.
The standards are very high cuz you're in the pro leagues that you're playing with everyone else, right? So it's like, well, you may be the 800 pound gorilla in the private markets, but in the public markets, all of a sudden you're like, well, we're not just comparing you with, you know, everyone, your sector.
It's like, all right, well why do I put my capital with you versus Microsoft versus Amazon? And it's like, well that's a completely different story, right? And so where I'm getting to with all this is in the public markets, sometimes that level of scrutiny can hamper, You know, longer term investments, right?
If you are constantly looking at a stock price, you're constantly thinking as a c e O about next quarters financial performance. You deprioritize or you get distracted from things that you, you know, uh, sacrifices costs that you need to invest in, in the short term to get to March longer term result.
do you think the sort of sentiment advice around the board rooms that you've been around has really shifted and everyone was grow faster, launch more, you know, expand your offering, and now people are much more like, you know, let's talk about the path to profitability or,
It has dramatically shifted is correct. you know, maybe start with kind of how, , I see what a, the board role really is.
I think the, function of the board, is to. A CEO and a management team to achieve their full potential.
And, , , what that means is, you know, we like to think of ourselves as a trusted advisor. I think a lot of what we do also is, our big part of that value prop is having consistency in the themes and the values and the messages that we send to companies, right? I think one thing that, , can be sometimes a little bit valid, destructive to companies when they go to board and like, you know, investor egos Hey, you gotta go grow growth.
And then the next point they're like, no, no, no, no, you gotta go. Profitability, profitability, profitability. It's a very confusing thing. for a C E O I think the consistency, tends to be, important and it needs to be, you know, grounded on principles, right?
And so it's sort of like, hey, what, for example, in this case of growth versus profitability, obviously with the markets, you know, being where they are today, and, and more importantly with a potential macro headwind coming, you know, where are you cutting your costs, right? Are you cutting too close to the bone?
let's examine that. Let's unpack that a little bit. we're still driving to what we've always said to start with is how do you become the greatest company that you can be?
and you know, part of that, in this, particular example, you know, is, uh, how do you survive, for example, the storm right to come out and emerge as, the best company to, be positioned to, you know, reap the benefits of a, leader or survivor. When the storm blows over. our MO and my personal view as well is that, , you know, being calm and being balanced, as a trusted advisor are, those are important ingredients to have in the boardroom.
We certainly try to espouse those valleys when we're there.
I heard someone say really nicely, like, my role is to be a stress absorber, not a stress causer.
Yeah. Yeah. That's a good way to frame it too. Uh, look, at the end of the day, it's, you know, I like to think of excellence and success in the context of teamwork as, as a professional sports team. , some people like to use family as the sort of metaphor, the reason why I don't really agree with the, the metaphor of family is family is all about unconditional love, right?
sports teams are not, sports teams are all about conditional love. And what that condition is, is winning, And so if we're all aligned to that mission, , you know, you gotta act just like a professional sports team. And so in that context, you've gotta be hard, you've gotta be fair, you've gotta have the courage to say the right things you've gotta push back, and all those things that, think about a sports team environment, right?
We're not here to pat you on the back if, people have failed. Like, we gotta hold the bar high on expectations, but, you know, we're all there to win. And so, you know, how do we deliver on those things? I love , so much there. Um, let's, talk about some of your particular investments, right? Like, I think it's kinda interesting to highlight some things like Newbank maybe, yeah, I can talk about Newbank. so for those who don't know, , Newbank is the measure by number of users. It's the largest digital bank in the world outside of China. And I say that because, you know, they have I think 70 million users now, 40% of Brazil's adult population uses this.
and so it's an app that people check every day. It's, fascinating. and I say in the world outside of China, cuz you know, I think China has Alipay and Tencent and those things.
they're different beasts you know, when we invested in them, they were this, in 2019, they were a one product, one geo company. So, you know, very specifically they were providing credit cards, to Brazilians. And these credit cards were , the relationship was governed, through an app.
Right? So you didn't really have a physical branch at all. it was a digital bank today. they have multiple products it's a bank account, it's p2p, it's, , wealth management, there's all kinds of different things. They're in Brazil, they're also now in Mexico. They're the largest, digital bank in Mexico. , they're also replicating the same success in Columbia.
Uh, so these are the top three geos in Latin America, obviously.
How do you think about, , replicating what's working well in one geography or in one country, really? How do you know if something's gonna play well?
Yeah, it's a really good question. Minnie, , I think if FinTech specifically, is difficult, right? And let me break that down a little bit. So, you know, When you think about businesses that serve consumers, when you go from geography to geography, people speak a different language. They behave differently. Cultural differences tend to necessitate a different product, you know, , if you've ever taken your laptop to, uh, you've been on a holiday to like Germany or France or, Japan. The Netflix programming there is different, right? Like if you go in your hotel room and you check in and all of a sudden it's like, well, I was watching this thing before and it doesn't work here, In FinTech there's definitely this element of like, Hey, when you go to a different geo, you gotta count for the, consumer behavioral cultural norms. But the other element of it is infrastructure, right? So, for example, is a different regulatory environment in Mexico than it is in Brazil.
and in FinTech, a lot of times what people forget is starting a FinTech business also means you need to understand very well the lay of the land of regulation. And infrastructure, right? So like, what are the underlying rails? Is the MasterCard and Visa there? you know, a lot of times like that doesn't exist in certain countries, right?
I mean, are there certain themes, let's stay on FinTech. Like are there certain themes that you're following closely that you're excited about or just, maybe like things that are surprising right now in FinTech?
Yeah, I mean, from a theme perspective, I would say the big one that we've invested behind in the last few years and new bank placed in this theme is this broader concept of sort of, we call the rebounding of financial services.
And so essentially the, I'm gonna, try to break this down in, in simple terms, but it's, legacy financial institutions that, , they have terrible relationships with the customers. They generally have a lock on, you know, whether it's, , consumer banking.
And so it's your relationship with your chases of the world and, you know, substitute which bank that is and which country that is, or corporate banking, right? Where it's like, , you know, it's the same thing. , and, the state of the world, , anywhere in history until the, the point of the last 10 years broadly, uh, have been that these incumbent banks of these legacy banks have held that.
Really tightly, uh, and they offer you a suite of services. Now, you go to, I don't know which, is your primary banking account?
Is, is it Wells Fargo? Wells Fargo. That's probably everything for you. It's not just banking, it's also checking. It's also, and so by unbundling what I mean is, uh, some of these digital players, technology, first players, new banking example, where, you know, they are starting with, a very, very underserved need.
And so you see this with Chime in the us cash app in the us where they go, Hey, we're gonna provide you with, sort of like a banging account in a debit card, an ability to spend money and store money for free. No more overdraft fees, none of that nonsense, right? , that the legacy banks have, basically abused over time.
and once we've solved that underserved need for you, we're going to unbundle all of those different services. And so we're gonna cross sell different types of products to you as a happy customer. And then rebundle that. As a bundle, experience and so basically disrupting banks from inside out, right?
It's basically unbundling what they did and rebundling to you as a much better service. And when it's layered on technology is layered on better service as layered on products in a much more 21st century, just so to speak. You're like, oh gosh, this experience is so much better now. It's the same thing in consumer, you know, we like to call these super apps, right?
So like Newbank definitely is a, a financial super app. Some people call it financial supermarket. You know, I think Cash App in the US is probably closest to canonical example of that happening, right? So Cash App today, most people don't, I mean, if you're on the coast, you're using Venmo. Most of the other parts of the country use Cash app.
And like, if you look at the Cash app, today, it's no longer just p2p where it used to be, You know, now there are cards, there are things you can do on the investing side.
There's all these different financial services that it provides to you. Uh, and you're like, damn, all I gotta do is log in this app and it solves all my needs. You know, and SMB small, uh, meeting businesses, you know, it's, it, the same thing is happening there, right? , some people brand that office of the cfo F It's the same thing, right? It's essentially starting with a very underserved need. , and then branching out,
I would say though, with the SMBs, like one thing I just, in my portfolio that I keep seeing is we do a lot of vertical SaaS and previously every one of my vertical SaaS companies is also a FinTech company. a and it almost feels unbundling again because it's a very specific thing.
It's, payments for boutique fitness studios or for hotels or something.
Yeah, that's, so that's a completely different, I'd say there are different perspectives on it, right? by the way, internally, we have different themes on this too, or we call 'em different things. One of the perspectives of one of the frameworks is what we call, , full potential SaaS, , or SAS Plus.
And so, you know, the, exactly to your point, a vertical SaaS company, typically if it owns the control point,
you know, in, in the stack, are able to not only expand into different, offerings, you're also able , to kind of extend upwards right into, different networks along the wind. So, like, toast is an example of a company that we invested as Toast.
Um, you know, toast was exactly that. they started off as a, point of sale software. And today, You know, , there's a large sort of payments attached
Like once you've, you've served your customers on the workflow and, and what they do, like, it's like, it's very natural to then say, Hey, do your payments, here too, and this is sort of like how, Stripe came to dominance cuz they embedded the payments for these companies.
And so instead of saying, Hey, you can go become your own Vintech, we can allow you, enable you to operate these financial services in the background, seamlessly.
And so, you know, the distinction here is. , you know, do you as a company offer these financial services natively or do you kick it to a vendor, right?
and so, the value creation or the value flow obviously is, different depending on whether you become your quote unquote FinTech or, you know, you buy something outta the box.
And so then in payments, you know, like payments is one way to think about it. Like, there are many other, so layers within financial services, right? So after payments, what about lending? What about working capital? What about wealth? What about insurance? , there's so many different layers of financial services that you can, can think through in terms of, okay, well, can a SaaS company provide those attaches or those attached products or, can a third party vendor, do it via, you know, empower this buyer and embed it offering
I mean, I really, it's interesting to hear how you sort of are classifying these things. Is there anything else you wanna talk about in terms of like, areas that are getting you very excited
within FinTech.
or otherwise?
Sure.
I mean, lots of FinTech obviously. I'd say the other area , you know, I've been thinking about a lot is ai, right? And like generative AI definitely is, you know, one of the bigger buzzwords
In the venture community, these days.
I, I don't think about , generative AI specifically. I think about AI more broadly and agi more broadly. Uh, and it's, it's fascinating. I, that's been, know, occupying a lot of my mind as well.
have you read anything? Are there certain things , within generative AI or agi? I either way.
, so there's a book called The Singularity is near
by Ray, Ray ksal. You probably know this book. Uh, it's one of my favorites of all time. it was written almost 20 years ago now. I think. One of the big themes in there actually is a, it's when you read it, you're like, holy shit, this guy so ahead of his time.
but one of the big themes in there was the rise of. It was written in 2005, as I recall, it left a huge impact on me. This book is like 700 pages thick. You know, I read it from cover to cover on a flight back from Japan and I was like, holy shit. I bought a physical copy for every member of my family.
Hmm.
Like, I was just like, this is insane. I read it again. you know, people are like, oh my God, where does AI thing come from?
Humans love affair with AI is not new, right? A lot of times, like for the most part of it, it's historically it's been expressed in sort of post-apocalyptic, you know, expressions. Right? And I, I actually love it cuz I'm a big sci-fi fan. But you know, it's always like, oh, this is gonna be really bad for humans because as the machines versus us.
I think in general, humans fear what we don't know. you know, it's, it's the same thing. Like, I, I like to harken this back to the industrial revolution.
People are like, oh my God, the machines are gonna take over and this is gonna relegate everything that we know to be true, and jobs are gonna be lost, and so on and so forth. But , if you zoom out, that was one of the best things that could have happened to humanity. it, it lifted all of us.
You know, and it's all, everything actually really is about progress, right? technology helps to elevate societal productivity. I think that's generally true, and AI is expression of that. And by the way, , generative AI itself is so
because everyone can see it. Right. I don't know if you used, have you
used Lens or chat G P T?
and when we tried to write our investment memos,
Oh, are you serious?
just, we didn't like not to like, yes we did. It was pretty good actually.
So, you know, I mean I guess it is gonna sound. It's hard to parse all this together, but what I'm thinking about with AI here really is, as an investor, right, where is this value accruing in the food chain, so to speak. So yeah, you try to use, general frameworks as you will evaluate any landscape.
You know, is it the infrastructure layer, is it the mineral layer, is it the application layer? Like how does this impact, you know, end customers and, who is sitting on this sort of strategic high ground, so to speak, the bottlenecks and the sources of proprietary data, right? Like, is that, is that where it is?
but if you zoom out like this is causing foundational ripple effects to both consumer and enterprise behavior, right? Which is basically, by the way, when I say, changes transformational behavior changes to consumers and enterprises, that's sort of like what tech investing is all about.
It certainly is all like for T C V, at least that's sort of the way we view the wall, I think what's particularly interesting is that, we're seeing emerge as standalone vendors, that can offer this as a service.
And, and that makes it very interesting because all of a sudden you're like, well then there's an actual investible universe.
And the in investible universe is in those vendors, is what you're talking about?
that's right. I mean, you could say, you know, , Like, I think, and barley, I'm gonna totally butcher this cuz I'm not in China, but I, I did speak to a buddy recently who, he vests solely in China and he's there, uh, you know, and obviously I, there's been no travel to China in the last few years, so it's been hard to understand what's going on.
But I probably asked him like, Hey, like what do you make of this whole, , open AI and stability and, and all these guys in the us And he's like, dude, like it's not here. the government's here, use a lot of AI for sure, right? So like, if you go through the airports in China, I don't know this firsthand,
But it's like facial recognition and all these like, troves of data are being stored by, you know, big entities. It's big tech in government. They own all this data and they're able to handle it in, transform it in ways, all kinds of applications that are, ai like so to speak, right?
But there's no, as a service, , they are the gatekeepers of , all those models, uh, and all that data. But in the US it's, it's, it's interesting because again, like businesses are emerging where they are standalone vendors, they're
providing the service to others.
Beyond just the areas where you look , and how that's changed and how AI is getting you excited, you know, has just your investing philosophy changed? Like, has your approach to investing changed?
well, it depends on when I I think, yeah. I mean, I think versus, say three years ago, probably versus five years ago, I, I talked about the things that that don't change. Uh, right. There's the style and strategy that I uh, and I think broadly at T C v, , we all hold to be true is number one, we think technology is the best space to be investing in.
cuz we believe we're technology investors you know, at heart. And we believe that that's where most of the value and excitement occurs. I think just being an investor that likes to go deep, right? So we're yeah, I think the general focus is I think there's a lot of value in having deep domain expertise.
And so, you know, we like to invest, first of all in teams. You know, the two teams can be sitting on the same opportunity and execute completely differently.
So that's, that's huge. The second is sort of like, I like to call into the depth of your value proposition. In general, the depth of a valley proposition tends to arise. from underserved needs. . And so if there's a need that is severely underserved the solution and the value proposition has the potential to have a lot of depth, And I think the other sort of going through the pillars product is very important.
And this again, is, our style as, as a firm. You know, we like to think of best product wins. And so we've been invested in Netflix for decades. Spotify, Airbnb, Zillow. I mean, we've, we've invested in 200 companies over our history and 80 of gone public. And most of the time, if you look at them, they tend to be the best products in the.
and then, and then unit economics, which It's like, it's, it's a very important pillar, right? You can't first of all, you can't sell something for less than what it costs , right? To make and then beyond. what a cost to make. It's also what a cost to acquire. It's a very simple equation, right?
People are like, oh, well there's LTV this, there's c Then like, the real question is, are you making more money selling something than you are buying it, than you are acquiring it?
But that's sort of the brass tacks, right?
Okay. So David, we're over time. We are supposed to end now. What if I ask you one more question, How do your friends describe you?
Uh, that's a very interesting question. Say focused I'd say intense. say loyal.
Those are good. Three. Those are good. Three. I think TK said something along the lines of all three of those. Definitely the intensity. I think
Did he really, did he not say I was good?
Okay. He may have said that I can't. Yeah, we'll have to check the video tapes. I think we got some.
That's good.
Yeah. Do you get a chance to like feel proud about your success and where you are in life?
Yeah, no, I think, I think gratitude is important. I think taking stock is important. I wouldn't say success at all. I don't I think I'm far from it. You know, I I will say being able to, like, this is one thing that I, I think about a lot. And by the way, surfing helps a lot with this. I think it's one of those sports, by the way, that like, is so misunderstood.
you're either in it or you're not. Right. And like a nons surfer looks at it and you know, and it's like, oh my God. Like they have all kinds of negative impressions cuz of what Hollywood has spun up. But like, surfing is, first of all, it might be one of the most physically intense sports in the world.
Like, it's also extremely competi. But like, I love the competition of surfing because barring some of those, you know, territorial people on, on the ocean, which you can never avoid, like surfing is generally what I like to call an infinite game. And I'm barring this phrase, cuz you probably have heard this before, but you know, it's not like or basketball, whatever, where're like, hey, here's a set of rules, you know, and here's how you win.
Surfing is infinite. There's no, there are no points, right? You can literally do it forever and ever. You're competing with yourself to get better. But it's intensely competitive. And I think the last one for me, and I'm sure you feel assuming when you go out, like a lot of times when you surf your relationship with the ocean allows you to be in a space where you can practice gratitude. And gratitude is where I'm getting to where. , you know, appreciating the moments of gratitude where you understand, hey, like, you know, when you zoom out in life, you know, are you, are you deeply appreciative of where you are? Can you count the people and the things around you that have given you joy? And, you know, I I kind of view that as, you know, you asked a question about success.
I like the view of reflections from a point of view of gratitude. And I think, uh, yeah, I think I'm very grateful for, for everything that's happened to me. I'm very grateful for where I am. I'm very grateful for being at T C V and being able to have, in my view, one of the best jobs in the world. Meeting some of the smartest minds yeah, it's, it's pretty awesome.
Wow. I love that. It's a great place to end. David, I love learning about your approach to investing and to life. Thank you so much.
Yeah. Thank you so much.