How to win in the AI hype, is Growth Financing back? & European venture ecosystem with Matt Turck, FirstMark Capital

 Welcome to a new episode of the Unicorn Bakery. My name is Fabian Tausch and today we'll have a look at Matt Turk's and Firstmark Capital's recipe for success. Matt built and sold a venture back in the years, I would say, was then the managing director of Bloomberg Ventures, built it in the beginning and then 10 years ago, it's a while, moved to the New York-based venture firm Firstmark. You invested in companies like Pigment, Ledger, Synthesia and many more. You're also known for the MAD report, which is a look or taking a look at the landscape of machine learning, artificial intelligence and data ventures, like overall the ecosystem. And yeah, what should I say? I'm super happy to have you here in Berlin. So thanks for taking the time stopping by. Welcome to the Unicorn Bakery. Thanks for having me. Excited for the conversation. I should say that now you're also a podcaster and so we're sharing a bit of the same traits. I have a first question that I think is super, super interesting because there are a lot of podcasts that people can and should listen to when they want to know a bit more on the backstory and I think there are a lot of good interviews done already. So that's why I want to dig in a bit deeper. The first thing, because I met Adam, one of your partners in New York and we talked a bit about the hype cycle in 2020, 2021. I then talked to a lot of VCs here throughout the years and met a friend of mine, David Roskam from Magnetic earlier today and he was like, yeah, I think what Firstmark is doing very well is they're investing very concentrated and very thinking about like not doing too many deals per partner, a different investment philosophy than we have it here in Germany or in Europe very often. So let's break down investment philosophy a bit. So how are you thinking about being a venture investor? Yeah, so at Firstmark we practice venture capital in a way that is almost traditional, which was definitely not the cool thing to say two or three years ago, but very quickly it's becoming cool again. And by traditional I mean that we have that model where, as you said, we don't do too many deals a year. It's very much a high conviction, low volume kind of play. But when we do invest, then we sign on for years of service. On the whole, we tend to be lead investors. We come in typically at the Series A, sometimes at the Seed, and then we have a fund structure that enables us to double down at the B, at the C, at the D, at the E. We have one of those opportunity funds structure that's coupled with a core fund that enables us to do that. And it's very much that model, going back to the old days of Silicon Valley, of really trying to be a partner to the entrepreneur. As corny as it may sound, that's really the model. And we found that it's just hard to do if you do too many new deals a year. So having said that, look, behind the scenes, it's a little nerve-wracking to do that kind of style of venture because you keep saying no to opportunities, some of which are really exciting. But you have to just focus on a few, and then you're in a constant state of, oh, was that the right decision? You have FOMO on some companies that you could have invested and really liked, but again, because you cannot do too many deals a year, you said no to. And it's hard. But it's, in our opinion, one, the best way to generate great returns for our LPs. And two, at a personal, professional level, just love that style because it is truly that hand-in-hand partnership with entrepreneurs that people talk about when they talk about the good aspects of venture capital. How many deals do you do in a typical year? So in a good year, I'll do two series A's, and then I'll probably do- In a bad year, it's three C's. Two C's. Well, it's actually a really interesting point that you're making. And look, we're not the only early-stage venture firms in that situation, but we found ourselves in the crazy years, 2020 and 2021, sort of struggling to do series A's because the valuations were so high that, in reality, they were series B's, except with series A or actually pretty often seed metrics. And we didn't do a lot of those. In fact, as I'm racking my brain through trying to think of one we did, you know, there were very few. And then we came down. So we started doing a lot of seeds. And when you look at our most recent fund, the proportion of seed versus series A is much higher than we were anticipating. And look, as a VC, you need to adapt to markets. And in our case, we are reasonably disciplined around valuations. And that's what happened. So now that the market seems to have shifted back, and we can talk about this, but in my opinion, it's a lot more nuanced than it seems, we are starting to do a lot more series A's again. I think one important thing that you mentioned is managing FOMO and also getting used to it and having it, but also embracing it and saying, okay, that's still what I wanted to go for. And I think that's also very important for a lot of founders, this can be on the current AI cycle, and the hype cycle that we had in 2020, 2021, and so many other things, like there's so many opportunities for founders all the time. So that they also have to think about how are you personally managing the fear of missing out and figuring out what you're actually focusing on and what you really want to do rather than what you could do. Yeah. So in general, I think there's something beautiful about the power of constraint. The fact that you cannot do everything should be a feature. It's certainly not a bug. And that's true for VCs. But as you just alluded to, that's true of founders. From my perspective, founders ultimately are in a way in a similar business as venture capital, which is capital allocation and time allocation, and doing less tends to produce better results over time. And it's been actually something I've really enjoyed in the last year and a half, which otherwise has not been the most enjoyable period of time. But one thing I did enjoy is the fact that in all the companies I work with, the fact that cash became more of a constraint, as had the almost immediate consequence of drastically narrowing down the focus. And across all the companies I work with, all the projects that were kind of not mission critical, possibly side projects, a lot of those just went away. And again, across all the companies I work with, there's a sense of focus, which is pretty enjoyable. And lo and behold, it turns out that with great focus, you can see great results, acceleration in product roadmaps, product development. And I find it personally very refreshing. I would say in 2020 and 2021, I didn't feel that, for example, for VCs, money would be a constraint. But I also talked to Adam when I was in New York, your partner, and then he told the same that you did, that you did not make too many deals in the, let's say, Series A deals that were from the valuation side, Series Bs, and at the same time seats that were Series A slides, like too crazy. So he mentioned some numbers. On the one hand, I forgot them. On the second hand, I'm not sure if they should be public, but that the average was like super high, but your average was definitely a way lower from the deals that you did. And so as a company, because I can imagine that it's super easy to still get hyped up, because everybody's doing deals, everybody is like, sometimes writing checks after like a few days, and instead of spending weeks and months, and of course, it was very efficient for the founders, but at the same time, very dangerous, because they don't actually know who they took on. So I personally imagine that it's super hard to stay true to your core, while everybody else is doing exactly the opposite. Yeah, that's why 2020 and 2021 was not fun for us. We felt dragged into doing all sorts of unnatural things. And as you said, the shotgun marriages of situations where founders and VCs met, and then like a day after, you need to make a decision because there's another 10 term sheets that come, those are now turning, not surprisingly, to be challenging. Sometimes they work out, because you just lucked out in having a good relationship, even though you didn't really have a time to date beforehand. But most of the time, I think they're turning out to be pretty challenging. The combination of not really knowing who your VC is, plus a more difficult environment. I think now that we're actually, in my opinion, just starting to get into the problematic zone, that's not going to turn out to be great. So again, you know, look, I go back to that traditional venture aspect. I'm just in the process of doing a Series A now, meaning that we are between the term sheet and closing, and that took several weeks. And the entrepreneur was actually trying to slow down the process. I was trying to preempt the deal, and they didn't let me. Instead, they said, well, we'll have an organized process in a few weeks. And you know, so I was not happy about it, because obviously that meant that the price was going to be higher, and the likelihood of getting the deal lower. And I did feel strongly that I was the right partner, but you know, to their credit, or at least that's very much their right to do so, they decided to have a process. And the whole thing, yeah, it probably took, you know, three, four months. But the good news is that I had many more meetings with them. And you know, it feels like exactly the right decision to be working together and have a clear sense of where I'm, you know, what I'm getting into. I was joking in 2021, I think I tweeted that, I can't remember the exact words. But I think I said, the first board meeting is the new due diligence, meaning the first board meeting after you do the deal. And it's sort of what it felt like, you know, in the fallout of this deal. So anyway, I think we're back to what venture should be. And I think that's very good for everyone involved. What should founders actually look for? Because I think a lot of founders are just used to what happened two, three years ago, and don't really ever, because they got their preseed, they got their seed and maybe a preempted Series A, they maybe also forgot what that actually is to fundraise and what they look for in a partner. From your perspective, what will you say founders should actually look for? I think first and foremost, you need to look for a partner that truly understands and loves what you do. And doesn't do it, doesn't invest in the company, thinking of the company as an asset, but much more someone who is in the venture building business and can commit for many years. So that's first and foremost. I do think that everything else being equal, people with experience tend to be better. So I'm saying everything else being equal, because sometimes people with experience are completely flat out, don't really have bandwidth, are on a million boards and will not have enough time in reality to dedicate to you, except if you're the next Facebook or Figma or Snowflake. But everything else being equal, look, it's like all things, right? Whether you believe in the 10,000 hours principle or not, but especially at the series end beyond when that person is going to be a board member, most likely, you want somebody who has been on boards for many years and has seen a whole range of situations. Because people tend to be better after they've done it many years, it's pretty much as simple as that. And then, you know, look, on top of that, there's all the things that one can assume and imagine. Certainly, brand has an impact. A firm with a good brand will be better at creating a hello effect around the company. By the way, good brand doesn't necessarily mean the brand that everybody knows. It can mean a really good brand for what you do specifically. So if you're in the logistics business, VC that has a deep specialization and a good brand within the logistics industry is going to be as great as, you know, a generalist VC firm. And related to that, we at FirstMark believe very much in the concept of platform. And we have a very full-fledged effort there. So look, platform is the thing that used to be kind of like new and different years ago. And by now, every single VC is going to tell you that they have a platform. And look, some do. But there's a whole spectrum of what that actually means. So I can talk about what that means for us, which is that basically half of our team is focused on post-investment support, which in our case means three things. One, the creation of networks and expertise that is available to the companies in the portfolio. So that manifests through a lot of events we do. That manifests also through what we call guilds, which is a series of private invitation-only communities for CTOs and CFOs and CMOs. We have one on AI that we started recently that enables professionals in each one of our portfolio companies to have a home where they can learn, where they can network, where they can connect with peers. So that's one. Two, corporate introductions. That's, you know, something we've been doing for a very long time. And look, there's no genius to it, but the beauty is that we're in New York, and New York is the place where all the customers are. There's a very impressive concentration, as we all know, of large global 2,000 companies. Either they are headquartered in New York or they have a large office in New York. So look, we don't do that just in New York, but being in New York really, really helps. So, you know, we've been pounding the pavement for many years trying to get to know all the people in media and pharma, obviously financial services, and all sorts of companies, you know, the government, Washington, D.C. is not too far. So we have a deep network and we help making introductions there. And last but not least, talent. And, you know, we have people doing this full-time. And again, look, there's no genius to the concept of having people that do talent recruiting on the team, but we've learned through many, many years of trial and error what works and what doesn't. And at this stage, we have a lot of best practices and processes around how to do this well. So, you know, it's just working because we've been doing it for many years and have learned, again, what works and what doesn't. Yeah, I think a lot of people say that they have platform teams. A lot of people say that they are a good partner. And so even if they do, yeah, hundreds of deals, I would say like that's very, very explicit. Yeah, absolutely. And again, it's like, you know, to say something that's maybe obvious to everyone in basic. Yes. So one, a lot of VCs will say those things. By the way, you know, as much as I like making fun of my own profession VC on Twitter and all the things, I do think there's a lot of VCs who are very good, very well-intentioned, do great work. I'm on, you know, a number of boards with people that I really like and respect and are actually totally not the caricature of the VC that you hear on Twitter, but like very, very good, smart people. So a lot of people, a lot of VCs will say those things. So like, you know, do your work, do your research, talk to other founders. Certainly, if you are lucky enough to be in a situation where you have several term sheets and different VCs competing for the privilege to invest in your business, speak to other founders in their portfolio. The usual standard thing to ask. And again, maybe like everybody knows this, but if not, let me mention it. You should talk to not just their best companies, but also companies that did not work out and get some information about how those VCs handled difficult situations. And so, you know, but, you know, like I do think having said all that, that for any given company, there is not an infinite number of VCs that are right for you. So be selective. Again, all the things I said, do they really understand your industry? Are they really committed? Do they have the time? Do they have the experience? Do they have the brand? Do they have the support network? Once you, you know, draw all the circles, the sort of the Venn diagram intersection is pretty narrow. Yeah, fair enough. One thing that I really loved when I researched and listened to a lot of podcast interviews is that you said that you, for a long time, really wanted that the CEO was very technical. And especially in a country like where I'm from, Germany, where a lot of founders are very business heavy. And of course, we have a lot of great universities, and we have more and more ventures founded there and stuff is happening. But a lot of founders and CEOs are often very business heavy and maybe into product, but also that is not always given. But you said you changed your mind a little on it that you said, okay, you're accepting the business founder a bit more. Yeah, so look, that statement very much comes from the fact that the vast, vast majority of what I do as an investor is reasonably technical. So on the whole, I'm much more of an enterprise investor. Actually, I'm a 90% enterprise investor with a particular predilection for the world of data, machine learning and AI. So that's what I've been doing for many years now. For that type of business, and I do it both at the core infrastructure level all the way to the application level. On the whole, it makes more sense to have technical founders because those are technical domains. Having said that, I think there is something really interesting about technical founders, which is a whole maybe different conversation because what again may seem obvious, but something I've learned over the years is that building a company is really like building a machine with different parts that need to work together. So there's a concept of systems, and I've found that people with a technical background tend to naturally think in terms of systems. So that has worked pretty well. So look, separately from that, I 100% believe that you can be a great founder with not a technical background. So don't view that statement otherwise. I 100% believe you can be a great founder without a technical background, just to restate. And what you're alluding to that I've started opening up a bit more to business founders on my end is again within the realm of technical ventures. I've found that it actually works pretty well to have tight teams of core founders where different people do different things. So if you have two technical founders and one person that's less technical, but they have a very strong bond and naturally work together, then I find that actually the business person, having the business person as part of the founding team has worked a lot better than I thought it might. But in the examples that I'm thinking of, those people did have a very strong bias towards product. So I think again in the kind of type of ventures I do, having people that are purely business and don't have a natural inclination towards product, I think that's a little difficult. Just being like a sales and marketing person, I think you need to at least have a very, very deep understanding and excitement about going into the weeds of the product. Fair. But now we're combining a lot of topics in one because what you said is like a very technical team and we recently saw a very huge round for a very technical team. So we're combining now the hype cycle of AI, the technical team, the therefore very high price of a seed round. I would say one of the highest ever. I would never say that it's the highest, I'm not sure. But Mistral AI that raised 100 million something on 250 million something valuation. What are your thoughts when you look at what's happening with companies like Mistral AI? Yeah, that's really got people on Twitter really mad. It was in some ways entertaining. Look, for somebody like me, I have the benefit of just not being involved with the company. I imagine if you are involved with a company, whether a founder, an employee or an investor, that must have been profoundly annoying. And it was sort of interesting how strongly people reacted to that. Look, so I haven't met the founders. I do spend a lot of time in Paris. I do know a lot of founders. I was offered an introduction to the company, but this is very different from the type of investing we do as a firm. By design, because we do early stage investing, we just don't have the fund size to enable us to come in and write whatever, 50 or 75 million check, $7 million check into a brand new venture. So that's not even worth having the conversation. It's just outside of our strike zone as investors. Look, having said that, so I can't really comment based on any kind of informed knowledge about that specific deal. It seems to me to be less crazy than people reacted to. I do think that for certain type of ventures like this one, you do need capital up front. You are going to have to buy or rent. I love GPUs, a lot of hardware, and that's just the nature of the beast. It doesn't strike me as a completely crazy deal from an investor standpoint. If they sold 43% of the companies, just basically compressing multiple rounds into one. So now, yes, putting a lot of money on paper, unproven founders, because they haven't done it before, at least for the three main ones, may seem crazy. But again, from everything I'm hearing from friends in the Paris ecosystem, it's an A plus or A plus plus plus team. Two of the five founders, I don't know exactly the details of how things are organized, but are the founders of Allen, which is a very successful company in France. So at least some people on the team have done it. So yes, it makes for very splashy headlines. I don't know that it's necessarily that crazy. And then again, a venture firm on the one hand and founders on the other hand are willing to do that deal and think it's a good idea. Who am I to, from the sidelines, say whether that's smart or not smart. So that's Mistral. Separately from this, we are undeniably in a crazy hype cycle. You've heard me say before that I have been at FirstMark 10 years now, and this is my third AI hype cycle. There was one when I started around 2013, 2014, that was on the back of the resurgence or the acceleration of deep learning post the ImagineNet competition in 2012. There was another one sometime around 2015, 2016 around chatbots. And this is the third one now that restarted on November 30th, 2022, when the chat GPD was released. So we are in this almost vertical part, just going up in the level of excitement. Although I'm starting to sense that things are starting to slow down just a tad bit in terms of level of excitement. Largely because I think as a society, we cannot sustain this level of attention and intensity for that long. So it's been six months, seven months of just news every single day, actually several times a day. And I think everybody's exhausted of the whole AI train. So this is, I think, starting to slow down a bit. And inevitably, it will die down at some point. Inevitably, there will be some kind of trough of desire and mind. It's always like that. But I do think it's real. I do think the substance behind it is transformative. So it's one of these weird moments where hype and reality actually sort of aligned. But from an investment perspective, and from a company creation perspective, it's a very tricky time. And we can talk about it. I think one thing I want to state also with the VC topics in the beginning, where I sometimes pushed a little further, and also with Mistral.ai, it's not about bashing any of these companies or anyone who's doing anything in the space. It's more trying to get some perspective on things because it's super hard for people out there who are not involved to understand how the people involved, or at least with some thoughts on it, are thinking about it. Regarding what you mentioned right now with the third hype cycle, the question that I'm thinking about when I would start building an AI venture right now, obviously, I'm not a technical founder. So I would need definitely one, two, three people who are actually deeply into it. But what are the things that will bring me through such a cycle? What are the companies that ended up surviving the first hype cycle, the second hype cycle? And what do you think are the, not the actual company, like this has to happen that the company is getting out of the hype cycle without failing? More on the what traits do the companies and the founders have to develop and push forward to also be robust enough to at least have a chance? Yeah, it's a very interesting question because that sort of goes back to the business founder discussion we were just having. So as obvious as it may sound, the company that successfully made it out of the prior hype cycles actually solved a business problem. And each time, the last two times, it was the same thing. There was a first phase of excitement around the technical capabilities. And suddenly, there's like all the things you could do much better, all the things that you just couldn't do before that you were now able to do. So people started dreaming all sorts of different applications. But lo and behold, fast forward, you're into the hype cycle, you inevitably landed in a spot where it was all about, okay, what problem do you actually solve for me? Enterprise, who is a customer of that technology, to the point that the websites of the companies in question, the startups in question, early into the hype cycle, we're like, okay, we like AI for whatever, food, gaming, whatever. Fast forward, like one or two years, it's like, okay, no, no, we solve this problem. And you really had to look around and fish on the website somewhere to see the mention of AI. So AI goes from front and center at the beginning of the cycle to basically disappearing at the end of the cycle. So I think there's a fundamental truth there, which, again, sounds obvious when you state it that way. But like when you're caught into the fog of war, if you want, it's much harder to really do. So solving a business problem, first and foremost. And then in terms of what that means for the teams, that was your question? Also, yeah. So look, for an AI venture, personally, I look for the intersection of three things, and that's what I've seen succeed, which sort of ties nicely all the prior part of the conversation we've had, I think. One, I do want to see somebody on the founding team that is truly excellent at machine learning and AI, because I do think that for all the hype and all the conversation about AI commoditization, AI remains a deep tech endeavor. So somebody that really, as the background, the kind of people that read all the papers and are very deep into this, that's one. Two, I like people or founding teams that have an ability to turn whatever AI into a product, and that's much more conversation around engineering, that's much more conversation around software features like workflow and collaboration. And three, I look on the founding team for people that have a natural commercial inclination. Doesn't mean that people need to be natural-born salespeople. It means that they naturally thrive on solving customer problems. So on a team of three, I would want to see this. There are very, very rare situations where you can find this in just one person, the CEO. And when that happens, it's a three, two, one people that combine the three traits, and it's much rarer than you would think. In my book, that ranks super, super high and makes me disproportionately interested in potentially founding the company. Everything else being equal. What ranks nearly as high in your book? Because you said in your book that these traits rank super high. So especially at a seed level, that's the number one investment criteria. Then look, I do care about the rest. So you were asking about the traits of companies that make it out. So solving a business problem is one. Look, some level of defensibility certainly matters. I personally think that the conversation around modes is generally exaggerated a little bit. Look, like anybody else, I prefer situations that are less competitive. Like everybody else, I prefer situations where there is a clear level of defensibility. I do think that very, very few companies actually have a long-term mode that's truly defensible. But everything else being equal, yes, if this is a situation where a company has a unique data set, that's interesting. I do like the concept of data network effects as a potential mode, which builds over time, but basically means a situation where if you work with a network of customers with one cloud-based machine learning product, over time, that cloud-based machine learning product can learn from all the customers. Obviously, in a way where all customer data remains private and all the things, but your core algorithm becomes smarter and smarter with just more data, more interaction, more feedback. So I do think that's interesting. So that's one of the things I'm looking for as well. So yeah, a combination of all the things. And maybe to close, for an AI venture, I tend to get particularly excited about companies that are trying to solve a problem where AI truly delivers a 10x improvement, for lack of a better term, meaning that typically they do things that couldn't really be done without AI, or are done so much better that the ROI from a customer perspective is just night and day. I think defensibility could be the word of 2023, because I heard a lot of also pre-seed and seed investors try to dig into defensibility as early as possible, which... Yeah, you just don't know. ...is super hard. So how do you think, or how do you evaluate defensibility in early stages? I don't, is the short answer. I obviously like to think about it, but I go into a venture, especially at the seed or rarely pre-seed, eyes wide open that defensibility may or may not manifest. Like I just said, I think the likelihood of a company actually building a truly strong moat over time, I think that's vastly overblown. There's very, very few companies that actually do that. Some level of defensibility, certainly, like a truly strong moat, I'm not sure, maybe. So I don't sweat it too much at the seed stage. Having said that, I think about how crowded a space it's going to be, because it's painful to be in a segment that is so obvious that you have like another 12 companies, and there's not real differentiation other than better execution. Better execution. So if I can, finding something that's a little out of the way tends to be more attractive to me, and or finding founders that are so uniquely positioned to do this that they will be able to build competitive advantage, but just moving faster. So one of my recent investments, which is unannounced, is sort of an LLM for code kind of company, and it sounds like that's very much not differentiated, but the founders come from a professional background where the very specific code problem that they're tackling, they are very uniquely situated to do it, and they've done it for a long period of time, and the intersection of like solving that coding problem plus their deep machine learning AI background, basically there's a number of people in the world that can do that, which is pretty limited. So that's interesting in terms of early stage defensibility. I like that. I think that's helpful for a lot of founders also to think about how can I think about it, but also I think a lot of investors sometimes need to hear that. I doubt the notion. There's a lot of people that seem to think that that whole generation of LLM-based applications that do marketing or sales or writing automatically stuff, that those companies are 100% not defensible, and I have a little bit of a different view, and look, I'm not an investor in any of those companies, again, like OpenAI plus X kind of thing, but I just think that the defensibility of those companies will just build over time in the same way the defensibility of a SaaS company does. I think those companies just need more time on earth to build something that's more differentiated, more unique, and they're perhaps more defensible, but that's going to be through features, that's going to be through workflow, that's going to be through collaboration, which I always think is a very interesting way of building stickiness and some level of defensibility because you have multiple people at a given customer that work together on a tool and therefore if you try to take out the tool they're more likely to protest and fight to keep it. So more time on earth for all those companies. I think the jury's bit out. We will need to see if truly they are super easily replicable and if they are not defensible. More time on earth means hopefully at some point they raise growth rounds, like for example two of your investments, Synthesia and Pigment did. Are growth rounds back already? So it's an interesting question and I ask myself that. So look, those are just two anecdotal points with a very small n and at the same time I think that is pretty interesting because both of those rounds were very preemptive. Neither companies were planning on raising, both of them have plenty of cash in the bank. At the same time it's funny how this works. Sometimes I look like I've been doing this for a number of years and I'm still sort of amazed how those processes work. It almost felt like the VC community decided that those two companies were going to do a growth round and everybody at the same time sort of descended on the companies with not just a, oh I want to learn more, but with a, no no I want to do a deal now kind of approach and as a result both deals were highly competitive. Both companies got multiple term sheets. So I think what's happening is a combination of different things. I think a lot of growth investors have been sitting on their hands for the last 18 months and those are people that want to do their job and they want to invest and it's just extremely boring to not do a deal in 18 months and as a result they want to do something. If they are going to do something then there's going to be absolutely a flight to quality. So both Pigment and Synthesia are considered to be A-plus companies and they are super great teams, great traction, great customers, all the things. All of this is undeniable. Neither of those investments are like oh but this is kind of experimental. Both are a business that are clearly working. So the question is more okay well at what price, especially if it's a competitive process, can I tolerate the price and that type of thing. But as it turns out multiple firms were willing to make this bet. Now beyond those two companies what that means for the broader market we'll see but it seems that yes that the market is surely but slowly coming back. So all of this is subject to whatever happens in the few months. They are at the macro level. There's potentially a recession but there's also potentially a soft landing. Nobody knows. We've all been for the last 18 months trying to figure out what was going to happen. It sort of feels like it could be terrible. That's certainly a possible scenario. It's also a possible scenario where it could be much milder. So yes the growth market seems to be coming back pending whatever happens in the macro. I'll support you with the growth market is back. Last question because of time but you're from France. You're living in New York for a while. You invest a lot in Europe. What are your thoughts on the European ecosystem compared to the U.S. ecosystem because you see and know both. Yes I'm a huge fan of Europe and I have been for a very long time. And look I mean there's certainly a personal aspect to this but I like to think that it's simply because it feels less foreign to me. So I've been investing in Europe pretty much since the beginning of my time at FirstMark 10 years ago. And yes I did feel a little different when I first started venturing into the ecosystem. But again because of you know cultural inclination to the extent that there's such thing as a European culture. Never felt just like a fish out of water just the way some of my purely American colleagues might have. But having said that like I just think that the rise of a European ecosystem has been just a wonderful thing to see. And I think it's just getting started. You know as it turns out it takes a couple of decades sometimes more to truly build an ecosystem. If you look at New York as an example. So sure like New York especially you know in the last year or two now everybody seems to have agreed that like New York is truly a thing. And look post pandemic there's been like this massive influx of people moving from everywhere including very much San Francisco to New York. And now New York feels obvious. But New York had been in the making for you know 25 years 30 years. If you think of sort of like the OG success stories in New York that's companies like you know DoubleClick and we're talking you know in 97 98 99 you know. So it's been a bit. And you know as recently as as one or two years ago like people were asking me OK well what's you know like is New York truly a thing. Like you think this you think there are startups and it's like a million startups and every single VC firm in New York and large successful public companies. But I think the same thing is going to happen to Europe. So if you think about how long it's really been in Europe that you've had tech startups has been you know arguably 10 years really in my opinion in the last five years you've seen this acceleration of companies and especially of the kind of companies that truly make an ecosystem. And that means in my opinion companies that have global ambitions. You know it used to be not that long ago including very much when I spoke to German entrepreneurs when I first met them. You know 10 years ago people were still very much in the thinking of yeah you know we're going to be in Germany for the first five years and we're going to conquer the market. And then it's going to be the dark you know region. And then yeah maybe you know seven eight years from now we'll start thinking about the US. But you know it's very much like a step by step kind of thing. Whereas now in the last five years like the radical thing that changed is that you know all the entrepreneurs now like especially like all the kids right like all the people that are one or two years out of school everybody wants to build a global category leader. And you know the reality is that it's now possible. One fascinating aspect of Pikmin that we were just talking about is that they are emerging as the category leader for the new generation of business planning software. And they're largely doing it from Paris. So yes they have a bunch of people in the US and they have a bunch of US customers. But you know look whatever the time five years ago seven years ago the discussion would have been well you know you the founders need to move to the US like typically to San Francisco. And by the way you need to incorporate the company as a Delaware company. And that would have been the conversation. And it was like okay now that's the way it's going to be if you want to not just raise money from US investors but truly create a category leader. And now it's like no like you know it's a this is a French law company founded by two French co-founders who very much live in Paris. As far as I know have zero plans to move to the US. And yet they have like all the cool US logos that you can imagine. So I think all of this is really interesting. Now just to close having said that the big obvious question in the European ecosystem is that you need to have exits. And that hasn't really started just yet. There's a real question around whether European companies can go public in Europe. So are the European public markets mature enough from a tech startup perspective. What does a buy side think. And or how do those European companies go public on the US markets. So look it has been done. Certainly can be done. I expect it to happen a lot. But for that to happen you truly need to be a global category leader. So if you look at some of the Israeli companies as an example like the Wix and everything they were able to do that successfully. I'm trying to think about the best example but you know like UiPath and companies like that you know thinking of European companies. But they are truly horizontal global category leaders. It's much harder if you have let's say a consumer business that's very European centric that the US buy side may have never experienced or come across. So all of those are real problems that one needs to think through. But anyway long winded way of saying I'm super excited about Europe. About 40 percent of my portfolio is now in Europe or has European roots. So did I coup being the perfect example. So did I coup being a you know superb company that's a global category leader for enterprise A.I. targeting global 2000 companies very much a company that started in France did flip to the US has been headquartered in New York a few blocks away from our office for the last six years. At the same time still is as you know plenty of people in Europe was a bunch of like the sea level living in Europe. So it can be not so that I could be an example. You mentioned ledger based in Paris here in Berlin. I'm a private investor in softer which is no good company. Where are they. This here is a have two companies in the UK. You mentioned Synthesia. I'm also a private investor in a company called Surreal DB. But again all of those companies are companies that truly have global ambitions like none of them want to build a European champion. I think not much to add. I would love to discuss like so many things even further. But we have to postpone this to another session. Let's see when I can grab grab you back into the seat. Great. Well this is lovely. I really appreciate it. And it's a wonderful discussion. I really appreciate you having me on the podcast. It's been an absolute pleasure. I'll link to the mad landscape to your blog to first mark to your LinkedIn or Twitter or both for for some memes as well. Thanks for stopping by and thanks everyone for listening to the Unicorn Bakery.