I think it's going to end up with some serious catastrophe for many of the players.
The market is not balanced.
It means that a lot of that cash that's flowing into the market would be wasted.
What a guest we have in the hot seat for you today.
Gili Ronan, founder of CyberStops and one of the most successful seed investors ever.
Venture is a game.
We know very little when we get into investments.
In his 19 company portfolio of fun one, check this out.
He invested in a Dekacorn, Wiz, seven unicorns, and he had three other companies acquired.
That is an insane hit rate.
We need to be selfish and we need to be greedy.
Those are good trades for an early-stage investor.
Prior to CyberStars, Gili spent over 15 years as a general partner at Sequoia, where he invested in some of the world's best cybersecurity companies.
As an investor, you look at yourself and say, okay, I really f***ed up.
I'm not in a business of babysitting founders.
Ready to go?
Gilly, we've been friends for a while.
We did a show remote and it is just so much better in person.
And so I've been so looking forward to this.
I also love shows.
You've got to remember why I do this show.
I do this show because I love to learn from people who are so much wiser than me.
And it's like the greatest joy to have you here with me.
So thank you for doing this, dude.
Happy to join.
And if I knew that you are coming with shorts to the interview, I would come, I would show up earlier.
Dude, do you not realize that we have the table so I can hide them?
I look professional from above.
Oh, I didn't mean to disclose any state secrets, but it's fine.
It's fine.
We know that my shorts are a little too short, but i want to start dude on our conversation that we literally just had, which is does the venture business work anymore when we have entry prices of 150 and 100 x ars, as we are seeing today?
So you could say that there are multiple answers to that.
First of all, the venture business as a whole doesn't work.
It doesn't work.
It shouldn't work.
And returns distribution are not divided equally between players.
Otherwise, it would be too easy There won't be winners and losers.
It would be boring.
None of us would be playing that.
We would do something else.
The expectation that the venture business would work out is set yourself for disappointment from the get-go.
It doesn't work.
Now, it worked for some people.
It works for some people for some time and the number of people it works for them for a long period of time.
Let's take our favorite friends from Sequoia Capital or Andreessen Benchmark, Greylock Lightspeed.
That number of players is super small.
And if you look at all amount of money that's flowing into the markets right now and for the past few years No, I don't think it's going to work.
I think it's going to end up with some serious catastrophe for many of the players.
If I'm a limited partner and I have distributed my venture allocation evenly, I wouldn't sleep well at night.
Again, as you know, I'm focused solely on cybersecurity, so I know very little about other domains that you probably know way more than I do.
But cybersecurity is probably an interesting enough market to talk about and it's a sizable enough market to talk about.
The flow of new players into cybersecurity is quite steady for the past, I would say, 20 years.
You're looking at around 350, 400 new teams that get funded every year, you know, across US, Israel and a little bit in Europe unfortunately, you know it should be more, I guess and hope it would get a bigger number over time.
But that, you know, that number, that's the...
100% of the cybersecurity universe.
So think about it like the past decade, There were about 4,000 new cybersecurity startups.
In the next decade there'll be probably four to five, maybe 1000 cybersecurity startups in the world.
That's a large number.
Over the past few years.
The entry price, as you rightfully mentioned, is going up for many of those startups.
When I wrote the first check to Asaf Rapoport at Adalom, the first company they started in 2012, It was done at, if I'm not wrong, 15 million post.
Many of those deals done at high prices.
And still, if you look, so that's in the incoming stream.
If you look at the outgoing stream, You look at exit prices or even the likelihood of a cybersecurity company to become a unicorn.
Do you have any idea?
Take Israel, which is probably 40% of the market.
So we have to multiply the Israeli number by two and a half to get the global number.
Do you have any guess?
What's the number of companies that became unicorns in cybersecurity last year 2025?
Six to eight.
Two.
2024?
You're five.
One.
That was a bad year.
It's two or one till 2022.
The only year which was an outlier, which was an exception, was 2021.
2021.
There were like seven companies that turned unicorn but that changed the mindset of investors.
And were they synthetic?
Were they artificially inflated?
Have they persisted as valuable companies or is that 2021 bubble?
You know, in a way it doesn't matter.
It is what it is.
Those are the stats.
We can argue about the reasons and the drivers and we are probably going to be wrong because we have all kinds of biases.
But the fact is that, out of around 150 new companies in cybersecurity in Israel, the likelihood you'll hit a successful company is still 1.
It's one out of 150, maybe two out of 150.
And the prices the entry prices where you buy stock at the seed stage is going significantly higher, means that the market is not balanced.
It means that a lot of that cash that's flowing into the market would be wasted.
And it means that you have to be...
Not as just a limited partner.
As a founder, you have to pick your financing partners more wisely, because the numbers and the probabilities are not working in your favor.
They're working against you.
And it's just getting worse and worse over time.
Can I interrupt you and say I can say this because we know each other and you know there's so much love and respect for you.
Do you think you're being a boomer?
And what I mean by being a boomer is the alternative argument would be, Gilly.
We are seeing labor displacement like we've never seen before.
We're seeing outcome sizes expand like we've never seen before.
We're seeing CrowdStrike and Palo Alto networks reach sizes of market cap that were never before thought possible.
Of course we can pay more on entry because the outcome sizes are so much bigger.
You can say that.
That would be a legitimate argument and I would accept it with all humbleness.
It would not change the probability facts around this game.
And venture is a game.
We know very little when we get into investments.
If we analyze product ideas and markets, mostly we analyze smoke, because the founders would change their mind in just a few weeks and it would be a different product, different market, many different things.
So we know so little, and you're right, some of the outcome definitely in cybersecurity became very massive because the pain points in cybersecurity are massive.
This is not an argument why we should invest less in innovation in cybersecurity.
The contrary, we should invest more and innovation in cybersecurity, for reasons we can discuss in a minute.
But we should be super realistic as investors and limited partners about the ongoing and lasting impact of entry prices when we invest in innovative technologies and emerging teams.
What we haven't discussed, correlated to that increasing entry price, is the increasing fund size that has been associated and correlated to that.
Fund sizes have ballooned.
I mean now we have 10.
We both love you know your Sequoias and your Andreessens and we have 10 billion funds.
I mean Andreessen.
I know it's combined so it's a little bit misleading.
But you know, David George has a 6, 7 billion pool.
That's...
It's a lot of money.
Do you think the mega funds will be able to return venture-like economics in this generation of venture, given what we just discussed?
The funds that have the tradition, the textbook, the guardrails to make great investments.
They would continue to do well.
So would I invest in those funds personally?
Yes. we should we should admit that we are looking at at a massive opportunity ahead of us so it's not it's not criticism of the opportunity the opportunity is here it's real uh and and you know the investment in innovation is justified and and those companies especially those companies that are growing very, very fast, they need a lot of cash, more cash than before.
And you know I don't think that cloud code and you know AI, which at least in the next few years, would not change that materially.
And it takes a lot of money to build large companies.
So yes, I encourage founders to raise a lot of money if they like to continue and build significant companies.
So you can correlate fund sizes to that.
My concern is around entry prices and whether that would limit innovation at some point in time, because disappointment would would would show up.
What did you turn down because of price that you later regret and what did you not see?
If you do a post-mortem, You know we are exercising the science of greed.
So, almost by design, we need to be selfish and we need to be greedy.
Those are good trades for an early stage investor.
Those are not bad, negative trades for anybody who's dealing with early stage.
Yes, price is an important consideration.
And whenever I see an inflated price seeded deal where essentially it's a bet on a team, I get more skeptic now.
Whether I turn it down or not, it depends on many other factors.
I think one challenging thing about where we are today is so many of our prior assumptions or beliefs are questioned.
And one of them is around growth.
The growth of companies today is so much more significant than it has been in the past.
How do we value companies when the growth trajectory and pathways are so very different?
First of all, I believe that trajectory velocity growth rates are the most important indicators for a healthy business.
I think that part of our job is to look at that growth and try to sense whether it's being engineered or it's being organically achieved.
And there are ways to engineer growth.
But whenever you see a company that's a business that's growing very, very fast, it's a good company.
As a general statement, I mean.
Because that's the best predictor for a company that does well.
And over time I learned that Whenever a business is getting to a point it's growing super fast, year over year it becomes part of their DNA.
So it would not slow down just because.
Just because, you know, averages and things like that.
There needs to be a... a significant external event to slow them down.
So if a company grows fast, it would continue to grow fast.
It's part of the DNA.
They probably do something very right at that company.
Now we can go and analyze that and and backtrack that and attribute that to all kind of founder trades and market dynamics and things like that.
It doesn't change, you know, if you look at the way companies like Wizz or Sierra have grown.
You know, at CyberStarts we do the same type of you know exercise product market fit exercise with all our companies and you know we call it sunrise.
We spoke about it last time we we met and um, it's an attempt to get into some sort of alignment between the pain point in the market and the solution you have.
So you know you really sell something that people would use and love and buy more and recommend to their friends and colleagues.
That's product market fit.
And at Wizz.
When you look at the first year of selling software, you know the first quarter was a million dollars.
And then second quarter of selling software was $2 million.
And then eight, and then 24.
So that's an amazing year.
That's in 2020. or maybe partially 2020 and then early 2021.
When you see that level of growth, this is not a one-time event.
And the company continued.
By the way, we had the records of companies like Palo Alto Networks or ServiceNow, who are part of the Sequoia Capital portfolio.
I had access to the numbers and this is insane pace what we've demonstrated.
Do you think great companies are up and to the right there?
Because I was always of the belief that actually companies zig and zag and they pass up.
I'll give you the other, so Sierra, They had an amazing start.
They sold probably half a million dollars in the first quarter and then a million dollars and they sold zero for two quarters.
Literally zero.
It was, okay, what's going on?
As an investor, you look at yourself and say, okay, I really fucked up.
And then the team and I really attribute that to the founders, to Yotam Segev, the CEO, and Tamar Bar-Ilan, the CTO They really analyzed what's going on.
They made some modifications.
And the next 12 months, they sold $12 million of new business.
So they went 2 to 12.
And then I don't like to disclose all the numbers because it's all still in, you know, it's a...
It's an active company that's making terrific progress, but it continued to grow extremely fast.
Because when you see a company that grows that fast, it's part of the DNA.
There's something about the company that make them grow fast. amazing execution on go-to-market.
It may be weakness on the competitive side.
It may be perfect timing with market.
It's probably product-market fit, but there's reasons that you can analyze.
But that thing that makes them move so fast, Typically most of the cases would not simply fade away.
So one of my biggest lessons is the importance of market size and just having mega, mega markets.
Because to your point on like up and if you hit target and you continue to hit target, honestly I was like yes, but so many companies plateau.
They hit 20, 30 and then boom.
And the markets are just not as deep as we thought.
They're more crowded.
And we thought the market is not what we thought it was.
Am I wrong?
And does great quarter compound to next great quarter?
And how do you think about that?
The majority do plateau.
I don't think you are wrong.
I'll give you two contrary examples.
That's the beauty of our profession that it's made up of the exceptions.
Because the rules, Who cares about the rules?
Take a company that focused early on, one of my portfolio companies in fund one called Noname.
It was focused on API security.
Amazing company and and you know they did.
First year, i believe it was three million dollars or so, second year 15.
Okay, that's amazing.
And they, they slow down.
Why the market for api security was?
You know it wasn't a market, It was a niche segment within application security.
And the company, in order to really sustain that growth, had to really reinvent itself into a much bigger product vision, market vision, and it was super hard.
And eventually we sold the business to Akamai for half a billion dollars or so.
And, you know, that was end of story.
On the other hand, another company in our portfolio same year, founded on the same year 2019, company called Island amazing founders.
Mike Fay is the CEO, Dan Amiga is the CTO and the company is basically selling browsers.
And their idea is enterprise browser.
Now, believe me, in 2019, the number of customers, number of CISOs, number of chief information security officers that told told us that they need an enterprise browser equals the number of CIOs or users that told the market in 2006 that they need an iPhone.
It's a market that doesn't exist.
And still, the company is growing super fast.
It's a 5 billion company today in valuation selling, growing very, very fast in a market that it actually they define the market.
And the market is growing.
I can't talk about the specific customers they have, but they have tons of financial services and Fortune 100 customers.
And think about a bank that's using an island browser instead of...
Google or Microsoft browsers.
That's unbelievable, because you're essentially competing with free, which is a tough competition.
The conclusion again in my mind is that we are we are exercising the science of exceptions and it's good that we share that those lessons.
But if you just take those lessons and apply them linearly, I think that it would be very hard for you.
You mentioned two incredible businesses there with Sierra and Islands.
I am interested because when companies are on a trajectory like they are and I'm not choosing them, so I'm kind of just saying a trajectory that's amazing and fast-growing companies that are clearly looking like winners, capital concentrates.
And what happens often is the foie gras.
You know, foie gras, funnel, explodes.
Do you worry that too much money goes in too quickly and the founders are defocused and distracted?
I'm never worried about that.
Never worried about that.
Why?
Because it takes a lot of money to really build those companies.
And if we don't need the cash this year, we need it next year.
So I'm not worried about that.
The contrary example of engineering growth, if you are taking good money and your magic number is horrible, And for every dollar you spent on sales and marketing, you generate 10 cents in new ARR, you're in a horrible business.
And yes, you can take that money, throw it, and your efficacy, your yield is so low that...
You would not be able to sustain it.
But if your yield, if you've built a product that fits what the market needs, product market fit, you've got a team, a go-to marketing that executes in a decent way, decent plus way, your yield would be significantly higher.
Now, it may not be as you'd like it to be, to be, I don't know, 140 cents on the dollar.
Maybe it's going to be because it's early.
It's going to be 65 cents, growing into 80 cents on the dollar, but the yield would be decent.
You can see how you can turn it into a profitable business.
Why would you care that you have, you know, another extra $200 million in the bank?
I think the concern is that you have a brilliant but young founder who suddenly brings forward a product roadmap, does four things not one becomes defocused, opens up new geographies too soon, hires too aggressively and poorly, and then suddenly the core business that we liked, we loved, is now all over the place and we need to rein it back in.
Intellectually, I get it.
I respect that.
I don't have that concern.
I'm not in a business of babysitting founders.
For me, this is like babysitting the founder.
If we trust them to build, in my case, an important cybersecurity company that's critical to all the major banks in the US, and you put in their hands the safety of our nation's most sensitive information and then you tell them okay, and you can't handle the idea that you have some extra cushion in a bank and you're going to get sloppy and lazy.
Okay, I don't buy into that.
You mentioned engineering growth.
One way that you can engineer growth today is actually in your cogs and spending on inference and allowing for a reduction in margin.
Now, I was always taught that margin matters, but we're seeing margins denigrate in a wave of AI as more and more is spent on inference.
Do we just appreciate that margins will come good eventually?
Or do we appreciate that AI is just a different margin profile that we have to get used to?
I'm not sure what's the right answer.
Because I don't think that we've seen enough of healthy, profitable AI businesses to really drive back the important vital signs for a healthy AI company.
Who knows?
I can tell you for sure that the vital signs for a healthy cybersecurity company involves high, healthy gross margins.
My instincts are that gross margins matter.
Are they important?
How much I discuss, how often I discuss gross margins with my early stage companies?
Never.
Because part of the journey and part of our job as investors is to really help the founders realize what challenges, what problems they need to tackle right now, this year, and that's 2026, and what are the challenges and problems they that they would tackle in 2027 and 2028.
So, if you have, you know if I would be lucky enough and you become a founder of a young cybersecurity company in the CyberStars portfolio.
I would tell you, you know, gross margins are important.
Let's talk about it in 2029.
Let's build the foundations of healthy business, assuming that we would get to deal with gross margins.
Now, that's true for cybersecurity.
It may not be the truth for AI businesses.
As I said, I don't think that we, as an industry, have enough track record and history with that.
I suspect that gross margins would continue to be important.
Has your expectation on the growth rate of companies changed before triple triple, going from three to 10, was good.
Now with a Lovable, with a Legora, a Harvey, you need to go to 50 and 50 to 200 in two years.
The growth rates are so different.
Have what you expect changed?
I think that exceptional companies traditionally went in extremely high pace.
And an extremely high pace for me is, let's say, in the first five years from the moment you start to sell till the fifth year afterwards, if you go uh 4x 4x, 3x and 3x or new in a new ar, not ar, new ar So in the second year you do four times the new ARR that you have done in the first year.
I'll save you the math, that's 144X after five years.
Which means that in the first year, even if you have booked 1 million of new ARR, in the fifth year you'll book 144 million of new ARR.
That's a nice company.
That's a nice company.
Now, if you've done 2 million in the first year and you follow the same velocity, you'll do 288 million of new AR.
That's even a better company.
So I don't think there's a limit on what great is.
I just gave you the amazing numbers of whiz and I'm confident that five years from now I'll be able to show you, I'll be able to demonstrate another team that showing that actually Wiz was a slug and they can move much faster and they've done whatever it is.
But bar for real greatness for companies, I think pretty much stay the same.
Now you can do higher than the bar.
That's great.
Good for you.
Do that.
You can grow from 5 to 50 to 200.
Please do that.
But even if you do, I don't know, in UAR, 1, 4, 16, 48, those are terrific numbers.
You'll do well.
You may not be the most iconic company ever, but you'll be a very, very nice company.
They're terrific numbers and they're even more exciting if the multiples on them that we value those companies at are good.
I look at my public market book, and I used to think I was so good.
It used to just be green, green.
And now I look at it, and it's all red.
I mean, Google and Nvidia aside.
And I look at it and I'm like, oh, maybe I wasn't so good.
And the multiples are so low.
You have Monday trading at like one and a half X.
You have Wix trading at two and a half X.
They just announced a buyback which is enormous at their 4 billion market cap.
What do we do in a world where these multiples are so low and public markets don't value what we always sold?
I'm not always sure I understand public markets and sometimes I'm confused and baffled, exactly as you are.
Is that markets have expectations about growth rates, exactly as we have discussed?
And for whatever reason, if they believe that the growth rate of a company would decline because of whatever reasons.
In those specific cases, my guess is there is an expectation that autonomous programs would displace and would eat part of the business of those companies.
But again I'm not sure and I'm not confident about what I'm saying, but that's my assumption.
Then you would see the multiplier declining.
But if those companies would continue regardless of the market, would continue to grow at incredible pace, the multipliers would rebound back to where they are.
The multiplier is just the market anticipation for your growth rate.
With the extension of private markets, because I think so many people are so baffled by the public markets that they don't want to go there like your stripes or your canvas of the world.
Do you think the extension of private markets in the way that we're seeing is fundamentally good?
I think it's functional.
And I think it's sustainable.
For me, going public is not a financial event.
It's a branding event.
It's an occasion where you tell your customers, your partners, your employees, your future employees, I'm here to stay.
That's IPO.
Because typically it's not a financial event.
It's not a liquidity event.
It's contrary.
It's the opposite of liquidity event.
You get shackles on your hand.
You cannot sell stock.
You've got all kinds of limitations.
It's hell for liquidity.
But it's an important marketing event.
So I believe that still many founders and many companies would choose to go through that exercise and pay the price for lack of flexibility and lack of liquidity, just to gain the value the long-term value of that marketing event.
But IPO by itself is not a financial event.
It's not liquidity.
It's the contrary of that.
With that extension we have the ability to sell in secondaries and finally sell into much higher priced rounds.
How do you think about your responsibility or the importance of selling in secondaries much later on and providing mega returns to LPs in these very highly priced rounds?
I think about secondaries, first of all, in the context of retaining talent.
That's I think the most important consideration.
I have in mind when I think about secondary, because it doesn't just take a lot of cash to build important companies, and specifically important cybersecurity companies in our case, it takes longer time.
And with the current market, you typically grant employees stock for four, maybe five years.
Yes, you can do some new refill and new allocation, but typically those are fractions of the original allocation.
Because the company is bigger, there are more employees.
It's in a different stage.
You get to situations where your best employees, your most important employees, your best engineers, your best product managers, your best salespeople are already fully vested and structurally you are unable to allocate them equally large or equally tempting grants and you actually force them out of the company.
Because for those employees, assuming they were not born super wealthy, that equity.
They are lucky enough, they are happy enough to be part of a company that is doing extremely well.
They are fully vested.
Now most of the wealth of their family is actually attached to that one company so it's actually very very logical for them to consider diversification exactly as we diversify our portfolio by going and joining another team and hoping to to build a diversified portfolio now the antidote For that, a market built-in weakness is the secondary.
That's the reason, by the way, that at CyberStarts, we created a vehicle.
We call it employee liquidity fund, which is focused not on one-off type of secondary deals, but creating a program, a recurring program, with a portfolio company where we provide liquidity to their employees every year.
And what we do is that we underwrite tender offer every year.
So the employee of that company knows that they are getting liquidity the very same type of liquidity they would get in a public market.
They would get it in a private company.
And that would help our portfolio companies retain talent.
How does the rest of the cap table feel about that?
You have Rofus, obviously, right of first refusals.
Well, I'm happy to let others participate with me.
I do not object to that.
We just announced that we've done our first type of secondary program with Sayera.
I think that we are buying probably not mention the exact number, but it's many, many millions of dollars of a few hundred employees of Sayera.
How do you do the valuation setting on those?
Is it like a premium to last round and you just have a kind of blanket valuation mechanism?
It's an ongoing process with management.
You have to price the round.
So liquidity is back to the topic.
I gave you the example just to show how we practice this theoretical argument about it takes more time for companies to mature and to get to the public market.
If they get to the public market, it becomes a strain on their talent pool and how secondaries are actually the solution for that.
The story I just told you or the example I just gave you is a way to solve it.
I'm sure there are other ways to do it.
Secondaries can be also a way for early stage firms like CyberStarts to return capital to limited partners.
You know it makes these systems, it makes the markets more sophisticated and with that extra sophistication you can create better solutions, first of all for employees, for founders and for limited partners.
And overall, I think that's a highly positive element in a business.
So you will lean into liquidating some parts of positions and providing cash back in earlier situations.
Look, it's not a secret that you know.
At CyberStarts, we have soldered secondary shares at companies like Wizz early on.
By the way, I regret...
I sold every single share at Wiz.
I regret it because if I sold it right now, I would show better performance for my limited partners.
But at the time, it looks like the right thing and the responsible thing for us to do.
And we did it.
What did you get wrong?
Obviously, you made millions and millions.
It's incredible.
But like when you sort of do a postmortem on that, what did you not see that you would like to have seen?
It were the early days for cyberstarts.
And you know we talk about startups.
You know cyberstarts or you know 20 VC, and those are startups.
Those are businesses with business plan, with teams, with clients.
Early on, I thought that it's a good thing for us to show our limited partners that not all We had an incredible super high paper value of portfolio.
And I wanted to demonstrate to them that we can actually show some drive, some liquidity to them.
Do you think there are core misalignments between GP and LP?
And so we can take that as an example where I say an early GP will want to show great DPI because they want to go and raise and I'm not saying you here at all, but in most cases because they want to go and raise a bigger fund sooner.
And actually, if I'm in a holding LP, I want you to retain that position.
And I don't want you to do that.
There's a misalignment there.
Do you think there are other misalignments that we don't talk about?
Potentially.
But even for that quote-unquote misalignment, it's always easier to look at it over time.
But back in the early days when I made a mistake and sold with stock that you know, if I knew where it's going, I would hold on to that.
The reaction from my limited partners and I have still a very sophisticated smart set of investors was overwhelmingly positive.
They were cheering for that because for them it was you know, it's a new gp uh and, and that was a a positive event.
I had only one or two super smart lps.
I remember one, you know.
One of them called me and say hey um, I'm not investing here to diversify or to hedge my risks.
I actually like to take more risks.
And I appreciated that.
And by the way, I still believe it was for cyber starts back then, it was the right decision.
When you look back at the investors that you were and that you are today, have you changed much?
I think I changed a lot.
I probably went zero to one, meaning No business, seed investment, no idea to a real business probably close to 50 times.
That's a lot.
And I hope that if you do that type of journey 50 times, you learn something.
And I think I'm learning every day.
I think that what's the only constant in our business is the diversity and the change of the people I meet and partner with.
And I think that's what makes this profession In many ways, it's a terrible profession.
It's a profession where you don't know if you're good in what you're doing for five or six years.
Show me another profession where you show up to work every day for five years.
You have no idea if you're doing any good.
In that sense, it's a terrible profession, but I really think it's one of the most exciting professions in the world, just because it gives you the opportunity to share your life with so many amazing individuals.
You can gain just a little bit from every team you partner with, but cumulatively I think that we are gaining a lot.
We have to listen better.
We have to become better listeners over time.
That by itself makes us better people, better parents, better partners.
You're going through a change and it's not like one time change.
It's a gradual change and the more you do that, the more teams you go with to the journey, the more ups and downs you experience in the business.
You change and I think you become a better version of yourself.
What would you say to me and to many people in the industry who are looking at frameworks that we used to use and they are kind of out the window?
Whether it's your rule of 40s or your triple triple, double doubles, or your focus on margins in the early days, or whatever these are.
And the world seems to be less secure or obvious than it was in a prior generation.
What would you say to that younger generation of investor feeling insecure about their skills in this new world?
Learn as much as you can from old farts like myself.
But at the end of the day, use your guts to make decisions.
We don't.
You know.
Nobody knows better than you do.
Do you have a monopoly on the israeli cyber market?
I don't know.
I don't know and I don't think about it.
Do you ever have a company, though and I don't mean this arrogantly at all, and you don't sound arrogant, because I'm asking you do you ever have a cyber company in Israel where their seed round is announced and you're like I didn't see that?
Maybe once or twice over the past eight years.
There are deals that I'm telling myself, okay, I should have done it.
That was a mistake.
Which one most resonates?
It really doesn't matter.
And I probably don't regret the right one and I regret the wrong ones.
But one thing I learned about the business is that I focus on my business, on the deals I've done and the teams I've partnered with.
That's where I put my focus and energy.
You can't cover everything and you can't get everything.
You are not going to win every battle.
And if you are stressed about winning every battle, you know I need to be in every important AI company.
I can predict that you are not going to be in every important AI company.
I need to be in every important cybersecurity company.
You are not going to be in every... Over time. in every cybersecurity company.
So I focus on my portfolio companies and I try to do the best with the teams that put their faith in CyberStarts and work with us.
So funny, I remember speaking to Pat Grady about the great companies that Score invests in.
And I was saying about, oh God, you're such great pickers.
And I was kind of being very kind as is deserved.
And he said, you don't understand, dude.
Every single public company that doesn't have Sequoia as an investor is a mess.
This is not okay.
You understand that?
And I really hit home on like market share for them as being a core driver and it is for Andreessen.
Have you lost a deal in the last five years?
Yes.
You have?
Yeah.
Who did you lose to?
Some other amazing investors.
Is there anything else you could have done?
I always think I never want to leave anything on the field.
That's what I say to the team.
We could have done more.
I could have...
Done another customer call, send them another intro, hired someone else for them, paid more.
Is there anything else you could have done to win it?
Absolutely.
There are always things you can, you know, if I look at this, the cyber starts a business.
We are improving it all the time.
And we are always...
I'm telling my partners all the time, we are always as good as our next investment.
You know why it really doesn't matter?
Because if all our investments would be amazing and we've lost one or two companies, that doesn't matter.
So again, everything leads me to the conclusion that let's focus on our own thing.
We typically get what we want to get.
We can always improve.
I'm very, very happy with the progress.
Before we do a quick fire as we think about building teams.
You have an amazing partnership and you have great people in your team.
What would you advise me on how to build a great venture partnership with incredible dynamics, relationships between partners?
What should I know that you've learned?
Lots of lessons I'll pick one one example, which might be non-trivial.
I learned that people are very different and they bring different talents with them.
So, as a manager, as an executive, as a managing partner, very easy mistake you can make is to try and create some sort of guardrails and textbook and bring everyone into the same mode of operation.
You do that typically because you think OK, this is what worked for me.
Now here's a new partner.
Let's map the gaps between the way he or she performs and that recipe and let's bridge the gap.
My view on that is that i would let each team member play on the relative strengths and would not require them to focus on improving their weaknesses, but actually play more often and stronger on the relative advantages, because on their weaknesses, at the best case, they can be as good as the market.
But on the things that are exceptional.
They are creating real advantage, real better.
You know, some real greatness.
And that leaves cyber starts with a team of people that really enjoy working with each other.
But each of us is operating in a different way and we respect that.
I think you you, you do you learn that through mistakes.
I think i've put guard rails on people before where i like, constrain them to my way of thinking, and then actually i realized that that's a net negative for them where it was a positive for me.
Exactly Okay, quick fire round my friend.
What have you changed your mind on most in the last 12 months?
Founders chemistry, how important that is.
I always thought that chemistry with the founder is important, but founders are brought to life in all shapes and forms.
Focus on the teams that you have the most chemistry with.
Are the best founding teams not often broken up eventually?
We always say like ah, the CEO is amazing.
But the CTO and I was like don't worry, just focus on the spikiest element being the CEO.
The CTO will probably fall away.
They might leave, they might be ahead of Ange, whatever that is, just focus on the spikiest person.
Does the founding relationship matter?
Extremely, extremely matter, yes.
How do you test it?
Yeah, simple tests.
Do they know each other?
Were they, I don't know, roommates for a long period of time?
Did they work together and went through some challenges?
And sometimes you don't know.
Who do you learn the most from as an investor?
If I'm fortunate to have people like you or Neil Major or Pat Grady as my mentors, who are yours?
The decade I spent with Sequoia Capital was formation period for me.
It wasn't an easy period.
I couldn't do what I'm doing today without learning from Doug Leone and Michael Moritz, and Jim Getz and Pat Grady.
It wasn't easy, as I told you.
It took me a long time to mature as an investor.
And it's hard.
It's hard to really, you know, it's crazy hard.
You show up to the office every day.
You're surrounded by super achievers who are building amazing companies.
And you look yourself in the mirror and say, okay, I'm the shittiest investor in this room.
You know, there are 10 guys around me.
I'm the worst.
And the next day, I'm still the shittiest investor.
And you go like that every day.
It's really hard.
It's really hard.
You have really bad days sometimes.
It takes a lot of greed and determination to keep going and believe that you're going to figure it out.
What was your hardest day as an investor like i?
Can pinpoint one for me when the first company i invested in shut down.
I had to shut it down.
That was super hard.
That was because it's a very public failure.
It's a failure that you cannot cover.
It's a failure that you, you know You have to deal with.
What motivates you more, the thrill of winning or the fear of losing?
Thrill of winning.
What's the most memorable founder meeting, first founder meeting that you think of when I say that?
It's not the best founder, but just like the most memorable first founder meeting.
Really fun first meeting with a founder.
I would not mention the name. where during the meeting the founder starts to shout, I'm the best.
I'm the best motherfucker.
I'm the best.
And it's like, okay.
And he's like, it goes on and on like 10 minutes.
He's like praising himself and it was his way i don't know his crazy way to to demonstrate self-confidence.
Did you invest?
No, Did it turn out to be an interesting company?
Public company.
Wow, that's amazing.
Okay, final one.
What are you most excited about when you look forward to the next 10 years?
Working with my team and growing.
You know amazing investors that can keep on making impact on cybersecurity.
Gedi, I so appreciate you.
I so appreciate the friendship.
I so appreciate the honesty.
You've been fantastic.
Really enjoyed it.
And Harry, thank you so much.
You should invite me more often.
