Episode 33: Amit Garg- Investing in the future of Artificial Intelligence
About Amit Garg:
My next guest on The One Percent Project is Amit Garg. Amit is the Managing Partner and Co-Founder of Tau Venture, an AI-focused seed fund. He kicked off his career at Google and then went to work with Norwest Venture Partners and Samsung NEXT- Samsung's investment arm. He has also co-founded HealthIQ, which is valued at USD 450M. He did his bachelor's and masters from Stanford and MBA from Harvard Business School.
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In this conversation he talks about:
How his professional and personal journey helped him as a venture capitalist?
Why did he set up an AI-focused seed fund?
What is his venture evaluation and investment framework?
When should a founder consider raising from a VC?
How should seed-stage founders build their teams?
Why is bottom-up market sizing more insightful?
His thinking behind investing in nuTonomy and Misfit.
Key Take-Aways:
Venture capital money is "Rocket Fuel". If you take rocket fuel too early, you will burn in the atmosphere before reaching the moon and the stars.
It is not about 'WHAT' you do but about 'HOW' you do it.
Team, Technology and Traction are the three most significant aspects a venture capitalist should look for while investing.
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Transcript:
*The transcripts are not 100% accurate.
Pritish: Hi Amit Welcome to the One Percent Project.
Amit: Pritish thank you very much for having me. I've seen a much about your work, we put you in touch obviously with Christina Lopez from FidoCure, and you guys did a podcast a couple of months ago and big fan. So, thank you. Thank you for having me.
Pritish: Thank you. So, which aspect of your experience has helped you the most as a venture capitalist of being of Indian origin born in Brazil, speak three languages, products analytics guy from Google, building a crowdfunded hospital training and finishing an Ironman or climbing Mount Kilimanjaro?
Amit: Wow, Pritish, you did your homework and I'm honored that you looked up all of this. A lot more to learn and grow. I'm going to take both sort of an easy but also hard answer. It's not so much the experience of what you do. But I think it's the experience of how you do it and in my case, I've always tried to surround myself with good people, any stage of my life, high school, my teachers elementary school, my friends, my parents, well, I didn't get to choose my parents, but I got lucky, the jobs I have gone to, the companies I've worked at, my co-founders, I think everybody has something to teach and working with people who have more and more to teach makes you a better and better person and people who push you forward. So, my mentors, and mentors doesn't mean necessarily your bosses, mentors means anybody who has something to teach you, whether it's your spouse, whether it's your parents, whether it's your elementary school teacher, or your high school professor, or high school teacher, or your college professor, or your bosses at work, or your co-founders, like everybody has, in some way, shape, or form in ways that I don't even realize taught me something. So, that's what I aggregate. I think it's in some ways why I have become a venture capitalist. Also, I'm a collector of good people, the entrepreneurs I've invested in all of them are, at least in some way, infinitely more interesting than me, infinitely more capable than me and I learned something from them also. So, that's what I seek and that's what I always tell anybody is that seek good people, you will learn so much from them.
Pritish: Why AI seed fund?
Amit: So, this is a theme that Sanjay, my partner and I evolved organically in our careers. We're both computer scientists, I did my undergrad, a master’s at Stanford in computer science, biology, sort of my Masters, Sanjay did it at MIT, I worked at Google, he worked at Microsoft. So, we have been around AI now throughout our professional careers and in our investment careers we kept coming across the theme increasingly more, especially in the last two or three years. Yeah, AI is nothing new. It's been around for 50 plus years. But AI is now possible in a way that wasn't before. There's a lot more data, there's a lot more computational power and there's a lot more acceptance of technology disrupting, I call it 10x, doing a 10x difference in industries that previously were much more opaque. Like take healthcare. Here in the US digital innovation now is growing by leaps and bounds. It was about time. Take enterprise, it's a little bit ahead in terms of adoption of technology and AI. But yeah, it's made massive changes in enterprise. So, we start from the ground up that look, we have moved away now from developing core AI, to applying AI is the same transition that mobile did about 10, 15 years ago, when iPhone became a platform, or the cloud did 20 years ago, that the internet did 25 years ago, nobody says today I'm building a.com. It's sort of understood, yes, I'm building a company that will have a web presence.
So, AI is going through the same transition and we wanted to bring all of our experience to mark in industries that are typically hard, like I focus on healthcare, and you interviewed one of my founders a couple of months back so you can appreciate this, that in healthcare, you can do so much more with data, you can maybe solve cancer, you can save lives and we wanted to provide a health first AI first, seed first. Seed meaning, It's the first capital infusion that an institution is providing. I'm speaking from my perspective, by the way, my partner focuses on enterprise and he provides a tremendous amount of health help in his enterprise domain and we do a little bit of automation. So, cars, drones, robots, it's a smaller thesis for us because it's more hardware intensive, and we want to be software focused, but that's why we focus on the verticals on the stage and ultimately, apply the AI horizontal uniting all these teams. We don't look at AI as being an industry, we look at it as an enabler of these industries.
Pritish: You definitely have looked at AI very closely. How do you compare the evolution of the West compared to the Asian markets?
Amit: It's a fascinating topic and reminds me of a couple of books I've read recently. You may be familiar with Kai-Fu Lee, his book which I highly recommend for all the audience here Kai-Fu Lee is a technologist who spent a lot of his career in the US at Microsoft, and then went back to China and has built one of the foremost venture capital world firms there and he has some cogent arguments that I do agree with, which is that if you take the east, especially China, for many reasons, business reasons, cultural reasons, they're able to collect data, and they're able to analyze data in ways that are not as easy in the West. But on the other hand, the West overall, it's hard to generalize but overall, is coming up with many of the technological innovations, very cutting-edge innovation. So, I don't see this as a zero-sum game, I don't see East versus West, you alluded to my personal background, I am a citizen of the world, I've grown up in a different country, have worked in a different country, I've citizenships from multiple countries and I believe that it's the partnership of East and West that will create the best results for all of us and we want that, we want all countries to develop AI. I don't want that world where there's one country that is a superpower, I want a country in a world where it's a multipolar world. So, at a very high level, let me just take China as an example, China can mandate that hospitals share data with each other and that will help overall everyone because you can analyze the data, it's much harder to do that in the US for a variety of reasons, historical reasons, regulatory reasons, privacy concerns, but you do have some, not all, some of the best minds around AI sitting here in the US. So, let's all work together to solve these problems. But the goal of technology is to serve human beings. So, let's do that.
Pritish: So, let me ask you a different question. Can AI be a good venture capitalist?
Amit: Well, let me ask you a question back, can AI be a good podcaster?
Pritish: No
Amit: Well, in that case, you could probably subscribe to my same school of thought here. AI is a very powerful tool. But AI is not a replacement. For a human being, AI will destroy lots of jobs. Let's not put it mildly. But AI will create a lot of jobs. Also, the AI, in my mind is similar level of revolution, bigger revolution than what the Industrial Revolution was 200, 300 years ago, or the agricultural revolution was 2000 years ago, we're living through that same level of transformation, except we're living it much faster, we're living it within one lifetime, probably and it creates a massive impact to the point that people won't be necessarily able to train and retrain. Technology is evolving faster than the ability of human beings to adapt to that technology. But it is ultimately a platform, a tool and let me take that as an example, 200 years ago, scientists and doctors had come up with a technology that allowed them to measure and monitor human beings in a way that had never been done before and it was really exciting, because now you could actually quantify what a patient was going through and there was a lot of resistance at the time that why should we adopt this technology?
Why should we actually do this? Doctors should just talk to patients, should just feel patients and they should get all the data just from these interactions with data of patients, it took about 50 years for that technology to get adopted in a massive way. We call the technology the thermometer. It was the thermometer, today it's inconceivable to us that why wouldn't you use a thermometer to measure somebody's temperature. But that's the debate that went on 200 years ago, we're going through the same thing today. 200 years from now, future human beings will look back and say what were we thinking? why aren't we using AI to help with diagnostics? Why aren't we using AI to help parse signals from noise and detect an arrhythmia when you can actually detect it all that just in the doctor's office? Why aren't they using AI to empower patients to actually monitor their own health? Why aren't we using AI to do drug discovery? all of this is very, very powerful tool, it can be used incorrectly, very much so. But if it's used correctly, it will empower us to create the type of world we want to live in.
Pritish: What is your investment framework?
Amit: So, we are primarily seed focused funds, we are based in Palo Alto heart of Silicon Valley, we invest now in US and Canada, we are very friendly towards teams that are perhaps based globally. So, you have you engineering in India, or you have your business development person sitting in Hong Kong or your go to market is Kenya, all of that is fine. In fact, these are all real examples of companies we have seen and, in some cases, invested in, but I need the CEO to be based in US and Canada and for the markets to be US and Canada and that's just a question of resources of where we are and where we can help the most. So, that's one part of our investment framework and the other part of the framework is that we're primarily seed, we do look at Occasionally a little bit already, a little bit later, we have made investments that I would call pre seed, we have made investments that are series A, B, or C, but they are much smaller part of our thesis, the must bigger part is that we look for companies that are nine to 18 months away from a product market fit.
Or call it another way, from a series A, we look for companies that have a pipeline, or maybe they have pilots, or sometimes they even have revenues and I call that a mature seed. Another framework I have to offer here is that a pre seed is a PowerPoint, a seed is a prototype, a mature seed, or call it a pre-A, or a seed extension, or a seed two people have all kinds of synonyms for this, it is effectively you have a pipeline and maybe pilots and a series A is your product market fit and a Series B is you have business model, scalability, and then series C, D, and E and so on. S, I look for that inflection point in the seed, where I can come in and really, really help other entrepreneurs with two things. One is getting them more customers and another one is getting them more investors and I'm happy to go into more detail into both those aspects if it's interesting, but that's overall a framework and we have this published on our website and other parts for anybody who's listening and is interested in getting more depth.
Pritish: You should actually double click on both of them, and how do you assist them in both the segments? And why is that important as a venture capitalist?
Amit: I believe that the word venture of venture capital is the more interesting word. If you're looking for capital, there's so many ways of getting capital, go get a loan from a bank, or go get government grants, or a family office or a corporate investing in your life. All of those are legitimate ways of getting good money. But if you're looking for venture capital, you're looking for people who can really be co-owners with you in the businesspeople who will be partners, who will hopefully increase the odds of your success, not just by a little bit but by a lot, I like to call it you give up, let's say 20% of the company, but you increase the odds of your success by far more than 20% you perhaps increase by 2, 3, 5, 10x and that's the reason to work with a venture capitalist and what I do is especially help you get more customers and get to more investors, which ultimately, if you think about it is different ways of getting your more money and customers.
Because at the seed stage, you need to get commercial attraction, you need to get to product market fit for a lot of companies. Here in the US, it means getting to a 1 million annual recurring revenue and I use my advisor network, we have a very extensive advisory network that includes Chief Medical Officer of Microsoft, Chief Innovation Officer of the American College of Cardiology, CIOs of lots of security, cybersecurity companies, and enterprise companies, and so on and a good chunk of that is on our website and we will pair them up with our advisors who can help them with pilots. We have limited partners, LPs, aka, have our own investors, oftentimes sitting in all kinds of companies that we also leverage and then we have co investors and other folks that we know and we really, really focus on getting a company a big contract, I'll give an example. iterative scopes is a company that does computer vision for colon cancer, we introduce them to one of our advisors to insight medical, which is the largest network of gastroenterologist here in California, and helped with BD and it ended up being a seven-figure contract within a year and it was the first big contract 7000 US dollars, by the way.
So, we pride ourselves on helping our companies do that over and over and over and then the second thing is we introduced them to other investors. For iterative scopes, for instance, we showed them to a lot of other VCs, three of them ended up taking the bet and we ended up representing almost 1/3 of all the capital coming into the company, and directly and indirectly, and we also show other deals to their own investors and help them come alongside us and it's good for them because they get to see good deals is good for the agencies coming in is good for entrepreneurs, they get access to really good folks and they get money obviously and it's good for us, we get to work together with lots of other folks and I get to have brownie points. That's how we call it here in the US and a lot about seed is collaborative. In fact, I argue that venture capital at the early stage, it's about being cooperative. It's about working together to help reduce the risk of something that's inherently hard to do. At the later stages series D, Series E it becomes much more competitive, because venture capital funds compete to own as big of a piece of smaller and smaller pieces of the pie that are available. But a great venture capitalist at the early stage is somebody who truly, truly believes in, let me partner with as many folks as possible and share the pie. A smaller piece of a bigger pie is preferable to me than a larger piece of a smaller pie. In fact, owning 100% of zero is zero, I would rather own 1% of 100. Because I'll have one, I would rather own 1% of 100 million and that's a good outcome compared to owning 100% of zero.
Pritish: But I think you alluded to a point of which is interesting, I think for a founder as well. You invest in businesses, which would hit product market fit in, let's say, 12 to 18 months or round about there. How do you do that assessment? How can actually founders use that toolkit or that experience that you use when you're investing?
Amit: Yeah, no, that's something I'm very grateful in my career is that I've seen things from both sides. So, as a VC, I was trained at some great places, and I would write deal memos, and I would analyze the market, the product, obviously, the technology, the fundraising, the dynamics, how they're going to use the funds, the competitive landscape, I would drop exit scenarios and at the end of the day, the team, that's always the most important, the relative way to give to the team. At the early stages its higher, at a later stage is a little bit different, it's usually a little bit lower, because you have more metrics, but it's always the most important. So, by doing that training, then building my own company, I knew the questions that my own investors were looking for and now that I'm building my own fund, I bring all that training to fruition.
So, even though it's a smaller fund with two partners, me, and my partner, we do write those deal memos as an exercise in our own discipline, we often share those deal members with our own entrepreneurship to show them what we're thinking, that's highly unusual. By the way, most investors do not share their deal, man, they often don't do them and when they do them, they don't share them. We as an exception here, do share them and get their own feedback also, and I laid out the framework here, all the things I mentioned, those are the things to look out for. But at the seed stage, especially I qualified it into three buckets, I call it the three T's. This is my own framework here. It's team, technology, traction. Team is, who are the people behind the company? How do they meet? How do they work well together? What are the holes? Are they aware of this? How will they bring on new people on board? How will they work well with us? like they could be amazing entrepreneurs that may not be open to advice from us, in which case, it's basically star players that don't want to have somebody who is going to help them. That is usually not a sign of a good partnership. So, we do look for folks who will also due diligence on us.
By the way, it goes both ways. We like entrepreneurs that will ask us, what can we do for them and ask us hard questions and ask us about what we are good at and maybe we can't help them as much, which shows us that they really care and their thoughtful traction is ultimately about their pipeline and pilots and how do they grow into actual contracts and eventually bigger and perhaps more contracts, so CAC, LTV, charter, all those things come into play of the consumer model then we want to see about monthly active and daily actives, and LTV and so on and then technology, since we are a fund that that prides itself and to its deep tech expertise and focuses on applied AI, we want to understand what you're doing, how do you create a 10x differentiation? How can you do 10x? Either faster, or cheaper? Or better? But how do you create a sustainable advantage moving forward? Because if you're building a startup, chances are you will either have incumbents that have a lot more money, a lot more resources than you that will try to beat you. Or you will have fast followers. So, how do you protect yourself against this ultimate defensibility is, execution. But having a technological edge really goes a long way and we are computer scientists first and foremost. So, we expect people not to throw lingo at us, we expect people to explain it to us and anybody who's using too many buzzwords is sometimes oftentimes a sign that maybe there's more style than substance. So, we like to see entrepreneurs who can really truly explain what they're doing.
Pritish: When should one have a VC on the cap table?
Amit: When you're starting to ask those questions? I think Pritish you answered the question yourself, if you are thinking about having a VC then you have good reasons, where we are learning all the time also, by the way as VCs, things change the markets evolve, what is the seed or series A now versus 10 years ago versus 20 years ago is very different than what will be the case even a year from now could be different. So, all these norms evolve and what is Hong Kong versus England versus us, or China is also evolving all the time. So, if you are asking the question, then you are starting to think, Okay, what can somebody who is a professional investor, who is investing other people's money, but who has some expertise here really helped me with? I usually counsel entrepreneurs that, don't take the money, if you're not ready for it, go raise the money, if you need a little bit of money from other sources, on rocket fuel. If you have the beginning of a rocket, great, let's talk about it. But if you take rocket fuel too early, you'll burn up in the atmosphere before you can hit the moon or the stars and the rocket fuel does come with bigger expectations, the market will expect more if you have raised from a venture capitalist if you have raised more money and the metric that I'm using once again, is that you're nine to 18 months away from product market fit.
If that's the case, let's talk about it. Let's see how we can help you, let's talk about if you think we are the fit for you, if you are the PowerPoint stage, oftentimes you should be raising from angels, rather than from VCs. Angels, the difference, by the way is people investing their own money, who can also be very helpful. VCs are investing other people's money and it comes with a different lens. It comes with a different purview. It's angels, most of them are people who are investing on the side who have other things that they're working with and VCs, this is what we're doing for a living, we're not doing anything else.
Pritish: And how would you say a seed stage founder should build a team?
Amit: So, the data shows that most companies that have succeeded are two co-founders, sometimes three, sometimes even four, or five or six. But most of the time, it's two people. Are the exceptions to the rule? Obviously. Amazon is pretty famous for being essentially one founder. If you read the stories looks like maybe there has been a founding engineer, etc. But it was really one founder. But it's an exception to the rule. Google was two founders, there are exceptions to every single rule for sure, for sure, but most good companies, there are two founders and we like to understand if it is two founders, how do they come together? how do they work together? and usually having worked together is a very strong sign that they will work well together. Now, also, it's not a guarantee and obviously, once again, there are exceptions to the rule, there are two people who have just met that work very well together, they are two best friends that will work very well together.
ut oftentimes, co-founders are people who have been colleagues, they may be best friends also, but they work well together. So, we look for that. Now beyond those two people, or three or four, or if you are a solo founder, it's how do you bring other skill sets into the company? If you are a technical founder, how do you bring the businessperson? If you're a business minded founder, how do you bring the technical person? If you are a rare profile of both being strong in business and technical, then how do you not go crazy? How do you bring enough people to help you? and at the seed stage, oftentimes, it's about bringing five or six others. So, we look for how to build a strong engineering team, we look for companies that have a deep tech angle. So, oftentimes, it's four or five engineers. in Silicon Valley, at least finding engineer is like finding a unicorn, because the engineers are competed ferociously by small and big companies and there's amazing talent here. But it's also hard to get that amazing talent. So, we look for ways in which people can access the talent, maybe they have known other people before, maybe they have a lot of charisma and reputation already, maybe the strength of their idea. Or oftentimes, you also see people hiring outside other parts of the US, if they are based in New York, or Boston or Chicago, they will hire people, obviously, within their regions and we are very friendly towards investing outside of Silicon Valley, by the way, over half of our investments are outside of Silicon Valley, about half I should say and sometimes people will hire in other countries, we have companies now that have engineering teams in New Zealand, in India, folks in Singapore, and sometimes their go-to market is in Thailand, or in a smaller country. These are all real examples from of our portfolio, by the way, so we try to understand those things.
But ultimately, what we are looking for is a strategy. There's no right or wrong strategy. But there is such a thing as a good fit in terms of strategy. If you are, for instance, I'm using a perhaps an example more cogent to us. If you are somebody who is absolutely new to Silicon Valley, you have just moved in and you are looking to hire only in Silicon Valley, then our question is, how will we do it? Like we need to understand that. Can you do it? sure. It will be harder, but how will we do it? And if let's say it's the opposite situation, let me make an example here. Let's say you're based in New York City; how will you find good talent in New York City or do you need to actually go to another country or not? Let's say you're building a healthcare company and you don't have great regulatory expertise. Oftentimes, that's the case. We'll have a consultant; do you even recognize if and when you should bring on a chief Commercial Officer? And finally, I would say the team is not just full-time people, team also includes your mentors, your advisors, your board members, your investors. So, we've tried to understand who the extended team is also.
Pritish: You have spoken about bottom-up market sizing is more crucial. Tell us why.
Amit: There's certainly value in doing top down. But I strongly believe that bottoms up is the right or the most complete way of doing it. Top-down means I can find great reports. But I've outsourced in some ways my thinking, the reports, and those assumptions, may be true, maybe not bottoms up, at least what the model you're building, you take into account the willingness to pay, you take into account customer adoption, oftentimes, LTV, which is lifetime value, cost of customer acquisition, which is the CAC or in the case of a consumer company, more consumer minded company, the daily actives, monthly actives, engagement metrics, virality. There's a whole host of ways of looking at this problem that have been talked about extensively within articles and podcasts and so on. So, I think that that's the way or the most complete way of doing it. We obviously can check that with top down, and we see if we're coming to similar conclusions or not and if you're not, then why not we do also compare it to what the CEO, the founder, I should say, is thinking, if it's a little bit more mature of a company, they'll have a financial model, and then we will look and analyze that financial model, we will oftentimes build our own financial model, at least look at the assumptions and see what assumptions we have.
I think it's an important exercise for anybody who is investing to have their own view. It's totally acceptable. In fact, I think it's an amazing thing if you, account for other people's views. But you shouldn't make your decision just based on that. You should make your decision from your own view, people who make decision based on other people's views, they're falling hard mentality and there's certainly a place for that. But then you are a minority investor, you are very much a follow investor and I am now not a big enough funds to lead deals, but I'm very close to it and I do want to have my own thinking before I make my investments.
Pritish: Great. Before we get into the rapid fire, I think one question I definitely have is, why did you invest in Nu Tonomy as well as MISFIT wearables? These are probably one of your biggest exits. You got in seed, you exited Nu Tonomy at 450 million. Misfit, you've gotten seed again and exited at 250 million. So, what did you see while investing in them?
Amit: Yeah. So, as usual, it's not just one person, it's a teamwork. In the case of Nu Tonomy, one of my senior partners at my previous funds had actually come across the company, and I believe suggested to me that, hey, go take a look, I don't even think he took a meeting, I think he came across them at a conference and thought it was interesting. So, I do owe it to him for giving me the tip. But then I did the bulk of the work in terms of understanding the company and advocating for the investments, I did have to have the support of the rest of my team and I do owe it to many of my partners in order to actually have done the investment and then continued working with them closely and in the case of Nu Tonomy, this is 2015 when we made our first investment at the seed stage, I'm very proud, by the way, that was fully virtual investments. So, I thought I would mention that but, in some ways, I guess ahead of the curve, I did not meet the founders in person at the time of that investment. I did do a lot of reference and diligence as they did on me. So, I felt I knew them really well and it was a function of geography. They were in Boston and Singapore and at the time, I just couldn't travel, or they couldn't travel to meet me in person. We did meet after the investment quite a few times, but fully virtual investment in 2015 and the key reason that we invested in them obviously very strong team, Karl Iagnemma and Emilio Frazzoli and Doug Parker. These are amazing technologists. They're world class, they have a lot of profile and anybody listening to this, you should absolutely look them up. They're amazing individuals.
So, that obviously was a huge shock. But the thing I guess that converted us to investing was they had developed models on how to predict a car, a self-driving car would make decisions that require 10 times less data. Think about you and me, if you are driving a car, you don't map out every single inch of a road. If you go to a place you have never been before. You can still drive there because you have rules in your head. You have mental models of how the world should operate and that's what this company had done. They have taken existing models but adapted them. It's an algorithm called RRT star and then they'll also use methods that were used in a different industry, in this case in the aviation industry, it's called formal methods that allow them to have more predictability in their code and allow them to model how a car would make decisions more similar to how a human being makes decisions so that it would need 10 times less data. 10 times less data means that you can get the car into the market quicker, you can also sustain that advantage moving forward. So, that was the crux of that investment. I have spoken in more detail about this in some blog articles, I've written. Karl and Emilio and Doug can obviously speak much more richly about this. I know there have been very public about many of these things, this investment is now very much public, because it got sold in 2017 for 450 million, as you said. Misfit wearables was a company that I helped source. At that point in time, I was much more junior, and it got picked up by another colleague of mine, and he left the deal.
So, I cannot take more credit than that. But I did know the founder, very well, one of the founders, and it did help mediate these conversations and I stayed very much in touch with that founder. In fact, I invested in him again, actually, through tau ventures, and many of the founders I have backed by the way have become investors in US Intel ventures also. So, it goes both ways. So, I'm very proud of that as founders that back to becoming investors in us. But anyways, in the case of Misfit wearables, it was a two co-founders really, who had too many degrees to their name, and came from great institutions, especially MIT in their case, and had built companies before and came together to solve a problem at that time, that was pretty big, which is think about problems that Fitbit and Apple and Samsung and many other countries, companies have solved in terms of wearables and these guys were, in many ways ahead of them. So, I think about 2010, 2011, 2012, this is the start of digital health, this is started wearables. So, this company did have a great exit. I don't know if the number is public, so I can't quote it now. But just take my word for it, it was a very good exit, both for the founders and for the fund. So yeah, that's the nutshell of the thesis behind both those companies.
Pritish: Let's get into rapid fire for questions, one word, or one sentence? Are you ready?
Pritish: Venture capitalists are in the business of?
Amit: Obviously making money because it is what the fund exists for. LPs give you money so that you make more money for them. But the second thing is also helping create great companies. You can't do one without the other and helping create companies, I believe there's a way of doing it, where you create value, a lot of value, I believe value, and valuation come together. If you create value, you get good valuation. So, I do believe that there's an overlap on those two twin things.
Pritish: The hardest thing about your job?
Amit: Making good decisions, whether it is decisions in terms of where I spend my time, we get 2000 deals, and we end up taking 200 meetings. So, I look at a DAC and very quickly I say, this is in the 10% of cases where we should do look deeper and 90% of the time, this is not a good fit for us. On that 200 deals, we go deeper, and end up doing a second meeting with maybe 100 and then a third meeting with maybe 50 of them and then with about 20 to 25 of them, we go very deep, 50 hours’ worth of work in terms of understanding them. So, making good decisions on how deep I go and then once you make the decision to invest, that's a really big decision. How do I continue helping them make better decisions? And how do I continue helping them. It is, finding a good investment is hard, making that investment is the start of a journey. It's 90% of the journey is what happens afterwards.
Pritish: You have been writing on LinkedIn, I think since 2015, pieces of articles on your blog. So, one blog or a book that has influenced you the most personally and professionally?
Amit: I'm very impressed with the level of homework and diligence you do. So, you are indeed right. I have been most active writing about venture capital and startups since 2015 and for anybody listening in if you want to follow, it's published on LinkedIn, it's syndicated in a few other blogs, including data driven investor, which has like a million readers, and I'm happy to syndicate with anybody else and going to your question. I'm influenced by many, many people who have written many good books and good thoughts. It's really hard to identify a single one but I guess maybe the hard thing about building company, the exact title is from Ben Horowitz book, The hard thing about hard things.
Amit: Yeah, it's the hard thing about hard things and it's a fantastic book, I highly recommend it to any entrepreneur Reid Hoffman also has a great book called, The startup of you. I do remember reading it and enjoying it, then the Lean Startup by Eric Rees and from zero to one, but Peter Thiel. There's so many great books. Those are foundational books. But then there's tweaks to those teasers all the time from other VCs in the ecosystem from other entrepreneurs from blog articles. So, I don't believe in having a single authoritative source of wisdom, I believe that I can learn from everyone.
Pritish: And the last question, your most favorite superhero?
Amit: Might be Batman actually, and I'm smiling a little bit when you're asking this is because when I was co-founder of health IQ, and we have talked about this publicly, so I'm comfortable sharing this example, health IQ was helping people lose weight and get healthier. I did it on myself by the way, I hope it's not obvious. I lost 20 kilos in three months and had torn my MCL three times and overcame that to do Ironman Triathlons and building the company was a huge influence to doing that health journey and the health journey was a huge influence in terms of building the company. So, I owe it to my old co-founders and colleagues, a lot of support and encouragement towards achieving these goals. One of the things we were trying to do at that time was understand people's mindsets and I actually asked people, a lot of questions, hundreds of thousands of people a lot of questions and one of the questions I discovered is, I would ask people Who is your favorite superhero? This is a true story, by the way and the options were Superman or Batman and we found that there was a correlation.
We don't know if it's a causation, but it was a correlation with people who answer Batman, and who had healthy behaviors and we hypothesized that was because Superman is somebody who is born with powers and those powers, they grow with time. It's not like he doesn't need to grow his powers, but he is genetically different versus Batman is a normal human being, granted very wealthy, but still a normal human being who trains himself who puts himself through a lot of ambition to get to where he is. So, Batman is a self-made in some ways and people who believe in Batman, I think, are people who believe that they control their destiny a little bit more. I will not say they can create their own destiny, because I think your destiny depends a lot more on just you. But I think I can shape my destiny in a big way and I am the biggest shaper of my own destiny. So, that's why I would say Batman, but hey, listen, I like both movies.
Pritish: Amit it was a pleasure having you on The One Percent Project.
Amit: Thank you very much Pritish for having me. Thank you very much for everybody listening in.
Amit: And once again, for anybody interested in learning more about us. It's Taoventures.com. We are on LinkedIn; I promise you any message you send will be read. I unfortunately, am not able to do justice to everyone. I am not able to respond to everyone. But we do follow up whenever something makes sense and we try to be helpful to everyone we engage with.
Amit: So, thank you, Pritish.