Why Now Is The Best Time To Buy Public Software Companies

TITLE: Why Now is the Best Time to Buy Public Software Companies CHANNEL: Invest Like The Best DATE: 2026-03-24 ---TRANSCRIPT--- My guest today is Mitchell Green, the founder of Lead Edge Capital. When I think about Lead Edge, I sort of think about this giant money machine that Mitchell and his two partners have designed over the last 15 plus years to make remarkably consistent investment returns for their clients. They have all sorts of unique aspects to the machine that they built, whether that’s their collection of LPS, their eight-point criteria for how they select companies, the way they do cold calls, the way they construct their portfolio. This is just a totally different way of approaching markets. They’re trying to hit singles and doubles and deliver very consistent returns. Mitchell says it’s really important in life to be memorable. That’s just a great simple thing that you can do. I think you’ll find listening to Mitchell today and him talk about his entire machine and the firm that he’s built that he himself is extremely memorable. I hope you enjoy learning about his business.

So the first time that I heard about lead edge capital was was the very famous list of what companies report starting with cash profits and then if they don’t have cash profits and you go down this very funny list

hierarchy of bullshit

Yeah. And the bottom one is the place that’s voted the best place to work in New York City or something.

Absolutely.

Where did that list come from? Why did you put that together? We’ve always found that the best way to communicate with, you know, our audiences, which is entrepreneurs and also our investor letter about a different topic. And I started my career cold calling companies and that’s the way we source deals. But when you start your career talking to I think Brian and I probably spoke to like 10,000 companies and if you want to know it’s a good company just, you know, call 10,000 of them. You’ll figure out really quick. It’s pretty good pattern recognition. Until like our head of PR coms came in a few years ago. We had actually never posted any of these things online. We joked that we sent this letter to some people in the VC community. one of which is like our buddy Andre Horowitz and they posted it online for us. Um we just thought like think like it’s like a very simple way like in a world where people spout off total bullshit all the time and like you see everything in DAX this is just like a good way to distill it.

Talk to me about the 10,000 calls. What did you learn calling that many companies? You learn to be very disciplined actually and you learn that most things are actually just noise and to figure out like what makes a lead edge company and then try to ignore everything else. You learn a lot about like responsiveness of people and like more I think more responsive CEOs tend to be better CEOs. I think another thing you learn that’s really important for young people, if you tell an entrepreneur that you’re going to actually do something, then actually do it. And in a I think that’s actually true of like life. Um there are so many people that say they’ll do they do things that just like never do them. And so if you’re known as a as a firm and a or a person that actually does what you say you’re going to do, it goes a long way. So if you tell an entrepreneur, hey, I know somebody at Adobe. do you want an intro because it looks like it would be helpful for your business? And he says, and here she says, I’d love to. Well, then guess what? Follow up with that. Like, do what you say you’re going to do.

Can you describe what seems to me like I would call it a machine that is Lead Edge much more than most investment firms where a lot of great investors will tell you there’s a lot of art, there’s a lot of um, you know, everything’s different. Lead Edge feels to me like unbelievably well constructed as a machine to produce returns. Um I’d love you to just before we go into all the details of the as component aspects of the machine describe the machine itself at a high level.

We run this place like it’s a software company. My background was at Bessemer where I worked for somebody that was extremely disciplined that was building the code program. My other partner Brian worked at Bessemer we were the first two cold callers and my other partner Nema worked at Insight. And I think Insight is one of the best like software investment or technology investment machines on the planet. So we’ve like modeled ourselves on that, you know, to build a good investment firm that stands the test of time. If you want to go build the next TA Associates or General Atlantic or Bessemer or Sequoia, you just have to be like extremely rigorous. And so our number one KPI that we run this place by is what is our gross dollar retention for LPs? We want like 95% gross dollar retention because the only way you can get that is one have good investment returns and great client services. So how do you through long periods of time across people that will come and go generate like world-class returns is you need to have like a process and the process for us starts with you know 18 to 22 to 24 year olds that talk to about 9,000 companies a year. You get those 9,000 companies like how do you figure out which ones to work on? So then you need this like framework to guide these 18 people to like well it’s gonna be an interesting company because in the investment business like we have one asset it’s time and it’s like precious and so like how do you guide people to say no quick and so we built this framework that we really took from coming out of Bessemer and so like they helped build the Bessemer 5 we took the Bessemer 5 turned it into lead eight and it’s like drives everything we do. Now when we find the company we’re then super creative. We’ll buy 10% 80% LPs out of a 20-year old fund, buy employee secondary, fund somebody’s CV, we don’t care. We’ll do anything.

If I think about the two sides being the LPs and the companies that you invest in, I’ll come back to the eight criteria. The LP story that you have is also quite distinct and different. Can you describe that in a lot of detail?

Sure. Our LP base is all like world-class execs and entrepreneurs. I know we do have some big institutions, but 95% of our capital is like all these world-class execs and entrepreneurs and we use these LPs throughout the entire investment life cycle. It literally starts with sourcing. If a company won’t call us back, we’ll email our LPs. Two, let’s say it’s like an automotive software company. We’ll have Rick Wagner, the former CEO of GM, who’s a longtime investor. We will be like, will you send them like the CEO a note? And if you’re like an automotive software CEO and the former CEO of General Motors calls you like they’re way more likely to take an email than like any knucklehead email. Then for diligence we’ll say hey it’s like you’re a healthcare software company 25 million of revenue maybe you say like biotech or pharmaceutical software it’s like oh I see Pfizer is a customer how big is it 2 million bucks could be bigger oh it could be 10 million I’ll meet the former CEO and then I’ll call up Ian Reed and be like hey Ian can you talk to this company they’d love to talk to you. By the way, can you like tell us what you think? And then if it’s super interesting, could you call Pfizer and like back channel it? And then you might say the entrepreneur, hey, I don’t see Biogen as a customer. Would you want to meet the former CEO? So you call up George, you’re like, “Hey, George, I found this company. It meets seven of our eight criteria.” Then like post investment, we literally send emails to our LPs. Be like, hey, you know, Toast is looking for intros to these restaurants. Do you know anybody? And it turns out all these people invest in funds and never get asked for help. That’s how we do it and how we leverage them. But it’s not actually why we did it. It would be a lot easier to go have 20 giant institutions write you 50 to $300 million checks versus me spending a huge amount of my time running around the world all the time spending time with these people. Because if you want 95% retention, that’s what you need to do because they’re your clients. The reason we did it is because I knew that the returns in this sector in the tech investing sector flow to the top 10% of funds. Like they just do. And I had the pleasure of working for one of these firm’s best venture partners. So when I was starting Lead Edge I was like why in God’s name is anybody gonna take my money? I could teach him how to ski, but that isn’t going to be very helpful. But I said, you know what? Had I been the global head of HR at Proctor and Gamble and my partner been the global head of HR at Microsoft and the other one been the head of HR at Nike. When I called Workday 80 times at Bessemer and Dave Duffield by the end was like, I’ll hire you as a salesperson. I’m not taking your money. If I had been like a world-class HR exec, he would have engaged with me because he would have known that I could have introduced to those companies. Like I have tons of other HR execs. I know these people in a world that’s super crowded and undifferentiated and I think it’s exponentially the case more today even than what it was 15 years ago. It just like differentiates us and we do what we say we’re going to do.

How many LPs do you have?

Probably like 800. 95% by number are these executives.

If you think about the level of returns versus the consistency of returns, how much does one matter versus the other for the gross retention?

I think consistency is more important on a per deal basis. We’re trying to make a 2 to 5x in 3 to seven years. That’s like a 25 net IR if you just actually map it on a curve. Put it into a fund. We want to generate you two to 2 and a quarter x nets with 20 net IRRs. Some of those deals aren’t going to be 5xes. Some of them might be 7xs. We try to our downsides have been very low. We’ve I think we’ve only lost all of our money like in one deal ever. And that’s because of the criteria we look for in a company, what our average company looks like and the fact that very few of our companies have any debt on them now. So I’m trying to make a two to two and a quarter x net which is more like a two and a half x gross. However, if something is a really big investment in the fund and we do not run funds with like 115 companies in them. We run funds with like 20 investments in them. So if we’ve made something a 7 10 12 15% position and that goes like 8 10 12x that’s how you can 3x net a fund.

Because you rarely lose money, does that mean you also almost never hit some like giant grand slam?

Correct. We’re like Cal Ripken doubles doubles and triples. We’re not Sammy Sosa or like Mark McGwire. It’s all about hitting doubles and triples and if you do that with very little leverage in the portfolio, 90% of our companies or 85% of our companies are like recurring revenue. So if you invest today and know what revenues are in July, that’s like a pretty good way to invest. 50 60% of our companies are like profitable businesses. Now you may get it wrong like you may back the wrong team. You may overestimate the size of the market, but I think like 70% of the time we own the pref. So you may get your downside 1x. Now sometimes you need to recut the deal with the entrepreneur or the management team. So you’re making slightly less than that. But if you can avoid zeros and turn those zeros into like 0.8x’s or 0.1x’s, it massively helps return. We’ll sell like we will out of probably a third of our exits have been secondaries. We will buy secondaries. We will also sell. We constantly underwrite. We’ve been referred to as traders or like hedge fund guys and we’re like no no we’re just trying to actually make money because this company is about to be a living dead and you’re going to be in this thing for the next decade.

Maybe spend a minute before you go through the buy criteria talking about selling more. So what is the process?

We have an investment committee. There’s three of us. Myself, Brian, and Nema been here all since fund one. We have a disposition committee. Same thing. We meet. We think a lot of firms do a really really good job on the buy. Very very few firms do a very good job on the sell, like knowing when to sell, pressuring to sell. We would tell you that the private equity funds tend to do a much better job on the sell than most venture growth guys. And like hedge funds if you do invest public equities or long only funds like you constantly can buy and sell. The three of us meet one to twice a month and just walk through the portfolio and just talk about it like hey there’s a round going down in this company should we sell like how can we try to position this company for a sale over the next 12 months? The fastest way to get fired at Lead Edge is have a company and not tell us when there’s a liquidity opportunity or just like something’s about to happen before it happens.

What does the holding period end up being on average then?

I bet our average holds are three and a half to four years probably. We took advantage. Everybody gets all excited by our 2015, 2016, 2017, 2018 returns. Like our 15 and 18 returns look very good, but it’s just multiple expansion and we sold. That’s it. Like if you think you’re going to make a 2x in four years and you make a 4x in two years, it’s amazing what it does to net IRR, right? People forget the reverse happened in 2021. Nobody’s 20 and 21 funds. I think the venture growth ecosystem gets like a bad rap, but it’s going to be every alternative asset. Their 20 and 21 funds are going to be awful relative to earlier funds because you had people thought they were going to make a 4x in two years and are instead making a 1.6x in eight years. And so that’s going to have huge impacts on the industry.

Talk about the eight buying criteria.

Some highlights. So there’s eight criteria. 10 million plus in revenue. Why do you have like product market fit? Are you growing? Because we don’t invest in startups. Are you growing like 25% a year? We generate returns through growth. We don’t use leverage. You have 70% plus gross margins. Why? Because at the end of the day, you trade on multiples of earnings. Revenue multiples are just like shorthand math for what it will be in earnings multiples when you don’t grow that fast. There’s a reason that Facebook gives away electronics in the vending machines and Dell charges for Cokes. One has 80% gross margins and one has like 15% gross margins and we think that just drives at the end of the day earnings. Are you recurring? It’s like a heck of a lot easier to invest knowing what revenues will be today. So I know what they’ll be in July than they are today. Are you capital efficient? This metric is probably kept us out of the most trouble. It’s like our version of return on equity. Are your revenues today greater than your historical cash burn? So, what do I mean by that? Are you 20 revenue? Have you burned 80? Like every other tech company. Cumulatively. Have you burned 80 since inception or have you burned 10 since inception? We’re looking for like this one to one ratio. In a world where capital is a commodity, if you can build a business that’s growing nicely while burning less than your revenues, you’ve got a pretty good business. Look, we don’t invest in startups. If you invest in startups or $2 million revenue companies, then obviously it’s harder. Are you profitable at the bottom line? Do you have any customer concentration? Like I just don’t want to wake up and find out 40% of my revenues like disappeared because some customer didn’t decide they didn’t want to work with you.

I want to talk about the price you’re willing to pay for companies. So much of this sounds like a private equity strategy.

But you mentioned Toast and it’s not like Toast was 25 million of revenue growing 150% a year and it was like we paid like 500 million bucks it was like 20 times revenue people like that’s crazy it’s like not when it went from like 10 to 25 so we just try to build like a forward model. Look you can pay as high a price as you want. You just got to be right on your exit. You got to be right on your multiple. How people got in a bunch of trouble in 2020 and 2021 is they just assume the exit multiple is 20 to 25 times. That’s insanity because when your exit multiple collapses. So you can pay 20 or 25 times revenues and if you’re right like some of our companies have been, then it’s fantastic. But you can also be wrong like some of our companies have been and you look like an idiot and I think investing in OpenAI at 800 billion is a little insane personally.

So right now there’s this seismic thing. You can look at the Constellation Software stock price as like the perfect visual indicator. This intense skepticism of the market that boring traditional high gross margin software businesses are worth much at all. But I’m curious how you process this moment.

Our belief for right or wrong is that the competitive advantage of software company has never been about R&D. We’re not building semiconductor chips. We’re not building biotech and pharma companies. This isn’t that to build chamber of commerce software. You too could build this. My mother couldn’t. But my brother could no problem. So could Microsoft. Any of our companies in our portfolio. If Microsoft took 500 people and gave them a month, each one of our companies could be out of business. But they just don’t care about the chamber of commerce market. They don’t care about the price optimization market for manufacturing companies. They don’t care about the tax software market for a very specific niche product. So the software companies are really about distribution sales and marketing customer success client services. So we believe that it is the incumbent’s game to lose in software today. There’s a reason Workday has like 98 or 99% gross dollar retention. It grows like 10 15% a year. It only took like 20 years to get there and it does like three billion of free cash flow. Exxon or the hospital system or Warburg Pinkus or KKR or Proctor and Gamble probably spent three to five years implementing the software. If you think they’re going to start building their own HR software, you’re out of your mind. Now the GUI in how you access it is going to be far different but actually they already have the customer relationships. At the flip side, why did Coupa get built? The reason it was able to be built is SAP bought Ariba and they just left it for dead. So they built this big business. They took it public and now it’s been sold to Thoma Bravo. What I actually worry about is Thoma Bravo or any of these big private equity funds if they’re putting a bunch of debt on it, it’s not growing that fast anymore. If they’re putting a bunch of debt on it and then what they do is they brag about driving all their companies to rule of 50 businesses. Now, do they end up cutting a bunch of people in R&D and sales and marketing and product that if you were being run by an entrepreneur with no leverage, you would have kept? I worry that a bunch of these private equity owned assets that are overlevered are ripe for disruption versus independent software companies that are focused on growth that are trying to innovate. And I like to remind people that if you look at e-commerce, everybody in 99 and 2000 thought every big box retailer was going out of business. But if you look at the top 50 largest e-commerce companies in the United States, yes, Amazon is number one. You know who two through 10 are? Walmart, Home Depot, Lowe’s, Macy’s, Target. A lot of the incumbents will win. Now again, Montgomery Ward, Kmart, Sears, busted for either overlevered, didn’t innovate. So for us, that’s what we’re constantly thinking about.

Does that mean that right now feels like an especially opportune time for your style because entry multiples are lower?

I think the best risk-adjusted returns right now are in public software names. When you know, Warren Buffett says, “Buy when everybody is fearful and sell when everybody’s super excited,” people hate software. When we bought a bunch of our ByteDance stock two years ago when everybody hated China, Alibaba has doubled off its lows and doesn’t grow and trades at 15 times earnings.

If you think about the CV like the very specialist type buys that you’ll do. Can you explain an example?

We like to use the house analogy. You walk down the street, you go into apartment building, you’re like, “My apartment needs to have these six things. You can go in the front door and lead the primary round and put money on the balance sheet or you can buy the whole business. You can go in the side door and buy an early investor or early employee out, but maybe that’s not available. So, we’ll go through the basement window with a pickaxe and buy a derivative.” Because if you run a business and this can of Pepsi owns 30% of your business and I go to the glass that is an investor in the can of Pepsi’s fund and that like is there half the LPs and I literally buy that out and you own 30% and I buy half the fund. I just bought 15% of your company. It’s the same thing. It’s just a derivative. Now do you have as much control? No. Do you have as much insight? No. But you trade off price for access. We made a big investment in Zoom. We couldn’t go into the front door. The company didn’t need money. We sure as heck weren’t buying the entire business. There was secondary to buy but you couldn’t buy it because Sequoia would roll for you. They’re smart. They’re like, “Why would we let these knuckleheads in?” The company was one that took a long time to get funded and wasn’t backed by Sequoia originally. It was backed by random Chinese people and Chinese funds. So we’re like, why don’t we go to this fund that has stock and their LPs have been in this thing for 10 years. Maybe their LPs want to sell. We’ll just buy your position in the fund. Or why don’t you just create a new vehicle? Any LP that wants to sell, we’ll step into their shoes. In a world where LPs and GPs are desperate for liquidity. That part of our business is absolutely booming.

If I think about the dollars deployed, how much of it is direct capital on a balance sheet, secondaries, something creative?

70% creative. 70% is special situations or secondary. And by the way we will evaluate in an IC a public position a control buyout a minority deal or a special sit. It could be you could hit four different things in one week. We just all underwrite the same return. But today the opportunity is we are a market drawdown away from it exploding in stuff to do.

The hard part seems like is finding a company that has six of the eight criteria that you can also buy at a multiple that you’re excited about for the forward return. What percent of companies meet all eight criteria?

By the way, no correlation how it performs either. If we do like an eight criteria deal versus like a five criteria deal, there’s actually no correlation to it being a better deal. What we try to do is if you say it must meet eight criteria, 9,000 companies becomes 90. To do five or seven deals a year, it just doesn’t work. And so for us, what we say is it must meet five. That’s about a 10% yield. We’re trying to get to like 900 companies that we can then actually do work on. So you have 900 companies that meet five or more criteria. You do diligence on about 150 to 175 to do five to seven deals a year.

If five criteria companies don’t outperform eight criteria companies, doesn’t that imply the criteria aren’t predictive? So then why have the criteria?

Because you need to set a framework for what to focus on and what not to focus on. That’s it. It’s getting us to a small enough pool. It’s like knowing your strike zone. My partner uses the Ted Williams analogy. Ted Williams knew in the hitting zone exactly where to swing and what his probabilities were. Yes, you can hit a ball 2 inches above home plate and it could be a grand slam, but if you do that over an entire career, your entire career won’t be very long. It just enables us to know what pitches to swing at. Our biggest mistakes have honestly been not swinging at the pitches when they were in our strike zone. That’s what we’ve learned over the last 15 years.

How do you train these young people to be able to get all this information out of an entrepreneur?

It is incredible what people will tell you on the phone. People love to talk. It’s investigative journalism with sales. We tend to hire people that are former athletes. Getting a C or a D on a test is not your biggest failure. Dropping the ball at the Rose Bowl or not making the Olympic team, that’s failure. So you’re looking for people that are insanely persistent. People that are really inquisitive. And then it’s just, hey, Patrick, pretend you’re Toast. We’re doing work on the restaurant point of sales system space. I read a bunch of articles that sounds like you’re kicking butt. By the way, I just talked to Square and Clover. We’d love to talk to you. And by the way, we’re different than a lot of firms. A lot of our capital comes from world class execs. One of our LPs is the former CEO of Wendy’s. We’d be happy to talk to them if you want to meet these people. And once you get the person on the phone, you just have to show knowledge. That’s where AI is incredible. You give every analyst an associate, you give them the power of knowledge and you can sound super smart. Hey, I saw on LinkedIn you have 80 employees. So, what, you like 10 million revenue, 15 million revenue? Oh, I see your employee count growing like 80% a year. What are you growing, like 150%? Not that fast. Oh what, like 100%? Yeah, around there.

We just raised our seventh fund. It was three and a half billion.

Where do you feel the most tempted to go tinker on the machine for the next decade?

Continuing to as the firm gets bigger. How do you build a culture of teaching people to still be creative scrappy hustlers? That’s the most important thing. How do we get creative and do CVs? We were doing CVs and nobody wanted to do CVs. We didn’t know they were called CVs. We just thought it was paying somebody a profit share. It’s like continuing to innovate on that. What’s really interesting is the secondary markets now for some of these names are so liquid. So actually you almost don’t even have to underwrite to this thing going public. It’s like can it just get big enough with enough escape velocity where I can then sell out?

How often are you personally excited about the company and its product?

Frankly, this is what drives me nuts about a lot of people in the venture capital ecosystem is like they think they’re actually changing the world and everybody should tell everybody about it and they’re like doing God’s greatest gift to mankind. We don’t think that. We love helping entrepreneurs. That is what gets me excited and gets us up in the morning. I think gets everybody up at Lead Edge is helping an entrepreneur try to bend the curve and make that customer intro and help find that great CFO or the audit chair or whatever. We love making customer intros. That’s what gets us the most excited.

How often do you control the business?

We are in a control position about a third of the time. And when that’s the case, it hopefully should be no different at all, but there’s less knuckleheads around the table. When we invest in a business and when we exit, something like 75% of the time, the person who was running the business when we invest is still involved in the company.

What have you learned about culture?

I didn’t think I appreciated how much culture comes from the top. Follow-ups, send handwritten thank you notes. I’ve sent handwritten thank you notes to everybody I meet. Almost everybody I meet, every entrepreneur, every company. Guess who also does now? The 22-year old analyst. And by the way, we track it and report on it. If you just treat people the way you want to be treated, that just flows. We’ve built a culture of treat LPs like you yourself want to be treated.

Can you talk about this crazy one-on-one thing you do with every employee?

I got the idea from Tom Barnes at Excel KKR. I asked him what’s something you do that really helps the firm? He’s like interview everybody once a year. So we sit down with every employee. You personally do. I personally sit down with every partner, every VP, every associate, the accounting person on the back end, every receptionist. What do you like about your job? Green, red, yellow. Green you love, red you hate. Let’s figure out what you hate and why. Second bucket, if you were me running Lead Edge, what would you change? Three, what’s something we can do to make your job easier? What you learn is incredible. You get a bunch of really good ideas every year.

Is there anything else in the culture that carries that much freight?

Being the good person is just not that hard frankly. And in a world that’s insanely competitive, if being the nice guy gets you the call back and being the helpful person, then do it all day long. And another really important thing is that I can’t be the bottleneck. I can’t know every LP. If you’re a 25 year old or 23 year old associate here and you have to go to Seattle next weekend for a wedding, then I’ll pay your trip if you stay on Monday and go meet a bunch of LPs. 99% of firms on this planet wouldn’t put 23-year-olds in front of LPs. I’m like, if you’re smart enough to work here, you’re smart enough to meet this LP.

How do you spend your time?

I probably spend 60% of my time with LPs. 25-30% of my time is investing related. And then probably 15-20% is operational. Nema probably spends 90% of his time investing, 10% on everything else, which is what he should do. Brian probably spends 60% of his time investing and probably 20-20 on LPs and operations. The three of us play to our strengths and weaknesses.

What are the investment machines you most respect?

Insight, TA, and probably Excel KKR. I think Devin, Jeff, Triplet, the guys at Insight have just built a factory. They probably talk to 30,000 companies a year. TA is the one that pioneered cold calling. And Excel has built an incredible value creation team that I think actually adds a lot.

Riff on ways you’re excited and fearful about AI.

I’m the most fearful for what I don’t know. AI is going to change the world in ways nobody can think about just like the internet did. In 1999-2000 we wouldn’t have mentioned social media. Today it’s $3 trillion of value. AI in the long term will create the biggest productivity gain of the last 7500 years. Don’t know if it’ll be like electricity but it’ll be pretty damn close. People are going to be able to build awesome businesses. What I worry about whether it’s internally at Lead Edge or outside at our portfolio companies is do we have the right people in place so that we don’t get disrupted. I joke you want to hire a bunch of young people because the young people are the ones that’s going to figure out AI more than the 60-year-old or 55-year-old. We actually rank all our portfolio companies and we’re saying like what’s your AI readiness score.

What goes into that score?

What’s your data look like? Is it structured in a way that you’re going to be able to leverage AI? How many new AI products have you come out with? What’s your AI revenues on new products? How much more product releases are you able to release? I strongly believe that if in 2024 your budget for 2026 was to have 150 software engineers, you should still have 150 software engineers because those software engineers can be exponentially more productive and they can create more products that your sales team can then go sell.

Who do you compete with?

We would bid against Insight, FTV, JMI, Battery, Bessemer when they do late stage bootstrapped stuff. Sometimes we compete against Meritech and IVP. But rocket ship companies in Silicon Valley are awesome. I’m just not paying 100 times revenues for them. There’s too much money. Matt Kohler said it best. They backed these giant internet companies when distribution was loose and capital was tight. It’s the reverse now. Capital’s everywhere but four companies control distribution.

Your view on the state of markets and technology markets?

Overhyped, over-frothed. I believe this AI capex bubble will end badly. It’s like the telecom bubble all over again. Apple may have been the really smart one in all this. People are just going to overspend. I’m convinced that people who invest in all these AI companies, all these VCs, have to portray the view that software is dying because they have to justify how much money they’re going to spend. If you start to run assumptions on how much money is going into these companies and what that means for how much earnings you have to drive and what that means for how much power you need to generate. Where are the nuclear power plants coming up? It just doesn’t work. But that presents the opportunity. That’s when you’re going to buy these companies.

My fundamental belief is that the models will commoditize and that companies like Google and Facebook and Amazon and Apple have a competitive cost advantage. Amazon, Microsoft, and Google have more data to train a model than these new model companies will ever have. And then all these Chinese models or European models, a bunch of these things cost a fraction of the cost to run. You can run them locally. Why would you pay that amount for OpenAI tokens when you can just run DeepSeek or one of these other 10 models? I think we worry the most about commoditization. I have no clue when this will stop. It will probably go longer than people think.

What’s the most surprising thing about you?

How driven I am and how much I truly love what I do. I put my heart and soul into everything I do. Whether it’s racing cars competitively, I was a nationally ranked ski racer, or how I run Lead Edge. I probably sleep like 5 hours a night, 4 hours a night. It’s because I love what I do. I’m insanely competitive.

Was it enhanced through formative early experience?

Ski racing. 100%. Process, do these things and you’ll get better. Constantly analyze video and do these things the next run. I grew up on a ski hill that was 500 feet. Lindsay Vonn grew up skiing on 500 feet Buck Hill in Minnesota doing laps from 4 PM to 10 PM at night. Mikaela Shiffrin views her time on snow as limited. When you get off the chairlift, constantly, everything is a drill.

When I asked the guy Scott Booth who ran Eastern, I asked him why he hired me. He said, “Because when things get scary, you’re going to want to buy.” He’s like, you go on the hill at 80 miles an hour. This isn’t scary. You can make a decision going down the hill at 80 mph. In the fall when it happened, I was like, this isn’t scary. Let’s buy. Ski racing helped me really understand a very fine line in risk-adjusted return behavior.

Why did you choose to start the firm?

Just go do it. If you want to be an entrepreneur, my partner Brian is like, “The reason you started a firm is because nobody was going to hire your ass.” I’ve always wanted to be an entrepreneur. If you want to generate generational wealth or build something, you need to be an entrepreneur. I just encourage people if you want to do it, there’s no better time than now. What are you waiting for? I actually think it’s easier to leave when you’re 27, 25, 30, than when you’re 45 and have three kids. I had nothing to lose if it failed.

Once you made lots of money, do you still care?

100%. Keep score every day. I want to win. People like Ken Griffin and Steve Cohen are mentors or LPs of ours. Those guys have built incredible things. It’s not work for me. This is fun. I travel constantly to meet companies, LPs, entrepreneurs, bankers. People hear my schedule and they cry. It’s not work. It’s fun.

What’s the kindest thing that anyone’s ever done for you?

Pete Wilmont, he’s passed away, was the former CEO of FedEx and a Williams alum. I started a company in college and he was the first person that ever believed in me. I was 19 years old and he became an investor. The company completely failed. When I was trying to get my first jobs and got my job at Bessemer, he was my reference and he basically told the person they were insane if they didn’t hire me because I was the most persistent person he ever met.