Shardul Shah: How Index Makes Decisions & Why Benchmarks & Averages in VC are BS | E1202

Shardul Shah is a Partner at Index Ventures and one of the greatest cyber security investors of the last two decades. Among his many wins, Shardul has led rounds in Datadog, Wiz, Duo Security, Coalition and more. Shardul is also the only Partner investing at Index to have worked in every single Index office from London, to SF, to NYC to Geneva. Prior to Index, Shardul worked with Summit Partners, focusing on healthcare and internet technologies.
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Timestamps:

(00:00) Intro
(05:52) Deciding Between Personal Meetings & Delegation
(06:49) Why Specializing in VC is Crucial
(07:51) Navigating Mental Plasticity Across Investment Stages
(11:22) Valuations: Striking the Balance Between High & Too High
(13:32) Balancing Execution, Market Timing, and Sizing Risks
(15:51) Has Shardul Misread a Founder’s Potential? What Went Wrong?
(17:24) How Capital Requirements Affects Shardul’s Investment Strategy
(22:37) The Hardest Part About Doubling Down on Investments Like Wiz
(26:03) How To Balance Debate & Team Harmony
(31:10) Importance of Signaling for Founders with Multi-Stage Funds
(33:34) Tips for Structuring Angel & Operator Allocations
(34:27) Best & Worst Areas: Sourcing, Selecting, Securing, Servicing
(36:35) Key Lessons on Being an Effective Board Member
(40:02) How VCs Can Be Damaging on Boards
(41:18) Right Timing on Selling & Taking Liquidity
(44:35) The Future of Venture: Boutique Firms vs. Cash-Rich Giants?
(46:40) Quick-Fire Round
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In Today’s Episode with Shardul Shah We Discuss:

1. Investing Lessons from Wiz and Datadog:
Why does Shardul believe that TAM (total addressable market) is BS?
Why does Shardul believe that every great deal will be expensive?
How does Shardul evaluate when to double down and concentrate capital vs when to let someone else come in and lead a round in an existing company?
How does Shardul think about when is the right time to sell a position in a company?

2. How the Best VCs Make Decisions:
How does Shardul and Index create an environment of truth-seeking together, that is optimised for the best decision-making to take place?
What are the biggest mistakes in how VCs make decisions today?
Why does Shardul believe that all first meetings should be 30 mins not 60 mins?
Why does Shardul believe it is so much harder to make investment decisions when partnerships are remote? What is better remote?

3. The Core Pillars of Venture: Sourcing, Selecting, Securing and Servicing:
Which one does Shardul believe he is best at? What is he worst at?
Does Shardul believe with the downturn we have moved into a world of selection and not just winning every new deal?
Does Shardul believe that VCs provide any value? What are the biggest misnomers when it comes to “VC value add”?

4. Lessons from the Best Investors in the World:
Who is the best board member that Shardul sits on a board with?
What has Shardul learned from Gili Raanan and Doug Leone on being a good board member?
What have been some of Shardul’s biggest investing lessons from Danny Rimer?
Why does Shardul hate benchmarks when it comes to investing?
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