Venture Cycles and Hard Lessons with Matt McIlwain (Madrona)

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Hi, my name is Oliver Henry from Alpha Partners, and welcome to Driving Alpha, a podcast from Alpha Partners interviewing top VCs about how they drive alpha for their LPs, their founders, and everyone else in their ecosystem. I am delighted today by guest Matt McIlwain from Madrona. He's been in the VC industry for 25 years, so true veteran, and I can't wait to hear his perspective on a number of topics. I do want to cover that Matt's investments that have reached IPO include Accolade, Appdoo, Nautilus, and Smartsheet. In addition, he has a number of investments that have been acquired and truly in terms of driving alpha for LPs and just generally investors and founders alike, he's one of kind of the noted personas in the space. Prior to Madrona, he was Vice President of Business Process at Genuine Parts Company, which is a public company. And prior to that, he was at McKinsey. So I want to say, Matt, thanks for joining the pod.

Oliver, thanks for having me. Really looking forward to our conversation.

Excellent. So I kind of want to get, you know, let's wind back the clock. Let's go back to, you know, you're, you're at McKinsey and then you're at Genuine Parts Company. Just want to understand kind of how you got into venture. How'd you fall into this space and why have you stayed?

You know, I love to say that I got to venture capital through selling auto parts, which is partly and not a conventional path, but to connect the dots, I was at McKinsey in Atlanta, absolutely loved it. We were helping, you know, transform some big enterprise companies in the very, very early days of technology differentiation. And one of the areas that was of course becoming on the scene in like 1994, '95 was this thing called the internet. And nobody had a real clue how much it was gonna change the world, but I was excited about trying to do that in a real-world place. I went to work for this holding company called Genuine Parts. Our biggest business was Napa Auto Parts, so hence the auto parts in, but the real connection of the dots is that we also had an office products business. And so we were the backend for all these dot-coms, and I got to know a bunch of the venture capitalists and the companies they backed. One of those groups was Madrona. Madrona had been the first investors in Amazon, and in '98, '99, we explored doing a joint venture between Amazon, Napa Auto Parts, and Madrona. Thank God we didn't do it. It would've been a disaster. And we figured that out with the Amazon team. And then Madrona raised its first big outside fund in late '99 and asked if I was interested in moving from Atlanta to Seattle and joining the team. And so that's how I got to Madrona and to venture.

Excellent. And quite the story and honestly really interesting timing. So you joined Madrona in '99. What were those first years like? I mean, you, you go through the dot-com bust, you go through kind of this revamp or venture and startups where probably a lot of people are thinking, you know what, the internet is a fad and it's not gonna be here to stay. What were those first early years like?

Well, they were very tough. Years in venture. I actually started full-time in 2000, and, you know, the peak of the NASDAQ at the time was in March of 2000, and it went pretty much down from there for quite a while. And I was kind of the B2B person. The nomenclature was B2C and B2B, business to business. And one of the first projects I got to help on was there were 8 B2B seafood wholesalers that had been venture-backed. 8, and there's 2 in Seattle, which is actually kind of a historically a fishing town. And we merged those 2, still couldn't save them in terms of turning it into something successful. So there was all these, this B2B triage that was going on. Happily, Madrona had enough capital from that relatively newly raised fund and a mindset that we're gonna play the long game, that we also continued selectively to make new investments in companies like Isilon that you referenced earlier. You know, that was 2 26-year-old engineers from Real Networks that left in the middle of this total, you know, market meltdown to start a company to do storage better than it had ever been done before, data storage. And so we invested in them and just like every company, it had its ups and downs, but ended up being really kind of the fund maker for that fund. And so the fact that we were able to double down on some companies, let some companies go, and then continue to make selective new investments, I think served us well in what was a very tough macro environment.

Excellent. Yeah. Well, you persevered, I guess you made the right bets back then, and then here you are 25 years later. Just raised Fund 10, is that correct?

Oh, that's right. Yeah, we, we just raised Fund 10. So we actually have two strategies now, and combined we raised $770 million for those two strategies. One of them is pre-seed to Series A, kind of what we've classically done at Madrona, which we call Day One for the Long Run investing. You know, we want to be there at the earliest days, you know, just like, you know, Zoll and Paul, we were the founders of Icelan in 2001 and roll up our sleeves and help them through every step of the journey. And we have the capital to do that. We also learned about 10 years ago that because we were out ahead of the curve on a lot of these technology trends, whether that was SaaS and then cloud and applied ML/AI back, you know, in 2012 when we first started investing in that category, we, I'm sure we'll come back to that. Oftentimes there's some really great breakout companies that aren't in the Pacific Northwest. You know, historically most of our really early stage companies were in the Pacific Northwest. So we started investing in companies around 2016 that were maybe Series Bs or Cs and could be anywhere geographically. Happily for for us, you know, 3 of the first investments we did on that strategy were Snowflake, UiPath, and Accolade, all of which subsequently went public and were quite successful investments for us. So we have a portion of our $770 million that's dedicated to what we call acceleration stage investing, or companies that have gone from founder market fit to product market fit and are starting to accelerate their scaling.

Excellent. Well, it's great you have kind of capital solutions for founders at any stage, and it definitely helps when, uh, you launch a new fund in 2016 and you get, uh, essentially get 3 Grand Slams right off the bat. So not too bad. So I do, you know, it's a good segue into kind of, you know, how you support and work with founders because again, the theme of this podcast, the title of it is Driving Alpha. So I did want to ask is how do you particularly drive alpha for your portfolio company founders? Where do you see investors going wrong in detracting value from founders? And how do you ensure that you're always adding value? You're one of the good investors, one of the good guys.

There's a lot to unpack there. You know, I think one of the things we look foreign founders is an incredible curiosity to deeply understand the problems they're going to solve. And we may talk a little bit more about that. I think we have to approach partnering with founders with that same curiosity. You know, things are always changing. They're changing more rapidly now than ever before in terms of everything from the technology stack to how you build and operate businesses to, you know, the go-to-market elements of it. And so if we approach things, I think with a groundedness and a humility and a willingness to roll up our sleeves and know that we're the trusted advisor. I was just on a call with one of our amazing Gen Native companies that's, you know, kind of in the enterprise space in marketing, you know, really transforming the way certain marketing processes are done within big enterprises. Think like Amazon and Microsoft as customers. And we were brainstorming on everything from what's going on on the go-to-market side, what are some of their key learnings there and how do they think through prioritizing, to some of the things we're seeing in the next generation of applied AI. There's something called, it's gonna sound wonky, but there's something called the Model Context Protocol, which was something that was introduced by Anthropic a couple of months ago. In the last few weeks, it's become clear that that is going to be the de facto standard for how agents talk to agents and models talk to agents. And so we were thinking through how does this company embrace MCP, Model Context Protocol, as it continues to shape its product architecture over time. So that's a pretty big range from go-to-market prioritization to next-generation things that are happening in agentic AI. And we've got to have a core team for every company, usually 2 is how we do that. And then the broader Madrona team that's all aligned to roll up our sleeves and help those companies win.

Excellent. Yeah. I mean, you know, when you speak with investors about rolling up their sleeves, that definition can span a lot of different possibilities, but it's great to hear. And what I've heard from a lot of excellent founders is that Madrona loves to be hands-on. They love to be really consultative with founders. And it's really just, it's a partnership at the end of the day. It's not, you're not necessarily investors. It's more of a partnership.

Well, I think, you know, just to add to that, I mean, there I think are places where either the firm is too big or has maybe been too successful that at times they aren't rolling up their sleeves and really helping those companies that they back. And I think that you've also gotta have sort of the resources and the mindset to be able to roll up your sleeves. The other thing you gotta be super careful of is if we're trying to give too much advice or try to do too many things for the company, then we've either got the wrong management team or we're not doing our job right. And so there is this balancing act of, hey, we want to be helpful, but we gotta trust and empower the team that's on the field every day building that company. 'Cause we have a portfolio of them.

They're almost like children, is that, you know, you gotta be supportive, you know, in the early days, but you gotta let 'em run eventually as they grow up. Yep.

Absolutely.

Great. I do want to ask one question, and this is more so, I guess it's more understanding of kind of how you approach picking investments or how you identify kind of making investments. And so I often refer back to a, you know, excellent TED Talk from Bill Gross at Idealab about the most important factors that determine startup success and failure. And there's really like kind of key factors. There's about, let's say, 5 of them that he evaluates in across all the portfolio companies and other companies he's looked at. And they come down to idea, the team, the business model, the funding, and timing. And Bill, from his studies, determined actually timing was the most important factor, which actually he didn't expect to find. So I, I have a couple questions around that is, do you agree Do you agree with Phil's hypothesis based on your own personal experiences? Is timing the most important factor for startup success?

Well, Phil is super accomplished and has, I think, done more research on this aspect than I have, so I'm reluctant to disagree with him, but I do think that I would ultimately say if you had to pick one, I would pick team. And you know, part of the reason for that is I think teams figure out where they are in the timing curve of what I like to call the why now question. Why can this solution that you're bringing to market now be better than the previous solutions to the same problem? And so great teams figure that out. And if they realize that their bigger vision isn't quite right because it's too far ahead of where the market is, then they adjust from a timing perspective and they find ways to win in the here and now to earn the right to win in the long term. But that's the team. That's judgment. I think AI is going to do a lot, but I don't I don't think it's going to fundamentally replace human judgment. For that matter, it won't fundamentally, you know, kind of change human nature either. I think those are things that are kind of lasting dimensions. I ultimately kind of favor team in this particular construct. You know, there's the one that you hear sometimes, there's the jockey, which is the team, there's the horse, which is the company, there's the race, which is the market, you know, and then I guess it's the length of the race would add the timing thing, you know, into the equation. And I'm going with the jockey.

Okay, fair enough. Well, I think the jockey is a good bet at the end of the day, but I do have to ask a follow-up there. So if team is most important piece in your mind, if you had to pick one, can you think of a particular team that regardless of the timing, regardless of the market conditions, was able to pivot, was able to essentially wrestle with the situation they were with to ultimately persevere and kind of find their luck or make their own luck along the way?

Yeah, I mean, I think there's a bunch of examples, you know, Appdoo and Smartsheet are a couple that come to mind, but you know, let's take Appdoo. And, you know, this is a company that was selling into the enterprise and they started the company in 2007. And so things really got tough there with the great financial crisis in the middle of 2008, you know, and onward for at least a year before things really started to come back. And what they did was they understood, and Sunny Gupta is the founder there, he understood that enterprises always wanted to be finding ways to save money. And he was trying to help them identify all the money they were spending on technology and being able to create a dialogue between IT IT and finance and building a system, which Aptio became, technology business management, so that you could literally have a bill of the IT costs and it be understandable between finance, the line of business, and the IT folks. And that was getting harder and harder first because of virtualization, why now? And then because of cloud, which was another why now added it to that. And what I would say about that is it, there's a set of attributes I found in founders that really make this happen. And so think of this as a circle. We're at the top of the circle, or think of it as a clock, right? So the kind of the first quarter of the hour is all about genuine curiosity. Why does this problem exist? And why is it becoming a bigger and bigger problem? Maybe it was somewhat of a problem in the past, but why is it getting worse? Now, in that case, virtualization was the driver of why it was getting worse. And then, you know, do we not have good solutions to that? And then that curiosity leads to a problem which is internal to you, which is you get conflicting information. So what am I going to do with all this conflicting information? Well, you gotta have a good skill at triangulating all the information and synthesizing it into what you believe. Now you've gotta be, I call this sort of like strong convictions loosely held, you know, because again, remember the curiosity is the first point. So it goes curiosity into sort of triangulation, then into action. Some people are paralyzed to take action, and at the end of the day, the only way you're gonna learn if you're right or not is to actually go do and to run experiments, to walk through doors and see what happens and learn from it. And by the way, when you learn from it, you've got new data that comes back around to curiosity. So I've kind of gone around the clock, as it were, here. And that loop, which Sonny and his co-founders were especially good at, allowed them to navigate even as the first couple of years out of the gate, timing was a little tough.

First of all, I love that saying is strong conviction loosely held or strong views loosely held. It's a, it's a great saying. And also this idea of kind of curiosity to essentially reinvent the wheel, to rethink existing paradigms or existing beliefs that have been essentially strongly held by the public for forever. I recently heard Blake Scholl speak, who's the founder of Boom Supersonic. It's an incredible story how essentially he's built a supersonic plane for the first time that will be commercially viable, hopefully, you know, since the '70s. But prior to that, he was at Groupon. He had no prior aerospace training. And it's this phenomenal story of he just, he challenged the status quo and he had this insatiable curiosity to your point about what, you know, what is possible in certain spaces, even if he didn't have any prior training. So actually, I want to flip that back to you, is not only about kind of this ability to persevere and break through when the timing necessarily wasn't right, but can you think of a particular founder or team that you've encountered where it's like, I cannot believe the insatiable curiosity of this team or this founder, where they're diving into a problem that I frankly didn't know existed or was solvable?

Well, it's fun that you bring up Blake. I actually first met Blake when he was leaving Amazon, and he and a couple other guys named Jeff Holden, they started a company and it did not work out. And I think the great thing about, you know, Blake and that team was that, and he was particularly curious about what are we learning here? What, why isn't it working? We didn't invest in that company. We could have been very wrong about that, but he is an impressive entrepreneur and a lifelong learner. And I think, you know, I mentioned Sonny, you know, let's maybe take, you know, the Smartsheet books as an example. So this is a company founded in 2006 and, you know, it's hard to remember now, right? I mean, this is another one of my favorite expressions is, How do you turn the improbable into the inevitable? And having seen that happen over and over again now, in this case, the idea that, hey, maybe when we're trying to get work done, we could have this cloud-based collaborative way to do that. Now today we just take that for granted. That was inevitable at some point. It wasn't in 2006, you know, and what also was not clear, and one of the struggles they had in the early years, is that at Smartsheet, they had a capability to do this, but they built a good backend, but they really hadn't built a modern frontend. And this new thing called mobile touchscreens web-based mobile devices became a thing in 2007, 2008 with first the iPhone and then the iPad and all. And so if you wanted to collaborate, you needed to be able to collaborate across this diversity of devices. It wasn't just laptops. Then they built something that looked like a spreadsheet and in a way it was sort of trapped in that metaphor because people thought of it as doing something similar to just like a spreadsheet, but in the cloud. So it was a collaborative spreadsheet when in the reality it was a very sophisticated project management tool. That can allow teams to do big rollouts of products, or it was used extensively in the later years that, you know, for things to navigate in the times of COVID et cetera, et cetera. And so Mark Mader, Brent Fry, that team was really good at, in fact, you know, kind of being curious about how do we go build the better product? And then again, coming out of the great financial crisis, they were just scrappy on search engine optimization and search engine marketing. Today, search engine optimization, search engine marketing are not going to move the needle for most companies in terms of how you do product-led growth. But back then, if you were an expert in it, which they were, they didn't have a sales rep for the first like 3 years. It was 2011 when they hired their first inside sales rep, when finally they had so much momentum in the business they could even afford to think about ramping it up. You know, that company, billion 3 in revenue, just got bought by Blackstone and Vista in January for over $8 billion. So, you know, people kind of always look back and say, oh, SmartCheetah was always a success story. But you know, we almost kind of shut it down in early 2009.

Great story about curiosity. Also, I love the inevitability kind of prospect, but I want to come back and pin in the curiosity point and also just identifying great founders. And I want to key in something that you've touched on a couple of times is like, why us or why now? You've written about and you pioneered this idea of the power of why. And I don't want to— I've read it and I really enjoyed it. And I'm going to apply it kind of how I think through founders, but I don't want to steal your thunder here. So What is the Power of Why and how do you use it in your evaluation process of startups?

So the Power of Why framework is— and framework's a terrible term, but whatever, you know, it's the way I listen. It's the framing way I listen when entrepreneurs come in to tell their story. And by the way, we love hearing these stories. You know, it's— we view it, it's our responsibility to add value every time a founder comes in to tell us their story because, you know, we're only going to invest in maybe 1 out of 100 of them. And so if we don't add value, then, you know, it wasn't a good use of their time. So what I'm listening for and what we're listening for is these 4 why questions. First is the why, just the why does this problem exist and why is this problem unsolvable or not solved well enough? I'll use a kind of a famous example, right? You know, people have been trying to get from point A to point B, you know, since, you know, man could walk. And we had hitchhiking. That was one mechanism for it, right? At some point in time. But, you know, that problem still is often unsatisfactory. And so, you know, the folks at Uber and Lyft were deep thinking deeply about this, right? You know, the why. The next thing is the why now. What has changed? Whether it's societal expectations, whether it's technologies, whether it's business models that might be able to solve the problem better than it's ever been solved before. And superficially continuing on with our, you know, kind of car sharing example, it wasn't until we had a combination of things, cloud computing, networking layers for data across cloud computing, i.e., things like Twilio, mobile devices that were affordable enough for both the passenger and the driver so that through the cloud and through GPS, another kind of robust, reliable global positioning system, I could connect those people and I could connect them in time and space. And so I had a better solution to hitchhiking. And that's the why now, because these technologies all aligned in kind of that 2007, 2008, 2009 timeframe. The third point in this triangle. So if the why is the top point of the triangle and then you got one down here and then you go one across is really the why this. And this is the thing that I find is most often directionally correct and specifically wrong at the beginning of a company. What do I mean by that? Uber was a town car service, black town car service that created software to connect a passenger with a black town car service. It wasn't peer-to-peer, which is what it became. That drove the success and they had to iterate their way into that. I remember when they came up to Seattle to launch Seattle as the second market and they had a big event at a fancy restaurant because it was all about black town car But of all those 3 whys, they're actually not the most important one going back to why I bet on team. And that's the one that's in the middle of the triangle, which is the founding team, which is the why us. Why are we the people that have the founder market fit and the passion for that problem and the intuition about the solutions and the ability to build a solution in a way that we can kind of continually iterate on and find not only a compelling product solution, but then as you referenced earlier, what's the right business model? For that product solution. So a little bit long-winded, but that's kind of how I think about it.

No, I think that was perfectly winded. And I guess great illustration of how you think through things. I want to key in on, again, the, what you believe to be the most important part of that triangle, the why us. And I want to kind of reference actually an investor of Lyft, Mike Maples at Floodgate. And he talks a lot actually about how GPS was kind of, you know, without the GPS innovation within the iPhone 4s, that if that wasn't included, the company would have never got off the ground. So, so really interesting you bring up that point. But he writes in this book called Pattern Breakers about you know, how important it is for founders to be able to break the mold or break with ideas or traditional ways of thinking through things. And it's this really interesting idea because VCs are often obsessed with the idea of pattern recognition. I think pattern recognition can be interpreted in a variety of ways, but if you apply it to, you know, founder beliefs or excuse me, founder beliefs or founder qualities, is that actually may not make sense. Is that maybe you want to break with the pattern of prior founders or prior people within the industry to think in new ways. But that all that is to say is kind of, I'm going to understand is how do you evaluate the why us? We touched on kind of founder curiosity, but what are your mental heuristics to evaluate, you know, who are the extraordinary founders and who are the ones that may just be, you know, thinking with the crowd?

Yeah. Well, I think the curiosity, triangulation, experimentation, and then you're kind of back around the loop again is an important— and you're listening for that. And sometimes I try to thoughtfully challenge the point of view when a team comes in. I'm a little bit interested in how they're going to react to that. And sometimes people are strong convictions, strongly held, and that is good, but maybe not optimal, you know? And so it's, you know, especially in the face of actually new data, are you open-minded enough to change your point of view? Now, you know, Travis, to give him credit, right? You know, he did, right? He realized the bucktown cower service wasn't the solution, just to kind of go on and on about that example. So I think what you're looking for is, I often say that curiosity is an act of humility. People go, oh, well, what do you mean by that? And what I mean by that is humility is saying, I don't know. I mean, I might have strong convictions, but I don't fully know. And so you're trying to decipher that in a kind of a set of meetings, which is why it's useful to take some time to really know founders. Sometimes you gotta get to know them pretty quickly depending upon the dynamics of the situation. And then I think the other piece about it is they've gotta have passion for that problem. And you know, even though, you know, we talked about Blake before, he maybe didn't know anything about supersonic travel, or maybe he did, right? But he was super passionate about it and he had gone deep curious on it. And I think We've invested, which we wouldn't have done 10 years ago, but in the last 6, 7 years, there's been a big why now for us at the intersection of AI and life sciences, because the cost of data, the digitization of data, what you can do with that data in life sciences has just been transformed by things like AlphaFold and RosettaFold. And we could go down a deep, deep hole there. But there are some founders that have such high conviction about specific ways you can solve problems better than you've ever solved them before in curing cancers or addressing autoimmune diseases. And listen for that authentic conviction. Conviction about the problem they're trying to solve is really, really important, as well as having some of those personality traits that you think are going to make them successful.

Excellent. I think we kind of all can grab some soundbites and tidbits of kind of how to evaluate great founders there. I do want to tie this back again to kind of the theme of this podcast, driving alpha, because you have been one of the, I think, a few VCs in this current landscape of being able to drive returns, drive exits. And I actually just saw you recently on CNBC's Closing Bell, we were discussing this idea of kind of exit potential in today's current M&A landscape. And so I want to understand how you're coaching founders right now because, you know, DPI has been difficult to attain in this current, you know, kind of last, I don't know, 5, 10 years, call it 5 years. So how are you telling founders how they should approach exiting, talking to strategics, working with PE, even thinking about IPO? How are you thinking through that and talking to founders about that?

Well, I think it's a really good question because I think especially on the kind of M&A side right now, there's more opportunity than there has been. You know, the IPO stuff we thought was going to pick up more this year. We're seeing a little bit of opportunity, but some of the macro uncertainties that have creeped in at a policy level have made that harder. But the M&A side is not the case. There's been a significant pickup in M&A. I think it's going to continue throughout the year. And so I think, you know, there's two things you can do as a company. One, you want to be in a position that you're controlling your own destiny and so that there's no need to have to sell. The good outcomes are when the companies get bought, not sold. And so one, control your destiny. Secondly, be out in the market, be engaged, be engaged with your competitors, be engaged with the big players in the ecosystem, build authentic relationships before there's ever any conversation about 1 1 5 and the two of us should merge and then we could really take, take the hill together. Or wow, you know, I'm doing really good stuff right now, but you know, I as a company and we're executing well, we understand our unit economics, but that this is a whole AI disruption and either I've got to really figure out how to become you know, Gen AI enhanced, you know, 'cause that was maybe started 6, 8 years ago, or I've gotta go buy a company that was good technologist but didn't have the wherewithal to go build a business around it. Or maybe this is the right time for me to, you know, partner up with one of the bigger players in the ecosystem and get bought by them. And so I, I think the key part of that is, you know, you want to have differentiated, or I even sometimes call it unfair access to the information of what's really going on in not just the general capital markets, but in your domain space, your category's market dynamic. And then I think you'll be better prepared to make decisions along the way.

I think that's pretty fair. And, you know, I think maybe founders may be a little daunted or, or maybe be averse to, to speaking with everyone in their ecosystem and kind of keep it, you know, their cards close. But it is a great point is that to be bought and not sold and also to be a master of your own destiny is, is also making sure you have a competitive nature to actually those M&A conversations. If you have multiple people interested in multiple bidders, things tends to turn out the, the way that you want.

I'll give you one example, and then back to the point about rollercoaster rides, right? So Isilon came out of the great financial crisis and they, you know, had a few kind of challenges as well. And Sujal, the founder, had stepped back in as the CEO and their stock was at $2 a share. They built a relationship with the player that they were trying to disrupt, which was NetApp, network appliance NetApp. And I think they thought, well, we should build that relationship. You never know where that might be handy. But then out of the blue, about a year later, It was actually the folks at EMC that reached out and said, we want to get to know you better. And we're a little bit more direct than that, to be candid. Long story short, the company kept executing, so they were controlling their destiny, controlling their future. They had no need to sell. And there was lots of drama that ensued over the course of 2010 with both NetApp and EMC and other players in the market. And right at the end of 2010, EMC bought the company for $34 a share. So within less than 2 years, they went from $2 a share to $34 a share through their own execution, macro getting better, but having relationships with multiple players when that M&A season came and they did a good job of navigating it.

Excellent story. And, and yeah, really good, uh, good example of kind of how you can control your own destiny, uh, through great execution, but obviously building relationships. I do want to ask one more question and more so on kind of the life advice or professional advice space because, you know, you've lived through, you know, let's see, I guess it's, you know, 2, I guess 3 maybe kind of market cycles. You, you've seen kind of everything that venture has to offer. I want to understand, or I wanted to, to learn is what's a, what's your greatest life lesson that you've learned through a mentor or kind of along the way that you would like to share with our listeners that are generally kind of a younger or even some earlier partner VCs?

Well, you know, I was really fortunate at Madrona, you know, when I joined the firm that we had these founders that were all experienced executives and had done different things like running airlines to being senior execs at the early mobile companies, McCaw Cellular, which became AT&T Wireless. And even though that first cycle, 2001, 2002 was very tough, they took the long-term perspective. And in taking the long-term perspective, I think you can do what I call time arbitrage. In anything that's feeling really hard and challenging at the moment, you gotta engage with that, right? It's like you can't go say, I'm going to avoid it, but if I engage with but I take the long-term view, I have seen time and time again, you know, we get through it together. And I know that sounds a little bit like, wow, really? Well, sometimes when you get through it together, you have an outcome like Isilon. Sometimes when you get through it together in the context of venture, you sell the company and maybe we get kind of our money back and everybody gets a good job somewhere. I mean, it can't, it's not always like huge success. As I like to say, you know, venture is by definition a daring and risky journey. And so the outcome can be success through the journey, taking the long-term perspective, time arbitrage. And I saw that firsthand when I was there, kind of the early days of Madrona. We of course saw it again during the great financial crisis. I gave you a few examples of that. You know, the other thing is like COVID. I mean, you know, it's, we're like right at the 5-year anniversary of the really depths of the lows in COVID. And we all rallied to create something called All In Seattle and get the the tech community to raise a bunch of money to support all the people in need. And in the moment, you know, when we're all trying to figure out how to help our extended families stay healthy, and sometimes there weren't and all, but like doing that, taking that kind of action, you know, that was going to help people for the long term, I think served the community well and saved a lot of lives.

Well, first of all, that's an excellent initiative and thanks for putting that together. I mean, I don't live in Seattle, but I'm sure the, the whole town or all the people of Seattle are thankful for that initiative. But also this long-term perspective idea is really interesting. Actually, I was just watching a podcast with Sam McIlwain talking about time arbitrage. And the idea is that, you know, kind of where is there arbitrage opportunities in this market? And his idea is that, you know, generally there's in the short term, there's markets are essentially highly efficient. You can think about like high-frequency trading and markets is, you know, from quarter to quarter there's a ton of efficiency, but long-term there's not as much efficiency. There's not as many people taking long-term approaches to thinking, you know, building things or investing. So I think you're spot on there. And I think that's honestly what a lot of investors can take into account? Because a lot of people are looking, you know, right in front of them thinking about, you know, how do I get from this raise to the next raise? Not how can I get from this raise to exit?

Well, I think, thanks Oliver. And I actually think it's harder now because everything's being evaluated constantly, you know, on social media, communication's effectively free, multimodal communication at that. And so it's, I think, even harder to say, I've gotta listen to what's happening in the here and now, but I gotta maintain this long-term perspective. And that's again, back to the attributes of founders that have been successful. That's good on Sam to be thinking of that that way. And one, one last thing I'll say is, you know, in the whole AI world, there's absolutely gonna be massive disruption. But at the end of the day, we kind of not so jokingly say the most important AI model is actually the business model. And so great, you're disrupting some field, some problem that's not been solved as well in the past 'cause it now can be solved better. What's the business model so that you're not just creating value, but you're capturing value? Now, OpenAI figured out how to do this largely because of a little bit of luck. With ChatGPT, and that's the dominant revenue source for them. Now, there's skill and luck. They often go together, but you know, what's going to be the business model? And I think there's going to be some pretty substantial, maybe even more so on the consumer side than the enterprise side, changes in terms of how business models work going forward.

Yeah, I think the jury's still out. And what's good is we could do this in another one of these in 5 years and we'll, we'll see kind of how those things worked out. But until then, I want to say, Matt, thank you so much for your time. Thanks for imparting some wisdom to our listeners and good luck to you in this year, in the following years, and congrats again on Fund 10. Well, thanks, Oliver.

It's been Absolute pleasure for me, and I look forward to that follow-up 5 years from now.

All right, take care.

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