Episode 16
Making the Bet Before the Answer Is Clear
Key Takeaways
An engineering background can provide an advantage in technology investing because it helps investors understand technology as a fundamental source of leverage.
A technical insight is a novel way of solving an existing problem that would not be obvious to a capable engineer, while still having commercial implications.
Ashmeet looks for three things when investing: a mission-driven founder, a genuine technical insight and a strong market.
The strongest founders often have a sense of mission that goes beyond money, ego, power or even the technology itself.
Early-stage venture investing requires a willingness to take significant risks and make decisions long before the outcome is clear.
AI is changing the nature of software development in a way Ashmeet compares with earlier major shifts in computing, including the invention of the compiler.
Ashmeet’s own view of AI has changed. He now believes humanity has created a new form of intelligence, although he does not believe this necessarily leads to a single superintelligent model or singularity.
As careers become less tied to a single employer, people have greater responsibility for directing their own paths, but also more agency and freedom.
When founders face uncertainty and do not have enough information to make a decision, taking action can create new information and improve their judgment.
Ashmeet’s Watershed Moment
Ashmeet identifies several decisions that fundamentally changed the direction of his life and career.
One came before his career had really begun. His first application for a US visa was rejected. Rather than accepting the outcome, he applied again, eventually making his way to the United States and later Stanford and Silicon Valley.
Another arrived after he left VMware. Ashmeet was an entrepreneur in residence at Foundation Capital and expected to start another company when Catherine Gould asked him at a Christmas party whether he had ever considered becoming a venture capitalist.
He hadn’t.
A lunch followed, and Ashmeet ultimately decided to try venture capital despite having planned financially and personally for a very different path. His wife was pregnant, the opportunity initially came with no long-term certainty, and investing was an unfamiliar career.
Looking back, Ashmeet also points to leaving school partway through his undergraduate studies, coming to America, starting a company and eventually moving into venture capital as consequential bets on his own future.
Those experiences connect closely with one of the central ideas running through the episode: important decisions are often made without certainty. Sometimes the only way to discover what comes next is to make the bet and act.
Full Transcript:
Declan Waters (00:01.3)
Hello everybody and welcome to the Watershed Podcast. Today's guest is Ashmeet Sidana, founder and chief engineer of Engineering Capital. Ashmeet has spent his career as an engineer, a founder, an operator, and now an investor. He has worked on VMware ESX, he's built And sold his own software company, and has since become one of Silicon Valley's most interesting early stage technology investors.
His investments have included companies such as Rubrik and most recently CodeRabbit, which was valued at 1.5 billion in his latest funding round. Ashmeet has built Engineering Capital around finding what he calls a genuine technical insight, often backing founders before there is much more than an idea and a small team. Ashmeet, welcome to the watershed.
Ashmeet Sidana (00:54.552)
Thank you.
Declan Waters (00:56.426)
It's a pleasure to have you. I've been looking forward to this conversation. So why don't we start off by maybe just taking a little brief walk down memory lane? I heard this great story that you have, before you'd even seen a computer, you found a book about programming and started writing programs out on paper at night. Take me back to that time. How did a kid growing up in rural India become so obsessed with technology?
Ashmeet Sidana (01:25.57)
Wow, you've really done your research. That book was on the throwaway pile of a friend of mine's sister who had gotten married and was just literally cleaning her shelf. And it was a book called Teach Yourself How to Program. I picked it up, started reading it. I was in high school and I fell in love. It was just so amazing to me that a machine would be able to compute, to seemingly think.
and process that I fell in love with the idea. I had never seen a computer, I had no idea what a physical machine like that would look like. And so it was one of those serendipitous, events that occur in people's lives. All my life I've been a fan of computers.
I was fortunate to come here to the United States to study and I ended up in Silicon Valley, which again, purely by accident, not by design, turned out to be the heart of the technology revolution. So my entire career has been spent ever since I graduated from Stanford, has been spent within five miles of Stanford.
Declan Waters (02:30.107)
Right. And it all came from a book. Isn't it interesting how a book can just broaden your horizon so quickly and open up possibilities that Ashmeet probably maybe in those days you weren't even considering.
Ashmeet Sidana (02:45.742)
Absolutely. It opened an entirely new world to me, this single book. I still think books are a wonderful medium. I still like to read. I read every day. that's the last thing I do before I go to bed. And it is a great it is one of the great gifts you can give someone.
When I meet someone new and if I'm at a loss of words in a conversation, one of my favorite questions is, what's your favorite book? Or what's a book that you recommend? And I have read many books on people's recommendations which have stayed with me and have impacted me for my whole life.
Declan Waters (03:18.345)
Mm-hmm. Do you enjoy reading books about because I'm an avid book reader as well, so I'll love to spend just a couple of minutes on this. What what types of books do you get the most value from now compared to maybe earlier on in your career? How have you seen that kind of evolve over time?
Ashmeet Sidana (03:38.447)
I tend to go through phases. I'll get interested in some aspect and then I'll just start reading more and more about it. One book will read to the next. when I was running my company, I was an entrepreneur. I was reading a lot about adventure travel, Shackleton, Peary, North Pole, Apollo program. It's like, who are these crazy people who would literally, take the risk of killing themselves? these days I've been reading obviously a lot about AI.
Which is technically extremely interesting. My technical background is in operating systems. I had not really studied AI when I was in school, other than just one intro to AI course. And so since 2017, I've been an associate of the University of Toronto CDL lab, and I've been participating in their reading group and reading a lot about AI. And then I've also been reading about political science because I have a daughter who's interested in political science, and I knew nothing about it. And that seems to bring in aspects of philosophy, history.
Declan Waters (04:30.354)
No.
Ashmeet Sidana (04:35.152)
History, politics, obviously, which seems extremely relevant to the impact that AI is having also. And so in some ways, those topics have merged. But those are the two areas I'm reading in. But I'm open to anything. I mean, I'll read, any book on any topic if it catches my fancy. I do have a long list that I have to get through, so it always ends up at the bottom of the pile. But I do like to read.
Declan Waters (05:00.266)
Imagine. Yeah. you took us to Stanford in Silicon Valley. maybe just half a step back there. So how how did that all start? When you when you came to America, talk me through, did you go straight to the Bay Area or was there a different
Ashmeet Sidana (05:23.63)
Yeah.
Pretty tortured educational journey. You know, growing up where I did, where we had no access to education, though my parents were educated and they really wanted me to study right from the beginning. I mean, my mother taught me English as the first language because she really thought it would help us, later in life. And so as a family, we spoke English at home, even as children. Eventually I came to Delhi. From Delhi I went to BITS Pilani. From BITS Pilani I went to USC.
University of Southern California. That's the first time I came to America. And then I came to Stanford for graduate school, which is when I knew I had found my home. I knew this is where I wanted to be.
Declan Waters (06:08.19)
Yeah. And your story arc is really interesting to me because you've you've got the engineer, the founder, the operator, and now the investor. we're going to talk about your career in a bit more detail, but do you feel with that background that you it's made you a better investor? It made you a more of a rounded investor in terms of you know the way that you're making decisions.
Ashmeet Sidana (06:38.302)
I think anyone can be a great investor. Engineers in particular make great venture investors. So within the venture investing domain, I think being an engineer is an unfair advantage. Not that you couldn't succeed. I mean, there are famous examples of non-engineers doing extremely well. I mean, Mike Moritz was a journalist, who obviously is a fabulous investor.
You know, John Doerr was a salesperson who was a fabulous investor. So there are clearly counterexamples. But given that we leverage technology, and technology itself is one of the intrinsic forms of leverage in venture investing, having it having an engineering background, I think, gives you an unfair advantage.
Declan Waters (07:25.384)
Yeah. So looking at the watershed moments is is the question I ask every guest and I really look forward to it because it's those pivotal moments, isn't it, Ashmeetet, where you look back and reflect on your career, those decisions that you made. Could you identify, one or even maybe two that really kind of stand out for you as being those important moments for you?
Ashmeet Sidana (07:50.999)
Yeah, there have been several moments which I look back on and I sometimes marvel on why that happened and how it happened because I can't fully explain it. Certainly one of the most impactful ones was walking into the American consulate and applying for a visa and getting rejected. And I can't even remember if it was a woman or a man who was standing across from me and who said, I'm sorry. And I was just stunned, you know. I was standing there like, my God, I was going to go. But then I came back, I applied again and I
Of course, I did get a visa and I did end up coming here. So that's clearly one. And then I would the second one which I would point to was when I left VMware. by then I was you know an operator, a CEO, a founder. I had gone through sort of I was mid-career in my journey, and I remember Catherine Gould, the founder of Foundation Capital, asking me at the Christmas party: I was an entrepreneur in residence thinking of starting another company. I was at Foundation Capital, I had left VMware, I was brainstorming.
Declan Waters (08:22.836)
Fantastic.
Ashmeet Sidana (08:50.952)
Ideas, doing what every entrepreneur does, trying to meet as many people, trying to network with VCs. And she said, would you like to be a venture capitalist? And I was like, why do you ask? You know, sort of an interesting question. I was in my 30s, still young.
Declan Waters (09:03.402)
Yeah.
Ashmeet Sidana (09:11.766)
I had, had by then I had an MBA under my belt. Obviously the VMware story was being written, the company had been sold, an important, impactful technology. And she says, Well, we think you might make a good VC. Have you ever thought about it? I was like, No. She was like, Okay, let's have lunch. And so, I show up at Left Bank, which was her favorite restaurant in Menlo Park, and we had lunch, you know.
Declan Waters (09:27.656)
Yeah.
Ashmeet Sidana (09:38.115)
We had lunch together. And here I am. So grateful to her, to Mike Shu, to Bill Elmore. You know, these people had a huge impact on my life, Jim Anderson. I'm a venture capitalist because of them. The people connections are huge. They, even in an age of AI, even in an age of technology, I think there's no substitute for that in person connection. If I wasn't standing at that Christmas party, if I wasn't chatting with her, famously Mark Zuckerberg met Sheryl Sandberg at a Christmas.
Christmas party, here's a Jewish person meeting another person at a Christmas party. history might have been different. Certainly my life would have been different.
Declan Waters (10:09.001)
Right.
Declan Waters (10:18.9)
Yeah, and did you realize Absolutely, I'm so pleased you went for that lunch. Big decision. And at the time that did you feel it it could have been a quite a consequential moment for you? Or is it just looking back on hindsight now that you that you realize that it it was? Did it feel like that at the time?
Ashmeet Sidana (10:24.46)
Yes, exactly.
Ashmeet Sidana (10:38.346)
It did, because my wife was pregnant. I didn't have a job and we had made a budget, for me to start a company.
Declan Waters (10:41.321)
Mm-hmm.
Ashmeet Sidana (10:48.426)
I had sort of carefully planned this entire thing out between, having the baby, the medical care. You know, we have to think about all of those things very carefully here in the US. Remember, this is pre-Obamacare days in terms of planning out all of those things. And and suddenly I was like, I'm just going to follow a different path, just risk everything in a different way.
Declan Waters (11:00.028)
Yeah.
Declan Waters (11:13.034)
Yeah.
Ashmeet Sidana (11:13.251)
And try my hand at venture capital. Remember, the offer I had was only for quote, a year or two to try it out to see if we like you and you like us.
So there was no permanence, there was nothing long term in it. And it was a career that was entirely alien to me. While I did have that MBA, I had never thought of myself as an investor. The first time someone referred to me as a money manager, I sort of almost felt offended. You know, I was in an LP meeting And someone said, all these managers and all of you. And I was like, that's me. And now, of course, I am, of course, a professional investor. I'm a professional
Declan Waters (11:34.367)
Yeah.
Declan Waters (11:42.098)
Yeah.
Ashmeet Sidana (11:54.177)
Professional money manager, though as a very early stage venture capitalist, very little about the in early stage venture capital is really about the money. It's really about the technology, the market and the people where I spend my time.
Declan Waters (12:06.069)
Yeah. It's it's interesting to me to hear you tell that story because, you are making bets on other people all the time. But here here's a really good example where you actually just made that bet on yourself, didn't you? You said, I'm going to I'm going to really give this a go. It tells me a lot about your personality and your character that you made that decision at that particular time in your life as well.
Ashmeet Sidana (12:33.396)
Yes, I mean there are three very clear times when I made, sort of life consequential types of bets. You know, leaving school halfway through my undergrad, without any future coming to America, leaving to start a company, and then throwing everything away to try my hand at venture capital were three, very important bets that I made. But people make bets like that all the time, whether they realize it or not.
I mean, you choose your life partner to get married. You choose what you're going to study in college. Those are clean sheets of paper where people make those bets. Whether they do it explicitly or implicitly, they do make bets which will change the rest of the life.
And those are one-way doors. You know, you can't undo getting married. Yes, you can get divorced when etc. But there's no undo having children. Those are life-changing decisions.
Declan Waters (13:25.055)
Very much so. Yeah, absolutely. okay, I want to now just focus on what I'm going to call your superpower. these extraordinary decisions that you make very, very early on in a in a company's journey.
There's been a number of examples and we can certainly go into some of those. But I wanted to ask, like when you look at the ones now that have really worked, was there something that you saw at the beginning, Ashmeet, that other people either couldn't just see yet, or just couldn't believe it at the time? What is it that you that you think that you saw that others didn't in looking back on some of those big decisions?
Ashmeet Sidana (14:15.286)
I think I've been blessed with the ability to see things from multiple angles at the same time and then try to put them together. So it's one thing to take is you can be an expert on a particular technology or a lawyer or a maybe a politician, journalist, whatever. And you can be amazingly good at something, but you may not be able to put it together in the context of the entire world, in terms of where it's going to go and how it's going to work.
So let me give you a non-example first, and then we can get into some real examples. Of course, as a venture capitalist, I'm happy to talk about my companies all the time. My child was in kindergarten.
When Elon Musk first made the claim that he's going to have a self-driving car. And it was the talk of the parents' group PTA conversation that day when we walked in and everybody's having wine and cheese. We are introducing each other. And there happened to be another father who also happened to have a daughter in the same grade in kindergarten and who said, our children will never need a driver's license.
And I don't know this person, I don't know his background. It turns out he's actually a PhD in physics, a patent attorney, deep in technology, very interesting person. I didn't know this person at all. I met him for the first time that day. And I looked at him and I said, I'll take the opposite side of that bet.
Declan Waters (15:34.355)
Right.
Ashmeet Sidana (15:41.229)
And he was like, Okay, you're a little brash, you know. So what's the bet? And I said, Okay, the bet is my child, our children, because they're both in the same grade, they will graduate high school, will get driver's licenses, and if we can press a button and the car will drive us to the restaurant in San Francisco and we can go to a dinner of our choice, then I will pay.
Declan Waters (15:43.229)
Yeah. huh.
Ashmeet Sidana (16:09.59)
And if not, you will pay. And we had that dinner, you know? We had the dinner and he had to pay. So Elon Musk was wrong, and he was wrong. Because, that's an that is a problem of incredible complexity. Driving a car, which requires only two decisions. You know, famously in artificial intelligence, one of the first lessons you learn in artificial intelligence, that driving a car requires you to make only two decisions.
Declan Waters (16:11.145)
Okay, that's right. I like that's right. Yeah, absolutely. That's great. Yeah.
Ashmeet Sidana (16:39.2)
If you can get two decisions right, you can have a self-driving car. Do you go faster or slower? Do you turn left or right? If you can answer these two, this those are the only two decisions you need to make correctly to drive a car anywhere, anytime in the world. Wow, what a simple problem. And you would think that an AI would be able to do that. The problem is AIs can do that kind of sort of, but not all the time and not reliably enough that we have self-driving cars now. Yes.
Today we do have Waymo, we do have, in tiny areas of the world, maybe 1% or 0.1% of the world, you could do it. But certainly we are well beyond the deadline I had set for that bet. So making a holistic decision is, I think, the real way in which investments are made. Is this person suited to this problem? Is this problem suited to a very low capital, early stage seed investment?
Declan Waters (17:17.087)
Yeah, yeah.
Ashmeet Sidana (17:35.65)
Which could be built in a year or two, which could be commercial in five or six years, in a way that could return a venture-style outcome. Those types of things bringing them together is the real art of great investment.
Declan Waters (17:48.332)
And in your mind, you've been around so many founders over the years. what do you think the best founders that you have worked with over the years have in common? What is the connected tissue between them from what you've been seeing?
Ashmeet Sidana (18:09.836)
It's a bit of a cliche, but the best founders have a mission. They have a sense of purpose and a mission that goes beyond making money, beyond ego, beyond power, beyond even technology. They have a sense of mission which is deep inside them. And the example I always give is going back to the adventure travelers, the great explorers. You know, why do we try to climb Mount Everest? Because it's there.
Declan Waters (18:38.645)
Yeah.
Ashmeet Sidana (18:38.668)
Why do I want to be the first person to reach the North Pole? Because it's there. There's no logical reason to try to risk your life, to try to, go do that. It's just insane. Everybody knows it's just snow and ice and blistering winds out there. And yet we do it. And people who have a sense of mission are special. They are born with that. They cultivate that. They appreciate that about themselves. And they change the world. You know, Gandhi did that in politics. I mean, I can give
Declan Waters (19:03.915)
Yeah.
Declan Waters (19:14.859)
I know you enjoy talking about the companies that you're investing in. Are there any founders that you would like to maybe call out in terms of embodying these principles?
Ashmeet Sidana (19:28.384)
Yeah, for sure. So right now I have many such founders, obviously. I look for these people. you mentioned CodeRabbit. So Harjot is the founder and CEO of CodeRabbit. of course he has this sense of mission. I think he's a great technologist. More interestingly, he's a second-time founder with me. In other words, he did his previous company, NetSil, where I was also the first investor. I'm the first investor here in Code Rabbit.
Declan Waters (19:32.565)
Yes.
Ashmeet Sidana (19:54.201)
Where he gave me that honor. At that time, when he started his first company, he had just dropped out of UPenn from the PhD program and he wanted to start a company. So here's the classic student leaving school who is sort of agitated with a sense of energy that the PhD program is not able to draw, who wants to build a company. I backed him. Subsequently, we raised money from Mayfield, sold the company to Nutanix. I mean, he had a very successful run. And then he came to me with what became Code Rabbit.
Which of course, went through its early pivots, its early development, just like any other startup does. But he is a man on a mission. he is a person who has a deep understanding of technology, who understands business, but who wants to leave his mark on the world, who wants to be remembered for what he created. When he first said to me, we are going directly against anthropic, head to head against all of these frontier models, that's
Declan Waters (20:30.987)
Yeah.
Declan Waters (20:40.468)
Yeah.
Declan Waters (20:52.415)
Yeah.
Ashmeet Sidana (20:53.556)
You know, you know. I don't know if this is controversial, but this is Gandhi standing up and saying, we're going to take on the British Empire. it's a little daunting. But you it can be done. It can be done.
Declan Waters (21:07.275)
Sure.
Declan Waters (21:12.107)
Yeah, but you but you like founders that embrace with confidence those big challenges, big goals. Yeah.
Ashmeet Sidana (21:19.382)
Yes, most VCs are risk-seeking. Good VCs are extremely high risk seeking, even more so than their founders. Many people who come into investing, especially people who don't have an an entrepreneurial background who start in investment banking or public markets or those types of consulting, those types of backgrounds, they don't appreciate how much risk you really take.
In an investment. If you want to be in the next Facebook, the next Google, the next Code Rabbit, the next Rubrik, the next, those are mine, of course, the next Signal FX, you really take a lot of risk when you do that.
Declan Waters (22:03.456)
Yeah. In Engineering Capital was built really, wasn't it, around this idea of technical insight. From your perspective, what qualifies as a technical insight for you?
Ashmeet Sidana (22:16.12)
Yes. So you think of Silicon Valley as the heart of technology, certainly today in the world, And some of the best technologists live over here, certainly some of the best venture capitalists live over here. Believe it or not, technical insights are underappreciated and underinvested even today in Silicon Valley, even though we are the very heart of technology. And that is a structural gap that exists for reasons which we can get into if that's of interest.
But what is a technical insight and why does this gap exist? A technical insight is when you are able to solve a problem in a way that is not obvious to a good engineer who has a good understanding of your technology. So it is a novel solution to an existing problem. In that way, I describe a technical insight as being halfway between something that is obvious.
There's no insight if it is obvious by definition. And something that is research, something that's a research problem, perhaps you're aiming for a Nobel Prize, you're aiming to write a research paper, an academic paper. A technical insight is something in the middle. It's not something which will get you a Nobel Prize. It's possible but unlikely, but it's also not obvious and it has commercial implications.
Declan Waters (23:26.879)
Okay.
Ashmeet Sidana (23:36.897)
So those are technical insights. In the case of Code Rabbit, it was the ability to use generative AI to do code reviews. So everyone was using so when generative AI comes on the scene, obviously a very old technique, but had come on burst on the scene with ChatGPT And sort of the emergence of these chatbots. And then everybody started applying it to code and saying, wow, you can really generate some amazing code using generative AI techniques. It was not obvious.
Declan Waters (23:49.345)
Yeah.
Ashmeet Sidana (24:06.562)
That you could also review code using generative AI techniques. And I went like, aha, that's a light bulb moment, you know.
Declan Waters (24:10.56)
Right. Yes. Yes, absolutely. So you mentioned AI. it has made it has made it very it's made it very possible to build extraordinarily quickly. I wanted to get your thoughts on whether you think that's an opportunity.
Or a challenge or both. Has it made your job harder in some ways? Like how do you distinguish from a really important company from something that is sort of temporarily benefiting from the underlying technology? You know, it's a very, very noisy market right now.
You know, how do you dissect that and get and get to the to the core of it?
Ashmeet Sidana (25:00.162)
Yeah, so unquestionably AI allows you to develop code much faster. And AI will change the very nature of software development. Just like the invention of the compiler changed the nature of software development. And if you go even further, the invention of a software-defined machine, a machine that could be defined in software, which you know obviously Alan Turing famously did in 1936.
Declan Waters (25:28.172)
Yeah.
Ashmeet Sidana (25:28.648)
…with his Turing machine and then built the Colossus, etc., during the Second World War. Those were inflection points in human capability to build a tool. AI is of that level. Now it may also have the next level of capability where it becomes sentient, it has some capability where it can be recursively improve itself, etc. We don't know about that, and I'm ignoring that for the purposes of this discussion. That's an even more interesting discussion we can have.
But that is really the frontier of science. That's not the frontier of investing today. The frontier of investing is happening, which where which you are describing, where people are using AI to very rapidly write code, which is changing the very nature of software development. And hence you get companies like CodeRabbit. But remember, CodeRabbit is already several years old. So that investment decision was made several years ago. The investment decision I'm making today assumes all of that is already happening and will continue to accelerate.
So you have to bring that into focus. when you make an investment decision, is really what's going to happen three to five years from now. That's the lens I use. Three to five years, will this work? If it works, does it survive? If it survives, can it make money? If it can make money, then it's a good idea. So there's a lot of tests. And of course, most of the time we get it wrong. You know that. I mean, we're almost always wrong in venture capital.
Declan Waters (26:50.262)
Yeah. And
Declan Waters (26:56.852)
Yeah, absolutely. And and in a shorter time frame, say the last twelve months, what have you seen inside your portfolio that has kind of changed your thinking about AI? Because you're you're working every day with founders at the cutting edge. You know, you're really getting these insights that many people just don't see. Has it changed your your opinion on AI? I mean, twelve months is a lifetime in this in this industry, of course, but any thoughts on that?
Ashmeet Sidana (27:26.644)
Yes, absolutely. So for the longest time, I referenced, some of the work being done in AI at the University of Toronto. I for the longest time there were these two camps, where on the cusp of AGI, AI is going to change the world. this is just a stochastic parrot, it's just, regurgitating text which people have put on the internet before. It just thin you just think it's intelligent. And I was always in the latter camp. I was like, it's just a machine.
It's just a bunch of bits and bytes, and I would always try and break it down to the lowest level. And I could do it. You know, I'm an engineer enough that I could be like, no, that's that did this and that did that and that did that and that did that, and that's why this happened. So it's boring, you know. I have changed my mind on that. I now believe we have genuinely invented a new form of intelligence. I believe it will continue to grow and develop.
Declan Waters (28:09.1)
Yeah.
Ashmeet Sidana (28:24.992)
It is not AGI in the form of a singularity. I disagree with Kurzweil on that. I don't think we get we end up with a singularity where there's one single model that is super intelligent and takes over. But I do believe we end up with a world of models, each of which is individually more intelligent than every other human being on that aspect of knowledge. So we are on the customer.
Declan Waters (28:33.26)
Mm.
Declan Waters (28:48.084)
Hmm. The lead article for The Economist last week was, will AI have a conscience?
Ashmeet Sidana (28:55.384)
So that I is a question I haven't worked on at all. I am aware that involves, things beyond science in some ways. So there are philosophical other aspects of it which we have to answer. You know, I certainly think my dog is conscious, but I also know she's not very intelligent. I mean, if I pulled out a little beef treat right now, I know exactly what she's going to do. Yeah.
Declan Waters (29:05.236)
It's interesting where the discussion is going.
Declan Waters (29:19.564)
Yeah, that's right. There's a level of predictability there, right? But you know. I'm intrigued and how you're using AI personally. it could be in terms of learning in different ways with a AI, how you're using it to to you know help you make decisions. Is it becoming quite an important part of your daily routine?
Ashmeet Sidana (29:47.169)
It has not as a tool, which is what most people talk about AI, especially in in investing, and my inbox is full of people trying to sell me tools like that. Do better sourcing, do account and portfolio analysis, etc. I don't do any of those, but AI, specifically Claude, ChatGPT, etc., are my new interlocutor. So I talk to them, I converse with them.
Declan Waters (29:57.494)
Sure.
Ashmeet Sidana (30:17.34)
…quite a lot. And I do feel it helps me. And maybe that's a little bit idiosyncratic because I'm a solo GP and I work alone. And where in the past I used to seek out people to have those conversations, sometimes I will have those conversations with an AI and feel satisfied and feel like you know it moved my thinking, it made a step, it did something. Because I run such a narrow and a niche practice, because I work alone.
Declan Waters (30:34.582)
Yeah.
Ashmeet Sidana (30:44.884)
I don't have the needs for a platform. I'm not trying to, build any of the things which a large firm is trying to do. So the tool aspect of it is less valuable to me.
Declan Waters (30:54.444)
Yeah.
Well, you say you're a niche practice, but there is lots and lots of founders that are trying to get into your office, Ashmeet, and into your calendar. So let's just be take a sort of a practical look at this and maybe help out some of these aspiring founders that would like to have this this conversation with you. So, a couple of first-time technical founders get the opportunity to to pitch to you, Ashmeet, what what are you looking for in this kind of like
The first conversation.
Ashmeet Sidana (31:27.66)
Yeah, so the three legs of the stool for me are firstly that mission-driven founder. I'm looking for a person who has the desire, the motivation, the ambition, not the training, not necessarily the education, but those but the desire and the willingness to to fight to win the gold medal in the Olympics, to be the first person on Mount Everest, to take on that crazy challenge which they're going to have to learn along the way.
How much did Mark Zuckerberg know about running a company and being a great CEO at the age of 19? I would argue nothing. What did Bill Gates know? Nothing. Right? And yet they've become great CEOs. Steve Jobs, et cetera. So firstly, I'm looking for the great founder. Second, I am looking for that technical insight that we talked about. That is a just, it was an arbitrary decision that I made when I started Engineering Capital because it was going to be a small, narrow firm.
There are great companies that are built on consumer insights or great investments that are made, based on business model insights. And there are VCs who specialize in that and they've done very well, and there's nothing wrong with that. So I don't want to impugn that in any way. But I only focus on companies where there is a technical insight at its core. And then finally, it has to be a great market. If you don't have a great market, you are a victim of your market. Warren Buffett likes to say that when a great team meets a mediocre market.
In a few years the market retains its reputation. The team doesn't. Exactly. And so I'm very cognizant of that. I was lucky to end up in Silicon Valley and in technology, which is generally speaking a great market for venture investing. But ultimately, you are a victim of the of your market. I teach a class called market size for markets that don't exist yet, where I make this point, you are.
Declan Waters (32:59.048)
Yeah. Very wise words. Yeah.
Ashmeet Sidana (33:24.842)
…your products are a victim of the market that you are going after. So it's a formal class and I just walk through these case studies in it.
Declan Waters (33:34.634)
A question that just popped into my head was because you are so wise and have so much good advice, Ashmeet, what would you say to, people coming out of college now, looking looking at the jobs market, right? A lot of people we we've seen that there's a lot of anxiety for people coming in. What advice would you give to people coming, to looking at this right now?
Ashmeet Sidana (33:58.787)
Yeah, what I would tell them is that the world is changing and there's some good news And some bad news in the change that is occurring, and you need to embrace that change because if you don't, it's going to run over you. So one change which has which is occurring and has accelerated thanks to AI is that you are now your own CEO and your career is your own responsibility, whether you like it or not. Fifty years ago.
You had the alternative, you had the opportunity, if you were decent, good, hardworking, to join a large corporation, and perhaps your parents or you know people of a previous generation would work for their entire career in that single company. And so that opportunity no longer exists. It is still there on paper and conceptually it exists, but it is not a practical reality for you. That's the bad news. You are your own CEO, you have to own it now.
That's also the good news. You have a lot more agency, you have a lot more freedom, you have a lot more flexibility. And if you embrace that change and if you experiment with it, the sky is the limit. You can find fulfillment in whatever way you want. It doesn't have to be money. Fulfillment can come from many different dimensions. You have to choose them, you have to balance them, and you have the freedom and the opportunity to seize them in a way that has never existed before in the world.
If you were born a peasant, 200 years ago, you had very little agency. You basically got up every day and went to the field and did what you had to do for 16 hours a day. And if the weather gods stayed on your side, you got to eat a full meal. I mean, it was literally that bad. And if the king decided to fight a battle, maybe your son got killed because the king decided to fight a battle. That's the amount of agency you had. Today it's a very different world.
Declan Waters (35:41.77)
Yeah. That's right.
Declan Waters (35:50.89)
Yeah.
Ashmeet Sidana (35:56.471)
If you embrace the change and you take agency, you can mm be you know you can accomplish and achieve your fulfillment in whatever way you want.
Declan Waters (36:07.468)
Mm-hmm. But it's down to you, right? You got to do it. You got to do it. As Arnold Schwarzenegger always says, you got to put in the reps. You got to put in the reps. Yeah.
Ashmeet Sidana (36:09.974)
It's down to you. That's the downside. Yes.
Yes, exactly, exactly. You can't just be along for the ride.
Declan Waters (36:19.84)
Exactly. Well the last question I had for you, on leaving things on a inspirational note, is what would be the one thing you would tell a founder who is approaching their own watershed moment right now? What advice would you give them?
Ashmeet Sidana (36:40.31)
Yes, this is a lesson I learned with great pain myself, which is when you have to make a decision in a time of great uncertainty and a time of great ambiguity, those are the hardest decisions to make, especially for founders who have high agency, who are decision makers, tend to be type A, want to be in control. So, what can you do in a situation like that? And the lesson is that activity.
Creates information which allows you to get better judgments. So when you are at a loss for what to do, when you don't know how to make a decision, when you are faced with great ambiguity, activity is the answer. Doing activity, knowing that the activity may fail, taking activity that is hopefully a price that you can bear is the only alternative. And founders who demonstrate that they tend to succeed.
And that is why it is so hard to do a startup because you have to maintain this activity all the time. You as the founder, CEO, the key leaders, you have to constantly be doing that. And so the lesson is that activity is how you create knowledge.
Declan Waters (37:55.276)
Yeah.
Ashmeet, that's such a great place to leave it. Thank you so much for sharing your personal story. I've thoroughly enjoyed getting to know you better on this podcast. you've given us some wonderful practical advice. you've given us optimism of the future for the younger generation, but also for the aspiring founders that want to chime into your office one day and get that first check to get them on their way.
I this conversation was as good as I hoped it would be, and I know you're an incredibly busy man, and I really appreciate your time on the board today. So thank you so much, Ash Ashmeet.
Ashmeet Sidana (38:37.696)
I am humbled at all those words and I am so grateful and honored. Thank you.
Declan Waters (38:42.292)
Thank you very much.