Oren Zeev on why to stay small and solo, and the nature of AI investing today.

Samir Kaji (0:09)

Welcome back to another episode of Venture Unlocked, the podcast that takes you behind the scenes of the business of venture capital.

In today's episode, I have the pleasure of welcoming back Oren Zeev of Zeev Ventures. As many listeners know, Oren has remained a one-man firm since inception, despite nearly managing three billion in assets. We covered several broad themes during the discussion, including the growing disconnect between private and public valuations, how fear of missing out in massive fund sizes have created a consensus-led industry, and why despite this, he's kept his strategy focused on going early into things that are not obvious at the time of investment. We also talked about where value capture will happen within AI, both in the short and long term, and the difficulty today investors have in assessing the true staying power and durability of high-growth AI companies. This is a really fun one to record, as Oren is uniquely transparent and honest, and I really hope you enjoy it.

SPEAKER_2 (1:02)

Samir Kaji is the CEO and co-founder of Allocate. Allocate and Venture Unlocked are independent of each other. Any statements or references made by Samir or his guests regarding third-party investments or securities are solely their views and opinions, and are not intended as investment advice or an endorsement of such parties or securities by Samir, his guests or Allocate. Allocate or its clients may maintain relationships with or investment positions in guests, third parties or securities mentioned in this podcast.

This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Samir Kaji (1:41)

Oren, it's so great to see you and thanks for jumping back on the show and in person this time.

Oren Zeev (1:45)

Yes. Well, I had to travel from a very long distance.

Samir Kaji (1:50)

Walking across the street, I know it's a very long distance. I've been looking forward to this conversation because you and I talk a lot about everything from micro, macro, and there's a question that an LP asked me the other day. They said, how do you make sense of today's market?

The word I used was, it's disorienting. It's hard to make sense because on one hand, you have companies that are growing faster than we've ever seen in history. On the second, you've seen the supply and demand imbalance has created valuations. So, I'd love from your lens, how do you make sense and how do you distill this down into what is the game on the field today?

Oren Zeev (2:27)

So, first of all, I'm not sure that disorienting is bad. When everything is clear, nobody can make money. So, maybe disorienting is good. I definitely see the market very bifurcated in the sense that some companies get all the attention and the crazy valuations, but I don't feel that, and arguably, we're in a bubble, but you can never tell when you're in a bubble only in hindsight, I believe. So, maybe well, maybe not, and even if we are, maybe it pops tomorrow, maybe it pops in three years. So we really don't know.

But I don't think it's across the board. So, that's the first thing I would say. The second thing I would say, I think there's a disconnect between the public and the private markets, because I don't see, I actually don't see signs of bubble in the public markets at all.

And some companies that you compare a private company to a comparable public market company, and the comparison makes no sense. So one is wrong, and usually it's the public markets who are right, by the way.

Samir Kaji (3:39)

More often than not, right?

Oren Zeev (3:40)

More often than not, yeah.

Samir Kaji (3:42)

When you think about that, so I agree with you, private and public divergence has always been there. I think it gets amplified during these times, because if you look at the multiples of public companies, they're actually fairly rational. There's some exceptions, of course, in there that you look at and say, why does it get the multiple on whether it's EBITDA or sort of revenues? In the private markets, it's supply and demand. And I always think about the markets, and this has been said by a lot of people. In the short term, the markets are a voting machine. Long term, it's a weighing machine.

And the difficulty is, you're playing right now. And right now, of course, we have AI as this big transformational agent. I don't think there's any question how big this is, but there's also the prices you're paying. And so you've said, and a lot of investors that I've known said, the cost of omission is much higher than the cost of commission, right? Because the thought is, you invest, and the worst you can do is lose 1x. But emitting an opportunity could be 100x, a 50x, a 200x.