Insight Partners' Deven Parekh

Auren Hoffman (00:01.026) Hello, fellow data nerds. guest today is Deven Parekh. Deven is the managing director at Insight Partners, a global venture capital and PE firm with over 80 billion assets under management. Since joining Insight in the year 2000, he's made more than 140 investments in enterprise software, data, and consumer internet businesses globally. Deven, welcome to World of DaaS. Very excited. Now,

Deven Parekh, Insight Partners (00:24.415) Auren, glad to be here.

Auren Hoffman (00:27.406) Insight Partners was founded as Insight Venture Partners back in like 95 and kind of evolved into this global firm that does private equity and venture investing. That's pretty rare. Very few venture capital firms kind of make that jump. Why do you think it's so rare for venture capital to expand to PE? But some PE kind of go the other way into venture capital.

Deven Parekh, Insight Partners (00:49.835) Well, first, an interesting story. Insight was actually founded when I joined Insight at the end of January of 2000. It was Insight Capital Partners, but our law firm at the time had not done a good job. And it turned out there was another firm in Texas that had the same name that did not do what we did. But it actually required us to change our name. So we changed our name to Insight Venture Partners. And then...

Auren Hoffman (01:00.031) Okay.

Deven Parekh, Insight Partners (01:16.193) over, and I'll answer your question, kind of over time as we kind of had a strategy that went all the way from venture to kind of buyout, we figured Insight Partners kind of reflects the broader spectrum of kind of what we do. But if you go back, I mean, we're on, you know, we're currently investing out of Fund 12 in the process of raising for Fund 13 and starting to invest out of that. We've had buyouts of one form or another since Fund 2.

And so we had now, it wasn't as evolved as it is today.

Auren Hoffman (01:45.134) Okay, so you're already, we're kind of already thinking that way.

Auren Hoffman (01:52.076) It started as an RIA already, like back then.

Deven Parekh, Insight Partners (01:54.881) No, wasn't. At the time, didn't. SEC registration wasn't a thing for private equity funds back then. Right. So that that changed over time. But I think that the but think about the structure of the market, really, because from the beginning, we were focused only on software. If you go back to ninety five to 2000, 2002, 2003, you had a lot of software companies. You didn't really have a lot of profitable software companies. Right. So most of those companies were raising capital to kind of invest.

Auren Hoffman (01:59.926) Okay, got it, okay, yeah.

Deven Parekh, Insight Partners (02:23.947) for further growth with investing sales, investing marketing, investing product, maybe to do &A, but generally not. So the universe of companies that we'll call it buyout candidates or private equity candidates were pretty small. And at the time, software companies also, and it's interesting how much that market evolved, but at the time lenders were not really that interested in lending to software companies because they were like, well, we don't have any assets, right?

Business models were much more license and maintenance. You didn't have the same level of recurring revenue as you had today. And then over time, the market changed. much more, A, you ended up with a much larger number of companies that were breakeven or profitable. The lender view of software companies changed pretty dramatically. So your ability to actually put leverage on those companies changed.

Auren Hoffman (03:16.106) When did that? we, cause around that time we started to see like Francisco, Tomo Bravo, Vista, you know, all these, all the, these kinds of clout, like, like all these competitors that you guys have that are, they all kind of started right around then.

Deven Parekh, Insight Partners (03:22.506) Yeah.

Deven Parekh, Insight Partners (03:28.395) Yeah.

Yeah, it's interesting. We used to be investment in a company called AMS. It's since been renamed Verta 4 and it's been through three or four kind of private equity owners, which was a company that sold, it's one of the two dominant providers of software insurance brokers. And it's an oligopoly. Both companies are owned by private equity. And I remember back, this is going back to probably 2003.

2002, 2003, somewhere in that range, we put debt on that company of two times EBITDA. And I'll never remember, I'll remember being at the board meeting and how excited we were that lenders were willing to put two times EBITDA on a software company, right? It was in the 2002, 2003, know, somewhere in that kind of timeframe.

Auren Hoffman (04:13.782) wow, okay. What year was that?

Auren Hoffman (04:19.68) So, okay. So even, even all right, even then it was hard to do. Okay. Yeah.

Deven Parekh, Insight Partners (04:23.457) It was hard, but it changed quickly. Because I think what people figured out is actually that, and if you talk to lenders today and you ask them kind of where have they had the least amount of credit losses, software is for most lenders would be the answer. Because you do have very high recurring revenue and that recurring revenue can be run very profitably. And I say can, because it's not always run profitably. And we can talk about how the market evolved. So then as you think about insight,

So some of that just happened organically. But then as the opportunity set became bigger, we also added people from, I always kind of joke that to some degree, Insight is a firm of immigrants. And by that, mean that we hired people from lots of different firms over time. have DNA from Summit and we have DNA from... DNA from...

Auren Hoffman (05:15.392) Right, and they were kind more the original, like Summit and TA were like, were, they were, they were doing this in the eighties even.

Deven Parekh, Insight Partners (05:21.439) have DNA from Vista. So we've hired people from lots of different backgrounds. And I think that's been very positive for us as every firm has a different kind of mindset about how they look at businesses. And we've got two things. We've got some of the capabilities, some of the private equity capabilities, how to raise debt, structuring, all that stuff. But we also kind of got different perspectives on how to look at those businesses. So over time, we've kind of built out the team.

such that we've got capabilities to do, obviously we've always had the capabilities to do the earlier stage, but we've kind of built out the capabilities to do the later stage as well. And, you know, over time, now we have a Structured Equity Fund, we have a public fund. So really our, I always joke that we're cradled to grave. Grave's not a grave, it's not really a grave. You can't really think about the public markets as a grave, but we're able to take them from an early stage company.

all the way to a go private, if that's what they ended up needing to do.

Auren Hoffman (06:23.598) Why do so few venture capital firms kind of make the jump to be like more ambitious? It seems like even, you know, except for maybe like one or so, like very few of them actually make that jump. They kind of like stay in there kind of that lane.

Deven Parekh, Insight Partners (06:36.865) I think it depends on how you define ambition. If you look at a lot of the early stage funds that had, call it four or $500 million early stage funds and that was it. There's one firm that's continued to do that extraordinarily successfully benchmark, right? They haven't really moved from that.

Auren Hoffman (06:55.948) Yeah, benchmark. They kind of have the same model. Yeah. But even like a client of Perkins, if you imagine like you guys were starting out in the nineties, like the client of Perkins of the world, like they've kind of really stayed as a very succinct thing.

Deven Parekh, Insight Partners (07:05.941) But then if you look at other firms like say TXACOIA, they expanded globally. Now, of course, I know that they expanded globally and then they kind of went back to basics geographically, but they went into growth. They built heritage, they built a public business. there are firms, the question is how do they do it, right? So we kind of started with the growth stage.

went back a little bit to earlier stage and then also moved forward to kind of being able to do private equity. Other people did more kind of geographic expansion or built a bigger growth business. think one thing you'd say, the mentality of being a minority investor is very different than the mentality of being a majority investor, right? And not everybody wants control. And when you have control, you have to exercise it.

And so it's a different model and it's a different way you drive a board. It's a different way that you're taking more financing risk when you own 80 % of a company than when you own 10 % of the company. So I think for the same reason that a buyout investor has a really hard time turning into the mentality of a minority investor where the way you get influence is not because people have to do what you're telling them to do, but it's because they want to do what you're telling them to do because you're advising them in a way that makes them feel like...

Yeah, that's good advice. And so it does require a very different kind of management style.

Auren Hoffman (08:36.536) Now, since you guys are kind of in between kind of half VC, half PE or something like, know, VCs are often run as like a loose partnership in a way, not necessarily like a team. It's kind of a collection of individuals and sometimes PE firms are, you know, often they'll have like a CEO or co-CEO and they're a little bit more run like a company. Like how does insight navigate that?

Deven Parekh, Insight Partners (09:00.927) I think we're much more like a closely coordinated partnership, right? So there's, I think we take something from both. And by that I just mean that we don't have a CEO, we have a management company and there's four of us that are in the management company, but then we have a much bigger investment committee. Each one of those investment committee members has a team. But then we meet very regularly to talk about like what we're all looking at and what we're all doing. So it's a,

Auren Hoffman (09:04.472) Okay.

Deven Parekh, Insight Partners (09:30.131) Each think of it this way that each each team member or each IC member is kind of a mini CEO of their group. And then we all come together and talk and collaborate. And I think the thing that I think is the most important is we really work across the firm on deals. Right. And so when we're taking a company private, we're talking to the early stage team to talk about what are the disruptive companies that are coming when we're looking at something like

Auren Hoffman (09:36.696) Yeah.

Deven Parekh, Insight Partners (09:58.325) the Databricks deal that just got announced yesterday. It's everybody from the early stage team to the public team working together to both win and understand the business. So I think one of the, think we try really hard to take advantage of the fact that we have all these capabilities. Well, how do we bring those capabilities together when we're looking at any stage deal? I think your partnership is too loose. It's kind of hard to do that.

So that I don't know if that answers your question, but that's kind how we try to make it all work.

Auren Hoffman (10:32.078) That is different than many of these large private equity firms, whether it's like Carlisle or Vista or, you know, KKR or Blackstone or whatever. There's usually either like a CEO or sometimes there's like a co-CEO from like a co-founder type of thing. And a lot of them are actually public companies. If you think like they actually went public eventually and like, could you see a scenario where like you guys go public at some point or?

Deven Parekh, Insight Partners (10:37.472) Yeah.

Deven Parekh, Insight Partners (10:47.113) Yeah, our models are marvelled. Our models are

Deven Parekh, Insight Partners (10:59.361) I don't think there's anybody at Insight who necessarily has that aspiration. I think that once you go down that path, by the way, I know criticism for people who are going down that path, there are advantages, but then you really have to focus on scaling and growth and revenue growth. it's like you're a public company and your responsibility is to the shareholders as it should be.

Auren Hoffman (11:03.127) Yeah.

Deven Parekh, Insight Partners (11:27.775) I think we have the flexibility to kind of focus on that. Of course we want to grow the firm because we want a bigger pie for everybody, but it's not motivated by, I need to get to a certain level of revenue or I need to get to a certain free cashflow yield. And then you have to publicly disclose a lot more information, including about your portfolio. we don't really see a lot of benefits for our strategy and being public.

Auren Hoffman (11:55.278) It's interesting because most venture firms, if you think of the classic benchmark Bill Gurley kind of advice, it would be have a single CEO, go public as soon as possible, raise money and give up equity. Yet none of the venture firms take that advice. They don't do any of those types of things.

Deven Parekh, Insight Partners (12:17.205) No, look, think I always look, I joke internally. if we gave the same advice to ourselves that we sometimes give our companies, we might do things differently. But one of the benefits of being private is you can choose to do things differently if you choose to.

Auren Hoffman (12:36.428) Yeah, yeah, totally. Now you guys have invested really through all the different tech cycles that we've seen. every time people would say, this time is different. You guys have invested through SaaS and through mobile and through cloud. And now we're kind of in this AI cycle. What is kind of the same and what is different?

Deven Parekh, Insight Partners (12:59.073) Well, the same as you always have a hype cycle on the investment side, right? And you've seen that in, you know, in the valuations on the AI side, right? And that happened in prior cycles too. kind of early, early people get very excited about the growth. And that has like a dramatic inflationary impact on valuations. That's the same. You can debate whether it's more or less than some other cycle, but they all had that. You know, I think the thing that's different is

In some of these prior cycles, if you look at going from client server to SaaS or SaaS to mobile, the amount of people in the world who are touching the new trend quickly has never happened as quickly as this. So if I went to my mom and dad and said, hey, what's your view on SaaS? They wouldn't really have had an opinion.

They might still not have an opinion, but you know what I mean is like even if they were in that world, would have some strong opinion on it. You know, I think I probably, think my kids were subscribers to ChatGPT before I was, you know. I remember my son calling me from college and saying, dad, are you a premium subscriber on ChatGPT? And I said, no, but I have it on my app. He's like, well, that's a huge mistake. You should have the premium version. Right. And I was like, okay, wow, my son is this focused. And it had just come out, right. They just had launched the premium version. He was a subscriber.

right away. And so the the infusion of AI into kind of everyone's life as quickly as it happened is probably different than prior cycles. And so I think it impact people's lives much, faster than cycles. then what I'd also say is like in prior cycles, you know, I think the short term predictions of the impact

will probably be overstated and the long-term impact will probably be understated. That also happens in hype cycles. Everything's going to change and everyone's going lose their job in the next 18 months. I don't think that's going to happen. You've got lots of interesting companies, for example, focusing on software development, agent-based models for software development. Just to use one example. Do I think that means that there's going to be no software developers in two years? No. Over the last 40 years, if you go to the average software developer and say,

Deven Parekh, Insight Partners (15:20.435) Is it easier to develop software today than it was 40 years ago? I think almost everyone would say yes, because there have been lots of tools prior to agent-based software development, AI, that made software development more efficient. We've been investors in that cycle. Well, software developers have continued to grow through that period of time, even though their productivity has increased. Now, there's some natural limiter, but also if you go to the average software company and you invest in software,

And you say to the CEO, well, if you could develop software twice as fast, would you cut your developers in half or would you develop more software? Almost every single one of them, unless it's a legacy software company that's not growing at all, is going to say, develop more software. Right. And so I think the first impact is going to be more throughput. And people are going to be actually able to do things faster and in more volume than they could do before.

But where you'll see, I think the initial impact is sure, if you're a legacy company and you're not growing and you're just trying to deal with disruption from an emerging company, sure, then you're gonna start using these type of tools to kind of reduce cost. So probably got off the frame of your original question, but I think it goes back to what I was saying, which is that I think people's assumptions around the short-term impact are probably.

too high, too overestimated. But I think.

Auren Hoffman (16:48.994) Well, I have I have seen most of our companies, especially the ones that are a little bit more mature, like they've been cut like if you just think of like the offshore con software contractors that they've been using have gone down pretty dramatically over the last year. So maybe it's not like the super high end, you know, MIT grad or something. There may not be cutting that person yet, but that that that

40 to 50 grand a year offshore developer is going away often at pretty high pace. I don't know if you've seen the same thing.

Deven Parekh, Insight Partners (17:25.009) But you see, mean, think we definitely, one of the areas we definitely see it as a customer support, right? And I think the thing there, I think the fascinating thing there is if you look at the last cycle of offshoring, right? So we didn't use to offshore either, right? You go back 15, 20 years, not every software company was offering now, it's become much more common. But in customer support, people offshored and they reduced costs, but they probably reduced customer satisfaction, right? Calling to the call center.

Auren Hoffman (17:29.88) For sure. Yeah. Yeah.

Auren Hoffman (17:38.573) Yeah.

Deven Parekh, Insight Partners (17:52.395) Calling the Citibank and you're talking to an Indian call center was not as good an experience as talking to a call center in the US, but the per unit cost of the call was lower. Fascinating thing about AI is not only is the cost lower, like dramatically lower, the NPS is higher, much, much higher. People are having a better experience and you're reducing cost. And so that obviously is, now I don't think that's going to be true in every functional area. I think it's clearly true in customer support.

Auren Hoffman (17:57.581) Yes.

Yep.

Auren Hoffman (18:06.604) Much higher. Yeah.

Deven Parekh, Insight Partners (18:22.293) But, you is it true across all the areas, functional areas of the organization? Probably not. But I think you're going to start seeing, and then the other thing I think is the other interesting thing Warren is going to be like, where does the value capture happen? Right? So I'm going to use law because they're legal, because there's been so much talk about this. Right? was with a managing partner of a law firm and we're talking and I'm like, well, how are you thinking about AI for your business? And he was like,

I don't know, how should I be thinking about it? And I said, well, what I would say to you is like, I'm probably not gonna be willing to pay you a lot for your associates anymore. You have this model, we have this huge team of people underneath you that are doing work and then charging me $1,000 an hour for that I think are gonna be able to be automated. I think that's pretty disruptive, your model. And he was like, well, what do you suggest I do? And I said, well, I would figure out a way to charge me 25, I was kind of being extreme.

But I was like, I think you should figure out a way to charge me $25,000 an hour for you. And he said, well, what do mean? I'm like, well, you're a litigator. And if I'm on a really important business litigation, like I'm not going to have AI run it for me. I need somebody to run it. Somebody's going to go to court and actually make my case. I'll pay a lot of money for that for success. I'm just not going to pay money for everything else. So I think you need to rethink your pricing model. Otherwise you have a problem.

Auren Hoffman (19:35.032) Yeah. Yep.

Deven Parekh, Insight Partners (19:50.303) A lot of your margin is coming from taking really low price relative talent and charging me a lot for it, as opposed to me paying a lot of money.

Auren Hoffman (19:57.518) Now, of course, part of the problem is that guy or that gal that you're talking to, they started as a junior lawyer and kind of like, you know, was able to work their way up. It is possible that we are going, like, there is going to be less need for that, like, first, second, third year person right out of law school. And then we're not going to be training as many experts.

Deven Parekh, Insight Partners (20:05.067) Thanks.

Deven Parekh, Insight Partners (20:19.393) And that, think, that was the, and that's where the conversation went. He said, I hear you, but the challenge is I was one of those people and I built my skills by actually doing that work. And like, what's going to happen if all of a sudden, like, what if, buyout models and private equity models are just done by AI and nobody ever has to do those models. I don't build those models anymore, but the fact that I was at Blackstone working 18 hours a hour doing those models means that when I get one, I can find the mistake.

Auren Hoffman (20:23.277) Yeah.

Yes. Doing the grunt stuff. Yeah.

Auren Hoffman (20:38.712) Yeah.

Auren Hoffman (20:47.756) Yeah. Yeah, exactly.

Deven Parekh, Insight Partners (20:49.437) I've done it. But if I'd never done it, I might not. So I don't have an answer for that question. And that will all have to play out over time. But the point really was more around what happens, particularly in services industries, around where the value goes. You can reduce costs, but does the customer capture it? Or does the law firm have way more margin because they charge the same fee, but with a lot less labor cost? I don't know the answer. And it'll probably vary by industry.

Auren Hoffman (21:06.317) Yeah.

Auren Hoffman (21:19.616) And how do you think like it affects these there these economies like India, Philippines, where they have so much of it is coming from outsourcing a lot of it from customer service right now. Like, are you think those economies are at risk?

Deven Parekh, Insight Partners (21:38.317) I think that you have a lot of those economies that are going to have to rethink kind of what are going to be. Now look, they have other offsetting forces that are probably going to help them. If you look at India, two things have happened. One, they had a lot of growth here. Where they didn't historically have growth is building indigenous intellectual property, right? Because people were worried about the IP laws. They're making progress on those issues. You're actually seeing

Auren Hoffman (21:47.992) Sure. Yeah.

Deven Parekh, Insight Partners (22:07.645) software companies get created in India serving global markets. Two, unrelated to tech, but they have a huge initiative in manufacturing, right? And the geopolitical dynamic between the US and China is creating a massive need for increase in manufacturing investment in a lot of those other Southeast Asian markets. And they're going to need to have, just like they had, you know, they're going to need industrial policy to kind of develop those markets.

in a much, much different way so they can diversify their economy away from just these types of things. So I think they're thinking about that. I don't think they don't know that this is a risk. Now, the problem is developing those things takes a lot longer than it does to shut down a call center. But I think it's those governments are going to need have to think about kind of pro growth policies or aren't fully dependent on these types of jobs. And they do have the benefit of this geopolitical dynamic that's going to drive more investments.

Auren Hoffman (23:07.758) Now, the at least the more mature companies that I have been involved with in the last year, all the different AI investments they've made have massively reduced their costs and they've become way more profitable. And they have not yet, as you kind of said with the law firm, passed that on to their customer. But at some point, you just can imagine someone is trying to win more business.

and they start lowering price to win more business. And then there's kind of a race that, so like you would assume at some point, the profitability from before AI will be the profitability post AI or something.

Deven Parekh, Insight Partners (23:51.23) It's, it's look, the only person who benefits in that world is a monopolist, right? And that's why we have antitrust policy. And so

Auren Hoffman (23:57.43) Yeah, yeah, that's right. Or just all the customers are going to benefit because their costs are going to go down and potentially quality will go up. Yeah.

Deven Parekh, Insight Partners (24:03.521) Correct. But I do think a lot of this also depends on what industry is it, what's the end market, what's the value to the customer, how commoditized is the service relative to... There's so many things that kind of interplay into where the of value chain ends up being.

Auren Hoffman (24:17.1) Yeah, of course.

Auren Hoffman (24:22.924) Yeah, yeah. Now, Insight is globally invested all over the world. know, Israel, Europe, India, China, Latin America. How I imagine just doing the diligence is very different as you're going globally. Just the trust is different in each country, the amount you have to dive into the information available, like

How did you guys think about that as you're expanding?

Deven Parekh, Insight Partners (24:53.473) Yes, look, we haven't done China in 15, 15 years now. And I think it's because the one so the one thing it's important for us to figure out as we think about where we are open to investing is can we actually have any edge? Is there something that differentiates our ability to win a deal in a place where we don't have local team? Even Israel, where we now have some local team.

Auren Hoffman (24:56.012) Okay, yeah, okay, yeah.

Auren Hoffman (25:08.077) Yeah.

Deven Parekh, Insight Partners (25:19.009) We probably had 60 investments in Israel before we had a local team. Right. Well, our model is very different than other firms like drop in an office and then create it and then kind of figure it out. Ours is like, no, you had to prove that the market exists, that there's liquidity to get in that market. And and one of the reasons for that is we want the bar to be high. Right. So if you want to do a deal in India, you have to be convinced enough to want to fly to India because we don't have an office there.

Auren Hoffman (25:47.98) Yep. Yep.

Deven Parekh, Insight Partners (25:48.705) spend time, do the diligence, and then come to the IC and say, this is a globally attractive opportunity for these reasons, and I'm willing to go to board meetings in this place. So that's a pretty high bar. And then if you then end up with enough deals in a place, then you kind of end up in the Marlowe. I think we came to the conclusion on China, this was pre the geopolitical stuff. It just had no edge. There's nothing, too much on the ground, too much local capital.

Auren Hoffman (26:00.524) Yeah, super high.

Auren Hoffman (26:12.194) Yep. Yep. People on the ground or have like deeper roots. Yep. They're going to beat you.

Deven Parekh, Insight Partners (26:18.113) The deals we were seeing were frankly deals that other people there were not doing, right? We're not seeing, we didn't have the, it's not true in most of the other parts that we're investing in. We're not that active in Latin America. I haven't been for a while. We're looking and you might see some deals, but it's not the most active place for us. But Europe, and it's all of Europe, and India is new for us over the last few years. You know, I think there's still holes in that market. I say holes, there's places in the market where there's a capital availability is kind of not what it might be.

Auren Hoffman (26:21.751) Yeah.

Deven Parekh, Insight Partners (26:48.193) It's not as competitive. It's not as commoditized, let me put it that way. But yes, your view as it relates to diligence is different. And just even things like governance standards are different. The accounting standards are different. The regulatory environment is different. Some of these things you unfortunately learn by doing not the hard way, right? India's changed their...

Auren Hoffman (27:13.825) hard way.

Deven Parekh, Insight Partners (27:18.017) kind of regulatory view on kind of fintech multiple times, as example. And so I think the way we think about it is the result of that is in certain markets, we actually have to, it's not good enough to earn the same return, right? If our targeted return is X, if you're going to go into a market that's perceived to have more diligence or regulatory risk, you better get a higher return. you need a premium. And so in some of it.

Auren Hoffman (27:41.698) Yeah, you need a premium.

Deven Parekh, Insight Partners (27:46.537) And the tougher the market is from a diligence or governance standard, the higher the premium is. And then the other thing is really, it's the other side, it's liquidity. mean, so India's got lots of really interesting dynamics in terms of economic growth, in terms of rising middle class, English speaking, increasingly ability to build intellectual property there, but there's not a long track record of liquidity.

Right, public markets there are not as robust for the types of assets. They have been for very short period of time, but not over a long period of time. You'd be hard pressed to find tons of firms that have had lots of money out of that market. So what we try to do is take smaller bets, invest in a market, learn, build a portfolio, and by doing it at a small scale, learn the pitfalls.

and then decide whether it's a market that we want to continue to double down on or one where we feel like the risk return doesn't work.

Auren Hoffman (28:47.64) Because it's becoming so much easier to start a US company, like on Stripe, you can literally just go and do it. We have found that so many companies are Delaware C-Corps, even though 100 % of the team is outside the US. And the team actually could sometimes be in many different countries around, but they start the Delaware C because just like investors are familiar with it, it's easy. Everyone understands it. Capital's there.

Deven Parekh, Insight Partners (29:16.981) Well, there's obviously a lot of debate about kind of regulatory overreach in this country. And there is a lot of regulatory in this country. But I think what people also know globally is that when you look at rule of law, when you look at your kind of ability to know what you own, when you know the US is still kind of a pretty good place in the world to do those things. So it is interesting.

to see people in lots of these other countries want to come to this country that has all this regulatory burden, which maybe is going to change in a new administration. But I think people, I think it's one of the great things about the US is that people do feel comfortable kind of coming here. And while there's problems here, just like there's problems everywhere else, people feel like they understand the rules of the road. You might not like every rule, but there are rules.

and the rules get enforced by and large. I'm talking about in the corporate context right now. And that gives people confidence to wanna build a business here, even if they're offshore.

Auren Hoffman (30:28.344) Yeah. just like the, some places maybe they have rules like Germany or something may have rules, but the tedium, if you've ever had like an exit in Germany, like the amount of paperwork that one has to fill out and...

Deven Parekh, Insight Partners (30:44.747) Well, the amount of paper like in certain countries in Europe, have to actually sign, you have to initial every page in ink. There's no docu-sign for these documents. like the, my only point is.

Auren Hoffman (30:52.182) Yeah, totally. Yeah. Yeah. I mean, just getting my money. One time I gave my money out of Germany was like, it was like a nightmare. I couldn't believe it. I'm what is going on?

Deven Parekh, Insight Partners (31:04.234) So my only point is we complain about the US. It's not so bad relative to some other places.

Auren Hoffman (31:07.31) Yeah.

Right, exactly. Now, you guys, as you mentioned, you've done a ton of investing in Israel because Israel is a small market. They kind of have to go international from day one, right? And like, what else is like interesting about the Israeli market?

Deven Parekh, Insight Partners (31:26.529) Well, my partners, Jeff Horning and Teddy probably spend the most time and have done an amazing job in our Israeli strategy. But you hit the big point, right? Obviously they're forced because of the small population and a small market to have to go outside. But the second is the proportion of technical talent relative to the size of the population is incredible because of the requirement to go to the military. And if you look at

I mean, you look at our cyber portfolio as an example, almost every founding team has come out of the military. Every founding team met their co-founder in the military. They worked together, largely on things that they can't talk about. But the result of that is an incredible amount of technical talent relative to a very small population. And then a need to basically have to go outside of the US.

Third is, and I think you're seeing this over the last year, I mean, it's an incredibly resilient place. I think it was, I was surprised after the events of the last year, and I'm not saying there's no effect on the economy, but when you look at our companies there, it held up remarkably well. This is with people getting called back. Tons of disruptions, people getting called in to go into the reserve.

Auren Hoffman (32:42.008) Yeah. Even with tons of disruptions with people getting called in and having to serve. Yeah. Imagine with 40 % of your people like constantly getting called in.

Deven Parekh, Insight Partners (32:50.815) Yeah, and yet, yet they made it work. So when you kind of combine this incredible technical talent with this incredible like will to win and resilience, and then a forced need to have to go outside your economy in order to build a big business, it's kind of led to great things. And the thing that used to be true was if you go back 10 years with like the book Startup Nation and all that, what you'd

What you'd see is that these companies tend to exit early, right? Like the bill of market sell, right? And that's changed radically. I mean, think Insight's been a part of that as have others. But I think it's been shown that you can build a company in Israel and get to dekakorn status. And so I think that people are more motivated to actually...

go build a big company, not just build a company to go exit at &A quickly.

Auren Hoffman (33:54.05) Now in this, as you mentioned, we're about to start with a new administration and there likely will be some like trade policy changes and other types of changes. How do you kind of think about that as an investor?

Deven Parekh, Insight Partners (34:09.793) Look, I mean, I think, I mean, I think if you look at the, you know, the history of Donald Trump, but it's something that he's been talking about for a long time. It tends to be something that he takes seriously and talking about trade and the unfairness, the balance of trade long before he ever ran for president. you go back and look since the 80s, he's been talking about this. So it's an issue that I think he feels strongly about. And if you talk to people,

Auren Hoffman (34:30.828) Yeah, for since the 80s for 40 years. Yeah.

Deven Parekh, Insight Partners (34:38.753) who are in that orbit, which I have, which I'm sure you have, they are going to take action on trade. What we don't know is what is going to be some of this, I think is a negotiating strategy. And you've already seen that with Mexico and Canada, you know, they come running. And I don't necessarily know that we're gonna end up with a 40 % tariff on every country globally. You know, I think it's gonna end up being personally, I think it'll end up being

different than that, but the possibility of that level of tariff is probably going to lead to some negotiations that will lead to probably a better place. I think I was at dinner with the CEO of a large money center bank last week, and their economist's view was that they thought that the tariffs would end up for most countries between like 10 and 20%. They believe that that was when you coupled with

This is their view, but when you couple this with some of the regulatory reform and other things that are likely going to come as well, that companies would be able to absorb that without having massive price increases to consumers. Now, the big question is, what happens with China and the tariffs to China? Because obviously we still import a massive amount of goods.

Most people buy TVs today for less than they bought them 20 years ago And you can rail against china, but I don't think people want to pay three times the price for their tv I I Again, i'm not i'm not sitting in the meetings But I think in our business to answer kind of your question The the us and china and the us and mexico and china I think are probably have got amongst the higher risks on how these tariffs play out. Those aren't

Auren Hoffman (36:33.324) Yep.

Deven Parekh, Insight Partners (36:34.337) quarters that dramatically affect our investing. More likely what affects our investing is what does the stock market look like, what rates look like, and what does general economic growth look like. And I think in a less regulatory intense environment with rates generally on the way down, I think we have risk of higher inflation for sure. Some of the trade just some because of other reasons.

But I think we're probably gonna be in a pretty constructive environment for business. And that's not a political comment. That's just a, with less of a focus on kind of antitrust as well, right? So I think you're gonna see more &A. I think you're gonna see a business environment where people are gonna be more open to investing. So I think for, as an investor, putting my investor hat on, I kind of expect it to be a...

pretty good environment to do what we're doing.

Auren Hoffman (37:34.702) If you go back 15 years, the US and Europe had almost the exact same GDP. Now the US has just massively outshined the European GDP. 15 years later, we've seen a massive divergence. What explains that?

Deven Parekh, Insight Partners (37:52.891) You talked about it earlier, right? You talked about how hard it to get money out of Germany. You didn't talk about the work rules. You didn't talk about the lack of flexible labor. You kind of know that if you hire people in some of these countries, it's very hard to make changes. And so I think those, and then those, you know, those economies are, have regulatory dynamics that in many ways are much, much worse than the US to operate in. And so I think that

Auren Hoffman (38:00.972) Yeah.

Deven Parekh, Insight Partners (38:21.825) And then you've got, think, and this is going to change over time. mean, we still, for all of the concerns we have, are still the innovation center of the world. Now we can lose that, but we haven't yet. And I think we should all always remember that and work hard to make sure we don't. so I think that combination of kind of lack of flexible economies and look.

Europe doesn't know what it wants. If you just look at what happened with Brexit, you look at how the EU is operating, they don't all want to follow what Brussels is saying. So you've got this divergence in those economies. think they understand that they've got this. It's interesting to see that they're already talking about increasing defense spending. I think the view that there could actually be

a war in Europe that affects them that they're not really well prepared to deal with without us and not know exactly where we will be necessarily is causing them to have to make real investments as well. So they're not like in the easiest place right now. Now look, we still have really interesting companies in Europe that growing. I've, look.

Auren Hoffman (39:43.887) Sure. But most of these, I mean, most of the economies, just, they never could recover from the 2008 financial crisis. they just, that just hit them at a pace way more than it hit the United States. Like somehow maybe we got hit more like right away, but we were able to come out of it much, much quicker than these other countries.

Deven Parekh, Insight Partners (40:07.509) We also used, you know, we also used, and there's some effect for us in that, right? We used a pretty big bazooka gun in order to make sure that we did come out of that. Now that's put us in a fiscal situation, which probably isn't sustainable in the long-term. I think in the short-term, it has sustained, right? But in the long-term, I think we're gonna have to figure out how we bend the curve to start bringing down

Auren Hoffman (40:13.74) Yeah. Sure. Yeah.

Auren Hoffman (40:27.426) Yep.

Deven Parekh, Insight Partners (40:37.409) the deficit. not stating anything that others haven't stated, but it's probably not long-term sustainable. So that bazooka from 2008 and the bazooka from kind of COVID, which I think there was a lot of support for at the time, has a cost that we'll have to address as well.

Auren Hoffman (40:59.192) Going back your companies, what are some not obvious indicators that something is not going well at the company? it's like, all hands, we should start be really diving in. What are the, for someone who's been in this industry for 25 years would know, but somebody like me wouldn't understand.

Deven Parekh, Insight Partners (41:17.045) Yep.

Deven Parekh, Insight Partners (41:20.961) Well, first of all, you would understand. So I'm not sure I'm going to tell you anything that you don't already know. But I think particularly like it's interesting, like, you know, because people talk about AI is going to just drop software and you know, there won't be a software industry. I don't really buy into that. We can talk more about why I don't buy into it, but it is reasonable to think about what the impact of AI could have on a company, a software company. And are we being proactive enough in order to do that? So where's the first

sign of that. mean, the first sign of that is in in gross retention, right? It's like the trap. That's the metric. When I start seeing degradation in retention, I really want to understand it. I want to understand it right away, right?

Auren Hoffman (42:02.784) So even if the net ARR is going up, but if there's enough churn, then there's a problem.

Deven Parekh, Insight Partners (42:09.311) I think one of biggest, I think one of the biggest mistake is getting seduced by net retention. I'm not saying that retention is bad and one should look at it, but as a leading indicator, roads retention.

Auren Hoffman (42:16.406) Yep. Yep.

Auren Hoffman (42:21.966) Because you're looking at gross really looking at like cost like the which customers are churning or or are they down or are we downselling it was 100 it was 100 grand a year and now we're only charging 50 grand a year like wire what's going on there.

Deven Parekh, Insight Partners (42:27.135) Yeah, well, the book, or they're downselling.

Deven Parekh, Insight Partners (42:34.433) And then look, in during what would definitely happened, particularly during COVID is as this IT spend went up a lot, you had lots of companies just bought, you know, enterprise licenses, seats for everybody. Then it turns out, well, it turns out that everybody at Flex Capital uses all the software that you might have bought during that period of time were insight partners. And so some of that is rationalization. You had it during, you know, when the Facebooks of the world and the Microsofts of all the world.

Auren Hoffman (42:41.997) Yeah.

Auren Hoffman (42:46.094) Totally. Yeah.

Auren Hoffman (42:54.104) Yeah.

Deven Parekh, Insight Partners (43:04.053) decided they need to show more free cashflow growth and laid off. I the funny thing is when they did those layoffs and you went back and looked at the numbers, it was like one or two quarters of people growth. It's like the numbers seemed massive, like 10,000 and 15,000, but when you went back, they added that in a quarter.

Auren Hoffman (43:14.2) Dolly.

Yeah.

Right, was like they went, they did the layoff in 2022 and they went back to the numbers of 2021 or something like that. Yeah.

Deven Parekh, Insight Partners (43:27.125) Right, and my guess is if you went back and looked at all those companies today, they're way above that again, right? So I think gross retention is a big one, right? And then the second, and this is really more a comment on a more mature company.

Auren Hoffman (43:31.287) Yeah.

Yeah.

Auren Hoffman (43:41.87) But just to kind of double-click, like so many, it's true, so many companies I'm involved in too, so many companies, 2000, 2001, they were selling like stuff like hotcakes. And sometimes they're selling it to people who had a reason to downsell. Sometimes they're selling it people who really didn't need it, but they're selling it anyway. then a lot of that churn in 23 and 24. But it's like,

Deven Parekh, Insight Partners (44:01.877) Yeah.

Auren Hoffman (44:11.416) How do know that's like a trend that it's going to keep going down or that was like, that was just like this cohort of customers that turned.

Deven Parekh, Insight Partners (44:16.161) I think this is why I think you actually have, this is the one thing you really have to dig into. was at a board meeting yesterday where churn had kicked up and I kind of got the, well, this is what happened. And I'm like, right, I kind of want to see it by customer. I kind of want to see it by customer because I want to understand is if this is a customer that's been there for 10 years that suddenly downsold like 50%, it's different.

Auren Hoffman (44:23.277) Yeah.

Auren Hoffman (44:34.445) Yeah.

Auren Hoffman (44:42.382) It's more of a problem. Yeah. Yeah.

Deven Parekh, Insight Partners (44:45.602) than a customer that bought during COVID, that product market fit wasn't perfect and they realized they didn't really need it. So unfortunately with this one, you don't have to do it if there's not a worrying trend, but if there's a worrying trend, I think you actually have to peel the onion back on it. And I do think people, us included sometimes, got seduced by net retention. And I think, know, 23, 21, 22 taught me that don't get too seduced by net retention. You really do have to look at gross retention.

Auren Hoffman (44:58.957) Yeah, for sure.

Auren Hoffman (45:05.528) Yeah.

Deven Parekh, Insight Partners (45:15.029) The other thing in a movie.

Auren Hoffman (45:16.494) and gross retention numbers, like what starts to be concerning to you like a year over year? Yeah.

Deven Parekh, Insight Partners (45:21.377) You mean percentage wise? Look, in a new deal today, so let me answer the question slightly differently. Like in a new deal today that we're looking at, we're really not doing anything that's a sub 90 % gross retention. And I would say the vast majority of the companies are 93 and above. And so if it's below.

Auren Hoffman (45:41.23) Wow okay that's that's that's excellent like 93 and above is excellent on gross retention.

Deven Parekh, Insight Partners (45:45.089) If it's below 93, what we're generally seeing, we're breaking it out and saying, okay, you got an enterprise business that's 95, you got an SMB business that's 80, and yeah, of course, but then you're blending and, right. Now, in an SMB business, if your retention, I'm gonna make up a number here, but let's just say your retention is 80. I would argue that an enterprise company with a retention of 80, like, you just can never make money.

Auren Hoffman (45:51.19) Yep. Yeah, okay, got it. Yeah, because SMB businesses should be lower in general. Yeah, yeah, okay, yeah. Yeah, okay.

Auren Hoffman (46:05.879) Yeah.

Auren Hoffman (46:13.047) Yep.

Deven Parekh, Insight Partners (46:14.335) In an SMB business, can, with one caveat, which is going to my second point, your cacks got to be really, really low. If you have high cack, it just doesn't work. The math just doesn't work. But the second is cack.

Auren Hoffman (46:17.186) Your cacks are low or something. Yeah. Yep.

Yep. Yeah. And even most of these enterprise businesses, like their tax are way higher probably than they should be. if you have 80 % or if you have even at 85 or whatever, like you have to figure out a way to start reducing your tax.

Deven Parekh, Insight Partners (46:37.697) And people always say, well, yeah, I 93 % retention, but I upsold and to upsell, need to have the cost because there's always a... The second is, and this, what I'm about to say probably doesn't apply as much in a series A company, but it's CAC, right? If all of a sudden you see your CAC move up, you kind of want to know why because it can be, sometimes it's something's, okay, a competitor.

Auren Hoffman (46:45.408) Yeah. Yeah, yeah.

Auren Hoffman (47:00.032) Mm-hmm.

Deven Parekh, Insight Partners (47:05.811) is being a little bit more aggressive and you want to meet the competition. But sometimes it's like, well, product market fit is not what I thought it was, right? And it's actually costing me a lot more to reach a customer than I thought. There could be some underlying trend that's not just my Facebook cost went up, right?

Auren Hoffman (47:07.297) Yep.

Auren Hoffman (47:22.7) Yeah. Yeah. Or like this one strategy you had before has run out and there's no new customers to get at that one strategy. the new strategy you have to do is much more expensive.

Deven Parekh, Insight Partners (47:29.505) And you sat your...

Deven Parekh, Insight Partners (47:36.457) And so the early stage kind of converse of that would also be a little bit like, think of an early stage company where the CAC looks really attractive, but it's because you have this great product market fit. But maybe like you got the early adopters because it was easy. But then as soon as you get the early adopters, all of a sudden, it's kind of, it just got hard. And so maybe your addressable market.

Auren Hoffman (47:47.991) Yeah.

Deven Parekh, Insight Partners (48:01.153) not your TAM, but your addressable TAM, maybe smaller than you think, because as soon as you got through the original, the early adopters, it got expensive, right? So I think the biggest challenge sometimes, and I was having a conversation with a different CEO this morning, I was like, look, your board deck's like 120 pages. Like it's got thousands of statistics in it. Like you gotta distill this down to like the five or six things that matter, right?

Auren Hoffman (48:04.663) Yeah.

Auren Hoffman (48:19.107) Cheers.

Auren Hoffman (48:26.168) Yeah.

Deven Parekh, Insight Partners (48:26.529) And look, sometimes people do that because if there's 120 pages, it's kind of hard to focus on anything. Sometimes they do it because they think that's what the board wants. And it's amazing to me how many boards, some of which I'm on, everybody thinks it's the wrong board deck, but nobody wants to be the one to say it. And so just, you go on for years doing it, where in a majority deal, I can just say, hey guys, like, this is not the right format.

Auren Hoffman (48:32.12) Yeah.

Auren Hoffman (48:53.154) And would you say, mean, almost the definition of any great business, like truly great business is that their cax decline over time.

Deven Parekh, Insight Partners (49:02.891) There's probably, I'm trying to think, mean, there's probably examples of businesses that are great, that their CAC didn't decline as much. I don't know the numbers well enough in my head to like, you build a brand, right? Like at the end, like when Monday started, nobody knew who Monday was. Now people know who Monday was and they're gonna get web traffic and they're gonna get free traffic that they would never have gotten in the beginning.

Auren Hoffman (49:11.03) Yeah, yep.

to some point like if you have a great enough brand and you know these other yeah yeah.

Exactly. Yeah. Yeah.

Auren Hoffman (49:28.503) Yeah.

Deven Parekh, Insight Partners (49:31.745) Amazon would be a great example early. I mean, just a super example, right? Nobody knew Amazon was you just spend a huge amount of money to acquire an Amazon customer. mean, I was thinking the other day as I was, I was at a doctor's appointment, it was raining and I got in my, I went to click Uber to go 1.6 miles. It was $82. And I was like, you know, that moment where like, you're like, you're stuck because like you have to get the doctor's appointment.

Auren Hoffman (49:33.506) Yeah.

Auren Hoffman (49:49.646) Holy mackerel.

Auren Hoffman (49:56.462) Right, you have no choice. You gotta pay the 82 bucks.

Deven Parekh, Insight Partners (49:59.225) and you have to the 82 bucks. I'm like, wow, talk about like LTV. I looked at my last, I'm not gonna say the number, you get the Amex statement at the end of the year where it gives you your thing. I couldn't believe the family Uber spent. mean, lifetime value to CAC, Uber probably takes it in my family.

Auren Hoffman (50:12.489) right, right, right, we're gonna summarize this for you.

Auren Hoffman (50:21.902) Yeah, yeah, yeah. absolutely. Now you mentioned boards, like, I'm sure you've been part of boards that have been extremely effective and work really well and maybe part of boards that aren't as effective. what, how, if you're advising a CEO or, you know, to run a great board, like, how do you advise that person?

Deven Parekh, Insight Partners (50:44.021) Well, it's a few things. think what happens in boards is that you can have a situation where you kind of want to be able to have a balanced conversation and not have one or two people dominated because then it kind of makes it hard for others to kind of jump in.

Auren Hoffman (50:58.851) Yeah.

I assume there's a size thing too, like once it gets beyond a certain number, it's hard to have a productive meeting.

Deven Parekh, Insight Partners (51:05.845) Yeah, look, I think, my number is gonna be smaller than other people's number. I don't like even numbers for obvious reasons. Like, I'd be five. I think that's the right number. By the way, I'm lots of boards that are way more than five, right? I don't find them to be that. You're not getting incremental benefit out of the next three, right? I think it's like pick five. Now, unfortunately what's happened in kind of venture world is some of these companies did,

Auren Hoffman (51:09.1) Yeah.

Sure.

Five, yeah.

Yeah.

course.

Auren Hoffman (51:24.524) Yep. Yep.

Deven Parekh, Insight Partners (51:35.603) series A's through, you know, H's that like, in order to get those rounds done, need to keep adding board members. Right. And now all of sudden you're sitting there with like six venture investors, like on the board, all of them came in at a different price. That's, that's, that's a challenging, that's kind of a challenging dynamic. But I think the thing I would say is that this is going to sound like motherhood and apple pie. And I don't mean it to, it was like, be thoughtful about the board materials. Right. I, if I had.

Auren Hoffman (51:42.307) Yeah.

Auren Hoffman (51:49.421) Yeah.

Auren Hoffman (51:53.08) For sure, yeah.

Deven Parekh, Insight Partners (52:04.683) brought in a new invent, if were starting a company fresh, I'd kind of sit with the board before the board meeting and say, what's most important to you? How do you like to consume materials? And I'd come up with a board deck that is, not create, to me, I've said this a lot of CEOs, I don't think anyone's ever done this. It's like the ideal board deck would be a board deck that the CEO is actually using to run the company. Meaning that it was basically just, it's maybe a slightly PowerPointed version of

things that you're using, one CEO who uses the board deck is their quarterly operating review. It puts some executive summary on top, right? But if it's not, if the board deck is not useful to you as an operator, it probably is not the right document, right? So too many times the board deck is a sales document to the board as opposed to here's kind of, here's the things I'm struggling with. I have a, I have a.

a personal investment in something that's not software, right? Like a friend's thing. And I texted him, he was like, things are great. know, things are great. And I said, look, just tell me the two best things and the two worst things. And I learned something by asking him that simple question, right? Which I learned a thing that was going well that I didn't expect. I learned something that wasn't going well that I wouldn't have expected. But had I not forced that construct, it wouldn't have happened. So to me, the most important thing in a board deck is highlights and lowlights. That should be the first page.

Auren Hoffman (53:18.445) Mmm.

Auren Hoffman (53:27.843) Yep.

Auren Hoffman (53:32.396) Yeah, yeah, yeah, just like with your kids, roses and thorns. Yeah.

Deven Parekh, Insight Partners (53:35.265) Yeah. And then I think a little bit of pre-conversation with board members before the board meeting is helpful. And the last thing is you kind of, if you, your job is to kind of come up with a board deck that's relevant and tight, but then you got to have the expectation that boards read it. And I don't think board meetings should be like,

college classes, like reading the thing. Like, okay, like you've all read it. Now let's talk about the four or five big issues. I'm going to refer to pages in the board deck as helping kind of guide the conversation. I would say.

Auren Hoffman (54:04.408) rehashing the meat rehashing all the yeah. Yeah. Yeah.

Auren Hoffman (54:16.856) Yeah, and how do you like shame that one board member that didn't read it or something?

Deven Parekh, Insight Partners (54:20.993) Well, it becomes obvious over time. But I think the out of the boards I'm on, think one gets run like that.

Auren Hoffman (54:23.286) Okay, yeah.

Auren Hoffman (54:30.158) Yeah, interesting. All right, well now hopefully they'll all listen to this podcast and they'll all change. Now a few personal questions, somewhat personal. Why is the International Development Finance Corporation so important? Like what, I know that you've been on the board of that and like why is that such an important institution?

Deven Parekh, Insight Partners (54:34.293) Ha ha ha ha ha!

Deven Parekh, Insight Partners (54:46.933) Yeah.

Well, so just, you know, so the DFC used to be used to be called OPIC, not OPEC, OPEC, but OPIC. And I first got on it during the Obama administration. And then I served on it during the Trump administration. And then I served on it during the Biden administration. So I've kind of seen it across. And it's really kind of really important tool of U.S. foreign policy, if you think in the developing world.

Auren Hoffman (54:58.198) Yeah, yeah, yeah, yep.

Auren Hoffman (55:10.435) Yep.

Deven Parekh, Insight Partners (55:18.721) So when we have a policy, for example, having more alternative energy in Africa, well, it's hard for US companies to go into these countries and build solar plants, get them financed, get risk insurance because they have risks in those countries that they don't have, sovereign risks that they don't have. And the DFC,

is the organization that the US government does to do that. I don't mean just climate, I'm using that as an example. And we do it through direct equity investments now, we do it through loan guarantees, we do it through political risk insurance. And it is one of the very, very few parts of the federal government, Export-Import Bank being the other, that are net profitable, right? So we charge for all of that.

Auren Hoffman (55:52.322) Yeah, yeah, of course. Power plant, whatever. Yeah.

Auren Hoffman (56:15.863) Yeah.

Deven Parekh, Insight Partners (56:16.449) and we actually send money back to the Treasury every year. And I think it's, what's been gratifying for me to see is it's been across every administration, it's worked really well. And sure, there might be slight shifts in priorities, but the team is great. It's a team that could work in the private sector if they decided to not do that.

Auren Hoffman (56:40.738) Yeah, it started like, well, at least the new incarnation of the DFC started in the first Trump administration and then continued in Biden and Biden and almost continued very similarly, I think. Right.

Deven Parekh, Insight Partners (56:47.681) So OPIC, yeah, yes, and OPIC had been trying to get, so we were the only DFI, development finance institutions, every China, they all have these. We were the only one that did not have equity authority. And so we could only invest in debt. Even if we're investing in say a fund in a new market, we had to use a debt security. And that's a pretty big competitive disadvantage. And in the first,

Trump administration is part of what's called the Build Act, where OPIC turned into DFC and kind of got a slightly broader mandate. They also got equity authority. So DFC now has that. So it's been a pleasure to be involved in that. They do incredibly impactful work on a global basis in developing economies in areas that I think have huge strategic foreign policy importance. And it's been a fun way for me to give back.

Auren Hoffman (57:44.622) Cool, two other questions we ask all of our guests. What is a conspiracy theory that you believe?

Deven Parekh, Insight Partners (57:52.641) It's a conspiracy theory, like, so RFK has gotten a ton of bad press. Mostly RFK has been appointed or has been nominated for HHS. And there's the vaccine piece of it, which, you know, some of it feels a little out of the mainstream, but it's interesting to me that like, I think the vast majority of what RFK has been talking about is our food supply. I a hundred percent agree with him on

And I'm excited for there to be a focus on this. I think that the government and FDA and all has actually been very, very kind of infiltrated by the food industry. And most nutrition studies are funded by the people who are selling us snacks. And so the fact that we actually have the potential to kind of change that.

And for example, maybe not have food stamps get used to buy Coke and then increase benefits for Ozempic. We're out making our country healthier. And so maybe that's not full on conspiracy theory, but I think RFK gets thrown into like everything he says is crazy. And I actually think a lot around the make America healthy again, is something that I actually think is a really important initiative. It shouldn't really matter that it's

Auren Hoffman (59:01.165) Yep.

Deven Parekh, Insight Partners (59:20.225) under what administration it happened.

Auren Hoffman (59:22.414) By the way, how excited are you or concerned are you about these like GLP drugs like Ozempic? Like do you think they're gonna make a huge difference in American health or do you think they're cause for concern?

Deven Parekh, Insight Partners (59:34.017) Well, look, it's interesting to me that there's all these studies that say, well, Ozempic helps people have less heart attacks. No, actually losing weight helps you have less heart attacks. just Ozempic helps you have it. I think what happened is these drugs were originally developed to treat people who had diabetes or had conditions that really every other thing wasn't working. And what I worry about, and it's led to a very large market cap of NOVA.

Auren Hoffman (59:41.806) Right. Yeah. Yeah.

Deven Parekh, Insight Partners (01:00:00.097) is that it's now being prescribed before people even try to make a lifestyle difference. And I think that's a mistake. And we don't know what the long-term side effects of these drugs are. We know what some of the short-term side effects are. And we know that if you don't actually do, for example, resistance exercise and other things, it actually leads to muscle degradation, which causes other problems. So.

Auren Hoffman (01:00:04.973) Yeah.

Deven Parekh, Insight Partners (01:00:24.649) It's not that I don't think it's a really powerful drug. I think it is. It's just that we've taken a TAM, which is everybody who might be overweight, and said that's the addressable market, where the addressable market really should be a smaller subset of people who can't get to where they need to get to through conventional means. That's my concern.

Auren Hoffman (01:00:45.368) Okay, yeah, that makes sense. Last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?

Deven Parekh, Insight Partners (01:00:52.225) Well, I think, know, my kids are right now 21 and 24, right? So like it's a time when they go to college and they're graduating from college. Like you tend to get in the mode of giving a lot of advice. And I think the biggest thing I see now, and maybe this is, I feel like it's more relevant because you can give people advice earlier in their life, is I feel like there's this world where everybody, the advice is you need to figure out what you want to do, but you need to figure out what you want to do by the time you're like 10. And I'm exaggerating.

Auren Hoffman (01:01:20.024) Ha! Tolloy!

Deven Parekh, Insight Partners (01:01:21.017) But like, if you're going to be in soccer, you have to start when you're five. If you're going to want to be a coder, you got to go to coding camp when you're like seventh grade. If you're going to be an investment banker, well, we start recruiting like freshman year. yeah, that's obviously an exaggeration, but you know what I'm saying. And I think the thing, I look at it, I was a total science nerd in high school. I thought I was going to be an MD, PhD. I thought I was going to be a researcher.

Auren Hoffman (01:01:24.428) Right, right, totally, yeah.

Auren Hoffman (01:01:29.911) Yeah.

Auren Hoffman (01:01:35.192) Hey, freshman year of high school. Yeah, yeah.

Deven Parekh, Insight Partners (01:01:50.817) And one of the things that I feel like I ended up doing, I'll just tell, if it's okay, like one little short story, which is my freshman year, I went to go volunteer for college Democrats. And my roommate went to go work for the DP, the Daily Pennsylvania, which is a newspaper at the University of Pennsylvania.

Auren Hoffman (01:01:58.37) Yeah, please, yeah.

Deven Parekh, Insight Partners (01:02:17.569) Second semester we both suggested the other person come and join the organization. Like, Devin, why don't you come to the newspaper? And the other way. And the crazy thing was that by senior year, I was president of College Democrats and my roommate ended up being editor in chief of the newspaper and we recruited each other to the other thing. Right? And it's just sometimes you just have to expose yourself to things. He's still a journalist. I'm still involved in politics. And it's just...

Auren Hoffman (01:02:43.214) Mm-hmm.

Deven Parekh, Insight Partners (01:02:47.499) kind of thing of like you have to experience life and life might take you in like this weird way, but you kind of have to just go with it. And it's hard to give that advice. And my point is it's hard to give that advice these days because it feels like you're somehow shortchanging your son or daughter by telling them that they need to know, because that's what everybody else is doing.

Auren Hoffman (01:02:54.079) Weird directions. Yeah.

Deven Parekh, Insight Partners (01:03:15.617) But actually kind of while I was always really motivated, I didn't end up doing much of what I thought I was going to do when I was in high school.

Auren Hoffman (01:03:23.01) Yeah, yeah, yeah, you kind of people find their own paths and even later in life. mean, I find even like 50 year olds are changing and doing things and yeah.

Deven Parekh, Insight Partners (01:03:27.232) Yeah.

Deven Parekh, Insight Partners (01:03:32.417) It's just great. I think having the permission, I guess, to feel like you can do that and not know where you're gonna be in 20 years or feel like you have to know is, think, I don't know, that would be my, that would be my point I'd make.

Auren Hoffman (01:03:50.094) Alright, this has been awesome. Thank you, Devin, for joining us on World of DaaS. I follow you at DJParekh on X. I definitely encourage our listeners to engage with you there. This has been a ton of fun and I really appreciate it.

Deven Parekh, Insight Partners (01:04:05.247) Warren, thanks. Always great to see you.

Auren Hoffman (01:04:08.238) Amazing.