Thu. Jan 20th, 2022

If 2021 wound down, The Exchange wanted to elaborate on what could happen if the startup music stopped playing. So we have an experienced venture capitalist Matt Murphy on the phone to talk it out.

Murphy began his career at Sun Microsystems in the mid-1990s and joined venture shop Kleiner Perkins in 1999, where he remained until 2015. From there, the investor changed teams to Menlo Ventures, where he has worked ever since. For a bit of context, Murphy has invested in DocuSign, Egnyte, AppDynamics, and Carta, among others.

The Exchange explores startups, markets and money.

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But most relevant today is his experience investing during recessions, including both the 2000 startup contraction and the 2008 financial crisis. So, armed with a handful of questions and a recorder, we discussed a myriad of topics, from the current startup benchmarks to the sustainability of today’s startups and changes in the overall startup success rate.

Our conversation with Murphy was extensive. To limit its length, we’ve organized its answers by theme and added subheadings where the topic has changed slightly. We’ve also sharply revised our questions down and made modest changes to the transcript for clarity and length, including expanding certain acronyms.

Enjoy your snow day read!

Whether the current period is overheated or supported by fundamentals

Matt Murphy: Well, I think it’s really good that the investments I’ve already made are highlighted because it makes you feel like a hero, and very traumatized from trying new things because it makes you feel like a sucker. [Laughter] [But yes,] the way valuations have changed and continue to change in a relatively short period of time is astonishing. Certainly more than in 1999. It just feels like this has been a more sustainable period. It’s more spread out, and every time you think it’s a new max, something else happens.

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