On Investment Philosophy and Strategy
- On Long-Term Vision: "We just said we'd like to invest in great businesses that are going to be a meaningful part of the S&P 500. To this day, I still have a list of the S&P 500 companies on my desk. I stare at that list all the time, and I just try to figure out what companies are not on that list today, that will be on that list tomorrow."[1]
- The Power of Concentration: Greenoaks operates with a remarkably concentrated portfolio, believing that deep conviction in a smaller number of exceptional companies will outperform a diversified approach.[1][2] This strategy allows them to devote significant resources to each investment.[3]
- Conviction Over Consensus: Mehta has a history of making high-conviction bets that go against the prevailing tide, a quality described as "extremely disciplined" with "exceptional timing".[1][4]
- Do Your Own Diligence: A core tenet of Greenoaks' success is their obsession with conducting their own primary research and not outsourcing due diligence.[5] Mehta learned this lesson the hard way after missing out on an early investment in SpaceX by relying on the opinions of others.[1][6]
- Focus Beats Diversification: The firm's philosophy is that true value creation comes from a deep understanding and partnership with a select few, rather than spreading bets widely.[5]
- Patience Through Volatility: "Without exception, all the businesses we've been invested in for more than five years have gone through a rough patch or two. Where the fundamental premise of the business and the quality of the business is being questioned."[1]
- Ignoring the "Trivial Many": Greenoaks remains hyper-focused on identifying a small number of extraordinary founders each year, deliberately ignoring the vast majority of investment opportunities.[7]
On Founders and Partnerships
- Founder-Centric Approach: Mehta's investment philosophy centers on understanding and supporting the visions of founders.[8] He aims to be the "single most important partner they have".[1][6]
- Viewing Founders as Artists: He sees founders as artists painting their masterpiece, emphasizing the beauty in the business they are creating.[5]
- The Importance of Character: "He's also got incredible EQ, which wins people... But it's not what makes Neil rare, which is those plus conviction and courage," says Coupang founder Bom Kim on Mehta's character.[6]
- Backing Visionaries: Greenoaks has a track record of backing visionary founders and sticking with them through challenging times, as seen with their support for Carvana's CEO Ernie Garcia.[8]
- Maniacal Focus and Ambition: He looks for founders with an intense focus and a burning ambition to build something truly great.[4][9]
On Business and Markets
- Jaw-Dropping Customer Experiences: A key concept for Mehta is identifying companies that create "jaw-dropping customer experiences," as this is a strong indicator of a durable competitive advantage.[2][7][9]
- Unreasonable Expectations as a Competitive Advantage: Believing in and striving for what seems unreasonable can be a significant differentiator in business.[7]
- The Simplicity of Great Businesses: "The laws of great businesses are the laws of great businesses. it is not complicated."[7] The secret lies in the disciplined and consistent application of these fundamental principles.[7]
- Finding Value in Unobvious Places: Mehta has a talent for seeing potential where others don't, often by digging deeper than surface-level metrics.[8] For example, with Coupang, many investors were deterred by low initial margins without understanding the long-term potential.[6]
- The Power of an Internal Locus of Control: Mehta is described as having an incredibly strong internal locus of control, with a belief in his ability to "shape or bend the world, rather than bending to it".[6]
- The Future of Success: "One thing, though, is certain: success over the next four decades will look different than success over the last four."[8]
On Process and Execution
- The Discipline of Saying No: The firm's concentrated approach necessitates a rigorous discipline of saying no to almost every opportunity in order to maintain their high underwriting standards.[3]
- First Meetings Matter: Mehta is often in the initial meetings with founders, a practice that is notably different from many other large investment firms.[7]
- Understanding from the Outside-In: Greenoaks aims to understand a potential investment from the outside better than anyone else, allowing them to move quickly and with conviction when they find the right opportunity.[7]
- Providing "All of Greenoaks": When the firm commits to a founder, they get the full support and resources of the entire firm, not just a small part of it.[7]
- The Imperative of Ruthless Prioritization: To achieve their goals, a ruthless focus on what truly matters is essential.[5]
Learnings from Neil Mehta's Journey and Greenoaks' Success
- Early Conviction Pays Off: Mehta's decision to invest 40% of his first $50 million fund into Coupang, a bet that returned approximately $8 billion, is a testament to the power of early and strong conviction.[1][2][9]
- Building a Reputation for Radical Focus: While many venture capitalists chase hype, Mehta has built a reputation on long-term thinking and a relentless focus on his core principles.[5]
- The Value of a Strong Partnership: Greenoaks was co-founded with his friend Benny Peretz, highlighting the importance of a trusted partnership in building a successful firm.[9][10]
- Learning from Mistakes: The decision not to invest in SpaceX was a costly one that reinforced the importance of independent thinking and primary research.[1][6]
- A Disciplined Approach to Growth: Greenoaks has scaled to manage billions in assets with a remarkably small team of investment professionals, underscoring their commitment to a focused and disciplined approach.[1][2]
- The Power of a Clear Mission: From its inception, Greenoaks has had a clear and unwavering mission: "Find great founders building great businesses, become their single most important resource, work tirelessly to invest in them, and then become the most important partner they have. And do it over the course of decades, not years."[6]
- Exceptional Timing and Going Against the Grain: Henry Kravis, an early investor in Greenoaks, noted Mehta's "exceptional timing" and his willingness to go against the prevailing market sentiment.[1][4][6]
- The Importance of EQ and IQ: While intelligence is crucial, Mehta's high emotional intelligence is cited as a key factor in his ability to build strong relationships with founders.[6]
- Thinking in Decades, Not Years: Greenoaks' investment horizon is measured in decades, a mindset that fundamentally shapes their investment decisions and partnerships.[6]
- The Significance of Craftsmanship: Mehta's appreciation for builders of all kinds was shaped by his grandfather's gun shop in India, influencing his perspective on the dedication and skill required to create something of value.[2]
- Seeing Through the Noise: During the market downturn, while others panicked about Carvana's prospects, Mehta saw an opportunity and invested further, a decision that ultimately paid off.[6][10]
- The Value of Being an Independent Thinker: In a world of consensus-driven investment committees, Mehta's ability to operate with first-principles thinking gives him a significant competitive advantage.[6]
- Proactive Risk Management: Mehta's warning to his portfolio companies about the risks at Silicon Valley Bank months before its collapse demonstrates a proactive and diligent approach to protecting his investments.[10]
- Giving Back to the Community: Beyond his investment activities, Mehta has established a nonprofit to revitalize parts of San Francisco and has made significant donations to his alma mater to support scholarships and entrepreneurship.[10][11]
- The Art of Seeing What Others Miss: By talking directly to customers and suppliers, Mehta and his team uncover insights that are often overlooked by investors who rely solely on financial models.[6]
- Building a Firm that Reflects Your Values: Mehta has built Greenoaks to operate in a way that is consistent with his core beliefs about investing and partnership, even if it differs from the industry standard.[6]
- The Courage to Be Different: It takes courage to operate with a concentrated, long-term focus in an industry that often rewards short-term gains and diversification.[6]
- The Intertwined Journey with Founders: Mehta views his own journey and the development of Greenoaks as being intertwined with the founders he backs, such as Bom Kim of Coupang.[7]
- The Enduring Principles of Value Creation: Despite the ever-changing market dynamics, the fundamental principles of what makes a great business remain constant.[7]
- A Passion for Investing in Founders: Mehta's career trajectory, from D.E. Shaw to founding Greenoaks, was driven by a deep-seated passion for partnering with and investing in founders.[8]
- The Long and Winding Road to Success: Great companies are not built overnight, and investors must be prepared to navigate the inevitable challenges and "rough patches" along the way.[1]
- The Power of Storytelling: While not explicitly stated as a quote, Mehta's ability to articulate a compelling vision for his firm and his portfolio companies is a key element of his success.
- Focus on the "Why" Behind the Numbers: Instead of getting fixated on current metrics, Mehta seeks to understand the underlying drivers of a business and its long-term potential.[6]
- A Commitment to Continuous Learning: His deep dives into companies and industries reflect a relentless curiosity and a commitment to continuous learning.[5]
- The Importance of a Strong Moral Compass: While not explicitly quoted, Mehta's emphasis on partnership and long-term value creation suggests a strong ethical foundation to his investment approach.
- Building a Legacy: Through his investments and philanthropy, Mehta is focused on building a lasting legacy that extends beyond financial returns.[10][11]
- The Human Element of Investing: Ultimately, Mehta's success is rooted in his ability to connect with people, understand their visions, and build relationships based on trust and mutual respect.[6]
Sources
