Oren Zeev: Why AI Growth Expectations Are BS & Won't Last? Why GPs Shouldn't Tell LPs Their Strategy

In the world of venture capital, conformity is often disguised as strategy. However, Oren Zeev, the visionary behind Zeev Ventures, has built a billion-dollar track record by systematically ignoring industry norms. As one of the most prominent solo capitalists in the ecosystem, Zeev operates without a team, pays himself zero income from management fees, and adheres to a singular philosophy: the only rule is that there are no rules.

From his early bets on companies like Audible and Chegg to recent wins with Navan (formerly TripActions) and Houzz, Zeev’s approach challenges the traditional "growth at all costs" narrative. In a landscape currently obsessed with Artificial Intelligence and inflated metrics, his perspective offers a sobering yet bullish roadmap for founders and investors alike. This deep dive explores why Zeev believes current growth expectations are often nonsense, how AI will actually impact incumbents, and why the "messy middle" of venture capital is facing an extinction event.

Key Takeaways

• Operational complexity is an AI moat: Incumbents with complex operations, regulatory hurdles, and deep integrations are likely to be beneficiaries, not victims, of the AI wave.
• Sustainable growth trumps vanity metrics: Zeev warns that a "growth only" mindset encourages bad behavior, such as circular deals. He prefers 2x growth with healthy unit economics over 3x growth with poor fundamentals.
• The bifurcation of Venture Capital: The future of VC belongs to massive platforms (like Andreessen Horowitz) or specialized craftsmen (Solo GPs). Firms in the middle will struggle to survive.
• Radical LP alignment: Zeev reinvests his management fees back into the fund and is the largest LP in every vintage, ensuring he only profits when his investors do.
• Preemptive rounds strategy: Founders should take capital when offered but continue spending as if the valuation hasn't changed to avoid the trap of being overfunded.

The AI Tsunami: Beneficiaries vs. Victims

The prevailing narrative in Silicon Valley suggests that AI will rapidly disrupt legacy software companies, allowing agile startups to clone products with a fraction of the code and cost. While Zeev acknowledges AI as the most significant technological shift in human history, he challenges the idea that incumbents are destined to die.

Operational Complexity as a Defense

Zeev introduces a critical framework for evaluating AI risk: differentiating between pure technology plays and operationally complex businesses. If a company’s primary value proposition is simple code, they are at risk. However, businesses that rely on distribution, deep integrations, and regulatory compliance possess a natural defense.

"The technology is 5% of it. You have data, distribution, and integrations. The bottom line is I think this notion that all the incumbents are going to die... I don't buy it."

Using his portfolio company Navan as a case study, Zeev argues that while the market has punished SaaS multiples due to fear of disruption, companies like Navan are actually beneficiaries. By utilizing AI to automate support and enhance user experience, these companies can dramatically improve gross margins without losing their market position. The moat isn't the code; it is the data and the complex ecosystem the company has built around it.

Why AI Growth Expectations Are Often "BS"

One of the most contentious points in the current market is the expectation for startups to show explosive, unnatural growth rates to attract Series B or C funding. Zeev argues that AI does not change the fundamental mathematics of business compounding.

The Danger of "Growth at All Costs"

When investors signal that only top-line growth matters, it drives founders toward unsustainable and sometimes unethical behaviors. Zeev points to the rise of "circular deals"—where companies buy each other's products to artificially inflate revenue—as a symptom of this pressure. This creates perceived value without creating real economic value.

Zeev’s advice to founders is to ignore the hype cycles. A company growing at 100% year-over-year with strong unit economics is often a better bet than a company growing at 200% with broken fundamentals.

"AI doesn't change mathematics. Compounding is the same compounding before AI and after AI."

While there are rare "land grab" scenarios (like the Uber vs. Lyft wars) where margin must be sacrificed for market share, Zeev contends that for 99% of B2B software companies, healthy, sustainable growth is the superior path to a public listing.

The Bifurcation of the VC Industry

The venture capital landscape is undergoing a structural shift. According to Zeev, the industry is splitting into two distinct winning models, leaving a "messy middle" that is destined for failure.

Platforms vs. Craftsmen

1. The Platforms: Firms like Sequoia, Andreessen Horowitz, and General Catalyst offer massive scale, armies of support staff, and comprehensive services. They win by being everything to a founder.
2. The Craftsmen (Solo GPs): Investors like Zeev offer speed, high conviction, and a direct personal relationship without the bureaucracy.

Funds that fall in between—traditional partnerships with 5-6 partners that lack the resources of a platform but also lack the agility of a solo GP—are in a precarious position. They struggle to differentiate, leading to difficulty in raising capital and winning competitive deals.

The Solo Capitalist Advantage

Zeev’s model is built on speed and conviction. He does not need to convene a partnership meeting or play internal politics to write a check. This allows him to move faster than traditional firms, often making decisions in days rather than weeks. This agility appeals to founders who want a partner, not a corporate board member.

Radical Alignment: The "Zero Fee" Model

Perhaps the most unique aspect of Zeev’s strategy is his approach to fees and alignment. In an industry where General Partners (GPs) often become wealthy from management fees regardless of fund performance, Zeev has taken a contrarian stance.

He takes a lower-than-average management fee and reinvests 100% of it back into the fund. Consequently, he has zero income from management fees.

Skin in the Game

• Biggest LP: Zeev is the largest Limited Partner in every single one of his funds, typically contributing around 13-14% of the capital.
• Pure Carry: Because he draws no salary from fees, he does not see a dollar of profit until his LPs have received 100% of their principal back.

This structure eliminates the principal-agent problem found in large firms, where partners might be incentivized to deploy capital just to raise the next fund and secure more fees. For Zeev, if the fund doesn't perform, he works for free.

Navigating Valuations and Market Timing

Zeev admits that even seasoned investors cannot time the market. Reflecting on the 2021 bubble, he notes that while he invested in high-quality companies, he—like everyone else—overpaid. The lesson isn't to stop investing during peaks, but to understand that vintage diversification comes from investing consistently over decades, not trying to time a specific year.

The Series A Trap

Discussing the current state of Series A investing, Zeev highlights a recurring issue: price detachment. Founders often raise seed rounds on a concept, hire a team, and return a year later with "progress" that is merely optical—an office, a beta product, but no real product-market fit (PMF). Yet, the valuation jumps significantly.

Zeev advises investors to look past the label of the round ("Series A," "Seed Plus") and rigorously test for genuine PMF signals. If the risk hasn't been substantially reduced, the valuation hike is unjustified.

Preemptive Rounds

When founders are offered large sums of cash preemptively by aggressive funds, Zeev’s advice is pragmatic: Take the money. It is foolish to turn down capital that de-risks the company. However, the discipline lies in not spending it.

Founders should deposit the capital but continue operating with the fiscal discipline of their previous runway. The danger arises when startups increase their burn rate to match their bank balance, leading to a loss of focus and efficiency.

Conclusion

Oren Zeev’s philosophy is a testament to the power of independent thinking. By rejecting the committee-based decision-making of traditional VC and aligning his financial incentives entirely with his LPs, he has built a model that prioritizes substance over optics.

As the market grapples with the implications of AI, Zeev remains an optimist. He views the current era as the most exciting time in history to be an investor, provided one can distinguish between the noise of hype and the signal of operational value. Whether you are a founder navigating a fundraise or an investor assessing the next wave of disruption, Zeev’s core tenet remains relevant: ignore the herd, check the unit economics, and remember that real value takes time to compound.