The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:51:59 · Harry Stebbings, Jason Lemkin
[00:51:59] S2: Jason, what else tickled your fancy from this schedule? [00:52:02] S0: You know, I mean, I almost don't wanna bring it up, but, bending spoons laying off basically all of Airtable. Not a surprise. Right? But, man, I mean, I wrote this when it happened and no one cared. I'm like, guys, everyone's talking about the money and the ARR revenue and the D and I'm like, you realize almost everyone's losing their job. I didn't see anyone care, give a, give a rat's arse about the fact everyone's going to lose their job. I'm like, everyone lost their job at Vimeo. Everyone lost their job at Evernote. Everyone's going to lose their job at Miro. And I barely saw a tweet about anyone giving a rat's ass. And I'm not even judging because this is capitalism, but man, when you sell your company to Benning Spoons, you just gotta realize your entire team's gonna be gone. And do founders owe anything to their teams? Do boards of directors own anything to their teams? Or do they just owe the best returns to Cedars Sinai? Do you have any moral obligation to sell to someone that's going to lay off 80% of your team within weeks? They are stakeholders, especially if you're cash flow positive and growing like Miro and Airtable. Right? They both have hundreds of millions in the bank and growing. Do they matter? Do they matter legally? Do they matter ethically? Do they matter at all? Or is this just part of the startup game? I wouldn't do it. There's no way I would sell my company and have 80% of my team laid off. I just never But
00:53:11 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:53:11] S2: but just pause, Jason. Can... Let's just stay on that. You have a fiduciary responsibility to your board and to your shareholders if you're mirror, say, and that is the best and only offer for you. What do you do? I think Rory [00:53:24] S0: can help remind me. I do think legally you have an obligation to your shareholders above your employees, right? I believe... I'm mixing up my Delaware law. I'm pretty sure that's true, For [00:53:33] S1: a public company, it is the only obligation you have, and they're extraordinarily clear on that. And even if in your mind you're thinking about something else, you never say it in a public company board because it just lays itself open to shareholders. Your sole job when you enter into an acquisition period is to maximize value for shareholders. So yes, that's there. I actually don't know in private [00:53:53] S0: what they're private. Right? [00:53:55] S2: Yeah. So so Jason, would you not sell if you're Miro, which is a private company? [00:53:59] S0: No. I wouldn't I wouldn't... The people that work for me so hard, I wouldn't I wouldn't let them all be laid off the next week. No. I wouldn't do it. Life's too short.
00:53:59 · Jason Lemkin, Rory O'Driscoll
[00:53:59] S0: No. I wouldn't I wouldn't... The people that work for me so hard, I wouldn't I wouldn't let them all be laid off the next week. No. I wouldn't do it. Life's too short. [00:54:07] S1: Pushing only on that. I hear you. And, if you've another alternative that even if it's gonna make you less money, you might well choose to sell to them. The question is if you're locked into a forever march where, you know, over the next two years, a lot of them are gonna leave anyway. Right? Because when you get on the forever march, as you know, retention is the problem, especially for the best people. There's a little part of it that says accepting that having that kind of talent repurposed is actually just better for everyone. Go into the Bending Spoons deal, but cut your deal on your employee economics upfront. So know what everyone's getting into. Because I do think that the debt march will get old pretty quickly. You know, you'll try and do the noble thing for your employees, and then over the next two years, they'll all peel off anyway, and you'll be left with your even more empty husk that's now worth one times revenue. So I hear you, and I'm normally the softy in this group, but sometimes resolution is worth it even for the employees. It's complicated. It's complicated. [00:55:02] S0: I just don't think that there's an acquirer you can be more sure will have... Will lay off all... The vast majority of your team than the bending spoons. [00:55:10] S1: No. The the mission is clear.
00:55:10 · Rory O'Driscoll, Jason Lemkin
[00:55:10] S1: No. The the mission is clear. [00:55:11] S0: You don't know what Vista's gonna do. You don't know what Tomo Bravo's gonna do. You don't know what Francisco partner, but you know what the bending guys are gonna do. They're gonna just axe almost your entire team, right? To a next level I've never seen before. Right? Maybe Constellation does this. I don't know, but I've I've never seen it before. [00:55:25] S1: For what it's worth, I think bending spoons has an... I mean, they all are very efficient, Bending Spoons has a central, a bigger centralized component. I think Constellation's argument is everybody runs on their own, but we don't spend a ton of money in sales and marketing, and you got to have 40% EBITDA, I don't care how you do it. I think bending spoons argument is all of the above, plus all your G and A is centralized, all your people are centralized, so you just need even less. So it's variations on a theme of lean and mean, and even leaner and even meaner.
00:55:54 · Jason Lemkin, Harry Stebbings
[00:55:54] S0: I'll tell you the other one just on the theme. And Harry, you can cut me off if you want, but I was thinking about this and I put this, I'm very sensitive to this. As we had on the dev podcast, I'm confused what loyalty means in the AI age, right? I've got many flaws. Loyalty isn't one of them. But, you know, Cloudflare Matthew just came in and said, I'm laying off 20% of the team, just doing it. He did it in one day and they beat the quarter. They've accelerated growth even more. The stock price is up like 80% this year. And it's not bending spoons. He didn't decide to gut Cloudflare, but he made the right call. He's like, we're not failing. We're an AI beneficiary, but we are too slow. We're wasting too many times, too much effort on folks that aren't going to get us there. I'm going to do 120% cut, not because we're struggling, but because we're to grow even faster and they've reaccelerated. You know? I think bending spoons, it it will... I don't know. But some of these are just too small. This one, I see these layoffs. I always think on... As as much as I care, I'm like, they're too small. Cloudflare did 20, and it worked. [00:56:58] S2: The hard thing for bending spoons now is it actually has to find large enough companies that it can buy. There's lots of smaller companies, but it needs to find large enough revenue based companies that it can actually buy. That was what was really interesting when I spoke to them. [00:57:10] S0: Yeah. It's 3% organic growth. So if you wanna grow 80% like they are, you gotta buy big stuff. Right?
00:57:10 · Jason Lemkin, Harry Stebbings
[00:57:10] S0: Yeah. It's 3% organic growth. So if you wanna grow 80% like they are, you gotta buy big stuff. Right? [00:57:16] S2: Honestly, Jason, the churn on these companies when they buy them, though, I mean, the numbers are just... You have to price increase to the max just to keep these these businesses going. While we were talking, it may be uninteresting to you. I might have been a user of this company in the past. Bumble has announced that it will be taken... Rory, Bumble, if you don't know, you probably don't, being a happily married man for so many years, but it's a dating app where young men can find young women. And I think there's a professional network as well where you obviously have a dating app, and they are being taken private by mister Ravi Gupta in his new firm, Ithaca Holdings, for $1,300,000,000, I believe it is. It's a pretty cool bit of news, a holding company taking Bumble private. [00:58:02] S0: Yeah. Was... Market cap was, 500,000,000 before the deal. Right? Yeah. Yeah. Good premium, man. VCs have always hated it, right? The churn, the problems with the customer lifetime value, they've always hated it, right?