The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:36:27 · Harry Stebbings, Sameer Dholakia
[00:36:27] S1: The fuck? [00:36:28] S0: Early growth is very different than late growth. It's so different. Okay. Tell me. Me. Tell me. Go ahead. [00:36:35] S1: They're both growth. [00:36:36] S0: No. No. No. No. When [00:36:40] S1: we do an early growth, mid growth, a not so late growth, a late growth, a pre IPO... [00:36:45] S0: You got to draw. I will concede, Harry, that there is a arbitrary distinction cut off line somewhere, but I will tell you qualitatively, there is a big difference between investing in a company that is in there in the 20 to 40,000,000 of revenue range or is between, you know, call it, I don't know, 500,000,000 to a billion dollar valuation versus I'm coming into a fireworks at 15,000,000,000. That's a... I mean, you're talking about a very different stage of company. What you know about the business is different. The risk profile is different. The check size is gonna be different, all the things are gonna be different. [00:37:20] S1: I get all of that, but I think what matters is your multiple on invested cash. And actually, I think if you look at, say, a fireworks, I think the upside is just freaking enormous. [00:37:30] S0: Enormous. Yep. Sure.
00:37:30 · Sameer Dholakia, Harry Stebbings
[00:37:30] S0: Enormous. Yep. Sure. [00:37:32] S1: And I adore and I adore the Ligure, but by nature, I think the upside is just less because it's a vertical market. It's not intelligence for the world. I mean, I think Max would agree with that. It is law. And even if it's tax and compliance as well, it is still relatively verticalized. And so I think your multiple on invested cash is what you should be looking at, which I would argue would be the same, actually. [00:37:56] S0: I agree with you that many of the opportunities that we are investing in... Because we are only trying to invest in the very best in both of those stages of early growth and late growth. I do believe that on both sides of those, you can find ten and twenty x companies. We want nothing less than a five, and that's a really high bar in growth. [00:38:14] S1: What did you do from your early growth that's not in your late growth that you rue not putting in your late growth?
00:38:14 · Harry Stebbings, Sameer Dholakia
[00:38:14] S1: What did you do from your early growth that's not in your late growth that you rue not putting in your late growth? [00:38:20] S0: Oh, that's a good question. I'm really excited about another vertical AI company called Field Guide that is in, it's AI for auditors. Right? So we've done AI for doctors with the bridge and AI for lawyers with Evenup and, Legora, and and Field Guide is AI for auditors. And I did that one early. They were, I think, they were sub 10,000,000 of ARR at the time we invested. It's probably a little under a $200,000,000 entry price, and they are just ripping. They are growing really fast. I'm really excited for them and and proud of them, and we haven't yet been able to back up the truck. Their inflection has been extraordinary. I think like a lot of companies post this January, February magical time when the models took a leap forward, all of a sudden, their solution became wildly more compelling, and and the uptake is is showing it. [00:39:10] S1: I'm gonna push you, but is that really a generational company? Like, no offense. Yeah. It's it's it's fascinating. But no. No. But, like, fireworks is. Cognition or factory could be [00:39:22] S0: Sure. [00:39:22] S1: Like like, and, again, I mean it with zero disrespect to field guide. It can be a phenomenal bit... A $1,020,000,000,000 business. But to be in the late growth, as Excel calls it, like, the leader's fund for Excel, is this really the generational?
00:39:22 · Harry Stebbings, Sameer Dholakia
[00:39:22] S1: Like like, and, again, I mean it with zero disrespect to field guide. It can be a phenomenal bit... A $1,020,000,000,000 business. But to be in the late growth, as Excel calls it, like, the leader's fund for Excel, is this really the generational? [00:39:37] S0: Well, it depends on on your view of the... Of where you would define generational. If generational now is you gotta get to a $100,000,000,000 market cap, then then, yeah, I agree with you. It's probably not that. And and some of those others certainly can be, but I think it's an extraordinary business. And that's one I wish I had backed up the truck on more. [00:39:55] S1: And if the price is right, then to the point that we said earlier, the multiple on invested cash can actually be the same. So [00:40:01] S0: Exactly right. [00:40:01] S1: That's... Do you have separate teams for early to late growth? [00:40:05] S0: No. Same same group. We've got four great GPs, you know, an amazing team of VPs and associates that are going after this thing. We've been working on it. Man, I'll tell you, Harry, I am so fired up about our growth team and and the the practice we have built over the last few years. I'd put our growth portfolio up against any growth team in the world. I really do. I think we're gonna have the... One of the best portfolios in all of growth, in all of venture capital. [00:40:29] S1: I spoke to many people on your team beforehand, and they said the real focus you have on culture. And I thought, oh gosh, how boring. [00:40:38] S0: Come on, man. It's the most important topic.
00:40:38 · Sameer Dholakia, Harry Stebbings
[00:40:38] S0: Come on, man. It's the most important topic. [00:40:40] S1: Every CEO is like, I wanna talk about culture. And then you speak to their team and it's different. And it's just like every marketing team is like talk about culture, talk about culture. I did hear something though that I would like to ask. Talia told me to ask you about teammates and friends beat colleagues and coworkers every day and twice [00:41:05] S0: on on Sunday. That's right, man. I I have used that line repeatedly for a decade now. [00:41:11] S1: How does that impact how you build a venture firm today then?
00:41:11 · Harry Stebbings, Sameer Dholakia
[00:41:11] S1: How does that impact how you build a venture firm today then? [00:41:15] S0: Well, look. First, I'll explain the genesis of the line, and then I'll talk about why I think it's so important even in firm building as much as it was. It came from when I was leading and serving at SendGrid, and I have just always believed, like, building businesses, the hardest thing to do is to align masses of humans, so many people to work in a coordinated and orchestrated way towards a singular goal. That is really effing hard to do, man. And every every CEO listening is like, yep. They hear that. They know that. That is the hard bit. And I have found it was a strategic competitive advantage if your team, if your humans actually liked each other, if they actually cared about each other, and they thought of each other as teammates and not colleagues. And the reason, Harry, is that teammates work harder for each other. They're not working for themselves. They're working for their teammates, and they're working for their team. And you never wanna effing let down your teammates. [00:42:08] S1: I get you. I obviously agree. You can't disagree. But then how do I then put that into practice to turn coworkers and colleagues into teammates? What can be done?