The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:00:00 · David Tisch
[00:00:00] S0: I've never understood trying to compete head to head against who I would deem to be the best VCs in the world. Every concentrated manager will say that we win 90% of the deals we wanna win, and I think that's total BS. I think it's like 20%. I think the lean startup was a total fake. There's people to me right now, and this happens in hot market conditions that are playing a short game. I believe the right to invest in subsequent rounds is earned. I work for our LPs, and my customers are founders. We don't allow grenades at early stage. You're not allowed to throw a grenade on someone else's deal.
00:00:39 · Harry Stebbings
[00:00:39] S1: This is 20 VC with me, Harry Stebbings. Now over years, me and David Tisch have done many shows, and I've always questioned his model. Low ownerships, very diverse portfolios. And you know what? I was wrong, and I was wrong on many different accounts. David has absolutely crushed it. Yes. He was an investor in Cursor from one of their earliest rounds to a $60,000,000,000 sale to mister Elon Musk and X. What an incredible outcome that was for David and Box returning the fund multiple times, but he's done it with so many companies from Baseten to Clay to Rogo. David has crushed. He's one of the best early stage investors of our time. He's a true craftsman in a world where everyone has become a capital accumulation machine. David is one of the best. This was a phenomenal discussion, and I can't thank David enough for being so open. And in all honest, willing to go against the grain with some of the things he said today. I loved making this happen. But before we dive into the show today, what do Uber, Cursor, and Harvey have in common? Well, they made the really wise decision to build on Fireworks. Fireworks is the specialized intelligence platform behind many of the world's leading AI products. Companies use Fireworks to deploy the latest open models, specialize them with their own data, and run them in production with the speed and reliability modern AI applications demand. But getting models into production is only the beginning. As AI usage scales, the best model for one request isn't always the best model for the next. Well, that's where Fireworks Nexus comes in. Nexus connects to the AI coding tools and harnesses your engineers already use and intelligently routes each request to the best model for the job, helping you optimize for quality, latency, and cost without changing how your engineers work. To see intelligent model routing and practice, visit fireworks.ai/20vc to create a free account, and use the promo code two zero v c 50 to claim $50 in credits for 20 v c 50. While Fireworks powers AI, Larridin helps you measure its impact. Every company now runs two workforces, humans and AI agents. Larridin is the first unified dashboard across both workforces that measures their work and optimizes their impact. Larridin answers four questions. Who's using AI? Which tools? What is it costing?
00:03:04 · Harry Stebbings
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00:04:42 · David Tisch, Harry Stebbings
[00:04:42] S0: Thanks for having me back. Nothing's happened in between the past two and a half years and now, so we can just sort of regurgitate all the old conversations. [00:04:50] S1: Has our job completely changed, David? [00:04:52] S0: In some ways, totally. And in other ways, not. I think, you know, I've been doing early stage investing for seventeen years now, which makes me old. And I think a lot of the times people try to relate the current moment to a historical moment. So, you know, is this like 2021? To me, no. It has nothing to do with '21. It's a totally separate moment. And this one's funky and interesting and maybe frothy, maybe insane, whatever it is. But it's a standalone new market condition that you have to figure out in today's world. Because in '21, there were a bunch of other factors, macro micro, that were creating that environment. And if you go back to, you know, '18 and '15 and 2010, each one of these moments are just different. And so I could argue our job has totally changed and equally explain that our job is just to do whatever the current market conditions present. And the actual job is, like, see, meet, get to know great founders, make a decision, should we invest or not, and beg them to take your money. That's the the funnel that we operate in.
00:04:52 · David Tisch, Harry Stebbings
[00:04:52] S0: In some ways, totally. And in other ways, not. I think, you know, I've been doing early stage investing for seventeen years now, which makes me old. And I think a lot of the times people try to relate the current moment to a historical moment. So, you know, is this like 2021? To me, no. It has nothing to do with '21. It's a totally separate moment. And this one's funky and interesting and maybe frothy, maybe insane, whatever it is. But it's a standalone new market condition that you have to figure out in today's world. Because in '21, there were a bunch of other factors, macro micro, that were creating that environment. And if you go back to, you know, '18 and '15 and 2010, each one of these moments are just different. And so I could argue our job has totally changed and equally explain that our job is just to do whatever the current market conditions present. And the actual job is, like, see, meet, get to know great founders, make a decision, should we invest or not, and beg them to take your money. That's the the funnel that we operate in. [00:06:02] S1: I I totally agree with you there. In 2021, I think we can acknowledge it was just incredibly bubble like. It was a good time to sell. It was a bad time to buy. There was no fundamental technology innovation. There was short term behavioral change with COVID in different respects, communications, buying. Everyone says, well, now starting to feel like 2021. Are you in that camp of the craziness is real, or are you in the camp of no? We are so early, and there is so much room to run.
00:06:31 · David Tisch
[00:06:31] S0: I don't think it's as simple as that. I think in each one of these moments, there are good companies and bad companies. And so as a VC generally, and especially as an early stage VC, I think the macro is less impactful than the micro. Is the company that I am fortunate enough to be an investor in the good one? Is it the great one? Is it the most important one? That transcends the macro. And the macro to me is like a portfolio analysis. It's a industry analysis, but it doesn't come down to a specific company analysis. So do I think there are, you know, not perfect companies raising a lot of money at big valuations? Yeah. But I don't know that that's ever not the case. And I think you've seen it historically in our industry. There are incredibly public blowups of some of these companies that happen in catastrophically messy ways. It sometimes create TV shows or movies or documentaries. And then there's companies that die quietly in the night. But I think underlying all of these moments of of brothiness are probably a handful to a lot of great companies that are building high quality businesses, and they're doing it in, you know, a long term oriented way. Are they raising money quicker? Are they raising money less dilutively? Are they doing it at big valuations? But I don't think that that is a, like, industry wide harmful set of conditions. It's just, is this company a great company? Can this founder, can these founders navigate incredibly complex changing environments almost in real time today to create an enormous amount of value that I think you are, to your point, in the early innings of a deployment of a horizontal new technology that will have tremendous impacts. But like all other technologies, what you see is this initial wave of impact, initial set of reactions, some version of plateauing, more innovation, plateau, innovation, plateau. The difference this time is those cycles are like two to three months. It's the new model release. It's the new revenue growth of a vertical AI business. It's a huge M and A deal. All these moments create these mini cycles that feel like they have waves across the industry.