The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:31:25 · Harry Stebbings, David Tisch
[00:31:25] S1: You do 50 companies a year? [00:31:27] S0: A little more, probably. [00:31:29] S1: David, do you remember them all? [00:31:31] S0: Yeah. I don't know what the other people who do one to two deals a year do all day. Podcast. [00:31:36] S1: Podcast. Sounds [00:31:40] S0: lovely. But there are LPs that don't believe in our math. Our math works. I know our math works. I see our math and I think our partners also believe our math works and that's awesome. Because our model's terrible if the mouth doesn't work. [00:31:54] S1: From a liquid returns basis, what has been the single best investment? [00:31:58] S0: We were fortunate enough to have met Cursor sort of before they were working on the business that scaled, and my partner, Claire, got to know Michael when they were investing on Dorm Room Fund together, and we were in the earliest round [00:32:14] S1: of Cursor. Did that return the fund? [00:32:16] S0: Yes. Multiple times. [00:32:18] S1: Yeah. I told you this model doesn't work, David. I know. You didn't listen. [00:32:22] S0: I know. I gotta I gotta do better math. Well, our Excel sheet broke. I tried to update it one day and Do do you [00:32:29] S1: know what's astonishing with that? And I'm really pleased you chose that actually as an example, which is the speed to that enterprise value. At four years. I thought thought every LP was moaning that Venture's taking too long. Now we're seeing OpenRuder. Was OpenRuder one of yours? It was not. Oh, bugger. It wasn't my one. Know. [00:32:45] S0: Next time.
00:32:45 · David Tisch, Harry Stebbings
[00:32:45] S0: Next time. [00:32:46] S1: Next time. But, like, you know, this was, whatever, two two years to $8,000,000,000?
00:32:46 · Harry Stebbings, David Tisch
[00:32:46] S1: Next time. But, like, you know, this was, whatever, two two years to $8,000,000,000? [00:32:51] S0: Yeah, I think the speed of company creation, growth, explosion is different. And I also think underlying, like, blessed to have been an early part of the Cursor story. And I think, you know, what they did and accomplished is truly sensational and it's generational outcome. It's the biggest venture M and A deal in history. We were just lucky to have been there early. Underlying, like in the fund that Cursor sits in, in the early stage fund that Cursor sits in, for me, what I love is there's 10 other companies that are fascinating, and they're just taking a slightly more reasonable timeline to grow and compound. Do I think any of them will get to the accomplishment of how big and great Cursor was? I don't know. And that's not like a binary, they did it or didn't. But I think what you have to appreciate in this early stage investing is that things take time. We were the earliest investor in a company called Clay. Clay is a bumpy four year road to explosive growth and now is growing and compounding what they're doing in an amazing way. But it's not a clean, story. And I think it takes learning and it takes iteration and developing their go to market that got them to where they're at today. We're in the seed round of Baseten. You needed inference to sort of become a space. And Baseten today is a full outlier company, and they're running at full speed and sort of hitting that hockey stick fully. But it wasn't this just start up into the right.
00:34:29 · Harry Stebbings
[00:34:29] S1: Do you think the best companies are generally immediately obvious? Or do you think actually the value is generally actually in the messy middle and the ones you don't expect?
00:34:39 · David Tisch
[00:34:39] S0: I think there are signs early on that a founder is running the experiment at a world class level. And that is either they are hiring total outlier people to join them quickly. They are finding customers that are inaccessible early. And you're almost confused as to how they're getting so far ahead so quickly. And it's a lot of the time, some combination of the product and the go to market conversations that they're having, or they pick the right idea. But I think there are always challenges and bumps and sometimes those are prolonged and sometimes those are immediate. And so what you're really identifying is can this founding team navigate? Again, like I think the market is so complicated today. We spend time and we ask young people, we go to college campuses a lot. And we were up at Harvard and MIT recently and talking to undergrads. And I asked, like, raise your hand if you have a vision for what the world is in ten years, which is our job. And which if you go back in time, young people, old people, there was like, I can see what the world's like in ten years or or some guess of it. No hands went up. And I'm like, five years? One hand. Two years. That's when you started to get some hands. And I think that's what people are feeling today is uncertainty as to the timelines of what the future looks like. And when you're in this moment of AI and you have people saying we're all about to die from AI and you have other people saying we're entering an age of abundance and free flowing markets that will change the way labor forces work like that's a pretty wide gap between the prediction of the future. And then you have the models rolling out frequently with major innovations that in some way are important to a subset of companies. But in the end, not every company is going to need the cutting edge, bleeding edge model. And so you're watching this age of AI deployment, AI adoption, and it's going to impact people differently at different speeds. So it's complicated. And then you're seeing AI impact the physical world, science, all these spaces that felt hard to access before that are getting opened up because of this horizontal technology shift. So there's just a ton of uncertainty. I think you feel it in the public markets. You see it with compute access, compute pricing, energy, data centers, the politics around all of it. This is complicated.
00:37:04 · David Tisch, Harry Stebbings
And so when you're asked to predict the future, I don't know that anybody sits here today and actually has an answer. And it's cool that people come on podcasts or tweet or do whatever they do and say like, I know where the world's going. And you're like, no, you don't. So I think what you're looking for in today's founders are people that are capable of real time navigating ever changing conditions that are insanely fast and insanely complicated. And so to your question of like, do you fund somebody and know it immediately? No, Because I think the world's changing too quickly today for that to be a condition. [00:37:42] S1: Do you think the founders that succeed today are different to those in the past? Yeah. If I look at the founders, I mean, they're inherently a lot more technical. There's a lot fewer sales led founders today than there are