The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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
00:37:42 · Harry Stebbings, David Tisch
[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 [00:37:56] S0: You're in a moment of that. Right? And so the question to me is, like, if you're an early stage investor, is there two years out when actually sales matter again in some way and go to market becomes a differentiator? And if that's the answer, you should fund those people today because their exposure to the bigger markets is not gonna be as purely relevant for like one to four years when their company is a bit further along, their product's ready. And so if that is your bet, it actually makes sense to start rotating a little differently today than... You can't, as an early stage investor, solve an immediate opportunity or need, nothing goes fast enough. But I do. I think the founders today are more technical, in a non offensive way, smarter than ever before. I think there's less opportunity for mediocrity to succeed. And you can't just identify a gap in a business market and go attack it with laissez faire approaches. You have to be so good in order to win right now. And, you know, you saw, I don't know if you saw the Scott Wu video that went viral where he's doing Counting a Cut. You're like, I can't compete with that. [00:39:05] S1: I saw a great one, which is Cognition is just a rapper around Scott Wu.
00:39:05 · Harry Stebbings, David Tisch
[00:39:05] S1: I saw a great one, which is Cognition is just a rapper around Scott Wu. [00:39:09] S0: But you have to, if you look at every company right now that, to me is becoming an outlier, the founder quality of each of them is really, really impressive. There was an era where like everybody was told you should start a company. Everybody should start a company. And I don't think we're there anymore. I think it's, can everybody start a business? Sure. And I think that's okay. And I think the word company and business are in some way different. And Venture Capital for probably ten years was funding a lot of categories that were not capable of becoming as big as maybe you thought at the beginning, because what they were aiming for was a bit smaller. I think today, the appetite for scale from the venture product is uncompromisable because you need to get huge to make the mouth work. And I think the founders' ambitions today are A, huge, and B, the opportunity set feels unlimited. [00:40:10] S1: I don't want to, like, single out a company, but it's a company that we both know and everyone will know, which is testament to its success. But would you fund, like, a Harry's today?
00:40:10 · Harry Stebbings, David Tisch
[00:40:10] S1: I don't want to, like, single out a company, but it's a company that we both know and everyone will know, which is testament to its success. But would you fund, like, a Harry's today? [00:40:20] S0: I think Jeff and Andy from Harry's are world class founders that if you put inside of any company, they would build something of importance and of meaning. We at Box Group have stopped funding brands, not because I actually think they're small. I don't think you can fund brands at Seed. Because brands to me are built off of your initial data set of like, does the brand resonate? Does the product resonate? Do people buy it? Do you have like customer LTV or CAC to LTV ratios that make sense? And you don't get any of that data at seed. I think one of like the more interesting investor products out there is like doing brand investing at Series I don't think it fits in your traditional venture firms today, but I think there's a subset of investors that fund brands. If you look at the beverage industry is a great example. If you look at some of the QSRs, if you look at personal care, there are scaling brands that are fascinating business. I just don't think where we sit today, we're equipped to invest pre momentum. [00:41:27] S1: Can I ask one thing that I see, you said it's very much a founder's market earlier? They can choose the price they want with the people they want. To me, it's like a real haves and have nots, which is like there are three categories where if you're in that category, how
00:41:27 · Harry Stebbings, David Tisch
[00:41:27] S1: Can I ask one thing that I see, you said it's very much a founder's market earlier? They can choose the price they want with the people they want. To me, it's like a real haves and have nots, which is like there are three categories where if you're in that category, how [00:41:39] S0: There categories of haves and have nots. That's... You only named two. [00:41:43] S1: No. Three categories of interesting company that investors just go nuts for. And then, obviously, it's more than three, but a small number. And if you're not in that, even if you are in AI four x, investors are, nah. Not interesting. Not in compute. Not in inference. Nah. Not in data centers. Not in chips. Whatever. And you're instantly dismissed. Do you see that too? [00:42:04] S0: Yes. But I, again, come back to founder quality and founder ambition and execution. So we were in the earliest round of a company called Rogo. They were building AI for finance. Gabe finally told the story. But after the seed round, I helped them go out to try to raise an A. I put my name behind this company fully, and I'm like, Rogo is going after something huge, and Gabe is sensational. And I sent it out to make up a number. He said 40. 40 Series A lead investors. He got fully passed on by 39 of them. Did Keith do [00:42:37] S1: that round? [00:42:38] S0: Keith did that round. So 39 nos. This is now a consensus company. It has now been funded by Keith led the A, Sequoia did it, Kleiner did it. [00:42:50] S1: Do you doubt yourself? Yeah. You do, or you just think, God, the mimicry of this market's ridiculous?