The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:55:45 · Harry Stebbings, David Tisch
[00:55:45] S1: To be clear, you did just raise, what, $5.50 across two funds. I mean, the scale Yeah. The scale has changed. [00:55:53] S0: Sure. But the same exact investment style. And I think we see founders today come to us and say, you're doing the same... Like, you're you're exactly where you were ten years ago when I started my last company. Maybe the check size is different, but we are not... We as a firm, our DNA, our craft is oriented towards being there at the very beginning, at the dream stage. And that to me is, like, what I wake up and get excited about. And I think that when you look at new venture firms, their ambition is to be a multistage firm for the most part. And that's a very competitive part of the market. [00:56:25] S1: It is. I don't actually think they know what their dream is. And I know I know... And what I mean by that is, like, you know, one thing I would say to young people, I sound really old, is, like, be careful what you wish for because you might just get it. And I think the truth is if you know the people at the multistage firms, a lot of them are not happy, the ones who are running it, and wish they were the smaller firms.
00:56:44 · David Tisch
[00:56:44] S0: Yeah. But I think I think I think there are different form factors of the multistate firm. I think you see benchmark scaled today, USV scaled today, and the DNA inside of those firms and the relationships inside of those firms are very different than some of your other scaled firms. I think what Conviction has done is amazing and skilled. I think what Ribbit's done is amazing and skilled. And then you go to Thrive. Like, Thrive has created a generational venture firm in a different flavor, in a rapid amount of time, and challenges at the very top of venture. And I think the way that they've built that firm is so different than, again, your traditional multistage firms. And so I don't think it's as simple as categorizing every firm is the same. I think you have to look at each firm individually and the execution of how they've done it. I think like what Daniel and Nat had done for the moment that was incredible. And what Allot has done is incredible. All those firms I just mentioned are new in the grand scheme of things, I guess Benchmark and USV are not, but the other ones are new. And the speed at which they've gotten to where they've gotten is incredible. And the quality of what they've built is incredible. And that was ambitious. And I think when you look at the new firms today, I think the ones that are great are going to execute great and have real ambition and make a real space for themselves in this industry. And the rest of them are going to go away.
00:58:08 · Harry Stebbings, David Tisch
[00:58:08] S1: When you think about finding, picking, and winning, if I were to ask you to review yourself, one through three, one being best, two being mediocre, three being worst, how would you review yourself? [00:58:20] S0: I just think we're mid constantly. No. That's what the kids say. Our obsession at our firm is to see things. We all wake up every day and try to see. I think we see somewhere between 5075% of what we wanna see. That's my guess. Hard to know, but we can always be better there. There's like always something out there that we didn't see that we want to see. Getting in front of people, finding a way, not just to get in front of them, but for them to take you seriously. That's like what we wake up and obsess over. Winning, when you don't win, it hurts. That's like a, what could we have done better? It is the area in venture I think you can tactically work to improve. You can try different things. You can, like, figure out what you can do better. And I think we spend a lot of time on that. [00:59:13] S1: What has that led to? You spent a lot of time on that. What have you changed as a result?
00:59:18 · David Tisch
[00:59:18] S0: Everything. I mean, you you have to know what tactics to bring to the fight. That's like reading a room and guessing which playbook of really relationship building that you want to use. What does a founder want from you? What are they looking for? And how do you convince them that you are the answer to what they're looking for? And it really is so founder dependent. Like there are certain founders that don't want to talk a lot. There are certain founders that want transactional help. There are certain founders that want a friend, that wanted a set of experience, that want somebody who is around all the time to bounce things. Like, it's a services industry. And so the win condition to me is selling your service to the point where a founder wants it. And that's complicated, especially in this market. The picking is the art of this business. And it's so hard. You can look at our firm from afar and assume we say yes more than other firms. We don't. We are hyper focused on saying yes when we should. But that's a really, really hard thing to do at the early stage in real time. And I like want to tell you I know how to get better at that, or we can get better at that. And yet, like, there comes a point when you're in your career and you've seen enough reps that your taste is your taste. And you're gonna say yes. You're like butterflies show up. You're gonna say yes. They don't. You're gonna say no. You can convince... We think about how to make the right decision a lot and don't know the tactics to get better at it.
01:00:55 · Harry Stebbings, David Tisch
[01:00:55] S1: David, how many companies do you meet a week as a firm? A lot. [01:00:58] S0: 50 to a 100. [01:01:00] S1: So people are meeting 20 companies a week? [01:01:02] S0: Yeah. At least. [01:01:03] S1: And then every Monday you come for an IC and you talk about the five best? Tuesdays and Thursdays. Twice a week. [01:01:11] S0: We use Mondays for work. No, we are agile with our decision making. I think group think is terrible. We don't vote. Somebody here has to want to do a deal if we're gonna do it. Somebody needs to be like, this is something that I am excited about and I think we should do. And so I think decisions start with a human on our side being excited about something. Whether that happens inside or outside our meeting is not important. If we get to our meeting and one of my partners is like, I did a deal yesterday. Great. And equally so, like, I'm leaning into this. I want to talk through it. Great. We internally don't allow negativity in making early stage decisions. [01:01:55] S1: What do you mean by that? [01:01:56] S0: If you aren't the person that has spent time with the founders, you aren't allowed to be negative about it. [01:02:03] S1: But what if you know something about the market that you feel the- I don't think anybody knows anything about markets at the
01:02:03 · Harry Stebbings, David Tisch
[01:02:03] S1: But what if you know something about the market that you feel the- I don't think anybody knows anything about markets at the [01:02:08] S0: early stage. Markets evolve. If you know something about the founders, but we probably diligence that before we're taking meetings and leaning into something. Like if there are ethical issues, if there's reputational issues with a founder, I think that is an important thing to share. We don't allow grenades at early stage. You're not allowed to throw a grenade on someone else's deal. Our job is to get to yes. If you name a company at early stage, I can tell you why it's gonna fail. Any company. Here are the five risk conditions, and here's why it's gonna fail. The easiest thing to do if you've done this for, like, a year, you can guess why a company's gonna fail. Your memos that every firm writes are very obvious why it's not gonna work. That's not the job. And by the way, on a probability basis, it's not gonna work. Because 70, 90, whatever the number is, percent of early stage companies don't work. So you explaining why something isn't gonna work is incredibly obvious and incredibly irrelevant. The magic of our business is is squinting and seeing why something is going to work. By believing in the thing that you see that the founder sees that you are aligned with the founder and seeing is going to work and saying yes. Our job is to say yes to the right things, not to be fearful of saying yes to the ones that don't work.