The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:28:59 · Nick Shalek, Harry Stebbings
[00:28:59] S1: I was talking earlier about the value of being thesis driven. You know, another way of saying this is sort of pointing out that you want to pre negotiate the ideas in your mind. When we underwrite an investment, we work really hard to imagine these types of scenarios. And often, like you live through them in small ways with these companies or with other companies across portfolio. That's what it felt like with Robinhood, like we'd been to this movie before. So I think when you've done that, you don't overreact even in a frightening situation, feel like, you know, we understand this business, we've done the work, and let's be steadfast, and the right kind of partner is not the kind of partners who, you know, suddenly try to re examine everything that they know to be true. I think there's a lot of things actually about being a sector focused fund that are a disadvantage that people think are advantage like expertise that we talked about earlier, because, you can become way too full of your own ideas, and you miss that the best companies are often have some very core simple insight. But one of the advantages of being a sector focused fund or a focus firm in general is you can really underwrite and get to know companies and a theme. And I think that can make you steadier as an investor over a long period of time. [00:30:01] S0: I do wanna move into my favorite though, Nick, which is a quick fire. So I say a short statement and you give me your immediate thoughts. Does that sound okay? [00:30:07] S1: Sounds great. Okay. So what's the favorite
00:30:07 · Nick Shalek, Harry Stebbings
[00:30:07] S1: Sounds great. Okay. So what's the favorite [00:30:09] S0: book and why? What must you be reading on the summer holidays? [00:30:11] S1: You know, really I love fiction. So if you ask favorite book, I'd say something like East of Eden or All the Kingsmen just because I think they're timeless parables and beautifully written and fun to read and reread. But if you want something about FinTech and innovation or entrepreneurship, think I a great thing to read is a piece of the action, which is Joe Nocera wrote this book about financial innovation in America over the twentieth century. And one of the reasons I love it is it just reminds you, like, I think a lot of good business history that nothing is new. Like before Robinhood, there was Schwab. And before Stripe, there was Visa. And before Chime, was there Bank of America and on and on. Very well researched and written with great pacing. [00:30:45] S0: You are also the first person on the show to suggest that. That's a great moment for me. Tell me, when you think back at the Ribbit journey, what would you have done differently?
00:30:45 · Harry Stebbings, Nick Shalek
[00:30:45] S0: You are also the first person on the show to suggest that. That's a great moment for me. Tell me, when you think back at the Ribbit journey, what would you have done differently? [00:30:52] S1: Yeah, it's easy to say because hindsight is twenty twenty. But I would have done more of the things that we knew we should do. Like the biggest manifestation of this is we could have been even more concentrated in the companies that we really believed in. We've done plenty of doubling down on our winners, but I would try to do it even more. Some of this is classic bull market thinking, but I think the signal was really strong after working with companies even for a matter of months. Other than that, I think most of what I would have done differently fits in the bucket we talked about earlier, where we just had the wrong idea about something or about a company and we did an armchair underwriting. It's fine to have boundaries in places where defocus, but you also need to just go meet the founders and hear it from them. And our worst mistakes have been where we sort of judge from afar rather than finding ways to dive in with real curiosity. What's been [00:31:33] S0: your biggest miss and how did it come about, Nick?
00:31:33 · Harry Stebbings, Nick Shalek
[00:31:33] S0: your biggest miss and how did it come about, Nick? [00:31:35] S1: Yeah, the biggest miss has been in payments. We've ended up making large investments in payments. But early on at Ribbit, we had the opportunity to invest in in stone and Adyen and Stripe, you know, in a number of companies that are relatively early stage. And we said we're not doing payments right now. Yeah, that allowed us to focus on a number of other things. So you can't really run the counterfactual. But again, I think the miss was we had an idea. And we wanted to stick to that idea rather than just really go and listen and look where the data would take us. [00:32:03] S0: Tell me, what do you know now that you wish you'd known at the start of your career adventure? [00:32:06] S1: Oh, there's a lot. I'll give you two. Yeah, there's the platitude that you have two ears and one mouth, and you should use them in proportion. And in the early days, I thought I needed to have an opinion on everything. And that's how I could provide value, especially since I was young, I didn't have a track record building a huge company, I felt like I needed to have a strategic view on any topic. It's simply not true. And worse, it's counterproductive, since no matter how smart you are, your job as a VC is to cajole and challenge and suggest, but you can't possibly have the answers since you're so much further from the customers than the entrepreneurs. But secondly, if I was giving myself advice, I'd just say buy more Bitcoin.
00:32:06 · Nick Shalek, Harry Stebbings
[00:32:06] S1: Oh, there's a lot. I'll give you two. Yeah, there's the platitude that you have two ears and one mouth, and you should use them in proportion. And in the early days, I thought I needed to have an opinion on everything. And that's how I could provide value, especially since I was young, I didn't have a track record building a huge company, I felt like I needed to have a strategic view on any topic. It's simply not true. And worse, it's counterproductive, since no matter how smart you are, your job as a VC is to cajole and challenge and suggest, but you can't possibly have the answers since you're so much further from the customers than the entrepreneurs. But secondly, if I was giving myself advice, I'd just say buy more Bitcoin. [00:32:41] S0: Well, I mean, that was actually gonna be my next question is like, Ribbit invested fund one directly into Bitcoin. Talk to me about that process and
00:32:48 · Nick Shalek
[00:32:48] S1: the decision there. Yeah. Very early at Ribbit, we were working in the office for Micky's old company, and it was me and Micky and Wences, Micky's longtime business partner. And Micky and Wences just wouldn't shut up about Bitcoin. It was, you know, very fringe, and I thought they might be out of their minds. But for two long time fintech founders from Venezuela and Argentina, it was just mind blowing that there might be a global digital non sovereign form of money, and that you could transact with it fully peer to peer without any financial institution in the middle. They both lived through hyperinflation. So it wasn't a weird idea to them that the currency of record in your country might not be a reliable store of value. Yeah, I'd worked briefly on Facebook credits. So I knew some of the problems of trying to build a centralized digital currency. But when Micky started making noises about buying it in the fund, and I said, Alright, if we're gonna do that, like we better write a letter to our LPs about what Bitcoin is and why. Yeah, I spent a few weeks on that and myself have been kind of hooked on crypto ever since and convinced that, you know, it's one of the best risk adjusted bets you can make anywhere in the world. A lot of people have asked like how we thought about buying crypto in the funds, which other firms just felt like they couldn't do. Know, at the end of the day, think you get the investors, you know, the reactions you asked for, like, we always told our LPs, we might do unexpected things, so long as they were great investments. And it turns out Bitcoin was just the first of many to come like that. And we took the risk, but we also... We've been fortunate to have amazing partners from the start who trusted us.