The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:34:10 · Rory O'Driscoll, Harry Stebbings, Jason Lemkin
[00:34:10] S1: in a nutshell, it is the JEV opportunity. It's not quite one for one, but, yeah, you're right. [00:34:15] S2: I'm I'm going slightly off on a tangent on this, but people do like it when we talk about Venture. It was a $40,000,000 seed round for JEV. And, you know, I just had a conversation with my team right before this, and they're like, dude, we never see anything less than a $20,000,000 first raise for anything anymore. The seed rounds, minimum are, like, eight to 10 with someone spinning out of a good company. Are we seeing the evaporating of traditional seed? [00:34:39] S0: Why do you think Andreessen just did a university? They need to go pre inception. You think I'm kidding? No. Mean, finally someone figured out that Peter Thiel got this right eighteen years ago at the Thiel Fellowship and the dorm room fund, which sort of did cursor. You got to go pre inception if you want to do seed now. Inception Inception's too expensive. You got to go pre inception. But Andreessen Horowitz did launch Horowitz Andreessen University today with $40,000,000 to do pre inception investing, right? To do the Thiel Fellowship on steroids. I think it's a very rational response to your point. But I do think Peter Thiel saw this space before anybody did and executed. The only thing he didn't want to do was scale it up. He didn't want to build a Thiel Rabois University like Horowitz and Dreeson. He just didn't want to scale it It could have been. I mean, they have the best people in the Thiel fellowship. They get the best... Today too, they get the best people.
00:34:39 · Jason Lemkin, Harry Stebbings
[00:34:39] S0: Why do you think Andreessen just did a university? They need to go pre inception. You think I'm kidding? No. Mean, finally someone figured out that Peter Thiel got this right eighteen years ago at the Thiel Fellowship and the dorm room fund, which sort of did cursor. You got to go pre inception if you want to do seed now. Inception Inception's too expensive. You got to go pre inception. But Andreessen Horowitz did launch Horowitz Andreessen University today with $40,000,000 to do pre inception investing, right? To do the Thiel Fellowship on steroids. I think it's a very rational response to your point. But I do think Peter Thiel saw this space before anybody did and executed. The only thing he didn't want to do was scale it up. He didn't want to build a Thiel Rabois University like Horowitz and Dreeson. He just didn't want to scale it It could have been. I mean, they have the best people in the Thiel fellowship. They get the best... Today too, they get the best people. [00:35:32] S2: Do you know what? I I I don't think they do anymore. Think Z fellows get the best today, actually. [00:35:36] S0: Okay. Maybe. [00:35:37] S2: Z fellows gets unbelievably good people.
00:35:37 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[00:35:37] S2: Z fellows gets unbelievably good people. [00:35:39] S0: At the end of day, idea, right? The problem with these things is if you don't put enough people into them, they don't scale. Right? That's why Z Fellows maybe is more interesting than the Thiel Fellowship, and why Horowitz and Dreesen is more... If it's the same as Marching, because you're just putting more resources and things that, you you used to be able to run a fund with a blog. Like that would give you all the deal flow in the world you needed for like five unicorns in a row, but you gotta scale this stuff up, you know? [00:36:01] S2: Now you're on a podcast with a professor. [00:36:03] S1: Yeah, used [00:36:04] S0: be able to just do with a podcast and one dude in a in a in a closet and do just fine. [00:36:08] S2: We haven't answered my question, though, which is I [00:36:10] S1: will go back to your point, Harry. Right? You are correct. Once you go beyond the vigil to even an individual an idea, you're right. You're seeing bigger checks. You you are seeing 20... Look. Think I the TypeScript was... I think it was even bigger. I could be wrong. I think I thought it's almost 40, but I could be wrong. But yes, people are writing bigger checks now up and down the stack.
00:36:10 · Rory O'Driscoll, Jason Lemkin
[00:36:10] S1: will go back to your point, Harry. Right? You are correct. Once you go beyond the vigil to even an individual an idea, you're right. You're seeing bigger checks. You you are seeing 20... Look. Think I the TypeScript was... I think it was even bigger. I could be wrong. I think I thought it's almost 40, but I could be wrong. But yes, people are writing bigger checks now up and down the stack. [00:36:27] S0: Or if you wanna do traditional seed checks, right, you have to tolerate far low... Lower ownership in many cases, not all cases. You can still hunt your own deals, right? And then when you do the math, you got to hunt $25,000,000,000 outcomes. If I'm going to do four into JEV or three into JEV, if JEV exits north of 25,000,000,000 after dilution, I can still do my 100X, right, that I need to do or my 50x, right? But the low ownership for seed works, but man, you need the big outcomes.
00:36:27 · Jason Lemkin, Rory O'Driscoll
[00:36:27] S0: Or if you wanna do traditional seed checks, right, you have to tolerate far low... Lower ownership in many cases, not all cases. You can still hunt your own deals, right? And then when you do the math, you got to hunt $25,000,000,000 outcomes. If I'm going to do four into JEV or three into JEV, if JEV exits north of 25,000,000,000 after dilution, I can still do my 100X, right, that I need to do or my 50x, right? But the low ownership for seed works, but man, you need the big outcomes. [00:36:54] S1: And then the other thing just to take into account that I always feel everyone forgets, right, is discuss on really dorky economics common, but nominal GDP, in other words, just inflation, but inflation plus growth from 2010 to the day is about two and a half x. So, you know, what that means is a $100,000,000 in 2010 is $250,000,000 today. You know, just in terms of your ability to command with money is an ability to command resources, because obviously, software salaries have at least kept up with nominal GDP growth. So what it means is if you were writing five... $3,000,000 checks in 2010, let's do $4,000,000 checks, you should be writing $10,000,000 checks in 2026. That's just math before anything else has changed. Then on top of that, you take into account the fact that in 2010, the world wasn't a shitter, and in 2026, everything in tech looks amazing. You get to 20,000,000 before you blink.
00:36:54 · Rory O'Driscoll, Harry Stebbings
[00:36:54] S1: And then the other thing just to take into account that I always feel everyone forgets, right, is discuss on really dorky economics common, but nominal GDP, in other words, just inflation, but inflation plus growth from 2010 to the day is about two and a half x. So, you know, what that means is a $100,000,000 in 2010 is $250,000,000 today. You know, just in terms of your ability to command with money is an ability to command resources, because obviously, software salaries have at least kept up with nominal GDP growth. So what it means is if you were writing five... $3,000,000 checks in 2010, let's do $4,000,000 checks, you should be writing $10,000,000 checks in 2026. That's just math before anything else has changed. Then on top of that, you take into account the fact that in 2010, the world wasn't a shitter, and in 2026, everything in tech looks amazing. You get to 20,000,000 before you blink. [00:37:49] S2: Would you actually argue then that now is a better time because your check size requirements have gone up two and a half to three x, but the outcome sizes on the back end have gone up significantly more than two and a half to three x when we look at the cursor