The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:04:30 · Harry Stebbings, Erik Bernhardsson
[00:04:30] S1: No. I didn't, but I would have welcomed Demesti in another suite. I wanted to start with... I was talking to Zach Frankel last night, and he said about your childhood and, like, early indicators of success and, like, exceptional ability. How did you fall in love with technology? And for me as an investor, what would have made me excited in seeing your childhood? [00:04:50] S0: I started coding 1992 or something like that. I was eight. I just loved it. You know? It's like one of those things. I realized you can control computers. I had a Mac Plus, you know, one megabyte of RAM or whatever. And, yeah, I started making games and, like... I mean, they were terrible. But, you know, it's just... I think back at, like... In a way, I'm, like, so grateful. I look back at, like, my childhood. My friends, they were, like, collecting hockey cards or whatever. That was, like, their hobby. My hobby was programming, and and now I make a lot of money from it. Isn't that kinda create... Like, you know you know when you think about it? Like, the fact that I can make a lot of money, like, doing what what was my hobby since I was eight? Kinda nuts. So I I... I'm just so grateful about, you know, the fact that I fell in love with technology and coding, and then I started doing programming competitions when I was 16, 17, and so much fun. [00:05:35] S1: Modal was your first company, or is your first company. Why did it take so long?
00:05:35 · Harry Stebbings, Erik Bernhardsson
[00:05:35] S1: Modal was your first company, or is your first company. Why did it take so long? [00:05:40] S0: I think the consistent pattern in my life is like I never had quite enough confidence in myself. And a lot of it that was missing was just the confidence, a little bit the money too. So it wasn't until I was like 'thirty six, 'thirty seven I started Modal. And I think, I don't think I've ever wanted to necessarily start a company. It was like one of those things where like, I just saw this big opportunity in the market. I almost thought to myself, like, why is no one else doing this? Such an obvious idea. And that led me to think, like, maybe I should start a company. And then, you know, five years later, here we are. It's gone pretty well. I think in hindsight, maybe I should have started much earlier. [00:06:14] S1: Do you wish you had? [00:06:15] S0: I look at some of these, like, Stanford kids, and they're, like, 21, and, like, I kinda feel they maybe have too much confidence. You know what I mean? Like, they're, like, you know, think they're gonna take over the world, and they're 21. I think the ideal age is maybe, like, I don't know, 32 or something like that. You have a little bit more experience. You know how to navigate people. You know how to hire people. You know how to fire people, like all these things. I don't know if I would have been a good founder, like, in my twenties.
00:06:15 · Erik Bernhardsson, Harry Stebbings
[00:06:15] S0: I look at some of these, like, Stanford kids, and they're, like, 21, and, like, I kinda feel they maybe have too much confidence. You know what I mean? Like, they're, like, you know, think they're gonna take over the world, and they're 21. I think the ideal age is maybe, like, I don't know, 32 or something like that. You have a little bit more experience. You know how to navigate people. You know how to hire people. You know how to fire people, like all these things. I don't know if I would have been a good founder, like, in my twenties. [00:06:37] S1: Before we get into the market and everything beneath that, we were chatting downstairs, we often hear that founding companies is like eating glass. It's hard. It's painful. How do you feel about those?
00:06:37 · Harry Stebbings, Erik Bernhardsson
[00:06:37] S1: Before we get into the market and everything beneath that, we were chatting downstairs, we often hear that founding companies is like eating glass. It's hard. It's painful. How do you feel about those? [00:06:47] S0: Dude, hate that stuff. It's like, I don't get it. Like, you're eating glass, like, every day. Like, why are you doing it then? Like, I don't know. You expect some, like, magic reward, like some big cookie in the end? Like, I never understood that mindset. I I think it's like this mindset that a lot of people have. I'm gonna suffer pain, and then there's gonna be this big reward in the end. I don't know. I don't think about it that way. I enjoy every day I go to work. Of course, there's, like, hard times. Like, there's, you know, you have to have hard conversations, maybe fire people, maybe, like, do hard things. But, like, in the grand scheme of things, like, I mean, such is life, and I enjoy life. I I enjoy building a company. And I don't I don't think of it as like one day we're gonna flip this company and be... I I hope to work on this for twenty, thirty, forty, fifty years. I'm having so much fun. I don't wanna sell this company because I would just go and start model two. You really wouldn't. Yeah. [00:07:29] S1: I [00:07:29] S0: don't I think money necessarily makes you happy. I mean, little bit. Like, it's good to have some money, but, you know, be on a point. Like, what... You know? I like building stuff. I love technology. I love coding. So much fun. [00:07:39] S1: You're such a sweet...
00:07:39 · Harry Stebbings, Erik Bernhardsson
[00:07:39] S1: You're such a sweet... [00:07:41] S0: Is that is that Swedish is that Swedish mentality? Maybe it is. [00:07:43] S1: Yeah. Dude, never has an American come on before and said it's not about money. I mean, I do care [00:07:48] S0: about money a little bit, but maybe you're right. Because I do think in Swedish mentality, it's like self actualization. Like, doing what you enjoy is kind of the highest form of prestige in a certain way. And it could be music, it could be poetry, whatever. It almost doesn't matter. What do you do that you don't enjoy? Yeah. I kinda hate fundraising, honestly. I mean, it's fine, I don't know. I enjoy it when there's good people, but it's kinda challenging. You have to say no to a lot people. I guess that's a good problem to have. But in general, it's Oh, you have [00:08:14] S1: to say no to a lot of people? Oh, Erik, [00:08:16] S0: what's I know, I know, that's a horrible thing. [00:08:18] S1: Oh, you can [00:08:19] S0: only have [00:08:20] S1: 10,000,000 not [00:08:21] S0: $50,000,000 [00:08:22] S1: You've never done a deck, have you?
00:08:22 · Harry Stebbings, Erik Bernhardsson
[00:08:22] S1: You've never done a deck, have you? [00:08:25] S0: I've never made a pitch deck, yeah. Every round we've done so far, I like to get to know people well in advance of raising money. So every round we've done, I mean most recently we announced a d round yesterday with Accel. I've been speaking to Rich and Gonzalo at Accel for I think at least a year. And at some point, we're like, actually, you know what? We could take some money. Like, what are the terms? Like, let's discuss terms. And then it happened very quickly because we already had that relationship. [00:08:51] S1: How do you think about price optimization? Is it a game of getting the highest price? [00:08:55] S0: No. I don't think so. I I think maybe in later stages, it becomes a little bit more of a commodity, like the money itself. But I I think in the early days, like, I mean, for for several reasons. Like, one is that there's a misalignment in Senate. Like, VCs always wanna put in way more money than a company needs. And that, you know, you just take on a lot of dilution. It's not good as a shareholder. But the other thing is, like, you actually wanna hold back, I think, and and it's often better to raise a lot less money at a lower valuation and then keep the VCs hungry for the next round. [00:09:21] S1: Is this not the generation, though, where actually capital is the moat and you need so much more money than you think? You said that VCs wanna give you more money than the company needs. I thought AI was finally the output exhaust for venture dollars that was needed.