The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
01:10:11 · Jason Lemkin, Rory O'Driscoll, Jack Altman
[01:10:11] S2: The only thing I thought about this has to do with NFX. I mean, I get the appeal of investing your own capital, right? And I think frankly, I think anyone investing that has some resources has thought about at least a little If you've got a little bit of money, I'm like, F the L pack and all this while just to invest my own money, especially if I have a hot hand, I'll get into these great deals and you know, I'll get 100% instead of 25% or 20%. Everyone's thought about it. Only thing I always thought about, if it's such a great idea, why didn't Peter Thiel do [01:10:37] S0: it? [01:10:38] S1: Well, Peter Thiel did put a huge amount of his money into each founder's fund. [01:10:41] S2: But not all but not all of it. [01:10:42] S1: Right? No. Not all of it. I think [01:10:44] S2: It's just an it's just an example, right, [01:10:46] S1: of not doing all of it. Right? I think you're right. Mean, I think what he would say is if you wanna build a firm, you need outside capital. You need salary to pay people. You actually need kind of the tension with stakeholders outside your firm to do it. So I I think if your aspirations are firm building, then you would say, I'm gonna put in as much of my own money as I can because I believe in the strategy, but, you know, as much LP capital as we need. So that would be my guess.
01:10:46 · Jack Altman, Jason Lemkin, Rory O'Driscoll
[01:10:46] S1: of not doing all of it. Right? I think you're right. Mean, I think what he would say is if you wanna build a firm, you need outside capital. You need salary to pay people. You actually need kind of the tension with stakeholders outside your firm to do it. So I I think if your aspirations are firm building, then you would say, I'm gonna put in as much of my own money as I can because I believe in the strategy, but, you know, as much LP capital as we need. So that would be my guess. [01:11:08] S2: Yeah, it's like 30% of the fund that he funds or something like that. But the NFX thing I did notice, I think they said goodbye to the team in the note. So to Jack's point, yeah, it's easier if you don't want to have a team, right? If you don't want to have And a... They have life goals too. It's not just the money. You can fund the salaries, but they have life... I mean, they want to be partners. [01:11:25] S0: I totally agree with what you just said, Jack, Pitt. Like, you're building a firm, you have junior people, they want to have a goal, they want to have a career. You have to take outside money. You got to do all the things. I I think, by the way, the beauty of putting 30% of your own money in is you can look the LPs of the eye and say, thank you for your opinion. But as the largest LP investor here, I'm very comfortable putting 20% of my fund in SpaceX in 2008. So duly noted that you're concerned, but hold that thought for eighteen years and you'll be glad.
01:11:25 · Rory O'Driscoll, Jack Altman
[01:11:25] S0: I totally agree with what you just said, Jack, Pitt. Like, you're building a firm, you have junior people, they want to have a goal, they want to have a career. You have to take outside money. You got to do all the things. I I think, by the way, the beauty of putting 30% of your own money in is you can look the LPs of the eye and say, thank you for your opinion. But as the largest LP investor here, I'm very comfortable putting 20% of my fund in SpaceX in 2008. So duly noted that you're concerned, but hold that thought for eighteen years and you'll be glad. [01:11:51] S1: Yeah. And, you know, by the way, I think a lot of this gets lost. You know, we rarely talk about, you know, LPs and all of those things. But the end result of all of this, you know, venture capital work is hopefully that you're generating money for groups that it matters for and all of those things. And if you're an employee at a firm where it's all the principal's money, you're kind of like a family office where if you do a really good job, you enrich that person versus, you know, hospitals and endowments and all that stuff. Do think people care about that too.
01:11:51 · Jack Altman, Rory O'Driscoll, Harry Stebbings
[01:11:51] S1: Yeah. And, you know, by the way, I think a lot of this gets lost. You know, we rarely talk about, you know, LPs and all of those things. But the end result of all of this, you know, venture capital work is hopefully that you're generating money for groups that it matters for and all of those things. And if you're an employee at a firm where it's all the principal's money, you're kind of like a family office where if you do a really good job, you enrich that person versus, you know, hospitals and endowments and all that stuff. Do think people care about that too. [01:12:20] S0: Agreed. On both sides, I will say just as a comment, you care about it a lot because you want to do really well for your LPs and you also feel the burden of it too, right? Is that, you know, you're not just letting yourself down. I mean, you know, I'm always conscious of the charities that many of our LPs embark on. And I have this mental model, if we're doing wrong, we're doing something that's not working out. I have a couple of charities that are super small, where I'm like, I know exactly where this money goes in some homeless program for teenagers in the Midwest. And I'm like, we're sticking it to them. Okay, people. Let's get back to work and make this happen here. But you're right on that. [01:12:51] S3: Jason, would you ever do this move? I think you're probably the closest to us in doing this move with the greatest of respect.
01:12:51 · Harry Stebbings, Jason Lemkin
[01:12:51] S3: Jason, would you ever do this move? I think you're probably the closest to us in doing this move with the greatest of respect. [01:12:56] S2: So I thought about it. And and to Jack's point, the reason is... And and you rethink it, right? I'm like, okay, not withstanding most of this conversation. If I want to be able to write a $5,000,000 check to be relevant, that's too much for my balance sheet. It's too much risk. Okay. So I mean, Homebrew, first of all, they were phenomenally successful, right? Small LP and some other funds, right? They're comfortable with those diverse size checks, right? I just didn't want to do them. Like I don't get a lot of joy out of the 100 ks check that I do in sixty seconds. If I got joy out of it, then maybe I would do it. But I'm like, hey, I got to be able to write a $5,000,000 check or I don't wanna do this game. But it wasn't for that. I probably would I probably would. In fact, the Homebrew guys recommended I do it when I started. They're like, don't do this fun thing. Like, back in the day, you have enough of a brand. You have enough. Just just just do it direct. So that echoes with me once in a while. But even if benchmarks change, you do you you do have to fund the check size you you... That you're you're optimal at writing. Right? Somehow you gotta fund it. [01:13:51] S3: Boys, what have I missed? Rory, Jason, Anthropix founders locking up 50.1%.
01:13:51 · Harry Stebbings, Jason Lemkin, Rory O'Driscoll
[01:13:51] S3: Boys, what have I missed? Rory, Jason, Anthropix founders locking up 50.1%. [01:13:56] S2: You know what's weird in that? You know what I didn't get in that story? Maybe you guys have some color. Like, why why did they wait so long? Why didn't they lock up the control a little bit earlier? Like, what am I what am I missing in the in the story? Right? Did the guy from Skype not let him do it, and Duskin Moskovitz vetoed this? Like, what the hell happened? Why did it take so long to to get voting control? [01:14:14] S0: That's because you probably actually have it in the pre IPO structure. But I'm willing to bet just based on a bunch of different things. And then it's when you convert everything to, common stock that typically voting rights expire on the IPO. So what my guess is they had a pre IPO deal, and now you got to recreate a post IPO deal, because everyone's cap structure changes. So I've, you know, I've been in situations where it's been in existence pre, and then you realize, oh my gosh, everyone, all these preferred stocks that have minimal voting rights, or maybe two out of five board members convert to common. Now it's just based on ownership. Oh my God, in this case, I own 2% of the company. I think we're going to do it differently. And look, [01:14:53] S2: could be. Yeah, could be.