How I Invest with David Weisburd
00:19:39 · Brijesh Jeevarathnam, David Weisburd
[00:19:39] S0: I agree with that second... With both the points you made. And that's one of the, as I said, the kind of early litmus test of is this venture firm moving in the right circles, I. E. Seeing the best deals and then winning. One of the challenges of that is in the very early stage, seed series A, these companies, it becomes a bit... It takes a while for them to truly become winner circle companies, quote unquote. And so just to even know if seed investment X made, let's say this year is a good one and they're the best founders in the category, it's going to take two, three years, right? So in the seed and early stage, this is still a challenge, I. The long feedback loop, but I fully agree with your point. There's many interim markers of, is this investment in FundX a good one or not? [00:20:41] S1: So I want to go back to this concept of the founder whisperer. How do you know early on whether a venture capitalist is a founder whisperer?
00:20:41 · David Weisburd, Brijesh Jeevarathnam
[00:20:41] S1: So I want to go back to this concept of the founder whisperer. How do you know early on whether a venture capitalist is a founder whisperer? [00:20:53] S0: That goes back to my point about tapping on network for references and speaking to a lot of participants in the market. We like reference lists. We love off the list references. And we have a big enough network now where we can talk to people, founders that is, and get a sense of venture firms' relevance and attractiveness to founders. A canonical example that people talk about might be Elad Gil. I mentioned him only because he wrote the Growth Handbook and he's very revered as a mentor and a company builder alongside the founder of the company. There are greatness like that, where these folks, they may not be the domain expert in said company's domain, but they have enough founder trust and confidence in company building chops from before to still end up early on the cap table. I really think it comes down to a resonance with the founders' worldview and empathy for what they're doing. It's hard to kind of say what kind of person, what archetype is best suited for that. What I mean is there are career VCs who are good at this, there are former operators who are good at this. And I think it comes down to a personality type and really making the effort to build the trusted relationships with the founder community.
00:22:40 · David Weisburd
[00:22:40] S1: One thing I've learned from talking to hundreds of investors is that great investment firms aren't built on investment returns alone. The firms under are great at the things most people don't see, their operations, their relationship with LPs, and the quality of information they use to make decisions. And here's what AI has changed. Every firm now has access to the very same models, so the intelligence isn't the edge anymore. The edge is what you could feed it. Firm with its fund operations and data in one connected record can actually put AI to work. A firm running on disconnected systems simply can't. That's why thousands of GPs run their funds on Juniper Square. Juniper Square puts your fund operations, data, and administration together in one connected record. That means less time managing disconnected systems and more time investing, working with LPs, and building your firm. This episode is brought to you by Juniper Square, the operations partner for private market GPs. Learn more at junipersquare.com/howiinvest. That's junipersquare.com/howiinvest. There's been this ongoing battle probably since the beginning of venture, since nineteen seventies, about what makes the best venture capitalist, this career venture capitalist versus this founder turned venture capitalist. Where do we stand on that today?
00:23:52 · Brijesh Jeevarathnam
[00:23:52] S0: Ten, Suddenly twenty years ago, there were all kinds of great VCs with, I'll call it idiosyncratic backgrounds. And once again, the examples might be, I'll pick Mike again, Moritz, who was a journalist or people that were more in a sales function in their prior role, not exactly like deep technologists who came in and became great VCs. And now I think it's not true that there's one speck, but I do think what's happening is in this moment in time, the technical chops of a venture investor get put to the test very quickly. The founders these days, and I'm generalizing, tend to be very young, often very technical. If And you don't speak their language, it's hard to kind of build a connection than to build conviction and then to win the founder over. So maybe the prototypes of what makes a great VC has shrunk a little bit. There are still many different kinds of former careers that translate to VC investing. But I would say it's maybe a little bit less heterogeneous than it was fifteen, twenty years ago for the reason I just said.
00:25:14 · David Weisburd
[00:25:14] S1: The other thing that's maybe a little bit paradoxical is this concept of the right to win. So a lot of people look for this canonical right to win. But, of course, when you're a founder and you're looking to fill your cap table, you're looking to fill different needs on a cap table. So you might want somebody with brands, somebody with a lot of capital, and maybe you want somebody that could help recruit these types of engineers. How much does right to win matter in the context of a startup? And is there such a thing as the correct right to win, or is it as diverse as there are types of founders and types of industries?
00:25:51 · Brijesh Jeevarathnam
[00:25:51] S0: I do think there's a bit of a difference between the right to win, as you just said, in an earlier stage company, where it's more of a founder bet and compared to a later stage company where there are more metrics to evaluate and frankly more capital being raised, right? If I start with the growth or later side of the equation, the right to win, even taking a step back from that, even seeing those deals and being able to pick where they want to put that growth check. Nowadays, the growth checks are large, as you know, right? $5,100.500000000 checks. In the very best companies, which are raising a lot of capital per round, it is still a food fight to get on the cap table. The company may be raising $500,000,000 or more. There are companies raising tens of billions now, as you know. But it's surprisingly still a heavily subscribed round. I think in those cases, the right to win might include the brand of both the person and the firm in terms of not just kind of the patina of the firm, but also longevity, like how long they can kind of keep backing this journey. Because as we see, the private capital markets are really expanding and eating into what the public markets used to do. I want to come back to that point. I'm going to park it for now. So the brand matters. The check size or how deep the pockets are, I should say, really matters as well. Right? Can this investor back me not just now, but in six months or a year, but I need the next growth check? And then I think potentially as these companies prepare for exit, either M and A or IPO, they look for the right board member to draw from these institutions. So those all are attributes, not comprehensive by any means, of the right to win at that stage. If I go to the earlier stage, it might be a different sense of right to win. On the seeing side, it includes showing up at hacker houses these days in San Francisco or somewhere else, I don't know, and courting with the best of them or speaking the language, like I said, or just understanding at the very fundamental level what these often 20 in age or sometimes even younger, how they see the world and connecting with them. As you know, at that stage, it really is a founder bet.