20VC: Why Follow-On Investments Are Always A Better Investment, Why Spray and Pray Investing Is Like The Stock Market & Why Startups Need A Board From Day One with Jerry Neumann

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Jerry Neumann is one of New York’s leading angel investors with a portfolio including the likes of The Trade Desk (IPO: 2016), Datadog and Flurry (acquired by Yahoo) just to name a few. Prior to angel investing, Jerry built the first open market for the pricing and exchange of real-time consumer data in the form of Root Markets. Jerry was also the Managing Director @ Omnicom’s Venture Capital Division where he enjoyed an incredible 5 IPOs from the portfolio.

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In Today’s Episode You Will Learn:

1.) How Jerry made his way into the world of VC in the 90s and why it was difficult to lose money in venture at that time?

2.) Why does Jerry believe that the vast portfolio construction model is “wrong” and a “dead end”? In what circumstances does Jerry believe “spray and pray” investing can work? Why does Jerry believe you can only have as many companies as you can actively help? How does this lead Jerry’s thinking on his own portfolio construction?

3.) Why does Jerry believe that startups must have a board from Day 1? What are the inherent benefits of having a board so early? In the earliest of stages, how should those board meetings be run? Who are the best board members Jerry has worked with? Why were they so exceptional? How does Jerry think about building board intimacy?

4.) Why does Jerry disagree with the conventional wisdom of Silicon Valley that price does not matter because the exit will either be huge or a zero? How has Jerry seen the best firms in their thinking on market price vs indicated discount price? How has Jerry’s thinking on price sensitivity changed over the years?

5.) Why does Jerry believe that the follow-on investment is always a much better investment? How does the risk-reward ratio change from initial to follow-on investment? How does Jerry assess and prioritize future financing risk when investing in an opportunity? How does he mitigate that as much as possible?

Items Mentioned In Today’s Show:

Jerry’s Fave Book: Console Wars by Blake Harris

Jerry’s Most Recent Investment: Edmit

As always you can follow HarryThe Twenty Minute VC and Jerry on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

We also speak about Movidiam – as brands turn to smarter ways of creating video and digital content, the Movidiam platform offers faster turnarounds whilst maintaining or improving quality. They’re already working with some of the biggest, most innovative companies to help compare teams and freelancers across the global curated network of creative talent. Producers and marketers looking for the best creatives can get a shortlist from Movidiam’s account managers in hours – tailored to their project’s needs. Submit a brief or check out the platform at Movidiam.com.

20VC: Why Your Board Are Right 50% of The Time, Biggest Lessons From Being Mentored By Reed Hastings & Raising $130m in Funding and The Balance Between Growth and Capital Efficiency with James Reinhart, Founder & CEO @ ThredUp

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James Reinhart is the Founder & CEO @ ThredUp, the world’s largest online thrift store, and consignment store. To date, ThredUp has raised over $130m in VC funding from many friends of the show including Tim @ Redpoint, Patricia @ Trinity, Eric @ Founder Collective and Ian @ Goldman Sachs just to name a few. As for James, prior to ThredUp he was a Goldsmith Fellow in Social Enterprise at HBS and a Bill George Fellow at the Center for Public Leadership at the Kennedy School. Before that, James co-founded Beacon Education Network, a charter management organization serving low-income students on California’s Central Coast.

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In Today’s Episode You Will Learn:

1.) How James’ childhood dream of being an architect changed to founding the world’s largest online thrift store?

2.) Tim Hale @ Redpoint: “James is one of the most naturally talented leaders I have ever worked with”. So what does great leadership mean to James? How has James seen the way he communicates and inspires change with the scaling of the company? What has James observed as the core characteristics that great leaders share?

3.) Why does James believe that investors are inherently wary of the female and child clothing market? How did James see the funding rounds differ from round to round? What did James really look for in his early investors? How does investor value-add change with time and scaling?

4.) What have been James’ core learnings in managing a board with transparency and efficiency? James has said before “your board is right 50% of the time”. How does James look to determine which 50% is right vs wrong? What is a time when James has gone against the decision of the board? How did the situation result?

5.) Having raised over $130m in funding, how does James think about the balance between aggressive growth and capital efficiency? How does James assess when is the right time to pour fuel on the fire? How does James react to the mindset of “sustainable growth”? How do investors think about capital efficiency?

Items Mentioned In Today’s Show:

James’ Fave Book: Sapiens

As always you can follow HarryThe Twenty Minute VC and James on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.

20VC: The Biggest Trend Of Our Lifetime Is The Decentralisation of Entrepreneurship Away From The Valley, The Biggest Lessons From Learning The Craft of VC at Sequoia & The Benchmarks Required to Attract Growth Investors with Chris Olsen, Founding Partner @ Drive Capital

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Chris Olsen is the Founding Partner @ Drive Capital, the venture firm that believes the Midwest is the opportunity of our lifetime with more entrepreneurs building billion-dollar companies in the Midwest than in the last 50 years combined. Since inception in 2012, Drive have built an exceptional portfolio including the likes of Duolingo, FarmLogs, LeadPages and Udacity. As for Chris, prior to founding Drive he was a Partner @ Sequoia Capital on the West Coast where he learned the craft from some of the very best in the business. Before that he spent time at both TCV and UBS.

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In Today’s Episode You Will Learn:

1.) How Chris came to found the largest venture fund in the midwest, Drive, from being a Partner @ Sequoia Capital and learning the craft of venture there?

2.) Why does Chris believe that the biggest trend we will live through is the decentralisation away from Silicon Valley? What are the essential ingredients an ecosystem requires in order to foster this thriving tech hub? What does Chris believe it is fundamentally essential for companies to be in close proximity to?

3.) How does the lack of venture funds in the Midwest affect Chris’ views on pricing? Would Chris agree with Peter Fenton, “never turn down a company based on valuation, it is a mental trap”? How does Chris look to differentiate between expensive and too expensive?

4.) How does Chris think about reserve allocation with Drive? What framework does Drive adopt to determine where to allocate reserve dollars? How does the shortage of follow-on investors in the midwest impact Chris’ approach to follow on financing? What level does a company need to be in order to attract attention from larger growth funds?

Items Mentioned In Today’s Show:

Chris’ Fave Book: The Old Man and The Sea

Chris’ Most Recent Investment: Duolingo

As always you can follow HarryThe Twenty Minute VC and Chris on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.

20VC: Thumbtack’s Marco Zappacosta on The 3 Core Elements To All Board Meetings, Raising $250m from Sequoia and Why You Have To Win Supply Side Acquisition First For Marketplace Success

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Marco Zappacosta is the Founder & CEO @ Thumbtack, the startup that allows you to find local professionals for pretty much anything. To date, Thumbtack has raised over $270m in funding from some of the very best including Sequoia Capital, CapitalG (Google Growth), Ali and Hadi Partovi, Scott and Cyan Banister and Jason Calacanis. Due to Marco’s incredible success scaling Thumbtack to helping millions of Americans today, he has been recognized by Forbes as 30 under 30 and Thumbtack was recently acknowledged as one of GlassDoor’s best places to work.

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In Today’s Episode You Will Learn:

1.) How Marco made his way into the world of startups and came to create one of the most prominent marketplaces of the day in Thumbtack?

2.) What does Marco mean when he says “founders must treat board members as employees”? How does Marco view the optimal structure for a board meeting? What are the core elements that founders must takeaway? Where do most first time founders go wrong with board management?

3.) Thumbtack has raised over $250m in VC funding, how can one look to achieve both operational efficiency and capital efficiency with such large injections of capital? What is core to maintaining this sense of frugality despite such large investments? How does Marco think about when is the right time to raise that war chest round?

4.) How does Marco suggest that marketplace founders can entice the supply side in the early days? How has Marco seen his supply-side acquisition change and develop with time? What has worked and what has not? Does Marco agree with Leah Busque that in marketplace, the NPS for one side will always be down?

Items Mentioned In Today’s Show:

Marco’s Fave Book: The Wizard and The Prophet

As always you can follow HarryThe Twenty Minute VC and Marco on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.

20VC: How a16z Uses NPS To Create Better Founder Experiences, Why Intellectual Curiosity Is The Most Important Investor Trait & Creating A Fund To Last Through The Ages with Zal Bilimoria, Founding Partner @ Refactor Capital

 

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Zal Bilimoria is Founding Partner @ Refactor Capital, one of Silicon Valley’s newest entrants to the early stage scene with a $50m fund looking to back founders solving fundamental human problems. Prior to co-founding Refactor, Zal was a Partner @ a16z where he co-led investments in Omada Health, Branch.co, AltSchool, Honor, and more, while helping to launch the firm’s Bio Fund. Before becoming an investor, Zal spent 10 years as a PM at Microsoft, Google, Netflix, and LinkedIn. He worked on emerging markets for Windows, became one of the first monetization team members at YouTube, and then  became the 1st Head of Mobile at Netflix and helped start the Sales Solutions business at LinkedIn.

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In Today’s Episode You Will Learn:

1.) How Zal made his way into the world of VC with a16z from the very corporate worlds of Microsoft, Google, Netflix and LinkedIn?

2.) What were Zal’s 3 biggest learnings from seeing the internal processes and scaling of a16z? How does a16z use NPS in such a compelling way that it automatically improves founder treatment and interaction within the firm? What was it about a16z that led Zal to believe being insanely curious is the biggest skill of an investor?

3.) What are the signs and leading indicators that a scientist has the mental plasticity and ability to translate into a CEO and business leader? What are the biggest challenges as a VC in assessing whether this plasticity is present? Why does David believe that the very best founders are looking to solve “fundamental human problems”?

4.) Over the last few years we have seen an explosion of deep tech capital, Elad Gil suggested this reminded him of the 2007 cleantech days, does Zal agree with this suggestion? How does Zal think about the common concern of having to carry companies for longer given the extended milestones to prove progress?

5.) Zal has said before his goal is “to build a seed firm to last among the 100s of others”, what does Zal believe is crucial to this sustainability of fund and brand? How does Zal evaluate the insanely crowded seed market today?

Items Mentioned In Today’s Show:

Zal’s Fave Book: Seveneves

Zal’s Most Recent Investment: Solugen

As always you can follow HarryThe Twenty Minute VC and Zal on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.

20VC: Why You Have To Raise $100m+ If You Want To Go Big Today, The 5 Fundamentals To Starting and Scaling A Successful Marketplace & Why Female Founders Under-Promise and Over-Deliver with Paul Hsiao, Founding Partner @ Canvas Ventures

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Paul Hsiao is a Founding Partner @ Canvas Ventures, one of Silicon Valley’s leading and newer entrants to the Series A scene. At Canvas, Paul has made investments in the likes of Everwise, Fluxx Labs, Roofstock, Thrive Global, Transfix, and Zola. Before founding Canvas, Paul was a partner at NEA, where he led an early-stage investment in Houzz, as well as, had the privilege of helping eight companies go public on the NYSE or NASDAQ and seventeen companies with successful M&A exits during his 10-year tenure with the firm. Prior to VC, Paul was an entrepreneur with the founding of Mazu Networks, a pioneer in network security that was acquired by Riverbed Technologies.

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In Today’s Episode You Will Learn:

1.) How Paul made his way into the world of VC with NEA and got Scott Sandell as his first mentor in VC?

2.) Question from Oren Zeev: Having been a partner at both, how does Paul compare the culture and strategy of two such differing firms of Canvas vs NEA? How does Paul’s thinking on exit expectations and requirements change with the change of fund? How does a smaller fund fundamentally change the way you think about investing?

3.) What does Paul believe are the 5 fundamentals of building and scaling a successful marketplace? Why does Paul believe that it is the supply side that tells you if your marketplace is or is not working? Why does Paul believe stubbornness is good in marketplace founders?

4.) Why does Paul believe that raising $100m is critical for new companies if they want to go big? What does this mean for capital efficiency? What does this mean for ownership with multiple dilutive rounds impacting investor returns? How should founders then think about winning the “capital arms race”? What are the exceptions to these rules?

5.) Female founders receive 2.19% of VC funding, however, Paul has many more female founders in portfolio than the industry. Why does Paul think this is? What would Paul like to see change in the distribution of VC funds? What is the required steps to make this happen?

Items Mentioned In Today’s Show:

Paul’s Fave Book: The Innovator’s Dilemma

Paul’s Most Recent Investment: Thrive Global, Roofstock

As always you can follow HarryThe Twenty Minute VC and Paul on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.

20VC: Why Facebook Will Be The Company To Succeed in Crypto, Why Founders Should Be Actively Angel Investing & Commonalities of Great Leadership From Mark Zuckerberg to Mark Pincus with Darian Shirazi, Founder & CEO @ Radius

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Darian Shirazi is the Founder & CEO @ Radius, the startup that provides you with not just data but truth allowing you to gain clarity to reach and convert your best B2B prospects. To date, Darian has raised over $105m in VC funding with Radius from some of the very best in the business including our friends at Founders Fund, 8VC, Salesforce Ventures and rockstars like Jared Leto and Charlie Songhurst. Prior to Radius, Darian has enjoyed roles such as first external engineering hire at Facebook and working on the “Sell Your Item” team at eBay. Darian has also made several angel investments in the likes of MessageMe, Sprig and Try.com just to name a few.

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In Today’s Episode You Will Learn:

1.) How Darian made his way into the world of tech as Facebook’s first ever intern at the age of 17 and how that led to the founding of Radius?

2.) According to Joe Lonsdale @ 8VC, “Darian is one of the most respected founders and CEOs in the valley”. How does Darian define great CEOship? What have been the commonalities he has seen in the great leaders he has engaged with from Mark @ Facebook to Mark Pincus?

3.) How did Darian approach the fundraising strategy for the $85m he has raised with Radius? How does Darian believe that founders can test quickly whether an investor is truly interested? Why is it so important to be fundraise as fast as possible? If an investor could only provide Darian one thing, what would it be and wh?

4.) How does Darian respond to investors that suggest founders should not be actively angel investing, as Darian is? What operational benefits does Darian gain from angel investing? How does Darian think about angel portfolio construction and specialisation? How has Darian seen investor attitudes alter when it comes to capital efficiency?

5.) As an early Bitcoin miner, how does Darian evaluate the world of crypto today? Why does Darian believe BTC has reached escape velocity compared to other currencies? Why was Darian skeptical on Ethereum for so long? What are Ethereum’s ongoing challenges? Why does Facebook have the chance to dominate the world of crypto?

Items Mentioned In Today’s Show:

Darian’s Fave Book: Sapiens

As always you can follow HarryThe Twenty Minute VC and Darian on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.

20VC: Greylock’s Jerry Chen on The 2 Fundamentals To Assessing Startup Risk, Why Good Investors Have To Be Optimistic & Why VCs Get In Trouble When They Move Outside Their “Strike Zone”

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Jerry Chen is a Partner @ Greylock Partners, one of the world’s most successful VC funds with prior investments in the likes of Facebook, Instagram, LinkedIn, AirBnB, Dropbox, AppDynamics, Coinbase and many more incredible companies. As for Jerry, Jerry invests in entrepreneurs building new enterprise SaaS applications and in all aspects of AI and cloud infrastructure. Jerry currently sits on the Board of Docker, Cato Networks, Gladly, Rhumbix, Spoke, and Blend. Prior to joining Greylock, Jerry was Vice President of Cloud and Application Services at VMware where he was part of the executive team that scaled the company from 250 to over 15,000 employees and $5B in revenue. Check out Jerry’s recent writing on Risk: The Game of Strategic Investment here.

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In Today’s Episode You Will Learn:

1.) How Jerry made his way into the world of VC with Greylock from being on the exec team at VMWare, responsible for their scaling from 250 to over 15,000 people?

2.) What does Jerry believe are the different frameworks for how investors should measure risk? Why does Jerry believe to be a good investor, one has to be an optimist? What does Jerry find the most challenging element of risk assessment? What types of risk can Jerry tolerate and which can he not in a potential investment?

3.) How does Jerry break the theme of risk down into 2 very different categories? How does one define “uncertainty” in an investment? How does this compare to “probability”? How does both “uncertainty and probability” alter when comparing differing sectors? Does Jerry think that current pricing takes fair account of both “uncertainty and probability”?

4.) What does Jerry mean when he says, “you have to have product go-to-market fit”? Why does Jerry believe that platforms shifts are fundamentally distribution model shifts? Where does Jerry see an inherent opportunity within these net new nodes of distribution shift?

5.) How does Jerry evaluate the SaaS world today of bottoms up or top down? Why does Jerry believe that if you are budget additive, bottoms up with small ACVs is the current strategy? What does this mean for those that are budget replacements, both in sales model and ACV?

Items Mentioned In Today’s Show:

Jerry’s Fave Book: Skin In The Game 

Jerry’s Most Recent Investment: Blend

As always you can follow HarryThe Twenty Minute VC and Jerry on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm.  Simply head over to Cooley.com or you can check them out at Cooleygo.com.