20VC: Bedrock's Geoff Lewis on Whether VCs Actually Provide Value or Not, Why Bedrock Does Not Have An Ownership Focus and The Difference Between Principles and Rules When Building a Firm or Company

Geoff Lewis is the Founder and Managing Partner @ Bedrock, now with over $1BN in AUM, Bedrock invests in breakout technology companies that are incongruent with popular narratives. In the past, Geoff has backed some generational defining companies such as Wish, Lyft, Nubank, RigUp, Vercel, Anduril and many more. Prior to founding Bedrock, Geoff was a Partner @ Founders Fund. In Today’s Episode with Geoff Lewis You Will Learn: 1.) How Geoff made his way into the world of venture with his joining Founders Fund? How his time with Founders Fund led to his co-founding Bedrock with Eric? 2.) Geoff Lewis: The Investor: How does Geoff reflect on his own relationship to price? How does he determine when to pay up vs walk away? How does Geoff approach the re-investment decision-making process? Where do most go wrong when it comes to allocating reserves? What have been some of Geoff's biggest misses? How did they impact his investing mindset? Why does Geoff not believe that ownership is as crucial as other VCs suggest? 3.) Bedrock: The Firm What have been some of the biggest challenges in building Bedrock? Where does Geoff believe many firms make core mistakes in firm building? What are the differences between principles and rules? Why does Geoff believe all firms need to have principles? How does Geoff approach internal talent building? What are the signals of people that will succeed in venture? How do they approach learning? 4.) The Market: How does Geoff analyse the current state of the venture market? Does Geoff agree with the notion of "play the game on the field"? Why does Geoff think markups are BS and just VCs looking for external validation? How has Geoff learned to isolate from the VC community and retain that purity of mindset working with great entrepreneurs? Item’s Mentioned In Today’s Episode with Geoff Lewis Geoff’s Favourite Book: Friedrich Nietzsche Geoff’s Most Recent Investment: Praxis

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  Welcome back to 20 VC with me, Harry Stebbings. Now, the show today is a special one for me personally. Now, I first met this guest in San Francisco over five years ago. Instantly, I thought he was incredibly special and I wanted to have him on the show then. Five years later, it's fair to say it took a while to convince, but we became great friends in the process. And so I'm so thrilled to welcome Jeff Lewis, co-founder and managing partner at Bedrock. Now with over a billion in AUM, Bedrock invests in breakout technology companies that are incongruent with popular narratives. In the past, Jeff has backed some incredible defining companies such as Wish, Lyft, Nubank, RigUp, Vassell, Anduril and many more. And prior to founding Bedrock, Jeff was a partner at Founders Fund.

• 0:41Harry Stebbings?

  I'd also want to say a huge thank you to Garrett at Flock, Joana at RigUp, Spencer and Eric at Bedrock and Brian at Founders Fund. A real team effort on the schedule and it made such a difference. But before we dive into the show today, if you're a venture capitalist or corporate strategist, I want to tell you about Tegus. Tegus is the only company in the world that aggregates qualitative information on private companies from seed stage to pre-IPO. With Tegus, you can access other VCs and founders' expert call transcripts from previous rounds to help source fast-growing companies, create compelling emails to get a founder's response and diligence companies when a round is moving fast. Tegus also provides the most flexible and highest quality way to run your own expert calls with no upfront fees or call minimums.

• 1:23Harry Stebbings?

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• 2:06Harry Stebbings?

  head over to cooley.com and also check out cooleygo.com. Coolie's award winning free legal resource for entrepreneurs. And finally, Sprig. User researchers want their product teams to build amazing experiences that are informed by user insights. Product teams want to ship products quickly without having to wait for research. With Sprig, both teams can get their way. Sprig is a user research platform that lets you ask bite sized questions within your product or existing user journeys. Companies like Dropbox, Square, Open Door and Loom all use Sprig's in product micro surveys and concept tests to understand their customers at the pace of modern software development. So they can make every product decision a customer informed product decision. If you want to obtain rich insights from users at the pace you ship products, then give Sprig a try by visiting sprig.com.

• 2:51Harry Stebbings?

  Again, that's S P R I G dot com. But that's enough from me. So now I'm so excited to hand over to the one and only Jeff Lewis.

• 3:03Speaker 01

  You have now arrived at your destination.

• 3:07Harry Stebbings?

  Jeff, this is so good to do. I'm thrilled that we can make this happen. I asked you five years ago in the founder's fund office. You are delayed until today, but a very special day for me. So thank you so much for joining me.

• 3:17Speaker 02

  Great to finally do this, Harry. Thanks for having me.

• 3:19Harry Stebbings?

  Not at all, but I want to start with a little bit of context. We always love a good story tell on how the person made their way into the wonderful world of venture, as you said before. So how did you make your way into the world of venture? And what was that entry point for you, Jeff?

• 3:30Speaker 02

  Really started back in 2009 when I took a leap and left a hedge fund to start a startup. And that business ended up becoming this company called Topgast, which was an enterprise SaaS company. After we sold it, one of my investors, Founder's Fund, sort of asked me if I wanted to try out being a venture capitalist. And I ended up joining Founder's Fund as a principal in 2012, really thinking that I would stay for like a year and go on to start another company. Because Topgast, while we'd made our investors some money, it certainly didn't change the world in any meaningful way. And I always thought I'd go back to building another startup, but just fell in love with venture and joined at a moment in time in 2012, when there was so much opportunity, this wave that might be cresting now in venture was really just starting back then in 2012.

• 4:12Speaker 02

  So I just ended up getting to invest in some phenomenal companies and working with incredible entrepreneurs. And one of the folks that I'd known from my startup days. Even predating my time at FF, I was Eric Stromberg and in late 2017, early 2018, we decided to start Bedrock together. And it's been a whirlwind since. I can't believe four years have passed since we made that decision.

• 4:31Harry Stebbings?

  Can I ask you, the beauty of this in our relationship is I can go a little bit off schedule, but you mentioned 2012 and the time of innovation they are entering. Bluntly, I have a lot of GPs who are telling me off record how jaded they are, how much they hate the venture world today, how they look forward to imminent retirement. I'm not quite suggesting that here, but like it is a very different market. How do you compare the two markets today? Do you share a similar sense of jadedness around how it's changed?

• 4:54Speaker 02

  I'm far too young to be jaded here. You're obviously much younger than I am, but I am still in my 30s. And so it's a little bit too early in my lifespan to be jaded. I will say that it's obviously every year it's gotten progressively more competitive, progressively more crazy. So the prior year was always easier than it is the next year. And I think that's just the way this industry is. Because the reality is at the end of the day, what we're underwriting here are companies that are going after opportunities to truly transform the world, really improve society in fundamental ways, hopefully to the extent they work and net positive. But yeah, I think the thing that is different now is the disconnect between the public market valuations and the private market valuations.

• 5:34Speaker 02

  To me has never been greater. And so that is the new variable where I think how that variable ends up playing out is going to be really key.

• 5:41Harry Stebbings?

  How do you think that does play out? You know, I speak to a lot of early stage managers who actually don't pay that much attention to public markets. I always think it's a big mistake. How do you think we're going to see the trickle down effect? Will it be a compression of multiples on, you know, the valuations that the early stage managers get for their companies entering growth? What does that look like in terms of the trickle down?

• 5:57Speaker 02

  Well, I think we're already starting to see the trickle down. I mean, the way it's played out ex post over the past few years is just the valuations have gotten much higher, even at the series A and B rounds. And so certainly as an early stage manager myself, just as you are, I'm now having to very much laser focus on counter narrative companies that only us and maybe a few other firms are excited about. Because anything that's seen as conventionally good and conventionally working is trading at just absolutely astronomical AR multiples. And I think ultimately the correction will trickle down to the early Stages, it's just going to take time. I mean, it's just going to be a delayed reaction. At the end of the day, the micro always needs to dominate. And so the company specific story, the entrepreneurs building a business,

• 6:40Speaker 02

  that is always much more important to me than like where the public markets are trading. But we are in a moment in time where the disconnect is so great between public market valuations and private market valuations that something does have to give over the coming quarters.

• 6:52Harry Stebbings?

  Can I ask, when it comes to price and when you think about lessons from prior experiences, we were talking before the show with me questioning, again, I'm always very open about my life, but me questioning whether to pay, I was bidding 200 and other brilliant crossover funds were doing 300. My question to you is like, that for me is a very big jump. You know, you've always advised me brilliantly well. How would you advise me here on the price elasticity moving from 200 to 300 on a 2 million ARR deal that I'm already paying 100X for? How should I think about it?

• 7:22Speaker 02

  Well, it's a double down price decision, which actually is where it's easiest to get tripped up. And so my framework on price is for point of entry for one's initial investment, less price sensitivity, I think is okay. I think if you're doing a smaller ticket, you're getting into a company, you can be a little bit less price sensitive. Where I think there's more potential to get tripped up is in this situation. When you're already high conviction, you already know the company and you really want to double down. Getting that pricing right is actually really important. But I will say that you're already paying 100X ARR multiples. The difference between 100X ARR multiple and 150X ARR multiple. The reality is those are both insane. And so you have to have extremely high conviction and to have done your diligence

• 8:06Speaker 02

  and really believe this set of entrepreneurs, this company is going to transcend. And if you feel that way, I would go for it at 300 versus 200. If you don't, I would do zero.

• 8:16Harry Stebbings?

  You said there about doubling down and following on and really making sure the price is right there. What does that process look like for you in ensuring the price is right on that? And how does that differ from initial?

• 8:25Speaker 02

  Well, it's really difficult. So we in practice view every follow on opportunity as we're investing for the first time. So we try and use that filter here on the investment team. Myself, Spencer, Eric are always like, okay, bottom up, would we make this investment? Again for the first time. If so, what's the right price? The reality is when you have this momentum on a company and you've got great firms coming in and doing, you know, high velocity follow on financing rounds. It is very easy to get emotionally swept up as an investor in that momentum and be like, oh yeah, like firm X is leading it at this multi-billion dollar valuation. We should like do, you know, a super duper prorata. It's very easy to get swept up in that momentum and it's more important now than ever in my career.

• 9:09Speaker 02

  As a venture capitalist, it's been 10 years now, more important ever. Every other firm thinks abstract away where the markets are at and just underwrite the company based on your unique view as a firm on the company. And so the process is a lot of diligence, a lot of time with the entrepreneurs. For me, looking back on my career, where I've gotten it most right has been where maybe the market is unclear. Maybe there's a lot of competition, maybe the business is going through bumps in the road, but the founders and the opportunity they're going after are just one of a kind. And if you can really key into that correctly, you can get these follow on decisions right more often than you get them wrong.

• 9:48Harry Stebbings?

  If that's where you got it right, in terms of the follow on decisions and where you got them wrong, were there some takeaways for you from those?

• 9:53Speaker 02

  When you're a high conviction investor, which is what I am, I'm a high conviction investor. There's always this pressure that's put on you from various constituents to prove out that conviction via concentrating capital in the winners. And certainly our strategy at Bedrock is we concentrate capital in our winning companies. Where I've gotten it wrong has been where I have had an inkling that there's something off with the entrepreneur or there's something off with the business model or there's something off with the numbers. Even when we diligence the numbers and log into the dashboard and validate them, something's not quite adding up. And there's a voice in my head saying, don't double down at this moment in time. Like, yep, you're a high conviction investor, but there's something that's a little bit off. And what I've learned is I really need to follow that instinct.

• 10:36Speaker 02

  And I've kind of trained my partners here at Bedrock and my team to if I have an instinct that like, maybe we shouldn't like back up the truck into something to really like tease that out of me and like have a series of robust debates internally, because that little Voice in your head saying something's off. I've never gone wrong following that little voice. Where I've gone wrong is when I've ignored it, doubled down or tripled down anyways, to prove out the conviction.

• 10:59Harry Stebbings?

  Do you know where I've gone wrong most? I've gone wrong most thinking, and this is fucking arrogant, given how young I am, but thinking I'm smarter than the market that I'm looking at. A lot when audio and podcasting, I mean, this platform in particular, what a miss that is. Anyway, but like anything in audio, I'm like, no, it's crap for these reasons. I feel like I know it too well. Or if I've lost money in it before, or stuff hasn't done well in it before. How do you retain mental purity with each deal, even if you've done very well in it before, or done badly in it before, but altered your mindset?

• 11:29Speaker 02

  Well, first of all, you're definitely not too young to be arrogant. So I want to course correct you on that immediately. And in fact, youth, I would say, is the biggest asset one can have as a venture capital manager. The youth enables you to, to not be jaded and to rebuild these mental models for every new market, for every new company that you encounter. I'm hanging on to my youth by a thread here, but I think I've still got another few decades left, hopefully. And surrounding yourself with young, independent thinkers, I think is really important. And so I actually can't take that much credit for like rebuilding investment frameworks and like getting rid of past biases on deals. It's really the people I surround myself with at Bad Rock, the entrepreneurs I talk to, the other investors I talk to, that I just like use to help push my

• 12:12Speaker 02

  thinking on, help me underwrite every new opportunity with fresh eyes. But I do believe that there's a pattern match thing in venture capital. I think there's some value to that, but the best companies just don't fit any pre-existing patterns is what I've found.

• 12:25Harry Stebbings?

  You know, what I love about you, Jeff, is I can ask you anything and you won't tell me, you know, bullshit, which isn't always the case on this show. You know, VC value add is this hailed thing that we all have to sell because all cash is green. Do you think VCs actually provide value today? And how do you think that through and explain it to founders?

• 12:41Speaker 02

  I think that some do. And by some, I mean, maybe a dozen or so. And so I think there's probably a dozen VCs that you could say are, are actually value adding. Even in those instances, the value add is, will only work if there's the right VC entrepreneur fit. You have to have truly that incredible interpersonal chemistry, like a really special vibe. Between the investor and the entrepreneur for like day to day rolling up your sleeves like helping with recruiting, helping with key strategic decisions to work. That's the type of value that I try to add. That's what I try to do here at Bedrock. You know, I'd say maybe there's like a few firms in the world that have a brand that can on the margins help you with recruiting and help you with hiring. But ultimately, the best companies only need the help from a VC in a downside scenario where it's not working.

• 13:25Speaker 02

  And I think that there's like 12 VCs that actually provide that value add. And so I think it's vastly overstated as a concept.

• 13:32Harry Stebbings?

  Okay. So how do you think about spending your time across the portfolio? What does that look like?

• 13:36Speaker 02

  It's 50 50, helping existing companies, working with entrepreneurs, serving on boards. And then 50% like just constantly meeting new entrepreneurs, learning about new sectors, getting smart on things, debating as a team internally. It really is 50 50. I have historically tried to roll off boards after a few years to free myself up because I take a board commitment very seriously. That's a serious responsibility. So I've always tried to sort of limit my board commitment, but at this point I think I'm on seven boards or something. So it's getting a little bit. Still compared to many VCs, not that many, but maybe getting a little bit unwieldy. So that is kind of, I think, secret in ventures. You have a lot of investors try to self actualize through serving on the boards.

• 14:17Speaker 02

  It's sort of this very sexy thing to do when the company's working, to be on the board, to be there for the ringing of the bell at the NASDAQ, at the New York Stock Exchange. And then in practice, I don't actually think there's that much that a board can do to help a company. I don't think that being on the board enables you to add an order of magnitude more value than being a involved investor who's not on the board.

• 14:36Harry Stebbings?

  No, listen, I totally agree with you. And it's the one question that actually guests always ask to be taken off the schedule, which is how do you manage your board load when it gets above 10 or 12? They say, hey, hey, hey, no, no, no, take that off. I do want to ask you, Bedrock, you've built something very, very special in a short space of time, Jeff. What have been the most challenging elements of building the firm that is Bedrock? And you know, for me, in the preceding chapter, to you, what advice would you give me having built such a great foundation to Bedrock?

• 15:02Speaker 02

  I mean, the reality is when you're building a venture firm, you're sort of rewriting the script, starting from scratch.

• 15:10Speaker 02

  With every new fund. And so it's not like building company that's building a product that you're sending into the world. You sort of have to rewrite the script with every new fund. The strategy needs to constantly be changing. And so I think in practice, what that means is having very clear principles from day one, but having few rules. Lots of principles anchored in principled, disciplined thinking, but not that many rules. So for example, our guiding ethos, our principle at Bedrock from day zero was we want to search for narrative violations. We want to search for companies that for whatever reason are being overlooked or underestimated by other investors where we can get in at a counter narrative moment in time. That is the guiding ethos of the firm. In order to do that, we really can't have many other rules.

• 15:54Speaker 02

  So for example, I used to have a rule that I would never do an uncapped note. This was a rule I had from my first days of VC. It was drilled into my brain. You're nodding that you agree with that. Drilled into my brain by like some of the people who mentored me at Founder's Fund. Never do an uncapped note. And I think one of our best investments at Bedrock was doing an uncapped note investment in Rippling. And so you sort of have to always know when you have an exception to the rule and know when to break the rule. That's really hard. And then at the end of the day, you're only as good as your last fund as a VC. And you're on such a delayed time scale for the actual like results data to come in. Even if things look good on paper, mixing things up, adding new people to the team, going into new sectors.

• 16:35Speaker 02

  You have to rewrite the script with every fund and that is really freaking hard to actually put into practice year after year, fund after fund.

• 16:42Harry Stebbings?

  Tell me, in terms of principles and rules, Jeff, what's the difference? Help me understand. How do I delineate the two?

• 16:48Speaker 02

  Well, a principle is like, what is guiding your actions in the world? Like, what are your first principles? So it's like, we're searching for narrative violations. We want to enter a company at a certain moment in time. And that has valuation constraints, that has like a certain amount of traction that we're looking for, but not too much traction. We're looking for a certain type of entrepreneur in terms of mission orientation, how they carry themselves in the world. But other types of things around like ownership percentage, for example, lots of VCs will say, we need to own a certain percent of a company. We don't have that as a Rule here. Other VCs, a lot of firms have a very, very specific stage focus. We are mostly oriented towards early-stage technology, but we will flex later-stage, like Vercel with FAD, with Flock Safety.

• 17:31Speaker 02

  We have done, you know, a fair amount in the decentralized world. We did Bitcoin and Ethereum shortly after launching our first fund in 2019. We've continued to do things in crypto, including backing emerging crypto managers via our funds. And so I think rules around portfolio construction, we have them, but rules around sectors that we get excited about, rules around when exactly we'll make an investment, rules around the way an investment is structured, we try not to have too many of those.

• 17:58Harry Stebbings?

  Okay, I have to ask, you know, I'm 2,800 shows in, 2,799 of them have said, "Ownership is crucial, Harry. It's all about ownership." Why do you feel that ownership actually isn't crucial? And walk me through that thinking.

• 18:11Speaker 02

  For me, the companies where I've done the best and where if I look retrospectively to our Bedrock track record, our pre-Bedrock track record, the ownership percentages were actually quite low. And so you basically, for me, it's operating the world, what's worked for me and what's worked for us at Bedrock. And in terms of cash in, cash out, the best deals have been, the ownership percentages are quite low initially, and then you try to concentrate capital into the successive rounds as they work.

• 18:36Harry Stebbings?

  When I asked you first on the show, Jeff, the beauty was I was much nicer and, you know, I just, you know, said everyone was amazing. The challenge is not that many people listened. Now, many people listen, but I'm not as nice. My question to you on narrative violations, I get it, I love it, but like Vercel, Lambda, The Athletic, I mean, are they really narrative violations? I don't mean it rudely, but they're all fantastic. They're all great entrepreneurs, building in great spaces. Is it a narrative violation? You can pick or choose and go, "Yes, Harry, and this is why."

• 19:09Speaker 02

  Well, of those three that you listed, Vercel is by far our largest investment in terms of dollars, and of those, it dwarfs the other ones by a significant amount. Absolutely was counter-narrative when we invested. And so from the outside looking in, it's like a hyper-growth web development platform that monetizes through SaaS. But from the inside looking out, when we Invested initially in 2020, they had de minimis enterprise ARR. They had insane adoption amongst developers. But the whole idea of investing in an open source company that had very, very low revenue was like, this is a toy. This isn't actually a company. Dejerm, the founder, built it initially as NextJS as a programming language and like reverse engineered the company initially called Z, then Versal on top of NextJS.

• 19:53Speaker 02

  So it was absolutely a narrative violation when we initially invested in Series B because developers are seen as very fickle. It was seen as just a fad. There wasn't a real proven sales motion, a real business behind it. Absolutely counter narrative. Today, you know, they've grown over 10X since we initially invested just over a year ago. It's seen as conventionally working and they've raised several rounds of follow on financing, given it's working so much. But when we wrote that first check, highly counter narrative. And I still think it's a very undervalued company, quite honestly.

• 20:21Harry Stebbings?

  Can I ask, in terms of that transition from counter narrative to along the narrative that is traditional, what are your lessons or observation in terms of when it crosses that chasm from counter narrative to, I would say bluntly now, Versal? I mean, I had every big, big growth fund ping me asking for interest to Guillermo and Versal on their latest round, where it seems to be very much agreed that it's a great company. When does it make that transition? Is it traction? Is it funding? Is it, what is it?

• 20:48Speaker 02

  I mean, for us, it's traction and/or perception of traction. And so some of the best narrative violation investments have been, there is amazing traction that we see at Bedrock because of how we're underwriting the opportunity. But the market does not perceive the company as having the amount of traction we perceive it as having. Something like Flock Safety would be a great example of that, where we got in very early, leading a Series A1. At the time of the Series C, which Meritech ended up leading, and we did a super duper massive Prorata in that one. In 2020, they actually had incredible traction and it unlocked police sales, but the market hadn't seen that. And so it's either traction or it goes from having not a lot of traction to a lot of traction, or the market just does not see the traction it actually has.

• 21:32Speaker 02

  I don't care about what other firms are doing and where other firms are pricing things. Like, sure, it's nice to get markups, but ultimately I never want to use follow. On financing rounds, it's like validation that a company is working. It's always about the asset quality.

• 21:44Harry Stebbings?

  I totally agree with you and I'm actually going to ask you a couple of things about, you know, my own insecurities later on. It's like a counselling session, but you don't get paid. But my question to you is, I spoke to Brian Singman before the show and he said, the enemy of great venture returns is capital concentration limits on a per company basis. You've spoken about doing super duper priorities into flock safety. You've done very big checks into Vercel. How do you think about this enemy of great returns being this limit on capital concentration per company? Would you agree?

• 22:12Speaker 02

  I think Brian's 100% right on that and I've learned a lot from him on how to concentrate capital into companies. It is very easy to get it wrong and if you get the capital concentration wrong, you blow up your fund and so getting it right is very important.

• 22:25Harry Stebbings?

  What does getting it wrong mean? Too much in it? Too like too little in it?

• 22:28Speaker 02

  If you pick the wrong companies, so if you're putting 20% of your fund into a single position, concentrating it over successive rounds with 30% or 40%, if that company does not end up being a winner, that fund is not going to perform that well. You identify your best company correctly and can't get that one wrong if you're going to concentrate capital.

• 22:45Harry Stebbings?

  We're always told of the benefits of temporal diversification, Jeff. Do you agree with them and do you bake that into your kind of investing strategy today? I'm just wondering, you know, everyone tells me play the game on the field, Harry. You know, it's about deployment and putting money to work. Do you agree with the play the game on the field?

• 23:00Speaker 02

  So this is one area where I actually strongly disagree. Someone who I have a lot of respect for, Bill Gurley, I've heard him say this on Twitter, you have to play the game on the field. I don't think benchmarks playing the game on the field either. So I think maybe it's something people say, but the smartest people don't actually do it. We're not playing the game on the field over here. So I'd say the game on the field today is like extreme velocity of deployment. It is optimizing for high markups quickly by crossover funds. And we've actually massively slowed our deployment pace over the past few quarters. We're deploying actually much slower now than we were at the height of our prior fund deployment cycles. So no, I think you need to play your own game and I think the game on the field right now is a little bit wacky.

• 23:42Speaker 02

  So we are more so now than ever really committed to our narrative violation strategy of finding counter narrative companies, getting in early. And temporal diversification is really important. I mean, we're still investing out of Bedrock one, which we closed in 2018. Bedrock two, we invested quite quickly. It was about a 18 month deployment timeline. Luckily, we have some recycling and some reserves there. And with Bedrock three, I think it's going to be like a three year plus type deployment cycle and future funds will be the same.

• 24:10Harry Stebbings?

  Multiple times I've cited that, kind of not caring about, you know, markups and what following funds do and how other VCs kind of interact. I respected this a lot. I heard you say in another interview, I stopped caring about what other people say about me. I wish I was the same, but I'm a very fraught and

• 24:25Speaker 02

  You're gonna get there.

• 24:26Harry Stebbings?

  My question is, like, it's easy to say, but it's hard to do. How did you do that? And how have you changed as a result, Jeff?

• 24:33Speaker 02

  Well, look, I don't want to misstate what I said. I absolutely care what the entrepreneurs I work with think about me. I absolutely care what my team thinks about me and absolutely care what our clients at Bedrock, our investors who invest with us, I think about us and our performance. All that said, the external validation of things like markups, it's not real. It's only real to me when the company has either been acquired or has IPO'd and you get cash back to your clients or shares back to your clients and shares in your pockets as managers. That's when it's real. The markups along the way are not validation of performance. And so just having a first principles view on a company and on your portfolio, to me,

• 25:15Speaker 02

  that's what really matters. And honestly, being able to like think independently and form your own judgments on yourself and your team and your performance, you can't do that when you're starting your career. It just takes a lot of time to build that competency over many years. So it did take me a long time to get to this point. But yeah, got to think from first principles.

• 25:33Harry Stebbings?

  Final one before the quick fact, but I do want to ask, you know, you worked with Spencer and Spencer's now a partner. You've also seen kind of the internal training program at Founders Fund and seen people scale there. What have been some of your lessons and what's some advice, again, to me, scaling my firm and my team in terms of what it takes to scale people in the investing role from more junior to partner, senior, carrying their own book? What lessons and advice would you have?

• 25:56Speaker 02

  The number one, two and three lesson is hiring people That are truly self-starters and have some sort of guiding motivation where they're gonna just independently take on initiative and force themselves into your world to learn through osmosis. And so like, I think everything that I learned at Founder's Fund was through osmosis from working with some of the greats. Hopefully Eric Spencer have learned a lot from me through osmosis, but you need the person you hire to initiate that. And like, for example, Thomas, our CFO, who joined us last year from Accolade Partners, has just been incredible at like, asking questions, learning through osmosis, like spending time together in person. So it's like, people who understand that learning through osmosis, they need to initiate that,

• 26:40Speaker 02

  the onus is kind of on them. Those folks do great. When you feel that you are like, having to provide the energy, be the power plant for another person, that's where I think hiring can go wrong.

• 26:52Harry Stebbings?

  In terms of learning through osmosis, I totally agree and I get you. In a remote world, that's more challenging. How do you structure the team physically and virtually to ensure that osmosis does occur?

• 27:03Speaker 02

  Great question. I'd say part one of that, we aren't really that remote. I mean, most of us live here in Austin, Texas, where I currently am. And so we spend a fair amount of time together in person. We go and meet our entrepreneurs in person. So we've sort of like, we've moved beyond the pandemic at this point here and we're pretty much in person more often than not. I don't really like Zooms other than when I'm speaking with you, Harry. Part two of that is getting to know someone for a long period of time before hiring them. Eric and I knew each other for, you know, eight or nine years before we started Bedrock together. We got to know Spencer for well over 18 months before we actually hired him onto the Bedrock team. And that story is true of basically everyone we've hired. So it's spending a long time getting to know people before you hire them, I think, sets you up for that successful osmosis learning process, even in a remote first

• 27:48Speaker 02

  world. Obviously, if you're running a company that's not a venture capital firm, you can't do that. But as a VC, you can scale your firm at whatever pace or cadence you want to. So you should take time getting to know people before hiring them.

• 27:59Harry Stebbings?

  Why do you think most people go wrong in terms of scaling their firm? I want to avoid the potholes. I want to avoid the mistakes. Why do you think people go wrong in terms of scaling and building the firms in the first few chapters?

• 28:10Speaker 02

  Lots of failure modes. I'd say the one that we are most paranoid about avoiding is building a machine that's not actually fun to operate. And so I think there are like lots of firms that have built really impressive machines. And then if I was to transpose myself into being the manager of that machine, I think I'd be having a lot less fun than I'm having today at Bedrock. And so we want to be here for the long haul. I want this to exist as an institution 20 years from now. But I want to keep having fun and have more and more fun with every year that passes. And so I don't want to build a machine that I become a prisoner to. And I think that's a huge failure mode for venture capital firms.

• 28:49Harry Stebbings?

  I totally agree with you. But I do want to dive into a quick fire round, Jeff. So I'm going to say a short statement. You're going to give me your immediate thoughts. Does that sound okay?

• 28:56Speaker 02

  A little bit scared, but let's do it.

• 28:58Harry Stebbings?

  Tell me, what is the favorite book and why?

• 29:00Speaker 02

  Too many to list. I think basically all of Nietzsche's work really speaks to me. So I'm on this deep philosophy binge and I have been for the last several years.

• 29:08Harry Stebbings?

  Tell me, how do you deliver critical feedback that may not always be what people want to hear without being a jerk? I hear it's a superpower of yours.

• 29:16Speaker 02

  I am self-critical more than I'm critical of anyone else. And so I think the people that know me and the people I work with closely, the entrepreneurs, our team at Bedrock, they know that I'm the hardest on myself versus anyone else. And so when I deliver critical feedback, they are able to receive it through the lens of Jeff holds himself to like the most exacting of standards. And so this feedback is coming from a good place.

• 29:37Harry Stebbings?

  What did you or didn't you believe that you've changed your mind on recently?

• 29:41Speaker 02

  Something around a higher power, probably. I think I've become more religious as I've grown older, whereas I used to be much more of an atheist, probably.

• 29:47Harry Stebbings?

  Tell me, what would you most like to change about the world of venture?

• 29:50Speaker 02

  I mean, it's not my place to really change it. It's sort of like the market's the market. There's lots of ways for people to win. There's lots of ways for firms to be successful. I think that what we're doing is something that I love doing. We're just going to keep doing it. So I'm going to let the venture world be the way the venture world is and just focus on what we at Bedrock can do day to day.

• 30:08Harry Stebbings?

  Austin versus Miami. This one was on Twitter. How do you feel about Miami, by the way? I've never been to Miami. I'm Brit. So help me, Austin or Miami?

• 30:15Speaker 02

  I think Miami's great. I don't think you can compare them. I think the type of person that would want To move to Austin, like Miami is not the same type of person that'd want to move to Miami. They're just totally different cities. It's like comparing London to like Athens or something like that. They're very different.

• 30:29Harry Stebbings?

  Tell me, what is your biggest strength and your biggest weakness, Jeff?

• 30:32Speaker 02

  Biggest strength is intuition, full stop, across the board, people, markets, companies. Biggest weakness is I am, you know, historically I've been too self-critical. I've been too hard on myself and I need to get myself a little more slack sometimes.

• 30:46Harry Stebbings?

  Jeff, what do you want to build with Bedrock?

• 30:48Speaker 02

  Our mission is to find entrepreneurs that are violating popular narratives through sheer force of will and building unstoppable businesses. And I think through doing that, we will build the best early-stage technology investment firm in North America. That's what we're trying to do.

• 31:01Harry Stebbings?

  Final one for you. What's the most recent publicly announced investment? And why did you say yes and get so excited?

• 31:06Speaker 02

  I think the most recent publicly announced one was Praxis, which is they're trying to build a new crypto city-state. I'd gotten to know those founders for several years before we invested in the seed round. And I'm just very excited by the vision around innovating with governance, using crypto as a wedge to do that. And their community building has been, you know, second to none and been really impressive. So that was announced, I think, about a month ago. We have several that have been unannounced.

• 31:30Harry Stebbings?

  Jeff, it only took five years to make this happen. It was all your fault.

• 31:34Speaker 02

  It was.

• 31:35Harry Stebbings?

  But honestly, man, I so appreciate it. It's such a pleasure to have you on and so thank you so much.

• 31:39Speaker 02

  Likewise. Thank you, Harry. It's been a pleasure.

• 31:43Harry Stebbings?

  I'd also just want to take a minute to say a very personal thank you to Jeff. He's been a great friend, mentor, advisor to me, and I really do so appreciate the relationship, Jeff. So a huge thank you to you for that. Thank you to you for giving up the time on the show today. Absolutely loved that discussion. Before we leave you today. If you're a venture capitalist or corporate strategist, I want to tell you about Tegus. Tegus is the only company in the world that aggregates qualitative information on private companies from seed stage to pre-IPO. With Tegus, you can access other VCs and founders' expert call transcripts from previous rounds to help source fast-growing companies, create compelling emails to get a founder's response, and diligence companies when a round is moving fast.

• 32:23Harry Stebbings?

  Tegus also provides the most flexible and highest-quality way to run your own expert calls with no upfront fees or costs. Cool minimums, the ability to do 30 minute calls and simply paying the experts rate at an average cost of $300. Tegus makes expert calls easy. Find out why a majority of the top venture funds are using Tegus on a daily basis. Head over to tegus.co/growth for your free trial. Speaking of incredible resources Tegus provides, I've always been a big history man. And so I want to talk about Cooley, the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley is one of the most active law firms in advising both early and late stage financings, handling more than 1,300 private financings every year with an equal split of investor and company clients.

• 33:08Harry Stebbings?

  So to learn more about the number one most active law firm representing VC backed companies going public, head over to Cooley.com and also check out Cooleygo.com, Cooley's award winning free legal resource for entrepreneurs. And finally, Sprig, user researchers want their product teams to build amazing experiences that are informed by user insights. Product teams want to ship products quickly without having to wait for research. With Sprig, both teams can get their way. Sprig is a user research platform that lets you ask bite sized questions within your product or existing user journeys. Companies like Dropbox, Square, Open Door and Loom all use Sprig's in product micro surveys and concept tests to understand their customers at the pace of modern software development so they can make every product decision a customer informed product decision.

• 33:52Harry Stebbings?

  If you want to obtain rich insights from users at the pace you ship products, then give Sprig a try by visiting sprig.com. Again, that's S P R I G dot com. As always, I so appreciate all your support and I cannot wait to bring you a fantastic 20 growth episode this coming Wednesday.