20VC: The Truth About Multi-Stage Firms; Why Portfolio Services are for VCs not Founders | Why Politics is Rife & Decision-Making is Broken in Large VCs | Why Reserves are Bad for Founders & How Boutique Firms Will Win with Mark Goldberg @ Chemistry

Mark Goldberg is a Managing Partner and Co-Founder at Chemistry, a $350M fund announced just yesterday with the mission to lead the best seed and Series A rounds. Before Chemistry, Mark was a Partner at Index Ventures, where he led early stage investments in Plaid, Bridge, Pilot, Anrok and Persona. Prior to Index Ventures, Mark was one of the first business hires at Dropbox. In Today’s Episode with Mark Goldberg We Discuss: 1. The Truth About Multi-Stage Firms: Why are portfolio services there to help the investing partners and not the founders? What are the most broken elements within a multi-stage firm? How does decision-making break down in large partnerships? When is the right time to work with multi-stage firms? When is not? 2. From Boutique High Margins to Commoditised Low Margins: With the immense amount of cash that has entered VC, will returns simply get worse? Who will be the winners in the next 10 years of venture? Who will be the losers? What can they do today to change this? What element of the future of venture are not enough people spending time on? 3. Lessons from Leading Unicorn Company Rounds: What happens to all the unicorns with insanely high prices they cannot grow into? What has been Mark’s biggest hit? What did he learn? What has been his biggest miss? How did that change his go-forward approach? Does Mark agree that 90% of VC do not add value?

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

• 0:00Speaker 00

  I think one of the dirty secrets of multi-stage investing is that portfolio services teams are not for founders, they're for the VCs. They are a way to make something unscalable scale. So we have a very light reserve model. Peanut buttering all of your reserves and every prada round that gets done is not a good thing for the founder. The biggest mistake is when you try to make consensus decisions at the early stage, I think you end up with consensus funds.

• 0:24Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. And today we have a very special show for you. On Wednesday this week, we saw a new fund announcement in the form of Chemistry, a new $350 million seed and series A firm from Mark Goldberg, Ethan Kurzweil and Christina Shen. Today, I sit down with Mark to unpack it all. For those that do not know, prior to Chemistry, Mark was a partner at Index Ventures, where he led early-stage investments in Plaid, Bridge, Pilot, Anrok and Persona, to name a few. But before we dive in, what do Henry Ford and AI have in common? Neither could change the world without automation. In the future, there will be two types of businesses, those that have automated and those that wish they had.

• 1:06Harry Stebbings?

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• 1:50Harry Stebbings?

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• 2:29Harry Stebbings?

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• 3:12Harry Stebbings?

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• 3:45Speaker 00

  You have now arrived at your destination.

• 3:48Harry Stebbings?

  Mark, dude, I am so excited for this. When we last did one, I was actually young, so this is a joy. And I really appreciate our friendship. So thank you for joining me.

• 3:58Speaker 00

  Harry, it's a total pleasure and it has been so fun to watch you launch your new fund. I think I read online that it was a 10-year overnight success and I think that's what most resonated with me. You've been doing such a good job crushing it and I'm thrilled for you. So it's fun to be doing, doing new funds at the same time.

• 4:14Harry Stebbings?

  Dude, it is great fun and there's nothing like having your own shop. I always say this to people, like having your name above the door is the most special thing and building your own is just so special. I do just want to start with that, which is like, there are so many venture firms respectfully. Why did you feel like the world needed another one and what was that kind of realization with the founding of Chemistry?

• 4:35Speaker 00

  The world doesn't need another venture fund. It needs a new venture fund. There are too many VCs right now, but we wanted to do something different. What Christina, Ethan and I started talking about was if you were going to design a fund where you fully align the values of the investors with the founders, what would it look like? That was kind of the question that was the jumping point to getting started here. And what we thought about is first off, it would be smaller. It would be focused. It would be a combination of experienced investors from some of the biggest multi-stage platforms coming together, a venture style and seeing if you could do something different. And you just talked about, you know, what it feels like to be an owner. I wanted that. Christina and Ethan wanted that. And we felt like the combination of experience and hustle was something that would kind of be the blueprint for a new fund.

• 5:18Speaker 00

  So that was kind of the, the origin of, of how we started talking about this.

• 5:22Harry Stebbings?

  Why does fund size correlate to alignment to founders?

• 5:26Speaker 00

  I don't necessarily think the fund size does. I think it's the purview of the responsibilities of the fund. So for us, having a stage focus, I think is very important. I've seen, I think, what the growth of different products and the size of a portfolio does to the focus of an investor. And I think there's a paradox at a lot of the, the larger legacy institutions where the most experienced VCs have the least amount of time to spend on new deals. And I think that's a problem for founders. And that was something that we thought a lot about as we were debating whether or not we were going to jump into this. And one of the things we thought we could help solve with, with chemistry.

• 6:00Harry Stebbings?

  Is that not just nature of a maturing portfolio that even if you are a series A owning investor at a multi-stage firm, if you're 10 years in to a year over a five year, fuck, you've got 10 board seats there.

• 6:13Speaker 00

  So absolutely, the, the longer you're in market, the portfolio is like an iceberg. It just grows. And especially in an environment like today where liquidity is, is not as readily available. That said, taking an axe to all the bureaucracy of a large institution gives you superpowers in terms of what you're able to do with your time. And so while the.

• 6:31Harry Stebbings?

  What is the bureaucracy of a large institution?

• 6:33Speaker 00

  When you're running, I think, I think when you're running an organization that is, that is hundreds of people, that is multinational, like many of the large funds are today. I think there's a lot of time spent on people management, on administrative work that has a, that has a tax on the organization. When I think the most important thing is spending time with founders and spending time with founders at the early stage.

• 6:52Harry Stebbings?

  They would say that they have incredible teams and they have IR and they have legal and accounting and portfolio services, which mean they are able to just be finding the next Dylan Field. What do you say back to that?

• 7:05Speaker 00

  I would challenge the notion that when you talk about, for example, some of the portfolio services teams, I think one of the dirty secrets of multi-stage investing is that portfolio services teams are not for founders, they're for the VCs. They are a way to make something unscalable scale. And I think right now we're starting to see the cracks of an industry that has relied on subdivisions of the job, whether it's a talent team or a team that's going out and finding customers. But I think what founders really want is not to be disintermediated between the relationship between an investor and the founder. That's really the premise of our fund and one of the things that I think that some of the industry has gotten wrong. Now, I would also clarify, I don't think it started that way. I think the intention, and if you go back to the innovation from 10, 15 years ago,

• 7:49Speaker 00

  when Andreessen Horowitz started, it was a great idea. It was this sense of excitement and innovation for venture. But I think where we are now is it's become more of a crutch to these organizations to try to get leverage in an area that's very difficult to do.

• 8:03Harry Stebbings?

  I think it's also used as a justification for the increase in fund size because now you can show to LP as well. We've got 10 people in talent, 10 in BD, we even do sales for our companies. In which case, we need the new huge fund because this is how we've structured our team.

• 8:17Speaker 00

  I think what founders really want is a direct relationship with an experienced investor.

• 8:21Harry Stebbings?

  You said it kind of like, what would it be if it was like true alignment between GP and founder? Sounds so nice. So do you guys only take common shares then? I'm being serious. I can be deliberately spicy with you.

• 8:35Speaker 00

  You can absolutely be spicy. You know, I think when we think about alignment, it's more about putting the incentives in terms of where you're spending time. One of the things that pulled us into starting New Fund, and I bet you saw this as you were kind of going through your fundraises as well, is this sense from founders that we want experienced investors that have time to spend with us. We want something new and fresh in the ecosystem, and I think that's a lot of what we're trying to bring here.

• 8:59Harry Stebbings?

  Do you know what, as I get older, Mark, I'm sorry, it's the end of the day on a Friday, dude. Like, no, I actually, I take the key through a boy's school of thought, which is like, the best founders don't need you. I say to founders, listen, generally, 90% of VCs don't really add value. I try to be no different, but I'm a really nice guy. I will always have more money for you, and I have the world's best network. Other than that, Inshallah. But I will never be a bad investor for you, and I'm super supportive. So I think they love that. It's like, just don't get in my way. Give me fucking money and shut up. That's what they want.

• 9:33Speaker 00

  Well, first off, I think that you would clear the bar for, you know, 80% of the industry by doing no harm. And I would agree with that principle. The other thing that I would agree with is that the later stages, that's all that matters. When you're doing it, when you're picking what growth investor you want to work with, what you should care about is the price and them staying out of your way. I would disagree with you at the early stages. And my experience over almost a decade of doing this is that there are times, even the best founders who are running autonomously, where, and I actually, there's a concept that we, one of my great mentors, Mike Volpe, talked about magic moments for a founder journey, where it's not about placing the IC employee 142, the resume in the right spot at the company. It's about building a relationship where when the founder is questioning, hey, I'm not sure if I'm working with my co-founder, and they want

• 10:18Speaker 00

  to call you at 11pm on a Saturday night, you pick up the phone and you're there for that person. And when that company does well, and they remember, like, what were the important moments in my founder journey? I think those are the things they think about. So I would disagree with you at the early stages. I do think building that sort of trusted relationship is ultimately what makes an excellent investor. Though I would say a great investor might just be doing harm.

• 10:40Harry Stebbings?

  I agree with you. I think this is one of those ones where there's nuance, because you're speaking from Silicon Valley, and I'm speaking from Europe. Our competitive sets and landscapes are very different. I guess my question to you is like, when you looked at that landscape, why were you like, ah, yes, we should be here?

• 10:57Speaker 00

  You know, when I joined Index Ventures almost a decade ago, you know, the pitch that I would give to founders when I didn't have a brand or a portfolio was I'm going to out hustle anybody else. And I remember some early deals where I would be going head to head with the equivalent of a gill from 10 years ago. And a founder would say, why would I choose you? You're an associate, you have no experience. And I would say, that's my advantage. My advantage is that your success matters so much to me that if this doesn't work, I don't have a job anymore. And that pitch didn't always work. I lost a bunch of deals, but I won a bunch of deals as well, because they're different products. That choice is good for founders. Our view with chemistry is that the idea of having a small team, clean slates, this playing offense at a moment when many people are distracted is a really interesting

• 11:39Speaker 00

  idea for for founders that want that that kind of relationship. And that's actually why we named the fun chemistry.

• 11:44Harry Stebbings?

  I think the younger the founder, the more they want the brand is the lesson that I have. Different to what people think. People think younger people will take a new firm, younger people, they crave the brand more. I find the second tier serial founders have had the multi-stage product before. They've seen that it's not all it's cracked up to be. And they actually go for the person the second time around. Do you agree or am I missing that?

• 12:06Speaker 00

  I agree with the framework, though I don't think it's the age. I think it's the the relationship to kind of insider outsider in Silicon Valley. If you're coming into the ecosystem and you don't really know a lot of venture, what you're thinking about is the big brands, the Andreessen's, the Kleiner Perkins, the Sequoias, and you should. Those are the names that are household names that if you stop the founder on the streets of Austin or Portland, you know, those are what you're going to hear about. To me, it's less about the age and more about kind of the proximity to your kind of networks.

• 12:34Harry Stebbings?

  Doug Leone said to me, or I think it was on a show, he said that the venture has transitioned from a high margin boutique community to a low margin commoditized industry. Do you agree with that transition?

• 12:49Speaker 00

  Well, first off, that's really interesting for somebody who is leading one of the multi-stage, the most successful multi-stage funds and God bless Sequoia. I mean, their ability to innovate as a leader, I don't envy that challenge. I have always enjoyed being a challenger and punching in that direction. So for him to say that is a very interesting.

• 13:05Harry Stebbings?

  Their funds are relatively constrained for what they do. Like their seed fund is 190. I think their growth is like a billion. Like they're not crazy. They, they, they are always collated in this like Sequoia raises eight billion and you're like, wow. But actually, when you look at it, they are quite constrained products.

• 13:23Speaker 00

  So what I would say is I think the direction of the industry and I'm sure everybody who observes the industry would say the same thing, has been one of industrialization in the last decade. And when I say industrialization, what I mean is the boutique experience of, hey, there's going to be a handful of partners, you're going to know everybody there and their reputations is not really, that, that was kind of the past. And the future seems to be this sense of, you know, let's increase the AUM, let's increase the team sizes. And I would challenge even you, Harry, to say at some of these big platforms, name more than three, four or five partners when there might be 30 check writers. So that's what industrialization means to me is when you, you know, the name, the brand of the, of the institution, but you might not know who the check writers are.

• 14:03Harry Stebbings?

  But is chemistry a like a reversion away from that industrialization back to boutique-ness?

• 14:09Speaker 00

  That's exactly right. It's a contrarian thought right now. Inspired by funds like Benchmark, like USV, we think that there is this kind of personal relationship at the early stage that we're going to try to reconstitute the fund around.

• 14:22Harry Stebbings?

  So how big is the fund?

• 14:23Speaker 00

  The fund's 350 million.

• 14:25Harry Stebbings?

  How did you come to 350 million being the right size fund? And stage wise, this is seed and A?

• 14:31Speaker 00

  That's it's seed and A, it's lead checks, it's seed and A. And it was really a bottoms up exercise. We thought about what is the right pacing for each, each GP? And for us, when we looked at our investment history over the last 10 to 15 years, it was about two to three investments per year. There were years that, you know, in 2021, I did far more and, you know, which was the wrong decision at that point. But when we looked at what was the right number, it's about two or three investments per year. And that's how we built the fund, which is that's about the pace that each GP should have in the fund. It's about a three year fund and we'll have, you know, about 25 investments in each fund.

• 15:03Harry Stebbings?

  Do you think it's big enough for the A? Because if you think about Series A funds, okay, if we take average Series A check, we're like, say 10 to 15 million, let's say 15 to be considered. 15, 15, we're at 300 minus fees, that's your fund done. Not enough diversification and no seeds in that.

• 15:20Speaker 00

  So this will be a seed in Series A fund. And I think when you say A, you have to be careful because when you say A, it's like, what does that mean? I would argue, you know, I'm seeing.

• 15:28Harry Stebbings?

  If you're doing, if you're doing Iliad from OpenAI, it means a $10 billion check.

• 15:32Speaker 00

  It means you're going to need to raise a much larger fund. But even if you exclude the handful of billion dollar Series A AI deals. You know, I think I'm seeing deals in the market that are 30 to 40 million dollar Series As. And I think one thing you have seen, or I've observed in the industry is that As that would have been 15 million, you know, five years ago, could be 30 to 40 million today. So when you talk about us doing a 30, we could do that from our fund, but it would be a very big swing. What we're looking at is, I would say, a click in front of that where it's not totally obvious that there's a category winner. You know, we are going to have to roll up our sleeves before there's obvious financial traction. There's more risk at that point, but we think we can do some earlier kind of Series As. So almost the concept of a Series A, I would argue is it depends, you know, what you're talking about.

• 16:16Harry Stebbings?

  So what size check is that?

• 16:17Speaker 00

  I think a 10 to 15 million dollar lead Series A check is a very reasonable thing. If you're willing to go a click earlier in terms of stage.

• 16:23Harry Stebbings?

  But does that work in terms of portfolio construction? Because with, that's on assuming no reserves, you just don't have enough.

• 16:31Speaker 00

  So we have a very light reserve model that might be worth clicking on. I think that the way that as a new fund, we think about reserves is we believe that supporting companies from those early stages is extremely important. But that peanut buttering all of your reserves and every Prada round that gets done is not a good thing for either the founder or the LPs in a fund. And so we have a very light reserve model. We will double down on companies where there's, you know, exceptions, but we have a very light reserve model.

• 16:58Harry Stebbings?

  I spoke to one of your LPs before and they were like, oh, well, like they're not competing against their old shops because they're going a little bit before. And I was like, I compete with all of their shops and I do pre-seed. So they are competing. How do you think about that?

• 17:13Speaker 00

  So first off, we're going to be competing. We're going to be competing with everybody and that's fine. I mean, this is an industry where you're both working with people on one deal and competing against them in the next. But we are certainly going to be competing tooth and nail in every deal that we're in. But we think that's a great thing for founders. Founders should have choice.

• 17:29Harry Stebbings?

  Do you worry about the expanded round sizes? Something that I am genuinely just concerned about right now is like the amount of eight million dollar seed rounds, where I'm having to stump up six for not a huge amount of traction at a pretty high price. And that's kind of becoming the norm.

• 17:45Speaker 00

  I think you have to play the game on the field. And the question is, are there good companies that are emerging right now in this vintage? I would say yes. Now, are there ridiculous deals happening that I don't think fit the risk return profile? For you or for me? Absolutely. But I think around that, there's plenty of work to do.

• 18:01Harry Stebbings?

  How do you determine when to pay up versus when to sit it out? Like when it's just not a chemistry deal? I look at like my biggest mistakes this year have been Suno and Eleven Labs. And both of them I didn't do because they were small checks, probably like 1% each. And that didn't fit the model. That was my lack of mental plasticity.

• 18:22Speaker 00

  One of the lessons I learned from Index Ventures and certainly two of my mentors, Mike Volpe, Ilya Fushman, was you want to be in the category winner. And when you need to pay up to be in a category winner, you know, you don't want to be in the number two or the number three in a category. And there are times when I'm willing to take risk in that direction. Your risk is the valuation, but you feel extreme conviction in the, you know, the leader in a category. That's in time when I'm willing to kind of stretch. The other time, Harry, just before you jump in, and really the way I think about early stage investing, is so much of a founder focus of do I have insane conviction in this individual, in this founding team? And when those variables line up, I tend to feel more confidence in my ability to kind of stretch on the deal price in terms.

• 19:05Harry Stebbings?

  Totally agree. Taking one by one, you said about kind of the importance of being the category winner. I so agree with you that it's like the 95% to one and 5% to everyone else in the market. I'm constantly oscillating. I don't like competitive markets. But then I consistently hear people say the best markets are competitive because there is incredible value at the end of them. How do you think about market competition? Do you like competitive markets or not competitive markets? And how do you think about my statement?

• 19:31Speaker 00

  I don't mind competitive markets. I think so much about ideas are a dime a dozen. You want to find people that are excellent at execution and that have the vision to outcompete the folks in their market. I have never shied away from competitive markets. What I lean into is a founder who is willing to go head to head at a competitive market and I believe has the hot spot to go in it. So for me, a competitive market validates the opportunity and is not something that I shy away from.

• 19:55Harry Stebbings?

  You said about execution being everything that I so agree with you, dude. What are the reasons why from zero to one, execution goes wrong most often you see?

• 20:04Speaker 00

  To me, it's the founding team. I think that no company I've been a part of from the early days has been a straight line success. Everybody takes a punch in the face and the founders that have the grit to take the punch in the face and get back up are the ones that I think have the highest correlation of going from zero to one and ultimately from one to a public company. I think a lot about not, do they miss their OKR by 30% this quarter and therefore this isn't going to work? No, it's, is this somebody who's resilient enough to take the adversity, to learn from it? And the velocity of their learning is ultimately what crosses the chasm.

• 20:35Harry Stebbings?

  Well, I mean, I had Zach from Plaid on the show and he said that OKRs at the early stage were just bullshit entirely. So.

• 20:40Speaker 00

  I think he said that OKR, it was a great episode. And I think he was saying, why were they lifted from the manufacturing industry and plopped down into the software world? And I would very much agree with that.

• 20:48Harry Stebbings?

  What are the reasons why execution breaks most post-product market fit? You've worked with some incredible companies post?

• 20:54Speaker 00

  Post-product market fit, I think hiring is probably the biggest limitation I've seen. When you were an early stage company, this is where, going back to our conversation, and what is the value out of a VC? Again, do no harm should be beating 80% of the industry, but I wouldn't agree with your zero. So I think that at every stage, and when you feel the pull of product market fit, you need to really consider who are the leaders of your functions, especially your go-to-market functions, and are they the right people? And when you move from founder-led sales into a professional organization, really asking yourself, do I have the right people in those seats? And back to the point of, what can a VC do to be helpful? Showing people what great looks like, one, two, three stages in front of where they are, and giving them a way to evaluate where their team is relative

• 21:37Speaker 00

  to that, I think is a very helpful thing. And the folks that I've seen take longer to get from. From that one to 10, 10 to 100, are the folks that tend to make the wrong decisions around hiring in their leadership teams. And by the way, I'm very bullish on their leaders, and I can give you examples that have scaled from the early days all the way to, you know, an exit. It's unusual, but it's possible. But I think having a way to give founders a sense of this is what great looks like for your stage. And these functions that you might not have seen before is a very important thing for them.

• 22:05Harry Stebbings?

  So I'd say pre-product market fit. Also, everyone forgets how long hiring takes. It takes three to six months to find the person, three to six months to ramp them, and then 50% of the time, three to six months to fire them. And you've gone 18 months and you've still got nowhere. And that's why I prefer serial founders. Because they have an existing network. They've worked with Mark before. They know how Mark works. Sign Mark next week. He onboards a week later. Job done and he's fully ramped by week four. Now, I then have so many people say, but the naivety, the brilliance of first time founders. How do you, I'm forcing you to pick one, which one and why?

• 22:40Speaker 00

  First time founders. I think the, the ability to, to think from a, a clean slate, to do potentially foolish, but on the other side, potentially visionary and transformative things. The hunger, the naivety that you describes in a first time founder, I think outweigh a lot of the benefits of having seen the show from one, two, three times in the past. There are caveats. I love founders that have tried and not broken through with a first business. So a founder who feels like they gave it a shot, but ended in a place that they weren't happy with, and they have a chip on their shoulder, I think is a great profile. A founder who has done so well that, you know, they are financially independent, or they might not have the same level of hunger that they brought to their first business. I'm less excited about that.

• 23:23Harry Stebbings?

  Founders should not choose chemistry if they want...

• 23:29Speaker 00

  If they want an established brand that's been around for 30 to 50 years.

• 23:32Harry Stebbings?

  Do you think that's still worthy?

• 23:34Speaker 00

  I think different founders want different things. You know, you and I talked about it earlier in the conversation. A founder that is coming new to Silicon Valley, that really wants the validation of a, you know, of an established fund that's been around, we're probably not a great fit for.

• 23:45Harry Stebbings?

  For founders listening, does the established brand, I don't think the established brand helps with hiring, because I think it helps with hiring the wrong type of people. You want people who love the founder, love the team, love the mission, not love the fact that a big brand is in there. Does it help with customers?

• 23:58Speaker 00

  I don't think it helps with customers. I think it helps with funding. You know, when Sequoia does a deal, there's going to be money that follows it. That's great. That's a feature of the brand equity they've built over a long period of time.

• 24:08Harry Stebbings?

  Tell me, when you were doing the fundraise, how did you organize it? I know that sounds strange, but did you go to friends and family style first? People you knew who were super high likelihood? Or did you go for the anchors, big names first to solidify the base? Which approach?

• 24:25Speaker 00

  I think we tapped a rich vein in the LP community that there was some frustration, especially at this point in the cycle. Some of the venture funds that they had invested in 10 years ago, 20 years ago, they felt like had become asset managers. And the idea of being able to invest in a pure play venture fund that had experience, but also a lot of hustle was something that we think resonated in the market. So I think we were fortunate that we, we kind of hit a market moment in the fundraise that, that aligned with a lot of the, the zeitgeist in that community.

• 24:52Harry Stebbings?

  When did you start the raise? Like what type of time of year?

• 24:55Speaker 00

  We raised this summer, so we went out from kind of June to August was our fundraise.

• 24:59Harry Stebbings?

  It's pretty quick and in summer is even quicker.

• 25:01Speaker 00

  We were very fortunate. I think, again, we were, you know, tapping into some real excitement about a team that, you know, I don't think there's a team of experienced GPs that's come together with three folks in quite some time. And I think that was something novel. And again, at a time where the macro backdrop was a little bit of frustration with how big some of the multi-stage funds, the legacy institutions have become. And this sense that the returns you saw 10, 15 years ago from small teams and focused partnerships may not be the same going forward.

• 25:28Harry Stebbings?

  What size of check was the largest check?

• 25:31Speaker 00

  We wanted to keep enough diversity in the fund where we didn't get anybody, you know, kind of much over 10%. That was kind of where we adhered to. So we wanted about 20 LPs and that's, that's pretty close to where we landed.

• 25:41Harry Stebbings?

  In terms of like LP construction, was there anything specifically that you wanted? I find some managers get a bit wanky about like, oh, we won't take family offices.

• 25:49Speaker 00

  No, we wanted good people. I feel like I have learned so much about being an investor from going through a fundraise.

• 25:55Harry Stebbings?

  What did you learn about? Tell me, what did you learn?

• 25:58Speaker 00

  I mean, so many things. I feel, first off, I feel like every VC should have to fundraise just to be table stakes of the VC. And in some ways, I think my order of operation was wrong where I invested for almost a decade. For becoming a founder, I wish though it would have been difficult to have done in the opposite direction, but some of the learnings. So first off, there was so much empathy from having to pitch. For a decade, I heard, you know, I sat on one side of the table and heard the pitches. And to be forced to feel the pressure of stepping into a room with everybody's eyes on you and you need to deliver is something everybody should do at, you know, in some regular interval to kind of balance the equilibrium of power. And I think, I don't know if you felt the same way, Harry, when you were fundraising, but for me, I felt tremendous empathy for that. And I'll just give you an example. When you're pitching somebody, this is one of many meetings to them. And this

• 26:42Speaker 00

  is the most important meeting of your day. I mean, for me, there were a handful of meetings like that.

• 26:47Harry Stebbings?

  I had one meeting where I just couldn't stop sweating. And then it's just the most awful thing in a big meeting room with like 12 people and you're standing at the front and you're like, oh, and everyone knows you're sweating. And it's like, oh.

• 27:02Speaker 00

  Well, as we know, it didn't hurt your ability to do, you know, something incredible with your own fundraisers. And in some ways, I hope to give you perspective. So when a founder is sweating in front of you, you have that empathy. And that's, that's a lot of what I felt, the sense of, you know, oh, okay, this is a really helpful reminder of what it takes to really put yourself in the shoes of a founder.

• 27:20Harry Stebbings?

  Did you raise money only from people you met in person? Were there any chats which were non-virtual, which were virtual chats?

• 27:27Speaker 00

  That is a very good question. And I think that we met everybody in person. Now, we, because we're in San Francisco, a lot of people were coming through for different LP events. So there was a lot of kind of the community moving through, but we hustled too. We spent a lot of time on planes and we, I mean, we were, we were out there. It was a quick fundraiser, but we were out there hustling very hard. Um, there were some, by the way, it's a great way to get to know your co-founders better. When we're in equal partnership, all three of us were, were telling our story. It's kind of like a group interview and poor Christina and Ethan, who had to suffer through me telling the same jokes and anecdotes over and over and over, sometimes eight, 10 times a day.

• 28:03Harry Stebbings?

  Well, that's the Tokyo test. I don't know if you know this.

• 28:06Speaker 00

  I don't know this.

• 28:07Harry Stebbings?

  Okay. The Tokyo test is can you fly to Tokyo with someone and being engaged fully in conversation throughout the duration of the flight? And if you can, that is either the sign that you should marry them or start a company with them.

• 28:19Speaker 00

  We did many, many tests throughout the relationship and the founding story of the three of us. The Tokyo test was not on there.

• 28:25Harry Stebbings?

  How many LP meetings did you take?

• 28:28Speaker 00

  We probably took 100 LP meetings.

• 28:29Harry Stebbings?

  100 LP meetings?

• 28:30Speaker 00

  Yeah, now we divided and conquered. And the other thing is, we tried to vet those meetings by first screening for the appetite for a first fund. There was, I think, I think a lot of interest in a shiny object to say, you know, I want to go meet this team. And we tried to weed that out by saying, you know, what are some first time funds you've done? If you haven't done anything in the last two years, you're probably not going to be excited, you know, about doing, doing things. So we did a lot of pre-screening, but we actually got to probably 100 meetings.

• 28:58Harry Stebbings?

  Okay, so you have 100 meetings. And so you have like 20 yeses for people who don't understand fundraisers?

• 29:03Speaker 00

  We were fortunate in that we were, we were pretty well oversubscribed. So it ended up being more, more than 20 yeses. And I think we could have raised a fund significantly larger than the one we raised. That said, we got a lot of no's as well. I mean, part of the LP community and understanding is what are they interested in? And if we walked into a meeting and they said, our belief in the asset class is that, you know, venture is no longer a good return. Or the only way to play venture is to be in, you know, five legacy brands. We probably had done a poor job in vetting that meeting. And there were a handful of those that we did not have success with.

• 29:34Harry Stebbings?

  Okay, so you have 100 and then say we end up with 20 there and they can, what was the number one reason in commonality wise, why people said no?

• 29:42Speaker 00

  Well, you know, it's, it's an interesting parallel to why we say no as GPs. And again, to the empathy point, I think a lot of the reasons people gave as a no were not the actual reasons. But the, the biggest reason we heard was the three of you haven't worked together. And there's a lot of teamwork, team risk in a new fund at this size with three people. And to their, to their credit, there is risk. I feel very comfortable with that risk. You know, in the same way that a VC might say it's too early for our fund, you never really know what people are thinking.

• 30:08Harry Stebbings?

  Did you push back when you felt like they weren't giving you the right feedback? Well, I, I of course got no's and I of course got kind of bullshit ones. And I would always say like, I really appreciate your desire to protect my feelings, but I really want to get better above everything else. Please tell me the real reason why you said no.

• 30:24Speaker 00

  We did, yeah. And we got some great, I mean, again, back to the parallels of being a good LP is very similar to being a good GP. The funds that we most liked working with, whether or not they invested or not, were clear. Direct, communicative, gave real feedback. It's a good lesson for me. It's a good lesson for anyone on the GP side. And again, why I would encourage anybody to go through a fundraiser like we did. You know, when we tell our friends, what are the best LPs? It wasn't the ones that necessarily all said yes to our fund. It was the ones that were great to work with and they were great to work with for the reasons. They gave great feedback. They were very sophisticated on their perspective in the market. Whether or not we aligned with that vision, you know, that was what made a great LP. And I think ultimately what makes a great GP.

• 31:02Harry Stebbings?

  What was the single best LP meeting that you had?

• 31:05Speaker 00

  We did have some funny stories from the fundraiser itself. And at one point, I remember Christina was having what I thought was her best fundraising meeting. She's just, you know, really doing a nice job with her talking points. And I look over and she's, and she's, you know, laughing and having fun. I look over and it's nine o'clock in the morning. And instead of a seltzer water, we had, we had, you know, we're borrowing somebody's office. It is, she had grabbed a White Claw instead. And so she's drinking her second White Claw, thinking that she's drinking seltzer water. And, uh, you know, we had a few things like that where, you know, you just kind of have to laugh in hindsight. And we had to tell her afterwards, you know, we didn't want to stop the train at that point, but we had to tell her she wasn't drinking, you know, something that was, uh, that was seltzer water.

• 31:43Harry Stebbings?

  Mark, did you have any terrible ones?

• 31:45Speaker 00

  The terrible ones were more misalignment, I would say, where we would get into a meeting and someone would ask us to pitch venture capital as an asset class. We had one or two of those where it was like, why is this asset class still worth investing in? That was more, again, an alignment challenge where if you're starting from that question, we're probably not in the right conversation and we did have a few of those.

• 32:06Harry Stebbings?

  Did you find one group more sophisticated, intelligent than others? Foundations, endowments, family offices?

• 32:13Speaker 00

  One of the best pieces of advice we got was build a diverse set of LPs. And not in terms of the institutions, you just described fund to fund, family office, endowments and foundations, but people that think differently and think independently. And that's why I think we ended up with such an interesting mix of people that we, we almost didn't want people to, to correlate with one another. And I think it would have been very easy to do. And for people that, that go this route, um, where there's a lot of correlation between, hey, these are all alumni of the same institution and so they're going to group things together. We wanted to avoid that and I think we're very fortunate we were able to.

• 32:48Harry Stebbings?

  I'm going to push you. What single LP check meant the most to get to you personally?

• 32:53Speaker 00

  So we had a few groups that told us this is going to be a six month process. You know, there's no way to accelerate it. And after the meeting, we're kind of done in two weeks. And we loved that kind of speed to conviction. And that meant a lot. Some of those early conviction checks where, you know, we weren't sure exactly how long the fundraiser would take. And having a few people say like, we believe so much in what you're doing. We're going to make exceptions to do this quickly and to get behind you.

• 33:17Harry Stebbings?

  What was your most recent disagreement as a partnership?

• 33:20Speaker 00

  Well, this wasn't the most recent disagreement, but a really substantive disagreement was about whether or not to build a junior team at chemistry. That was.

• 33:30Harry Stebbings?

  Why did that net out?

• 33:31Speaker 00

  We are doing it, but I'll give you some of the color around it. So I came in with more perspective that we need to be extremely streamlined. You know, having a GP only group is going to be an advantage in terms of the ecosystem. I think Ethan and Christina had a much stronger feeling that, that working with, with a junior team is going to add an element and a, and dynamic element in terms of different ages, different networks. That's really going to complement the GPs. What all of us were aligned in not wanting to recreate was the hierarchy and institution and bureaucracy of a really large organization. So what we netted out to is just a very small junior team. We're going to have two folks. We've hired one so far who's fantastic and already making a massive impact on the fund. But that was something we really needed to unpack and try to think about the pros and cons.

• 34:14Harry Stebbings?

  Are you doing office? Are you doing remote?

• 34:17Speaker 00

  Office, in-office every day is a really important tenant of how we think about building. You know, we're a new team. We're a startup, right? Like we need to be shoulder to shoulder.

• 34:25Harry Stebbings?

  If you could choose anyone to join as the fourth partner, who would you choose and why them?

• 34:30Speaker 00

  Some of the folks that I respect immensely are the Excel Venture Team, Dan Levine, Vasantharajan. Some of the folks that I would describe as similar age to the three of us, they're, you know, that are doing a tremendous job in the ecosystem. There are some funds that I would consider new guard funds a little bit in front of us. I think Saragow has done a tremendous job with conviction. Jack Altman, doing amazing things with Alt Capital. It's probably the most dynamic moment in 20 years in venture where you have these legacy institutions that are dealing with. Generational change, you know, huge portfolios.

• 35:01Harry Stebbings?

  Fund investing is like a company investing in a couple of ways. One, the best fund managers are like the best founders. They make you feel a little bit uncomfortable with their intensity. And then, you know, second, there needs to be a why now. There needs to be a moment in the ecosystem that causes this company or fund to be more exciting today than it was yesterday. And I completely share the perspective there. I do worry there's just too much money in this ecosystem, though. I lost a deal this week and I lost it because the competition doubled the price and accepted common shares.

• 35:29Speaker 00

  Yeah, I think both can be true. I think there can both be a shakeout that is already happening in terms of the amount of dollars. And I think there can be a turnover between an old guard and a new guard. And I think you and some other funds I respect represent that next chapter and what a new guard. But I think there's a moment and I don't think that moment existed three years ago, five years ago, even 10 years ago. And I think it's happening now.

• 35:48Harry Stebbings?

  Are you worried by the extended window of privatization by great, great founders like the Colisons continuously being private for years and years and years?

• 35:57Speaker 00

  No, I'm not. First off, I think products will evolve to create liquidity for those late stage private companies that give liquidity options to early stage investors. So I think the market will evolve. So just because companies are staying private longer doesn't mean I think the liquidity duration will be as long as it is today. I think we'll be, we'll see innovation in that area. So there'll be more secondary opportunities for early stage. I mean, my belief is the capital markets will, will create new products to solve for that. I do think that you need to have a long-term outlook in this industry. And even when, when I started fundraising, I thought the duration of a fund was 10 years. And I was surprised to learn that many of the LPs said, we rarely see closed funds before 15 years. It just, you have to have kind of the stomach to be in this for a long time.

• 36:39Harry Stebbings?

  Have you had your first carry check yet?

• 36:41Speaker 00

  I have.

• 36:41Harry Stebbings?

  When did you get it? What year?

• 36:43Speaker 00

  You know, I was very fortunate to join the venture industry at the end of 2015, early 2016. And I'm very grateful to have been at a, at a fund that, that did really well in those vintages and was able to get some liquidity. So I'm fortunate that I, I've seen that.

• 36:56Harry Stebbings?

  Okay, I'm going to make a statement. You can agree or not. I don't think many of the 2021 vintage funds will return one X. Agree or disagree?

• 37:03Speaker 00

  It's a very, what I would say is I don't think those funds will do very well. I mean, the, the vintage is going to be very, very challenged. Will it be a one X? I don't know. I think it'll be better than a one X. Maybe they're going to be tough funds.

• 37:14Harry Stebbings?

  What happens to all the companies that are marked up insanely highly with insane valuations by many of the multi-stage funds? And are worth 2 billion, 3 billion, not 10 billion?

• 37:25Speaker 00

  Well, I think we're already seeing some of the oxygen being sucked out of those companies. I think, you know, as you talk about your frustration with founders choosing to kind of raise at terms that feel unreasonable, I think we're seeing the other side of that, which is many companies wish that they'd taken a more graduated approach to their fundraising. Because the momentum, the cultural momentum, and I've got some companies that have been very thoughtful and deliberate in this effort. The momentum you lose when a fund, when the employees know that the valuation isn't realistic, I think really hurts the morale and hurts the ability of the company to kind of do its best work. So I think really deliberate founders that don't overstretch, actually, you know, you're kind of seeing the advantage of that, but everybody has to kind of go their own path.

• 38:05Harry Stebbings?

  So. I kind of have this new approach, which is I say, listen, I will let you choose the price. And they're like, what? And I'm like, there's just one clause, whatever price you choose, you have to be 90% confident that you can 3X that by the time you're going to raise your next. And if you don't, I'm going to be pissed.

• 38:23Speaker 00

  Yep. How's that working for you?

• 38:24Harry Stebbings?

  Honestly, founders love it.

• 38:28Speaker 00

  Are you seeing bigger or smaller numbers than you expected?

• 38:31Harry Stebbings?

  Smaller.

• 38:31Speaker 00

  I mean, that's amazing.

• 38:33Harry Stebbings?

  Because they're like, oh shit, the 25, I don't know if we'll be 75 when we're 1 million in ARR, especially at seed, I'm seeing the 25s go to 15s. Because they're like, I could do 45, but really confidently predicting 80.

• 38:48Speaker 00

  Yeah. I mean, I think it at least changes the tone of the conversation from one of, this is a zero sum game where the valuation is a reflection of my self-worth and kind of a scoreboard win, to one of, let's put this in the perspective of a long-term journey. So I think it's, you know, I think it's a really interesting framing you're giving to founders of, let's think about this in a different way.

• 39:05Harry Stebbings?

  I'm not literally letting them choose the price.

• 39:07Speaker 00

  No, of course, of course. But it's a little bit of mental jujitsu, which I will, I will think hard on.

• 39:12Harry Stebbings?

  How do you think about investing in AI today? Given rounds being the sizes they are, being the competition being what it is, how do you think about that?

• 39:21Speaker 00

  So I think we're already seeing the oxygen in this bubble start to get sucked out. Now, obviously, there are exceptions. There's still some extremely unreasonable deals happening within AI. But I think what's starting to happen is-

• 39:33Harry Stebbings?

  What makes you say that we're seeing the oxygen sucked out? Because I don't, I don't see that.

• 39:37Speaker 00

  I think that just calling yourself a dot AI company is no longer tacking the same premium onto your business as it would have a year and a half ago. And the people that were the same camp of founders that were a dot XYZ during the crypto boom, that have migrated to dot AI for the AI boom, are starting to recognize that they actually need a sustainable business, and that's what they're going to be evaluated on. Now, that doesn't mean that there aren't rounds happening at the, you know, the red hot center of the AI infrastructure ecosystem. But I do think there's starting, you're starting to see some pullback and some, some proportionality brought back into the other side of the market. Doesn't sound like you're seeing that, by the way you looked at me.

• 40:12Harry Stebbings?

  No, honestly, I see it being more crazy than ever. I mean, I've met three companies that raised at north of 750 pre-product. How do you structure decision making as a new firm?

• 40:22Speaker 00

  So we are a single trigger model, which means that any one of the three of us can make a decision on an investment and go with it. Now, the biggest mistake that I have seen from my own personal experience and from other funds is when you try to make consensus decisions at the early stage, I think you end up with consensus funds. And I think it's the errors of omissions at the early stage where one person or two people have super strong conviction in an idea that end up being the outliers. If you think about the outliers, you're going to get, you know, when you open the aperture, when you've got kind of the decision framework that I just described, you're going to get both. You're going to get deals that don't do as well, but I think you're also going to solve for the extremes that do very well. And that was the model that we, we landed on.

• 41:01Harry Stebbings?

  You mentioned the sin of omission there. What miss weighs on your mind most?

• 41:06Speaker 00

  Chime. I, I really love that business. From a fintech perspective, it was one where, you know, I would have loved to have been a part of the early stage rounds and, and kudos to the folks that, that figured that out earlier than I did.

• 41:17Harry Stebbings?

  Why is Chime a third the size of Revolut in a market that's five times bigger?

• 41:22Speaker 00

  I think nobody has really cracked the the product velocity that Revolut has. I mean, Revolut's product velocity is is just unparalleled in really any market at this point, including new bank. And, you know, you could argue the US is a harder market to differentiate on features, but Revolut has had a superpower. And, you know, they just move so quickly in terms of the breadth of products they're able to offer its customers. I don't think anybody's been able to match that in the US. That said, I think a lot of people get consumer finance wrong in the US and say, just because nobody has built a Revolut sized business means that it's not going to happen. Actually, the last time I was on your show, I think I predicted $100 billion neo bank coming out of somewhere. And I think we're a lot closer. I think Revolut's the closest we're going to see to that. So.

• 42:04Harry Stebbings?

  I absolutely agree that I think Revolut is that, but I would actually place a lot bigger bet on Revolut taking the US than Chime.

• 42:11Speaker 00

  I would argue that there might be a company nobody's ever heard of yet that actually wins the mantle.

• 42:15Harry Stebbings?

  You know, we have Mamoun on the show. He, you know, just lost tally. Brilliant founder Jason, but difficult business in the lending business. And he, his lesson he told me was just that lending's really, really hard. Is lending just an uninvestable category?

• 42:28Speaker 00

  I think lending businesses are very, very, very challenging. And if you look at the, the, the way that I've been comfortable investing in fintech, it's mostly been through the infrastructure that supports the growth of digital finance.

• 42:39Harry Stebbings?

  What do you do when you meet an amazing founder in a shit market where you're like, oh, I hate this?

• 42:45Speaker 00

  To me, it's a very obvious answer. I, I would, I would go all in on it. That would include lending as well. It gives me heartburn, but at the early stage, the stage I'm investing at, the stage it's core to chemistry. Finding great people at this stage, they're going to iterate into something that's interesting. And again, please take the other side of it. You know, even in my partnership, you would hear Ethan's much more markets focused than I am. But for me, great founders figure out way to create market. I mean, if you look at, and I was very fortunate to see some amazing companies from index from the early days, whether it was a Figma, whether it was a Wiz, whether it was a Data Dog, companies that, you know, have been able to build TAM by just increasing the surface area of their products. That's the lesson I draw from some of those businesses that I've seen from the early days.

• 43:26Harry Stebbings?

  My question to you is, what other markets are you like, like for me, recruitment software? Or, oh, no. Honestly, I'm pretty sorry, education. Ad tech just sucks.

• 43:37Speaker 00

  Okay, so one of, it's funny, we just looked at a recruiting software company, so I'm just laughing about that. But what I would say is, one of the dangers of experience, and having done this for almost a decade now, is shutting your brain off for a category that didn't work in the past. So I have a little bit of an allergic reaction when you say that, not because I disagree with you and any of those specifics, but in this sense of a trap that people fall into. And this happened in fintech. You look at the evolution of fintech. So in fintech, the most knowledgeable people were a bunch of the East Coast funds that knew, that had spent two decades inside of financial institutions and knew the market way better than the West Coast funds. And they outsmarted themselves from every money-making deal in the category, the really, really big ones. And the West Coast funds that had

• 44:20Speaker 00

  the naivety to lean in, I think still did really, really well.

• 44:23Harry Stebbings?

  I would say the smartest in fintech are Matt Harris and Mickey Malka.

• 44:27Speaker 00

  Listen, though, I mean,

• 44:28Harry Stebbings?

  And they've made a fuck ton of money.

• 44:30Speaker 00

  What I would say is, Matt Harris is probably the smartest and best fintech investor out there. I mean, you know, Ribbit's obviously incredible as well. But Matt Harris, I think, you know, has kind of set the direction of fintech for a very long time. But what I would argue is like, that knowledge can be counterproductive as well. If you know too much, because the crazy ideas are crazy, right? Like, you can outthink yourself from any good series A by overthinking, I've done it myself, I've seen other people do it. And I think knowing too much can actually be dangerous.

• 44:58Harry Stebbings?

  So what industry are you like?

• 45:00Speaker 00

  Sales, sales tools, the next AI for sales tools company. I have a very hard time, you know, keeping an open mind at this point.

• 45:08Harry Stebbings?

  I did, I did a Lavenice.

• 45:10Speaker 00

  You mentioned at the beginning, listen, it's, I know how well they're doing, but I just have a hard time, you know, seeing, I've just heard the pitch so many times, there's a lot of, of activity that I don't think is going to go anywhere there.

• 45:21Harry Stebbings?

  How do you turn people down? Do you say the honest truth? Or would you rather gloss it over because there's no point being that honest and blunt?

• 45:30Speaker 00

  My answer to that question has changed by fundraising myself. There were a lot of times where it was easier as a VC just to say something polite to not give people the real feedback. And having been on the other side of a fundraise and now felt the other direction. I think it's really helped me understand how useless that is and the importance of giving strong, constructive feedback.

• 45:52Harry Stebbings?

  The other big change, though, in you is you've moved from a multi-stage fund where you have to preserve optionality and you have to keep them on side.

• 46:00Speaker 00

  That is such a good point because you can be wrong and right at a multi-stage fund. When you're doing what we're doing at Chemistry, you get one bite at the apple. And that is, that's actually, for what it's worth, that's a new muscle for me. But it's also really empowering and it's one of the reasons I'm having so much fun right now. Because it focuses you in a way that I had not done before, where the danger of the optionality of being able to do every stage at every time is you have to keep so many doors open. There is something that focuses the mind by saying, this is the stage we're doing and this is the stage we are not doing. And therefore kind of giving yourself the kind of the test of conviction of where you are. And then being able to kind of adapt and change the operations around that.

• 46:38Harry Stebbings?

  What will you break first, or more willingly, check size or ownership?

• 46:44Speaker 00

  The check size. It kind of goes back to my sense of you have to be in the winners. And I think that when we feel like we are in a winner, I'm willing to to move up on check size to be a part of those companies.

• 46:55Harry Stebbings?

  What's your capital concentration limit on a per company basis?

• 46:58Speaker 00

  I can't remember what legally we have as the concentration limit, but certainly we don't want more than 10% of the fund in a single company.

• 47:05Harry Stebbings?

  I remember Brian Singman said to me on the show that the enemy of great venture returns is capital concentration limits on a per company basis. And he mentioned that they have 30% in some funds just for one company.

• 47:17Speaker 00

  Listen, if it's the right company, that's incredible. That would, I would have a hard time sleeping at night with that sort of concentration. But, you know, I think that-

• 47:24Harry Stebbings?

  If it was Airbnb, I'd probably-

• 47:26Speaker 00

  Then you're sleeping just, just great, but you're probably sleeping on a yacht in Saint-Tropez, so it's different. But I think like having some sense of perspective. But listen, I think one of the advantages of being a new fund is taking a lot of risk. I think we're going to try a bunch of things that don't work and I'm totally comfortable. I'm excited for that. Like, we should be doing all sorts of things and seeing how do we push the innovation in this industry? And I think that's going to create a better founder experience, even when we get it wrong.

• 47:50Harry Stebbings?

  If I were to give you one bit of advice, people and that no one, everyone will tell you the opposite. Don't be afraid to do brand deals where you do get into brand names with tiny ownerships. The most important thing is that you align yourself with incredible founders and incredible companies in this new era, especially in this new era of AI. Just get into some great companies and be aligned with them.

• 48:10Speaker 00

  So funny enough, we had some LPs say exactly the same advice, which was one of my more surprising moments from our fundraiser where some of the LP said, it's that important that you're in some of these brand deals to be able to establish yourselves and don't be afraid to lean into that. We had other, we had LPs say exactly the opposite too, but it was interesting that even the LP community was their positive externalities from being in these, you know, these winners and you should be willing to kind of compromise to do that.

• 48:35Harry Stebbings?

  Listen, my friend, are you ready to do a quick fire?

• 48:37Speaker 00

  Yeah, let's do it.

• 48:38Harry Stebbings?

  So who outside of chemistry do you learn most from in the venture industry?

• 48:43Speaker 00

  The person I learned the most from has been Mike Volby, just a tremendous mentor to me at, at Index Ventures and somebody I continue to call regularly for advice as I'm kind of navigating our, our new fund and next chapter.

• 48:54Harry Stebbings?

  What would you most like to change about the world of venture?

• 48:57Speaker 00

  I would change the group think. I think it's bad for founders and I saw a great meme go around yesterday of, you know, a cheetah, an airplane, a rocket ship, and then the speed at which venture gossip moves between associates. And that resonated with me. I wish there was a little bit more independent thinking in the industry.

• 49:13Harry Stebbings?

  One thing I do say to founders is like, you are either fundraising or you're not nowadays sadly. What WhatsApp groups have changed is the ability for associates to communicate very, very fast with large groups that actually, oh, I met Mark, he wasn't great. And actually they're not even at half a million in ARR. So we turned it down. It can really damage a raise when you're not even raising.

• 49:35Speaker 00

  I agree. I think you're totally right. I, I think companies can be very cognizant of those dynamics.

• 49:40Harry Stebbings?

  What do you most need to change in yourself as an investor to be better?

• 49:45Speaker 00

  You know, really thinking about how I spend time and reorienting it 100% towards playing offense is a new skill for me right now. After having been in a large

• 49:54Harry Stebbings?

  You think that's even possible, dude? I mean it nicely, but like you get board seats, portfolios accumulate. You can't. You have team members, they have culture, morale, promotions.

• 50:03Speaker 00

  So you can't forever. You can when you have a clean slate from day one. So you don't have it forever, but I have it now. I feel like I'm running with a jetpack on my back right now. It is a tremendous feeling and it's probably, you know, what you felt for your fun one before you'd made an investment. I mean, that's the, the level of energy and kind of the juxtaposition from carrying a, you know, a very heavy board load and portfolio load and going to that. So you're right. It's not infinitely scalable, but it's very exciting right now.

• 50:30Harry Stebbings?

  You can invest in a seed firm, a series A firm and a growth firm. Can't be yours or mine. Which would you invest in?

• 50:36Speaker 00

  Pick the fund? Oh, this is a good one.

• 50:39Harry Stebbings?

  Mine would be like cyber starts at seed or neat go at adjacent. A, it would, it would have to be benchmark and then growth I'd do thrive.

• 50:48Speaker 00

  So growth, I would do Meritech. I think they're doing extremely interesting work right now. Series A.

• 50:53Harry Stebbings?

  And they're constrained fund size for growth.

• 50:55Speaker 00

  And they're constrained fund size for growth and they're, they're just doing some really interesting work. So I'm a huge fan of, of kind of the strategy and the people.

• 51:01Harry Stebbings?

  They nailed generational transition with Alex, Max and Max.

• 51:05Speaker 00

  It's a team of hitters. It's independent thinkers. They're going to have tremendous returns and founders love working with them. So that's an obvious choice for me that there are some other great funds as well, including IBP. At the series A, I think Excel Ventures continues to just do really interesting innovative work. Very independent, very strong crew between Dan, Voss, Steve, a bunch of the other folks there, Amit. And it's seed. There's so many good, interesting seed funds right now. I, I have a hard time giving you one off the cuff of my head.

• 51:31Harry Stebbings?

  Come on.

• 51:32Speaker 00

  I'll tell you what though. We worked out the Uncork office to start the fund and, and they're a fantastic institution.

• 51:37Harry Stebbings?

  What's the most challenging thing about starting a new firm?

• 51:39Speaker 00

  It's hard building something from scratch. Here we are before this interview. I was trying to figure out how to get my microphone lighting set up at a big fund. That would have been, there would have been a whole team helping me do that. It's both the fun part. It's also hard. And that's, I think what makes it fun.

• 51:53Harry Stebbings?

  Mark, do you think richer investors make better investors? Because you're not afraid richer like personally wealthy. Yeah, because you're not afraid of downside.

• 52:02Speaker 00

  Nobody has ever asked me that. That is such an interesting question. My gut reaction is to say the opposite, which is that the wealth level correlates with a lack of hustle. And therefore, but it's, that's actually not in practice what I've seen. I think there is a correlation less about the money and more about the people who are so good at this job. That it's not actually, the money is the afterthought. They love the job and they love doing this. And I don't know if it's the, I don't give a shit anymore because I have so much money that I, I actually, I'm not sure it's that. I think there is to get to that level, there's such a love of the craft and of, of doing this job that they're probably pretty good at it.

• 52:39Harry Stebbings?

  Dude, listen, I'm so thrilled for you. Honestly, I, I'm so happy to see the news and this is such an exciting time. So thank you for doing this with me and it really means a lot to have the friendship.

• 52:49Speaker 00

  Harry, it's a total pleasure. Like I said from the beginning, congratulations again on your fun. Thank you for having me on the show and thank you again.

• 52:57Harry Stebbings?

  I want to say a huge thank you to Mark for joining us today. It was the only podcast episode that chemistry have done as part of the release. Such a joy to make that happen and you can watch the full episode on YouTube by searching for 20VC. That's two zero VC. But before we leave you today, what do Henry Ford and AI have in common? Neither could change the world without automation. In the future, there will be two types of businesses, those that have automated and those that wish they had. UiPath, the undisputed leader in automation, is taking us into the era of agentic automation. UiPath's new AI agents don't just follow rules, they think, they make decisions. They work alongside the world's most powerful software robots, already trusted by over 10,000 businesses.

• 53:40Harry Stebbings?

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• 54:24Harry Stebbings?

  Atio also lets you build Zapier style automations, gives you powerful reports and works perfectly for any go to market motion from PLG to sales led. And Atio is designed for the next era of companies like yours. And companies like yours shouldn't have to deal with inflexible, one size fits all CRMs. So join industry leaders like Eleven Labs, Replicate, Modal and more to scale your startup beyond the next level. Head over to atio.com/20vc and you'll get 15% off. That's 15% off your first year at atio.com/20vc. And if Atio helps you stay ahead by streamlining your relationships and operations.

• 55:08Harry Stebbings?

  Now, if you're looking to stay ahead on the investment side too, Fundrise's Innovation Fund is taking venture capital to a whole new level. It's a public venture fund anyone can invest in, not just institutions and accredited investors. The Fundrise Innovation Fund is democratizing venture capital, which could have big consequences for the industry. The fund is already off to a good start with 100 million into some of the largest, most in-demand AI and data infrastructure companies. Companies like OpenAI, Anthropic and Databricks. Check out the Innovation Fund's impressive list of investments for yourself by visiting fundrise.com/20vc. Carefully consider the investment material before investing, including objectives, risks, charges and expenses.

• 55:53Harry Stebbings?

  This and other information can be found in the Innovation Fund's prospectus at fundrise.com/innovation. This is a paid partnership. As always, I so appreciate all your support and stay tuned for an incredible episode coming on Monday with a business that was valued at over a billion dollars and overnight said, no more SaaS company. We're going AI first and AI revenue only. An incredible turnaround story on Monday.