20VC: Turning a $15M Investment in Monday into $1.5BN in Cash | The Strategy Behind a 37x DPI $45M Fund | The Three Step Process to Selling Positions that has Netted Top Percentile Returns with Avi Eyal, Co-Founder @ Entrée Capital

Avi Eyal is Co-Founder and Managing Partner of Entrée Capital, an early-stage VC fund with a portfolio including the likes of Monday.com, Stripe, Coupang, PillPack, and Snap. From their $15M investment into Monday, Entrée distributed a whopping $1.5BN, one of their $45M funds is a whopping 37x DPI. Avi is one of the greatest venture investors you might not have heard about. In Today's Episode with Avi Eyal We Discuss: 1. The Biggest BS "Rules" in Venture Capital: Why does Avi believe that it is BS for every deal to need to be a homerun and return the fund? Why does Avi believe that signalling is real and it is BS to suggest otherwise? Why does Avi believe that it is BS that ownership is crucial to make mega venture returns? Why does Avi believe that you do not have to win every deal to be one of the best in venture? Why should venture investors not manage the positions of their companies when they go public? Why is it BS to think they have asymmetric information when the company goes public? 2. What Makes the Best Founders: Does Avi prefer first or second time entrepreneurs? Why? Would Avi rather back a founder that is an expert in a market or one that is new to a market and has the naivety to not know what is hard? Are the best CEOs the best fundraisers? How does Avi rank the following when investing; team, market, traction and technology? When Avi has misread a founder, what was it that he missed? 3. The Biggest Hits and Biggest Misses: Monday: How did Entrée build such a large position in Monday over time? How did a Series A lead dropping out leading to a $1.5BN gain for Entree? Stripe: Entrée has now 50% of his Stripe position. Why? What is the three step process for Avi in selling positions? How does he know when to and what is the right amount? PillPack: Entrée made $15M from PillPack's exit. What did that teach Avi about ownership? Cazoo: How was Entrée the only one to make money from Cazoo? How did Entrée's sell strategy help him make millions when everyone else did not sell?

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

• 0:00Speaker 00

  Since the beginning of Monday, we invested approximately fifteen million dollars. The distribution from that was over one and a half billion dollars. I'll tell you that the next ten investments that were successful didn't equate to the gain on Monday. You don't have to win every deal, you just have to win enough of the good deals.

• 0:18Harry Stebbings?

  This is 20VC with me, Harry Stebbings, and I could not be more excited for the show today. Our guest is one of the greatest venture investors that you might not have heard of. He turned a fifteen million dollar investment into one point five billion dollars in cash. He has a thirty seven X DPI, thirty seven X on a forty five million dollar fund. I'm thrilled to welcome a dear friend of mine, Avi Ayel, co-founder and managing partner of Entree Capital. I'd also want to say Avi has been a long-term supporter of mine in 20VCs and I so appreciate our relationship, Avi. But before we dive in today, all of you listening use tons of software every day. Sometimes it fills us with rage, you can't figure something out, the chatbot in the bottom right is useless.

• 1:02Harry Stebbings?

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• 1:46Harry Stebbings?

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• 2:29Harry Stebbings?

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• 3:10Harry Stebbings?

  ensuring it not only reflects your unique style, but also ranks well on search engines. Plus, their flexible payment options cater to every customer's needs, making transactions smooth and hassle-free. And the Squarespace AI? It's a content wizard helping you whip up text that truly resonates with your brand voice. So if you're ready to get started, head to Squarespace.com for a free trial. And when you're ready to launch, go to Squarespace.com/20vc and use the code 20vc to save 10% off your first purchase of a website or domain.

• 3:41Speaker 02

  You have now arrived at your destination.

• 3:44Harry Stebbings?

  Abby, I am so excited for this, dude. Listen, we've been friends for many years. We get to do this in person, which is so much more special. So thank you so much for joining me. It's lovely to be here. Thank you for having me. Not at all. Now, listen, man, I think childhood shapes a lot of who we are and how we think. And given we know each other and we've been for walks in the park and we have that relationship, I thought I'd just dive straight in. When you think about maybe hardships in your childhood, what was the most prominent that shaped how you think today?

• 4:09Speaker 00

  I didn't have a extremely challenging childhood, but I was born in Israel at a tough time. I grew up in a lower middle-class family with a father who was mostly away in the military. And at the age of five and a half, I was whisked away by my family, my parents, to South Africa and pretty much dumped in a school, left to figure out a new language, figure out new friends, things like that, and integrate into a new environment. So it caused me to become very independent at a young age, and I had to figure out what needed to get done. So I worked hard and I tried to get results, and I think that shaped me.

• 4:47Harry Stebbings?

  So funny, you know, one of the biggest commonalities in successful entrepreneurs is they moved in childhood because you're forced to assimilate with new people, new environments, new cultures, and you have to make it work. And very much like a business with teams, you have to adjust and develop with everyone. And so it's a really interesting kind of commonality. I think there's a question of luck versus skill in this business. I think we're often too fake humble, if I'm honest. We're like, oh, it's mostly luck. How much of your success would you give to luck versus skill? And how do you think about that?

• 5:19Speaker 00

  So I can't lie, I have some skill. I was a serial entrepreneur. I started a bunch of businesses, but nothing came easy. When my friends at school were surfing and going to the beach on holidays, I was working part-time jobs. And so I strongly believe that the harder you work, the luckier you get. I would say it's 20, 30% luck.

• 5:41Harry Stebbings?

  What do you think is the luckiest moment that you've had?

• 5:44Speaker 00

  I would say not business-wise. You're wanting a business answer, I'm not going to give you one. I'd say it's luck of having my dive master scuba diving skills because that led me to surviving. That led me to living because I survived the tsunami in 2004 on Koppi P where two-thirds of the island, 2,000 people died that day. And I had amazing luck to be able to save myself, save a couple of people who were drowning and...

• 6:13Harry Stebbings?

  So what happened? You scuba dived away from...

• 6:15Speaker 00

  No, no, just the fact that I had scuba diving skills because I was in a in a hut underwater. And I managed to get out and save a couple of people in the process as well.

• 6:26Harry Stebbings?

  So I want to move to venture. One thing that struck me and always kind of came across in the references was like the speed of conviction that you have. You know, whether it's Ben at Designer Fund, who was like the Stripe deal, you were like, yeah, done. I remember with Alex and Kazoo, you were like, yeah, done on a napkin. How do you think about your ability to get very convicted very fast?

• 6:47Speaker 00

  I think you need to have a some sort of method and then that method it becomes tried and tested. At Entree, we have something called the four Ts, which is technology and team multiplied by timing to the power of the team. You need those elements in place.

• 7:03Harry Stebbings?

  Technology and team. So that's like the core product and the team that's built it. And then the timing of which it's coming to market multiplied by the team again. What does that mean?

• 7:12Speaker 00

  No, no. So so the formula is you take technology and TAM.

• 7:16Harry Stebbings?

  Yeah.

• 7:16Speaker 00

  Put a bracket around it to the power of the team.

• 7:19Harry Stebbings?

  Yeah.

• 7:20Speaker 00

  And you multiply that whole algorithm by timing.

• 7:23Harry Stebbings?

  Okay.

• 7:23Speaker 00

  So the key thing is, one, in in terms of priority, one is team, two is timing, and then technology and TAM.

• 7:31Harry Stebbings?

  If we just unpack those, when we think about timing, will you take market timing risk?

• 7:35Speaker 00

  Yes, we do. Market timing risk is is is a function of patient capital.

• 7:41Harry Stebbings?

  And you are the most patient capital?

• 7:43Speaker 00

  I think one needs to understand that you're not building for today. I think you're building for a much longer period of time.

• 7:49Harry Stebbings?

  How do you think about the the ability to sustain a company through multiple droughts of financing? So I I get you in terms of patient capital, in terms of waiting, but companies run out of money. And if the market doesn't come into fruition in the way that you think it will, you can't carry a company forever.

• 8:04Speaker 00

  Well, no, you you certainly can't carry a company forever, but if you have conviction and you're a salesman and a company plans properly in terms of its finances, there are milestones along the way where you can take different decisions. And so you can conserve capital or you can spend capital more quickly. And I think the trick is with companies is to figure out where those milestones are and which forks you are in the way and choosing the right fork. And then you need a fair amount of luck because there are a lot of investors out there. It's a challenge, but you can plan on how to approach which founders, which VCs at which

• 8:46Speaker 00

  time or which strategic investors at which time to get funding to hopefully succeed.

• 8:52Harry Stebbings?

  On the team side, with it being number one, I'm always interested. Do you prefer insiders to a market who know it brilliantly well? Would you prefer the outsider who's got a wonderful naivety to their approach? What's worked for you and what are some lessons for you from those two different camps?

• 9:07Speaker 00

  I think I prefer folks who have an intimate knowledge of the industry that they're going to tackle. I think they have a greater chance of succeeding. Practically, when I look at it, you take Roy Mann from Monday.com or you take Edo from Riskified, T J Parker, who we back to the Pillpack, who as a teenager used to ride his bicycle delivering medicines, drugs from his dad's pharmacy, or Run Corber, who is an environmental engineer who created Brezometer, which we can talk more about it. It's a company that struggled for six years until it suddenly didn't struggle and eventually was a big success.

• 9:44Harry Stebbings?

  When we look at those deals, if we say take a Pillpack and I may be diving in too deep and you can tell me, oh, down Tiger, you didn't have a huge amount of ownership there. Like when, you know, I think it was founder collective that led the first round and then an XL. How do you think about the importance of ownership then, given the fact that some of your biggest winners, like a Pillpack maybe, you didn't have the biggest ownership?

• 10:04Speaker 00

  One doesn't need a large ownership in large outcomes when you have a small fund. That fund was an $18 million fund and I think our proceeds from the sale was 15 or 20 million dollars gain. It was a contributor to the fund and I think that when you look at fund portfolio construction, you build your fund not by trying to have complete home runs on every deal, but we like to call it angel and core deals where. Angel deals are deals where you could have a smaller check deployed or a smaller ownership. And you have optionality to increase it with prorata over time or to continue.

• 10:46Speaker 00

  But a bunch of these smaller deals can get you significant returns, which can bring you a one X return on your fund. And then the big, the big ones, the headed out the ballpark ones are the ones where you get the extra multiples.

• 11:00Harry Stebbings?

  I love this. So how many angel deals do you have? Like just say like proportion wise, is it like thirty angel deals and fifteen core deals?

• 11:07Speaker 00

  Certainly the earlier funds, which were around eighty hundred million dollar mark. We had ten or so angel deals and ten or so core deals. Again, like angel deals, you spend less time on because core deals you're spending more time on. And you don't want too many deals because our model, the entree has been we add value. We actually work the companies.

• 11:26Harry Stebbings?

  We'll, we'll get to the value add element. Is that enough, dude? Like I was always trained on the like, oh, you need thirty at seed. I mean, I am not that good a picker to do ten.

• 11:36Speaker 00

  The largest number of companies we've had in a fund, I think, is twenty three, twenty four companies in a fund. We're different.

• 11:43Harry Stebbings?

  Can I ask, how do you get around the element of like other VCs saying, oh, well, Avi has angel deals. Just take him for an angel deal and let me lead the round.

• 11:51Speaker 00

  We do angel deals where we believe that the fund leading is a good fund and can drive the business forward. If it's a fund that will listen to our opinions, the business obviously has to be, has to pass muster. We kind of view angel deals as generally a deal we wouldn't have won. We couldn't have led.

• 12:12Harry Stebbings?

  Why don't you win deals?

• 12:14Speaker 00

  You don't have to win every deal. You just have to win enough of the good deals. And under our formula, you have to participate in, in enough good deals. At times we don't win deals. We probably lose most of the, the deals that we want to do. I think we get our fair share. Many a time, we don't have perfect conviction on a company. So we'll do an angel check as we see that the company proves the, the data points, the, the, the questions we had. We'll be very early in trying to lead the next round or put in a safe or trying to up our ownership before the next round.

• 12:49Harry Stebbings?

  What is an example of where you had lukewarm conviction and then gained conviction seeing execution?

• 12:56Speaker 00

  You know, I think Breezer Meter started off as as one of those where we didn't lead the pre-seed round, we bought a small check.

• 13:04Harry Stebbings?

  Small check is like two fifty K.

• 13:05Speaker 00

  Yeah, something like that. And then we saw a bit more conviction and we led the seed. And then we continued into the A and continued into the B. And then eventually we sold the business with and and we had the, I think we had the largest ownership in the company. We had seventeen, eighteen percent, two hundred and fifty million dollars.

• 13:22Harry Stebbings?

  Two hundred and fifty million.

• 13:23Speaker 00

  Yeah.

• 13:24Harry Stebbings?

  So that was an angel deal that was in the kind of

• 13:26Speaker 00

  Yeah.

• 13:26Harry Stebbings?

  Paul Campbell graduated.

• 13:27Speaker 00

  They've graduated to core and

• 13:29Harry Stebbings?

  Okay, gosh, yeah. And that returns thirty million dollars back.

• 13:32Speaker 00

  So that return gave us around thirty, thirty something million back.

• 13:35Harry Stebbings?

  There's this idea that you're not able to concentrate capital into your winners. I often hear it, which is like, well, that model doesn't work because if it's really working, Sequoia or Andreessen or whoever will just come in and just take the A and you won't see any of it. Is that incorrect, do you think?

• 13:50Speaker 00

  I don't think it's entirely incorrect. Today, you want to generally get the next round done by a fund that can do the round after that. If you get a fund in to do the A, you want to know as a founder that the fund that's doing your A can do your B, can lead your B, because you don't know where the world will be two, three years later. You want your investors to be able to continue and also continue when the trips are down, when when things aren't great. And and what we've found is that many times we've led the seed and led the A in companies that weren't executing at at the best, at the best time. But naturally, what happens is that if

• 14:32Speaker 00

  you are doing extremely well, inherently you'll gravitate to tier one funds who want to lead and who'll write a bigger check and will carry on. And and we've kind of feel that playing together i- is better.

• 14:44Harry Stebbings?

  Avi, is signaling risk real? Tier one fund does the seed and then doesn't do the A. Is the startup dead or challenged?

• 14:52Speaker 00

  I think the startup is challenged, of course. And and that's part of the challenge with what's happened today within the what I call the institutionalization of VC where Andreessen, Sequoia have become such big funds, they investment Managers, you know, their multiple targets are different, their R R targets have changed. It's almost like a black rock for for startups. And so it's very easy for them to write that very early check because it's such a small fraction of their fund.

• 15:19Harry Stebbings?

  And that large check, that five on twenty five is actually what?

• 15:23Speaker 00

  Or like twenty on forty or things like, you know, like big checks, you know, that's what's happening. And and and and for them to write a twenty million dollar check is like for you I to write a quarter of a million dollar check. I mean, that's you have to look at it in in in that context. So it doesn't matter to them when a startup starts, it needs to think about these things.

• 15:44Harry Stebbings?

  I think people have short memories and, you know, flow was three hundred million dollar check from Andreessen. I think people kind of forget pretty quickly these days. So I don't think even reputationally, it's that challenging unless it's really, really fricking bad. And even then it's kind of forgotten. A question that I have on the back of that is five on twenty five. I think price matters. I'm old school Avi despite my youth. Peter Fenton said before on the show that price is a mental trap or valuation is a mental trap. Saul, who's on your team, said to me that price and valuation is something that you have spent a lot of time disciplining him on and talking about. How do you think about price sensitivity today and valuation?

• 16:21Speaker 00

  I don't like expensive deals. What can you do? I think that high price deals with a large amount of capital early in a startup's life closes opportunities for it. I think it creates a situation where you're not really running the business as lean as you could be. You're not making the decisions that you should be doing at the earlier stages. I think it leads to bad decision and I think it narrows the permutations of future fundraisings down the line. Having said that, in Israel, you know, there's there's a big challenge where the the top deals are six to twelve million dollars on a anything from fifteen to thirty or forty prees. And I suppose that Entree has done at the bottom end of it.

• 17:06Speaker 00

  I mean, we've written some checks at, you know, six on twelve, six on fifteen, things like that. But we generally don't write the bigger checks. We we definitely don't.

• 17:15Harry Stebbings?

  Why do Israeli companies dilute so much so soon?

• 17:18Speaker 00

  So I'm not sure that they're diluting so much.

• 17:21Harry Stebbings?

  Well, six on twelve.

• 17:22Speaker 00

  Because it's, you know, six on twelve is.

• 17:25Harry Stebbings?

  I mean, do you want my wife and child?

• 17:26Speaker 00

  Is is four on eight is, you know, the question is.

• 17:29Harry Stebbings?

  Yeah, but I don't ever see four on eight, have I?

• 17:31Speaker 00

  It's the amount of capital and and I don't like that dilution. I don't like that valuation. I think that you can do more with less. And I think it sets the business from the start on the wrong path. Now, bear in mind, if I'm building the next GPU, my seed round has to be fifteen million dollars, a different type of business. But for asset light businesses, for businesses that today you can get MVPs out the door in three months, where three or four chaps can sit in a garage and or a basement and can write some code and and get some P O Cs with initial clients at at very little cost, real cost to themselves. I think that, you know, six, eight million dollar rounds is just unnecessary. It's unnecessary risk to take, unnecessary dilution to take. I think you can do a heck of a lot more with less.

• 18:16Harry Stebbings?

  So how do you determine when to pay up versus when not to? And does that mean that you don't do US deals as much anymore?

• 18:22Speaker 00

  I think we concentrate in different places at different times. From our perspective, we like to do the deals that we like. We we don't feel that we burdened by doing fifteen deals or twenty deals in two years and then raising another fund.

• 18:37Harry Stebbings?

  You don't feel you have to play the game on the field?

• 18:39Speaker 00

  No, you know, our view is we are one of our own largest LPs. Our personal money is probably first, second or third in size and in our various funds. And and we want to make sure that we invest it correctly. You know, in cricket terms, it's not a one day game.

• 18:57Harry Stebbings?

  What does that change about how you invest? When most of it's your money?

• 19:00Speaker 00

  Responsibility, shared risk, shared alignment, alignment with our LPs. We pay management fees.

• 19:07Harry Stebbings?

  Do you think you go slower because of it?

• 19:09Speaker 00

  I think we go at our own pace. Sometimes it's slower, sometimes it's quicker. It it's just our our own pace. We don't need to build A U M. We don't need to build management fees. So, you know, from our perspective as a fund, we we focused on the businesses and we don't want to do too many companies at the same time. Because we find that the more we involved with our core companies, the luckier those companies get.

• 19:33Harry Stebbings?

  We're gonna get to bad debt, it's like the post investment. The other one, though, was TAM. I I find TAM a wonderfully misleading topic because the greatest markets often start off as toys or the greatest products start as toys, the greatest markets don't exist. How do you think about TAM? What have been some of your biggest lessons in how to analyze markets when entering a business?

• 19:52Speaker 00

  Massive markets are great, but not every market is massive. You find great founders and those great founders are not necessarily running after massive markets. But if that founder and the business opportunity they have can be number one or number two in a in a smaller market. And when I say number one or two, I mean it in terms of revenue, profit, then people will want it and there'll always be an exit path for it. As I said before, more capital reduces the option. So in massive markets, you have to deploy larger amounts of capital to to fund because there are more competitors and it's, you know, and other things are happening. But we don't shy away from smaller markets. We want to make sure that you can absolutely be number one or number two in that in that market.

• 20:36Speaker 00

  And then you'll get a reasonable return and three reasonable returns make a fund.

• 20:41Harry Stebbings?

  Do you like competitive markets? People argue with me on the show about this. I hate competitive markets. You don't have pricing power, your cats are high, your retention is low, product marketing is harder. But then people say, well, any worthy markets, competitive, Harry, which I think is bullshit. How do you think about competition in markets?

• 20:58Speaker 00

  Competition is great when you're on top, right? But I suppose competitive markets, people invest in in those markets many times. More vanity than sanity is is kind of ruling the investment. Nothing wrong with competitive markets as long as you can have a good handle on your costs and you can win. I mean, if you take a company of ours, SeatGeek, as an example, highly competitive market, difficult margins. And yet they've managed to carve out a vertical offering within that market where they've gone deeper into the ticketing systems of the clubs and of the event spaces.

• 21:36Speaker 00

  They make money on on selling tickets, but they do so much better because they're starting to control the ticket generation, the price optimization, you know, all kinds of things like that. So I'm not afraid of big markets, but I'm wary of big markets, which are competitive.

• 21:52Harry Stebbings?

  I I totally agree and get you there. Would you ever back a founder where you think the founder is great, but the market is horrible?

• 21:58Speaker 00

  I think I would try get that founder to understand why I don't like the market. And if I can, and that founder chooses a different market, then I'll try back them. Or in some cases, like in SeatGeek, they they started selling tickets and then they found a wedge of getting in. They bought a company out of Israel called TopTix, which provided software for event spaces and and clubs to to manage their ticketing. And that wedge got built into a big business. Here again, Monday.com is another one where they went after a kind of a general market, right? But they figured out a wedge and now they're big businesses in that is Monday Dev, which competes with Jira and things like that.

• 22:43Speaker 00

  And Monday CRM, which completes with Salesforce and PipeDrive and things like that. And they've built big markets.

• 22:49Harry Stebbings?

  But I do want to talk about Monday because I spoke to Aaron before the show.

• 22:53Speaker 00

  Wonderful guy.

• 22:53Harry Stebbings?

  Fascinating chat. I'd love to just start with that. Like, how did you build conviction in Monday when respectfully SMBs was like, no, that's not a good market. CRM was like, no, that's not a good market. How did you see goodness when everyone else saw unattractive market?

• 23:10Speaker 00

  I think, starting off with Monday, the last business that I built myself was a SaaS product for the GRC market, governance compliance market, and I wanted to build it very open. But then we were using Microsoft SQL Server, you know, it was the early 2000s, AWS wasn't around. You know, there were so many limitations and I and and we built a successful business which we sold. But my vision was to build it in such a way that it would start vertical in GRC but move horizontal to other areas. And then Monday came along and I saw Monday and in that I saw everything that I wanted to build, but fleshed out so much better and no limitations because of AWS and things like that.

• 23:50Speaker 00

  And other VCs, other people saw Yammer or Slack or something like that. And so we were in in the first round of of Monday and.

• 24:00Harry Stebbings?

  How big was that?

• 24:01Speaker 00

  One and a half million dollars.

• 24:03Harry Stebbings?

  Okay.

• 24:03Speaker 00

  The old good days. And where others around the table didn't see it, I'm. And my hand on the table, I said, there's no way I'm putting in a safe. I'll fund you. Let's carry on. We're going to build a great business. And and I was very involved in kind of the day to day, almost of of the business at at some point there. And then if memory serves right, we we put another safe in and then we led the A. Every time, no fun, no tier one or tier two VC wanted to back it. They they just didn't see it. There was always the argument of. Uh, you don't have enough enterprise clients, but this is Yammer or this is Slack or this is this or, you know.

• 24:39Harry Stebbings?

  Did someone not show up to lead the A and then fall away and you had to like step in?

• 24:44Speaker 00

  So there was a potential Sequoia in Israel doing the A, but uh. Don't wanna say what the reasons were. He it ended up that uh we had to step up and and make it happen.

• 24:57Harry Stebbings?

  And so you step up and make that happen and you wrote a what check in that place, like a six million dollar check?

• 25:02Speaker 00

  No, no, it was the round was six million dollars. We I think we wrote one and a half or two million of it. It was a real, you had to get dig around and get like a bit of checks from everyone else to to make it happen.

• 25:14Harry Stebbings?

  Was there ever a time when Monday didn't look good? Was it just a rocket ship from day one?

• 25:19Speaker 00

  The first eight, nine months of Monday, we we didn't have product market fit. I remember we had like six customers and we had six months of cash left. And and then there was the breakthrough of of having product market fit. But then again, everyone shied away because of the market segment. They weren't going after enterprise first. And in retrospect, we should have gone after the enterprise maybe a year earlier than we did. But once we started the initial touchpoints of doing enterprise, then we did the B, which Jeff had insight. Had the foresight to lead and and it was a runaway success from there, but but even going to the C, the D, the E, the the big funds.

• 25:58Speaker 00

  The the tier ones, so to speak, were were always elusive. There was always a question and and I think that's how we ended up being. Such large shareholders of Monday and fortunate enough to be with the business along the way. Initially spending a lot of time with the business, but as as it grew, spending less, but but being around the table and I'm I'm. Extremely fortunate to be a board member of of Monday as a public company today.

• 26:23Harry Stebbings?

  How much was your position in Monday?

• 26:25Speaker 00

  We had invested over the period since the beginning of Monday, we invested approximately fifteen million dollars. The distribution from that was over one and a half billion dollars.

• 26:35Harry Stebbings?

  Fuck.

• 26:38Harry Stebbings?

  Dude, that's that's real money. That is impressive. Okay, so I'm just fascinated that when you think about that, and I mean this in total respect to like, you know, TJ and Pillback, but like, and then the fifteen million dollars that you get from like a Pillpack style, does that not just prove the complete outlier nature of venture? And does it not just prove like the only thing that matters is being in your net worth?

• 26:56Speaker 00

  We're extremely fortunate and lucky to make two million on a deal or one and a half billion on a deal. The the point is for us, it's a passion and for us, it's the ability to work hard. And sometimes I'll get a bad rep because sometimes I can be a bit harsh with my founders and things like that. But we we live it, we breathe it, we love it, we have passion for it and we do it out of love. And we think that playing that game with with that kind of passion is something that maybe sets us apart from some of the other players. It doesn't make us a pure financial player. Uh, we're looking for the business to succeed. We're looking for the business to do well ahead of the financial return we get.

• 27:39Speaker 00

  We kind of think that if the business succeeds, we'll be okay. A very different approach.

• 27:45Harry Stebbings?

  You mentioned that distribution. I I think I said this to the Forbes journalist. And I remember saying to him, like, Avi is just a fucking master at making money. And it's a hard thing in venture. Again, we've been, we've trained a generation that's all about getting in and it's not. It's about getting out as well. And that is a very hard thing that I fucked up on in the last vintage. Admittedly, with a very small fund, so at least my learnings that, you know, contained. What are your biggest lessons on when to start selling down and how to sell down?

• 28:13Speaker 00

  When we started Entree, we we put down uh seven or eight principles. And one of the principles that we put down was how do we not fall in love with the value we see on paper? And so we decided that the minute that the price per share of a current round is, I won't tell you exactly, but six or eight times your price that you came into the round, try sell a third. And when you get to the pre-IPO round or in the IPO across that kind of timeframe.

• 28:48Speaker 00

  Try sell a third. When the lockup expires after an IPO, sell everything and or distribute the the stock. The the idea behind it is that in the context of VC, we're private investors. We're not public investors. We're not Goldman Sachs or BlackRock or State Street or et cetera. We're our competence is getting the business to to a place where there's liquidity and it's successful. From that point on, it's someone else's opportunity. We've kept to that and that's managed to save us both in the case of Kazoo where the valuation got to two and a half billion pounds the round before the pre-IPO and we sold a bunch. And when the company

• 29:32Speaker 00

  went public, we sold a bit. And when the

• 29:35Harry Stebbings?

  Were you able to sell?

• 29:37Speaker 00

  Yeah, there were challenges because how much you could sell. But, you know, so we didn't sell a third at the IPO. We sold, I think it was 10% at the IPO. And then when the lockup expired, it was distribute. It wasn't, oh, the price is at five dollars now, four dollars fifty or five dollars. It's not at $10. But at $4.50, $5, it was still two and a half billion dollar business.

• 29:58Harry Stebbings?

  How much did Kazoo return for you?

• 30:00Speaker 00

  We did well. We did well.

• 30:03Harry Stebbings?

  You can't blame me for pushing. You did. That's a fascinating one. What's the take on Stripe? Ben told me to ask about this. Getting in and getting out.

• 30:13Speaker 00

  Ben's is the closest to the scene. But the one thing that I've discussed with Ben and that we've worked on together is the same principle. Luckily for me, we're investors in Ben's fund as well, Designer Fund, which is a great fund. He took our advice well in the process. And and I think we've together, I think we've both exited close to 50% or just on 50% of our holdings in Stripe to date.

• 30:39Harry Stebbings?

  You mentioned when lockup expires, you sell everything. Quite a lot of investors have the idea that they have asymmetric information. They've known the founder for a long time, they've known the company for a long time, and actually they're best positioned to know what to do with that public stock. Why is that not the right case?

• 30:55Speaker 00

  Bullshit. It's a public stock. So you have insider information, then you run a risk. The fact that you've known how the company operates in the private sector does not mean that you know how the company trades in a public market, where it's at the whims of trading machines, of hedge funds, of other people that can manipulate the stock price and can move the stock price very easily. When you're a private company and you miss your quarter, it's fine. But when you're a public company and you miss even by one or two percent, you've seen situations where share prices can go down twenty five percent, right?

• 31:34Harry Stebbings?

  He's all sales for, yeah, have a forty million dollar revenue miss and it dropped twenty percent. I know it was not that. People really fucked up on the analysis of that one, though. I I've listened to.

• 31:42Speaker 00

  But you can't control that, right? And then you're in the public market and you can't tell Capital One or any other fund, public fund, what to do with their with their stock. So it's not your opportunity. The point of VC is to get companies to an exit or to get public. The point of a VC is not to, you know, it's venture capital, it's not private equity, it's not long only funds, it's not hedge funds, it's not asset, public asset managers. That's called VC for a reason.

• 32:11Harry Stebbings?

  Doug Leoni said on the show and to me that the venture business has transitioned from a boutique, kind of cottage history, to an institutionalized commoditized asset class. Do you agree with that?

• 32:25Speaker 00

  As I said earlier, I think that the Andreessen's and the Sequoias of this world have become more institutionalized because of the large size of assets they manage. And, you know, when you're managing tens of billions or hundreds of billions, it's it's it's hard to manage single digit millions or or ten or twenty million with the same attention and and the same oversight that you have on managing a five hundred million or a billion dollar position. And I think that therein is the opportunity for artisanal or boutique. Or or smaller VCs where it does matter to them.

• 33:05Speaker 00

  And and a partner can bring the required attention for the required period of time to help you bu- build your business.

• 33:12Harry Stebbings?

  Do you think founders want your help? I remember Jason Lamkin said on the show, no, no, founders want you to give them money and sort off.

• 33:20Speaker 00

  It's great to have founders who don't need you. You know, they come to you for advice every now and again. They know what they're doing and they're building a great business and it's and it's going great. So case in point, when you look at Monday at the beginning, we were very, very involved. And if you look at Monday, once it got to the C or D or E, it was a meeting every month or every something like that. It just changes. And then they just need course correction sometimes, or a bit of mentorship, or a bit of alternative advice. But I think by and large, when you start a business, you can use help. I was a first time founder as well, and I made many mistakes. And and the one thing that made me make many mistakes and yet still succeed was was that I had

• 34:03Speaker 00

  someone with more experience who was a mentor. So I wouldn't be so bold as to say that everyone needs us, but it's good to have a partner along the way.

• 34:13Harry Stebbings?

  One thing I do think that people disagree with me on is I think actually VCs can be helpful pre-product market fit. I think this is something we drastically underestimate, which is like, I think a lot of founders that don't have a tied enough ICP. The product marketing isn't quite right. They're too diversified on channel acquisition. And actually, you can actually say, hey, we need to be tighter, we need to be more focused. And you can really direct the acquisition of product market fit by having those lessons.

• 34:37Speaker 00

  I tend to agree with you. I think there are founders, you can't always have everything complete. Everyone's got challenges, everyone's got weaknesses, you, me, e- everyone. And so, you know, some founders have a challenge in understanding how to raise money. We've got a founder and he's an ex-Google fellow, he's got forty patents to his name. Unbelievable guy in terms of the technology side of the business. And he he couldn't hire for shit. And and what we've done is we've got an organizational development specialist on our team. And she's helped him recruit unbelievable sales. You know, around him. We've got another person on our team who's been very involved in helping him understand how to raise his series A, which he did successfully.

• 35:21Speaker 00

  But on the basis that we kind of gave him a path and we showed him how to pick which VCs to go to, when to go to them, how to go to them. And he did the work, but there was just that element that that added that necessary gap that he didn't have.

• 35:35Harry Stebbings?

  Do you think the best CEOs are the best fundraisers?

• 35:37Speaker 00

  No, I think it's a it's a great advantage to have as a CEO. I don't think that if you can't raise, you're not a good CEO. I think there are, depending on the business, again, there are businesses where the primary day to day job is not raising money. The primary day to day job is building a product and closing customers. Raising money is a necessary evil that needs to happen every couple of years. So I don't think that.

• 36:01Harry Stebbings?

  I agree. I also think people often come like, you know, if you think about you sell to three people, your customers, your team and investors. I think people are like, yes, they are because you need to be able to sell to those three. But selling to customers and team is very different to selling to investors. Often it takes a different investor language, mindset, knowing what we've

• 36:17Speaker 00

  Correct.

• 36:18Harry Stebbings?

  Compared to the other two. And so you can be great at those two, but not that. My mistake in the past cycle has been not selling when I probably could have done. When that's my biggest mistake, what's your biggest investing mistake?

• 36:30Speaker 00

  Well, my biggest loss as an investment was very early on. We invested in a Boston based company called Harvest Automation. Bunch of really clever guys out of iRobot and

• 36:41Harry Stebbings?

  How much did you put in?

• 36:42Speaker 00

  Over the period of time, we put about four and a half million dollars in and we lost the money and

• 36:47Harry Stebbings?

  All of it?

• 36:48Speaker 00

  All of it, to the cent. And as an engineer, I fell in love completely with the product and what they were building and robotics. And this was in two thousand and ten, two thousand and eleven. But I didn't have a clue about AgTech. I didn't understand that these robots, they're going to run around, understood they're running around the field and they're moving pots and things and, you know, et cetera. And I thought, wow, we can do this, you know, and those, you know, we had like lidars on these things and, you know, and lidars were like, at that time, I think it was the most expensive. Piece of the road, but I think it was like twelve thousand dollars for a LIDAR. Today, a LIDAR can set you back a hundred and fifty dollars kind of thing. And I fell in love with the product and with the engineering.

• 37:31Speaker 00

  I completely was green and didn't understand that the the founders weren't suited for this. The market wasn't suited for this. And so you learn your your lessons as you go along.

• 37:43Harry Stebbings?

  When you don't believe in a founder anymore, do you tell them?

• 37:45Speaker 00

  Uh, I've had on occasion the situation where I've had to have a heart to heart with a founder.

• 37:53Harry Stebbings?

  What's the benefits of telling them? It's the question that I ask myself because it's like, it's just gonna hit that. They're not gonna say, oh, you're right. I'll stop. I'll give all the money back to all the investors.

• 38:01Speaker 00

  No, I think it's, I think it's, it it allows you to reset your relationship with the founder and reset their expectations from you as a fund and as a person who's either on their board or or person involved in their business. And I think it's important because I think it's important to explain and put your position forward. Hear them out and I'm sure that in many times they they have their rationale. But it it it kind of allows you to then be honest with them and move on from that. They don't have to carry it. You don't have to carry it. It's much easier for everyone just being honest.

• 38:36Harry Stebbings?

  Monday, one and a half billion. What was your second best returner?

• 38:40Speaker 00

  Hundreds of millions, so much less. I I'll tell you that the next ten investments that were successful didn't equate to the gain on Monday.

• 38:50Speaker 00

  Outliers.

• 38:51Harry Stebbings?

  It is an unbelievably strange business, huh?

• 38:54Speaker 00

  It is, it is, but.

• 38:55Harry Stebbings?

  I always say to my mother, can you imagine a chef when ninety nine of the meals that they cook suck? And people hate them. They leave the restaurant. But one is the best in the world for that. And then they are the best chef in the world.

• 39:08Speaker 00

  No, I think I I think a good restaurant is you have a few outstanding meals that happen on a night. And the bulk of the other meals are good. And that's like a good restaurant. And hopefully only one or two people leave the restaurant.

• 39:22Harry Stebbings?

  Many zeros.

• 39:23Speaker 00

  Interesting, because one of the fund of funds looked at our portfolio a couple of years ago. And they said to us that they couldn't. Couldn't get, couldn't get us. And their rationale was when they put us on their, on their chart of evaluating, they said your returns are top fifth percentile VC returns, but your losses are private equity losses. And they tried to argue to us that we actually don't take enough risk.

• 39:49Harry Stebbings?

  Yeah.

• 39:50Speaker 00

  You know, our losses at maturity, in other words, when I tell you we've got three funds that are over ten years old, or two are twelve years old now, thirteen years old, and, and one is about ten years old. And, and at that stage, you know what the, you've pretty much the loss rate has matured. And the loss rate has been around fifteen percent, twelve, one is twelve percent, the other is fifteen percent.

• 40:12Harry Stebbings?

  Do you think you take enough risk?

• 40:14Speaker 00

  I hope so. Clearly, I'm told not enough, but it's kind of in a public company, you know, they're right at the, at the bottom of the quarterly, they're right there that past performance is no indicator of future returns. So it's easy to sit here and talk about the last twelve years, but it keeps me up at night, what's going to happen with the businesses now over the next ten years? Because, you know, we have tens of businesses that are pre-seed, seed and, and A, and they have to get somewhere, right? They have to mature and they have to grow and they have to succeed. You know, you're only as good as your last deal or you're only as good as your next, your next exit, right?

• 40:48Harry Stebbings?

  What's the DPI on your best performing fund?

• 40:51Speaker 00

  Thirty-eight X.

• 40:52Harry Stebbings?

  Thirty-eight X.

• 40:53Speaker 00

  Yeah. But the, but the other two funds, a small fund is forty-five million dollar fund, but the other two funds, which are eighty million dollar funds, the DPI is around five, six X.

• 41:03Harry Stebbings?

  Pretty good.

• 41:04Speaker 00

  It's, yeah, it's reasonable.

• 41:05Harry Stebbings?

  It's one thing that frustrates me though, which is like, there's a generation, and I sound so fricking old, Bill Gurley calls me boomer, uh, which, you know, coming from Bill, uh. But I hate the way that so many, like, younger of us, like, I don't know if it's, like, gonna be a twenty X fund, but we'll definitely be an eight to ten X fund.

• 41:21Speaker 00

  I don't know. I'd kind of look at how many Xs is the fund after year eight or year ten. Before then, it just doesn't, doesn't count.

• 41:29Harry Stebbings?

  Sourcing, selecting, servicing, three core tenets of venture. How do you think about what you're best at and what you're worst at?

• 41:35Speaker 00

  Outsourcing could be much better. We're very good at servicing our, our companies.

• 41:40Harry Stebbings?

  Where are you weakest in investors' day?

• 41:43Speaker 00

  In everything. I want to be better in everything. For better or worse, one of my characteristics is that I always think that I'm not good enough and I always have to improve and.

• 41:52Harry Stebbings?

  Where does that come from?

• 41:53Speaker 00

  I think it comes from my childhood. I think it comes from having very strict parents. Having expectations by your parents.

• 42:01Harry Stebbings?

  Did your parents tell you they were proud of you?

• 42:03Speaker 00

  Uh, not enough, not enough.

• 42:06Harry Stebbings?

  Did how your parents parent you impact how you parent your children?

• 42:09Speaker 00

  I try to take the good. I hope that one day my kids will come back to me when they're much older and say that we did a good job.

• 42:16Harry Stebbings?

  I had a brilliant one the other day, which is like success as a parent is when your adult children choose to spend time with you. They actively want to hang out with you.

• 42:23Speaker 00

  That's true.

• 42:23Harry Stebbings?

  Another brilliant one is when you have well behaved grandchildren.

• 42:26Speaker 00

  You know, I think, I think as your, your kids get a bit older, I've got twins who are now twenty years old. And, and one is fifteen. And I think that as they get older, they come to you for wisdom. I, I'm sure other parents are guilty of this, as I am guilty of this, is that unfortunately, it takes us time to learn that they're coming to us for wisdom and many times we, we inadvertently take it as an opportunity to control. So many times the advice we give them or the thing, or the things we tell them is more about us trying to still control them or have some level of control over them versus trusting them that, that we've instilled the right values in them and, and hopefully giving some of our wisdom that we've learned over the years.

• 43:10Harry Stebbings?

  When we think about misses, I do think misses also shape mindsets. What's a big miss that you have and how did that shape your mindset?

• 43:18Speaker 00

  A big miss?

• 43:19Harry Stebbings?

  Uh, mine is Vanta. I remember Elad sent me Vanta and I've met Christina and I was like, she's great, Blake. What is this sock to?

• 43:26Speaker 00

  Misses are good to have. Misses are, are things that it helps shape you. It helps you learn and it helps you. And, and you can't win everything, right? But misses that you learn from, I'll give you two examples. There's one example where at Lemonade, they had done the A and I remember I was driving home and I was speaking to the founder of Lemonade and we didn't do the A and I said to him, well, you know, can I give you a? Can I give you a safe? Because we wanna be involved with you. We wanna be in the business. And he said, yeah, let's meet and talk about it and I'm open to it. And I said, all right, fine, I'm going, I'm leaving, I'm going overseas, I'm back in a week. You know, we'll set it up, we'll do it. In the rush of things, I forgot and never invested. Learned a lesson from that. Funny enough, it's the same.

• 44:09Harry Stebbings?

  Was that at the A?

• 44:10Speaker 00

  Just after the A. Now, I don't know that he would have taken it and this and that and et cetera, but my mistake.

• 44:16Harry Stebbings?

  So what did you learn as a result? Like, if you're in that, you cancel the trip and you do the deal, you write the safe when you're on the plane? Is there anything you would do differently?

• 44:24Speaker 00

  No, just be more determined, be more action orientated where you have an opening, put in your diary. You know, don't leave it for, I'll remember. I kind of tell a lot of founders that there's three Ws. Who, what and when? That everything they do has to be who, what and when. When you start a business and when you're running after your client and or trying to get a customer or trying to develop a feature or everything else. It's very simple. Who's gonna do it? What are they gonna do? And by when are they gonna do it? And if you instill that kind of principle through your managers and they do that to their employees, then the culture that you develop in a business is that much stronger.

• 45:03Harry Stebbings?

  So that's one, you said there were two?

• 45:05Speaker 00

  The second one was literally a repeat of the first one. And then there hasn't been a third one.

• 45:09Harry Stebbings?

  That fucking memory, I should give you a memory game. That's like, I love that. Well, yeah, that's a pain in the ass. You know what I do? I send emails to myself with like subject like, send safe to lemon. Is there anything that you know now that you wish you'd known when you started Entree? Final one, and then we'll do a quick fire.

• 45:26Speaker 00

  The experience is is something that you you should go through. Do I wish that I had acted differently at different points along the way? I suppose so. I suppose we all make mistakes. It's not about making the mistake, it's kind of learning from it and and dealing with it. And sometimes you have to learn how to deal with things differently. So I think it's a life lessons. But would I have it any other way? Suppose I'm at peace with with what we've done and and what we've built.

• 45:51Harry Stebbings?

  Final one, I promise for the quick.

• 45:53Speaker 00

  Yes.

• 45:53Harry Stebbings?

  I don't know what to say to this. But you decided to be more public in terms of fighting for Israel's right to protect itself and against. Global antisemitism. I spoke to Sean Maguire actually about this. And he said how amazing you've been and how you built your friendship kind of on the back of this in many respects. Why did you decide to be so actively public when it is easier bluntly to shy away, keep your views private?

• 46:15Speaker 00

  Sean's a wonderful guy. So there's two questions here. The first is the new government that came into power in Israel in 2022. And the events that led to the October 7th Hamas attack on Israel and Hezbollah in the north, which are still in play today. I find that Israel civil society is broken today.

• 46:34Harry Stebbings?

  Why is it broken?

• 46:35Speaker 00

  So contributions by one segment versus the expectations of another are misaligned in Israel. Segments of the population and as a nation and as being a Jew, I feel we held, I'd like to think we held to a higher standard. And I find that our nation, our ego, our self-interest, coupled with things like corruption are affecting our daily lives. And have been for for over a decade. And it's gone into the situation where government services like education and things like that are breaking down. And that in turn is breaking down our our social fabric. And there's enough blame to go around. The biggest consequence of all of this is October 7th.

• 47:17Speaker 00

  And I really fear that very little has been learned from the 7th of October and the events leading to 7th of October. We've reached a critical juncture as a society and as a as a nation, and things need to change. We need to change to empathy, to tolerance, to self-awareness and the restoration of our collective morality.

• 47:38Harry Stebbings?

  The tide seemed to turn against Israel where it's like incredible empathy and sadness for the terrible attacks. To a belief that actually the response is not aligned.

• 47:49Speaker 00

  So we need a new generation of leaders in Israel.

• 47:51Harry Stebbings?

  Is that how Israelis feel?

• 47:53Speaker 00

  I hope they feel that way. I think a fair amount do. But we need a new generation of leaders, you know, here in in Israel, there's it's a young country. If you look at the bell shape of Israel versus other countries, given the high birth rate in Israel, it's a young country. And so there are two and a half million people, just over a quarter of the population is under the age of, is is kind of between ages of 18 and 30. In other words, voters, and they're the future and they can create a new block. Most of the 120 members of parliament, members of the Knesset in Israel should go home. And like I told you, the comment about the kids and wisdom, I think that the older folks like me and others in Israel can provide wisdom and can provide management skill and things like that.

• 48:38Speaker 00

  But I think the decisions are for the youngsters in Israel to make. It's always been a nation that's driven by the young, young folks with great vision and great ideals. Historically, like the Kibbutz movement and, and kind of the, the early sixties and things like that. And we need to go back to that. And I think there's a big block of youngsters that can go out and vote. And, and all this leads to, and that's the first part. The second part is the issue of antisemitism. You know, no one around the world likes when a minority group raises its head too much. Minorities are great when, when they are a minority, right? And we see that.

• 49:11Harry Stebbings?

  Do you think we've always had this undercurrent of antisemitism? You see it in the US collegiate system. And I look at them and I'm like, I didn't think a lot of these students were always antisemitic. It's just that, sorry, it sounds awful, but the topic du jour, like climate change riots are on Oxford Street and we hate fast fashion and people just join.

• 49:28Speaker 00

  So I think antisemitism has always been there, you know, since literally the birth of Judaism over 3,000 years ago. The oldest religion in the world, the oldest nation, living nation, which can trace its roots 3,000 years or more. Jews were, were hated for being Jews. They were hated for being segregated. They were hated for being different. In the Middle Ages, Europeans didn't like to handle money because they thought it was dirty. And so they made the Jews deal with it. And then, you know, hundred, 200 years later, they say Jews financed the world and, you know, the root of all evil. You know, now what's become is that you hate, not you, that folks hate Jews for having a country as small as it is. I mean, it's one tenth the size of the United Kingdom.

• 50:12Speaker 00

  Out of six, seven billion people around the world, there are maybe 16 million Jews. There are fewer Jews today in the world than there were in second, at the beginning of the Second World War, the start of the Holocaust. But Zionism, which is self-determination.

• 50:27Speaker 00

  That's all it is, is just simply a step too far. The antisemitism today is about Israel, is about Jews having a country, Jews having self determination. There's Lord Rabah Sacks, who was one of probably the greatest philosophers of the 21st century. Said that in in history hatred starts with the Jews, but never ends with the Jews. Western society needs to get a wake up call. Israel and antisemitism are we the canary in the coal mine, we the frontline.

• 50:57Harry Stebbings?

  Remember the Nemo quote, and then, you know, it kind of ends with, and then they came for me.

• 51:02Speaker 00

  Yes, and so it starts there, but never ends there. And you've got to take a stand, you've got to do something.

• 51:09Harry Stebbings?

  Final one then, what actually happens from here? Do you not just breed a generation of Palestinians that continue to hate Israel and Jews?

• 51:15Speaker 00

  There has to be a change. Israel has to have fixed borders because set and fixed borders enables you to operate legitimately as a nation state, right? And I think that the Palestinians need real leadership. And I think the world needs to stop using the Palestinians as a scapegoat. And I think that everyone has to be a bit mature and come to agreements, whatever they are, that will promote peace. And I'm a patriot, I believe in my country, I'm a Zionist, and I have to take a stand. And if I don't, who will? And in humanity, humanity's progress is us leaving for the next generation, the world which is slightly better than the world we found.

• 51:58Speaker 00

  That's what we want to do, and that's why I help and others like me help folks and help the evacuees, the, you know, the hostages, the soldiers' families, the building resilience, trying to protect our country better and, you know, helping the army if it needs help. We've got to get to the next step. And that's why I say to you antisemitism, the first part of the answer I gave you about Israel society and the future that we want for our children. You take these three circles and you put them, there's an overlap in the middle somewhere. And we need to find that and you need real leadership and you need real, on both sides, you need real leadership and you need real vision. And it's not clear to me today, sitting here, what it is. I wish I knew.

• 52:41Harry Stebbings?

  Wide ranging discussion.

• 52:42Speaker 00

  Yeah, much deeper.

• 52:44Harry Stebbings?

  Monday additions to like a future of humanity and progress. I do want to do a quick fire there, Abi. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

• 52:52Speaker 00

  Sure, let's do it.

• 52:53Harry Stebbings?

  So what have you changed your mind on most in the last 12 months?

• 52:56Speaker 00

  That the world has become a far more dangerous place.

• 52:58Harry Stebbings?

  What's the biggest misconception of the Israeli startup ecosystem?

• 53:02Speaker 00

  That it's done for, that it won't bounce back.

• 53:04Harry Stebbings?

  Michael Eisenberg said on the show the other day, it's already bounced back. Cash is already flowing in faster than ever. True?

• 53:09Speaker 00

  I think it's starting to. I think there's a long way to go.

• 53:14Harry Stebbings?

  What's the best investment advice you've ever received?

• 53:16Speaker 00

  It's only your psychology. Complacency is the ultimate killer.

• 53:20Harry Stebbings?

  What are your views on some of David Sacks's views?

• 53:23Speaker 00

  So I don't know David Sacks personally. I've had one or two interactions with him in the past, but nothing that you can point to as being a relationship. But, you know, honestly, for the life of me, I can't work out what he believes America stands for. If it stands for even anything, you can't look after your own interests and not understand that the world is connected. You need to find commonality of interests and sometimes to promote others' interests because the net effect down the line is supportive of your interests.

• 53:52Harry Stebbings?

  What's the biggest piece of BS advice that you hear given most often?

• 53:56Speaker 00

  Contracted ARR.

• 54:00Speaker 00

  Folks tell you how they've they've signed a client, a customer, which has given them like fifty users or fifty deals, but that customer represents potentially five hundred thousand deals or it represents twenty thousand users or something like that. And so they write down the contracted ARR is the sum total of all those users. It's just another community adjusted EBITDA.

• 54:26Harry Stebbings?

  Tell me, what was the biggest mistake that you see first time founders make?

• 54:29Speaker 00

  Underestimating burn and overestimating their capabilities.

• 54:35Harry Stebbings?

  Biggest sin of the ZERP era?

• 54:37Speaker 00

  Venture debt, capital raising with no thought about how money gets returned. Most people think capital is sunk cost, almost like a grant, but capital needs to be returned. It's a soft loan.

• 54:50Harry Stebbings?

  Where will you be in ten years? What do you want for Entree? What do you want for yourself, Avi?

• 54:54Speaker 00

  I want to be on the beach with my wife, with my grown up kids, Hannah, Aria and Michael, and my two shitzus, Ralph and Charlie.

• 55:02Harry Stebbings?

  I know you. That wouldn't be you. You'd be bored after a while. I know you would. You'd be like, where's the next deal?

• 55:08Speaker 00

  I look forward to it.

• 55:09Harry Stebbings?

  Harry, where's the deal?

• 55:10Speaker 00

  Looking forward to being bored.

• 55:12Harry Stebbings?

  Dude, thank you so much for doing this. I've loved having you on and you've been amazing.

• 55:16Speaker 00

  Thank you. I really appreciate it.

• 55:19Harry Stebbings?

  I have to say, that was such a special show to do with Avi after so many years of friendship. And if you want to watch the full episode, of course, you can watch it on YouTube by searching for 20VC, that's 20VC, leave a comment. I always love to hear your thoughts and feedback. But before we leave you today, all of you listening use tons of software every day. Sometimes it fills us with rage. You can't figure something out. The chatbot in the bottom right is useless. You keep getting bombarded with these useless pop-ups. And for those of you who build products, no one wants their product to feel like this. Thankfully, a company exists to help users without annoying them, Command Bar. It does a couple of very helpful things. First, it's a chatbot that uses AI to give users extremely personalised responses and deflect tickets. But it can be beyond just text. It can also co-browse

• 56:03Harry Stebbings?

  with the user and show them how to do things inside the UI. Magic. But it can also detect when users would benefit from a proactive nudge, like a helpful hint, or an invitation to start a free trial. Command Bar is already used by world-class companies like Gusto, Hashacorp, Yotpo and Angelist. If you're a product CX or marketing leader, check them out at commandbar.com/harry. And talking about incredible companies with Command Bar, we need to talk about The Information. When a promising startup files for an IPO or a venture capital firm loses its marquee partner, being the first to know gives you an advantage and time to plan your strategic response. Chances are, The Information reported it first. The Information is the trusted source for that important first look at actionable

• 56:47Harry Stebbings?

  news across technology and finance, driving decisions with breaking stories, proprietary data tools, and a spotlight on industry trends. With a subscription, you will join an elite community that includes leaders from the top VC firms, CEOs from Fortune 500 companies, and esteemed banking and investment professionals. In addition to must-read journalism in your inbox every day, you'll engage with fellow leaders in their active discussions or in-person at exclusive events. Learn more and access a special offer for 20VC's listeners at www.theinformation.com/deals/20vc. And finally, let's talk about Squarespace. Squarespace is the all-in-one website platform. For entrepreneurs to stand out and succeed online.

• 57:31Harry Stebbings?

  Whether you're just starting out or managing a growing brand, Squarespace makes it easy to create a beautiful website, engage with your audience and sell anything from products to content, all in one place, all on your terms. What's blown me away is the Squarespace Blueprint AI and SEO tools. It's like crafting your site with a guided system, ensuring it not only reflects your unique style, but also ranks well on search engines. Plus, their flexible payment options cater to every customer's needs, making transactions smooth and hassle-free. And the Squarespace AI? It's a content wizard helping you whip up text that truly resonates with your brand voice. So if you're ready to get started, head to Squarespace.com for a free trial. And when you're ready to launch, go to Squarespace.com/20vc

• 58:15Harry Stebbings?

  and use the code 20vc to save 10% off your first purchase of a website or domain. As always, I so appreciate all your support. And with the 4th of July tomorrow, we will not have an episode coming out on Friday. So stay tuned for an incredible episode the following Monday with the one and only Pat Grady at Sequoia.