EP 100: Jeremy Levine (Partner, Bessemer) Reflects on His Best and Worst Investments

After 23+ years in venture capital, Jeremy Levine has thrived in many eras, taking risks on now-iconic companies like LinkedIn, Shopify, Yelp, Pinterest, and more. In our discussion, Jeremy shared stories behind these investments and the mindsets he’s developed along the way. We also explored how the VC landscape has evolved over the last 20 years and where the industry may head next. Plus, Jeremy shares insights from his journey into VC, along with foundational advice and principles that anyone aspiring to succeed in the industry may find valuable. Overall, an in-depth discussion for anyone who wants to nerd out on venture capital with us. (00:00) Intro (01:03) Exploring the Personal Motivations Behind Venture Capital (01:41) The Impact of Technology on Venture Capital (03:11) The Reality of Venture Capital Impact (06:45) The Ideal Venture Investment: The Donut Company Metaphor (07:30) Operator vs. Career Investor: The Best Venture Capitalists (09:57) The Dynamics of Choosing a Venture Investor (14:03) The Unique Paths to Success in Venture Capital (17:04) Authenticity and Adaptability in Venture Capital (26:33) Navigating the Complexities of Venture Capital Careers (34:11) Jeremy Levine's Journey to Bessemer Venture Partners (40:00) Navigating the Venture Capital Landscape: Insights and Strategies (40:30) The Competitive Edge in Early 2000s Venture Capital (43:26) Reflections on Career Paths and the Role of Serendipity (47:04) The Intricacies of Decision Making in Venture Capital (52:37) Evaluating Investment Opportunities: The Price Sensitivity Debate (55:22) Learning from Success and Failure: The Jet.com Story (01:08:26) The Evolution of Successful Entrepreneurs: Insights from Shopify and Yelp (01:16:22) The Strategic Advantage of Repeat Entrepreneurs in the Startup Ecosystem (01:19:38) Navigating Market Dynamics: Insights and Analogies (01:20:09) The Evolution of a Venture Capitalist: From Ideas to Impact (01:21:22) Pioneering User-Generated Content: A Venture Success Story (01:23:36) Exploring E-Commerce and the Power of Advertising (01:24:59) Innovative Investment Strategies: SaaS and Payment Processing (01:34:53) Bessemer's Legacy and Venture Capital Evolution (01:39:57) Expanding Horizons: Bessemer's Global and Diverse Investment Approach (01:52:35) Cultivating Talent and Embracing Industry Dynamics (02:02:36) Navigating Budgets and Investment Strategies in Venture Capital (02:03:55) The Importance of Accountability and Decision-Making Records (02:05:46) Investment Memo Strategies: Beyond Templates (02:08:43) The Dynamics of Voting and Decision Making in VC Firms (02:16:19) The Evolution of Venture Capital: Trends and Predictions (02:21:13) Building a Successful Venture Capital Firm: Culture and Operations (02:29:57) Mentorship and Individual Growth in Venture Capital (02:39:40) Navigating the AI Investment Landscape (02:41:36) The Debate on Announcing Funding Rounds (02:44:20) Closing Remarks Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

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

• 0:04Logan Bartlett?

  Welcome to the Logan Bartlett Show. On this episode, what you're going to hear is a conversation I have with Jeremy Levine. Now Jeremy is a general partner at Bessemer, where he started his career over 20 years ago. Jeremy's one of the icons in the industry, having invested in companies like Pinterest, LinkedIn, Shopify. He and I go very, very deep into the evolution of the industry since he's joined. How Bessemer came to be the firm that it is today, what Jeremy looks for in different investments, as well as his role in mentoring the future generation of venture capitalists. I really enjoyed this conversation with someone that I've long looked up to. You'll hear that discussion here now. So we were talking before, why I do this, and I have kind of an answer, and I don't have a great one.

• 0:46Logan Bartlett?

  One, it's given me exposure to people I wouldn't have met otherwise, which is awesome. And I've gotten to be friends with some of the people. It's funny, you walk away every time from this, not every time, but a lot of the times feeling like that's, that's my guy, like or woman or whatever. Like we walk away, we spend a lot of time talking about a bunch of different stuff. You walk away feeling like you're really close to the person. And then very rarely do you like keep in touch after, but I have had a few people that I have gotten to be close with that are of an echelon that I just wouldn't have had exposure to in my, my day to day, which is, which is interesting. The other one is like an interesting backstory of when it started was 21. And it started in 2021 because people could be everywhere, uh, because they were behind a Zoom screen.

• 1:27Logan Bartlett?

  And so suddenly time and space wasn't as much of a consideration to differentiate yourself in venture. And you've said stuff about like, hey, if you're a young VC, to stand out, you need to go fishing ponds that other people aren't fishing in, right? And as a B to B, you know, uh, series B investor, like there's a lot of people fishing in that pond. And sure, I could go hunt for other ponds, but I also was like, I should try to find something. If, if anyone can be anywhere behind a screen, I should find something just to make my. Name a bit more resonant in some ways, and I didn't have any other ideas. That's kind of the short version of like, I went through the things and it's not like I can go back in time and be a real like operator, like I can't go back and be a CRO, you know, Snowflake or something.

• 2:12Logan Bartlett?

  And I can't go invent the like browser and I can't go invest in Shopify or Yelp or LinkedIn or whatever. And so I was kind of like, well, what can I do? And this was the only idea. And I've enjoyed it. There's a weird itch. I don't know if you see this at all, but like there's an itch of fulfillment. Our job has such long feedback loops and it just takes a long time to get any validation of like success. And so you need to enjoy the inputs and the little wins along the way. This has very short feedback loops and short gratification. And I kind of control it far more than I control, you make an investment and

• 2:48Speaker 01

  It's out of your control.

• 2:49Logan Bartlett?

  It's out of your control. Like, sure, you can guide and support and that's the most, at least I find probably the most fulfilling part of the job is actually working with the companies. But from an equity value creation standpoint, that decision was probably the most important component of it.

• 3:04Speaker 01

  99.99% picking, 0.01% helping.

• 3:10Logan Bartlett?

  I think that's probably right, especially at my stage, right? When you're early, I think you can maybe make a case that the percentage could be even higher. I don't know, but

• 3:18Speaker 01

  I've been fond of saying this. So I think if you ask most investors how they spend their time, they do any kind of venture capital, they'll say about half their time evaluating new investment opportunities and half the time with their portfolio. And when you reach a sort of steady state, which is you're adding to your portfolio and you're subtracting from your portfolio at about equal numbers and you're subtracting both because you have some successes and they exit, or you have failures and they shut down. The steady state, and depending on who you are and how you think about it, is between 10 and 20 companies. 20 is like incredibly busy, 10 maybe a little capacity. But even at the low end, 10 companies, that means in the course of a month, assuming you're

• 3:59Speaker 01

  not working the weekends, there's 22 business days, 23 business days, half of them, you're looking at new investments. That means 12 business days for 10 companies, which means at most, you're basically spending one day on each company per month. And so my, my logic is if you as an investor can move the needle for a company run by an entrepreneur and a team where they're working probably

• 4:25Speaker 01

  Six or seven days a week and probably eight or 10 or 12 or 14 hours a day. And in your one day of the month, you can actually move the needle, then they must suck.

• 4:32Logan Bartlett?

  Yeah, there's something there. The one thing that I don't know how to quantify, and at least I would pitch this to an entrepreneur. And I'd be interested if you think this is bullshit or in your opinion, if you've seen this. There are, there are a handful of moments that matter in a company's journey. And it's, you're right, it's not every day. It's not every month. It might not even be every half year, year, two years. But there's a handful of those decision points. And if you can just help the entrepreneur see around a corner in some way, or provide that incremental counsel to help make the best decision. It's a very ethereal, like kind of bullshitty, oh, well, you know,

• 5:16Logan Bartlett?

  it's the way you would pitch it if you don't have any quantifiable thing you would do. So I understand the counterfactual of it all. You have to earn it, the right to be at the table and have the influence at that moment in time as well. But that's at least how I sleep at night with all the time spent on this.

• 5:32Speaker 01

  No, I, for sure. But I actually think your impact as an investor on an entrepreneur and his or her company is much more likely to be heavily negative than heavily positive. And so, you know, I talk about the Hippocratic oath, which I actually understand like, people have misquoted Hippocrates and what he actually said is different. But most people interpret it as like, you know, first do no harm.

• 5:56Logan Bartlett?

  Yeah.

• 5:57Speaker 01

  Which is what the doctors are supposed to do.

• 5:58Logan Bartlett?

  Your father was a doctor, so you grew up with this.

• 6:00Speaker 01

  Exactly. And most VCs don't do that. They want to have impact, but it turns out that oftentimes the impact can be negative. But yeah, sure, once in a while, if you happen to know the right thing to say or do at the right moment, it can be wildly impactful. But that's not, that's not, that's not why I do it. Or I don't think that, that shouldn't be your motivation as an investor. Your motivation would be mostly get out of the way. And if you've heard me do, have discussions about, you know, what I look for. I'm very fond of calling it, describing the donut company. Have you heard my donut company metaphor?

• 6:33Logan Bartlett?

  I think for people that haven't though.

• 6:35Speaker 01

  You know, the the goal is to find a company, which is a donut company. The donut company is a company where you go once a month, or once a quarter, however often you you meet to have a board meeting, or a strategy discussion, or what have you. And you show up and you eat the donuts and you go home. And that's your job, because they don't need any of your help. And they may not even want any of your help, but more importantly, they don't they don't need your help. Because if they need your help, that means they're missing something. And you don't want to invest in a company that's missing something. And I think one of the, there's an age old debate. It's actually not age old. It's probably a 15 year old debate about who makes for better venture investor, a former operator, or a career investor. And up until 15 or 20 years ago, almost all venture investors were just investors.

• 7:19Speaker 01

  There weren't many former operators, or if they had worked in a real company before, it was typically a really short stint. And they spent most of their career as investor. And and actually, I credit Mark Andreessen and Ben Horowitz.

• 7:30Logan Bartlett?

  I think it's 100% that. That's what I was gonna say. It's like, there's actually, we can we can denote when it started.

• 7:35Speaker 01

  And so so that having both been successful entrepreneur operators in their career, they made a big deal of of how great it is. And I think one of the disadvantages of a former operator is that as an operator, I think your mentality is often, how can I, how can I help or fix or improve this company? And people tend to be attracted to situations where they can have an impact. But the fact that your impact is needed should be a negative signal in and of itself. And that what you really want to look for is a company that doesn't need, necessarily want, or or certainly need your help at all. And if you're an investor who doesn't know how to operate anything, it's very hard to fall victim to that problem, because you have no instinct on.

• 8:14Logan Bartlett?

  Well, the other thing is, you've also seen a single version of events and most likely success. If you've been hired in as the VC former CEO, and so.

• 8:26Logan Bartlett?

  I worry a little bit about a desire to overly form fit the success you've had and take the wrong lessons of maybe just the product market fit was really good and it wasn't that you compensated salespeople this way or like, you know, it was, this was how your design team was organized. And it's like, you've had one success and so it leads to this false hindsight revisionist history of like, what actually led to that success? And so you can speak very declaratively, I find this with independent board members at times, they speak very declaratively about like, no, this is the way to do this thing. And like, yes, maybe yes, maybe no. You know, it's funny about the Ben Horowitz, Mark Andreessen thing is like, it was such a great branding thing out of the gate and they hired Lotte

• 9:11Logan Bartlett?

  Stahlgard and, you know, a bunch of other big CEOs and they're like, we're only ever going to have founder CEOs as our partnership and people forget this. And now like, obviously that changed, but it was so good for such a period of time and it really shaped the narrative of like, oh gosh, well, I'm, I'm never going to be a CEO. And so how do I go back in time and have the credibility of being a CEO? So.

• 9:34Speaker 01

  So I, so I've had conversations with a number of founders about, you know, how do you, how do you think about or choose your, your venture investor? And one of the many frameworks I offer is that, you know, in some sense, particularly for a series A or series B investment round, you're, you're getting an investing partner and you're also getting a board member typically. And if you want to think about it in really crass terms as an entrepreneur, you're selling a board seat effectively in exchange for an investment. And, um, and, and you can't, you can't take it back. Like, once you've sold it, you're giving the right, not necessarily to a person, but it is effectively a person, but to a firm to fill that board seat. And they're probably going to keep the person who was responsible for the investment in the first place. And that as a founder, you want to have people on your board who are, I think, pure investors who think very differently

• 10:18Speaker 01

  than you do as an operator and a builder of a business. You also want to have experienced operators on your board. But my argument, which I've can use myself is a compelling argument, you know, entrepreneurs can decide for themselves is that if you're gonna, if you're gonna have an operator on your board, operators are generally like, good ones are used to sort of. Telling people what to do and getting buy-in, but like ultimately like the buck stops with the CEO. And if you have a former CEO on your board, their default mentality is like, this is the way to do it. And you want that person on your board, but in a board seat that you control. So that if you don't like what they're saying anymore, you can say, you know what? I don't want to listen to you anymore. I'm going to replace you. But if you've sold them their seat, you can't just replace them.

• 10:59Speaker 01

  And so my, my logic is you want an investor in an investor seat and an operator in an operator seat. And if you're going to sell one, I'd rather sell it to an investor than to an operator.

• 11:08Logan Bartlett?

  When you're a hammer, everything looks like a nail. And so I'm glad we both as career investors sort of landed on the same narratives of like, this is, at least it allows us to go to bed every night and think about it. But I will say, one of the interesting things about that, that I've seen former CEOs in particular, maybe struggle with in the job of moving to venture is back to the earlier point of why I even do this at all. Is you're used, I, I'm, I'm pretty used to, I was in investment banking, you were in consulting. I went into venture, like I'm kind of used to soft diplomacy and like advice giving and all of that. As like the, hey, there's some good things, some bad things. Here's the trade-offs, like here's what I would recommend, but you go make the decision yourself.

• 11:53Logan Bartlett?

  And I'm very used to that role of like the, hey, I don't wield any power of decisioning at all. And it's, it's a hard transition, especially coalescing around a partnership, which is an interesting organization in a bunch of different ways. And however you structure it, even if you do a budget and you get autonomous decision-making and all that stuff. As I go, I know you guys will do, it still is like a, you know, an interesting organization. It looks probably at times not this dysfunctional, but like there's elements of a, the Senate or the House of Representatives. Like there's a bunch of different personalities and you, you build consensus on stuff. And even if you have the autonomy to go decide, it's still like a, a very different organization than a company.

• 12:38Logan Bartlett?

  Right? And so I think that's always an interesting adjustment for people.

• 12:41Speaker 01

  Yeah, you're trying, trying to drive outcomes through. Influence and persuasion as opposed to dictate.

• 12:48Logan Bartlett?

  Yes.

• 12:49Speaker 01

  And that's a very different mentality.

• 12:50Logan Bartlett?

  A lot of carrots, not a lot of sticks, although. Well, I appreciate your, as a self-professed introvert, willingness to do this. I was told that podcasts are good form factors for you because you like longer, unstructured conversations more than some of the other, I don't know, tweeting or whatever else you could do. So I appreciate you doing this. But that's actually a point I wanted to jump off from. So you've been doing this a long time. You've had a bunch of successes, companies like Shopify, LinkedIn, Pinterest, Yelp, among a bunch of others. And I've heard you say you practice craft in a very different way than your partner, Byron Dieter, who's been super successful, my friend, Brian Feinstein, also works at Bessemer, people that I'm sure we both look up to.

• 13:34Logan Bartlett?

  We've referenced some earlier, but from prior generations like John Doerr or Doug Leoni or whoever it is. As you think about the number of people you've been exposed to internally at Bessemer, externally through boards, people that have grown up in Bessemer and gone externally, is there a through line that exists that allows people to succeed in the industry when some people can be introverts and extroverts and people just practice it in a bunch of different ways?

• 14:03Speaker 01

  I don't know that there is, actually.

• 14:05Logan Bartlett?

  Does that just mean it's random?

• 14:07Speaker 01

  Yeah, I mean, I think people, you have to, it's really hard. And it's a job that moves in slow motion. We were talking about this earlier. You get feedback in really small bits and pieces over really long periods of time. And so to do that, you have to really love it in order to tolerate all the negative elements of long feedback cycles, tons of uncertainty, lots of self doubt. And so I think maybe that's the common thread. People who tend to do it and do it well and do it over a long period of time tend to love it. But, you know, one of our Are now retired partners at Bessemer, who was in the venture business for 30 plus years, and then he taught, taught basically venture capital and private equity at Harvard

• 14:52Speaker 01

  Business School for a decade, is this guy named Felder Hardiman. And Felder had this great one liner, he had many great one liners, but one in particular, as related to this topic, is he said, "Everything is great about venture capital, except for the other venture capitalists." And, and, you know, there are, there is like the prototypical venture capital who, you know, you know, wields, wield capital and decision-making authority and is a little bit obnoxious, or maybe a lot obnoxious with the big ego. And, and that's definitely true. And I've definitely come across my fair share of those people. But I think what's neat about being a venture capitalist is, one, you get exposure up close and personal to so many others, not even in a contrived situation like this, but actually in the course of

• 15:33Speaker 01

  your work, being on a board together, or jockeying to invest in a company, or welcoming a new investor to your company. And that's kind of neat. But, and in, in that, you also get to then see so many different ways of doing it. And that was the other thing Felder taught me. You know, there are so many ways of doing venture capital, and you have to figure out what works for you. And one of the tricky things in a mentor-mentee relationship is that the mentee tends to start mimicking or emulating the mentor, even if the mentor's style may be really ill-suited for the mentee. And part of the, the fun or the thrill of it is try, try to figure out like, what, what's your thing? What's shtick, maybe as sort of a kooky way of describing it, but, but, you know, what's your special ingredient?

• 16:18Speaker 01

  Or what's your, your, your, your go-to maneuver? Or how are you compelling on what dimension? And you might be terrible relative to an alternative investor on a certain set of dimensions, but you might be fantastic for a particular entrepreneur at that time. And part of what I think is so fascinating and challenging about it is, is the path of discovering like, okay, what, what's, what's, what's your role going to be? And why is that compelling to this other person?

• 16:41Logan Bartlett?

  Yeah, there's, there's something about like authenticity to who you are. The, the job is too long, and there's too many different, there's too much surface area of like, moving between things to do any fake version of yourself, or try to be performative.

• 16:56Logan Bartlett?

  For too long, across too many ways. And so whatever like is authentic, you can lean into it, right? Like I'll certainly lean into an authentic version of myself. I think about, you went to Duke and Coach K was there for a long, long time. And I, one of my good buddies is a big, whatever the Duke donor basketball group is. And so he'll, we'll go down every year for a game. And we went down a couple of years ago, it was Coach K's last season, and we had great seats and we're sitting, you know, whatever, right, right behind him. And he's playing Georgia Tech and Josh Pastner was the coach of Georgia Tech. And the Georgia Tech kid drained a three and held it up in the air and sort of like gave a little shimmy and showboated after. And it, and Coach K lost his shit. So much so that at the timeout,

• 17:39Logan Bartlett?

  he went over and finger in the face was like lecturing the Georgia Tech kid. And Pastner comes over, Georgia Tech's coach, and I'm like, oh my God, he's gonna like, go after Coach K and we're gonna see this whole thing. And no, he went after the kid on his team and was apologizing to Coach K. And he's like, I'm so sorry, I'm so sorry about this, blah, blah, blah. And I was sitting there thinking, and I was like, if, if, I think back on it when John Shire, who grew up under Coach K, got the job. And I was like, if Shire over extrapolates the lessons he learned from Coach K.

• 18:08Speaker 01

  Yeah.

• 18:09Logan Bartlett?

  To, to, yeah, it's, it's gonna be a disaster. Cause you can't be a 35 year old kid from Chicago who like played at Duke and you can't go over and lecture the kid on the other team. And so it's interesting, like the lessons you, you learn from mentors, you can't take all of them. Like the next Coach K will look nothing like Coach K. It's just they can't do that. And next Nick Saban will look nothing like Nick Saban. Next Jeremy Levine or the people you learned underneath, like probably won't look exactly like you. They'll internalize little bits of it along the way, but it's an interesting, yeah.

• 18:38Speaker 01

  Yeah. Well, I'm, I'm tempted to go down this Coach K path. I've never, I've never shared my thoughts on Coach K.

• 18:44Logan Bartlett?

  I would love to hear, was Christian Leitner actually your roommate in college?

• 18:46Speaker 01

  No, he was not my roommate.

• 18:47Logan Bartlett?

  Okay. That's a funny, that's a funny, you guys are contemporaries though?

• 18:51Speaker 01

  He, well, I was this, I was a freshman when he was a senior.

• 18:53Logan Bartlett?

  Okay.

• 18:54Speaker 01

  So, no, but, but I, I actually.

• 18:55Logan Bartlett?

  I'm sorry to dissuade people of that notion.

• 18:57Speaker 01

  I worked for the Chronicle, which is the student newspaper at Duke. And, and I was a sports reporter and my, in my sophomore year, so the year after Leitner had left, Cherokee Parks.

• 19:07Logan Bartlett?

  Sure.

• 19:07Speaker 01

  May not remember.

• 19:08Logan Bartlett?

  No, of course. I see him in the New York subway sometimes.

• 19:10Speaker 01

  Oh, is that right?

• 19:10Logan Bartlett?

  Yeah, yeah. He lives here. He's like, I mean, he's a very tall, tatted up, like, you know, funny character. I've also seen him at Duke games before. He's like a, still a pretty big fan.

• 19:17Speaker 01

  He's a big guy. He's hard to miss. But he, but I interviewed him as a reporter. At the beginning of his second season, which was the first season where Leitner was gone. And, uh, and, and basically Leitner was like a, a hard ass. Like he drove everybody. Um, and, uh, and Cherokee Parks described him as an ass. Um, and so that was the big pullout quote in my story. At times he was an ass. Um, which I thought maybe would annoy him a little bit, but he's like, yeah, it's true. And like, everyone knows it's true.

• 19:47Logan Bartlett?

  You thought it would annoy Cherokee or Leitner?

• 19:49Speaker 01

  Uh, well, Leitner, I'm sure wasn't reading the Chronicle, but, uh,

• 19:52Logan Bartlett?

  He was on Team USA or whatever.

• 19:54Speaker 01

  But I will tell you my, my, um, you shared a Coach K story. And so, um, he's remarkably successful. And, uh, and, uh, and over such a long period of time, which is hard to do in any industry or career. And I have enormous respect for it, but, um, but I lost a ton of respect for him. Um, during my junior year, was it my junior year? Yeah. My junior year. And so he did this amazing thing every year. Um, and your, your story reminds me of, because in my, my interpretation of your story about him sort of lecturing this, this young player on the other team. It's like, it was just inappropriate. Like, like he shouldn't have done that.

• 20:27Logan Bartlett?

  I was uncomfortable the whole time.

• 20:28Speaker 01

  Yeah. And his, his own emotion got the best of him. And I have another version of that, um, which is probably even worse. Um, and so he did this amazing thing, which is super generous, multiple amazing and generous things. Um, one is the front, the, the middle two seats in the front row of the press table was a reserved for the student newspaper, which is like pretty amazing. And so you'd be sitting there covering a basketball game. Next to somebody with an even better seat who was working for the New York Times or the USA Today or the Washington Post. And that was really cool. And then he did this other really cool thing for the student section of the, the sports section of the newspaper, which is he invited us to like a multi-hour conference in a conference room in Cameron Indoor Stadium where his office was

• 21:09Speaker 01

  to interview him. Like it was like a preseason interview on like, what are the things he's thinking about and worrying about and like hours of like just us asking us questions. And this is back, this is in the early nineties. And so as a reporter, you had a tape recorder and you might remember these things, the tape recorder, the tiny little cassettes.

• 21:24Logan Bartlett?

  Yeah, of course.

• 21:25Speaker 01

  Um, you know, no digital, anything.

• 21:27Logan Bartlett?

  Home Alone, I think, uh, they still, every time you watch it, yeah.

• 21:30Speaker 01

  Exactly. And so finally, um, we sort of getting to the end of it. And he's like, okay, is everybody finished? No more questions. Like turn off your tape recorders. And so everybody around the table, there's probably 15 or 16 reporters, like we dutifully like go and turn off the tape recorders. You can hear them go click. Except for one senior who was on the far end of the table, who pretended to turn off his tape recorder and didn't actually turn off his tape recorder. And then for the next five or 10 minutes, Sheshevsky just started screaming at us. And basically, the editorial department of the student newspaper ran a political cartoon, which was Sheshevsky, he had just signed a $10 million contract with Nike, where he would get the money, but the players would wear Nike, which was like fairly typical of the way these deals worked in the 90s.

• 22:15Speaker 01

  And so the political cartoon was wildly tasteless. I accept that. I had nothing to do with it, although I was supportive of it. And it depicted a limousine driving by with a man's hand leaning out the back of the window, the back of the limousine dangling a pair of Nikes. And the likeness of Sheshevsky was wearing essentially like a bra and panties, essentially dressed as a prostitute leaning against a lamppost. And he did not like this cartoon. But he didn't bother as like a leader figure and essentially like almost like an in parent, in parenthesis, what is it, in local parenthesis, like figure for all of us. He didn't bother to figure out like, well, who made that card, whose decision?

• 22:57Speaker 01

  He just assumed newspaper people like, and so, and so he just started screaming at us like incredibly loudly, incredibly vigorously. "I am no fucking whore." And he said it over and over again. And so this, this senior-

• 23:11Logan Bartlett?

  Still has the tape.

• 23:12Speaker 01

  Has it, has it on tape. And so for the rest of the entire year, back in the Chronicle offices, we had this phone system. And you could pick up the phone and press the button and it would like broadcast whatever you say over all the phones in the offices. And like over and over again, I just hear in my head, it's like permanently Xed, Mike Sheshevsky's voice saying, "I am no fucking whore." I am no, over and over and over again.

• 23:31Logan Bartlett?

  That's so funny.

• 23:32Speaker 01

  Anyway, I thought that was wildly inappropriate scolding. And by the way, it's just like inappropriate on so many levels. But, but I, I think in some ways, maybe to give him the benefit of the doubt, like people who are so driven and so competitive, if you sort of reveal that you're even a little bit against them, you sort of become this, this enemy.

• 23:51Logan Bartlett?

  Totally.

• 23:52Speaker 01

  And the emotion just bubbles up and through and he couldn't control it.

• 23:56Logan Bartlett?

  It's, it's, it's an interesting, I mean, this is not what I expected us to analyze here, but I'm, I'm happy to go down this rabbit hole. I was talking about this last night and one of the things in venture, to bring it back to that, people generally, it's everyone sort of talks about like it's a get rich slow business is sort of like one of the adages of it. And I've found that there's, there's kind of two groups of people broadly speaking that I've looked up to in the industry. And in broad strokes, it's sort of people that like maybe started on the immediacy of the internet bubble, kind of through the bubble. And there's like a point of like, you know, appreciation for limited partners.

• 24:40Logan Bartlett?

  And there's a point of like consciousness of dollars and all that. Like if you started in oh, one, oh, two, oh, three, oh, four, you saw like a lot of bleak times through that. And then there's the, then there's people that have come later and only saw like 20 years or whatever, 15 years of a, of a bull market and all of that. And it's, it's interesting how I've seen the two different paths of how people kind of live their lives and how that actually influences them and their style of both working with LPs, working with portfolio companies, how they travel, like the people that some people are still private plane, like it's super accommodating, easy to do.

• 25:24Logan Bartlett?

  Some people are still back coach Southwest flight, no matter what the income is. And so I always find it's interesting that like in this job, so many people are practicing it different ways. And then so many people like live their life in different ways after it. And I think it's, we were going to talk about like the office space thing at one point, but like what your office space says about you and what you wear and all of that stuff, like these are all sort of reflections of how you want to treat, how you want to be viewed. And so the Coach K thing, I guess, probably not a lot of people were speaking truth to power to him in post-Laitner in 1992, all of that.

• 26:03Logan Bartlett?

  So I, it's a, it's an interesting position for a student to be doing that, but it does have some parallels to like how people grow up in this industry. I'm curious your thoughts on.

• 26:13Speaker 01

  Yeah, um, I, I, I struggle with it all the time, both because.

• 26:20Speaker 01

  You have multiple audiences as a venture investor in particular. You've got your peers at other firms, your colleagues internally, your LPs and the entrepreneurs in which you've invested or in which or in whom you might hope to invest.

• 26:36Logan Bartlett?

  And the peer, there's the peers within the firms and then there's the people that are looking to you and modeling their behavior after you.

• 26:45Speaker 01

  That's right. And, and it's also, it is, and then, and so that's complicated because there's lots, and you can't be, you have to be kind of the same person most of the time. You can adapt a little bit to your audience, but you can't adapt wildly or it doesn't come across genuine or you're sort of quickly discovered as multi-faced, which I think isn't good. And then it's all complicated by the fact that if you're, you know, it's, it's, it's, it's the money business. And if you, if you do well and get lucky, it just like, it's wildly rewarding to the point of like, it makes no sense. Like no, no human needs to be, needs to earn the kind of money you can earn if you have a giant success as an entrepreneur or a venture capitalist.

• 27:29Logan Bartlett?

  But, but, but bad entrepreneurs are scraping by. Bad VCs, you do it long enough, you're still doing okay, right? Is, is.

• 27:37Speaker 01

  Yeah, I guess that's probably true. I mean, it depends how generous your partners are.

• 27:41Logan Bartlett?

  Sure, fund structure and fund size and all that.

• 27:43Speaker 01

  And you generally have to have done something to become.

• 27:46Logan Bartlett?

  Yes.

• 27:47Speaker 01

  A VC at a fund that's big enough where you can, you know, kind of.

• 27:50Logan Bartlett?

  But the feedback loops are so long that like you can, you can, mediocrity can hide for a while.

• 27:55Speaker 01

  Yeah, that's true. You, I think that is true. And relative to.

• 27:58Logan Bartlett?

  Luck followed by mediocrity, probably.

• 27:59Speaker 01

  Relative to a per capita GDP of $50,000 or $60,000 in America, you're getting rich, even as a mediocre venture capitalist. You're, you're not, you know, if you're really good and, and really lucky, you can get generational wealth, whereas if you're mediocre, you're not, you're not getting generational wealth in, in VC. But, but you're right, compared to the, the. Average work in America, it seems wildly unfair and it is wildly unfair. It doesn't make a whole lot of sense. But, but anyway, money complicates things. Money complicates things in all elements of life.

• 28:29Logan Bartlett?

  Money and power. And for the most part VC, you generally stay away from too much power. I would say, I mean, you, you wield with a little, but like if, for, for what people make for the most part in, in America. Let's say we just took dollar for dollar, like the jobs, the, the amount of responsibility and headcount that you would have to manage. Uh, for the most part, like the people that make $50 million in public markets generally, like public market leaders are, are managing companies that generally have tens, if not hundreds of thousands of people. Like in private markets and I, we, we probably both take solace in at least hedge funds and, and private equity firms are even more

• 29:09Logan Bartlett?

  uh, on the curve here, but like there's people that manage teams of three or five and, and hedge funds and, uh, and do far better than that. So it is this interesting thing that like it's, it's money. It's not power and money and power can exist together in other places, I think far more.

• 29:26Speaker 01

  Yeah, no, I think that's right. And, um, and it, yeah, I mean, uh, wealth generation is all about leveraging capital.

• 29:33Logan Bartlett?

  Yeah.

• 29:33Speaker 01

  And, uh, and as someone who's running a multi thousand person organization, you're essentially leveraging a fair amount of capital, but it can be a really small organization. But if your job is as an investor, you're also leveraging capital. Um, it's a weird, it's a weird industry.

• 29:47Logan Bartlett?

  It's a weird job. Did, uh, did you appreciate when you were getting into it? Like how much of, uh, you were like a fish in water a little bit and you're like, oh, well I found my way. I bounced around a couple of jobs. You did McKinsey for a little while, did a company for a little while, did LBOs for a little while. And then you found your way to VC and you're like, this seems good. Did you realize like that there was there? Did you know what you were getting into when you started initially or?

• 30:12Speaker 01

  I really didn't. I mean, I, I was always fascinated with investing and so, um, my, my first job was at McKinsey and, uh, that was sort of like my business education. I studied computer science in college and then I realized quickly, like I wanted to, like I missed in computer science or in a lot of science.

• 30:31Speaker 01

  In an academic environment, you're doing an assignment or a project and you can get to like the right answer. And that appealed to me a lot. And with with business and consulting, it's hard to know what the right answer is. It's hard to measure the quality of the answer. And so I really wanted to do investing and that ended up being my my second job. And I thought about lots of different kinds of investing. The best job I could get happened to be in what we now call private equity, but back then was leveraged private investing. And it appealed to me because I like thinking about the it's like a game and I like games a lot and and investing or making money is a game that's very easy to measure the results of. And that was somehow satisfying to me. I'm I mean, I like money. I have no problem

• 31:15Speaker 01

  with money, but like I wasn't focused on making money per se. I was more focused on playing a game where it's very easy to measure the outcomes and keep score in some ways. But the domain at the time, there was no such thing as software or private equity or technology private equity. We invested in metal bending businesses, specialty chemical businesses. These are sort of old industrial businesses. And the domain just wasn't that interesting to me. And so I left and I was actually on my way to business school. And then I had this free summer in between my job and business school and I took a job at a startup. And and that was just like wildly eye opening because my first two jobs were in these sort of elite ivory tower kind of companies, like very small, incredibly

• 31:57Speaker 01

  talented people who, you know, came from like the most selective, accomplished academic environments and so forth. And and now all of a sudden, I was in a company where there was an entrepreneur who like figured out how to create three pennies out of two pennies. And it was much more kind of, you know, bare knuckle brass tax tactics and like, how do we create something here? And and it quickly became a bigger company with more people, not because it was necessarily successful, but it was it raised money successfully. Two thousand or ninety nine. Nineteen ninety nine, summer nineteen ninety nine is when I started. And and I had a really interesting skill set at the time because I understood. Computer science and the and software, we were making software.

• 32:41Speaker 01

  But I had some business sense and understood kind of what investors did, having had two years in consulting and two, you know, whopping two years in investing. But I realized really quickly, like, I did not like it. And I did it for a full two years, but like, there are all these people involved and, um, and, and, you know, one person was like, you know, my, my kid is sick and someone else is like, I don't like this job anymore, my career prospects. And it was like, there's so much time spent on helping people deal with their problems. And that was not fun for me.

• 33:13Logan Bartlett?

  Yeah.

• 33:14Speaker 01

  I like being able to sit in front of a machine and, and tell the machine what to do and get the output. Like, that was much more rewarding to me. And also, when you work inside of a company, if you're really good at something, you work on a very specific problem. And you can become really expert at it, but you're really, really focused. And it's very easy to lose sight of the big picture. And I'm much more of a big picture person. And so I wanted to go back and do something in investing again. But having tasted software and technology, I'm like, I, I need to be in this domain. And so my fourth job was at Bessemer doing venture capital.

• 33:49Logan Bartlett?

  Oh, you were gonna go to Stanford, GSP and.

• 33:52Speaker 01

  I never, I never made it. And by the way, I, I.

• 33:55Logan Bartlett?

  You deferred and then.

• 33:56Speaker 01

  No, I didn't defer. I told them a week before I was supposed to show up for classes that I, I would like to defer. And they said, you can't do that now.

• 34:03Logan Bartlett?

  And then they deferred you, uh, the next go around.

• 34:06Speaker 01

  Well, they, they said to me, but look, in a year, you'll be even more experienced. So just apply again. And, and I fell for it. And so it was okay. And then I applied again a year later and they're like, no. And so in hindsight, it was obvious, but I was whatever 25 years old and I didn't realize that, uh, I was burning a bridge at the time, but.

• 34:24Logan Bartlett?

  So what was the connection to Bessemer? How'd you get, actually get looped in?

• 34:28Speaker 01

  I, um, I just started, I mean, this was a tough period. This is, um, May of 2001. Was, I guess that's when I started. So it was probably February or March of 2001. It was not a pretty world. The economy had been contracting, the internet bubble had burst. The telecom business was still going well, but it was about to burst just a bunch of months later. And, uh, and so I was looking for a job and so I. Must have sent emails to a hundred people in all various parts of the investment business. And, um, and I, I basically got three people to take me seriously.

• 35:08Speaker 01

  Um, at the time, there was this hugely sharp distinction between a quote unquote pre MBA and a post MBA. And I would, had I gone to business school, I would have been graduating like right then. And so my comparison set were people who were post MBAs. But I was tagged by many of these firms and people as a pre MBA because they didn't actually have the degree, which was super frustrating because I was like, I'm just this experience. In fact, I have more experience because I have, in fact, You worked for two years. 50% more work experience than, than they do. I was effectively six years out of college. Um, but nonetheless, that was hugely limiting at the time. The industry was very structured and rigorous. Like you fit into this bucket or that bucket. Um, but the firm I worked at before business school offered me to come back.

• 35:50Speaker 01

  Um, and I think they thought of it as it was a value buy because they could kind of get me on a pre MBA basis, even though. This was the, the LBO. LBO, yeah. I didn't really want to do that, but I needed a job. I mean, um, and so, uh, and then there was a venture firm that, um, it no longer exists. Um, that, uh, that offered me a job in California. What was the name? Um, at the time it was called Charter Growth Capital. Yeah. I think it ultimately became, or it was the, it, it evolved into Focus Ventures. Okay, yeah. Um, and, and they were more willing to accept the fact, like, maybe it would be a career as opposed to just a two-year job. Um, I didn't really want to move to California. Had I wanted to move to California, I probably would have gone to Stanford. That was a part of why I didn't go to Stanford too.

• 36:36Speaker 01

  And then, um, Bessemer historically, well, not historically, but, um, in recent years at that point, had an office in Menlo Park and an office in Wellesley Hills outside of Boston and no investing office in New York. But a couple of years before hired a former Bessemer backed entrepreneur to start a New York office. Um, that wasn't actually the design. The design was for him to move to Boston and join the Boston office, but he refused. And they sort of let him open up an office originally at his house in Marinerak, New York. And then eventually he opened up an office in Larchmont, New York. Um, and as someone who had lived in Manhattan for the, like, my first six years out of college, I didn't know where Larchmont, New York was. You have to take a Metro North train to get there.

• 37:17Logan Bartlett?

  Forty five minutes to an hour, probably.

• 37:19Speaker 01

  A half an hour. It's a close suburb, but, but nonetheless, anyway. And so, and that was like, I was offered a sort of a two year dead end job.

• 37:27Logan Bartlett?

  I always wondered why Bessemer was in Larchmont for, for all that time. It's basically one entrepreneur just lived there and built around it.

• 37:35Speaker 01

  So, so his name is Bob Goodman and Bob convinced this other partner, Rob Stavis, who had a very successful career as an arbitrage trader on Wall Street and had retired at, you know, something like the ripe old age of 39. And, and Bob and Rob knew each other. They both lived in and around Larchmont and Mid-Marinac. And Bob convinced Rob on a part-time basis to come look at venture deals. And they had run into each other as almost angel investors. And so Rob agreed on a part-time basis to start working at Bessemer. And Bob's idea was if he can convince Rob to hire an associate who would be working full-time, that'll like suck Rob in more because they'll have responsibility for this person.

• 38:15Speaker 01

  So I was that person. I was working for a part-time partner in Larchmont while living in, in Manhattan. That was my.

• 38:22Logan Bartlett?

  Was there any conditional, like, hey, we're doing this for two years or like, how did they frame it to you?

• 38:28Speaker 01

  It was, it was, it wa, it wasn't a hard definition, but every person who had done the job up until then did it for two years and then moved on. And so it was, and, and I might have told this story to others, but my, you know, my, my dad's a doctor, my mom's a teacher. I'm now in my fourth job, six years after college. Like they did one job effectively for their entire careers. And, uh, and I was also making less money than I did in my second job after college. And it had been defined as two years, which means I was going to be on to my fifth job when I was eight years out of college and they were both concerned like, what, what is wrong with you?

• 39:05Logan Bartlett?

  Little did they know you were just Gen Z before it was, uh, yeah. It was, uh, this is now in vogue again. You were there for a while. I, um, it's interesting. There, there's a lot of people, I guess, and, and part of this is timing, but a lot of the people I actually, uh, look up to, uh, and have learned from.

• 39:24Logan Bartlett?

  In some ways, either by observing or by being closer to all sort of started in a similar vintage of time. And part of this maybe is just like my age versus their age or stuff. But you did it near Jaguar. Battery was my mentor and he did it. Rob Ward at Meritech has been a mentor to me. He did, I think, Fenton started around the same time. My partner, Scott Rainey, started around the same time. There's some like this post-internet bubble thing, which should have been the like valley. Obviously, it was a nice run-up after that period minus, you know, the little 08 pullback and then what we've experienced recently. But there is some survivorship that has come from that like vintage of people starting.

• 40:05Speaker 01

  I think survivorship is a good word for it. I think the other thing is that, I mean, this is only clear in hindsight. But one is, if you're going to do something that tons of smart people are doing, it's going to be really competitive. And it's hard to compete with really lots and lots of smart people. And so in 01, no one kind of wanted to do it. And so there's a lot less competition. So that was factor number one. And then factor number two is that the internet bubble was a special thing. And I've reflected on this a number of times before. But if you were in the venture business from 1996 through 2000, you made so much money in such a short period of time because of this unbelievable

• 40:46Speaker 01

  explosion, that you then sat there in 2001, looking forward at what appeared to be bleak prospects. And the potential compensation was so dramatically smaller than what you'd already earned. A lot of the people who were actually good at it said, why am I doing this anymore? And so not only did you have very few people coming in because it didn't look so attractive, but you also had all this incredible talent basically saying, we're going to hang it up. And so it was this amazing time period where you could only be of, you could be of only average intelligence and be successful because the old timers who knew what they were doing were kind of leaving. And you didn't have this massive influx of new people, whereas I compare that to say 2019,

• 41:28Speaker 01

  when, you know, nobody was retiring from venture capital and there was this incredible influx of competition. And it's just, you know, competition is the most destructive force in all of business, in any industry. And so go someplace where there isn't any and you're going to do much better.

• 41:43Logan Bartlett?

  It's funny, I've reflected on this before, but my, my friends from like 2013, 14, when I like got into venture, all for the most part, like my associate friends at other firms are, are leading firms today, at least in part, like general partners at their, at their firm.

• 42:04Logan Bartlett?

  Brian Feinstein among them, and reflecting on it, it's actually not that I'm a good friend picker. It's we were doing, we were all doing software in 2013, 2014. It was like, I, I think back on like, I was a liberal arts school major from like a no name boutique investment bank. That I was just in the software industry and battery needed someone to do software. And I was just so well versed in, I could talk about all the metrics, all the like analysis. I knew the history of like the database wars in the eighties. Cause that was like a hack for me to sound smarter and more mature than I, than I was. And so I'd be like, oh, I know this is like, I mean, people soft and obviously that, that hostile takeover with Ellison and all. And they're like, how old is this person?

• 42:49Logan Bartlett?

  It was like my little hack for it and it just happened to be software, right? It was like that, that was totally random and it wasn't like I was software is eating the world and I need to be a part of it. It was like, that's what I got staffed on and that's where I started, which is just like a funny serendipity of all this stuff. And so when people ask, I'm sure you experienced the same thing, but people are like, can I pick your brain on my like career prospects? I'm like, sure. Or how did you get to where you, and I'm like, yeah, let's talk about it. It's interesting, don't take anything from it though. Like everything I did, maybe there's some like broad meta lesson of like, try to find something that's going to be more interesting tomorrow than it was today. And get there before other people are, but like, there's no pattern matching from my specific experience that you can do. It's like, there was the randomness and serendipity in that moment in time, which is interesting.

• 43:33Speaker 01

  I think that's, I think that's true, but also like you, you, um, yeah, like as I reflect, like the, the, the big decisions that drove success in my own career were these big macro decisions, like doing venture in 2001, or decided to do internet in 2004, 2005.

• 43:52Speaker 01

  Which, and by the way, those decisions were serendipitous. They weren't like, I plotted out pros and cons and 16 options and like, so, so in that sense, like, I share your point of view. On the other hand, I feel like I did iterate through a bunch of careers while constantly looking for one that I think I would enjoy more. And, and I think you can't, and maybe I'm just telling myself this as a story to make myself feel better about my own decisions, but I, I think you can't underestimate how much actually liking what you do matters because most jobs are hard and, and if you're going to be successful, it's, they're super competitive and they require intense effort and work. And to maintain

• 44:36Speaker 01

  intense effort in something that you don't really like is really hard.

• 44:41Logan Bartlett?

  Totally.

• 44:41Speaker 01

  Even maintaining intense effort in something you do like is hard. But if you don't like it, there's virtually no chance. And so I think that, that helps.

• 44:49Logan Bartlett?

  That's what, when, that is the one thing, I think, when people are like, what, what differentiates you, or like, why were you able to succeed in the industry as you rose? And I, I always am a little flippant about like, oh, I was doing software investing at the right time, right? But it was actually, I was a nerd for software and venture. And I, that, it was kind of though, like, I could, I could talk forever about history of venture firms and all this stuff. And like, I just, I don't know, I became weirdly obsessed with the industry. And the first time I went to Sand Hill Road, I was like, oh my God, this is what I've been reading about. Like, this is where it all happened. And it was, I was such a door, I was 24 years old or 25 years old, and I didn't know what venture was as a 22 year old, right? I just kind of stumbled into it at 24, 25. And it was pre, you know,

• 45:34Logan Bartlett?

  Andreessen Horowitz had just started, but it wasn't this big thing. And I just remember reading TechCrunch like a, like a nerd. And so when, when our LPs will ask me at times about this, and they'll be like, Where's like, how much time does this actually take? Does this take up or like, what is the ROI? Let's just talk about, you know, and it's a funny conversation to have. And yeah, because they're like, is this distracting from your day to day? And I can generally explain how like the two things sort of dovetail in a lot of ways. But the other point is like, I do this nights and weekends, like a hundred percent. I do this, you know, this will be, we'll sit here for a while and hang out and that'll be nice. But like all the preparation and stuff, that's stuff I just love doing anyway.

• 46:16Logan Bartlett?

  And so going back and listening to podcasts that you've done before, reading old blog posts or whatever, that is not something that you could force on someone like, hey, you need to like that. That's like, I would do this in my free time anyway. I would do it for free. I would do it if I didn't get paid to do it. Quite literally, I don't get paid to do any of this. Like this actually isn't really a part of the job. But if you, if you really love it, then it's really exciting to get up and work every day around it, which I'm curious on the parts of the job that you actually enjoy most. And you were talking earlier about like the 99.99 or whatever, the versus the board thing. As you sort of think about the different components of the job, and I guess we could

• 46:55Logan Bartlett?

  throw in mentorship potentially, and also, I don't know, LP, like presentation, management, all that stuff. I'm not sure what other components you would think about it. Networking and socialization, I get a feeling that's probably not the top of your list. Like, as you think about the parts of the job you find most fulfilling, is it, is it the board work? Is it the mentorship? Is it the deciding and coming up with the actual yes or no decision, like in the adrenaline feel? I don't know if you get, I get when making a decision at the end of the day. What part of that do you like?

• 47:27Speaker 01

  Yeah, no, the decision making, I mean, I think it's important, but it's, it's stress inducing and I lose sleep over it oftentimes leading into a decision. Like I find myself waking up in the middle of the night, thinking about, about these things in part because like when you make the decision, you're stuck with it for years.

• 47:44Logan Bartlett?

  And people are like, oh, it's like marriage. And I'm like, actually no, like marriage has legal recourse to get out of it. I'm sure my wife wouldn't love me here like professing that. But there's like a pretty tried and true structure at which marriages dissolve. There's not really like venture capital. Partnerships, one as a firm, but then two board seats. It's not an easy thing to get rid of, right? So you're really tied in.

• 48:05Speaker 01

  I mean, I'm happily married for 19 years and so I don't know divorce firsthand, but I've heard about really messy divorces and I suspect trying to get out of an investment would be similarly messy. So maybe they're more similar than they are dissimilar. But for me, it's very clear, like the thing that I just love, and it doesn't happen all that often. And so it's a bit like now we all know, thanks to Facebook and these other social networks about dopamine and how it works on the brain. But for me, the dopamine hit comes when I'm in a meeting with a entrepreneur or company and they tell me something that I never heard or understood before. And sometimes they realize they're sharing an insight and sometimes they don't even necessarily realize what an insight it is.

• 48:48Speaker 01

  But I live for that. That is so fun, so exciting. And, you know, it's sort of trite in the venture business to talk about how you'll meet with 100 or 200 or 300 companies for every one that you invest in. And in fact, I'm fond of telling some of the young folks who are trying to get jobs at Bestmar. Like if you think about that, that means if it's one out of 300, it means 299 out of 300 units of your time at work are spent doing something that's like taking out the garbage. Like that is not glamorous. We don't talk about that. We talk about all these wonderful companies that we get to be associated with. But the truth is, most of the time is spent with companies that aren't interesting.

• 49:29Speaker 01

  And then, and then you have the awkward and unrewarding task of then telling them why you're not investing, which isn't fun either. But when you hear about some idea or some insight or some opportunity that someone can exploit in a positive way and ideally also make the world more interesting or better, that's just really neat. And I don't think there's any job on the planet where you get to see the volume of those kinds of things that you do in venture capital. And so that gets me really excited. And then, of course, once you hear it, then you go into the stress mode about like, well, how am I going to convince this entrepreneur that I'm the right, or we are the right group to work with? And how do I now negotiate a deal and all these other stressful elements of it?

• 50:13Speaker 01

  But I think that that makes it worthwhile. And then what's really neat about it is that you get, while the feedback loops are long, You do, it's a little bit like in high school or in college when you get an exam back with a grade, you get this feedback on whether your choices are good or not. And, and what you thought was really insightful, you might find out six months to six years later, actually wasn't insightful, it was just wrong. And that's not very fun. But sometimes you get this feedback and it's like, you're right. And the best moments are when you felt like it was an insight. Other people are like, what are you doing? That seems so stupid. And then a few years later, you're proven right.

• 50:57Speaker 01

  And that is, that's like magical.

• 50:59Logan Bartlett?

  Yeah, that is a, I've had a few, not Pinterest, LinkedIn, Shopify types, but I've had a few of those that were like, I actually think probably most of my most successful investments, if you call it that, early in my career, had been like a little, they certainly weren't hot when they were, when they were fundraising. There was like this little unique insight that I felt like I maybe had or we had on the team that was a little different than everyone else. And when you, when you're a little, when you're confident and there's a little like arrogance that you've realized something that like maybe other people haven't, it's a really good feeling. It's like, no, no, you'll see it. I'm pretty confident you'll see it.

• 51:43Logan Bartlett?

  Now there's the insecurities that come when it doesn't happen and you know, all the psychological inputs of it, but.

• 51:49Speaker 01

  On the investing style point, I think you're one of the few early stage VCs I've said, I've heard talk about like price sensitivity. And for the most part, there's like this adage of like, oh, they'll work or they won't. And you know, they'll be big companies or not, but like price isn't going to be the determinant of success at mostly Series A, which is what I think of you waking up every day thinking about.

• 52:15Logan Bartlett?

  How do you think about price as a as a component of your decisioning?

• 52:20Speaker 01

  Yeah, I think this idea that price doesn't matter, that it's binary is is just wildly flawed and lazy thinking. I think it's just dead wrong. And the math is undeniable. So if you have a fund and it's a fantastic venture fund and it returns, say, five X. If you paid twice the price on all those deals, it would have returned two and a half X, which it's not bad, but that's not a great performing fund. And so price has to matter. Now, if your only choice is to invest in a company that ultimately accretes value a hundred folds and or is going to accrete value a hundred fold, and you wanted to invest at a price where it would have accreted two hundred fold.

• 53:03Speaker 01

  Yes, it is a mistake with the benefit of hindsight to have said no, when you only would have made a hundred times return. But you don't know in advance. If you did, it'd be a really easy job, and you only invest in the good ones, not the bad ones, which nobody, no matter how good how good they are at this business, has been able to do. So I think the idea that valuation doesn't matter is fundamentally wrong. And that and that in order to convince yourself that's the case, you have to travel like a single path through history and and think about a single decision. But that's just not the way the world works. Or that's not the way the venture world works, where we make a bunch of decisions and an aggregate price actually absolutely matters. And so how like how you decide what is the right price to pay or what's too much?

• 53:47Speaker 01

  It's definitely arts and only, again, with the benefit of hindsight, can you evaluate whether you made a good decision or a bad decision. But I like to think about it as as if I'm playing the game many dozens or hundreds of times. And that you're going to get a range of outcomes on any given company or across any portfolio. And the math is a math. It absolutely matters. And so I think there've been a few instances in which I chose not to invest in a company and it ended up being really successful. And obviously I regret those. But I also, I take solace in the fact that I'll try to convince myself, actually, for the risk that you were being asked to take, you made the right decision, even though this

• 54:32Speaker 01

  one course through life that we took makes it look bad. And I have a bunch of those.

• 54:36Logan Bartlett?

  Oh, yeah. I feel, it feels like we have the same psychological, you know, safety blankets or whatever on this stuff. And it's hard to know. It was like, no, no, I wasn't wrong. I was right in my thinking. The world just proved the distribution. It was the bottom half of the distribution. I actually knew it was, you know, 10% chance of 100X, 90% chance of something less than that, and it happened to be in the 90%, right?

• 54:59Speaker 01

  But, but look, so my favorite story or example of this, which I think also maybe uses this for like, how hard this job is. So we had, we had backed this pair of entrepreneurs named Mark and Vinit. And they built this business called diapers.com. And it was pretty contrarian at the time. It was 2007. No one in VC was doing e-commerce. And they built a successful e-commerce company. And ultimately they had Amazon and Walmart in a bidding war and they sold it to Amazon and everybody did really well. And then they went and worked at Amazon for a while. So they really understood e-commerce even better from inside the belly of the beast. And, and then Mark approached me, this is Mark Lor, and he approached me and he said, hey, I'm doing another company.

• 55:43Speaker 01

  This is a business called Jet. And, and I want to raise some money. I was like, great, like, I'll invest $5 million, we'll get like a normal venture stake. And he said, well, I'm raising 50 million at 80 pre. I was like, well, Mark, you don't have anything yet. He's like, yeah, but it's a really good idea. And so, and Mark had made us a lot of money. And like, I have a ton of respect for Mark. I had then, I still do now. But I was trying to get my head around like $50 million at 80 pre for a company that doesn't even really exist yet. I said, well, tell me the idea. And he described the idea and the idea was basically. Kind of like a Costco on the internet. And so we're not going to make any margin on any of the products we sell.

• 56:25Speaker 01

  But we're going to have an incredible selection, incredibly cheap prices. And we're going to charge a membership fee and we're going to make all the profits on the membership fee, which is basically the Costco model. And, uh, and I didn't think it would work. And, uh, and, and I also said to him, I'm like, well, Mark, you don't need $50 million to figure that out. You could build that and test that with five or seven million dollars.

• 56:52Speaker 01

  Which I think Mark acknowledged, but he said, I don't have to because I can get $50 million. And, and basically he went around and raised all the money and he came back and he looked like I saved you a slug because you invested in my last company and, and you want to invest. And I think it was maybe a 10 or 15 million dollar piece in the round. And ultimately a combination of like price that he was asking, the amount of money he was raising before he had built anything. And the fact that I just didn't believe that idea had merit on the internet. I said, no. And, uh, and it turns out that, uh, if you fast forward, like, I guess the headline is like, I was wildly wrong in that he sold the company to Walmart for $3 billion and we would have made a very handsome multiple of our money had we invested. So definitively it was the wrong decision. On the other hand, the idea didn't work.

• 57:38Speaker 01

  He pivoted the idea to something else. It became Jet. He did try to make money on the transactions. People wouldn't, there wasn't much tolerance to pay a subscription or a membership fee. And by the way, even Jet wasn't really working. And, uh, and many years before, in the final days of the Amazon Walmart bidding war to buy diapers.com, we went back to Walmart and said, you need to beat a $500 million price or the answer is no. And Walmart at the time was advised by, I believe JP Morgan as their banker. And they took the feedback and they basically said, we think you're bluffing and they wouldn't hit the price. And, um, and they were wrong.

• 58:23Speaker 01

  It wasn't a bluff and we signed a deal with Amazon. And after that, I had voicemail messages on my office phone, when that was a thing, from the CEO of Walmart saying like, please don't sell the company to Amazon. Like we're serious, but it was too late. Like we signed a binding no shop with Amazon. So fast forward a bunch of years later. When Mark went to Walmart again, after last time they failed to buy his company and said, "You need to pay $3 billion," it was like a seven-year setup. Because many years before, or whatever, it was five-year setup, many years before, he went to them with a price and they said, "That's a bluff," and they refused to pay, and they lost the deal. And so this time, when he went to them with a price,

• 59:07Speaker 01

  and I wasn't inside Walmart, I don't know what they're thinking, but my guess is like, "Wow, last time he told us the price, it seemed really high. We said no, and we lost. So this time, he came to us with a price. It seems really high, but we're just gonna do it." And so it was like 19 things were lined up for this thing to work. And the fundamental business, I don't think was working, but it was still a great outcome. And it's like, you can analyze the hell out of everything and be kind of right, but still be wrong. And by the way, it works in reverse, too, where you can have all the reasons why you did invest, and it should have made sense, but you know, some really bad string of luck went the other way. And so there's just so many random factors you have to be tolerant of.

• 59:44Logan Bartlett?

  The Jet.com story is always a fascinating one, just to think about, because all of those components of it were that it didn't, like your investment thesis was actually right, and your considerations were right. And yet, you were very wrong. Because of all it took, they really wanted to hire Mark Lorrie to run e-commerce, and you know, what he was doing, and it worked out. And I ordered Wonder.com. I don't know if you've done it. You're on the west side of New York, you can probably do it as well. I ordered it last night for dinner. So now Mark is back at it again with the ghost kitchens and all that stuff. So we'll see how that ends up going.

• 1:00:27Logan Bartlett?

  But one of the ones that you did decide to do was LinkedIn. And that was a, I think, overpay by all the common definitions that existed in the venture capital industry at the time. So much so that the other investors zeroed out, which is generally, for people that aren't familiar, you try to look somewhat to other people that are on the cap table, that are going to the board meetings. For some indication on their sentiment around the business. And it's usually not a great sign if they're saying, hey, we're going to put $0 into this round. That that generally means they're on the inside.

• 1:01:11Logan Bartlett?

  They've seen all the board decks and they think you're crazy, which is what happened in LinkedIn. So I'm curious that that obviously worked out and it was expensive by all definition of venture capital. What was the mental framework or the model that got you there on that one?

• 1:01:26Speaker 01

  Well, so Reed Hoffman, who was the founder, he was the person I was dealing with. He was still the CEO at the time and he's very clever and obviously very talented. And we struck a deal. And so this is going to get kind of get into the weenie venture math for a minute. But typically, when you agree to an investment, you agree on a valuation and there's a pre-money valuation and a post-money valuation. And I was sensitive to how much ownership we were getting in the business and I didn't know how much money the Reed's existing investors would invest in the company. And so he happily steered me toward, let's just agree on what the post-money valuation is going to be.

• 1:02:09Logan Bartlett?

  Which is generally actually, I'll lean there more because I guess, again, this is nerdy venture math, but if you fix on the post, then your ownership is fixed in the business and then they can raise as much as they want. If they decide to raise, you know, 10 million or 100 million, right? Your ownership is going to be the same in it.

• 1:02:30Speaker 01

  Correct.

• 1:02:30Logan Bartlett?

  Generally, people try to set some bounds of like, you know, between 30 and 50 or whatever it is so that at least you have a range for what it's going to come in at.

• 1:02:38Speaker 01

  Well, so, but as a result of that structure, the more money that would get invested in the round meant the lower the valuation was going to go because the pre-money plus the amount you invest equals.

• 1:02:48Logan Bartlett?

  What was the actual post at the time?

• 1:02:50Speaker 01

  It was two, uh, two fifty posts.

• 1:02:52Logan Bartlett?

  Two fifty posts, so two fifty posts raising fifty, you're giving up twenty percent of the company. Two fifty posts raising twenty five, you're giving up ten percent of the company in that situation.

• 1:03:03Speaker 01

  Correct, but, but also, um, and so we, I think we invested twelve and a half million dollars in the round. So we were buying five percent of the company. And so if no one else were to invest, the, uh, the deal would have been two hundred and thirty seven point five pre two hundred and fifty posts. But if the insiders invested their prorata, which was to do about half the, the round, it would have been a twenty five million dollar round, which would have meant it would have been a two hundred and twenty five million dollar pre money. So it would have been, uh, whatever that is, a five or seven percent drop in valuation if they invested. And by the way, from our perspective, from my perspective, I wasn't going to own five percent of the company. You'd much rather own five percent of a company that has twenty five million dollars of fresh cash than five percent of a company that has twelve and a half million dollars of fresh cash. So I was heavily motivated to see the insiders invest as much as they possibly could.

• 1:03:47Speaker 01

  And so I had phone calls with both of them, essentially laying out my case.

• 1:03:51Logan Bartlett?

  Who was it, Greylock and?

• 1:03:52Speaker 01

  It was, uh, Greylock and Sequoia. And, uh, and I was laying out my case, all but begging them to like, please invest, because it was just going to make my deal that I, I had agreed to with Reed better. And they both came back at zero, which I suspect Reed knew was going to happen ahead of time, which is why he agreed to fix the post money. And so he was a step ahead of me. Of course, in the end, like, that was a two hundred and fifty million dollar valuation. The, that was in two thousand and six. The company went public and then Microsoft bought it for twenty something billion dollars, so effectively like a hundred X.

• 1:04:23Logan Bartlett?

  That's just twenty something, I think it's like twenty seven, or it's like high twenties, it's not like, uh, we're rounding down.

• 1:04:28Speaker 01

  Yes, and there was, there was some delusion, there was another round later, and then there was, there was an IPO round, but it would have been something on the order of.

• 1:04:34Logan Bartlett?

  I think it would have been a good investment, they should have participated, uh, in that round.

• 1:04:37Speaker 01

  But I'll tell you, like, so the, and had I, I was blissfully ignorant of what the insiders were going to do. So it was probably helpful because I didn't have to get up the courage. And then once I found out they weren't going to invest, I was kind of committed. I mean, I could have backed out, but it would have been, it would have been awkward. But I learned a lesson, and the lesson I learned was that, um, sometimes, interestingly, when you're an insider. You know less about a company than when you're an outsider because when you're an insider, you tend to get lazy and you tend to absorb all the information that you're given by the management team in the form of board decks and other content discussions. And you don't really do any independent diligence anymore because you feel like you're getting all the information from the source. You don't need to.

• 1:05:19Logan Bartlett?

  And you're, and you're committed oftentimes like, hey, I'm in it. And so I can go do a bunch of external diligence calls, which you probably should do before a new round is coming together in general, I would recommend it. But like, your ownership isn't going to change that much in that next round. If you participate three or five or whatever it could have been for them.

• 1:05:39Speaker 01

  Although, although, I mean, that is true, although, you know, they each could have invested, what are five or $10 million for 100x? Like, I think they would have done the work and they should. But, but I think that the, the point is that you're just, when you're outside, you feel like you have to do more work and oftentimes that more work leads you to insider information that you don't necessarily have when you're on the inside. And so you can actually understand a company better if you're, if you're diligent and on the inside, that's the best situation. But if you're, lazy is maybe too harsh of a word, but if you're content to just get what you get from management compared to someone who isn't getting unfiltered access to management, but they're getting something from management. Like I was engaged with Reed and his team to understand what they had to say, but I also did on my outside homework.

• 1:06:23Speaker 01

  You can actually have a sharper perspective. And so I think it's, like, that has stuck with me. That was, that was in 2006, so it's a long time ago. And so both because now when I see investors approach company that I've already invested in, and they do all this outside in homework and talk to tons of customers or partners or so forth, I often want to get access to their information.

• 1:06:44Logan Bartlett?

  I ask for it every time and it's, it's always helpful. One, to know how they position, like, oh, interesting. So they do that, you know, that's, that's, or, or, oh, they use Bain clearly or McKinsey based on this font formula, depending on the firm, but, but, uh, yeah, it's, it's always informative to go through and do that. I actually give you guys a lot of credit. I mean, this is, again, we're nerdy on a venture stuff, but I remember when I was at Battery, we invested in Service Titan and one of the Rounds, you guys zeroed out and it was like, nope, market did the math, doesn't work. Next round came in and did like super, super pirata or like maybe tried to co-lead or something. It was like, actually, we redid the work. We thought about it with layering on payments or whatever it was.

• 1:07:28Logan Bartlett?

  Uh, our conclusion is the exact opposite and we're willing to pay 2X the price nine months later or something for it. So I actually like this honesty of thinking and iterating on it. I've seen it manifest. It's announced over 100, whatever. I don't know what it's actually going to be worth, but it's

• 1:07:43Speaker 01

  Hopefully a lot.

• 1:07:43Logan Bartlett?

  Yeah, it seems like a lot. Uh, it seems like eight, 10 plus billion dollars, uh, I think is probably a pretty reasonable estimate for it. So I give you guys credit for like that, that thoughtfulness and perspective around stuff. What, what is the commonality of deals that you actually get excited about then? Like what, what are the things? I mean, that insight point we talked about earlier. And so obviously it seems like that's probably one of the things that moves the needle, but like.

• 1:08:08Speaker 01

  Yeah. I mean, honestly, it's all over the map and maybe even getting back to the, my, my, my Mark Lorre story from before, like I am, um, you know, some people, um, call it like the, you bet on the jockey, you bet on the horse. If you've heard that metaphor before.

• 1:08:20Logan Bartlett?

  Yeah, of course.

• 1:08:21Speaker 01

  And, and I am like very clearly a, a horse better, not a jockey better. Had I been a jockey better, I would have bet on Mark again. I would have done really well. And, and so maybe, maybe it's some smarter to be a jockey better. But, um, but I love thinking about businesses, business models, industry, industry dynamics, how something will evolve. And, uh, and oftentimes the, the insider, the, the spark that I'll hear about that gets me excited about a business is one that I can anticipate how that will lead to a, you know, a, a permanent, or at least nothing's permanent in this world, but a semi-permanent advantage. And like, I love thinking that through. And, um, and my general view is a, a mediocre.

• 1:09:04Speaker 01

  Builder with a phenomenal idea or insight is much more likely to do well than a phenomenal builder with a really mediocre insight. Of course, that's wrong when the phenomenal builder realizes the idea is mediocre and then shifts to something else and does something fantastic. But I think that's actually really rare and much harder to do. And that I would rather get lucky, not because the great entrepreneur pivots to a better idea. I'd rather get lucky because the entrepreneur who I had a hard time assessing, who has a great idea, turns out to be a phenomenal entrepreneur.

• 1:09:41Logan Bartlett?

  Yeah.

• 1:09:41Speaker 01

  And so in almost all the investments that have worked out really well for me, that happened. And that at the time, the entrepreneur, I mean, obviously they're smart and hardworking and so forth, but it's really hard to know when someone who's running a 15-person company, whether they're actually going to be good at running a 15,000-person company. There's only one way to test that, which is to see them get there. But when that happens, it's really magical.

• 1:10:04Logan Bartlett?

  Yeah, there is this, uh, there is this element of, and I, I, I think once upon a time I was probably 100-0 on product market versus team. Uh, I was just like, hey, when, what's the, there's this saying, when a great team meets a good market or a bad market, like the bad market wins or something, right? And I also think that's probably a component of stage investing for, for me. I mean, you, you have some interesting examples. And I think about, uh, Toby Lukie, who you've been fortunate enough to work with for a long time at Shopify, or Jeremy Stoppelman at Yelp, or some of these iconic names that people look up to now. But Shopify went public at what valuation, like 800 million or 1.2 billion?

• 1:10:49Speaker 01

  Yeah, about a billion.

• 1:10:50Logan Bartlett?

  Yeah.

• 1:10:50Speaker 01

  Maybe, maybe between one and two.

• 1:10:52Logan Bartlett?

  One and two. And like Toby started it as like, I forget the backstory, but it was like a snowboarding, like offshoot thing, so he could sell snowboards or, and I, I, he's a, he's a very understated guy in general, with like a quiet intensity, but the, the Toby Lukie of today was not the perception people had of Toby Lukie when you originally invested, or Jeremy Stoppelman today, the perception wasn't what they have today. There's kind of this like, um, yeah, I guess it's hindsight bias on entrepreneurs and what they ultimately come to. I'm curious how you. Watching those people develop into what they have become, both as people, but then also

• 1:11:34Logan Bartlett?

  perception, I guess, how much of it is there the same people that they were then? And it's just they happen to succeed and so people treat them differently with much more canonical reverence versus they've evolved in a meaningful way?

• 1:11:47Speaker 01

  I think a little bit of both. I mean, they're, well, on them first, you know, they're

• 1:11:56Speaker 01

  a lot, you know, money and power change people. And so when you're a founder of a 15 person or 50 person startup, you probably don't have much money or power. And when all of a sudden that company has thousands of people worth billions or a hundred billion dollars, you have a lot of money and a lot of power.

• 1:12:13Logan Bartlett?

  I'm a lot for any internally as a general partner than I was in as an associate. It's amazing. Every last my jokes, it's like way better. Yeah.

• 1:12:21Speaker 01

  But, and so I think you, for both Jeremy and Toby, what's remarkable is despite enormous success, like they've stayed true to a few really important things, like they're both really self-aware and they both understand their strengths and their weaknesses. They, as a result, they end up spending their time and their focus on the things that they're really good at and enjoy and find other people who are really talented in the places or the areas that they either don't want to do or aren't very good at doing. Whereas other people who are more likely corrupted by power and success, think they're just good at everything. And then they start spending their time in areas that they're not very good at and in many cases, don't even like to do. And that's sort of the beginning of the end. They're much more likely to flame out or decide it's not for them or just start to face failure.

• 1:13:05Speaker 01

  Because when you do something that you're not good at and don't like to do, you're much more likely to fail. And so there's a thread of in both of them that's clearly the same. But at the same time, like, you know, I was joking with Toby, I'm, he's, I mean, he's a German immigrant to Canada, but I think of him as Canadian because he's spent most of his adult life in Canada. And, and, you know, there's, there's this Like, Americans are a little bit more harsh and, and, uh, and aggressive and Canadians are a little bit more nice. And so in many ways, you know, there's sort of this sort of a, it's not real because I think actually both are great companies and both can win. But there's sort of the Shopify in e-commerce and Amazon in e-commerce and Amazon is known as this cutthroat company.

• 1:13:48Speaker 01

  And Shopify is known as this much nicer company. And so I was, as Toby's business crew, I was trying to get him to think about how he could take advantage of some of the heft of Shopify and Shopify as a distribution channel. And so I encouraged him to read this book called Cable Cowboys.

• 1:14:05Logan Bartlett?

  Great book.

• 1:14:07Speaker 01

  So it's the, it's the John Malone story.

• 1:14:08Logan Bartlett?

  Yeah, yeah.

• 1:14:09Speaker 01

  And the metaphor is that John Malone owned a cable company and all these TV channels, cable networks, wanted to have distribution on his, on his wire to people's homes. And so in order to get access to the homes and, and have him carry these networks, he insisted on owning a piece of the cable company, uh, the networks. And so he ended up building this other business, which owned, you know, 10, 15, 20, 25% stakes in all these cable networks, which he got for free essentially in a, in exchange for letting these cable companies have access to the households that he had wired. And, uh, and the metaphor for Shopify is you have all these merchants now who use your software and all these other software companies want to sell their software to the same merchants. And so, and Shopify has this app store.

• 1:14:53Speaker 01

  And so my argument was instead of just letting everybody have access to all your merchants, maybe you should be getting equity stakes in some of these companies. And I was trying to say like, that's probably not for you, Toby or Shopify, but at least understand how someone else in a similar position capitalized on it to make his business even better. And, uh, and so Toby read the book and, um, and he got back and was like, I didn't really like the book very much. But I met him. I'm like, what do you mean you met him? He's like, yeah, I just, I called John Malone and, you know, I met him for lunch. I'm like, that's not fair. Like, I read the book. I'm like, that's kind of cool. You read the book and you're like, you go talk to the guy like, you know, that. And so, um, that is not something that Toby in 2010 could have done, but Toby in 2020, like no problem.

• 1:15:37Logan Bartlett?

  That's impressive. Yeah. Malone, uh, also if you want to know why we suffer through the Dolan fandom, uh, Dolan ownership of the Knicks, you, uh, you get a flavor of that in Cable Cowboys with, uh, with Dolan's father, uh, in building out all, all his stuff. It's, um, Yeah, that's interesting with with power and reverence and money and all of that. There's there's definitely that level of influence. I've actually found one of the interesting. It's an ancillary sort of derivative thing, but like there's this adage of backing repeat entrepreneurs or concept of it. And there's elements of it that are it's really great. And I've I've been fortunate enough to work with some before. When they've been really successful and they have like other options of not grinding on a startup.

• 1:16:22Logan Bartlett?

  It's pretty attractive just to if you could go be the whatever, go go on the beach or be an independent board member or whatever. I think about Brett Taylor now as like he's on Shopify's board. He's chairman of OpenAI. He was former CEO of Salesforce, co-CEO of Salesforce. And he's like outdoing another company and like another company is such a grind. And I I think Brett's a very special individual from everything I've been able to tell. And so I don't mean to speak of him individually, but I'm like, gosh, if I could just go hang out and go to Shopify's board meetings and then go to OpenAI's board meetings and be like the CEO of like one of the biggest software companies in the world, like all that seems pretty

• 1:17:05Logan Bartlett?

  versus hooking up the wifi in like the office building or like figuring out where the, you know, what our HR benefits policies are going to be or like recruiting the incremental engineer to come on board. It's an interesting thing of once you've had success, there's a ton of elements of it. Once you've had it, you get tons of advantages. And I think maybe the AI world, because of the capital intensity in some ways, is going to be different. Your ability to raise money is something of a strategic advantage and a big component of your ability to drive outcomes. I don't know. But I think about that example of like, if you have alternative paths of doing things, do you really want to do a startup versus Toby's alternative path was probably to keep grinding on this to make it work or go back to the snowboard store or something.

• 1:17:49Speaker 01

  Yeah, he didn't. He didn't. He's he's talked about it a lot. He didn't. He didn't really like working for other people. And so if you don't like working for other people. And I don't, I don't

• 1:17:56Logan Bartlett?

  It's a career limiter.

• 1:17:57Speaker 01

  Yeah, I don't, I don't think he has a college degree. So if you're not college educated and don't like working for other people, like what else can you do?

• 1:18:03Logan Bartlett?

  You're kind of pot committed at that point, to use a, I guess, a poker term there. Hey, this is Logan interjecting here for a second. For about three minutes, we lost some of Jeremy's audio. So we've done our best to recover it. But you're about to hear three minutes of recovered audio that doesn't sound nearly as clean as the rest of the episode from Jeremy. Who bothers you? Feel free to skip ahead. If not, power through. It's only three minutes and it's good content that you'll hear regardless. I heard you say you've had three good ideas ever in investing. I'm curious what those are. I think I, I think I can maybe guess. I assume they mean the broad themes by which you've, you've picked to make investments, but I'm curious what the three good ideas are.

• 1:18:45Speaker 01

  So, so, so we tend to focus our best on roadmaps and roadmap is like a collection of hypotheses that suggests there'll be options for little companies to become big companies because of some new technology or demographic shift or, or some, some catalyst. And, and so the first, and if you pick the roadmap right, you, there's a lot of leeway in picking mediocre companies and still being successful. If you get the roadmap wrong, it doesn't really matter what company you pick. It's not going to work. At least that's our, that's our theory.

• 1:19:16Logan Bartlett?

  I think it's right. I mean, it's honestly, Eric Vitriola used an analogy on this of like, the best boat in the world or best sailboat in the world doesn't move without wind. It's like, if you're in a bad market, but a little dinghy can fly if it's really blowing outside. And so I, I think that's an interesting analogy. Yeah. I'm going to start co-opting it as my own. Not, not enough people listen to all the episodes. I can just be like, yeah, I had this great idea, Jeremy. This is what I call it.

• 1:19:41Speaker 01

  But that is what you have about me. You hear a great idea from somebody, then you refine it as

• 1:19:45Logan Bartlett?

  That's actually, that's actually one of the jokes I'll tell entrepreneurs is I'm like, I started my career, I had like one, I had no good ideas and I said something stupid and I got corrected on it and then I had one. And so then I would go around and saying one and now I'm up to about 20. And so that means for board meetings a year, you've got me for five years if I say one every board meeting. And then I either need to add more or I'm going to be out, we're going to start back over again with the same 20. And so when I say something, I'll call, I'll call like an entrepreneur I work up, I'm like, this is one of my 20, I promise you, this is a good thing. This is not an opinion, this is like really advice you should take. And, uh, and so one of the 20 things I, uh, maybe I'll add to it after this episode, but.

• 1:20:28Speaker 01

  I like that, but it's the, when I think about the process of building and developing a roadmap, that is what it is. You, you crave an idea and then you go to people who are expert in that domain and you share the idea with them. And if they agree with it wildly, then you know you're onto something. If they don't, they'll tell you where they think you're wrong and then you incorporate that into your idea and keep doing that over and over again with more people. Until you have real confidence that the idea has merit or maybe there's nothing there. Um, so that is very much the discovery process that, that we tend to go through. But back to your question, like what, what are the ideas? The first one was that you could build a business on the internet where all the content was created by the users. And, uh, and that's obvious now, but at the time, no one had really done it and a few people were trying.

• 1:21:13Speaker 01

  And, uh, and there was huge questions like, well, content is created by the users, like, how are you going to make any money off of that? Cause you need the users to create the content and you can't charge them. And if it's user generated content, it's sort of low quality. And so you can't have ads next to that and like, how is it going to work? Um, and it just turns out that that idea was dead right. But in 2004, 2005, 2006, very few people shared that and these were consumer companies. And so, um, I benefited, we benefited enormously both because the idea was right. It led to Yelp and LinkedIn and fandom and actually a little bit later, Pinterest. But no one else is doing it. In fact, everyone else is still responding to the dot bond implosion of all these dot com consumer companies.

• 1:21:56Speaker 01

  And therefore, they didn't want to touch any of this stuff. And so my favorite example is Jerry Soplin. He was a member of the PayPal mafia, which is a huge thing today. Even then, in 2004, 2005, people knew about the PayPal mafia. And he was the, I think he ran engineering. Like he had a pretty senior role there despite being a very young person. And so he had access to every venture capitalist in Silicon Valley. And I think he went up and down Sand Hill Road and he mostly got funny looks from folks. And then some random 20 something who was living at the time in either Boston or New York. That was me called him out of the blue or emailed him and said, like, I think you have an interesting business. He's like, well, no one else does, like, who are you?

• 1:22:41Speaker 01

  And so being one of few people who like an idea is infinitely more valuable than being one to many people like an idea. And then by the end of 2006, lots of other people were noticing the success of some of these companies. And all of a sudden, there's tons of venture capital pouring into this little category. And that's more or less when I said, I'm done, I stopped. But then the companies in which I already invested had this massive benefit from lots of cheap capital who came in after us. And so like, it's another way of winning, if you will, or another advantage you get. So that was the first idea. The second idea that, and that turned out pretty well. The second idea that worked out pretty well was then by 2007, I actually took a little bit of a left turn before I got on to it.

• 1:23:25Speaker 01

  But I was really, I got really interested in advertising on the internet. And I looked at lots of online ad companies and ultimately couldn't get comfortable that there was durable value. And there was a lot of sketchiness in the online ad networks and online ad world at that time. But I noticed the customers of the online ad networks were these e-commerce businesses. And I started looking at the e-commerce businesses and many of them had no venture capital. And this light bulb went off. It's like, well, if you're spending money on ads and you never raised venture capital, you must be making money because how else are you coming up with the budget to spend the money on the ads in the first place? And so we started talking to a bunch of these companies and realizing like, hey, maybe this is a thing.

• 1:24:10Speaker 01

  And the only true pure play e-commerce company that we ended up investing in was diapers.com, but it was a successful investment. But it also gave us enough insight into e-commerce that when Shopify came along, which is a software company, not an e-commerce company per se, it was easier to understand it. And so that, and so that, that second idea, it didn't lead to a lot of investments, but it was, it was a very profitable idea. It worked out. And then the third idea was, was driven by one of our analysts, now one of my partners, Brian, who you know. And as an analyst, he found this company called MindBody. And MindBody was a software company selling software to yoga studios. And it was a pretty small company, but it was just trucking along with, with modest growth. It had been around

• 1:24:55Speaker 01

  for almost 10 years, actually, at the time. And most venture capitalists said, that's too small. If there are 50,000 yoga studios in America, and you sell $100 subscription per month to each one, that's a $5 million a month, $60 million revenue business. Like, why bother? That's not even venture worthy. And the two insights that Rick Solmeyer, the CEO, had, which we benefited from greatly, and we believe in her, one, like yoga studios are very close to Pilates studios, are very close to fitness or gyms, or, and, and actually

• 1:25:36Speaker 01

  you can get as far away as hair salons with almost the same software. And so it turns out the market was quite bigger than yoga. And then the second thing, which has had a profound impact on the software industry, which I think Rick might have been the first software entrepreneur to do, is he started to layer in payments. And when you do payment processing, instead of just charging the hundred dollar a month subscription, you can make a multiple of that in terms of your cut of the credit card processing fees. And I think you fundamentally changed the credit card processing business. And so that idea of vertical SaaS plus credit card processing came from that investment. And we would share internally updates on like how much great progress MindBody was making.

• 1:26:20Speaker 01

  MindBody did payments before Shopify did. Shopify's business, I think at this point, the majority of the business is actually from payment processing. And I think that insight came in part because we saw what's happening at MindBody. And we're saying to the Shopify team, like, you can do this too. And by the way, it is like an improved experience for your merchant customers if they don't have to go figure out payment processing. And I think since then, we've made 50 investments in software companies.

• 1:26:47Logan Bartlett?

  Sure. Titan certainly benefited from that as well. There's a number of others that touched.

• 1:26:51Speaker 01

  Toasts, Procore. I mean, it goes on and on. So anyway, so it's essentially, and I wouldn't say they were my ideas. I helped to capitalize on them or help push them. But I think it's another example of venture as a slow motion business. I've been doing it now for 23 years. And if you have three ideas that are really great in 23 years, that means it's like every six or seven years. And that requires enormous patience because when you don't have a compelling idea that's somewhat differentiated, your chance of generating great returns, I think, is much, much lower. And so half the battle is just being patient and, you know, reading and exploring and waiting around long enough for the next great

• 1:27:33Speaker 01

  idea to come. And you don't feel compelled to act to be productive in the meantime, which is likely to lead to a bunch of very mediocre investments.

• 1:27:40Logan Bartlett?

  The mistakes you've made, or that you reflect on, not the Jet.com type mistakes, but like the blind spots that maybe you had early in your career, or the blind spots that maybe you even still have today. Are there things that you've either course corrected on in particular, like as frameworks or insights or ways you approach investments? Or things that you know you need to augment yourself with a partnership that can benefit you to be able to do the job as well as you do?

• 1:28:21Speaker 01

  Uh, yeah, it's, I think, um, yes, for sure. I think for me, the most, the most obvious or stark one is that, um, I got, I got used to doing venture the only way I could do it in the first bunch of years of my career. And the only way I could do it in the first bunch of my years of my career, having had no like shining success in my previous careers or in my venture career, was to go find entrepreneurs and companies that would take capital from me, either because no one else wanted to give them any, or because they wanted to work with somebody who was really hungry, um, really on top of the details, willing to kind of work, but wasn't gonna have any sage

• 1:29:06Speaker 01

  advice for them because I had never been part of building anything significant before. And so that led me to have to be more deeply contrarian, or just like go further off the beaten path out of necessity. Um, and I also realized, or I internalized, maybe subconsciously, this idea that something that is quote unquote hot is just a giant waste of time, because there'll be 19 other investors all over it. My chance of being the most attractive investing partner for those entrepreneurs was extremely low, if not, you know, zero. And if you do show up and quote unquote win, you've had to outbid and pay the highest price, which can often turn a really great

• 1:29:47Speaker 01

  investment opportunity into a, a lousy one or mediocre one. Um, and so I just, I kind of programmed myself like, um, and in fact, I laugh because we talked earlier about like, you know, this sort of style differences between different people. And, um, you know, I have an ego. It's not a, I think I keep it in check. I have, you know, some sense of competitiveness, but I have some colleagues who are like incredibly competitive. And when they see something that other people want to do, it, you can see it in their face, the competitive juices get going and they just want to run toward it and win. They want to win the deal. Um, and my reaction is like, this is gonna suck. This is a beauty contest. I hate entering beauty contests. I'm not that beautiful. Um, I don't want to do

• 1:30:32Speaker 01

  this. And it's just so interesting to see such a dramatically, literally a diametrically opposite natural response from two people in the same business, even in the same firm reacting to it. Um, and so I

• 1:30:46Speaker 01

  That said, I've, you know, fast forward now, that was, you know, 15 years ago, 20 years ago. Now, having been associated with some companies that have been successful, I have a shot, maybe not a great shot, but a shot at competing for more competitive things. Even though my initial reaction is like, I don't want to do that. I want to go someplace where like no one else is hanging out.

• 1:31:07Speaker 01

  And, uh, and I have some colleagues who get very frustrated by that because their view is like, hey, you're one of the people around here who's like been successful. Like you need to help us win those opportunities. And whereas my, my gut reaction is like, I don't want to play that game.

• 1:31:19Logan Bartlett?

  Don't want to spend the time. It's funny. It's funny. My biggest competitive juice is to see the opportunity. Cause there's a finite number of deals that most of the things are pre-qualified in some way by the time I'll do series B and C. And so there's some, uh, point of clearance, uh, that they've gotten to a level of materiality, either because of prior fundraising or the amount of revenue they get to, even if it's bootstrapped or whatever, whatever the right consideration is. And I feel the competitiveness just to make sure we evaluate it. And it is, there's, there's a handful of firms internally, uh, that, and it's not even firms, it's like people.

• 1:31:59Logan Bartlett?

  That if they do an investment that we didn't just get a clear look at, it's, it's totally, I don't feel a need to win it necessarily. But I want a really informed opinion on why we didn't decide to do it. And so, uh, our, our, our team, if they hear about a deal getting done, they're like, they know to call, like not put it over slack or they'll call me. And it's like someone in my family died. They're like, you're going to need to be sitting down for this. Like, uh, they, yeah, they, they got one by us and I, that's where I will like, cause at the end of the day, we need the at bats, especially at the, you know, whatever the early growth, whatever we can define ourselves as stage. And so it's just being there and we don't need to win. I'm buying, we will lose our fair, there's a lot of good firms out there, but it's like being there.

• 1:32:43Speaker 01

  It's funny because so I, and maybe this is just a. A mental model of self-preservation, but you know, there's a lot of talk about FOMO, the fear of missing out and that, you know, you're clearly missing out if you don't see it. And I've convinced myself that I have, I have, I have JOMO, like the joy of it. Like, I, I love to know I didn't spend and waste a lot of time on something that I almost certainly wasn't going to do.

• 1:33:07Logan Bartlett?

  Yeah.

• 1:33:07Speaker 01

  And it's almost like a point of pride. I, I think that's, that's probably a little bit disingenuous and I'm, I'm, I'm saving myself from the, having to acknowledge that like, I wasn't invited to the dance at all, let alone, you know, got to dance with the most attractive mate. But, uh, but also there's something to it. Like you can spend a lot of time chasing things with very little to show for it and it's super frustrating.

• 1:33:29Logan Bartlett?

  Yes, it's very frustrating. And like, listen, if you, uh, there, there are a number of great firms that are going all out at all times on specific investments. And so your hit rate, you need to opt into the right races if you want to run the race. And I, I, I found myself increasingly, just like if the resonance isn't there with the entrepreneur or XYZ, if we're, one of the things I'll talk to our team about internally is like, why would they pick to work with us? What is the insight we have? What is the track record of success we've had? What is the relationships we have? What like, is there some reason? Cause there's so many good firms out there. Once by the time we could come up with the 10 firms that like otherwise would be doing the investment.

• 1:34:13Logan Bartlett?

  Now it's, there's hundreds. And so it's like, if we can't explain why it's us in some very clear articulate way, then we're the suckers at the poker table, or whatever the right analogy is. It's like, there, there better be some reason that it's uniquely us, because there's infinite amounts of capital that's out there. One of the things I think, uh, uh, is your Shingar, I'd love to talk about kind of, we, we've touched on different points of it along the way, but Bessemer, you've been there your whole venture career, 23 years now. Uh, as a firm.

• 1:34:46Logan Bartlett?

  It's been around for a while. I mean,

• 1:34:49Speaker 01

  110 years.

• 1:34:50Logan Bartlett?

  What was the evolution? I guess, what was the evolution through Carnegie or whatever? The US Steel? No, what was it?

• 1:34:58Speaker 01

  It was Carnegie, if you want to say correctly, but Carnegie Steel.

• 1:35:02Logan Bartlett?

  Do they teach you that when you come in as like an associate?

• 1:35:04Speaker 01

  I think I learned it the hard way. I think I was telling entrepreneur about it and they're like, that's not how you say the name. Like, oh, thank you for directing me.

• 1:35:10Logan Bartlett?

  I appreciate that. Best Eber.

• 1:35:12Speaker 01

  Exactly. No, but so Carnegie, Phipps and Frick were three Scottish immigrants. Or their families were all Scottish immigrant immigrant families to the US. And Carnegie started Carnegie Steel and Phipps and Frick were like his number two and number three employer executive. And they JP Morgan bought all the steel companies. He created the first monopoly, which is US Steel. And he bought Carnegie Steel for cash and was basically like a leveraged buyout. And Carnegie got $400 million in 1907, which is a lot of money today, but in 1907, it's like an ungodly sum of money. And I think Phipps got $50 million.

• 1:35:52Speaker 01

  And and he gave a bunch of it to each of his four children and they put a bunch of it in what is effectively a trust. And and he was really forward thinking and he he did a couple of things. One is he started investing that capital himself in other, what he called high risk, high growth opportunities. And he was really good at it and he invested in International Paper and Ingersoll Rand and WR Grace. These were all startups in the early 1900s. And then he hired non-family members, outsiders to both invest the money and to to serve as like a board of directors for this family investment company. And his theory was that if we keep this money together,

• 1:36:35Speaker 01

  even though eventually I'll have many descendants and today he has hundreds of descendants. We keep it together. Well, as an investment group, we'll have the advantage of scale to go to access things that if we split the money into like all the individual descendants, they would have much smaller bits and they wouldn't have the same scale. And that has served them extremely well. And so they've, as a family, have generated returns that are on par with any of these top university endowments who are generally viewed to be the most sophisticated and successful institutional investors. And it's now been going on for 100 plus years. So was that Bessemer Trust? So that was actually Bessemer Securities, which still exists. And by the way, I should mention, Bessemer was a fourth Scottish guy. He invented the Bessemer process, which if you Middle school or something, yeah.

• 1:37:18Speaker 01

  Exactly. You learned that was a way of making steel in high volumes very cost effectively. So he didn't name it after himself, which? Well, poor Bessemer died before anyone could actually build what he designed on paper. And then Carnegie Phipps and Frick built it and they got rich. But anyway, so he- So as an homage to? Exactly. The effective, the true entrepreneur, the inventor, he Phipps named his family entities Bessemer. And there are quite a few of them today. So initially it was Bessemer Securities, which still exists. You could think of that as a family office. And then Bessemer Trust is sort of like a competitor to Goldman Sachs Private Wealth Group or Citibank Private Bank.

• 1:37:59Speaker 01

  And it's essentially a private bank and that's owned by Bessemer Securities, actually. And then Bessemer Venture Partners was the high risk, high growth department of Bessemer Securities. And eventually, over the decades, I think around the seventies or eighties, when the focus shifted from manufacturing technologies to information technology, the then employees of the high risk, high growth department sort of spun out to have a separately named group called Bessemer Venture Partners. But all the money still came from the one LP, which is the Phipps family or Bessemer Securities. But they did a really smart thing, which is they said, hey, as long as we're investing in these companies, you, the employees of Bessemer Venture Partners,

• 1:38:43Speaker 01

  you also need to invest your money in the companies because we can't read all your memos and understand and second guess all your decisions. So we'll just say yes, as long as you're putting up a bunch of money each time.

• 1:38:54Logan Bartlett?

  Principal agent problem.

• 1:38:55Speaker 01

  And they solved it really simply, which is like make the agent into a principal and then you don't have to worry about it. And so that has continued on more or less to this day. And while we've grown quite a bit and we have other limited partners as well, they continue to be our largest. It's a super close relationship and we continue to invest a lot of our own money in all the investments, which is not only good for the fifth sound, but everybody else that keeps us well aligned.

• 1:39:20Logan Bartlett?

  So the decision to 15, 16 years ago, you guys went to outside capital beyond that. Was that just a scale consideration and diversification of the LP base?

• 1:39:33Speaker 01

  It was, it was a little bit scale. Actually, it was really prompted by our desire to start investing in India. And so we started investing in India in probably 2003. And it's kind of a random story, but we, we had lots of our portfolio companies starting to ask us about how they can access what at the time was a much lower cost technical labor force in India. And many of our startups are pretty small companies and they viewed us as a bigger institution, though by headcount, we're really not. And they asked us for help. Can we help them understand like how to tap this source of labor in, in India? We also explored China at the same time. And, and we ended up investing in a whole bunch of companies in India from probably 2003 to 2007. And we wanted to do more and more of it.

• 1:40:18Speaker 01

  And at some point in our discussions with, with, with our LP, they said, look, we love what you're doing, but you're going to start to stretch our families. Willingness to extend our balance sheet, particularly to one emerging economy country. If you want to keep doing this and keep scaling it up, and it wasn't huge scale, then maybe you should bring on outside investors. So they kind of pushed us a little bit to do it. And we did. And so our first fund with non, with non BVP employees and non, you know, PIPs entities was, was in 2007.

• 1:40:58Speaker 01

  And, and at the time, we ended up essentially raising what was a fund focused on India. But those new LPs rightly said to us, look, we don't want to just invest in your India stuff. We want to invest in all of your stuff. So we ended up with, with, with two funds, one that was mostly India focused, that we get a little bit of the stuff we did outside of India. And the other, which was mostly outside of India, that we get a little bit of the India exposure. And that's how we started. And then eventually we merged the two and we eliminated that complexity. And then, because no good decision isn't revisited at least 50 times.

• 1:41:36Speaker 01

  More recently, we actually said, you know what, instead of us allocating the capital to India versus the rest of the world, we'll let our LPs decide. And, and so we actually split it back out again. And now there's a, an India fund and a, and a non-India fund.

• 1:41:50Logan Bartlett?

  I was with some LPs last week, the week before, but I guess you guys had a nice event there recently.

• 1:41:55Speaker 01

  We did.

• 1:41:56Logan Bartlett?

  Went over there. I don't know. Did you go?

• 1:41:58Speaker 01

  I, I wasn't there, but yeah, I heard, I heard, I heard about it. I saw, I saw all the, all the pictures and the video. It's, it's actually really, you know, we, we, we've been investing in India since 2003. The first eight or nine years, we did things in India that were very different from what we've done outside of India. In particular, we were investing in, we could almost think of it as companies that you could imagine investing in, in America in 1950. And we thought to some extent, the Indian economy in 2003 or 2005 was kind of like where the US economy was in 1950. And this was like a brokerage firm, power plant, much more basic industry, if you will. And, and the truth is, we weren't that good at it. And by 2010, we kind of realized it.

• 1:42:41Speaker 01

  And coincidentally, the Indian tech economy had matured to the point where like, actually, we can do in India the same things we're doing outside of India. And so we really changed it. But and we've been in some really nice companies in India that we're quite proud of, particularly in consumer internet and now increasingly in software. But the Indian venture market hasn't been nearly as rich with exits as the US venture market. And so it's been trying and we've been super patient. And I think this event we had was almost a little bit of a celebration because it felt like the patience had paid off and we sold the stake of one of our India companies at a really successful game. We had another one that went public.

• 1:43:24Speaker 01

  And so it's a little bit of like, thank goodness, we all collectively had the patience to do it and the team in India was patient with us. And it worked. It's hard to maintain a small partnership across 14 time zones. And so it has not, it has not been easy.

• 1:43:39Logan Bartlett?

  14 time zones, geez. And you guys have 22, 23 partners, is that right?

• 1:43:44Speaker 01

  We do, two of whom are in India.

• 1:43:46Logan Bartlett?

  Yeah.

• 1:43:46Speaker 01

  And the rest are spread amongst Israel, London and various parts of the US.

• 1:43:51Logan Bartlett?

  How do you think about like, obviously there's the geo component of it, which the China tensions, I think we've seen a bunch of implications for different venture firms and trying to figure out how to unwind or disentangle some of the stuff as geopolitical climate has kind of ratcheted up there. But you guys have have changed or evolved and added things even outside of geo, right? Now you have a dedicated growth fund as well with people leading that. Talked to Brian for a long time about, because battery has had success in buyouts in that model and he would always pepper me with questions about like, well, so how do you think about this? How do you think about that and all that?

• 1:44:36Logan Bartlett?

  Which now actually has its own Bessemer Forge, is that right? So its own fund dedicated to it. And so how do you think about the commonalities and through lines, I guess, that exists between Bessemer? The entity and then these discrete strategies that may be underpin it. GOI get, especially if you're doing tech related stuff, but stages and strategies.

• 1:45:01Speaker 01

  So it's, um, thanks for the question. It's, it's actually supernatural and it evolved in a very organic way. And that is, we would, and so we started off with a single fund that was focused on venture capital. And over time, we realized like, hey, when you invest early in a company and that company grows and starts to be successful, oftentimes that company will want more capital typically at much higher prices. And it's fundamentally a different assessment of risk and return. And we would do that once in a while out of our fund. And we realized that actually having people who think just about that risk return trade off as a specialty might be better than

• 1:45:45Speaker 01

  all of us sometimes thinking about early and sometimes thinking about late. Though we do that too, and I think there's, there's some element of being a general athlete or a general investor that, that matters, but.

• 1:45:53Logan Bartlett?

  And the sheer market knowledge that exists between the series A company doing well and the

• 1:45:57Speaker 01

  Absolutely.

• 1:45:58Logan Bartlett?

  D company, you have better information symmetry. If you have people looking at later stage stuff.

• 1:46:02Speaker 01

  And, and actually technically we don't, we don't have a growth fund per se. We call it BVP Century and it's meant to write much bigger checks. Most of the time in companies that we've already invested in. And in any event, we'll never invest, uh, never say never. But typically speaking, when we invest from our BVP Century Fund, we're also investing from our, our quote unquote, original venture fund at the same time. And so you could think of it almost as an, an overage fund rather than a growth fund. And, uh, and it just, it, we had a bunch of companies that we loved. And some outside investor was coming in and offering to invest 50, a hundred million dollars in those companies. And, and we said to ourselves after a while, like, why are we waiting for someone else to write these really great checks in our great companies?

• 1:46:47Speaker 01

  We should do it ourselves. And that kind of led to the Century Fund. And, and, and so it started off as when you back an entrepreneur, what are all the ways in which you can service him or her with capital? Sometimes it's early, sometimes middle, sometimes it's late. Let's make sure we can do that and we can do that relatively efficiently. So that's how we ended up with Century. And then the BVP Forge, which is essentially a software bio fund. It came from the same thinking, which is that we're, we talk to lots of entrepreneurs every day. And, um, and oftentimes we might talk to an entrepreneur who has a. Let's say a $500,000 revenue software company, for example. And it's interesting, but it's not quite ready for a venture investment. It's not really a fit.

• 1:47:29Speaker 01

  And so we agree to keep in touch and we might talk to that company again. A year later or two years later, or three years later. And next thing you know, a bunch of time has passed and now it's a $10 million revenue software company. And it's growing at 20% a year. And it's not likely to ever grow at 80% a year. And so it's just not really a venture investment anymore. However, those are entrepreneurs too. They may not be a prototypical Silicon Valley entrepreneur that's building something that's trying to compound at really rapid rates. But oftentimes it has other really interesting attributes, like it's really capital efficient. They haven't burned much cash and they might at that point want liquidity. And they might say, you know, I'd love to find a partner who can help me take it from 10 to 25 million revenue over the next five or 10 years.

• 1:48:13Speaker 01

  And I'd love to sell half the company because I've been working really hard at this for a long time. And I like to diversify a little bit. And so if you think about it like

• 1:48:25Speaker 01

  like a funnel process, we were sort of dropping those leads on the floor and just saying, hey, that's not for us. And

• 1:48:30Logan Bartlett?

  I can think of one example at which my former employer actually bought one of those businesses that was like not a venture business. And it's been a, I think, a really nice outcome. It just required a different pricing and capitalization and structure around what was thought to be a venture business. And actually it was like, you know, more of a mid-growth kind of software buyout.

• 1:48:53Speaker 01

  Yeah, there's, so there's lots of great kinds. There's lots of software companies with very different profiles. And so, and, and we've been very active in software. So that was the idea. We, we wanted to have something to offer to those entrepreneurs. And, and we actually did an analysis and we're not, we're not investing $500 million the way that a Silver Lake or a TPG might. These are generally companies that might be. 10 or 20 or 30 million dollars in revenue and we might be writing a 50 or 70 or a 90 million dollar check. And we did an analysis of all the other, I'll call it middle market software buyout firms, many of whom have names that you wouldn't recognize. They're not

• 1:49:34Speaker 01

  household names, the way Silver Lake is, or the way Sequoia is. Nonetheless, they've generated really nice returns. And we did an analysis and we looked at every company they had done a software buyout with over like a 15 year period. And it turns out that we at Bessemer had talked to half of those companies on average, three or four years before they did a buyout. And we're like, wow, that's crazy. We have access to these entrepreneurs and we're kind of telling them to go away because they no longer fit our profile. That's silly. And particularly because we already have the relationship. And so, and you know, so

• 1:50:15Speaker 01

  we launched, it was, it was originally Brian Feinstein's initiative. And, but we, we knew it was, you had to have a different mindset, a different team. And so, there's a lot of collaboration, but as a totally separate team, our BVP Forge team, we sit in the same offices. I happen to be based here in New York and there's a bunch of people on the Forge team in New York. There's a bunch in California. And, and there's quite a bit of collaboration. And sometimes it's not clear at the first instance, whether an entrepreneur and his or her company is actually a fit for a venture round or a Forge partnership. And, and we have ways of working that out. But, but I'd say we, we, we launched the initiative at this point, it's probably three, three years ago. And, and they've made, I think,

• 1:51:00Speaker 01

  their first three or four investments. And it seems great so far. It's like another

• 1:51:05Speaker 02

  It's a great asset class. Hey guys, this is Rashad. I work with Logan on the show and I wanted to take a quick break to tell you about Redpoint's other podcast, Unsupervised Learning. Unsupervised Learning is our AI podcast where we interview guests from companies like Perplexity, OpenAI, Adobe, and many others about the topical things that are happening in the very, very rapidly developing landscape of AI. So if you're interested in going deeper, check out the link in this description for our YouTube channel, but also wherever you get your podcasts. So.

• 1:51:36Logan Bartlett?

  Back to the show. The, uh, the commonalities, the information, uh, symmetry that exists across different stages and sectors, I think is super advantageous. Uh, and so, and it's a really good financial product for limited partners. I'm sure as you guys ran the analysis and all of that, there's, there's, I guess, as you be, become a bigger firm with, with different strategies and all of that, there's all complications, uh, I think that, that, uh, I'm sure you guys have thought about in it, uh, but it's a, but it's an interesting, uh, yeah, it's certainly an interesting product. Um, I, I guess one of the things I wanted to talk about was retaining

• 1:52:15Logan Bartlett?

  talent and developing talent. Uh, I think you all, uh, have done a great job of developing talent from a homegrown basis, yourself included, but I think all of the senior most leaders I kind of think about at the firm have mostly grown up within Bessemer, um, although Two thirds, one third. Two thirds, one third. Okay. So, so a fair, fair number have grown up within Bessemer. Um, and then also there's a number of people that have been successful outside of Bessemer's four walls after they, um, have been trained by Bessemer. And it's interesting in, in hearing you talk about it. I feel that, um, there could be a point of, uh, that like that, that could be a sensitive pain point of like, oh, these people have gone on to

• 1:52:59Logan Bartlett?

  other firms and had successes, but I don't sense that, uh, from you. You're actually proud. The firm seems to be very proud of seeding the industry with other talented people, I guess. Um, maybe focusing on those two things separately, but maybe do the latter point first, uh, training the industry. A lot of your IP might walk out the door. Uh, how do you think about that and the point of pride versus the point of like consternation?

• 1:53:28Speaker 01

  I mean, it's, uh, well, first I'll say that this dates back a long time. And so TA Associates, which itself is like a 30 or 40 year old firm, it essentially spun out in some respects from Bestinver Venture Partners.

• 1:53:41Logan Bartlett?

  I didn't know. That's funny.

• 1:53:42Speaker 01

  Same for Advent International.

• 1:53:44Logan Bartlett?

  They were both like venture firms too, once upon a time.

• 1:53:47Speaker 01

  Yeah.

• 1:53:48Logan Bartlett?

  If you go read old venture history books, back to me being a venture nerd, like they were very, you know, growth capital as defined by venture, not growth equity and private equity, which they've gotten into.

• 1:53:58Speaker 01

  Yeah, as they got bigger, they shifted more toward private equity, but they came from-

• 1:54:02Logan Bartlett?

  It's a much more scalable business, that private equity.

• 1:54:04Speaker 01

  Indeed, it is. But yeah, they came out of Bestinver. So it's not new. And I think our general view is it's a small industry and having lots of friends in the industry, particularly when you have like a close working relationship, is to your advantage. And so, yeah, it's maybe a little bit painful when someone really talented has your whole playbook and is now playing for a different team. But at the same time, most venture capital deals end up with multiple investors over time. And so I think if you have more friends than fewer, it probably will work out to your advantage. I also think that we found

• 1:54:46Speaker 01

  over the years that many of our best investments in each fund have come from someone who's newer to the industry, not necessarily someone who's been doing it for a really long time. And so I think it's a huge, I don't know, strategic advantage, competitive advantage asset to be attractive to new people who want to be in the industry, whether that's people like our fresh out of college analyst class, and we typically hire three or four really young folks every year, or whether it's folks like Adam Fisher, when he joined us from another venture capital firm, or Elliott Robinson, when he joined us, or Samir Delacchio, who started in venture capital after having been a career operator. And

• 1:55:30Speaker 01

  so if you have a really attractive platform that really talented people want to join, you're much more likely to then also discover the next great venture investment. And so in order to have a platform that lots of really talented people want to join as investors, you have to have either- A clear path for them to build a career in your firm, or a clear path for them to use your firm as a springboard to go somewhere else. And ideally both.

• 1:55:57Speaker 01

  And so I think you're, you know, you're only as good as your last deal as a individual and as a firm. But the chance of your last deal being really compelling goes up substantially if lots of really great people want to work there. And, and so I kind of view it as the minute that you aren't attractive for the most talented people who want to enter the business, because you've either stopped hiring them or you've stopped helping them grow. It's the beginning of the end and a venture firm probably has like a 10 year tail towards death where it isn't still bringing on new talents and, and, and, um, and having kind of young or new people with fresh ideas.

• 1:56:41Speaker 01

  And you can kind of milk it for a while, but eventually it runs apart. And there are examples of venture firms who are at the top of the game, who are not anymore because they, they sort of suffer from this phase.

• 1:56:50Logan Bartlett?

  We've seen a fair number in the last like five years of, of that. And I think we're going to see a bunch more in the next five. There's a, in Kill Bill, there's like the, I forget what it, the five point exploding heart technique or something, which is you're dead, but you don't know it. And it's only until you start walking or something, you take some steps that you realize that you're actually dead. I, uh, I think about that with some venture firms. Um, on the retaining talent side of the house, uh, I guess you guys have a nice systemized program, it feels like for people ramping up within the organization. So how does that work? Like, at what point do people start leading their own investments? What guardrails are in place? What autonomy is given?

• 1:57:30Speaker 01

  It's, yeah, so it's, it's, it's relatively structured, but also,

• 1:57:36Speaker 01

  but also varies based on the market and the environment and, and, um, you know, what, what's happening within the firm and so forth. So as I like to say to any young person thinking about joining Bessemer, or frankly, any firm in the venture industry. If you're not willing to accept the fact that luck is going to play a major factor in your career, don't do it. Yeah. And so, because a lot of people are like, well, I want to know what the rules are. And I want to know that it's sort of like a fair set of rules. And I'm like, it isn't fair. And it's not, it's not that it's unfair by design. It's just like luck happens. And so for some people it could happen in two years and some people it could happen in 15 years. And like, you might be even the fifth, the 15 year slow burner might be even more talented than the person who got there in two years.

• 1:58:19Speaker 01

  But that's just the way the cookie crumbles or the ball bounces or whatever metaphor you want to use. So we try to create as much of a even playing field and fair set of circumstances as we can, but in a really heady period, in a massively expanding market, like from 2014 to 2017, it was easier to demonstrate talent and judgment than it has been in 2023, when the pace of new investments was much slower and the market's not expanding. It might even be contracting. And so even if you made some great decisions, it's hard for that to show up in the numbers. So that you got to accept that. And we think a lot about that because we want it to be, we want everyone to feel like

• 1:58:59Speaker 01

  they have a fair shot, even if they have to accept that the timelines might vary dramatically. Like mileage may vary or something like that as the advertisement's going on these electric cars. But we basically have a program where you, you can enter as an analyst or enter as an associate. Analysts are typically right out of college or maybe a year or two out of college. And analysts work all in New York in a sort of a central pool, if you will. And they end up joining teams on an ad hoc basis with other more senior professionals all over the world. And then associates are for the most part, one-on-one mentees with partners. Our analyst program is a two-year structured program. Most analysts go on to do something else. Some stay at Bessemer and become associates.

• 1:59:43Speaker 01

  And then the associate program is apprenticeship or more natural mentorship. And the idea is you, you learn by watching and by doing, and over time you do less watching and more doing, but at the beginning you're doing more. More watching and less doing. And we have a sort of like a hierarchical organizational structure, which is mostly meant to just confer more authority and judgment as you grow. But eventually you become a general partner. And that in our mind is like where there's like a bright red line. And until you're a partner, you're supporting somebody else's decisions. And then once you're a partner, it's your neck on the line. Now, we talk a lot about that.

• 2:00:23Speaker 01

  You know, we don't think it's, we think venture capital is a team sport more the way tennis or swimming is a team sport and less the way basketball is a team sport. And so, you know, in tennis or swimming, you as an individual are earning a certain score or track record or, you know, point or ribbon. Whereas on a basketball team, everyone's the same. And like some people may score more points and others may get more rebounds, but the team either wins or loses together. Whereas in swimming, you could win your race and your team can still lose. And you care about your teammates and you want them to win. But in some instances, you're even swimming against your own teammates. And we think we're a little closer to a swim team than a basketball team.

• 2:01:07Speaker 01

  And that we keep track of how everybody does individually. And we actually record decisions individually because we think it's hard enough that you got to wait four, or five, or six, or seven years to get feedback. If at the end of six or seven years, you don't even know if it was your decision or someone else's decision, then you're waiting like 20 years before you get the feedback.

• 2:01:24Logan Bartlett?

  So the, at a practical level, how that works, is that the voting decision on like a one to 10 basis that I've heard you talk about? Or is that something different?

• 2:01:33Speaker 01

  No, it's different. It's different. So when we, when we make an investment, we literally write down who made it.

• 2:01:40Logan Bartlett?

  And is that a single name?

• 2:01:42Speaker 01

  So let's say it's a $10 million investment. It's really simple when it's one partner. And then with that, their name is written in the book.

• 2:01:49Logan Bartlett?

  But it needs to be a partner that's name gets written down?

• 2:01:52Speaker 01

  Only, only a general partner.

• 2:01:54Logan Bartlett?

  Yeah, got it.

• 2:01:55Speaker 01

  If it's two people, they can split it. But they have to decide at the time.

• 2:02:00Logan Bartlett?

  What this split is.

• 2:02:01Speaker 01

  And so if it's 10 million, like I might be like, I'm responsible for eight and you're responsible for two. And that's written down.

• 2:02:07Logan Bartlett?

  And this rolls up into a budget that the fund is then a derivative of? Is that roughly?

• 2:02:13Speaker 01

  Sort of. It's more, it's more that some. We we use tools like a budget, which is it's and it's a loosely.

• 2:02:23Logan Bartlett?

  Yeah.

• 2:02:23Speaker 01

  It's a loosely out budgets. It's not. It's not like you need to go make this much. You need to go invest this many dollars. We don't do that. It's more like you really can't invest more than this many dollars over the next year or two or three without seeking special permission. And we use that to guide people. And that's particularly important when you're early in doing it because you're like trying to figure out, well, how much do I invest here? And then it also it's guardrails. And so among our group of partners, there are some people who are like, like I was in 2004. Like I had zero track record and no one knew, including me, if I was going to be any good at it. And so it doesn't make sense for that new, I'll call unproven partner to have as much access to capital as someone who's

• 2:03:06Logan Bartlett?

  Sure.

• 2:03:06Speaker 01

  generated billions in gains.

• 2:03:07Logan Bartlett?

  Sure.

• 2:03:08Speaker 01

  And so we use the budget to sort of slow some people down and speed other people up. In some instances, we're trying to slow down somebody who's really proven because we know they're just too busy. And someone who's unproven, but you can start to see the promise will use it as a tool to sort of push them to to kind of take advantage of the insight they have and go a little faster. But but but yeah, I think I think the budgeting is not such a critical part of the the the equation. I think the really critical part is the the idea that we're recording who's making which decision. Because it allows us, there's, there's a challenge that happens in many venture capital firms, which is that there are senior people and the junior people. And when something goes really well, all of a sudden, no one can remember who did it.

• 2:03:52Speaker 01

  I'm sorry, when someone goes poorly, no one can remember who did it. When something goes well, like amazingly, a senior person gets super involved and like tries to take credit for it, even though they might have had very little to do with it early on.

• 2:04:01Logan Bartlett?

  It's actually amazing how memories, memories are like a fascinating thing and.

• 2:04:08Logan Bartlett?

  I've been in many rooms where I've had one version of events and like remembered it crystal clearly, I think, especially when you're coming up in your career, you're much more attuned to like the nuances and then have someone look me in the straight face and be like, this is how it played out. I'm like, I swear it wasn't. And so I actually started to codify at a personal level, like my thoughts into a PDF, just so it serves as a cannot, because you have the deal memos and I understand you guys do particularly honest deal memos. And as much as you're framing, as much as I want to believe I, in any memo, I put my name behind, it's like the most honest version of events. It's still going to be five pages or something and

• 2:04:51Logan Bartlett?

  I won't have allocated the appropriate number of words to the, just the, the one sentence version of the way I feel about it, right? It's like, I wrote this long, loquacious thing about this or that. And, you know, this, here's the different risks and probability weighting them and all that. But it's like, it's kind of a structure and I go back to your, I had heard that you hate memo templates, which is an interesting thing because I, I feel like I can almost write in one sentence, what I think at a time and then PDF it and be like, all right, well, that I can't go back and change the PDF. It is what it is at this point. But I'm interested on your investment memo framework, I guess, or why you hate the templateized version of investment memos.

• 2:05:33Speaker 01

  Yeah. So I, so I think, um, people, when, when you're filling out a template, you don't, you're not thinking, you're doing busy work. And, and if you're given a template, suddenly the task at hand is to complete the template. And what I think you want, the mentality you want to embrace when you're trying to make an investment decision is like, what decision do I want to make? And what is the most important thing? And if your template is standard, it will always accentuate the same things for every company. But for some companies, like the most important thing is, The technology and for other companies, the most important thing is the market dynamic. And for other companies, the most, and so the problem with the template is it waits all these things the same way for every investment.

• 2:06:18Speaker 01

  But what you want to do is you want to say like, what actually matters here? And what is the story that I'm telling myself and my colleagues where I need to believe for this to be a great investment? And so if you start with a blank piece of paper, the likelihood that you're going to write the right story is much higher than if you're filling out a template. And so that said, like, I know when, when we go to write these things, we almost always grab a recent investment memo off the shelf that we think is doing, for a company that we think is doing reasonably well. And we open that up and we just start rewriting in those same sections because it's like a structure for our thinking.

• 2:06:59Speaker 01

  I think that's okay, but, um, but, but maybe it's not okay for the opening. And so like the way I typically approach it is I'm like, all right, the opening has to be, you know, the summary, which is typically between a half of a page and a, and a page or maybe a page and a half long. Like you gotta start with nothing there. You can't take an old memo and say like, such and such is a software company based in Akron, Ohio, cross it out, you know, Kalamazoo, Michigan, and you know, it has X million of revenue. Cause that's not the story. That's just regurgitating facts.

• 2:07:30Logan Bartlett?

  You, you do kind of need a, uh, there, there's some element of like lingua franca within an organization, especially if you guys are going to do voting as well, which is an interesting concept of, I guess, all the partners weigh in, right? On a scale of one to 10 of what they think about a potential investment. And so if I only give you, uh, you know, six sentences of my stream of consciousness thought of it, I'm sure everyone would look at me and be like, I need more info. Like this is not enough information for me to give you a vote. I guess it's fine on the decisioning side in some ways if I own the decision and I, I'm sure you guys have checks and balances that there actually needs to be a certain amount of information dissemination that exists internally. But yeah, it probably makes it hard to vote if, if there isn't some.

• 2:08:15Logan Bartlett?

  Uh, materiality to the memo and some like

• 2:08:18Speaker 01

  For sure.

• 2:08:19Logan Bartlett?

  Amount of data you're sharing with your partners.

• 2:08:20Speaker 01

  But also I'll say like, I think when you hear a vote, when somebody hears a vote, they think like you're trying to get, you're trying to win the vote or you're trying to get it approved. And, uh, and I think in, in a lot of, in a lot of investment firms, like that is what the vote is for, like is it getting approved? And, and actually technically speaking, um, if the votes you get in our partnership are so bad, it's possible that it could trigger the thing that actually causes the investment proposal to get rejected.

• 2:08:47Logan Bartlett?

  Is it still five and a half? Is that the?

• 2:08:49Speaker 01

  So yeah, we voted on a scale of one to 10 and the average has to be five and a half in order for it to be approved. But I, in 23 years, I can only remember one time that a vote actually didn't get approved.

• 2:08:59Logan Bartlett?

  Was it a bad investment?

• 2:09:01Speaker 01

  Uh, yes, it was not, it was, yeah, it was not Google.

• 2:09:03Logan Bartlett?

  Yeah.

• 2:09:05Speaker 01

  Uh, so now that we make lots of other mistakes.

• 2:09:07Logan Bartlett?

  Sure.

• 2:09:08Speaker 01

  But, um,

• 2:09:09Logan Bartlett?

  But the purpose of that isn't, I mean, is it, is it to codify, uh, where people sat in their thought process at the time for historical, uh, like, you know, the annals?

• 2:09:21Speaker 01

  That's secondary. So that's, that's valuable for on a secondary basis. And, and on that theme, it like, it keeps you honest and it forces us to have some recording of, of, of what you thought. So when you look back, you can't remember loving something. Like, wait a minute, I voted it a six. Maybe I didn't love it so much. So it keeps you honest. The primary purpose though, is that, um, as, as the, as the lead partner on a given investment, what I want is I want as much help from my partners in making the decision because I am held primarily to account for that decision, good or bad. I get the credit if it goes well, and I get the blame if it goes poorly. And when I accept and embrace that idea, I want, like, if you have an idea as one of my partners that might help me make a better decision, I want to hear that.

• 2:10:06Speaker 01

  And so the primary purpose of the vote is, is like, I'm asking you for feedback. Like I'm telling you, this is something I want to do, hear the pros, cons, risks, whatever, that I articulate in a memo or, and or orally. And now I'm asking you to tell me what you think. And so some people are really good at, uh, in real time, sharing a thought or an insight about a memo they read or a presentation they just saw, which is really helpful to me in making the decision. Other people aren't that good at telling me what they really think. So by forcing them to distill their opinion into a number. I get some information and like if they say they're voting a 10 out of 10, I'm like, it's really clear. Like they could have stood up, jumped up on the table and told me this is amazing. I love it. I love it. Or they can just say I voted 10.

• 2:10:51Speaker 01

  And other people who might be a little reticent, particularly if I'm a younger partner, voting on a more senior partner's investment, it might be hard for me to tell them like, I think that market sucks, or I think that entrepreneur is a crook, or what like, those might be hard things for me to tell, but I can vote a six in a spreadsheet and I can communicate something very clearly. And then it's, the onus is on the sponsoring partner to look at those votes and to say like, hey, like I saw you voted a six, like tell me more.

• 2:11:19Logan Bartlett?

  Is there qualitative information that goes along with it?

• 2:11:22Speaker 01

  No.

• 2:11:22Logan Bartlett?

  Like in the doc?

• 2:11:22Speaker 01

  Only oral.

• 2:11:23Logan Bartlett?

  Just the number.

• 2:11:24Speaker 01

  Just the number.

• 2:11:25Logan Bartlett?

  Interesting.

• 2:11:26Speaker 01

  Yeah.

• 2:11:26Logan Bartlett?

  And there's no weighting on, like everyone has the same.

• 2:11:30Speaker 01

  Same vote. Yeah.

• 2:11:31Logan Bartlett?

  Yeah, got it, got it.

• 2:11:31Speaker 01

  Yeah.

• 2:11:32Logan Bartlett?

  Interesting. And so it serves as a, as a check and balance of where the sentiment of the organization is and how it's been presented. Have you found it to be broadly indicative of success? That the things that tend to trend higher are the, or is it some variance barbell that like, hey, the people that love the stuff and hate the stuff tend to be the best investments?

• 2:11:59Speaker 01

  The, um, no, so the, many of the best investments actually had very weak votes. It's not a good, and, and I'll give you an example on a reason why. I think if, well, the simple fact is if everyone inside Bestinmer as a partner loves something and is voting it an eight or nine, 10s are quite rare. That probably means that if all the partners at Redpoint or Battery or Seco or Benchmark were looking at it, they'd also be voting eight or nines. There's no, there's no contrarian element to it. Like everyone loves it. And if that's the case, it means almost certainly it was hotly competitive. And if we're the ones who win it, we almost certainly had to pay a pretty aggressive price. And it's hard for the best deals to be the ones that you had to like really stretch for. Sometimes it works out, but, but it's hard.

• 2:12:43Speaker 01

  Whereas if a bunch of the partners internal to Bestinmer have a real concern about something, that means that other firms, a bunch of partners probably had a real concern, which might have dissuaded someone from bringing it into that partnership in the first place as a deal that they should pursue or an investment they should pursue. And so almost by definition, it's less competitive. And my favorite example is Skype. And so when, when Robs Davis proposed that we invest in Skype, He said that he had signed an NDA in which he promised not to tell anybody where he met with the founders, because they were essentially on the lam from the record industry in the United States, because they had also built Kazaa. And so people were like, what? Like, we're investing in fugitives?

• 2:13:27Logan Bartlett?

  This is gonna make it sound a little old, but Skype was the original Zoom, and basically, and Kazaa was, people are probably more familiar with Napster, but it was sort of the original file sharing, or it was a more peer-to-peer centric, they got around it somewhere.

• 2:13:42Speaker 01

  There was Napster that couldn't be shut down.

• 2:13:43Logan Bartlett?

  Yeah, it was kind of like a more distributed Napster, Napster on the blockchain, if you will, Kazaa back in the day. So they were, they were successful in this entity, but it was, you know, dubiously legal, I would say, at least in the US.

• 2:13:59Speaker 01

  Yeah, I think eventually they had judgments entered into them, entered against them in US court, because they were facilitating the pirating of music. I don't remember the details.

• 2:14:08Logan Bartlett?

  But they took their technology, and, or some of the peer-to-peer elements of it became Skype.

• 2:14:13Speaker 01

  Exactly. And by the way, and so that investment, which got a bunch of six and seven, or even got a five vote, I don't remember the details, I think that generated like 150 times return in 18 months.

• 2:14:24Logan Bartlett?

  Wow.

• 2:14:24Speaker 01

  And so, yeah, it's, it's, so it's not, we appreciate that it's not a means of deciding what to do. There are fail safes. If everyone hates something and is voting in it too, like, it will actually get rejected. But that doesn't really happen. Mostly, it's a, it is a language to communicate in a highly quantitative way, what you think of something, so that your partner who's making the decision, really on behalf of everybody, knows who to follow up with, and, and, you know, where the concerns really exist, so that he or she can hopefully make a better decision.

• 2:14:53Logan Bartlett?

  How'd you guys land on one to 10?

• 2:14:54Speaker 01

  It was there before I arrived, so I'm not sure.

• 2:14:57Logan Bartlett?

  One of the things that we've, at different points in time, and we debated the voting structure, and we don't really have one right now, at least our early-stage team does, our growth team doesn't, but like, doing one to four, because it forces you to get off the middle, and, you know, like a six versus a four versus a seven versus an eight and all that, but I, all these things are more artisanal than they are, you know, scientific, I would say.

• 2:15:22Speaker 01

  And, and, yeah, we, we've expanded with, with some of these things too, and we have, we have, we have a different system where everybody in the, in the partnership can vote, not just the partners' vote, which is also more just a way of conveying information. But the truth is, it's, when you force someone into something that's so binary... You're taking away from them the ability to articulate that like it actually isn't binary. Like in real life, it's hard.

• 2:15:44Logan Bartlett?

  Yeah.

• 2:15:44Speaker 01

  And so a lot of times you're not sure. And if you deny someone the opportunity to tell you that they're not sure, you're losing something. You're forcing them into something that isn't what they really think.

• 2:15:54Logan Bartlett?

  Yeah.

• 2:15:55Speaker 01

  And so there are pros and cons of all this.

• 2:15:56Logan Bartlett?

  Yeah, interesting. One of the refrains I've heard about from, I mean, I think people have been saying this probably for a decade. Is that venture is going to go the way the private equity industry and or the investment banking industry, or whatever the right analogy is. A lot of industries end up in this mode where there's some form of aggregation and asset accumulation in the private equity case that sort of barbells out the industry where you end up with boutiques on one side. And they can be big and successful boutiques, but boutiques nonetheless. And then on the other end, you end up with maybe asset managers or big conglomerates or whatever it is. It was a particular refrain in 2021. I think people felt like it was an inevitability we were on.

• 2:16:40Logan Bartlett?

  I hear it a little less now, but I'm curious your take, having been a student of this industry and lived it for a while.

• 2:16:48Speaker 01

  So I actually, I think it's probably right, but, but what is it exactly? And so I think in the private equity industry, there are a handful of firms that are gigantic. Blackstone, Carlyle, TPG, Apollo. But there are hundreds, maybe thousands of private equity firms.

• 2:17:10Logan Bartlett?

  Sure.

• 2:17:10Speaker 01

  And so, yeah, there is a, there's somewhat of a concentration of assets. But actually, I'm not even sure on a percentage basis if it's actually all that concentrated. They may be on average 100 times larger than some of the smaller ones.

• 2:17:20Logan Bartlett?

  And there's probably a normal distribution within private equity of firm size, I would guess.

• 2:17:24Speaker 01

  Yeah, for sure.

• 2:17:25Logan Bartlett?

  Versus venture, I think when people are talking about it, they're, they seem to be referring to a hollowing out of the middle. I think, maybe not.

• 2:17:34Speaker 01

  Fair enough. Well, so if I actually, so I don't think there will be. I don't think there'll be hollowing out of the middle.

• 2:17:41Logan Bartlett?

  Yeah.

• 2:17:41Speaker 01

  I actually don't. I think, I think there will be some firms that build more institutional company-like existences, just like some large private equity folks have done. And I think there will be lots of firms that maintain much smaller partnership-like instances. I, I, I think my guess is, and I've never looked at the data, it's probably hard to come by, but there's probably not a lot of correlation in private equity between the size of asset base and returns. And like what investors really want is a combination of the two. If you're an LP, you want to have amazing returns with scale.

• 2:18:16Logan Bartlett?

  Yeah.

• 2:18:16Speaker 01

  So someone who can generate 50x my money, but I can only write a $20,000 check, doesn't do me very good.

• 2:18:22Logan Bartlett?

  Yeah.

• 2:18:23Speaker 01

  And, you know, writing a, a, a $500 million check in a firm that generates a modest return isn't great either. And so there is like a, a sweet middle. And, and my guess is in private equity, there's still a pretty good diversity of, of where the returns come from. I think the venture industry is much smaller.

• 2:18:38Logan Bartlett?

  Yeah.

• 2:18:39Speaker 01

  And, and I think brand probably matters a bunch more in part because in a private equity transaction, it's a purely I win, you lose. You have no ongoing relationship or very little of an ongoing relationship once you've sold your company, whereas in the venture business, you're selling a small minority and so you really care.

• 2:18:55Logan Bartlett?

  Yeah, it's the person moving into your, uh, as a roommate versus the person buying your house.

• 2:19:00Speaker 01

  Exactly.

• 2:19:00Logan Bartlett?

  You care a little less about the, the home buyer than you do the opposite. Yeah, there is this element of like all logos look the same on a website, right? And so like you get a lot of brand benefit from just the number, you, you get to hide the, uh, all investments click here and that's below, but then you get to show your good ones up top. So I, um, and you get a lot more PR and known entity and all that stuff at scale. But, um, there's, there's kind of this other part of it, which I think you've, uh, you, you guys have done well and you've articulated is like people ultimately, successful people for the most part.

• 2:19:39Logan Bartlett?

  Don't love being employees. They like being owners. They like being leaders of stuff. And yeah, different people like management or whatever, that that stuff of it. But there is that element as well that I've been reflecting on more and more is like the path to the partnership, the lead. If if if the person, if the firm's named after the person or there's a CEO on top or whatever it is,

• 2:20:06Logan Bartlett?

  you know, one person will succeed them. But like, a lot of other people won't. And some people might be comfortable with that and they get to do their business and deal with it as as maybe. But I'm curious how you think about that and if that maybe more talented people will stay in sort of smaller, you know, organizations because of that fact.

• 2:20:24Speaker 01

  I I think it's huge. I mean, there's probably some element of self-selection also. You know, the the person who goes to work at a venture firm that's got one or two people's name on it. It's just different from the kind of person who goes to a venture firm where the people who are quote unquote in charge either didn't start or don't have their name on it. It's just, it's just, it's a different proposition. It's fundamentally a different proposition. I think in our case, like, none of us at Bessemer want to work for anybody else. That is very, very true. At the same time, I'll tell you, it's interesting. Not wanting to work for someone else is different than wanting to make all the decisions.

• 2:21:07Speaker 01

  Our our structure, as we've talked about already, is like very clear from an investment perspective. The decisions are highly distributed among the partners. And and the the people who aren't yet partners are apprentices with the hope of one day crossing that judgment threshold where they too are bestowed with the the privilege and responsibility and scariness of having to make decisions and write checks also. So the investment decisions are very clear. It doesn't funnel up into a small number of people or a group of owners or a CEO or anything like that. For non-investment decisions, it it it's more concentrated and it's essentially.

• 2:21:45Speaker 01

  There are partners who have proven track records and results and there are partners who have not. And as you prove more, you get more responsibility and authority on the non-investing part of our business. But what's interesting is that some people, most people who become career investors, they don't want to be a CEO or a manager. They want to invest.

• 2:22:07Logan Bartlett?

  Nor have they been trained at those parts of the job. Like actually, in some ways, maybe, maybe even the opposite because they've been so doggedly pursuing opportunities. They probably maybe haven't been a great mentor to people internally, or maybe they haven't thought about firm operations or investor relations or whatever it is that exists outside of it. So it might even be the inverse of.

• 2:22:30Speaker 01

  Absolutely. I think that's probably right. But, but so, but at the same time, if you, if you yield all the decision-making in the non-investing areas, it can feel like you're working for somebody else. And so we are, we tried to create this magic of once, once you, once you've proven yourself as an investor, you have the ability and authority to weigh into anything you want. But we have really talented professionals who are great at these different functions. And, you know, we have a 200-person organization, so you have to have an HR function. And we have lots of funds and financials, like you have to have a finance function with a CFO and so on and so forth.

• 2:23:14Speaker 01

  We have lots of complicated legal issues that we do. We have a general counsel and a legal function. And so for the most part, the people who are successful and thrive at Bessemer have the ability, if they want to, to get involved in weighing in all these other non-investing activities, but they don't because they never wanted to. And so I think the magic balance is making someone.

• 2:23:38Speaker 01

  Feel like and actually have the ability on certain things and at certain times, but not, but, but also give them the confidence like it's going. Okay. Like you don't need to do this. You can just focus on investing, which is where most people want to focus. And it's really hard to get that right.

• 2:23:52Logan Bartlett?

  It's, it's really hard to get it right. And there's a few things. I forget if this is before we started recording or, or in this conversation, but like I, I, websites and office spaces outside of people, like they're the only things that are in the investments you make, which we've talked about and all firms sort of litigate investments first and foremost. Hopefully people as a derivative of investments as well. And then there's these two other things that are very reflective of who you are. And it's, it's websites and office spaces. I found are like the third rail topics that it's just, it's a funny one because it, it's hard to get a group of people to agree on anything.

• 2:24:35Logan Bartlett?

  And I found that everyone thinks they can have, they like deserve to have an opinion about it. Right. It's like everyone is qualified because they've been in an office and they've seen a website before. And it's such a weird reflection of your culture and what you stand for. And, you know, what people go into every day. And so it's, those are the ones that I found are hard. I'm curious. I mean, as you guys think about that, is there, does that get just litigated among the, the inner group? Those specifically, but I mean, more meta, like we don't need to actually go into office spaces, but more meta, those considerations.

• 2:25:09Speaker 01

  Yeah. I, I, so, so those are really good examples because like everyone deals with them, but I, it's a, it's a much longer list. And I'll just off the top of my head, it's like, do you hold your annual meeting for your LPs? At the New York Public Library, which we did, or at a casino, which one of our competitors did. Like that says very different things about you and your image and who yours is firm. Do you, do you create like a clear and defined promotion path? Or do you not?

• 2:25:36Logan Bartlett?

  Do you break the rules? Are titles very important? And like you give bunch of?

• 2:25:41Speaker 01

  Everybody's a partner or nobody's a partner?

• 2:25:44Logan Bartlett?

  Right. Are you, do you give people different carry amounts based on, you know, their, their trajectory? And how badly you want to keep them? Or do you keep everything standardized?

• 2:25:53Speaker 01

  Yeah. So, so, so it starts with, there's just, there's tons of those things and, and getting, getting to consensus is not easy. And, and you can spend a lot of time, like, you know, um, when the, um, when the.

• 2:26:08Speaker 01

  When the, when the little girls' club of Menlo Park wants to sponsorship for their basketball team, like, do you, do you write the $5,000 check or not? Like, the, the number of ridiculously small things that you can litigate as a partnership, or in general, like, what, you know, are we, are we using our firm resources to do philanthropy, or do we keep philanthropy entirely out of the firm, and the firm is a business, and you do it personally? Like, it goes on and on and on.

• 2:26:29Logan Bartlett?

  Do you have a podcast that you sit down with sensibly competitor firms? Or do you not have a podcast? Yeah, so, there's a lot of these.

• 2:26:37Speaker 01

  Yeah, and so, but look, I mean, I think it's, you know, some people are more interested.

• 2:26:42Logan Bartlett?

  Is that that there's an inner circle group, and these things sort of can get litigated and, and decided within, you know, you guys have brand considerations and culture considerations, and so you sort of stick to the.

• 2:26:53Speaker 01

  And, and, and in the long run, it becomes, like, you have to trust each other's judgments, not just on investing, but in other areas.

• 2:26:58Logan Bartlett?

  Because not having a CEO sounds great until these decisions, like, there's not a clear mechanism by which to make them, right?

• 2:27:07Speaker 01

  Yeah, and, and actually, you know, we, we have, we have a few secret weapons. One of them is, has the name Sandy. She's our COO.

• 2:27:14Logan Bartlett?

  Okay, got it.

• 2:27:14Speaker 01

  And, and if there were, if, if there's ever, the closest thing we have to a CEO is Sandy, but, but an interesting way to describe parole is like, she's responsible for everything other than investing.

• 2:27:26Logan Bartlett?

  Yeah.

• 2:27:27Speaker 01

  And with an investment firm, I'd argue that the investing is the most important thing, but it doesn't function, it doesn't work unless everything else is taken care of and taken care of well. And because to the extent that all these other things that we've been randomly highlighting aren't being done well, the investors start to get concerned and agitated and distracted to go spend their time on those things.

• 2:27:48Logan Bartlett?

  Yeah.

• 2:27:49Speaker 01

  And that's when the whole thing falls apart. And so there has to be high levels of trust in both directions. And, and by the way, over time, even in the 20 years since I've been at Bestmar, it's evolved dramatically, where at the beginning, the, what I'll call the infrastructure of the firm was really thin. And, and now.

• 2:28:06Speaker 01

  We've taken entirely different approaches. Like, we want the best people in the world in these, these functions. Like, we harp on our portfolio companies to, you know, don't get a mediocre CFO, get an amazing CFO.

• 2:28:16Logan Bartlett?

  Do as I say.

• 2:28:17Speaker 01

  Yeah. And finally, we have an amazing CFO. And again, like, you know, when a company gets to 100 people and it doesn't have a head of HR, as a venture capitalist or a board member, like, what is going on here? Like, you need someone to have a head of HR. We were almost 200 people before we had a head of HR. And so, we're finally, growing up as a company, taking some of the medicine that we have been prescribing to our portfolio companies. And it makes an incredible difference. When you have really talented professionals in charge of functions and passionate about those functions, not investors who are doing it part-time on the side, because someone has to do it.

• 2:28:48Logan Bartlett?

  Yeah, 5% of their time, that's like, the 10th thing on their list.

• 2:28:52Speaker 01

  Yeah.

• 2:28:52Logan Bartlett?

  So, in preparation for this, I went back and listened to a bunch of different stuff you've talked about on different podcasts and all that. And one of the, one of the things I heard was, in the early days, it seemed like you enjoyed the IC element of the job. And by the time, you did a great episode with Kent and Brian on Best Like the Best, sort of talking about Bessemer and some of the stuff we hit here, but some other stuff as well. And it seemed like the, you were talking about Sarah Tabel, who's now a partner at Benchmark. And a nice note, she publicly posted a blog post as saying that, how much it meant to you to be, or meant to her to be mentored by you and all

• 2:29:32Logan Bartlett?

  the kind things you did along the way. And so, I guess, my question for you is, did I catch maybe a change in this? And you've learned to enjoy mentorship and maybe management of people more? Or is it the mentorship part you've always liked and the management part you maybe liked less so?

• 2:29:49Speaker 01

  So, so, two thoughts on this topic. One is, in the, a lot of people ask, like, why do, like, what motivates you to still do this job? Like, once you've done something successfully and, and, you know, candidly, you've made a bunch of money, like, you don't need to work to make a paycheck anymore. Like, why do you do it? And, and there's two reasons. And eventually, I'll come back to your question directly. First is because, just because you had success during a period of time or with one insight, doesn't mean you're actually any good. It might mean you're just purely lucky. But if you can have success... Two times, you're much more likely to actually be good than if you had success one time. And if you can have success three times, then you're way more likely than if you had one time or even two times. And my theory-

• 2:30:33Logan Bartlett?

  There's a funny thing, by the way, when people talk about like, oh, venture's a slugging percentage game and like how far the ball goes out of the park is, well, you know, the people that hit, make contact with the ball generally hit home runs as well. You know, it's like, there's-

• 2:30:47Speaker 01

  Correlation.

• 2:30:48Logan Bartlett?

  There's some element of like consistently doing it is, is an element of being good at it as well.

• 2:30:54Speaker 01

  But, but I also like, I'm, I'm a bit of a student of the investing industry overall. And I think a lot of people who are, who are revered from the outside as great investors actually only had one amazing insight in their career. It typically happens early in their career. They generate supernormal returns and then they spend the rest of their career reverting to the mean. And they thought they were good and the investors thought they were good, but actually they had one good idea.

• 2:31:17Logan Bartlett?

  Yeah, internet and clean tech.

• 2:31:19Speaker 01

  Exactly. And so, so to me, it's a huge challenge to say like, can you do it again? That, that motivates me. And then the second is that the job changes, it fundamentally changes once you've had a little bit of success because your, your whole persona changes. Instead of being a bit of an upstart yourself and having to look off the beaten path and, and barely being involved in the advice giving business, all of a sudden people come to you all the time for advice and, and you can look in the mainstream and like all these things change. And one of the changes that's been incredibly rewarding for me is, is like, I went from the only challenge was can I find interesting companies that turn out to be successful and invest in them. And that was it. It was a really simple, and by the way, if it had been any more complicated than that, I almost certainly would have

• 2:32:02Speaker 01

  gotten tripped up and confused, but I can say really focused on just that. In the second half of my career, Bessemer, I've continued to try to do that, but also teach other people how to do it. And actually teaching someone else how they can be successful, which will overlap with what I do, but also be very distinct, is a totally different challenge. And it's really intellectually interesting to me. And so that has been a huge motivator, which I didn't have in the very beginning of my career. I only got it as I started to work with or apprentice other investors. On the sort of individual contributor versus manager thing, I think that's like a, that's like a little bit of misdirection. So what I mean by that is that-

• 2:32:45Speaker 01

  Sarah Tavell, who's the first person I really worked with and Rafi Said, who's now a partner at Bo Capital and Talia Goldberg, who's now a partner at Bessemer, and Jenny Gao, who's actually decided to go work for Joe Biden or Talia Goldberg. These are all, I'm sorry, Alexander Sukin, who I'm now working with. Like, these are people who are so talented, they don't need any management. They're just wildly self-directed. And so it's still largely an individual contributor game. It's just like, we're doing it as two peas in a pod. I'm not, and like, everything I see as it relates to a potential investment, they also see. And now I have like a partner who I'm talking to, and I want to hear his or her ideas just as much as I want to form my own ideas.

• 2:33:29Speaker 01

  And so it still feels like an individual contributor game. It's just two people playing together. As opposed to when I go to the whole partnership now, like, I have all this information that they don't have, and I'm trying to convey it to them. Like, that's not true with Alex, who I work with on a database. She knows everything I know, and we're talking about all the details. And so that's a different kind of collaboration. So that part is wildly rewarding. And when you find someone who thinks about things differently and brings something to bear, you're like excited to see what they think and test your own reaction to a given situation. And so that, I still think of it as an individual game. It's just, it's like an individual game played by two people together. Not a firm of five or 10 or 25 or 30 people.

• 2:34:14Logan Bartlett?

  The self-starterness of it is the only, I mean, if you can't look at a blank calendar and figure out what to do with it, this job is going to be very hard. And most people can't. Like, that's actually a very unnatural thing to create work for yourself and just go out and be like, I'm gonna just do things with very ambiguous, long feedback cycles and no validation if I'm making progress. And so, you know, having someone, I guess it's a good point. The management of self-starters is actually far less than you think. In terms of pulling things out of, I assume Sarah was very different stylistically in the early days of how she operated than you did and Talia or whoever of the examples

• 2:34:59Logan Bartlett?

  you've given. Are there things that?

• 2:35:05Logan Bartlett?

  You try to pull out that are unique to them. Like, are you helping them on being themselves and how to layer that on top of winning investment opportunities and all that stuff and sort of pulling that out? Or is it more focused on the decisioning process and like helping them refine their mental models? And then I guess if, as we talk about the latter, how do you not form fit your own frameworks and thoughts on them and sort of let them have the independence?

• 2:35:34Speaker 01

  Yeah, so, so that's a really good, it's a really good question because they are very distinct activities. One is, can you, can you demonstrate to someone how you approach a problem and how you try to pick it apart and, and help them build the skill and the confidence that they can do the same, using some of the same techniques and maybe using some of their own intuition. But ultimately, like, reaching good judgment, I think you can take a different path to get there, but good judgment is good judgment. There's a totally distinct part of the job, which is, what is your persona going to be? How do you build a relationship with the entrepreneur of the company? How do you become a desired partner? And that's totally separate.

• 2:36:16Speaker 01

  And that's much more, you have to customize it to yourself and, and your person. And maybe there's a third part about it, about the job, which is like, how do I go find companies in the first place? And I think that can also be highly individualized to your taste and your style and what interests you. So I think as I try to self-possess my own ability to be a mentor, I think I'm pretty good at demonstrating and helping someone build confidence in their judgments, because that's kind of the, maybe it's the hardest and most important part, but it's the easiest thing because it's the same for everybody. And what I'm frankly still learning is like, how do you teach someone else how to be the best version of themselves?

• 2:36:55Logan Bartlett?

  Yeah.

• 2:36:56Speaker 01

  And, and that requires, honestly, a little bit more independence.

• 2:37:00Logan Bartlett?

  It's closer to parenting in some ways, or like, you want to pull out the, the, the best qualities of, of the person you're working with, rather than impart the knowledge that you have to them. And it's, it's an interesting distinction where I remember watching people like, like Rob Ward Ameritech and Niraj Agarwal, who I've referenced, and like the style they would bring to board meetings. And they just had such gravitas and like they spoke and everyone listened. And I was like, God. I can't do like, no one's gonna listen. You know, I can't copy that. I, that's not what I have. And then I went into my first meeting with, board meeting with Eric Vitriar from Benchmark, and he was just like all hell and spitfire and like a ton of energy.

• 2:37:43Logan Bartlett?

  And like, knew the ins and outs of the business really well and was super passionate. I was like, okay, so I can copy that. Like, that is someone I can look up to stylistically and port over some of those things. And so it's interesting. You do need to find your own style and throw your own pitches or whatever on that point.

• 2:37:59Speaker 01

  Yeah. And, and, and part of our, our sort of working in pairs thing is great up until a point, but then at some point, you have to, you have to separate. And you can come back and collaborate and talk about what you did and what you saw and what you thought. But if you don't separate, you're sort of stuck. And if, if you're the junior person, you're stuck in the shadow of the more senior person who's just naturally going to get more attention from an entrepreneur. But when you're on your own and that more experienced person isn't in the room, you have a much better chance to be yourself.

• 2:38:24Logan Bartlett?

  Yes.

• 2:38:25Speaker 01

  And so then it becomes like, how, how quickly do you separate? And then once you start separating, how much do you do independently versus come back together again? And, and honestly, I'm still learning.

• 2:38:34Logan Bartlett?

  It's an interesting thing. I, I joke, it was like, when I started out, it's, it's kind of like being a stand-up comedian and going to an open mic. And you, you bomb and you're like, all right, not doing that one again. And then you're like, you get up there and you test out some more material. And you're like, okay, well now I have a few good bits I can go to in working with an entrepreneur. I can do this, I can do that. And then you're just building your library up of, of stuff that you, you know, can resonate or the pitches you'll throw or whatever it is with a, with an entrepreneur, which is, yeah. It takes, it just takes practice, it takes reps and, um, I, I guess this might be a boring one and we can cut it if, if so, but, uh, I assume you're not, AI is like a big meta trend and you've lived through internet, mobile, cloud and all of that.

• 2:39:20Logan Bartlett?

  Are you spending, it's so frothy right now. I assume based on everything you said, you're probably not spending a ton of time singularly focused on it. Although I know some of your companies are in and around that world, so.

• 2:39:35Speaker 01

  Yeah, I'm I'm trying to figure it out.

• 2:39:38Logan Bartlett?

  Yeah.

• 2:39:38Speaker 01

  I mean, I'm spending a fair amount of time on it and it's injecting its way into most of the companies that I'm meeting as prospective partnerships and almost every one of the companies in which we've invested. But, you know, I formed a point of view at some point, or maybe put it this way, the consumer internet emerged in 1996. I didn't really start investing in it until 2004 and that was A okay.

• 2:40:02Logan Bartlett?

  Yeah.

• 2:40:02Speaker 01

  It was plenty early on and so I suspect the compression of time will be significant in in AI land relative to the emergence of these large language models and generative AI. And and when it may be too late to be investing, but at the same time, it's just really hard to have confidence in exactly how this is going to evolve. And if you don't have a really good framework, then you're destined to make a lot of mistakes. I think as a firm, we're comfortable knowing we're going to make a bunch of mistakes. But, you know, if you didn't invest in internet in 96, 97, 98, you you missed Amazon, you missed eBay. But Google didn't come along until 1999.

• 2:40:42Logan Bartlett?

  Yeah.

• 2:40:42Speaker 01

  And so I think you want to be there, but you also have to appreciate like we're all going to be so much smarter about where the value is and what's going to be commoditized. And I think I think it was Eric on on your podcast who said something to the effect of L L M's are like the fastest appreciating asset in human history. Like that stuck with me. That's a great line, which I will use. Thank you, Eric.

• 2:41:02Logan Bartlett?

  Yeah, you don't even need to credit them, by the way.

• 2:41:05Speaker 01

  He probably stole it from someone else who he didn't credit them, but if not, he can send you an email about that.

• 2:41:09Logan Bartlett?

  Yeah.

• 2:41:10Speaker 01

  Exactly.

• 2:41:11Logan Bartlett?

  I am, I guess last one is a personal gripe. Why don't why don't your companies announce that they do rounds? It's really hard for downstream investors to track portfolio companies when you're discouraging them from announcing fundraising.

• 2:41:26Speaker 01

  So I've had this, I've had this debate with many founders and basically.

• 2:41:29Logan Bartlett?

  It's the founders, it's not the, it's not later stage investors that are annoyed with you. It's founders that want the publicity.

• 2:41:35Speaker 01

  No, no, no. So I say it's the founder's choice. And so I give them the pros and cons. So the pro of announcing is it feels good to your ego. Your mom can call you about it and say, like, I read about you in blah, blah, my magazine or blah, blah, online post. And you start to get enormous amounts of inbound attention from other investors, all which feels good.

• 2:41:58Logan Bartlett?

  And, and talent potentially, or customer, whatever. I mean, there's some element of validation that comes with that.

• 2:42:04Speaker 01

  Yes.

• 2:42:04Logan Bartlett?

  So I tell myself.

• 2:42:05Speaker 01

  And so, but so those three things, the ones I mentioned, not the one you mentioned, I think are actually more negative than positive. And the one that I actually believe is really valuable is, is talent. You start to get interest from, from talent that you might always have a hard time getting to.

• 2:42:23Speaker 01

  The cons are that you're revealing to the entire world that you had enough of an insight that you can convince someone with money to give it to you. Which motivates every other entrepreneur to at least say for a moment, if they're even remotely interested in your domain. Let me go check, take a look, a closer look at that to see if there's something there that I should be doing or I should be copying. And the likelihood of you having funded competitors goes up by like 10x. And so in my mind, the downsides dramatically outweigh the upsides, in part because you can get most of the benefit on the talent side. From selectively telling people at the right moment that you did this financing.

• 2:43:03Speaker 01

  It doesn't help your top of funnel talent acquisition, but most companies at the early stages aren't, they don't need massive tops of funnel anyway. And so, but that becomes the tension. And so most of the companies that I've been involved with, when they announce it, they announce it because they want access to better top of funnel and recruiting. And that's the primary reason. Or at least that's how they justify it. And then they get some of those ego benefits as well. But in my mind, the longer you can hold off, because you don't need that juicing of the talent funnel, the better off you are because you've gotten to build more before other people know what you're doing.

• 2:43:35Logan Bartlett?

  Well, any of the companies you're on the board of, if they, if they listen to this, hopefully they will, and I will adhere to your rule of no funding announcement so long as they come to me. I'm going to have a harder time going to them without knowing what they are, but so long as they come to me, I will continue the principle of no funding announcements. But thank you for doing this.

• 2:43:56Speaker 01

  Thanks for having me. It's been a pleasure.

• 2:43:58Logan Bartlett?

  This is fun.

• 2:44:01Logan Bartlett?

  Thank you for listening to this discussion with Jeremy Levine, general partner at Bessemer. If you liked this episode, would really appreciate if you shared with anyone else that you think might find it interesting. We're always looking to grow our subscribers. So also, if you could subscribe on whatever platform you're listening to it on, we'd really appreciate it. We look forward to seeing you next week on the next episode of the Logan Bartlett Show. Have a good weekend.