E455: Hunter Walk on Why Venture is Getting Harder, Picking Great Founders, and Investing Against Consensus

What if the biggest threat to venture capital returns isn't picking the wrong startups, but building funds that are too big to succeed? In this episode, I sit down with Hunter Walk, Partner and Co-Founder of Homebrew, to discuss why the venture capital industry's obsession with larger funds, higher valuations, and hot deals may be working against investors and founders. Hunter explains why he and his partner walked away from the traditional institutional fundraising model to invest their own capital, how fund size changes the incentives behind investment decisions, and why the next generation of emerging managers could outperform established firms.

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

• 0:00Speaker 00

  The incentive model of the large firms has created a huge white spot for new investors. As you go from a $500 million fund to a $5 billion fund, you just don't care only about the multiple. You care about how much capital you get into these companies. Because would you rather put $20 million into a startup and get a 10x? Or $500 million into a startup and get a 4x? The reality is, your job is to do the latter.

• 0:22David Weisburd?

  You're the first venture capitalist across 450 episodes I've interviewed that decided to give back money to institutionalities and invest his money along with your partner. Why do that?

• 0:33Speaker 00

  It was really a combination of offense and defense. When we started in 2012 for $750,000, a million and a half, we could get that 10% to 15% ownership. By 2022, you're talking $3, $4, $5, $6 million to get that type of ownership. Do the math on the spreadsheet. All of a sudden, we're going from being a $90, $95 million third fund to a $250 million, $300 million fourth fund. Now, raising it's not a problem. Our LPs, we've earned the right to do that if we wanted. But returning it, I think, would have.

• 1:04David Weisburd?

  Enter, you co-founded Homebrew, which is one of the most prolific seed investors in the world. You were early to Chime, Cruise, Plaid, Gusto, Shield AI, a lot of these companies before the entire industry was coined.

• 1:17Speaker 00

  That's what I always joke. I'm like, the job of a seed investor is to invest in the company before the market map comes out. So we did Chime before neo-banks and fintech became popular. Obviously, now a double-digit, billion-dollar public company. And we did Shield AI, one of the top three most highly valued defense tech companies, before American Dynamism and defense tech and so on came forward. If you're doing it after the market maps come out, then you're just a pundit. If you're doing it before, you're a seed investor.

• 1:42David Weisburd?

  It's almost the difference between beta and alpha.

• 1:44Speaker 00

  Yes.

• 1:46David Weisburd?

  What do you think about the funding environment today?

• 1:49Speaker 00

  Wow. So I used to think that my job as an early-stage investor was to truly be non-consensus and then bet that those companies could convince the next round of investors that this matters. I almost think now, the job is to be pre-consensus, not non-consensus. Because there is so much crowding into the trends, mostly driven by AI. Some of that might be quite logical. Bigger outcomes, lots of capital needs. But I think a lot of it is actually based upon the incentive model of the investors. And I'm not sure that that's actually good for startups.

• 2:23David Weisburd?

  I want to double-click on that because unlike probably 99-plus percentage of VCs, you invest now your own money in Homebrew.

• 2:31Speaker 00

  Yes. So in 2022, we switched from a traditional model. We had raised funds from endowments, foundations, great outside investors, to investing our own capital. So Homebrew 4, which I call Homebrew Forever, since it's an evergreen vehicle, see, the marketing guy, is 100% of investments begin with our own capital, from my partner Sacha Patel and I. I joke that if I want to seem humble, I call it a bootstrapped VC firm. If I want to pat myself on the back a little bit, I call it a dual-family office, you know, some fancier structure. But yes, we're investing our own capital.

• 3:04David Weisburd?

  Going back to what you said before, which is, this consensus is largely driven by incentives. What are those incentives?

• 3:12Speaker 00

  If you are a venture firm, it's crazy to think that you're not influenced by the incentives as an individual GP and as a firm. And so, of course, you want to pick the best companies with great outcomes and so on and so forth. But when you think about the near-term incentives, they're not always aligned with that same type of patience to bet on a company when others don't believe and to be able to wait a long time for that to come true. You might tell folks, folks might say that, "Well, I gotta be in the hot names." Even if maybe there's some outcome risk down the road? Because if I'm not in the hot names, I don't build the brand. If I don't build the brand, I don't get to see the next good company, so on and so forth. So I truly think, if you gave lie detector tests to some of the investors right now, and you said, "You can be, choose one.

• 3:57Speaker 00

  You can pick either a hot name that's going to inflate a lot over the next few years, that you get credit for being associated with, but there's greater risk in the actual outcome, or something that kind of is under the radar for the next two, three, four, five years, but ultimately produces returns." I think a lot of people would pick the first. Because as a GP, you have an incentive to become a star within your firm. As a GP, you are trying to build a marketplace brand. And being associated with hot deals, hot founders, makes you relevant. And you're also trying to raise that next fund, which keeps you alive, pays your salary, so on and so forth. And so, losing, I guess, some of that, you know, "Be damned, I don't care, I believe in this company, and I'm going to bet on it." I don't know, I'm seeing that disappear a little bit from the market.

• 4:42Speaker 00

  It's not to say that everybody behaves in the same way. But as you know, people have once said, "Your fund size is your strategy." So when you have this coalescing around multi-billion-dollar fund sizes, it would be crazy to think that their strategies, incentives, aren't also coalescing.

• 4:57David Weisburd?

  So there's two aspects to that. I want to first handle the economic aspects, the dollars and cents. Let's say you have a $500 million fund. You invest in one cohort of companies. Maybe you have a chance to get a 3x. So now you have $200 million in carry. Or you go the safe route and you get a 2x. And now you have $100 million in carry. Well, obviously, there's a $100 million difference. But that $100 million may not come there for 10, 15 years if you're an early-stage investor. On the other hand, if you could raise another $500 million fund, that's $100 million in management fees guaranteed. So even if you are contrarian and right, which is no easy feat,

• 5:41David Weisburd?

  you still, at best, end up in the same exact situation. At worst, if you're contrarian and right over long term, and you don't raise another fund, that could be a career ender, even though the fund may end up doing.

• 5:53Speaker 00

  You're assuming that everyone's coin-operated. And I guess it's the question, when we started out Homebrew, we sort of said, "We want to sit at the intersection of excellence and joy." Excellent would be the economic performance, especially for ourselves, the opportunity cost of our time, and also taking money from endowments, foundations. People had great exposure to great managers. We wanted to do justice by their trust in us. However, we knew that if we were just excellent but not enjoying it, that we wouldn't actually continue it, right? So if we somehow managed to get returns but weren't proud of the work we were doing, like, life is too short. And so, our decisions were always try to focus, "Well, how do we sit at that intersection?" And frankly, I think if all you're doing is creating a net present value based upon the certainty

• 6:37Speaker 00

  of how much money you can raise and what fee structure that's going to create, then you are so misaligned with the nature of the founders taking the risks that you should probably just be a structured growth investor and create all your value and de-risk on the term sheet rather than in company picking. And that's what's sad. I think founders should have a bunch of different tools in their toolboxes to pick from when they're putting together a cap table. Essentially, what you're increasingly having is a box of hammers, trying to content-market why their color handle is better than the others. "We're all in on AI. We have the government captured in our lobbyists." All these things that have turned us like, big tech. Big tech in a way that big oil, big tobacco, you know, big steel used to be. And I don't know why I do early-stage. It's still because I like when more people disbelieve than believe.

• 7:22Speaker 00

  I like when the founders aren't quite sure it's going to work. For a while, that was rewarded with lower valuations. Now, not as clear. It's a tough market. But we actually think that the, I don't know, the incentive model of the large firms has created a huge white spot for new investors. Homebrew 10, 15 years ago, and a whole generation of new firms that are much closer to the metal than now the titans of industry on the venture side have become.

• 7:49David Weisburd?

  This episode is presented by Juniper Square, the operations partner for private markets.

• 7:56David Weisburd?

  I was smiling because me and my business partner Curtis just went through an exercise of going through the top 20 venture capital firms' websites. And essentially, all of them said a variation of, "We back great founders going after exceptional opportunities." It was almost the exact same message.

• 8:10Speaker 00

  Oh, I love this, because this is what I always say. Venture capitalists don't take the advice that they give to startups, right? They would, if they, you told a startup, "Well, what's your brand?" And you said, "We're here to change the world." You'd be like, "That doesn't mean anything, right?" But if you ask venture firms why they exist besides having capital, one of two things would happen. They'd give you exactly what you said, which is sort of the most bland thing. Even worse, I bet if you separated the 3, 5, 10, 12 partners from one another and asked them to answer that, I'm not even sure you'd get the same answer from all of them.

• 8:38David Weisburd?

  In many ways, it's the most optimal thing to say because it's attractive to the most amount of people without. Being contrarian to anything.

• 8:46Speaker 00

  Trying to be everything to everyone is-

• 8:48David Weisburd?

  But it doesn't sound like it's contrarian.

• 8:50Speaker 00

  We always used to say, you know, Steve Jobs, the pirates, right? Like, the technologists and the pirates. Venture capital started out believing they were, you know, accessories to the pirates, and somehow they became the Navy, right? You were talking about a little bit earlier the question about incentives and, you know, returns versus near-term momentum. What we failed to mention, and I think this makes it even harder, is these fund sizes are growing. And so as you go from a $500 million fund to a $5 billion fund, you just don't care only about the multiple, you care about how much capital you get into these companies. Because would you rather put $20 million into a startup and get a 10x, or $500 million into a startup and get a 4x? The reality is, your job is to do the latter.

• 9:33Speaker 00

  And so all of a sudden, your business model is not just impacting, it's changing the startup's business model, because they say, "Well, I need to raise 25." And you say, "How about 45?" "Well, what are you going to do with the capital?" "Like, I can't do anything with that." "Well, I need to get my ownership target. I need to write..." We only write $25 million checks. And so all of a sudden, the business model of the VCs is not just meeting the founders where they are, it's dictating the terms, you know, to the, "Take more, take more, take more."

• 10:04David Weisburd?

  So that's on the startup side-

• 10:05Speaker 00

  Yeah.

• 10:06David Weisburd?

  -that obviously has some unintended consequences. If you raise a certain amount of capital, it takes away opportunity to exit outside of IPO.

• 10:12Speaker 00

  I think it has unintended consequences for some of the investors, too.

• 10:15David Weisburd?

  Yeah, I want to double-click on that. So what are those unintended consequences of having a $5 billion fund? Is it just going later? And is that-

• 10:23Speaker 00

  A few things. One, you become less patient, because you have all this money put to work, and you want to see it start to get marked up faster, faster, faster, in order to legitimize having put it to work, who's going to do the next round. I think that you become-

• 10:39David Weisburd?

  Double-click on that. Why does a $5 billion fund have less patience than a $500 million fund?

• 10:44Speaker 00

  Well, because the velocity of getting that money into the company matters, too. You have a fund cycle, and so you want to put it to work within two, three years. So if there's, it used to be, what, 24 months, 36 months between funding rounds? If you're trying to get enough capital into that company, you can't wait, "Okay, I'll do the A in 2026, and then we'll do the B in 2029, and we'll do the C in 2032." Not out of the same vehicle, you don't have a six-year initial investment period. So you're trying to figure out, "Who can I load up on?" Now, it's different if you have a regular fund, a growth fund, so on and so forth. But a lot of these folks are investing out of large, single-

• 11:21David Weisburd?

  You just feel that pressure of deploying so much more capital.

• 11:24Speaker 00

  And if the company's not off to the races, then all of a sudden, you know, it's forgotten, even if some of the best companies, you know, were overnight successes, but it took 1,000 overnights.

• 11:34David Weisburd?

  And obviously, on a return basis, if you invest $25 million and take 20% of a company versus $45 million, take 20%, net-net, you're going to get a worse return investing $45 million if it's fundamentally the same company.

• 11:47Speaker 00

  Yeah. I mean, you, but you're, you know, one of the things that, you know, is unintuitive to people who didn't spend a world in finance is, as the fund sizes go up, the underwriting target goes down, right? Like, if you can consistently deliver 3x on billions of dollars, you know, you'll never go out of business. If 3x is your best return on a $25 million fund, you know, you might be 75th percentile, not 99th percentile. And so, actually, I used to think that venture investors at the seed, A, B, C stage, you know, maybe were different people, maybe had different ways of viewing the world, but essentially, we're all playing the same game. And it was really the growth investors, the people who would do the one round before the IPO, that maybe had a ratchet or things like that.

• 12:29David Weisburd?

  Those were the bad guys.

• 12:30Speaker 00

  Those were, well, they were the different guys, right? They were the ones who, at the table, playing the different game. Now, I think, everybody after, you know, it's less about stage and more about fund size, that like, everybody who's under $100 million fund is playing a different game than everybody who's now, you know, 500 billion, 2 billion, 3 billion, 4 billion. And I think as an early-stage fund, that has not just changed the nature of how you think about entering, but changed the nature of how you think about exiting. Secondaries, figuring out how to not do the later rounds out of your core fund, but instead using SPV vehicles, so on and so forth. Because you don't want to be the one at the table with the smallest chip stack and the largest underwriting target against people who are playing a very different game, and at the end of the day, don't really care about you.

• 13:14David Weisburd?

  It's interesting that you mention that. I had Eric Firstum from Angelist, and they have the benefit of having a 25,000-plus company dataset. So they could really, and they're, it's on their platform, so they're direct to it. There's no intermediary.

• 13:29Speaker 00

  This isn't the Cambridge Associates data that has, like, a bunch of stuff, but unfortunately is missing, like, the top 1%.

• 13:34David Weisburd?

  Yeah, they have access to all the information. And one of the things that they figured out is, they were basically, like, banging their head on the wall, they realized that you can't actually make generalizations about venture as one S-class. They had to turn it into early-stage and late-stage, and then they could actually compute some useful insights. But until you look at venture from these kind of two different lenses, and two just mathematically different lenses, you don't really get a good sense of that.

• 13:58Speaker 00

  I think you have to turn that duality into, you know, maybe four quadrants, because I think it's early and late, and then it's fund size. Because there's plenty of billion-dollar funds doing early-stage investing, you know? For them, it's a toe-hold sometimes, for them, it's, you know, trying to get information, but it doesn't mean they're not investing in that stage. And so I really do think it's kind of like, early-stage, small fund, you know, early-stage, big fund, you know, multi-stage, big fund, and then maybe just later-stage, big funds that matter. But I sometimes think, you know, what's the story? It's the, you know, I think every, like, I don't remember which culture produced this tale, but everyone has a version of it, which is like, there's a bunch of blind men and an elephant, and depending on which part of the elephant the man is touching, they think it's a different animal. If you're touching the tail, you think it's a rat. If you're touching, you know, the leg, you think it might be a hippopotamus.

• 14:43Speaker 00

  I mean, venture has become so big, the financialization of it, you know, whether you're direct on the cap table, or you're through a different vehicle, whether you're an evergreen fund or a fund that's raising every few years, whether as an LP, you're running your own book, you're, you know, a fund of funds, so on and so forth. We're all touching different parts of the elephant, and I'm sure you have all different people come in and talk about their part of the elephant. You know, I'm most excited about my parts of the elephant, which tend to be, you know, early-stage, bet on the company, bet on the founder, being willing to take the risk of being alongside them as both Homebrew, and then, you know, through Screen Door, the fund of funds we created, being able to bet on the next generation of emerging managers

• 15:24Speaker 00

  who I think are filling a very needed white space that has been left behind by the growth of these mega-vehicles.

• 15:31David Weisburd?

  So I want to get into your incentives, I want to get into Screen Door. But first, just to add more complexity, there's not enough complexity in this conversation.

• 15:37Speaker 00

  We're going to have 5D chess, not just 4D chess.

• 15:40David Weisburd?

  To add some more complexity, the LP side of the equation. LPs also have some interesting incentives, to say the least. The average, there's a famous pension fund study, the average CIO stays at a pension fund 6.1 years, which is 60% the deployment of what a venture capital fund is supposed to do. Oftentimes, they go over that. And oftentimes, when you look at the incentives, what are those incentives? You want to get into the most branded venture capital firms. What are the most branded venture capital firms? Almost by definition, the bigger your brand, the bigger your fund. Largest funds, and funds that have historically performed well, not necessarily moving forward. So you have this incentive. So it could be a situation where, pick your multi-stage firm, you're the CIO of an endowment

• 16:22David Weisburd?

  or pension fund, and you actually get positively rewarded for investing into this brand-name fund that may end up returning 2x.

• 16:30Speaker 00

  So I came in raising Homebrew 2012, 2013 with no venture experience. A lot of tech experience, product management, angel experience, but the LP world, I knew what they were. I mean, I understood the concept of endowment foundation, so on and so forth, but, you know, hadn't had any direct experience. And through, you know, raising our funds, through seeing other people raise funds, you know, what's the expression? The scales fell from my eyes, right? So I realized that there are a bunch of reasons why I say Darwin runs at half-speed in venture. And LP incentives, the long time cycles, like, so basically, the competitive dynamics are not fast enough to flush mediocrity out as fast as it should be. Why? Time cycles are very long. Why? Relationships. If you're an LP, and I'm a GP, and my firm has made you money, you will give me the

• 17:14Speaker 00

  benefit of, you know, in the past, you'll give me the benefit of the doubt as we go through a turnover, so on and so forth. But one of the reasons is exactly like you said, it's sort of, who's in the seat at the LP and their incentives. I was very surprised, we've had wonderful LPs, always a very small group, but the person, you know, who's sitting at, across from us, has changed, you know, more than we have. We haven't changed, there's two of us. But that role changes. And like you said, they inherit a book of business, and so they first have to make a decision about, "Well, am I going to rock the boat right away? You know, or am I just going to roll with these names for a while and then put my stamp on it?" You have the question about, you know, they're often managing privates in general. And so the sun doesn't just rise and set on the venture aspect of that. And so if they have, you know, a book of managers who, you know, some of whom may be a little bit long in the tooth, but as a basket, it's meeting their goals alongside

• 17:59Speaker 00

  other things, that might not even be their first place to turn to say, "I got to do work here." You know, they may be looking at their PE, you know, allocations, other stuff. And so I was like, "Wait, it's infuriating. Why don't you want to get into the best new managers as quickly as possible, so on and so forth?" It's like, "Well, I get punished more for taking a zero on a firm than I do for taking a, get rewarded for taking, for getting a 4x."

• 18:21David Weisburd?

  It's a central principle, A.J.

• 18:22Speaker 00

  Yeah, all these issues, right? And so, and good people, good, smart people, but it's just the question about, like, what about that system leads us to, you know, let mediocrity in venture persist longer than it should? I often say, "I have love in my heart, chip on my shoulder," right? So part of, and I know we'll get to it, part of the fund of funds, for me, was love in my heart, was, I just really love working with new VC firms. I learn a lot from them, in addition to be able to pass on knowledge that we've learned. The chip on my shoulder is, I watched enough National Geographic specials as a kid to know what happens when you want to speed up Darwin. You release some new natural predators into the ecosystem, and you let them chase down and kill the weakest of the herd.

• 19:05Speaker 00

  So like, I'm funding not scouts, not minor leagues, I'm funding competitors to myself, to the, you know, large firms out there, and I hope they take down a few of us.

• 19:16David Weisburd?

  Perfect segue into your incentives.

• 19:18Speaker 00

  Yes.

• 19:19David Weisburd?

  So, again, just to show you how unusual this is, I don't, I think you're the first venture capitalist across 450 episodes that I've interviewed that decided to give back money to LPs, to institutional LPs, invest his money along with your partner. Why do that?

• 19:36Speaker 00

  So, I would say we definitely inhabit a unique chessbase on the board. There are people who have, you know, left their venture firms to, you know, angel invest or to take a break. And either those people are usually wealth effect retired, they were good at what they did, and so they're really just kind of throwing some money around, having some good time, enjoying their life. Or they were asked to step away, they didn't have a good track record, and they are, you know, trying to rebuild a reputation, get a little bit of heat, to then go raise more money or get hired. So, we are kind of, obviously neither of those. And to be honest, it was something we always planned to do. We told our endowments, foundations, from the first fund, that we're not going anywhere, but we think sometime in the future, we're going to switch to our own capital model. And everyone just kind of nodded. I think

• 20:19Speaker 00

  that they thought, well, great, thank you for telling us, but like, really, one of two things is going to happen. Either you're not going to be good enough to do this for very long, in which case, doesn't matter to us what you think about you're going to do in 20 years, or you're going to be good at it and nobody stops, once they're good at it. Because it's fun, it's addictive, the, and the amount of capital you can make, and, you know, just keep raising, like, you do it longer than you expect.

• 20:41David Weisburd?

  And there's essentially a lifestyle creep. We were talking about this before we were recording, as, once you have this home, now you're, it's keeping up with the Joneses, now you're, now other, other.

• 20:50Speaker 00

  In general, even if you say, I'm not a ceiling guy, I'm a floor guy, the floor keeps rising, right? Like, you get used to certain things. And I think there's a lot of reasons, besides just economic incentive, that people do it. If they hire a team, they want to keep that team employed, right? They want to keep their firm together. If they enjoy being able to go $500 million deep into nuclear fusion before the technology's proven, it's harder to do that out of your wallet than it is out of a venture fund. So there's lots of reasons to continue institutional. We did it a little bit earlier than we expected. So, I sort of said, five funds, 20 years, if you do the math, that means we were going to do this change in 2030, sometime in the future, from what we're talking right now. Instead, we did it, you know, eight years earlier, 2022. And I think it was really a combination of offense and defense, to be honest. The offense was, what are we waiting

• 21:33Speaker 00

  for? Man, if this is what we want to do, why don't we do it now? We were successful enough over the course of our first decade to sort of earn the right to sort of call our shot, in the sense that, you know, we're willing to put more of our money at risk. Maybe we're not as entrepreneurial as the founders we back, but we're certainly more entrepreneurial than the average venture firm. And so, we looked at each other and said, great, let's do it. The defense, or the sort of reaction, I think, was, the market was changing around us. And in order to continue our strategy, which at the time for Homebrew was concentrated, early-stage venture, 10, 12, 15 investments a year, where we're leading, co-leading a seed round, owning 10% to 15%, the check size it took to do that was growing

• 22:13Speaker 00

  faster than inflation, right? So, maybe when we started in 2012, for $750,000, a million, a million and a half, we could get that 10% to 15% ownership. By 2022, you're talking $3, $4, $5, $6 million to get that type of ownership. Do the math on the spreadsheet, all of a sudden, we're going from being a $90, $95 million third fund, to a $250 million, $300 million fourth fund. Now, raising it's not a problem, our LPs, we'd earn the right, I think, to do that if we wanted. But returning it, I think, would have changed how we operated, in a way that, in order to make sure you're excellent, would have reduced the joy. It

• 22:54Speaker 00

  would have forced us to do a bunch of things, in order to run Homebrew successfully, that I don't think either one of us were excited to do. They didn't add value. They were about the business model of venture, not the helping startups, not the working together on white boards with founders. So, we said, why, why do that? Just for money? Not worth it.

• 23:11David Weisburd?

  Unpack those. What are those things that you did not want to do?

• 23:14Speaker 00

  So, the first thing is, I think you get into this insidious mindset about the types of exits, then, that you need to return the fund, right? Like, all of a sudden, if you're going to own 10% to 15% of a startup, and as an early-stage investor, let's just assume by exit, you'll be diluted down to half of that, whatever. So, all of a sudden, as opposed to a billion-dollar outcome being an outlier for you, do the math, da, da, da, oh wow, now I need a $5 billion outcome. Now, I need four of them.

• 23:39David Weisburd?

  Just to get the same exact.

• 23:40Speaker 00

  Just to get the same exact number. Now, it doesn't mean that we're not shooting for those same types of returns. Doesn't mean that previously, we were looking for singles, doubles, triples, and letting others hit home runs. We were fortunate enough to invest in, you know, several multi-billion dollar outcomes, not just valuations. But I do think your mindset changes from the first day you pick a company, but also, your question about, what does that company be becoming and how fast? And I think the, the heavier the weight on your shoulder, the heavier the burden is to imagine that the only way this company matters to me professionally is if it's a $5 billion company. You get impatient, you start giving bad advice to founders, you start encouraging them to do

• 24:24Speaker 00

  things faster and unnaturally, you start to try to preserve the valuation at all costs, in order to, you know, not, not take the write-down. And like, these companies, the first few years of a company, it's about figuring out who they are and what they are. And the venture business model should not be a factor.

• 24:43David Weisburd?

  One thing I've learned from talking to hundreds of investors is that great investment firms aren't built on investment returns alone. The firms under are great at the things most people don't see, their operations, their relationship with LPs, and the quality of information they use to make decisions. And here's what AI has changed. Every firm now has access to the very same models, so the intelligence isn't the edge anymore. The edge is what you could feed it. A firm with its fund operations and data in one connected record can actually put AI to work. A firm running on disconnected systems simply can't. That's why thousands of GPs run their funds on Juniper Square. Juniper Square puts your fund operations, data, and administration together in one connected record. That means

• 25:25David Weisburd?

  less time managing disconnected systems, and more time investing, working with LPs, and building your firm. This episode is brought to you by Juniper Square, the operations partner for private market GPs. Learn more at junipersquare.com/HowIInvest. That's junipersquare.com/HowIInvest. People talk about product market fit as if it's a singular event, but really, you're constantly rediscovering it.

• 25:48Speaker 00

  Absolutely, absolutely. So, I think that that first thing is, sort of, would it leave us in a mindset to be the best partners to the founders we were backing? And we were worried it would cause us to implicitly and explicitly stray. The second thing is, I think you have to put together a larger team, right? You have to, all of a sudden, start thinking about, well, if I'm going to write these bigger checks into companies, and I'm even more on the hook, I'm going to have to write more, I have to make better decisions about paradas, so and so forth, all of a sudden, I need more coverage, if I need.

• 26:14David Weisburd?

  Need more finance people.

• 26:15Speaker 00

  If I, well, also, not just back office, I mean, thankfully, that stuff can always be outsourced and so forth. But like, if I'm now hunting for more and more $5 billion outcomes, well, then I can't afford to say no to that, you know, emerging area of, let's say, AI bio, that Satya and I might not have any experience in, but is going to, if that's going to produce a disproportionate amount, if science AI is going to produce a disproportionate amount of the next $5 billion, $10 billion, $50 billion, we better have coverage, because if we don't have coverage, well, then I have to hit an even higher percentage of what I know how to do. So, you start bringing people into the firm, you start expanding the partnership, maybe without the type of relationship, the type of diligence. How many people have we seen come into these firms and cycle in and cycle out of the team page, that type of stuff? Or, oh, crypto's hot, we're going to be crypto, oh, wait, hold on, no, scrub

• 26:57Speaker 00

  that, de-publish the blog post, now we're AI, you know? Like, people end up chasing these hype cycles, because they're chasing returns. Not if they had a modestly or appropriately-sized fund that matched their skill set and understanding, you know, and were confident enough to say, I'm going to keep winning at that scale. So, we were worried about kind of a team creep and culture creep, as a nature of having to, you know, expand to encompass even, even more. Also, frankly, Satya and I, here's what we'd always say. Here was, here was our priority list. Partnership, portfolio, pipeline. Everything else is below the line. What does that mean? We've known each other since 2003, we sat this far from one another

• 27:41Speaker 00

  at Google for a bunch of years, we've been friends, in addition to professional colleagues. But if anything ever feels out of sort from the partnership, if we've even just haven't spent that much time together, nothing else matters as much as getting back on the same page. Fortunately, that hasn't been an issue. Of the investments we've made, and the next hot deal, what matters more? The investments we've made. We will always pass on a startup opportunity, if it's moving too quickly. If there's something urgent going on in the portfolio, where that founder depends on us to help them get through a tough spot, make a decision, so and so forth. I think that's why we have a, you know, stellar founder NPS, so to speak. I think, once you start getting, and everything else is below the line, operations, team, fundraising, media, content marketing, personal brand, right? I think the more and more you start playing everybody else's game, everybody's playbook,

• 28:26Speaker 00

  oh, now we're one of 15 $300 million early-stage funds, which might be exactly the right size, or might be no man's land, all of a sudden, how do I preserve that prioritization? Don't I have to start getting the hot deals? Don't I have to start doing the brand marketing? You know, where's, where's my portfolio? Oh, they haven't heard from me, but they've heard from my analyst or my, my Claude agent. That's bullshit. Like, I want to be there with people, I want to bet on people, I want to earn trust and context, so that they turn to me and say, I'm trying to figure this out, would you help me? As they start taking the $50 million checks from the larger funds, you know what they don't like doing? Calling the GP who gave them the $50 million check, and asking them what might be a dumb question about hiring. They can always turn to us for that, whether we're writing a check out of our pocket, which is what we do now, or before, when we were writing, you know, seven-figure checks out of a fund.

• 29:12David Weisburd?

  So fast forward to today, you and Satya are now investing your own money.

• 29:17Speaker 00

  Yep.

• 29:18David Weisburd?

  What's the strategy there?

• 29:19Speaker 00

  Well, I have the Homebrew tattoo on my shoulder. I got it when we started, not when we succeeded, because I said I wanted to capture the moment. Now, there won't be any rebrand, and I've only had to use it a few times to win a deal, sitting across from a founder.

• 29:31David Weisburd?

  Has it worked?

• 29:32Speaker 00

  Oh, yeah, well, of course, because when they say, well, I'm trying to decide between you and this other firm, and I'm able to say, the partner you're talking to at the other firm won't even be there in a year, and then I roll down my sleeve and I show them the tattoo, I said, I live my firm, just like you live yours?

• 29:44David Weisburd?

  It reminds me a little bit of-

• 29:45Speaker 00

  I might as well slide the term sheet right then. I mean, it's, why seed and seed?

• 29:48David Weisburd?

  It's actually why we put our name behind our brand, because it's always for Pierce. We can never say it's not us. We can never say some asshole, GP, promised you that. It's always our name. I got that from Ryan Serhant. Also, it reminds me of Neil Shaw. So he doesn't have a personal email. He only has his Green Oaks email, because he says that, I will always be at this email, I will always be at this firm. It's this kind of real signal that-

• 30:09Speaker 00

  It's not an outfit I take on or off.

• 30:10David Weisburd?

  Quite powerful.

• 30:11Speaker 00

  Yeah, I'm not trying to go anywhere else, that type of stuff. So, yeah, so we switched over, and it's been great. I think the-

• 30:17David Weisburd?

  So it's still called Homebrew?

• 30:18Speaker 00

  Still called Homebrew, Homebrew 4. Joseph and Capable is Homebrew 4. Because of the tattoo, it's gonna, yeah, Homebrew forever, like I said. What hasn't changed? Our appetite for risk, we're investing the same type of stuff. What hasn't changed? The hours per week we work. Like, this isn't, you know, retirement. What hasn't changed? Trying to be the most useful investor on that cap table, no matter whether we're first, which sometimes we still are, but more likely we're second, fifth, 20th, we want to be useful. The two things that did change, and I said, we invest in the same type of companies, it's still 90% pre-seed and seed. When we were only leading rounds, there are certain type of companies where you just felt like, why am I the best investor to lead a, you know, AI chip company, right? So there are certain types of things we've done in deep tech, cybersecurity, that before

• 31:02Speaker 00

  we know how to be a great supporting investor, but to be honest, I don't think we would have been a great lead investor. So I'd say 75% is the type of stuff we always do, dev tools, applied AI, fintech, so on and so forth. 25% are some of those areas where we're an excellent supporting investor. The other thing that's changed is, I ripped up the spreadsheet. At the end of a call, let's say you were a founder, and we were just jamming for 28 of 30 minutes, you telling me about your company, it sounds awesome, I want to work with you. I don't have to end that call by saying, fantastic, let's work together, I need 12.75% of your company, because that's exactly what the spreadsheet says. I don't care if that means you can't bring in another great co-lead, I don't care if that means you have to kick out, you know, some operators who would add a lot of value if you want to work with me, that's what I need.

• 31:46Speaker 00

  Now, of course, we're always in a partnership, you have to understand my needs of ultimately, you know, I'm a shareholder and things like that, but what we're able to say is, hey, fantastic, where are you in this round? Did you just finish it up? Oh, great, can we figure out how to get a small check in? Are you just starting? We'll commit to you before there's a lead, and we'll help you find one. Oh, here's, between, we'd like to do between 100K and 500K, you tell us. So you're basically pretty flexible, because all we want to do is work with the greatest companies and greatest founders. We've done about 70 investments over the four years, so we're still doing about 15 a year, and I like to think, well, certainly, we haven't seen every company in the world, I don't think we have 100% coverage, no one does, it's not our goal. Also, nobody is perfect in their selection, I'm sure we have false positives, I'm also

• 32:29Speaker 00

  aware we have, you know, false negatives. I do like to think that because our puzzle piece is so flexible and so valuable, you know, we do have 100% win rate, right? So the portfolio is probably like, the best expression of our tastes and interests over the last four years, because we didn't have to meet that company at just the right moment, where they had just the right slot available and just the right round. And it's been great. There's nothing else I would have wanted to do for the first 10 years. I think the market needed us to be leading, co-leading rounds at that point, and we needed that experience, we needed that success, but I would never want to go back to that for our second 10 years, both given where we are, as well as where the market is.

• 33:08David Weisburd?

  One of the things that Silicon Valley and venture capitalists trying to figure out is whether there's such a thing as a pre-seed and seed round anymore. Obviously, the nomenclature is there, people still use it from a marketing standpoint, but is there the small round to prove something out?

• 33:23Speaker 00

  I joke only in hindsight. I don't blog as much as I used to, but I, you know, I'm a 20-plus year blogger, you know, from back in the days, I've always enjoyed writing. And so I, friends who sometimes joke, like, whenever somebody asks a question like that, I always respond with a URL. Like, hey, I once wrote a post, you know, blah, blah, blah, but in this case, it's true. I wrote a post a while back called Seed is No Longer Around, It's a Phase, and I still think it's true. It's something that gets, you know, aggregated into a, you know, a series of funding events in hindsight. In hindsight, once you say, I'm sure of the small team I have, the product I'm working on, and I have product market fit for it, and now I'm ready to raise an A round. For some people, it might be a small $1 million, and that's actually all they need, they're off to the races, they raise $25 million next, and you can call that a seed, whatever.

• 34:08Speaker 00

  For others, it might be $2 million, $2 million, $2 million, $2 million? There's any combination. Now, in that, is there a point at which in total dollars raised, that it crosses from, you know, pre-seed, seed, to something else? When somebody announces $100 million seed round, do I kind of roll my eyes? Of course. I think for purposes of, you know, my strategy, but even more so for a lot of the fund managers who be back via Screen Door, who are mostly early-stage managers investing out of initial, maybe sub-hundred million dollar vehicles, they are really looking at the first round where enough ownership can be bought for a check that's meaningful to them. So for some of those people, it's similar to Homebrew, 10% to 15% ownership targets,

• 34:52Speaker 00

  where sometimes it's 5%, 7.5%. And it usually means those rounds are, capital-wise, you know, a few million dollars raised to maybe 10 at the most. Things above that, you just sort of get into the imputed math, right? Like, the valuations are high, so I think those start to move into big game hunting, large fund territory, and/or if you're a more modest fund, you're looking at that as sort of the 20% of your 80/20. These are momentum checks, everyone calls them differently, supporting checks, momentum checks, thesis checks, explorer checks. You expect them to be accretive to your portfolio. If you hit a true outlier, if you would put that into an early round of pick any of the

• 35:37Speaker 00

  recently filed S1s, right? It would probably still be the best returning, not just multiple, but aggregate dollar investment in your, in your fund. But, you know, you didn't have them in your initial portfolio model, you're not modeling them out yet, you know, as individual companies, you're holding them as a basket. And I think that's totally legitimate for an early-stage fund to do. It's not just logo collecting, it's, hey, I earned the right to put a smaller check into a larger round, I believe in this company for reasons that are greater than its competitors, and I want exposure to it.

• 36:14David Weisburd?

  Do you still make these thesis checks?

• 36:17Speaker 00

  Across our three institutional funds, they all were sort of 25 to 35 company vehicles. We would take maybe the amount of capital that we, you know, would use for like, one core check, and break that into pieces and do those, sometimes quite successfully.

• 36:31David Weisburd?

  And these are just companies at a higher valuation?

• 36:33Speaker 00

  Higher valuation, or that we didn't have enough conviction to try to go lead or co-lead around, maybe we met them too late, things like that. We had done that previously. And, I mean, our investment in Plaid was an example of that. In our first fund, we met them just as we were getting started, and they had already almost closed the round, there was a small amount of money left, but it turns out that when you put a small amount of money into a multi-billion dollar company, it can still be quite meaningful to a, what at the time was a $35 million net asset sort of size fund. Now, as Homebrew forever, it's like, they're all the same, because we're just committing checks. I think our median check size is, you know, somewhere between 100K, 250K, starting per company and that type of stuff. And so it's not the same for us, I think we look at every company the same way. Maybe the version of that for us now would be, when it's post, post-seed, I said 90%

• 37:18Speaker 00

  of what we do is still pre-seed and seed. If we missed it, or we were wrong, and we come back to it later, maybe that would be our equivalent now, because we're not trying to play catch-up just to get the logo on our website, nobody cares. What we are believing is saying, we were wrong, or we didn't see this, and we think that there is still the same upside from a net new, earlier investment. So for example, you know, in hindsight, let's use Anthropic, like you were just saying, like, turns out that the multiple upside from Anthropic at the Series B was still higher than the average multiple at a successful seed investment, right? So when we invest post-seed, it's not because we think the company has been de-risked, it's not because we want to be associated with the brand, we think, we think it's because

• 38:03Speaker 00

  it still offers us the same- Upside on a new dollar in as if we had picked a new company, a new venture. And so we do that selectively.

• 38:13David Weisburd?

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• 38:56David Weisburd?

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• 39:39David Weisburd?

  Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, and sometimes they even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are, in store, online, on your phone, or even at pop ups, and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly whether you're in your shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square Checking.

• 40:24David Weisburd?

  They also have built in tools like loyalty and marketing so your best customers keep coming back. And right now, you could get up to $200 off Square hardware when you sign up at square.com/go/HowIInvest. That's S-Q-U-A-R-E.com/go/HowIInvest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. Support for today's episode comes from Square, the all in one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works.

• 41:09David Weisburd?

  Checkout is fast, receipts are instant, and sometimes they even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are, in store, online, on your phone, or even at pop ups, and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly whether you're in your shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square Checking. They also have built in tools like loyalty and marketing so your best customers keep coming back. And right now, you could get up to $200 off Square hardware when you sign up at square.com/go/HowIInvest.

• 41:52David Weisburd?

  That's S-Q-U-A-R-E.com/go/HowIInvest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. I invested in Anthropic Series C, and one of the reasons was I've always thought ownership percentage was a vanity metric and really it was about multiple on capital. Now that you're investing your own money and you don't have to spin any narratives for LPs, where do you stand between ownership versus?

• 42:22Speaker 00

  I guess the way I think about it is that every fund manager needs to understand the math of their portfolio and what assumptions you want to base your portfolio management on. If you're somebody who believes, "Look, we're in a different era. The outcomes are orders of magnitude bigger, not just in aggregate, but before they go public." So like, these outcomes are bigger and they're being captured by the private markets, not the public markets. So I'm going to be comfortable owning less of these names, no matter the price, no matter the stage of entry. My answer would be, we'll see. Right? Certainly if you believe and if they've displayed a skill of picking and accessing

• 43:04Speaker 00

  those names, then they might be right. I still think, if you gave me today, you said, "Hunter, I know you just talked about not wanting or needing an institutional fund, but I'm going to force you to take $500 million from your previous LPs, go invest it." I think I would still mostly run a concentrated book because that's just still the way I understand how to create value. Doesn't mean that I might have broader targets of ownership. Maybe I don't need to own 10% to 15%. Maybe I'd be happy, you know, 8% to 10%, you know, so and so, I'd be flexible. But I wouldn't go multi-stage across the board, inception stage to growth stage.

• 43:48Speaker 00

  And I don't think I would be evenly distributed across all ownership ranges, largely because I don't know how to concentrate my time and effort and expertise when I do that. I do think that if you're looking at seed and Series A all day, that almost every Series B company you look at is going to be by definition, look better. They're further along. The selection bias has meant that they survived, so they have a more mature team, they're more like... And so I think if you're the type of person as an individual who is looking across all stages, playing all different roles in companies, so on and so forth, and considers yourself a generalist, you better have some other rubric to make decisions other than vibes.

• 44:30Speaker 00

  Now, a firm can be a collection of those individuals where the firm as a total might have somebody who, I do initial checks, that person decides on follow-ons. I do early stage, that person does late stage. The mechanics of velocity of a DevRel tool startup is very different than a consumer app. So they're the consumer person, I'm this, and together, whole is greater than sum of parts. I think you can get great market coverage, put together different strategies that way. I'm just skeptical that people can be repeatedly talented, looking at companies across all markets, all technologies, all stages, all participation.

• 45:10David Weisburd?

  If you think about, every human has their own L M, just like a model. And you've been trained on the pre-seed and seed L M. Some of the benefits of that model are going to be different than a growth model. What does that mean? For pre-seed and seed investor, for example, you're not focused on loss ratio primarily, you're focused on the upside. If you could have a portfolio with a 50% loss ratio, that's in the best companies versus a 30%, that's even in the second best companies, the first portfolio is going to do much better. So the intuition to be more optimistic or more focused on the winners versus not being in the losers versus if you're in a later stage fund and you have a 50% growth rate...

• 45:46Speaker 00

  And what communities are you...

• 45:47David Weisburd?

  Loss rate, you're going to be lost.

• 45:49Speaker 00

  We always talk about with Screen Door, one of the things we look for is, are the managers we're backing native to the founder communities they wanted to invest in? So are they somebody who grew up around the founders that they're thinking of backing, grew up in the technology spaces, grew up, whether it be literally growing up, or sort of academically, vocationally, demographically? Have they spent time in the markets that they believe that they have figured out and want to invest in? Because it turns out that we think that when you're sort of looking at the nature of the venture market today, and you have these very, very large asset managers, most of those folks have removed themselves from the scrum. They have teams, they have data tools, so on and so forth. They can be very valuable in certain ways.

• 46:33Speaker 00

  Certainly as companies grow, being able to be capital providers, being able to open doors, so on and so forth. But those first three to five years, that's why you don't often hear, "My largest investor was also my most helpful one." You hear a lot of things of like, "My largest investor was the angel who, or the founder who had done this right before," or "It was this fund who, the check that they wrote was meaningful because it wasn't an option value check. It wasn't, it was a belief check." And so, yeah, I think if you're a little bit more qualitative supported by quantitative rather than the other way around, which I think is sort of the early stage model that we practice, I'm always wary of trying to be all things to all people.

• 47:15Speaker 00

  Back to what you're saying about venture brands, it's like, if you can't say, if why you exist doesn't give a founder at least some sense of whether you're right for them or they're right for you or not, then you haven't told them anything.

• 47:29David Weisburd?

  So another way, conviction, if it's not polarizing anyone, it's not actually conviction.

• 47:34Speaker 00

  Yeah, and I think sometimes we think about polarizing as like, if you're not being controvert, you know, there's differences about strategies to attract attention.

• 47:40David Weisburd?

  Doesn't have to personally offend them, it just has to not be something for them.

• 47:42Speaker 00

  I say all the time, there are categories that we do not invest in as homebrew because I am not interested in them, we are not interested in them. They have fantastic entrepreneurs that have created very interesting companies, but I think founders deserve, especially early on, deserve investors who aren't waiting for them to pivot, aren't waiting for them to be validated, but who believe in them. And so we haven't done things, for example, in gaming, or fitness, or wellness by and large, because I don't think those are the categories we need to get up every morning and think about. Certainly, there's some wonderful companies in those spaces, but it's fine. We've been able to find wonderful companies and spaces that we do get up every morning and think about.

• 48:23David Weisburd?

  You mentioned Screen Door.

• 48:24Speaker 00

  Mm-hmm.

• 48:25David Weisburd?

  You founded Screen Door, which is quickly becoming one of the top LPs to back emerging managers and the managers backing the next pre-seed and seed. Your competitors, as you mentioned.

• 48:36Speaker 00

  Yes.

• 48:37David Weisburd?

  Tell me about the story about that.

• 48:38Speaker 00

  So, Screen Door is, like you said, sort of a vehicle that's meant to back the next generation of funds, sometimes called, you know, emerging managers, but you can just think of them as founders who start venture firms as opposed to founders starting startups. Sacha, myself, sort of started spinning on the idea in 2021 and founded it, brought in some of our friends and colleagues, Kirsten Green from Forerunner, Charles Hunter from Precursor, a bunch of people who had also started their own firms, maybe around the same time. And our goal, again, love in your heart, chip on your shoulder, our goal was, one, to be able to make meaningful bets, meaningful, put in business, great emerging managers

• 49:20Speaker 00

  who we thought could benefit, not just from advice, but benefit from an anchor check. So, how can we?

• 49:28David Weisburd?

  The signal.

• 49:29Speaker 00

  Yeah. How can we help write bigger checks than we were currently doing at the time? We were writing personal checks often into these, into these funds. But how could we go and be 10% of their fund instead of half a percent of their fund? And thus, as you said, sort of be a signal that helped them get to a first close, or if they're past a first close, help them get to a second close, get them off the fundraising trail and start to just building their firm. We also found that it was really interesting to work with these managers, that, the way I always think about it is, I'm NBA pilled, so I'll use a basketball analogy. On the court, Victor Weyman Yama is gonna dunk on LeBron James without hesitation. But off the court, he might saddle up to LeBron and say, "Tell me what you learned

• 50:13Speaker 00

  about likeness rights, so I can make good choices about how I manage my image and get the most money for my sponsorship deals, so on and so forth." Fierce competitors on the court, you know, can learn a little bit off the court. So, not to call myself LeBron, but we-

• 50:27David Weisburd?

  Yeah, which one are you?

• 50:28Speaker 00

  Well, you know, the beard suggests on LeBron, if not the physique. The, you know, so what we've been able to do, I think, is put together an amazing portfolio so far, about 20 to 25 managers who are the Victor Weyman Yamas, are the rookies of the year. They're folks who are getting into these interesting deals, interesting areas, you know, ahead of or alongside some of the best firms in the world. They're pre-consensus, you know, not post-consensus. And we learn from them and, you know, hopefully they learn from us. Not about investment picking, that's what they know how to do, but in firm building or in general questions or that type of what happens when type of stuff. Now, we did that originally with a group of us, raised a vehicle from institutional

• 51:12Speaker 00

  LPs, started writing these anchor checks. And I sort of call that a fund zero, not a fund one, because we knew that if we were going to build something of real credibility, it couldn't just be in our hands. We had day jobs. And frankly, we enjoyed our day jobs too much to, you know, sort of quit them to become professional LPs. So, we were fortunate in 2023, just two years after we founded, to sort of have kind of, I call it like our refounding. We were able to hire as a managing director, a woman named Lisa Colley. She also hired a team, all of whom had been first check sort of into EMs from various points on the LP spectrum. So, they were practicing a muscle memory that they had been at the forefront already. We didn't have to, they didn't have to unlearn how to, some of the incentives to the LP model.

• 51:57Speaker 00

  But now they were doing it out of their own vehicle. And so, Sacha, myself, some of the folks I named earlier, along with some new additions, have stayed on as what I'd call kind of GP advisors, helping Lisa and team on, you know, aspects of sourcing, diligence, underwriting, so on and so forth, when they ask it of us. But most importantly, making ourselves available, building relationships, working with the underlying portfolio managers as they move from their fund ones and twos to threes and fours and so on and so forth, and grow as their own firms. Sacha and I are also LPs in it, so we have real skin in the game. We don't draw salaries from it, so it wasn't, this wasn't a case of, "Oh, de-institutionalize Homebrew, institutionalize Screen Door, one pocket pays the other, so on and so forth."

• 52:39Speaker 00

  Like everything, you know, we sort of, like I said, we've put in our own money and we're, believe in the outcomes, you know, not just the inputs. But for me, it's been incredibly valuable. I'm in the, I'm in the group chats that I wouldn't otherwise be in, right? So, these early managers, many of whom are in their twenties, early thirties, just have a different way of looking at the world. They have different ways of doing things, many of which, you know, make me a better investor these days. We don't, as Homebrew, we don't get their documents, right? So, this isn't a data play. You'll see lots of venture firms, either as firms or as GPs, writing checks into emerging managers. Most of it is, I don't wanna say predatory, but it's with the belief that they are going to, the firm will benefit-

• 53:21David Weisburd?

  Confidentistic.

• 53:22Speaker 00

  Yeah. They don't see, it's, they're investing in the scouts, the minor leagues. They're not investing in competitors. We invest in competitors. I hope that Screen Door never underwrites a manager who doesn't a little bit give me a shiver, because I want them out on the field beating the established VCs. But you also build these relationships and you get to collaborate with them. So, we've co-invested with, you know, a number of them and companies, and it's really fun to see them do their work there, too.

• 53:43David Weisburd?

  It's a play on Ashton Kutcher's angel investing rule, which is if he even for a second feels like he should quit whatever he's working in, work for the startup, he invests. So, as soon as you find somebody that good that you're like, "Wow, what they're doing might be better than what I'm doing," then you kind of invest.

• 53:58Speaker 00

  Yeah. And obviously, you know, people have different playbooks and so forth, though it's not always an apples-to-apples comparison. But I would never wanna feel like I'm investing in somebody and then coaching them up. This is quite the opposite. We're investing in somebody who doesn't need our help, but our help and our mindset are attractive to them. We are a differentiated LP, not just in our ability and velocity to commit, underwrite a fund one, to be in a first close, that type of thing, but bringing a community and a mindset to their own building that I'd like to say, just like Sacha and I at Homebrew, our participation rarely is the difference between success or failure, you know, rarely the difference in success to a startup. But what we hope to do is slightly increase the velocity and probability of their success.

• 54:41Speaker 00

  I would say the same thing about Screen Door. We're backing great managers and just trying to increase the probability that they're great firm builders.

• 54:50David Weisburd?

  You mentioned that these managers, some of them are in their twenties. Oftentimes, they have a different mindset. You mentioned earlier, you're NBA pilled.

• 55:00Speaker 00

  Yes.

• 55:01David Weisburd?

  If you had to explain the pills that these managers are, what are they pilled in?

• 55:04Speaker 00

  It depends on the world and the specific slice of the world they grew up in. The ones who are, you know, early in robotics and have been around that maker space are just, I think, see the future a little more crisply. So, whether you call it, if I was gonna try to bring it back to basketball, it's, they're making no look passes while I have to-

• 55:29David Weisburd?

  Within their domain.

• 55:30Speaker 00

  Within their domain, where I have to actually see where I'm passing the ball. They have an intuitive sense for how this technology is developing.

• 55:36David Weisburd?

  Oftentimes, some of these investors-

• 55:37Speaker 00

  Because they don't know a world, they don't know the world before.

• 55:39David Weisburd?

  And oftentimes, some of these investors are even down on the research level, on the science level.

• 55:44Speaker 00

  Oh, yeah. Absolutely. They come out of companies, campuses, or, you know, Discord groups that are dealing with the raw material, not with the investment memo. So, what they sometimes need to think about is the, you know, how many of these do I want in the portfolio? What is the type of risk I'm taking in investing in this company? But they don't need any help on predicting the future or understanding the talents and competencies and spikiness of the founders, because they're hanging out with them. But it's not just a social aspect. It's, they also know how to help those companies build bridges to the partners, investors' talent that they need. They understand the mindset-

• 56:27David Weisburd?

  Sometimes they're translators.

• 56:28Speaker 00

  They understand, because the first 20 people to join a startup are more similar to the founders than not, right? Why would you join an early-stage startup if you didn't passionately and unnaturally believe in its ability to succeed? The idea of taking a first 20-person role and not having founder equity is almost crazy, right? You have taking almost all the risk besides maybe some capital raise for a fraction of the equity. You're only gonna do that if you love startups, love early stage, and believe in this one. And so, they also tend to be really great on helping founders assemble their early-stage teams. It's different than the talent group at a multi-billion dollar fund who's gonna call their executives for the Series B, Series C, Series D. These are folks who are, who's on the ground-

• 57:10David Weisburd?

  These are more through networks versus through processes.

• 57:12Speaker 00

  Right. Exactly. And often passive candidates, it's not job seekers, all that type of stuff. So, that's why I see them being so incredibly valuable. They're also peers, so they have the trust built in. They know that they're all, they're going through it. They're building their firm, just like somebody's building their company. It's more similar than different. When we were raising Homebrew in the earliest years, even though a venture firm is very different than a startup, the questions we were asking ourselves felt much more similar to the questions that a plaid, a chime, or whatever, asking themselves than what I think Sequoia was asking themselves in 2013. And so-

• 57:45David Weisburd?

  What do you mean by that?

• 57:46Speaker 00

  Well, all the questions about-

• 57:50Speaker 00

  What sort of things do we focus on now that pay off right away versus do we plant seeds that won't pay off for a while? What sort of team and structure do we build? How do we? We have too much to do, not enough time. How do we actually sequence it?

• 58:07David Weisburd?

  It's funny. We're both old enough and been-

• 58:08Speaker 00

  Looking for product market fit.

• 58:10David Weisburd?

  We're both old enough and been around enough to realize that up until about five years ago, venture capital was not seen as this ongoing cause. It was basically two people like you and Satya that came together and decided you wanted to deploy money and then maybe do another fund, another fund. And now it's gone from basically no intrinsic value, no GP staking of venture capital firms, to now venture capital firms going public reportedly within five years.

• 58:34Speaker 00

  Now you're like, what institutional value are we creating? It's like, I don't know. I go home each night. But that's why I thought it was so important when we, when Lisa et al. You know, sort of started Screen Door proper, we gave them, it's their management company. So like the things you can do when you sort of take a mindset of what's the right structure for something to succeed? And you say, let's just all succeed together are so different. How many venture firms break up because of economics or break up because of poor generational transition, so so forth? I'm not saying that like we did a generational transition or anything like that, but I'm saying if you don't look and you don't examine the core questions about incentives, what needs to, who's fully committed versus who's helping that type of stuff? It's like, we didn't look at it and say, hey, we started this thing.

• 59:19Speaker 00

  Come work for us. I hope you succeed. We said, great, we work for you now, not org chart wise, but you know, we're not, we're not tied to the organization, but it's like, this is yours.

• 59:28David Weisburd?

  The best answer to your question of how many firms are good at generational transfer is essentially none, except the ones that you know. So the ones that are still around are the ones that are good at generational transfer. It's Sequoia, it's Benchmark.

• 59:43Speaker 00

  Maybe. There's a bunch around that-

• 59:45David Weisburd?

  Maybe a couple.

• 59:46Speaker 00

  Still TBD. I call it like we're-

• 59:47David Weisburd?

  But everybody else, everybody that you can't name, everyone that people have forgot about in the last 20 years, some of these, some of the top funds. I don't want to speak of the dead, but-

• 59:55Speaker 00

  Or the dying.

• 59:56David Weisburd?

  Or the dying, but, but essentially no one has been good at it, except these small firms that have been able to figure it out.

• 1:00:03Speaker 00

  And still TBD. Some of them have taken one or two swings and then just now found the right, potential right combination. I often, so I'll show my age again. You know, you used to, you used to say, oh, I got a bootleg, right? It's a tape. And then is this a first generation bootleg, a second generation? Is it a tape of a tape of a tape? Like, did you get this off the soundboard at the Grateful Dead show or did somebody else record it? You recorded it. So I think unless they really think about this intentionally, who are the people we have? Does our strategy still match these talents? Are we too big for our strategy or are we too small? Basically, multi-generational venture firms are more likely to be dub tapes of dub tapes of dub tapes of dub tapes where the music sucks.

• 1:00:42David Weisburd?

  It's kind of the name.

• 1:00:43Speaker 00

  By the fourth generation. It's still, it says on the label, soundboard recording, Grateful Dead, Fillmore, 1963, but it's the fourth generation of that recording and you can barely make out the music and it's not a good jam.

• 1:00:57David Weisburd?

  The only firm that I've ever seen do a full reboot has been Kleiner Perkins.

• 1:01:01Speaker 00

  Mm-hmm.

• 1:01:02David Weisburd?

  Do you know any others?

• 1:01:03Speaker 00

  Only when, and that was, that was only when it became so painful and existential, right? They tried to do the, change the jet engine and air.

• 1:01:10David Weisburd?

  In many ways, that was a brand new firm.

• 1:01:12Speaker 00

  Yeah, they had to-

• 1:01:13David Weisburd?

  Do you know any other firms?

• 1:01:14Speaker 00

  I always wondered if they, I mean, maybe this was a step forward and you know, we're never privy to what goes on inside. I always wondered if, you know, Mumun et al. ever had any discussions about, in order to finish this, we need to rename it.

• 1:01:26David Weisburd?

  I'm sure those discussions happened.

• 1:01:29Speaker 00

  I mean, and credit to them, you know, they've kept the heritage while creating something new.

• 1:01:34David Weisburd?

  When these venture capital firms die, my sense of it is that it happens very slowly. Because these are 10-year funds, because talent slowly creeps out. Is that how it happens?

• 1:01:47Speaker 00

  I think unless it's really ugly, right? Unless, the ones that happen fast are usually partnership dynamics or behavior issues, right? When you think about sort of the last decade of those that sort of had to break up and give money back, or there's ones that actually couldn't raise and sort of make announcements that are everything but we couldn't raise, right? The ones that are slow, air coming out of balloon, I think it's the Sixth Sense, actually. I think they're Bruce Willis in The Sixth Sense. They've been dead for years and they haven't realized it. And eventually, the movie ends and it's the twist.

• 1:02:20David Weisburd?

  Spoiler alert.

• 1:02:21Speaker 00

  Yeah. Yeah. I don't think you have to say spoiler for a 20-year-old movie, but I appreciate your, you know, consideration for your audience.

• 1:02:28David Weisburd?

  So going back to, because you didn't answer my question. So these managers, I guess you, you answered it partially, which is one archetype of these emerging managers that you like to back are these technologists.

• 1:02:41Speaker 00

  Oh, sure.

• 1:02:42David Weisburd?

  These are roboticists.

• 1:02:43Speaker 00

  Native technologists from the-

• 1:02:44David Weisburd?

  That's one, that's one archetype. What else?

• 1:02:45Speaker 00

  We also back, so another one I'd say, so the way I always say it is, they have to be similar, but better, or different and excellent. So the, one of the archetypes we just talked about, I think the roboticists, that type of stuff, I think is sort of different but excellent. They're people who don't necessarily have track records. They might have portfolio model constructions or ideas on how they run, that want to run their venture firms that aren't informed by the top five firms and the way they run themselves.

• 1:03:12David Weisburd?

  And that's positive.

• 1:03:13Speaker 00

  It's positive, I mean, it's positive when it succeeds. There's good versions and bad versions of all these things. Just saying you're that is not sufficient, right? The similar but better, I think those more often look like spinouts very often. To be concrete, this incredible woman, Lu Zhang, left Sequoia to start a firm called Sunflower and we were, she's now investing out of a larger second vehicle, which we're a part of, but we're also fortunate enough to be in her first vehicle. And the types of stuff that she was doing at Sequoia and the types of stuff she's doing now, I mean, she might be able to compare it more specifically based upon her mandate at Sequoia or what, you know, she was able to get through the partnership or how much genius she had for what she could write versus what she had to get consensus on. But I get the sense that like, we weren't

• 1:03:56Speaker 00

  underwriting, oh, I invested in X and now I want to invest in Y. Sequoia doesn't do Y and that's why I'm leaving. We invested in somebody who had all the grit and determination of an entrepreneur to want to be able to go in even earlier with even higher conviction and run her own shop. And so if you look and you say, well, you're, she does, she's a very technical investor, does a lot of interesting stuff in the sciences and dev tools, so on and so forth. If you do some areas that other people have their eyes on, my question is, well, well, great. Why are you going to be better in them? Like, how do you beat those folks?

• 1:04:29David Weisburd?

  How do you out Sequoia Sequoia?

• 1:04:30Speaker 00

  Yeah. How do you out Sequoia Sequoia? And that ends up being, I think, a combination of some of the questions of playbook. Like, what are you specifically good at as a founder? And why are you going to be even better at that outside of the platform?

• 1:04:44David Weisburd?

  As a founding GP.

• 1:04:45Speaker 00

  As a founding GP. And some of it, I think, is the counterbalance to, well, these are the types of things I believe in and I think I can do out of a initially first fund, you know, sub 100 million, second fund 150, do out of a vehicle that's not a multi-billion dollar shop, where I don't have to take some of the considerations, some of the thought process, some of the deliberateness, some of the restrictions that come with that and that brand to run my own. And that combination, I think in general, spinouts are overrated. But, so I feel like the, you know, 80th percentile, 90th percentile spinout is going to underperform and the 99th percentile spinout is going to overperform. And I think she's a 99th percentile spinout.

• 1:05:29David Weisburd?

  Right. Back up there. So spinouts are one of the most popular strategies for LPs. In fact, a lot of LPs think about, we're going to put a lot of money into the multi-stage firms and we're going to do a couple of spinouts. Why is the 90th percentile spinout just not a good bet?

• 1:05:47Speaker 00

  Well, for the average LP, because a few things. One, I think most LPs, a lot of LPs can't get to ground truth on the story of why that person is leaving. Everybody does a very good job of telling the story of why they're leaving, giving that person the track record they need to go raise their next fund. My old fund is supporting me, so on and so forth. But if you really got to ground truth, if you knew who did the deals, if you knew how much of their attribution was theirs versus the principal, the associate, so on and so forth, if you knew who provided the value add to the founders afterwards, you would find that maybe that person's bio doesn't match all those sub bullets.

• 1:06:28David Weisburd?

  Do you think there's more adverse selection for partners leaving the top funds today? Or less, given that they're bigger?

• 1:06:36Speaker 00

  More adverse selection.

• 1:06:37David Weisburd?

  In other words, is there more top talent looking to leave the top multi-stage firms today? Or was, was there more five years ago?

• 1:06:45Speaker 00

  Well, I think there's a bunch of people leaving out of frustration with what becoming a multi-billion dollar fund has turned into.

• 1:06:54David Weisburd?

  Because the counter-

• 1:06:55Speaker 00

  But even some of those people-

• 1:06:56David Weisburd?

  The counteracting measure on that is just more management fees, more salary, more carry dollars, even a smaller percentage.

• 1:07:01Speaker 00

  I think some of those people, even some of the people who are good investors, have stayed too long to really understand how to be new fund builders.

• 1:07:15Speaker 00

  It's harder than they expected.

• 1:07:16David Weisburd?

  So even outside of investing, they might be bad.

• 1:07:18Speaker 00

  So the 90th percentile, the 90th percentile isn't just a saying that the 90th percentile, I don't think is going to be that impressive, isn't necessarily even a statement about the individual, although, as we were just relating, sometimes it is. And that's one of the things I think about so great about Screen Door, because we have those 10 to 15, myself included, GP advisors to help with the underwriting, like, we get to ground truth very, very quickly on spinouts and sometimes we were co-investors with them in company. I mean, we know, and people come to us ahead of spinouts to say, hey, what do you think? I see you guys start your own because we are the truth tellers and what it's like to build your own firm.

• 1:07:51David Weisburd?

  Said another way, that's almost the minimum viable team size to ascertain whether there's a great spinout, 15 super connected, super active people. And if you have one person-

• 1:08:00Speaker 00

  And it's different even than LPs thinking they have a great diligence network. Because you know what happens-

• 1:08:05David Weisburd?

  Misalignment.

• 1:08:06Speaker 00

  It's misalignment. We're all going to be in business together. Why, I'm not going to go on record saying anything nasty about you. Why? The risk of that getting back to you is too high. We're all going to be in business together. We're all going to make money together. That's why nobody, nobody calls anybody out unless, you know, it's a Twitter beef or whatever. And I got off that site years ago. So I think there's a bunch of things that you can say, the people spinning out, by and large, often aren't as good as they say they are. They might be perfectly wonderful, smart people, but we're talking about a power law business, right? They may have stayed too long and they actually don't know how to be competitive in a new firm mentality. Or they're spinning out past their peak. They're taking the shot that they wished they would have taken seven years ago, but they're no longer networked the same way.

• 1:08:50Speaker 00

  Maybe they don't work as hard. They're zooming in from the second or third house on the weekends as opposed to hanging out at the hacker house, that type of stuff. And there's nothing wrong with that. Like, I work a different style now than I worked when I was 22 also. But I'm not starting a venture firm at 53. And so I think that the spinouts seem like a safe place to put money. And it's very possible that they're not going to be, again, they're not going to be zeros. So maybe you're, very many of them probably won't be zeros. So you're settling for, oh, this seemed like a reasonable bet. If it comes in slightly below the benchmark threshold, it'll all get evened out and nobody's going to blame me for having picked the ex-benchmark partner-

• 1:09:33David Weisburd?

  And I could say I did a Fund One, I'm not just giving data.

• 1:09:35Speaker 00

  I got access, all of a sudden I got access. So it's like faux risk, you know? Where I think the real Fund One returns are going to accrue to LPs like Screen Door, who are pickers of both diamonds and diamonds in the rough, right? So the diamonds in the rough are the too small, no track record, we'll wait for Fund Two, Three, Four, Five, that cause major LPs to not be well positioned to invest in those. And then the diamonds are which is the cubic zirconium versus which is the flawless cut. Rex Woodbury, Daybreak, you know, coming out of Index, Lu Zhang, Sunflower, coming out of Sequoia. Those are the diamonds. There's plenty of other cubic zirconium that we did back.

• 1:10:16David Weisburd?

  Yeah, and this idea of consensus, Mark Andreessen says there's no more diamonds in the rough, only diamonds. I tend to believe that that's generally true, but it's not meant to be literal, meaning if you keep on going back to the, through the history of the startup, at some point they incorporate, at some point it was just two founders.

• 1:10:36Speaker 00

  It also has to do with your nimbleness, right? So if Screen Door was a $10 billion vehicle, that in order to allocate, needed to be able to write minimum $50 million checks into every firm and we couldn't be more than 20% of their, you know, AUM, well then maybe we would have, by our strategy, screened out all the diamonds in the rough. Because the diamonds in the rough are a $35 million Fund One that's going to deliver 10x. So I think by staying a fight-worthy but comfortable nine-digit size, by being able to cross the Rubicon in terms of understanding what it means to take underwriting risk in a manager like that versus underwriting risk in a $100 million spinout, everything

• 1:11:21Speaker 00

  we pass upstream will be diamonds. But when we got them, maybe they weren't yet as polished.

• 1:11:26David Weisburd?

  And you mentioned you're able to access through Screen Door, you're oftentimes able to go below certain thresholds where they're still diamonds. They're also coming to you for advice. What are otherwise very talented managers, where are their blind spots and where do they really need help?

• 1:11:44Speaker 00

  What I was always surprised by, we had a Charmed Fund Raise, I think, in 2013 for Homebrew One. Part of that was, we were coming to it, you know, later in our careers, we were both in our mid to late 30s, so we had networks, we had both professional and in Sacha's case, who'd done venture twice before, we had track records. We were also investing at a very, raising at a very good time. 2013, 2012 was sort of the beginning of the post-first round, post-Floodgate, post-soft tech now.

• 1:12:10David Weisburd?

  Beginning of the mobile, mobile era.

• 1:12:11Speaker 00

  A little bit later, but it was sort of the, it was the second wave. Every LP who had invested in a seed fund, early-stage manager, pure play before, was doing pretty well and wanted more.

• 1:12:21David Weisburd?

  It was Steve Anderson, Ron Conway.

• 1:12:23Speaker 00

  Steve Anderson, Bayes, Ron Conway, Chris Sacca. And those who had been like, I don't think that's a segment, or they can't possibly move the needle, were like, I was wrong. And so we were institutional from day, and we ran a good process. We were institutional from day one, very concentrated, small LPs, blah, blah, blah. Once I started helping others do the same, I was very surprised how long their fundraising was taken. People who I thought were excellent managers. And what I realized was that even if they'd been at great large firms, they were never involved in the LP side of the business. The IR person did the fundraising and the managing partners, some of them had never met LPs, whereas we had to live amongst them. So even just helping them think about two things, are you pitching the right product?

• 1:13:06Speaker 00

  And are you running the right process? Like, immeasurably speeds up, I think, the fundraising, let alone when Screen Door does commit so and so forth. One of the things I'm most proud of that Lisa and others have shared with me is that managers that they've passed on still come back and thank them for the advice, the help, like, you know, go and close their fund, so and so forth, do great, that they became better fundraisers because of the advice that they got from Screen Door, not just the yes or no. Ask people how many LP conversations, give them feedback, advice, support and introductions.

• 1:13:39David Weisburd?

  Or how many even say no?

• 1:13:40Speaker 00

  Or how many, how many even respond? That's what I always said, you know, oh, this is great, we should build a relationship. My answer was always like, the best way to build a relationship is to invest in our Fund One. If that's not right for you, that's fine, we'll try to, you know, we will keep each other up to date. We don't intend to grow our fund size that dramatically and we have LPs who I believe will have an appetite to grow with us. And so, you know, I'm not sure that there'll be an opportunity to work together again. And please factor that into deciding whether you want to prioritize or not. Not because I was trying to give them FOMO or play a game, but it's true. We were four LPs in our Fund One, we expanded that slightly, mostly based on recommendations from our current LPs of other endowments and foundations they appreciated, to eight major LPs in Fund Two, and then we added one in Fund Three, that we all took a little bit

• 1:14:24Speaker 00

  of cutback of our percentage on because they were such an interesting LP that we wanted to have them involved. If you were an LP who said no to Homebrew Fund One because you wanted to wait, you know, you missed a double-digit fund, sorry.

• 1:14:33David Weisburd?

  You referenced it, today's a much more difficult fundraising market for emerging managers.

• 1:14:39Speaker 00

  There's never been more people investing in venture. There's so many folks putting money in globally than when I started. But there's also so many more vehicles to put them into, including direct into private, so on and so forth, mixtures, these shared vehicles, and the underlying funds that existed over the last year. Everyone, every fund has doubled, tripled, quadrupled. So maybe it was a good time 15 years ago to run a strategy of, oh, we're, we are similar to X, or we co-invest with X a lot. And if you're an LP who can't get access to X, well then, great, invest in Y. When X has gone from 500 million to 5 billion, you can usually get some direct exposure, right? So being a first-round knockoff, a benchmark knockoff, so on and so forth, like, well,

• 1:15:24Speaker 00

  now you can get to first round, now you get to benchmark, all right? And so I really think that the people who are running, there's always going to be some market for look-alikes, right? But I mean, I think it's more fun to talk about what do the smartest people decide, rather than what do the second and third tier of LPs and the second and third tier of VCs decide to do? And so I get most excited when I see people running their own playbooks that are undeniable. And regardless of whether they're coming with a track record or not, you just believe that like, this fund is going to be created and we are probably underwriting a great fund and what we're hoping to find out is whether it's going to be a great firm, right? So when Screen Door makes a Fund One decision, or whatever the fund is that sort of is the, now it's an institutional fund, I think we are pretty confident we're underwriting

• 1:16:08Speaker 00

  a high-quality initial investment with somebody who wants to grow and learn and become not just an investor, but a managing partner. And that's what we will find out over the successive years, whether they even want to invest multiple, raise multiple funds. We've had some great managers who are having amazing Fund Ones, and I'd say they don't necessarily know if they want to raise a Fund Two. We have others that want to stay the same size, we have others that, you know, like Louis Sunflower and stuff, who've, you know, been able to grow successively as, you know, their own abilities and team has grown.

• 1:16:39David Weisburd?

  If I had one of the most successful careers in venture, going back to 2013, when you started your Homebrew, you mentioned it, double-digit returns, I used to read your blog, I didn't realize you were off of X, which explains why-

• 1:16:52Speaker 00

  I've disappeared. I'm in, I'm in my, you know, old man in the river phase, but you can still find my blog, it's on WordPress, you know?

• 1:16:58David Weisburd?

  We'll link it in the show notes, but if you could give yourself, younger Hunter in 2013, 13 years ago, one timeless piece of advice, that would, you-

• 1:17:10David Weisburd?

  Take the next 13 years of your career. What would that be?

• 1:17:12Speaker 00

  I'll do bonus. I'll give two. The one that I always say, and I pay forward when people ask me, well, what would you have done differently? When I said, look, we were very smart about a lot of things. I think what we did was we, though we under invested in systems and teams, because we weren't trying to be the next multi billion dollar firm. And because 2013, frankly, investing in IT and stuff meant something very different than vibe coding or spinning up.

• 1:17:36David Weisburd?

  It's far more expensive.

• 1:17:37Speaker 00

  And there's so many more platforms that are also built for the private markets, let alone building your own. I think that we made do with Google Docs and Notion Sheets for too long. And as the velocity of the markets, the founders, our talent networks, it wasn't that we fell behind, it's that we didn't take advantage of one of our strengths. So for example, now it's so much easier to manage, find and track in a non stalky way, like the first engineer hires at the companies you've backed. When those folks go into other companies, they should be coming to me or I should be finding them. That's dark deal flow before it becomes public deal flow, right? And that's not just doing listening stuff on LinkedIn for who changes the thing.

• 1:18:21Speaker 00

  I think it's having the data to then help you to know where to invest the actual personal time. And I feel like we ended up doing that in non scalable ways. And I think frankly, that probably hurt some of our returns towards the end of the institutional funders, where there were some folks that I would have thought would be like captured deal flow for us, that I ended up not getting to in time to get my 15%, right? So the double sort of penalty of you didn't know it early enough. And when you get to them, they don't have your ownership slot available. Very frustrating. So I tell them, I was like, even though you're not, you're spinning out a big firm. I don't expect you, and don't expect to recreate every database. Or hey, you're just spinning up.

• 1:19:00Speaker 00

  Don't spend all your time and all your management fees on software. You need to figure out how to pay for this, for this, for this. But like, think about the expansiveness of the information that you really want to have at your fingertips. Pick like one or two things, whether it be networks or introductions, talent for hiring, LPs for follow on, for direct, for whatever. Like, start building out the infrastructure. That's what I would have told 2013 Hunter, that like, build it out a little bit ahead of what you needed. The second thing I would have said is, don't invest through COVID. I feel like COVID, that period, the closed down period of 2020, like, broke some of our model.

• 1:19:43Speaker 00

  I was so used to meeting people in person and being able to get a real sense of who they were. All of a sudden with Zerp and so on and so forth, you're doing a Zoom and then pressured three days later to make a decision. Things that felt like PMF, product market fit, virtual offices. We're all going to need 3D renderings of our virtual offices. We're dead by 2021 or pivoting to something else. And so maybe I'll file it away. If there's another pandemic, it's a good time to buy an apartment in New York and a bad time to invest in of the moment startups.

• 1:20:13David Weisburd?

  Well, this has been absolute masterclass. I barely got through any of my questions, but appreciate you jumping on.

• 1:20:19Speaker 00

  This has been great. I'm, please, I'm always interested in what people have to say too. So I'm always happy to hear from folks directly. My information is on my blog. And like I said, I get the best job in the world. I back founders who start companies via Homebrew, and that's our own capital, skin in the game. And have the good fortune to be able to back entrepreneurs who happen to be build venture firms, who then are hopefully backing great startups via Screen Door. And so couldn't be happier to be in that stage of my career.

• 1:20:46David Weisburd?

  Awesome. Thank you, Hunter.