20VC: Bessemer’s Byron Deeter On Lessons From Investing in 14 $Bn Companies, What The Heck Is Going On In Cloud Today and Why Cloud IPO Floodgates Are About To Burst Open

Byron Deeter is a Partner @ Bessemer Venture Partners where he has established himself as one of the leading investors in SaaS and Cloud authoring the iconic laws on the state of cloud computing. In terms of track record, fourteen of Byron’s investments are valued above one $1 billion, including eight IPOs and counting. Byron's investments include the likes of Twilio, Intercom, SendGrid, Gainsight, Box, DocuSign and many more. Prior to the world of venture, Byron was a Bessemer Founder raising his Series A from them back in 2000 with Trigo Technologies. The company rapidly scaled to profitability and was acquired by IBM. In Today’s Episode You Will Learn: 1.) How Byron made his way into the world of venture from founding Trigo Technologies and selling to IBM in 2005? How have seeing multiple booms and busts impacted Byron's investment mentality today? 2.) What the heck is going on in cloud today? Is Byron concerned by the very rich multiples being paid in the ecosystem today? How does Byron think about how public market performance impacts his day to day role investing? Why does Byron believe that the floodgate for cloud IPOs is about to burst open? 3.) Having seen so many cloud IPOs, what should founders take from the lessons of those that have already been so successful? With 14 $Bn companies, what does Byron attribute his investing success to today? How does Byron think about what he wants to invest in today? Are we in an entirely new wave of cloud? 4.) As a former founder, how does Byron think that he engages differently with founders than more financial backgrounded VCs? What can board members really do to build that trusted relationship with the founder in the early days? Is it good for founders and board members to be friends? Is there a line of professionalism that has to be drawn? 5.) How has Byron seen his style of board membership change over the last decade? What would his advice be to someone who has just gained their first institutional board seat? What does Byron believe makes the best board members? What founder he has worked with most excels when it comes to board management? What made them so extraordinary? Items Mentioned In Today’s Show: Byron’s Fave Book: AI Superpowers, Legacy Byron’s Most Recent Investment: ScaleFactor As always you can follow Harry, The Twenty Minute VC and Byron on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

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

• 0:00Harry Stebbings?

  Welcome back to the 20 minute VC with me, Harry Stebbings at H Stebbings 1996 with two Bs on Instagram. And I'd love to welcome you behind the scenes there. I have to say though, looking back at the last few weeks on the show, Bill Gurley, Pallett Sequoia, and the quality continues today with a guest that I've been a fanboy of for a long time. He quite literally has more IPOs under his belt than I've done podcast episodes. And so with that, I'm thrilled to welcome back into the show Byron Dieter, partner at Bessemer Venture Partners. There Byron has established himself as one of the leading investors in SaaS and cloud, authoring the iconic laws on the state of cloud computing. In terms of track record, check this out, 14, 1, 4 of Byron's investments have valued above $1 billion, including eight IPOs and counting. Byron's investments include the likes of Twilio, Intercom, SendGrid, Gainsight, Box, DocuSign,

• 0:45Harry Stebbings?

  and many more incredible companies. And prior to the world of venture, Byron was a Bessemer founder himself, raising his Series A from them back in 2000 with Trigo Technologies. The company rapidly scaled to profitability and was ultimately acquired by IBM. And I do also have to add, I had Byron on the show about two years ago or so, and he's been a constant source of support to me, and I really do so appreciate that. A very special individual indeed. But before we get into the episode today, I'd like to give a big shout out to my friends over at Multiple, widely regarded as the go-to firm for game-changing companies when it comes to building your brand, crafting your culture, and gearing up your growth. They've worked with breakthrough companies such as WeTransfer, PipeDrive, Mixcloud, Unbabble, Signal, and Kallo. And when we set up stride.vc, they were the first call we made to help us get our story straight.

• 1:29Harry Stebbings?

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• 2:10Harry Stebbings?

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• 2:51Harry Stebbings?

  expert in your business. With Pilot, you can say goodbye to exporting CSV files and emailing attachments to a bookkeeper you can never get a hold of. Get your company's books in order and get your time back today. Check them out at pilot.com/20vc. That's pilot.com/20vc. But it's now time to dive in, and I cannot wait to hand over to the one and only Byron Dieter, partner at Bessemer Venture Partners.

• 3:19Speaker 01

  You have now arrived at your destination.

• 3:23Harry Stebbings?

  Byron, what can I say? I've been looking forward to this one for a very long time. It's been over two years since our last episode, so a huge thank you for joining my dulcet British tones again.

• 3:32Speaker 02

  My pleasure to be here, Harry. Great to be back on the show.

• 3:35Harry Stebbings?

  I would love to start, Byron. And for those that maybe missed our round one, tell me, how did you make your way into what I know to be the wonderful world of venture and come to be one of the most successful cloud ambassadors on the planet with Bessemer?

• 3:47Speaker 02

  Well, you're very kind. And fortunately, I guess I have to say it was the hard way. I was a founder first and have a lot of empathy and scar tissue from founding an early cloud business back in wave one of this SaaS or ASP wave that was known there. And I had the good fortune of working with Bessemer Venture Partners first as a CEO in their portfolio and getting to know them and a number of other great venture firms in the process. And so when we were fortunate enough to have a very good outcome from that business and I came out of that with a lot of conviction around the cloud trend, it was natural to take advantage of that five-year two-way job interview to then Turnover and join the group I respected most, which was the team at Vastima. And I've been really thrilled and privileged to have been leading our cloud efforts for the last dozen years ever since.

• 4:28Harry Stebbings?

  And I mean, what a dozen years it has been, but I do have to say Byron, and you know me, I take advantage of doing this show for my own personal learning. You mentioned your founding pre joining the world of VC and you've seen multiple booms and busts on both sides of the table. Can I ask, for me, I haven't seen a bust in my working life. What were your takeaways from seeing this and how do you think it impacted your mentality today?

• 4:50Speaker 02

  It has been a bizarre decade for all of us in this recent wave. And I think my biggest takeaway, having now seen both the 2000 blow up and then also the 08 Housel based recession is that essentially great companies are built in all markets. And so I've really given up trying to time markets, either as a founder or as an investor. And my point of view is find great people with big vision and pay the fair market price and generally really good things happen. And then the second thing, of course, is it does help to have one of these mega trends as a tailwind. We all look a lot smarter and taller when you're able to ride some of these massive macro dislocations. Cloud computing has certainly been one that I've benefited from and my companies generally have seen very early. But there are a number of these macro trends in tech and you can miss the mark or fumble around on strategy a little bit.

• 5:35Speaker 02

  But if you're right in the market and that product market fit, generally it will help you build a great business. May take a little more time, but you don't have to be perfect in the other realm of timing or execution.

• 5:45Harry Stebbings?

  Can I ask, do you think about market timing a lot? For me, especially say with Strive, me and Fred are always very cognizant of market timing and potentially having to carry companies. Does market timing really factor into your thinking or not, given the accuracy on the kind of macro trend that one's chasing?

• 6:01Speaker 02

  So on the entry, it really doesn't. And we've actually empirically modeled this. If you look at founding dates of the great companies that we think of across tech and it's amazingly even across cycles. What you tend to see those that exits do cluster and in particular acquisitions and IPOs. You will have market cycles and there will be really strong market windows and really weak market windows. And generally the best companies can afford to wait when timing isn't ideal, certainly on the IPO side, but even on the acquisition side. My own company had many acquisition offers all the way up and almost every one of our companies that ultimately goes public has said no to multiple credible acquisition offers along the way and they have the luxury of just building value and not having to get

• 6:43Speaker 02

  anxious about hitting specific windows for acquisition offers and for the IPO side trying to play into strong markets but at the same time being okay if you have to miss a cycle knowing that it'll be there in the future for you.

• 6:54Harry Stebbings?

  I'm so pleased you said that about the clustering of the exit environments because I do want to dive into the elements of the state of cloud today. You know, you could look at it and see extreme volatility within the market itself. You could look at the Red Hat acquisition to Google replacing Diane and it would appear relatively manic, one could say. So in your words, actually, that we've said before, what the heck is going on in cloud today, Byron?

• 7:15Speaker 02

  We have a few very fascinating dynamics where you see the incumbents in some ways acting like cornered animals and lashing out. And then on the pure plays, it's this beautiful second wave where you've got this market recognition and now a number of enabling factors where the headwind has become a tailwind for buying. On the first point, absolutely. This record acquisition by IBM of Red Hat is really all about Amazon Web Services crushing them in public cloud, them trying to make a play for hybrid cloud more aggressively and essentially draw a buffer line where they can be relevant and aspirationally they can be a leader in the hybrid cloud space. And then similarly for Google Cloud with the move from Diane to Thomas, bringing Thomas over from Oracle and trying to reinvigorate

• 7:57Speaker 02

  an enterprise motion there. It's a bold bet to try to shake things up. Meanwhile, you look at what's happened with Microsoft and the transition they did several years ago moving to Satya, who was the head of their cloud group, promoting him to the head of Microsoft corporate and seeing this fantastic turnaround as a result. They are several years into this transition and as Microsoft generally does, they're doing a great job of being a fast follower and are very aggressively gaining share and making strides on the enterprise segment of public cloud specifically. And so there's this macro battle of risk going on with the legacy vendors and there will be some fatalities there. But it's enabling the infrastructure as a service layer that now the pure plays can continue to benefit from. And that renaissance is still in the early days.

• 8:40Speaker 02

  We are seeing so much fantastic innovation lying below the surface with these private companies. And the best is yet to come in terms of the quality that will ultimately reveal itself in the public landscape in the coming years. It's just a fantastic lineup of companies.

• 8:53Harry Stebbings?

  It is indeed a fantastic lineup of companies, but when one looks at it in terms of exit environments and clustering of our exits. In terms of the pipeline, so to speak, there's no clear and impending cloud IPOs. Can I ask, are you concerned by this Byron? Is this very much part of the macro cycles that we exist in? Or is this actually more of a concern with extended with no prioritization?

• 9:13Speaker 02

  I think that that's a point in time comment. And if we did this podcast three months from now or six months from now, it would be an entirely different discussion. I think that the floodgates are about to burst wide open. And as we look at the private cloud landscape, we do the Cloud 100 event every year with Forbes. And it'll be in the September issue this year from the Cloud 100 list. But right now we're tracking 53 private cloud unicorns, meaning private cloud companies valued at over a billion dollars globally. And we just saw yesterday, in fact, with the first IPO of this recent wave with PagerDuty, a company that we are fortunate to be large investors in and have worked with Agenda Hot all the way through here. You know, that traded up 60% on the opening day. We've got Zoom hitting the road right now to go public shortly. That is a fantastically valuable company.

• 9:56Speaker 02

  And as you look ahead, companies like Slack, which is rumored to be doing a direct listing. You look at Stripe, which certainly could go public anytime they want and hopefully will be soon. You're going to see these $10 billion plus caliber companies starting to flip from private to public. And the lights will turn on on this segment in a way that public market investors and frankly, the community more broadly doesn't yet fully appreciate. And yet it's been lurking below the surface and building in the last couple of years, specifically as a result of this trend you commented on with them staying private longer. But I don't at all believe it's a reflection of a poor IPO class, quite the opposite, that the quality in the private side is the highest it has ever been. And that will reveal itself very shortly.

• 10:36Harry Stebbings?

  We mentioned the companies that are currently private and are considering or could go public at a time of their choosing. I'm really interested because as you know, I've interviewed over 2,000 VCs and a lot of them boldly say that public market performance doesn't really have impact on their. Role and activity. Can I ask, is that true for you? And how do you think public markets influence your maybe day to day mentality and investing with Vecima?

• 10:58Speaker 02

  I would agree that public markets are a lagging indicator for venture investors and certainly for founders, meaning that you can't react to that environment or the old analogy of it's looking in the rear view mirror. For us to be successful as venture investors and partners with entrepreneurs, we need to be five to 10 years ahead of what the public markets are seeing, or we're just going to be too late by the time the company is at scale. And so it's informative in that as you're on that transition point from private to public, you certainly want to be aware of the trends they're tying into and you want to make sure that they are understanding the language that you're speaking. But that really is tactical and really a late stage execution game versus the strategic things that lead up to that. And it's an important step. I don't mean minimize it. And certainly I do think it's something that we do pretty well and can be a good advisor for companies on and about,

• 11:43Speaker 02

  given our experience there, but I certainly wouldn't let that drive the strategy of the business.

• 11:48Harry Stebbings?

  No, I do get you in terms of not letting it drag the strategy. On the companies themselves, I've seen some pretty rich multiples, to say the least, of late, almost creative accounting. I'd love to hear your thoughts, Byron. How do you think about your in price sensitivity when really inserting yourself into a company and how do you think that's maybe evolved over time?

• 12:05Speaker 02

  It is a great time to be a founder. Let's just say that. These valuations are certainly the highest we've seen for an enterprise company in the last probably two decades. There was a brief window, obviously, in 99 for telecom equipment and consumer companies in particular, but that carried over a bit to the enterprise side. But since then, this market is hot and you can step back and say, let's sit on our hands and not invest. And boy, let's wait for the valuations to come to us. And I think frankly, that's what some of the private equity firms historically have done or some of the public investors. But if you flip around and say, we've got this gift of a macro trend that will foundationally transform technology. Software is the driver of technology. Cloud computing is the future of software. I don't think as an investor, you can afford to sit that out.

• 12:48Speaker 02

  And I feel very good in saying that whatever rich prices we're paying today, we will get rewarded many times over if we pick the winners and hold on to them long term. And so we're certainly anxious as everyone else is around the multiples. They are rich, but at the end of the day, I absolutely believe if we get the right companies, we will be handsomely rewarded for it and we'll believe it ends up looking cheap in the end.

• 13:08Harry Stebbings?

  I mean, we mentioned picking the winners and sticking with them. In terms of Bessemer, you've had more cloud IPOs than any other VC on the planet. I guess what my kind of subsequent question with this would be, having seen this incredible crop of companies, what should founders maybe take from them as lessons from those that have already been successful ahead of them?

• 13:26Speaker 02

  That's a great question. I'd probably point to two things. The first would be just this notion of the even keel, that people tend to react to the highs and the lows. And when things are going great, you kind of believe a little too much in that. And when things are rough, you just take the body blows a little bit too personally. And so trying to temper in some ways the highs right now to encourage the team to keep their head down and keep building real values, one, and that ties into number two, which is in all markets, efficient businesses will be rewarded, meaning businesses that can scale without needing to consume lots of capital or going way out on their ski tips in terms of customer acquisition. And so the importance of getting that model dialed in early where you've got the product market fit

• 14:08Speaker 02

  and you've got those unit economics working in an efficient way will absolutely reward you in the up markets. And you'll have the revenue growth and you may give up a smidge there to be more efficient or a little bit of time to get right, but you'll certainly be rewarded. However, in the medium to gallon markets, you will be disproportionately rewarded because investors will flock to quality and you will have the ability to invest in your model when others don't. As the cost of capital spikes in the market, the efficient businesses really pull away from the others. And so it's a way to essentially preserve the long-term viability of the business while also in many ways creating an insurance policy for yourself that is cycle independent.

• 14:47Harry Stebbings?

  I mean, speaking of kind of cycle independent, capital efficient businesses that sustain for the long term. I chatted to one of our mutual friends, Samir Sangrid before the show. And he said Byron's invested in seven companies that have IPOed. What does he attribute his investing success to? I've wanted to know for a long time. So I'm going to be the messenger for this one, Byron. What do you attribute that success to when looking at the crops that you've enjoyed before?

• 15:10Speaker 02

  That's funny. First of all, I'd say Samir has already merged the two in his mind because it's actually eight, but now with Twilio acquiring Stendgrid and working with both of them. I guess you could say that we lost one, it becomes seven. But I've been really privileged to work up close with 11 teams that have gone through the IPO process very closely. A couple that have sold along the way, and then the vast majority of them, including Adaptive Insights, by the way, last year, who was three days away from going public. And then instead chose to take the workday offer to Billion Six instead. So a great outcome either way, but a conscious choice by the team that they felt good about. And then indirectly supporting my partner, Ethan Kurzweil, who is the lead on our pager duty investment. But seeing fantastic CEOs like Jeff and Samir and Dan Docusign and Jent Hatta and the like.

• 15:55Speaker 02

  The end of the day is pretty simple, but the team really is our number one factor. And where we've lost money or where we've had very painful experiences along the way is where we just got out of sync with the team or didn't fully understand where the team was headed. And that's just no fun. And it tends to create a lot of added cycles in the relationship and ultimately less optimal outcomes. And so from my standpoint, I think the thing I've changed the most in my investing style from my first couple of years in venture to the last decade plus has been massive overweight on that element. And it's not that one founder necessarily is better, worse, or good or bad. It's just that style and tone and trust needs to be there between her or him and myself in a very compelling way.

• 16:39Speaker 02

  And then all the necessary conditions of, you know, strong product and business vision and those things. But that weighting has changed meaningfully for me in the last several years.

• 16:47Harry Stebbings?

  Again, I'm asking for your advice here. What can you do to really build that trust, that transparency and that alignment between founder and VC? Are there actually logical things like weekly calls, weekly meetings, going on offsites together to build that kind of more human relationship? What do you think one can actually do tangibly to build that kind of trust and transparency?

• 17:06Speaker 02

  A lot of it's around time early on and oversharing and over communicating. Meaning I do try to spend real time in the upfront process, ideally well before their fundraising, but in this cycle, that's not always possible. But do try to grab a meal. Drinks or those sorts of things just to understand the person individually. And then early in the relationship, we do often set up frequent interactions and have a lot of texts late at night and those sorts of things just to over communicate. One of my most recent investments around a text thread where the CEO is constantly sending over just photos of team events and quick updates and those things and just getting a lot of back and forth. And that's fun. And what I've told them is look, the importance from trust from me to you is that I will send you all sorts of opportunities and candidates and customer intros and those sorts of things.

• 17:49Speaker 02

  And I'll do it on the condition that you are comfortable saying no to the vast majority of those things. Because I don't ever want to feel guilty that I'm taking up your time or that you're having to follow up on something because it came from a board member. So as long as you're comfortable saying, hey, thanks, but not interested. And for 80% of those things, you just throw them away. And for 10% of them, you say, hey, that's great, but I don't have the time. Can you follow up on that and run it down and try to figure this out? And then the one out of 10 is like, wow, that's exactly what I needed. I need to see that candidate tomorrow or I need to talk to them immediately. And as long as you, you know, have that dynamic where it's okay to say like, that's stupid. Or, you know, I have zero interest, then I find you can build a lot on top of it. And the other thing I'd say is that the vast majority of my founders and CEOs are legitimately close personal friends.

• 18:32Speaker 02

  And that's something that I just feel if you respect each other, if you enjoy spending time together, it is really like finding another friend. And long after these companies have gone public or I've gotten off the board or they've sold or what have you. I mean, I tend to still, you know, go on trips with these folks. I tend to still swap holiday cards and go grab a beer when they're in town or when I'm in town with them. And that's just a fantastic part about this industry is that the quality level of people is so damn high. And it is so fun to get to work with this group that I just think it's one of the huge benefits of this quote unquote job we all do.

• 19:04Harry Stebbings?

  I mean, I loved hearing that. And as you know, Byron, I stalk the shit out of every guest and every single founder of yours. Consistently said what a joy it was to work with you. It's a great MPS for the VCs actually, but it was wonderful to hear. But like the subsequent question for me is because obviously for you, you're a former founder. So do you think you actually engage differently with your companies than other VCs because of that prior experience?

• 19:25Speaker 02

  I do. And maybe somewhat embarrassingly, I'd say that in some cases I'm less. Because there's more empathy there for the role. And I saw both sides. We were fortunate to have tremendously good investors with my company. But there were times where I do felt like the investors were trying to run certain functions and get into product strategy or get into, you know, sales execution. That was a level that was just taking up our team's time or getting them in uncomfortable situations. And my job as CEO then was in some ways acting as that buffer. And so I'm trying to remember that and be much more appreciative of the transitions that teams go through and companies go through. So that I just, I'll pick my shots more. And it's, it's really two levels of engagement. One is the first I was talking about where it's sending over opportunities and leads.

• 20:07Speaker 02

  And I try to be very low friction, short text, short emails. We've got a whole BVP funded solutions team that's constantly doing recruiting and marketing and those things for our companies. And so trying to expose a lot of at bats, often directly to the, the sales rep or those things. And then on the board level or the strategic side, it's just trying to be very purposeful. And when I speak or where I share point of view or where I ask for something, knowing that you create some ripple effects from each of those requests and the team's doing follow up on those things. And that team time is the most valuable asset that the company has, far more valuable than cash. And I want to be careful not to steer that in different ways and have unintended impact from any questions or any actions.

• 20:47Harry Stebbings?

  I mean, kind of speaking of the weight of your words there and unintended actions that can occur because of the weight of words often that board members do have. I do want to touch on the element of board memberships. It's something that I'm extremely passionate about now. How have you seen yourself maybe grow and evolve as a board member over the last dozen years, Byron?

• 21:04Speaker 02

  Prep more and speak less. Maybe, you know, a Lewis Alexander Hamilton reference there or something. But when board meetings are able to get materials out in advance, we absolutely do review them internally. I'll usually work with my associate or vice president to go through it, to talk about what do we see as the big issues? And then specifically, what are the couple of things that we want to be able to, to give input on and weigh in on in the board meeting? Kind of above all else. So that if a lot of people are talking in the meeting or we're tight in time or whatever, you know, what are the couple of things that we think are important enough to make sure we cover? And then a lot of other things we can follow up on a call or an email or whatever. And then go into the meeting.

• 21:40Speaker 02

  Is that sort of speak less but try to focus it a little bit more and of course I'm still learning in this role and so there are times where the weekend's jammed and I don't do the proper prep or when I come into the meeting and and not as coordinated as I should be and I'm asking the dumb questions but I do think I've gotten better with that and that's where I continue to push myself and hopefully I continue to learn in that way.

• 22:00Harry Stebbings?

  Now, it's an incredibly unfair question of me to ask, but you've sat on some incredible boards over the last decade. Can I ask, which you sat alongside on a board, did you learn the most from over the last decade?

• 22:12Speaker 02

  Oh, that'd be several of these CEOs. I mean, it's just, it's amazing how much perspective each of these executives brings to the board meeting, but I would say the the Truleo and SendGrid process, both the experiences with those CEOs who have very different businesses, but seeing how they evolved and managed those businesses and then now working with the two of them as a combined company and watching Jeff Lawson in action as he's been steering this has just been mind blowing. It is so impressive to see this early vision coming from the perspective of a developer and what a developer would want to launching this billion dollar revenue platform that is multi-product, multi-geography, pioneered entirely new go-to-market models.

• 22:55Speaker 02

  I'm not nearly as technical as he is and so just observing the product strategy discussions and he's pulled in some of the Bezos, Amazon methods and vertical documents for meeting orientation and trying to think through board alignment and how that's evolved. It's just been a fantastically fun journey and I've learned a lot on the technical side, but also on the management side as Jeff continues to evolve and try to make himself better as a CEO and raise the bar a year in and a year out. And that's one where now being on board several years as a public company, just every day is something new.

• 23:27Harry Stebbings?

  I couldn't agree. It was such a joy to have Samir and Jeff on the show, so I couldn't agree more there. But staying on the board, I've just joined my first institutional board, Byron.

• 23:35Speaker 02

  Congratulations.

• 23:36Harry Stebbings?

  Thank you very much. But what advice would you give me, having made this first step or first move and kind of what do you know now that you wish you'd have known when you joined your first board and maybe would advise me?

• 23:47Speaker 02

  I think it does have to do with the rolling of your sleeves and press. So just spend the time going into the meeting so that you can be aligned on what the issues are. And try to make the discussion as strategic as possible. There will inevitably be an update portion of the meeting where you'll go through the metrics. As you get to the public side, there will of course be the committees and the governance unfortunately takes up more and more of the time. But preserving the time for the strategic stuff is the most important actual use of the boardroom members. And so for private companies, that ratio tends to be the vast majority and the update part is very modest. And when you get to the public side, at least trying to keep that fifty fifty will allow, uh, one, it's a lot more fun. But two, you're actually having more impact on business than doing the road updates and financial functions, which can really be done pretty quickly.

• 24:32Speaker 02

  If there's alignment on the metrics and goals, you can, you can get through that much faster than a lot of companies generally do.

• 24:38Harry Stebbings?

  Well, I mean, you can invoice me later for that advice there, Byron, but I, I do want to finish on, on one final question for the quick fire. And it's, I spoke to Samir before the show and he told me about your Cal rugby coach. So tell me, what made him so extraordinary and are there any lessons that you maybe applied to your life and role today from that experience with him?

• 24:57Speaker 02

  Day in and day out, I constantly look back on Jack Clark and the Cal Rugby Program, absolutely. He's the winningest coach in collegiate sports history. I was fortunate to win four national championships as a player for him all four years. And I learned more about team building and leadership and feedback there than I did in the classrooms. And I still call on that today. I'm on the advisory board. I'm, I'm close with, with Jack and his staff. I literally have a Cal motto printed out in my house, which is this notion of entitled to nothing, grateful for everything. And it's the reminder that we're fortunate by place of birth and by a lot of things that preceded us, but we're entitled to nothing. And every day we need to go out there and make a case for why we should be here and we should be grateful for everything we have from family to professional success.

• 25:41Speaker 02

  And that for me is first and foremost. And when Jack comes and speaks to our CEOs or at events, that resonates deeply. As do the leadership principles of personal and team success that I think every organization in a high performing way need to embody. And if you want to be a champion and whatever you aspire to do, those team lessons are foundational. Essential and essential.

• 26:00Harry Stebbings?

  I love that kind of core strain of gratitude. So no, absolutely. And what takeaways they are. I do want to finish though on the quick fire on Byron. As you know, I say a short statement and then you hit me with your immediate thoughts in 60 seconds or less per one. Are you ready to rock and roll?

• 26:14Speaker 02

  Let's do it.

• 26:15Harry Stebbings?

  Okay, so your favorite book and why? What must I read?

• 26:18Speaker 02

  I'll give you two recent ones. I like all the old business ones, but AI Superpowers by Caifu Lee and Legacy on the New Zealand All Blacks. The first talks about AI in China specifically, two of the macro forces that will totally disrupt tech in the next decade. And then Legacy is about the New Zealand All Blacks, the current reigning world champions in rugby. And it's very much on this team building notion that I was referring to, including Jack Clark and Cal Rugby.

• 26:42Harry Stebbings?

  What moment has served as an inflection point and maybe changed the way you think?

• 26:46Speaker 02

  Being turned down by many venture firms as a CEO and specifically because they didn't believe the software as a service business model would ever make a penny of money. Literally said, we've gone through the Salesforce financials. This was in early 2000s. And we think this business model is completely backwards where you're front loading expenses and back loading costs. For me, that was the left turn, right turn decision. Do I believe this and am I going all in or not? Unfortunately, I committed then and I've ridden this wave now for 19 years.

• 27:14Harry Stebbings?

  Love it. Founders should always be raising. True or false?

• 27:18Speaker 02

  True in the sense that they always need to build relationships with investors, partners, employee candidates, acquirers. That is part of the outbound notion of the job. And you should have relationships with investors well before the round is ever comes together. And a lot of these best companies are raising without doing full formal processes these days as a result.

• 27:38Harry Stebbings?

  Yeah, no, absolutely. They are. What do you make the best venture partnerships?

• 27:42Speaker 02

  Radical trust and transparency in the discussion around the information sharing both ways and the candor. It just takes out so much friction. And then for my personal side, the friendship is a nice kicker. I absolutely believe that a lot of these things are five to 10 year relationships. And it really helps to like the person you're working with and want to spend time with them personally and professionally.

• 28:02Harry Stebbings?

  Now, this one seems ridiculous, given the amount of winners that you have, but I just spoke to Fred at Rainforest before the show. And he said, I'd love to know, has Byron ever made? Missed one. If so, what did he miss? And did it change his thought process?

• 28:14Speaker 02

  Oh, I missed a bunch. In fact, on the Bessemer Venture Partners website, we have an entire anti-portfolio that highlights our crimes of omission. Tesla is the one that is front and center for me. I'm a car geek at heart. I love hardware products and spent a lot of time with them early on and just couldn't see the path to viability at the high-end car in a tough automotive time. So I bought the first car and followed them and worked with them. But that $400 million DOE loan was a game changer for them and I never anticipated that. And missed one of three iconic companies of our era as a result.

• 28:46Harry Stebbings?

  How do you deal with shit hit the fan moments, Byron?

• 28:50Speaker 02

  This is where I think being a founder helps a lot because, boy, I had a lot of them going through a recession and customer cancellations and employee resignations and all of that. And I think our role as board member and advisor there first and foremost is to remind our teams of the big vision and how they just can't overreact to the short-term dynamics. And so a lot of that is frankly about picking them up, dusting them off, and just helping them get back in the game and to find another day. Because you don't need to be told why you were wrong or what a dumb idea it was at that point. You just need to be reminded that 95% of what you're doing, or 51% maybe in some cases, is enough to get to the right outcome and just focus on that.

• 29:26Harry Stebbings?

  And then final one. What's the most recent investment publicly announced that is? And why did you get so excited?

• 29:31Speaker 02

  So the most recent announced one is a small company in Austin, Texas, that people probably haven't heard of yet called ScaleFactor, which I firmly believe will be a household name in the coming years. They're pioneering this category called automated bookkeeping. And the idea is to empower every small business owner to take control of the business and have insights in the business and use artificial intelligence to help power it in a very low-friction way with mobile access and all that. And we said yes there because of the product vision, certainly is extremely unique. But really, the energy and the vision that just emanates from their team across the board and their CEO, Kurt, first and foremost, is just infectious. You walk through that office and you just sense that they are going to conquer the world and you want to be a part of it.

• 30:11Harry Stebbings?

  I absolutely love that and I look forward to it becoming a household name. Byron, as I said, two years has been far too long, but it's been so wonderful to have you back on the show. So thank you so much for joining me today.

• 30:20Speaker 02

  My absolute pleasure, Harry. Keep up the great work and the service for our community and wonderful to talk again.

• 30:27Harry Stebbings?

  What can I say, I told you, he's just such an awesome guy. And if you'd like to see more from Byron, you can find him on Twitter at BDita. Likewise, it'd be great to welcome you behind the scenes here. You can find us at Instagram at HStabbings1996 with two Bs. It really would be great to see you there. But before we leave you today, I'd like to give a big shout out to my friends over at Multiple. Widely regarded as the go-to firm for game-changing companies when it comes to building your brand, crafting your culture, and gearing up your growth. They've worked with breakthrough companies such as WeTransfer, PipeDrive, Mixcloud, Unbabble, Signal, and Kalo. And when we set up stride.vc, they were the first call we made to help us get our story straight. And what makes Multiple really special is their empathy for and experience of the entrepreneurial journey. That's because they've actually been on the frontline themselves, backing, building,

• 31:11Harry Stebbings?

  and growing, and even selling businesses as founders, operators, and investors. So drop them a line at [email protected] with the subject line 20minutevc, or head over to wearmultiple.com and find out more. So if that's the external-facing element covered, what about the internal? Well, then there is Brex, who built the corporate card for startups and who is the fastest company to reach unicorn status in history. Brex founders Henrique and Pedro built a payments business in Brazil but kept getting rejected for a corporate card in the States. So they built Brex with no personal liability, up to 20x higher card limits, and huge rewards like 7x points on Uber, Lyft, 4x on Brex Travel, and 2x on SaaS software. So if you're a VC-backed startup based in the US, see if you qualify for a Brex card

• 31:54Harry Stebbings?

  at brex.com and get card fees waived for life by entering the code HARRY during signup. Finally, another internal element that has to be taken care of, and I doubt you started a business to track financial statements or make cash flow spreadsheets. Well, using Pilot for bookkeeping gives you back the freedom to focus on your business. Every month, your dedicated account manager will send you an accurate, detailed financial report. And Pilot does accrual basis bookkeeping in QuickBooks Online, so you're never locked into a proprietary platform. Plus, you'll work with the same person each month, so you can really rely on them to become an expert in your business. With Pilot, you can say goodbye to exporting CSV files and emailing attachments to a bookkeeper you can never get a hold of. Get your company's books in order and get your time back today. Check them out at pilot.com/20vc.

• 32:39Harry Stebbings?

  That's pilot.com/20vc. As always, I cannot thank you enough for your support. It really does mean so much to me, and I can't wait to bring you a very special episode this coming Friday.