20VC: IA Ventures' Jesse Beyroutey on Game Theory and How It Impacts Investor Mindset, How To Avoid "The Pressure To Deploy" Today In Venture & Why Ownership Is The Single Most Important Parameter When Investing

Jesse Beyroutey is a General Partner @ IA Ventures, one of the top-performing early-stage funds of the last decade. Their incredible portfolio includes the likes of TransferWise, DataDog, Digital Ocean, X.ai and The Trade Desk, just to name a few. As for Jesse, his investments at IA include Digital Ocean, IronClad, TransferWise, Sight Machine and more fantastic companies. Prior to joining the world of venture, Jesse studied Systems Engineering at the University of Pennsylvania. In Today’s Episode You Will Learn: 1.) How Jesse made his way into the world of VC pretty much straight out of University and how that led to his being a GP with IA today? 2.) What is Game Theory? What does it mean to Jesse and how does it impact his investing mindset today? How does Jesse think about and assess startup positioning today? How important is positioning in the early days of the company? How does Jesse think about data as a sustainable moat or not? Does Jesse think in today's excess supply of capital environment that cash alone can be a moat? 3.) How does Jesse and IA think about portfolio construction today? Does Jesse ever feel the "pressure to deploy"? How have IA structured their own fundraises to ensure they never feel that pressure? How important a role does ownership play for Jesse when making an investment? Does Jesse believe ownership is built on first check? 4.) How does Jesse assess his own price sensitivity? How has it changed over the last 8 years? How does Jesse and IA approach both investment decision-making and reserve allocation decisions? How does the lead rely on the rest of the team when making decisions? Why does capital efficiency become a core question when determining reserve allocations? 5.) Why does Jesse feel that the reading to writing ratio that currently exists between founders and investors needs to change? What should the ratio be? How does the relationship between founder and investor change when the investor provides more content? How does Jesse look to avoid news cycles in the week? What works? What does not? What is Jesse's advice for anyone looking to do the same? Items Mentioned In Today’s Show: Jesse’s Fave Book: 7 Powers: The Foundations of Business Strategy Jesse’s Most Recent Investment: Gauntlet As always you can follow Harry, The Twenty Minute VC and Jesse 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?

  Here we go, another 20 Minute VC with me, Harry Stebbings, and I'd love to see you on Instagram at H Stebbings 1996 with two Bs, largely a combination of gym routines and mojitos, hopefully not at the same time, but to our episode today, and I'm thrilled to feature one of the industry's hidden gems, both in terms of funds and partners. And so with that, I'm so excited to welcome Jesse Beiruti. Now Jesse is a partner at IA Ventures, one of the top performing early-stage funds of the last decade. Their incredible portfolio includes the likes of TransferWise, Datadog, Digital Ocean, X.ai, and The Trade Desk, just to name a few. As for Jesse, his investments include Digital Ocean, Ironclad, TransferWise, Site Machine, and many more fantastic companies. And prior to joining the world of venture, Jesse studied systems engineering at the University of Pennsylvania.

• 0:43Harry Stebbings?

  And I do also have to say Jesse's partner, Roger Ehrenberg, who I have been lucky enough to have on the show in the past, writes the most phenomenal blog, my favorite in the world of venture, and you can find out more at infoarbitrage.com. 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. 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,

• 1:24Harry Stebbings?

  building, and growing, and even selling businesses as founders, operators, and investors. So drop them a line at [email protected] with the subject line 20 minute VC, 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 Enrique 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 at brex.com and get card fees

• 2:10Harry Stebbings?

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• 2:55Harry Stebbings?

  But that's quite enough from me. So now, without further ado, I'm so excited to hand over to Jesse Bayroussi, General Partner at IA Ventures.

• 3:07Speaker 01

  You have now arrived at your destination.

• 3:11Harry Stebbings?

  Jesse, I am so excited to have you on the show today. I've heard so many wonderful things from the brilliant Roger, so thank you so much for joining me today, Jesse.

• 3:18Speaker 02

  Thank you so much for having me, Harry. It's wonderful to be here and I'm incredibly impressed to be in the 2,000s of show participants for you. I can only imagine and I'm super impressed with all the work that you've put into this, so thank you for having me.

• 3:33Harry Stebbings?

  Well, that is very kind of you. I'm getting very, very old, but I do want to kick off today with you, Jesse. And so one of the rising stars in venture, so tell me, how did you make your way into what we both know to be the wonderful world of venture? And come to be a GP with IA today?

• 3:46Speaker 02

  I started at IA Ventures about eight years ago and I joined my partners Roger and Brad almost straight out of college at Penn with a brief interlude that had inspired me, which was working on a startup with a few of my closest friends from school. And from that experience and from spending time with a lot of other people starting companies, I realized that I had this absolute love for early-stage companies and that's what led me here.

• 4:13Harry Stebbings?

  Absolutely love that as an entry point. Can I ask, and you mentioned that your love for early-stage companies, it's one that I often get and both Of us being young on entering the industry. What would you say your reasoning behind that real love of that early stage was for you at that time?

• 4:27Speaker 02

  At the time, I realized that there was something incredible about the ability to build a product very early on with very few people and get something that people were using within a matter of days or even hours. That was what inspired me so much about spending all this time in the computer lab at Penn and meeting all these people who were starting companies by just doing some development. And I just thought, wow, what an incredible time where people can come and serve a need that other people on the internet have that they've never met before. Find those people and give them something that they wanted, that they didn't even necessarily know that they wanted. I just found that super inspiring and I found the energy and optimism of early-stage founders also incredibly inspiring.

• 5:11Speaker 02

  I just started spending more and more of my time with them and eventually one thing led to another and that became my life's passion.

• 5:18Harry Stebbings?

  No, I absolutely love it and I can agree with you more there on the optimism, I do have to say. But I want to start today, Jesse, on a topic that when we chatted before about, I realized we've never had it as a discussion topic on the show before. And as you said, 2000 and I'm going to take the opportunity to jump on it. So market game theory, tell me, for those that are maybe wondering what market game theory is, what is it from a nomenclature standpoint to start with?

• 5:39Speaker 02

  Absolutely. So game theory is the study of what makes a set of moves dominant or strictly dominant. And those are the two terms that I spend my time thinking about. When there's an available set of opportunities that's clear. So in any game, if you were playing, say, a video game or a board game, there would be a set of opportunities clear for every participant. And you can study what's the right set of moves that leads one player systematically or probabilistically to dominate over another one. So market game theory is the application of that to capitalism, to financial markets,

• 6:18Speaker 02

  to an economy, which is just an instance of a game that happens to have a massive parameter space and many opportunities available and many participants.

• 6:28Harry Stebbings?

  I mean, quite actually mind-boggling when you By the infinite opportunity set that's in front of you when you apply it to, as you said, kind of the wider macro society. How do you think about it in terms of kind of impacting your mentality on engaging or not with opportunities today? And how you engage as a venture investor?

• 6:43Speaker 02

  Yeah, so the interesting thing to me about game theory is that it allows you to, even sometimes in a closed form, to analyze the opportunity and strategy available to a company from any current position. And from the early stage, the things that are particularly of interest to us are the way that the company positions itself. So its message to its customers about what it will and won't do always. The guarantees that it provides are generally the most strong form of positioning that we observe, as well as the early resources that the companies avail themselves of and can corner

• 7:23Speaker 02

  to ensure that the company is the only one and can exclude others either by decree or through a practical barrier from using the same resource. And I love the fact that at the early stage, you get to think about that when you're thinking about building a market dominant company in some given space. What positioning can the company occupy in people's minds? It's differentiated and that is taking the best possible frame from customers' perspective and therefore dominant. And similarly, what perspective can you take with respect to, you know, we have a long history at I A Ventures with data assets. So can you get access to a data asset that no one else has?

• 8:04Speaker 02

  But also commonly, people think about this with respect to even founders and employees. Can we line up all of the top experts in this particular domain? So that we're the only ones that have access to them. Just being able to think through those things at the early stage, we see as a key indicator of the company starting off with the most possible advantage. And that's what we're in the business of.

• 8:28Harry Stebbings?

  Can I ask, I had a guest on the show the other day that said, really, with the strength of Apple, Amazon, Google, Facebook, anyone who feels they have any form of defensibility, be it cash or resources themselves, team and engineering, algorithms, access to data, they're actually being quite naive. There is no form of defensibility today, except the blind spots in which incumbents aren't going. Is that fair or is that slightly glib and short sighted, do you think?

• 8:53Speaker 02

  I think that that's fair in a whole host of markets. And so I think of that as a strong default. And I might compare that sentiment to the strong defaults in the 90s and early 2000s that you can't compete with Microsoft. And that's a strong default because there's a huge truth to it. But it's also possible to attack those particular sources of advantage from flanks and from areas of specificity that are too small for those extremely large companies to go after. And that's usually where we see as a fruitful place to start a company today.

• 9:30Harry Stebbings?

  No, absolutely. You also spoke about market dominance there. I'm really interested because I had Henry Ward from Carter on the show talk about the benefits of monopolist markets where you can really own the market and have super high penetration within the customer segments. I'm really interested, especially I saw a tweet the other day that said when a VC tells you that the market is too small, they're essentially saying, I don't believe in the founder to move into adjacent segments. Do you think that's a fair assessment? I actually do. I've invested in very small markets with the belief that the founder will leverage that platform to move into adjacent markets. Do you think that's fair? And how do you think about size of market when thinking about requirement to dominate market?

• 10:12Speaker 02

  Well, there are several really interesting questions there. And I love that you spoke with Henry at Carter. We're huge fans and users of Carter. And Carter is a phenomenal example that we reference often. So to start, I would say generally, the opportunity to dominate a market is inversely correlated with its scale. And I say generally because there are always exceptions to this. But you can look at a smaller scale market and especially a smaller scale market today that has the opportunity to grow a lot. Generally, there's an opportunity to dominate that market where, say, a market that has a ton of competition, the opportunities for dominance or accruing power in that market have usually already been taken up.

• 10:55Speaker 02

  As far as investing in a founder with the belief that they'll move into adjacent markets, I tend not to.

• 11:03Speaker 02

  Invest on that thesis simply because it's a matter of probability. Achieving dominance in one market generally does not lead to enough extra advantage in the next market to then dominate that one too. So you're compounding probabilities more than anything else. So I have to be personally excited enough about the initial market the company is working on to feel that if they just worked on this, it would be an incredibly compelling opportunity. And we can talk about adjacent markets later on. That's my philosophy about market adjacencies. I will say that we're not believers that it's impossible to dominate a market

• 11:44Speaker 02

  simply because of the existence of competitors that have a lot of money or that have a lot of engineers as companies like Facebook and Apple and Google and so on do. So we're not so afraid of that, but it creates a strong default that makes us have to spend time thinking about what are the angles of attack that allow you to achieve some power from the position of an early-stage company.

• 12:06Harry Stebbings?

  Absolutely. I do agree with you there in terms of being aware of that. I do have to also, you mentioned a couple of the moats earlier, be it data, be it kind of engineering resources. In terms of actually capital moats, we're obviously seeing the likes of SoftBank stay deployed, large and larger sums never. Can capital itself ever be a moat itself?

• 12:24Speaker 02

  That's an interesting question. I think that access to less expensive capital is one example of something like an economy of scale. So I might compare it to other economies of scale, right? It's at the end of the day about how much does access to capital cost you? And so having a firm like SoftBank back your company means that you have access to cheap capital and can count on that for an extended period of time. That being said, I do think it's really critical to go one step further in the analysis, which is, well, is capital a binding constraint in your market opportunity? And I think having a ton of capital can also cause a form of just sort of lazy thinking

• 13:08Speaker 02

  where, for example, companies that have incredibly high access to cheap capital and Not enough discipline or first principles thinking might end up choosing to vertically integrate or to expand internationally very, very quickly on the theory that somehow adding scale with capital equals power. And while that can be the case, it is not inherently the case. So it requires further analysis in order to determine if that's the right strategy.

• 13:38Harry Stebbings?

  Listen, I absolutely love that question and I totally agree with you in terms of some form of capital constraints enforcing a lot more creativity most often. I do want to ask, one thing I always struggle on is actually passing on opportunities. It's always very difficult to get it the right way and there's different kind of temperaments that one deals with and addresses. How have you found is the best way to pass on opportunities, Jesse? Advise me.

• 13:58Speaker 02

  Yeah, it's a great question about how to give feedback to an entrepreneur who's spent time pitching you their business and explaining it to you. I generally think of several different pieces of feedback that I might give. And I see this as a critical thing in every conversation is I first want to establish whether or not this is a business with the current level of information that the founder has, that they will be well-served raising venture capital. And I engage with that question because I find that so few actually do. It's sort of by virtue of the venture capital asset class present podcast included in this,

• 14:35Speaker 02

  doing such a great job of talking about entrepreneurship and raising venture capital as being one in the same implicitly. I think a lot of founders go out and raise venture capital with the belief that that indicates that their company is worth building. And I think the truth is there are a ton of companies that are worth building that are not necessarily with the present level of information that the founder has, a great high volatility upside call option that makes it a good idea to raise a bunch of capital and to scale it. So the most common form of feedback that I give that I find is rather different is simply,

• 15:15Speaker 02

  hey, I don't think that there's enough information yet to establish that this company would be well-served raising venture capital. And I feel really Comfortable going through the analysis of when and why to with with a founder in hopes that in some cases it helps them decide to gain some more information before making that decision, which is a rather serious and one way decision. Once you start to do it. That's the first. The second thing that I really engage with by virtue of my personal investment model, which is I don't make that many investments. We do one, two, three, each of the three of us at I have entries each year. So we don't invest very often. And for me, I have to feel very strongly about the thing that the company is working

• 15:59Speaker 02

  on and its path to power. So my most common second form of feedback is simply, I don't think that this is the sort of company I could imagine myself working on for long enough, and I won't be a great partner to you. Those are by far the most common reasons why I wouldn't pursue an investment after taking the time to meet with the founder. And then in terms of giving them feedback on their business, I usually just try to provide at least one thing that I think will be helpful for them to think about. But I never really think about it as a reason why the company is quote unquote right or wrong, which I think is often the cause of getting into some of this negative feedback cycle. And I just don't find that that's really constructive.

• 16:41Harry Stebbings?

  No, I mean, I think you should send me an invoice for that advice. But I do want to dig in on a couple of elements that you said there. You said that about the low cadence of checks that you guys write at IA. We're very much aligned to you with stride. I do have to ask though, I just got off the phone earlier this morning with a GP at another fund who said, Harry, there's nothing like the pressure to deploy. You'll learn that soon. Now, that made me quite concerned. Do you ever feel the pressures to deploy, given maybe our lower cadence of kind of jet writing compared to higher frequency funds? And do you see that in market?

• 17:11Speaker 02

  So we've done a lot of work at IA Ventures to try to create and maintain our independence. And by independence, I mean, our ability to make a fully independent decision about whether to pursue an investment, when to do so, and to really just not be subject to a lot of these sort of forces. So one intentional output of that high level Decision is we don't raise funds on a set and periodic cycle. And we've intentionally decided not to grow our fund size or assets under management, which is one variant of the pressure to deploy capital. If you get into this sort of business cycle of raising more and more funds on a frequent

• 17:53Speaker 02

  cycle, that creates some of this baseline pressure to be deploying that capital. So we tried to avoid that sort of pressure from the outset. And that helps us to not feel that specific sort of pressure. So I would say I don't feel it. People frequently ask me, what's your investment pace? And my answer is always, I actually don't even know. It's not a thing that we talk about or manage to at IA Ventures. So it would take me work to go through and figure it out and count up dates or something like that. And I like it that way personally. I think if I haven't found an investment in a while that excited me. And there's always a bit of self-reflection about why that's occurring that the amount

• 18:37Speaker 02

  of time elapsed can bring up, but it's not an exogenous pressure to deploy capital.

• 18:43Harry Stebbings?

  Can I ask, when you do find an opportunity that you are super excited by, I'm probably one of the biggest nerds when it comes to kind of decision-making processes. For you internally, many reasons I'm single, that's one of them. For you at IA, tell me, what does that internal decision-making process look like between you, Roger and Brad? And how do you guys think about kind of optimizing that?

• 19:03Speaker 02

  Yeah, it's a great question. And again, independence and accountability is something we've solved for from the very beginning. At this point, by virtue of Roger, Brad and I having meet for with my inclusion, eight years, the two of them together, 10 years of experience making decisions together. And I'm standing right now as we're speaking in the bullpen of our office. The three of us don't have individual offices. We physically stand, we have standing desks, we physically stand next to each other in the office. We have a little lounge where we sit down and talk to each other. We're in New York, we have lunch together every day and have been doing that for the eight years that I've been here. So as a Result of that, we spend a whole lot of time together and talk very frequently.

• 19:48Speaker 02

  And we know and understand and respect each other's opinions very deeply. We each think very differently about the same sort of opportunities. The combination of all of those things leads us to a decision-making process that can be extremely quick because we're spending so much time together and iterating together so quickly. But also where our model is that each one of us will lead an investment. And the person leading the investment is the ultimate decision-maker about whether or not we're going to pursue the investment. But in parallel, all of our investments are unanimous. So we don't do a voting thing. I say unanimous in the sense that all of our investments are things that we're all excited about by the time that we're making the investment.

• 20:33Speaker 02

  And the lead for the investment relies on the non-leads to help think through all of the reasons why this might not work, as well as all of the reasons in a generative way why it will work and what would make it really great, what would make it a powerful company. That a combination of feedback internally and a deep level of trust and understanding between us, and then spending as much time as we possibly can, getting points of view from others and synthesizing them, leads us to decisions that are ultimately independent and our own unanimous between the three of us, but with strong individual accountability for the person leading the investment.

• 21:12Harry Stebbings?

  No, I do really like that individuality and process there. I do have to ask, when you think about the insertion point and the ownership that you get on insertion, we're big believers that ownership's built on first check and actually it's very difficult to kind of build over time with rounds. I'm really interested, for you with IA and especially in New York and the US market, how do you think about when is the right time to build ownership? And is it first check? Is it round by round? What are your thoughts?

• 21:36Speaker 02

  I think it's a great question. And for a venture investment model, ownership is one of the most important parameters, if not the single one. And we definitely agree that building ownership early is by and large the only available strategy for having outsized ownership at exit. Which is why we prefer to lead investments at the seed stage or be sometimes even the first institutional capital in the company. That being said, we find that the follow-on decisions that come after our initial investment by the amount of capital involved are the most important decisions that we make. So even if we've built good ownership at the seed stage with our initial investment, we still need to make a strong decision about whether

• 22:19Speaker 02

  or not the company has a fundamentally a capital efficient model. That's the most important thing that we look for indication of by the time that it's raising the the series A or series B. And when we see one of those, we have often chosen to further build our ownership level in the company, even at the higher prices that come with series A and series B success because of that incredible capital efficiency that some of these companies demonstrate. But at the core, we are in vehement agreement that you build your ownership in your in your first investment.

• 22:51Harry Stebbings?

  I'm too interested. You teed me on that with pricing across round. In terms of just price sensitivity more generally, how would you assess your own price sensitivity stage, Essie, do you think?

• 23:01Speaker 02

  That's a really interesting question that I've never attempted to measure or benchmark. So I couldn't give you a quantitative measure of my price sensitivity or how it's trended over time. I would say it's probably exactly the same as it's ever been. And it's more the group of the three of us that ends up producing a consistent and more aggressive stance toward making investments in companies that are great while also keeping an eye on making a great investment in that company. Because I think we can all agree, there's a separate and independent factor of this is an intrinsically great company, and this is a great investment in that company, where the latter requires taking into consideration,

• 23:45Speaker 02

  effectively, options valuation. You're making a purchase of an option effectively when you're you're making an early stage investment. And I have the benefit of working with a former head of derivatives as one of my partners. So that's quite helpful for thinking a lot about option map. And so I'd say Unbalanced between the three of us, Roger is often the one that has the most clarity about whether or not a price is worth paying. Once we've established whether or not a company is a great company, intrinsically a powerful company that can exhibit dominance like we talked about before. But I guess I'd say we've pretty much kept consistent over the years about price.

• 24:25Harry Stebbings?

  Yeah, listen, I'm totally with you in terms of consistency around price and maybe a touch more discipline, absolutely. I do want to take a different tack there and discuss something that we've discussed before. And I thought, again, it was super interesting of the three topics you suggested, two we'd never discussed on the show before. So in its content and the response to consumption ratio. And so you spoke about writing versus reading ratio to me before in terms of founder to VC relationship. What did you mean by this kind of writing versus reading ratio in the founder VC relationship, Jesse?

• 24:56Speaker 02

  Absolutely. It's one of the things that I feel most passionate about. So founders, especially at the very early stage of the company, are, as I described before, kind of feeling around in the dark. And that can be an incredibly lonely process, of course, but also that can be a process that involves a lot of conflicting observations. So even if you're a great empiricist as a founder, you'll be getting conflicting feedback and customer responses and things like that. Nonstop in the early days of the company. I also would note that in the founder VC relationship at that early stage especially, the founder is going to be producing a whole lot of content.

• 25:37Speaker 02

  And that can come in the form of producing a board deck or just producing thoughts about strategy or people that they might hire, cultural elements that they're creating or the product that they're creating. And a lot of that gets shared with VCs and read where the VC response is, I've read it and yes, I agree. Or something at the very high level. And something that I started doing early on was trying to match the amount of content that's been generated. Maybe not in one to one proportion, but much closer to the amount of content that's been created. Is my level of reflection on that content. So I tried to respond to everything from early on with, actually, I think the first company

• 26:20Speaker 02

  that I had the pleasure of working on at IA called Transferwise started doing this and we ended up doing it with a lot of our other portfolio companies. We made our board decks into a Google document and that's something that people throw around as an idea very often, but when we actually implemented it, my strategy was to actually think through and respond to pretty much everything. And I find that that actually causes me to understand the company better and also to deepen my relationship with the founders because I'm effectively writing them letters on my beliefs about things quite often.

• 26:56Harry Stebbings?

  No, absolutely. And I'm sure kind of the level of your relationship also just increases with the increased engagement that you get from really being diligent about that level of response. I do want to discuss a different type of content though with you, Jesse, because the other type that VCs obsess over if you go on Twitter, which I never do, obviously, I spend the majority of my life on Twitter, but it's the element of staying in news cycles. How do you think about your ability to maintain this kind of obsessive control over news cycles and be on top of it and how important is that for you?

• 27:24Speaker 02

  Yeah, that's a fascinating question for me and something that I've personally experimented with a lot over the years. I personally find that the news cycle is exhausting for me and perhaps it's a result of being an introvert or something like that. So I have very low tolerance for consuming a lot of information and it triggers for me the absolute worst sort of behavior loops where now I have to finish reading the internet and that takes a whole lot of time. So instead I've worked on really limiting my media consumption and I'll tell you where I've landed after experimenting a lot this year. First of all, I deleted off of my phone every app or thing that I would unconsciously

• 28:09Speaker 02

  open and refresh and that included every bit of social media and news platforms. So I don't read them on my phone and further I stopped reading them during the week. So I set up, I use the app, I think it's called Self Control. My Mac and it blocks off most of the websites, news sites, Twitter, everything that I find I would be mindlessly opening and fall into some sort of trap on the internet with. And instead I relegated trying to pick the absolute best things to read for my Saturday or Sunday. And I find that that cadence of about once a week works extremely well for me where I can keep up on things, but I don't feel like I'm on the treadmill.

• 28:51Speaker 02

  And that creates a lot of space in my life for other things like writing back to founders like we're talking about.

• 28:58Harry Stebbings?

  My word, Jesse, I wish I had your discipline. I'm probably the worst in terms of discipline around Twitter and social, so I'm very jealous of that. But I do want to move into my favorite element, Jesse, which is the quickfire round. So essentially I say a short statement, you give me your immediate thoughts in about sixty seconds. It's an incredibly pressurized environment. Are you ready to dive in?

• 29:16Speaker 02

  Count me as ready.

• 29:17Harry Stebbings?

  So I'm on a flight to New York and I need a book. What is the favorite book and why?

• 29:22Speaker 02

  I would say my most interesting book is with respect to business, this book called Seven Powers.

• 29:29Harry Stebbings?

  Why?

• 29:29Speaker 02

  The reason is because it considers all of the factors that I was talking about around how to create dominance and power for a company that can be sustained over a long period of time.

• 29:39Harry Stebbings?

  How have you seen yourself change as an investor over the eight years?

• 29:43Speaker 02

  I have gotten much clearer on what I want to see in a company and in particular on how strongly I feel about the company making strong guarantees to its customers.

• 29:56Harry Stebbings?

  What do you believe that most around you disbelieve, Jesse?

• 29:59Speaker 02

  I definitely believe that keeping up with the news and news cycle is more of a form of entertainment than a form of productivity.

• 30:06Harry Stebbings?

  What's the biggest miss for you? This is quite a painful one. What's the biggest miss? And why did you say no?

• 30:12Speaker 02

  I was just talking about this yesterday. The company Plaid, I would count as one of my absolute biggest misses. And the mistake that I made was I looked at the product that they were thinking about building in the very beginning, which was consumer financial management and playing with location at the time app and didn't think about the infrastructure that they built underneath it.

• 30:34Harry Stebbings?

  No, I see. I don't think that's a miss. I had this argument yesterday with my partner, Pierre, and I was saying that was a miss that we potentially made. And I was claiming that it wasn't a miss because it was pitched a completely different product. And I totally get you in terms of being frustrated, but for me, I would take a different stance. Maybe I'm being naive and tricking myself. Tell me, I've just joined my first board, Jesse. What advice would you give me?

• 30:55Speaker 02

  I would say spend time writing as much as you spend time reading. And that will cause you to ramp up as a board member and understand and be effective at knowing what the company does much faster than not. Essentially, do your homework. Most people don't.

• 31:12Harry Stebbings?

  That's interesting. What would you most like to change in the world of tech in the valley today, Jesse?

• 31:16Speaker 02

  I would most like to change the way that people raise capital and to make raising capital not the focus of building their company.

• 31:26Harry Stebbings?

  Final one. What's the most recent publicly announced investment for you? And why did you get so excited?

• 31:31Speaker 02

  I invested in a company called Gauntlet. It was the first investment that I've personally made after spending a whole lot of time around financial services in the crypto world. And I got so excited about it primarily because it was started by a good, close, personal friend of mine, Tarun, who is, first of all, one of the most brilliant individuals I've ever met in my life. But beyond that, he was an expert in simulation and has applied simulation to everything from physics to financial markets, to proteins and chemistry. And I saw him applying something that he knew everything about to a domain that most deeply needed simulation

• 32:15Speaker 02

  and in particular agent-based simulation, which was enabling natural demand for crypto assets. Today, most demand for crypto assets is speculative. And what makes it viable for natural demand, people who would actually be using the crypto asset for some sort of productive activity, is primarily a strong guarantee, like we were talking about before, that would make it possible for them not to fear losing value using something that would be useful to them, as some you. Utility and I saw this as a critical enabler of that and of adoption of crypto assets. So it just so excited me to get to work with a brilliant and close personal friend, working on exactly the perfect thing for him, an enabler of a massive market.

• 32:58Harry Stebbings?

  Jesse, as I said, I'd heard so many great things, both from Brad and from Roger. So I'm so thrilled we got to do this and thank you so much for joining me today.

• 33:06Speaker 02

  I deeply appreciated your thoughtful questions, Harry, and really thank you so much for including me on the podcast.

• 33:15Harry Stebbings?

  I mean, such a fantastic guest to have on the show and I couldn't be a bigger fan of all Brad, Jesse and Roger R. Building with IA. And if you'd like to see more from us behind the scenes, you can on Instagram at H Stebbings 1996 with two Bs. It'd be great to see you there. Likewise, if you'd like to see more from Jesse, which is a must, you can find him on Twitter at BeRuti. 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.

• 33:59Harry Stebbings?

  That's because they've actually been on the frontline themselves, backing, building and growing, and even selling businesses as founders, operators and investors. So drop them a line at [email protected] with the subject line 20 Minute VC 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 Enrique 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 20 times 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,

• 34:43Harry Stebbings?

  see if you qualify for a Brex card 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.

• 35:27Harry Stebbings?

  Check them out at pilot.com/20vc. That's pilot.com/20vc.

• 35:33Speaker 01

  As always, I cannot thank you enough for tuning in and I can't wait to bring you an exceptional episode this coming Friday.