Pod Insights The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 20VC: Insight Managing Director, Deven Parekh on The Current Funding Mania, Compression of Round Timelines, Fund Deployment Speeds Increasing & How To Think Through Price and Time Allocation Across the Portfolio About this episode Deven Parekh is a Managing Director at Insight Partners, one of the leading investing franchises of the last 25 years with $30Bn+ in capital commitments, 400+ primary investments and over 200 portfolio acquisitions. Deven himself has made more than 90 investments since joining in 2000 including in the likes of Twitter, Alibaba, JD.com, Chargebee and Automattic (WordPress) to name a few. Deven also sits on the boards of Checkout.com, Calm, Saks.com, Optimizely and 1stDibs, again naming a few. If that was not enough, Deven also serves on the Board of the Carnegie Endowment for International Peace and the Board of the Tisch New York MS Research Center. As a result of his investing success, Deven has been named on Forbes Midas List 5 time and has been selected as a Top 100 Venture Capitalist by CB Insights 4 times. In Today’s Episode with Deven Parekh You Will Learn: 1.) How Deven made his way into the world of venture and how that led to his becoming a Managing Director @ Insight, way back in 2000? 2.) How does Deven analyse the current fundraising mania? Does portfolio discipline and temporal diversification matter anymore? How has Deven and Insight seen the velocity of fundraises change over the years? What can Deven and Insight do to get compress their decision-making timeliness with the compression of fundraising timelines? 3.) How does Deven assess his relationship to price and price sensitivity? What have been some core lessons for Deven when comparing deals that they did which were "cheap" vs "expensive"? How do Insight think about required levels of ownership today? Does Deven believe it is possible to build ownership over time? What is required to do so? What are the challenges? 4.) How would Deven describe his style of board membership today? How has it changed over time? What advice does Deven have for younger board members scaling into the role? How does Deven think about his time allocation across the portfolio? What is the optimal? How does this differ from reality? Why do your winners never need you? 5.) How does Deven evaluate his own insecurities and self-doubt today? In what way have these changed over time? How does Deven analyse the "weight of his words" within Insight? How does Insight structure the internal decision-making process to ensure that everyone's voice is heard? In what ways can firms foster that security for young partners to feel they can bring anything to the table? Item’s Mentioned In Today’s Episode with Deven Parekh Deven's Favourite Book: What We Know About Climate Change (The MIT Press), Draft No. 4: On the Writing Process Deven’s Most Recent Investment: TetraScience As always you can follow Harry and The Twenty Minute VC on Twitter here!
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Harry Stebbings? We are back. Welcome to 20 VC with me, Harry Stebbings. And what a show we have for you today. In the hot seat, one of the biggest capital deployers in the market with over 30 billion in capital commitments and over 400 portfolio companies. They are one of the leading investing franchises in the last 25 years. And so with that, I'm thrilled to welcome Devon Parry, Managing Director at Insight Partners, where Devon himself has made more than 90 investments, including in the likes of, check this out, Twitter, Alibaba, JD.com, Chargebee, Vinted and Automattic, the makers of WordPress, to name a few. Devon also sits on the boards of Checkout, where we had Guillaume on the show just last month, Calm, Sax.com, Optimizely and First Dibs, again to name a few. And if that wasn't enough, Devon also sits on the boards of the Carnegie Endowment for International Peace,
0:44 Harry Stebbings? and one that's very close to my heart, in the board of the Tisch New York MS Research Centre, with my mum obviously having multiple cirrhosis, really meaningful one for me then. As a result of his investing success, Devon's also been named on the Forbes Midas List no less than five times. And I do want to say a huge thank you to Guillaume at Checkout, Jeff Lieberman and Thomas at Vinted, for some amazing question suggestions today, really did make such a difference. But before we dive into the show today, did you know that more than 80% of US public stock is owned by just 10% of Americans? This divide is even greater in the private markets. Carter makes it as easy to issue equity to your employees as it is to issue payroll, and for employees, as easy to accept it too. More than 16,000 companies issue equity to their employees through Carter. Whether you're just getting started or getting ready to go public, the team at Carter can help.
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2:13 Harry Stebbings? They help VCs form and manage funds, make investments and handle the myriad of issues that arise throughout a fund's lifetime. So to learn more about the number one most active law firm representing VC-backed companies going public, head over to coolie.com and also check out cooliego.com. But enough of me, so now I'm thrilled to welcome Devon Parry, Managing Director at Insight Partners.
2:39 Speaker 01 You have now arrived at your destination.
2:42 Harry Stebbings? Devon, this is such a joy to do. The last time we met, we were in London. I'm sad we can't be in person, but thank you so much for joining me today.
2:48 Speaker 02 Thank you. I think you were drinking an espresso martini, if I remember correctly. So I hope you're still enjoying those.
2:53 Harry Stebbings? You have a great memory. And yeah, I mean, sadly, I'm more on espressos these days, but a totally good memory. But I do want to start, you know, you joined Insight over twenty one years ago. Talk to me, how did you make your way into the world of kind of venture and finance? And how did you come to be at Insight first? Let's start with some context.
3:09 Speaker 02 Well, yeah, no, this is not where I expected to be. I mean, I was a science geek in high school, went to the International Science Fair, went to Penn, was studying biochemistry. And like what happens a lot, serendipity happens. And I had a bunch of roommates that were economics majors and said, well, I guess I should take a class in economics. So I was doing research at the medical school at Penn while I was taking a class in econ. I really enjoyed the econ class. And so while I stuck with biochemistry as my major, I got a job on Wall Street after my freshman year and really liked that. I came back my sophomore year and went back to science and I kept kind of going back and forth. And then I had to make a decision and I decided I was going to do both. I was going to study economics and biochemistry. And then after, I think a semester, I took seven classes to try to meet the requirements for both. I decided that probably wasn't such a great idea.
3:53 Speaker 02 I had to make a decision and people said, well, how did you decide to do economics? Which is what I decided to do. I think honestly, it was impatience, which is I didn't see myself in school for how long it was going to take to be a doctor. Four years of college, four years of medical school residency. And I figured, well, if I go into business, I can start quickly. And I wish I could give a better answer, but I really do believe it was my impatience that led me to end up majoring in economics. And I went to Blackstone out of college and then I had an opportunity. To join a merchant banking boutique, what was then called at the time, Berens and Manellen Company, which was founded by the former co-heads of merchant banking in Merrill Lynch. A few years in, they decided that they want to do something in tech. They brought a few people on and effectively what our role was going to be was to help them raise a fund and we're going to invest in technology.
4:37 Speaker 02 That person really was Jeff Waring and Jerry Murdock, who ended up being the founders of Insight. Jeff and Jerry quickly figured out that Berens and Manella wasn't really going to add a lot of value in a tech fund and they decided to go off on their own. I built a good relationship with them and had worked on a few deals with them and they said, why don't you join us? I, thinking I was a hot shot vice president, you know, at the age of 25 and they were two people without a fund, didn't seem like a really good decision. So I decided, no, I think I'm going to stay, but you guys should go do this, which they did. And thankfully, we stayed in touch and Jeff and I had lunch in 1999. He was like, well, we're about to raise our first institutional fund. Maybe you should join us now. And that's when I joined. That's how I got to Insight.
5:15 Harry Stebbings? I mean, I absolutely love it. And what a 21 years it has been. I do want to ask it because, you know, I've never seen a macro crash. We've had the most wonderful bull market for the last however many years. You know, you've seen two very prominently, you know, one very close after you were joining Insight and then obviously in 2008. How did seeing those crashes impact your investing mentality stage, you think?
5:34 Speaker 02 And interestingly, there's been a third that we all just lived through, which is COVID, which was an economic effect, even if we didn't see it in the stock market. If you look at those three, I think they were very, very different. Back in 1999, you had high stock market valuations, but you had a lot of companies that weren't really companies. You know, 2000, while you had a massive contraction, a lot of the contraction was businesses didn't really have a model. And when the tide came in, it was clear they didn't have a model. And so you saw a lot of those companies never make it. 2008, you saw a very significant economic contraction, but you had companies that were real companies. And while they had to make radical changes in their business and cut expenses and do all those things, generally what you find is software were still pretty resilient and it kind of came back. And then the last one, which was in some ways the most interesting one, which we all got,
6:18 Speaker 02 certainly I and others got pretty wrong, was COVID, where we all met with our LPs. We said, you know, we're probably not going to deploy any capital. Valuations are going to go down dramatically. Get ready for probably our worst performance. A really long time and of course none of that came true. And I think that one of the things that many of us learned through that is software, even though we're obviously big believers in the software model, it turns out that it's even better than we thought it was, that it was even more resilient than we thought it was. And that COVID accelerated obviously the digital transformation trends that have been going on for a really, really long time. So I kind of come out of this and the big picture that I take out of those three different economic dislocations is that when you have real companies, which as I said in 1999, 2000, you had less real companies. The software model is incredibly resilient.
7:02 Speaker 02 I feel better about that, having been through those three periods than I probably did before.
7:06 Harry Stebbings? I totally agree with you in those respects and especially in terms of the resiliency of the software model. I think, you know, challenges, everyone is now seeing it from big macro funds to crossover funds. And the venture world has changed so much in the last year alone. You know, we've seen Tiger deploy 5 billion in three months, which is, I mean, blimey, it's faster than a 20 minute VC episode. And so my question to you is like, when you look at the current landscape, how do you, with your insight, how do you analyze the current kind of mania that we see in the market?
7:35 Speaker 02 Well, a couple of things. One, let's step back to the highest level and think about the macro. And I think a lot of people are of the same view that I think I just shared, which is that the software model is incredibly resilient. Even with the amount of growth we've had over the last 10 or 20 years, you know, only 20% of loads, as an example, are in the cloud, right? So there's still a long way to go. And I think people see another 10 to 20 years of growth. Two, I think growth has actually accelerated. If you look at our kind of median growth rate in our funds, you know, fund five, fund six, fund seven, fund eight, as you get to each successive fund, the median growth rate is higher. And that's with bigger funds. And so I think people are seeing the rate of acceleration increase. They're seeing the digital transformation trends are happening even faster and the rate of innovation is really faster.
8:18 Speaker 02 So I think generally when it comes to, because really your question, when it comes down to is really a question about the valuation world. We have a line that we use internally is that we never overpay, companies miss their numbers. What it really is saying, if we're right on our growth underwriting, price is not really the problem because it's amazing the power of compounding. If you take, and I'm going to use low numbers, but if you take a 10% growth rate over 15 Years, the company six X's. If you take a 15% growth a year over the same period of time, the company 16 X's. And generally in our spaces, we're talking about companies that are growing at 50, 60, 70%. So I think that what we've seen over the last three or four years is that companies have generally been able to meet or exceed our growth expectations. And if they can continue to do that, valuations while they've gone up, you can still justify them.
9:01 Harry Stebbings? They have over the years. I guess my question is, we're seeing it now like never before. Where I'm quite often seeing five to 10 million ARR companies be a billion five in valuation. And I'm just scratching my head going, I feasibly, I don't want to be pessimistic. I want to see the brilliance, but I can't see this growing into the valuation at the rate it needs to. Do you think we are going to see this kind of dislocation in the next few years? Or do you think actually they will grow into it?
9:27 Speaker 02 Look, I think, by the way, I think there was a company we were just talking about internally this week that we're looking at that I think has four million of ARR, they went for one and a half billion dollar valuation with well-known funds. Look, I think that every one of those deals is going to work, no. But the converse is also true. Like when we do our analysis of the deals that worked and the deals that didn't work, we often find is when we did something that we thought was cheap, those didn't work particularly well either. And I think that where we've generally had misses, they've been more because we said no on valuation and the company actually executed incredibly well at a very, very large market. So I'm not going to sit here and tell you that every company that raises money at a one and a half billion dollar valuation of four million of ARR is going to work, but you're going to have a subset that are definitely going to work. Our job is to make sure that we're getting in the right ones.
10:10 Speaker 02 And the ones that we're paying up for are the ones where our long-term growth underwriting is correct. And we won't always be correct, obviously, but we need to be correct enough.
10:18 Harry Stebbings? Can I ask, really interesting one. I had a chat yesterday with one of the best funds in the world. And they said, the way that they determine ultimate success is how much market share of unicorn companies do they have? So of the total available market of unicorn companies, they want to have north of 25% in their portfolios. How do you ultimately define like insight and your success? Is that one of those kind of meta questions, which is the guiding North Star?
10:39 Speaker 02 Look, ultimately, obviously, we measure ourselves by what our LPs measure us by, which is by having good returns, which we've been fortunate enough to have had. But what the person you spoke to yesterday said is another way. Saying the same thing, meaning if you actually have a high market share in kind of unicorn companies, which by the way, I don't think we do. And that's why I think our market opportunity is so large, which is that our market share in unicorn companies isn't that high relative to what I think it could be. In many cases, companies that we looked at and decided not to pursue, which means we have to get better as a firm on how we get comfortable with deals like that. But I think those things are related, right? So how do you get the best returns in this space? It's by being in the best companies. And when you're in the best companies, price generally didn't end up really mattering that much. Of course, you'd always rather own something cheaper. But generally, there's a clearing price.
11:22 Speaker 02 And the decision point isn't whether you'd like to do the deal at a lower price. Of course, you'd rather do the deal at the lower price, but we're not in a market where that's possible. I think the bigger challenge today, to be honest with you, Harry, is less around price. It's more on how quickly decisions are having to get made. And I think that, I think, might have, you know, negative implications, not just for investors, but also for founders. Because these deals are marriages. You're in these companies with people for a long period of time. I'm more troubled by having to not necessarily pay a price. I'm more troubled by having to make that decision over a weekend or in three days without having spent a meaningful amount of time. And even if that time's not in person, oftentimes you're seeing these decisions get made after a half hour, an hour Zoom. That concerns me more because I think we all feel it at every stage.
12:05 Speaker 02 I don't think that matters whether you're at seed or you're at pre-IPO round. Those decisions are getting made really, really quickly. And I think in some ways, at an earlier stage, it's even more important to spend that time because you're really betting on the person. You're not betting on a set of financial metrics, which we can do in a later-stage company.
12:19 Harry Stebbings? You know, when you think about that kind of compression in terms of timeframe and applied across the portfolio, I was always taught, and I'm a student of venture, temporal diversification is important and the benefits of it. It seems like that's kind of been thrown out the window. How do you think about temporal diversification, the benefits of it, and whether it's still such an important factor today than it was years ago?
12:38 Speaker 02 Look, I think it's hard to argue. I remember when I was at Blackstone, I was an analyst. We had done an analysis of what were the biggest drivers of our returns. It wasn't done by me. It was just done as a firm-wide exercise, and I was just part of it. But it was just interesting to see that one of the most important drivers was the year you did the deal. Because cycle of time mattered, right? If you bought at a time when prices were low and you sold at a time when prices were higher. There's no doubt, timing matters. That being said, it's interesting, right? If you go back to, you talked about 1999, you talked about 2008, 2007. At that point in time, we were investing slowly. And investors said, hey, guys, you're investing fast now. How come you invested slow during that period? The reality is, people slowed down, the companies slowed down raising capital because they saw the valuations contract. And it wasn't like there were so many deals to go do.
13:22 Speaker 02 And so, while of course you'd like to do temporal diversification, and of course, ideally, your temporal diversification would be such that when prices are low, you're deploying the most amount of capital. But those aren't the times when companies go raise capital, or not significant amounts of capital. And so, I think what you are seeing generally, I mean, we probably deploy funds in about two and a half years. Five or seven years ago, we were perceived as being extremely fast because we deployed in two and a half years. And LPs were like, you guys come back too quickly. And I think we're probably now average in two and a half years. And certainly, a lot of firms are coming back even sooner. The challenge is, as deployment paces have gone up, if you try to get temporal diversification defined as three or four years, fund sizes would be even dramatically larger than they are now.
14:05 Speaker 02 Which also LPs would say, hey, like, I don't really want you to have a $30 billion fund, have four years of temporal diversification, right? So I think that the economics for LPs, if they end up with four-year diversification at these types of deployment paces, the fee drag gets pretty high as well. So I think we're just in a market where temporal diversification is probably going to get defined as two and a half years, and some funds a little lower. But you know, in the market overall, it's probably more like two to two and a half years. I mean, that's kind of where the market is right now.
14:31 Harry Stebbings? We've mentioned price quite a few times. And I spoke to Jeff before the show. And he said, one of the most brilliant skills that Devon has is his ability to negotiate. And so I thought, that's such an interesting thing. He said, it's like your single biggest strength. So what do you think makes you such a good negotiator? And when you think about like the art of negotiation, what do you think its core essence is?
14:50 Speaker 02 Well, I think that people, unfortunately, they view negotiating as a game. And I don't really think it's a game. I think negotiation that works, to me, is one where you actually build a trust-based relationship with somebody. That they believe that what you're saying is true, that you believe what they're saying is true. You both have certain needs to satisfy your constituency. In my case, it can be my investment committee. In their case, it can be their co-founders or their company or whatever it might be. There's things that are important to them and there's things that are important to us. And I think in a good negotiation, you're actually sensitive to what you need, but you're also very sensitive to what they need. You try to bridge that gap and you try to bridge it in a way that's honest. And I think people feel like, oh, in order to negotiate, you have to have this princemenship style.
15:33 Speaker 02 Actually, honestly, don't think that works. And I think that, you know, I've done multiple deals on a handshake. I mean, you've got to Gia check out. I mean, we did that deal on a handshake. We never signed a term sheet. I knew what was important to him. He knew what was important to us. We shook hands. And, you know, my kind of my view was, and I'm going to say this, everybody's going to say, let's do term sheets by a handshake. But if a handshake's not good enough, maybe I don't want to invest. And so I think the key in a negotiation is making sure both sides really understand what's important to the other party. And everybody should walk away feeling like they got something. I think negotiations where one party feels like they got everything and the other side got nothing, those just generally don't work. And then the last one is be honest. I mean, how many times I've been in a situation where there's an advisor or there's a banker and they say, oh, we're not going to do a deal for a penny less than, you know, X.
16:18 Speaker 02 And you're like, okay, well, you know, then I'm out. And then you hear the deal get done at a substantially lower valuation two weeks later. Well, that didn't serve anybody that well. Like, we might have done the deal at that price. The company might have wanted us as an investor. So I think if you're transparent, honest, and you really try hard to understand what the other person wants. I mean, I think that actually ends up being how a good negotiation gets done.
16:38 Harry Stebbings? It's really interesting you say about kind of knowing what each party wants. I had David Tish on the show from Box Group the other day.
16:43 Speaker 02 I listened to it. It was a great interview.
16:45 Harry Stebbings? Thank you so much. And he said in the episode, like, the entrepreneur doesn't need to know my ownership requirements. They don't need to know that. And actually, if you're in the best companies, it doesn't matter. And so that's nothing to do with them and I want to remove that from their place. I'm intrigued on that element of ownership, because it's a very different stage also for you versus Box. How do you think about the importance of ownership today? A lot of people are going, well, markets are 10x bigger, so we don't need the ownership that we did before. How do you think about the centrality of ownership when you're investing today, Devin?
17:14 Speaker 02 Once we decide we like something, we like to own as much as we can. That being said, we don't have like a minimum We don't have a minimum percentage we have to own. You know, we have companies where we own as little as three, four percent. And we have companies where we own north of ninety percent. And one of the things that's different about us is that we're willing to, as you know, we also have like a buyout business where we do kind of full control transactions where we use leverage. But I think what's less known is that we also do control deals where we're buying control of companies that you would define as a venture company. Where a set of existing investors, for whatever set of reasons, wants to get liquidity. And we're excited about the growth profile of the company. They don't need to be profitable. We'll go by control. So we own seventy and eighty percent of companies that if I just showed you the income statement, you'd say, well, that looks like a venture company. That doesn't look like a buyout. And you'd be right.
17:59 Speaker 02 And we wouldn't be using any leverage. We would do an all kind of equity deal. So we come at it as, once we build conviction on something, we want to own as much as we can. That being said, if you've got an asset that's growing a hundred percent a year as a seller, you might decide that selling eighty percent of that doesn't make sense because the value is going up too quickly. So our view is, look, we'll get on the cap table. And if at any time you're interested in selling more, we're here and we're open to buy more, whether that be for secondary or whether that be for capital in the company or potentially finance additional M and A.
18:27 Harry Stebbings? Can I ask a tough one, which is like, you know, I've spoken to founders before who have offers from inside and they say, one amazing, obviously I'm very excited, but one concern is the signaling risk. Given your ability to invest across stage, it's what if they don't invest next round? And how is that perceived? How do you advise and answer that question with the insight hat on?
18:47 Speaker 02 The reality is the markets, I think David talked about this at his interview, right? I mean, the market has shown that the signaling risk is not that significant of a risk. That is entirely possible for us to invest in something earlier, for us to not pursue the next round and for the company still to be able to raise capital. As a practical matter in our case, it hasn't happened very often. We don't think of ourselves as an early stage fund. So if we're going into something on the earlier phase, we have pretty strong conviction. And generally, when the company is raising that next round, it's very rare that there's a sufficient amount of data where you're ready to say, oh, I liked it six months ago. I really don't like it now. Generally, there's been progress, but there hasn't been enough progress for you or not progress for you to make the decision to not continue to support the company. So I'll answer the question.
19:30 Speaker 02 In a theoretical sense, it hasn't proven to be a big issue in the market more broadly. Certainly hasn't been that big an issue in our portfolio because it's not been very common for us to not continue to support the company.
19:39 Harry Stebbings? I mean, in terms of supporting the company, we mentioned Guy at checkout. I also spoke to Thomas at Vintage. One area where obviously you're very instrumental in supporting the companies is on boards. You've sat on countless boards now. I'd love your thoughts on that. How do you think about your style of board membership and how's that changed over the years, Devin?
19:55 Speaker 02 I still remember one of my first boards back in 2002, maybe. I was with my wife, we're visiting schools for my son for pre-kindergarten, which of course in New York is like you're applying to Harvard. And the rule is when you're going on your school interview, you can't look at your phone, you can't do anything. And I got a call from the CEO of this company I was on the board of saying, I think CIO was quitting. I remember, I still remember the feeling I had because it's one of my first boards. I just thought it was a total disaster. I was like emotionally just wrecked by this. My wife was glaring at me saying to put my phone away, which I did, thankfully my son got in. And one of the things you realize is that companies have lots of ups and downs and you can't get that affected by individual ups and downs.
20:36 Speaker 02 So early on, I think I probably overreacted to the negatives and probably overreacted to the positives. So I think the biggest thing for all those years is you kind of get a little bit more even keeled about both bad news and good news. And you realize every company, even the most successful company is going to have bumps. You generally work through them and you have confidence in your team. So that's one. Number two, I think when you're early on, you sometimes forget that you're a board member, you're not an operator. You're not there to run the company. You're there to help. You're there to be a devil's advocate. You're there to challenge thinking. But at the end of the day, you're there to support the management team. And I think early on, you're so focused on that deal working, you feel the pressure of that deal working. That sometimes you go into the operating side unintentionally because you feel like this has to work. And I think as you do this longer, you realize that's really not your role.
21:21 Speaker 02 By the way, you're probably not, I'll speak for myself, I'm not going to add value telling a company how to operate. But I think I can add value because a lot of pattern recognition of being a devil's advocate, saying, hey, this has worked somewhere else. Maybe you want to talk to this company or maybe you should take a little bit more risk or maybe you should take a little less risk. So I think kind of playing at that strategic level is really what. I think a good board member does. And then the last thing is, try to lean into the things where you can really add value. I think there's a tendency early on to feel like you have to have an opinion on everything. Again, I'll speak for myself, that was a weakness. I felt like I had to have an opinion on everything. And I don't feel that way anymore. I know the areas that I think I can add value and I push on those. And where I can't, there's other board members and other people who are going to add more value to me.
21:59 Harry Stebbings? Can I ask, on the flip side of that, if that's like the board member side, on the founder side, you've worked with some of the best founders over the last decade. How do the very best founders run their board meetings? And I guess what do they do to extract the most value from them, from your perspective?
22:12 Speaker 02 That's a great question because I'm still on many boards and board meetings, there are still definitely board meetings I look forward to, I won't name companies now, and board meetings I really don't look forward to. And to me, the board meetings I don't look forward to, I talk about a profile of a board meeting, is kind of a recitation of facts. What I say to people is, I like to read history for fun, but I don't like people reading the history. So the board meetings I enjoy the most, where I have enough influence to be able to do this, I've broken up the board meeting into two separate board meetings. So one's a 45-minute financial overview of performance, where the CFO just presents the financial performance, people have any questions, they can ask. And then the main board meeting where there's one slide on financial performance. But then the rest of the meeting is really about highlights and lowlights, what's working, what's not working.
22:57 Speaker 02 Generally having one or two functional areas come in and present so that you get better exposure to the rest of the management team. And then kind of what are the key strategic issues that the CEO is kind of focused on? And those are my favorite board meetings. I also think that long board meetings tend to lead to recitation of facts and tighter board meetings tend to focus the conversation on the things that matter.
23:18 Harry Stebbings? One thing that I often think about is when you identify a core weakness or a core concern, especially related to the CEO or the founder's leadership, I'm never sure whether it's the right environment to air it openly in front of five other board members and really put the CEO on the spot, or to take them aside at the end and say, hey, Devin, I noticed this and we should think about this. How do you think about when's the right time to air those core concerns? Because you do also want to get the benefit of the wisdom of the people in the room.
23:44 Speaker 02 Yeah, I think it depends a little bit on kind of what it is, right? I mean, I think if it's something around, I don't feel Like our marketing strategy is really working here. I mean, this is using an example. You know, that's something where getting broader kind of feedback where somebody else might have a different view and really airing it out probably has value. I think where it gets more sensitive is when you think there's a member of the senior management team that maybe is not working as a direct report of the CEO. Or you have a challenge with the way the CEO might be handling something. I think those conversations are better had one on one. I think people tend to just think about ourselves. We tend to be defensive when people critique us in front of five people. And we tend to be less defensive when people talk to us kind of one on one, or at least I do.
24:22 Speaker 02 And so I find that those conversations are much more kind of constructive and people are more open in a kind of one on one type conversation.
24:30 Harry Stebbings? Speaking of the time on the board there, I do want to touch on time allocation across the portfolio. Because like traditional thinking would suggest, hey, you spend all your time with the winners. That's what drives the returns and bluntly you minimize time on underperforming companies. Just in terms of how you're going to optimize fund performance. How do you think about time allocation across a portfolio? Have there been any big lessons for you from the 21 years now?
24:51 Speaker 02 Yeah, I mean, you missed a category, which is that you've got clear winners. You've got the middle, which are meaningful for the fund performance. And then you've got the ones that are going to return capital or potentially lose money. How should people allocate? If you said, I'm a robot and I'm going to allocate my time in a way that totally optimizes fund returns. Actually, you spend almost no time with the winners. The market's great, the management's great, you're a cheerleader. You're not adding as much value as you think you are. The middle, you actually probably can influence the outcome. Maybe it requires making some changes in the strategy. Maybe it requires upgrading the management team, but there's probably ways that you can influence that outcome. So spending some meaningful time in the middle actually makes sense. And then spending almost no time on the capital returners or the losers. That's how an optimized machine would spend their time.
25:33 Speaker 02 I don't know of anybody who's actually spends their time that way, and I certainly don't. Why? Well, one, spending time with winners is a lot cheaper than therapy. We spend a lot of time looking for companies. It feels good to be around companies that are doing great, even if you're not adding a lot of value. And I don't know a single investor who doesn't want to spend time with their winners, even if they're not adding value. We probably don't spend enough time with the middle and we end up spending a lot of time with the bottom. So while that's not theoretically or hypothetically. The right allocation of time, I'm not sure I would radically change it. So that's probably where I am in the second description. I do force myself to spend more time, call it in the middle, which is the bulk of the companies. But the bottom, I feel like entrepreneurs have killed themselves to raise this capital, to go after this market.
26:16 Speaker 02 And partially, it's probably personal ego of not wanting to lose, but also like just feeling like you can't really abandon somebody. I think if you think about this from a long-term perspective, and I'm not saying people should spend a disproportionate time there. But I think, you know, when you wanna be referenced long-term, I think you wanna be referenced as somebody who, when there was a problem, you didn't abandon yet. I think there's a way to manage your time, obviously, and not spend a crazy amount of time there. But I don't think I'll ever get to the point where I'm like, oh, well, that's clearly not a deal that's working. I'm not gonna spend any time.
26:45 Harry Stebbings? Can I ask, speaking of those companies that maybe don't perform as well, I do have to ask this, and I hope it's not too personal. But you know, 21 years, huge successes, there's very little that you haven't seen. When you think about like your own insecurities and self doubts today.
26:59 Speaker 02 I think there's a term, right, insecure overachiever. I definitely go into that bucket. I mean, look, I think that I constantly am worried about, am I gonna be able to still find companies that are gonna perform really, really well? And look, when you wanna learn how to get better at tennis, you play with people who are better than you. And I think one of the great things about Insight, all my partners are amazing investors. And it's a firm where there's so many people who are doing amazing deals. And I constantly feel the pressure to keep up with them. I think that's a healthy thing. It's a good thing. But I think that it definitely keeps me on my toes, because I feel like, okay, well, Jeff Mauring just took that one public at this massive valuation. And Jeff Lieberman just sold this thing. And like, I gotta find something just as good. And I think that I've talked, I won't name people, but I've talked to people at other funds who are really well-known names.
27:44 Speaker 02 I mean, way better known names than me, who have the same concern about can they keep up? Can they continue to find great deals? It's not easy to do, right? So we all have to work hard. Look, I think, that being said, while it's not a great feeling to have that feeling. I also think it is the thing that keeps you going and keeps you motivated and keeps you working hard.
28:00 Harry Stebbings? Totally, it does keep you going. You mentioned that, you know, Jeff taking companies public. And you know, as we mentioned, some of the amazing successes you and the firm have had. One big question I always have is like, how? How do you prevent past successes or failures impacting your future decision making? And I guess with the many IPOs that you've had, a certain space or vertical can inherently seem more attractive than others because you've seen how good it can be. How do you prevent past impacting future decision making?
28:26 Speaker 02 Well, for one, if you sat in on our partners meetings or we had a first in-person outdoor lunch, I guess, of our investment committee earlier this week, you would not come out of lunch feeling like, boy, these guys know how to celebrate. We spend way more of our time beating ourselves up on the things that we missed. And why didn't we look at that area? Are we not being aggressive enough in that area? Or why didn't we do that deal when we saw it? So I think the first thing is you constantly have to focus on the things you can do better rather than celebrating the successes. I can tell you that's very much of our culture. And there's emails that go around when a deal gets announced and we talk about, do we look at it? Do we spend enough time on it? Who won it? What did they see that we didn't see? We do a lot of that. And so I think that part of it is what's the culture?
29:10 Speaker 02 Everybody loves what they do and everybody really wants to win. If you talk to anyone who's a competitive athlete, what do they do? They watch videos of their competition. They see what the competition's doing. They try to learn from what they're doing. How are they going to compete against that? That's what we do. We don't watch videos, obviously, but we spend a lot of time studying what others are doing and where we can learn from it.
29:29 Harry Stebbings? When firms scale inherently, even if you want like a meritocracy of ideas, hierarchies are created and people have different weight of words. I think the weight of your words are very impactful. How do you ensure that everyone feels a safe space where even an analyst can say, hey, Devon, I think you're wrong on this one and we've missed out. How do you think about creating that environment of safety and preventing words being too heavy from certain people?
29:54 Speaker 02 Look, it gets harder and harder as a firm gets kind of bigger and bigger. But I'll tell you what I do. And so when I'm working on a deal, we have a team generally of people who are working on it, people from our onsite team. People don't always understand that our firm, the way it works is really a team-based approach. So when we're looking at a new investment, there's members of the investment team. We have our onsite team, which is kind of our consulting slash operations team. And we all do that diligence process together. We generally have a meeting before we decide whether we're going to do something or we How to talk about the diligence findings and my approach on those is always to start with the most junior person and go to the most senior person as opposed to start with the most senior person and go the other way. And you have the most junior person speak first. Now, they don't like to be the first person to speak because they don't know where the rest of the room is.
30:35 Speaker 02 But I think it's really important because if I or another senior person says, I love this deal or this deal is great, they may think they hate the deal. Or there's something they found in diligence that they're concerned about. So you kind of need to let the junior folks speak first so that you make sure that they're able to. And oftentimes, they might have done the customer call, they might have done the references, they might have done some really, really important fundamental work. And you want to make sure that you kind of hear that. We were talking about this earlier with respect to pace, you know, with the decision making pace has gotten so quick. It's harder and harder to create processes to make sure that you get that data and you kind of incorporate it into your decision.
31:11 Harry Stebbings? Listen, I love that in terms of them speaking first. It reminds me of Annie Duke on the show who wrote Thinking in Bats. She tested that all ICs are done where you essentially actually document your thoughts beforehand. So the night before you write out all your opinions and then you submit them and then no one is impacted by external perspectives. And you have the most pure conversations, which I really liked as a method. I do want to move into my favorite though, Devon, which is the quick fire round. So I say a short statement and you give me your immediate thoughts. Does that sound okay?
31:37 Speaker 02 Sounds great.
31:37 Harry Stebbings? Okay. So what's the favorite book and why?
31:39 Speaker 02 I read really, really, really widely. You can, we're sitting in my kind of library here. So I don't have a favorite. Just as an example, just to show you the randomness of what I read, the last three books I read. One is What We Know About Climate Change by Kerry Emanuel, who's like a professor at MIT. Because I don't feel like it's a topic I know enough about. It's got a little bit of a scientific tilt, but it's great because it's 50 pages. So anybody can read it really quickly and it's a great summary of the topic. Before that, I read a book called The Book of Eels. Yes, eels as in the fish. By the way, it's a bestseller and it's a book about the history of eels, which is fascinating by the way, as well as the relationship with the author and his father. And then the one I'm reading right now is a book called On the Writing Process by John McPhee, who's been a 30 year writer at The New Yorker.
32:22 Speaker 02 And he's just talking about his process of how he writes. And I think writing is such an underrated skill, constantly trying to improve how I write. And so that's a fascinating book. Those are literally the last three books. So I read pretty widely and I read on pretty eclectic topics.
32:35 Harry Stebbings? Listen, I have not read the climate change book, so I think that's great. 50 pages sold. Book of writing, totally want to read that. The fact that you're reading a book on eels makes me think you should come to London and have an espresso martini with me.
32:48 Harry Stebbings? We'll resolve that in time, Devon. Tell me, on appearance, you've achieved everything that one would want to. What motivates you today, Devon?
32:56 Speaker 02 I just love to learn. And that goes back to topic one. The beauty of this business that we're both in is there's always a new thing to learn about. There's always a new topic to learn about. And how long you've been doing it is totally irrelevant. The smartest person about cryptocurrency at Insight, 25. And if I want to learn about it, I have to go back to first principles and learn it as if I'm 25 too. And I love that. That's what motivates me.
33:19 Harry Stebbings? What motto quote do you most frequently revert back to?
33:22 Speaker 02 It's an easy one. It's nothing worth having comes easy. And, you know, I've got kids, 18 and 21, and I tell them that. I think it's true for founders. I think it's true for myself. I think we're in this world right now where everybody feels like things happen really quickly. I think I listened to your, one of your episodes, maybe it was first round, talking about Roblox and how that was a 10-year fast journey. And everybody sees the end. And when people say, oh, Insight, you're so successful. And they forget Jeff Mooring and Jerry Murdock, like in a station wagon, running around trying to raise $30 million. And without that, it wouldn't be what it is today. So I think if it's worth having, you got to work at it. And it's not going to come easy. And I think there's a tendency in today's world to think that things are going to come easily, but they generally don't.
34:00 Harry Stebbings? Absolutely. Chris called it the slow bait. But tell me, what's the biggest challenge for you today with Insight?
34:05 Speaker 02 I think it's constant reinvention. You talked earlier about, like, say, what Tiger is doing. And, you know, five years from now, it'll be somebody else or something else or a different market shift. And I think it's continuing to evolve our business to the market opportunity. And I think we've done a reasonable job on that so far, but the markets are changing faster and faster and making sure that we continue to change as fast and while maintaining, and this is really important, the entrepreneurial culture that we have. And I think that's probably the biggest challenge.
34:31 Harry Stebbings? What do you know now that you wish you'd known at the start of your career in venture?
34:35 Speaker 02 That you're never going to know the answer. I mean, I think there's a tendency to feel like with diligence, you can get to 100%. There is no 100%. And we were talking earlier about getting people's opinions. One of my favorite things I do when I'm talking to people on my team and we're looking at a deal is I say, well, would you wire the money today? And they're like, well, but we haven't really done the customer calls yet. I'm like, right, we're not going to wire the money today. I just want to know, would you wire the money today? With no additional information. What would you do? And people hate that question. And it's my favorite question because it forces you to think of, okay, do we have enough information to make the decision? Because we're never gonna have. We could always do another five customer calls. We could always talk to five more employees. But at some point, you get to diminishing returns. Is that 80%? Is it 70%? Is it 60%? I don't know.
35:17 Speaker 02 But training people to think about making decisions with the information that you have when the information is not complete, including myself, by the way, is, I think, really important.
35:25 Harry Stebbings? I have to ask this one. You just gave me too much there. How do you get comfortable with making fast decisions with imperfect data? How do you get comfortable with that? And the second one is like, how often do people go, hell yeah, I'd wire today?
35:38 Speaker 02 Not often enough. And the reality is that how do you get comfortable with quick decisions? Is I think you just start thinking more and more about the history of what were the common themes about things that have worked? And are enough of those common themes in this deal to take the bet? You also have built in risk mitigation, which is investment size. Like, one of the beauties of insight is even though we have this really large fund, while our fund has gone up, whatever it is, 10 times, our median deal size has gone up like 30, 40%. And so we have the natural ability to risk mitigate by just writing a smaller check. And so I think that it's really, really trying to focus on what's the core thesis? And what are the real facts that we need to know that core thesis? The problem is, there's always, again, there's always a way to get more information.
36:23 Speaker 02 And by the way, I don't think we're, if you're asking whether or not we've perfected it, we definitely haven't. By the way, this is something I think the Tigers credit. I think they do well. I mean, I think they take more of a kind of a macro bet on a market. They do a lot of outside in work and they decide that they like the macro and they like what that company's market position in as they take the bet.
36:41 Harry Stebbings? Yeah, I don't think anyone could fault them for speed and decision making. Okay, we said the hell yeah to the would you wire the money today? What was the most recent hell yeah that you made? And then obviously subsequently made the investment on? And why did you feel the hell yeah?
36:54 Speaker 02 The most recent one that I've done is a company called Tetris Science. Tetris Science, if you think about Viva is to Snowflake, Tetris Science would be to Snowflake. So it's kind of verticalized data around the life sciences category. If you think about About a category that I think is going to have the same type of growth over the next 10 to 20 years and has had the same type, if not more, Moore's Law effects. It's life sciences, biotech, pharma. I mean, just think about how quickly we got a vaccine. Couldn't imagine that 10 or 15 years ago. And so I think that industry is going to see just an incredible amount of innovation. And I think Tetris Science is one of the more exciting software bets around that category. But as a firm, we've probably made seven or eight different bets around different software applications, different layers of the pharma life sciences industry.
37:39 Harry Stebbings? Devin, been so much fun doing this and I just can't thank you enough for giving up your time today.
37:43 Speaker 02 Thank you.
37:45 Harry Stebbings? I just love that discussion. Want to say huge thank you to Devin for being so open with my very wayward questions. If you'd like to see more from us behind the scenes, you can, of course, on the 20minutevc.com. I always love to see you there. But before we leave you today, did you know that more than 80% of US public stock is owned by just 10% of Americans? This divide is even greater in the private markets. Carter makes it as easy to issue equity to your employees as it is to issue payroll. And for employees, as easy to accept it too. More than 16,000 companies issue equity to their employees through Carter. Whether you're just getting started or getting ready to go public, the team at Carter can help. Check them out at carter.com. And then another incredible product you have to introduce is SecureFrame.
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Previous 20VC: Qualtrics Founder, Ryan Smith on The 2 Hour Decision Whether To Sell Qualtrics for $8Bn in Cash, Why Tying Your Identity To Your Company Will Never Make You Happy and His Relationship To Risk, Wealth and Responsibility as a Result Next 20VC: Farfetch Founder, José Neves on Zen Buddhism and Its Impact on Leadership Mentality, Why Head vs Heart is Not the Right Way To Think About Decision-Making & How To Work Through Self-Doubt and Identity as a CEO Page updated October 26, 2026 · transcript and summary are machine-generated
