Pod Insights The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 20VC: Scaling to $2BN AUM in 3 years, Fundraising Lessons and Tactics from 2,500 LP Meetings & What it Takes to Build a Firm That Stands the Test of Time with Harley Miller, Co-Founder and Managing Partner @ Left Lane Capital About this episode Harley Miller is the Founder and Managing Partner @ Left Lane Capital, one of the fastest-growing growth equity firms of the last five years. Just yesterday, Left Lane announced the closing of their new fund taking their AUM to over $2BN with an early portfolio including M1 Finance, Masterworks, Choco, GoStudent, to name a few. Prior to founding Left Lane, Harley spent over 9 years at Insight Partners investing in the likes of DeliveryHero, HelloFresh, N26, Calm, Udemy and many more breakout companies. In Today’s Episode with Harley Miller You Will Learn: 1.) Origins into Venture: How Harley made his way into the world of venture with his first role at Insight? What were Harley's biggest lessons and takeaways from 10 years at Insight? 2.) Left Lane: Fundraising What are harley's biggest takeaways on fundraising from speaking to 2,500 LPs for Left Lane I? With that experience in mind, what advice does Harley give to other first time fund managers on what it takes to raise successfully? How did the Left Lane pitch to LPs change over time? What worked? What did not work? With the benefit of hindsight, what fundraising elements would Harley have done differently? 3.) Left Lane: Firm Building What are the hardest elements of building a firm today? How did Harley navigate the transition from investor to fund manager? What was challenging? What is Harley's biggest advice to young people in venture looking to scale their career fast? What are 1-2 core inputs aspiring VCs should focus on as they build their career? 4.) Left Lane: Investing and Consumer How does Harley approach portfolio construction with the new fund? How does Harley think through outcome scenario planning and ownership requirements with the new fund? How does Harley think traditional growth equity models can be applied to consumer investing? What will Left Lane be in 20 years? What firm does Harley want to build? Item’s Mentioned In Today’s Episode with Harley Miller Harley’s Most Recent Investment: Masterworks
Transcript 11,351 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Harry Stebbings? Welcome back. This is 20 VC with me, Harry Stebbings. And this guest today I'd heard a lot about for a long time, and I always wanted to make the show happen, but knew this guest did not do many interviews. And so I was thrilled when we got the chance. And I'd also want to say before we dive in, last week, this guest announced their new funds, a massive day for him and for his firm. But I hadn't been very well with some health challenges. And on the day of his news, no sending me the links, no asking me to post on social, he checked in to see how I was multiple times on one of the biggest days of his and his firm's history. I think it says so much about him as a person. And so with that, I'm thrilled to welcome Harley Miller, founder and managing partner at Left Lane Capital, one of the fastest growing growth equity firms in the last five years. As mentioned just last week, Left Lane announced the closing of their new fund, taking their
0:44 Harry Stebbings? AUM to over $2 billion, with an early portfolio including M1 Finance, Masterworks, Choco, GoStudent, just to name a few. And prior to founding Left Lane, Harley spent over nine years at Insight Partners, investing in the likes of Delivery Hero, HelloFresh, and 26, Com, Udemy, and many more breakout companies. But before we move into the episode today, Harvard management company is constantly seeking out the next generation of great investors and entrepreneurs. HMC has managed Harvard University's endowment for nearly 50 years, and was one of the first institutional investors in venture capital. Their experience and long term investment horizon makes them ideal partners to get world changing ideas on a path to viability and success. They
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3:25 Speaker 01 You have now arrived at your destination.
3:28 Harry Stebbings? Harley, this is such a joy to do. As I said to you before, the amount of information I know on you is quite simply scary, having done so many references. But thank you so much for joining me today.
3:37 Speaker 02 It's my absolute pleasure. I've been looking forward to this for a long time.
3:40 Harry Stebbings? But I want to start with a little bit on you. I mean, it's an incredible scaling story. So talk to me a little bit. How did you make your way into venture? Talk to me, how did you come to found Leftlane in this incredibly fast and awesome ride that it's been so far?
3:52 Speaker 02 Specifically, how did I make my way into venture? I kind of fell back asswards into it. I went to Wharton undergrad, 2007 to 2011. The compulsion or the status quo was for every Whartonite to go into an I banking or consulting track, right? There wasn't this codified path for young adults who are right out of uni to go into venture capital or growth equity or private equity. That was a rarity. And there was this firm, Insight Partners, who was, I'd say arguably, the group that pioneered this concept of kind of an institutional Analyst Program and I was highly entrepreneurial growing up. I had a lot of different companies and pursuits and hustles from selling candy on the bus as an eight year old, right? And with zero cogs because my mother fueled my entire business until I got caught by the principal to starting more legitimate business throughout high school.
4:34 Speaker 02 And so coming into university and navigating that journey, it was very clear. I didn't want to do something that was the stereotypical track. I was always trying to swim a little bit against the grain. And so this firm insight was interviewing and I landed an interview. And my interviews with insight, which I'm sure were less rigorous back then than they are now are comprehensive. Largely talked about the same things I talked about to get into work, which were my entrepreneurial pursuits, kind of how I saw the world. It had nothing to do with tech. Literally 24 hours later, they said, we want you to come and work with us. And I said, guys, are you sure? I can barely turn on my television, let alone tell you what infrastructure, software. And they said, you'll be great. And I said, yes, I obliged, right? It was kind of a no brainer for me. It never felt like a job. It's never been laborious.
5:15 Speaker 02 To have that profound of a revelation as a 21 year old, three days into your job, where your job is literally having the latitude to go out there and speak with bright eyed entrepreneurs and sort of conversate with them and stare into their souls and eventually be a thought partner and sounding partner. Once you lick your wounds a little bit from some awkward and painful first conversations and meetings, there was no off button for me. I literally had to forcibly remove myself from my desk, be like, oh shit, I have to go home. It's quite late. No one was saying you stay there, right? There was no start and stop button. I think that was the coolest thing. And so that was 2010, right? So we're talking about 12 years ago at this point. And so that was my early journey into venture.
5:50 Harry Stebbings? How did that lead to Left Lane? Because it's a big move to start on your own and it's a massive thing to found your own firm. Talk to me, how did the founding of Left Lane come about?
5:58 Speaker 02 Early days with a lot of probably naivete and bravado, I was confident and was pretty decent at the role and at the job, right? Some of it was work ethic and input. Some of it was having a nose for markets, emerging markets before it was so apparent, before it was obvious. Or an ability to have a resonance, mutual resonance with founders. And I was able to do a lot of deals and they were more internet consumer technology deals, which was not what the industry at large was focused on. It was very enterprise software, SaaS focused. And that wasn't where I really cut my teeth. I think there was something about sort of growing up in Pittsburgh, middle class, being deep into the bell curve of that. A common consumer and I wore that on my sleeve that forgot other entrepreneurs that felt like that. And so that's where I carved out my own niche in practice and I became decently well known in internet and consumer tech.
6:39 Speaker 02 I knew pretty early on that I felt like, okay, I could do this. I want to be a founder, but within a venture context. And the only way you do that is to start your own firm, build an institution of your own.
6:47 Harry Stebbings? Were you nervous? I was fucking nervous.
6:51 Speaker 02 Nervous to leave, nervous to go out and do it or?
6:54 Harry Stebbings? Nervous because you leave the confines of funds being raised, a brand, and suddenly you're like, oh God, I need to go raise a fund now. I don't actually have a product. I need to start a brand. I need, Jesus, I hope this works.
7:06 Speaker 02 I was definitely more nervous than I would let off. I think I tried to portray confidence and sort of rally the troops. I had great training and I had a lot of the blessing of my former employer, right? Which meant the world, not just to me and our confidence, but to other allocators and folks that would sort of anoint us and bless us into the industry or not. But sure, it was nerve wracking when you have a standing start and the conversion rate, that hit rate. We did not, contrary to propeller belief, we did not walk in and sort of get resounding yeses across the board from the world's foremost institutions. In fact, we got a lot of no's, right? And a lot of rejection. And that was summer of 2019 that we left to start that journey. And I had a lot of bravado and naivete and I think we probably went out to some very gold standard LPs early on without a name,
7:49 Speaker 02 without a cogent product, without a sort of a salient deck work product and nothing to show for it. And we were coming up pretty empty handed and that we refined and sort of honed that pitch. And I think we're able to transpose the thesis that we had in our minds and put that on paper and ultimately communicate that with maturity and patience as opposed to being a word vomiter, right? Becoming a bit more of a word sniper and portraying that maturity. I think no one questioned would I, would we be able to go do deals? Could we be a deal jockey? What we had done in a sort of a singular fashion for the decade leading up to that and done a lot of them and good ones at that. Being a senior investment professional is one part of being a institutional fund manager, an asset manager. The job is so much more multifaceted. I think that was the biggest learning curve for me. And clearly the biggest thing that people wanted to get confidence in.
8:32 Speaker 02 And so we can go into how that played out, a lot of which was in the throes of the pandemic, but that'll give you a bit of a taste of the start of the journey.
8:38 Harry Stebbings? Can I ask, having been through that? First raise, where as you said, it changed and evolved a lot as a pitch and as a product itself. What are some of the biggest pieces of advice you could give to managers raising maybe their first time funds? Having been through that transition from very unshaped product to actually a very well honed perfected product?
8:57 Speaker 02 A couple of things. One, as my mother likes to say in life, timing is everything. And just because someone says no, you can't take that personally. They might be out of allocation for the year. They have too many people that look or feel like you, or they perceive. First and foremost, timing's everything. Two, it's a volume game, like make no mistake, just like a software pipeline. You need to pound the pavement and put a lot of reps in, knowing that that conversion funnel will start to invert, but you need to get that critical mass going. And so I think we earnestly did about 2,500 pitch meetings for our first fund, which to get to that fully subscribed fund of 630 million over the course of a year, we earned it. There was nothing serendipitous about it or fortuitous, right? Like it was outright grit, tenacity, and then refining of that pitch and that acumen, right? So this was not something we fell into.
9:39 Speaker 02 Lastly, I would say is throughout that raise and then subsequent to that, right? As you go and implement the practices that you promised, do what you said you would do. Process is as if not more important than outcomes for allocators, right? Outcomes will be determined three, four, five, dot, dot, dot, X years down the line, right? You have your paper marks, you have directional feel and pulse of how things are going, but you don't know until those companies are bought or go public. Doing what you said you would do, that process and adherence thereof can be measured in the here and now. And I think that is as if not more important, right, for allocators. And I think we honored that and did exactly that.
10:11 Harry Stebbings? My question to you is, you said there about kind of focus on the process itself and actually sticking to what you say you'd do. I get it, but me and you are also lucky to see some incredible situations and opportunities. How do you think about willingness to make an exception and then being careful enough to not let the exception become the norm?
10:29 Speaker 02 Listen, if you're such a strict interpretationist of what you said, then you'll limit yourself perhaps. But if, if something is so exogenous, like here are the goalposts, and those goalposts should be wide. And something is quite literally off the playing field, out of the zip code. Then you have to be really mindful of if this doesn't work. It's not just that it doesn't work and you lose whatever amount of money. As an emerging manager, You not only broke stride and did what you said you wouldn't do and you went off out of the zip code. That worked, in which case, great, you look like a hero. Or it doesn't work, in which case I think there's it's almost double a punitive. And so you have to be pretty sure footed about that. And then the other thing is sometimes we need to just think about evolving and iterating and not reinventing yourself, but adding more tools to your toolkit, right? If it's something that's going to give you new pattern recognition and the opportunity to go pursue things
11:14 Speaker 02 that might be derivatives or flavors of that or adjacent to that sort of X variable opportunistic thing, then why not go pursue it? Listen, at the end of the day, do what you said you would do. But if there are small exceptions to that, I think that's fine. And at the end of the day, LPs want you to make money as much as they want you to do what you said you would do.
11:30 Harry Stebbings? Couple of things that really shine through for me when I listen to you. One is kind of execution, but it was actually when I spoke to Scott at Masterworks, one of your founders. He said that it's your speed of execution that is everything and just unparalleled compared to anyone else. My question first is, how do you determine the things to go really fast on? And where speed of execution is key versus Ashley, we do it slow and we're very tempered in how we do it.
11:54 Speaker 02 Some comments, first and foremost, let it go on the record. I don't want going fast or moving with serious pace to be conflated for recklessness or lack of comprehension or diligence, right? One of our core mantras here at Leftlane is that they need not, they must not be a trade off. You have to move with real pace and speed, but not at the expense of execution and diligence. Oftentimes one gives in this world, and I think we've architected a practice to be able to do both. And it's how we train our people. Every single person that works with us at Leftlane on the investment team is trained on how to use SQL, how to use Alteryx, they can cut through raw data. It allows them to be really dangerous in the field with entrepreneurs and cut right to the heart of what you need to believe. And again, that's a two way street. A founder or a founding team needs to be able to match that tempo. If you're just driving really fast as the investor without visibility into where you're going, that is reckless.
12:39 Speaker 02 I think decision making is critically important. To kind of give you the bit of the story, right? As opposed to the theory behind Masterworks, that deal was proprietary. He wasn't out in market in earnest. This was last summer, July or there about of 2021. And we dropped everything. We canceled our vacations in sort of early August to drive at this deal before it got out to market. That was probably a 10 day exercise to wrap our arms around a really complex business from a standing start that we admittedly had little exposure to. And so I think that requires, it's an attitude, it's an experience set. It ultimately requires a certain founder or founding team, that archetype, who will match that intensity. Said I would offer a professional and then a personal commentary of where to go fast and where to go slow. So I just, I think going slow is spending time with your family.
13:23 Speaker 02 For me, that is where I truly slow down and you relish in that, you meander in that. That's not something where it's appropriate to go fast. So I wanted to throw that in there.
13:31 Harry Stebbings? I totally agree with you. I'm a total mummies boy, which is probably the coolest thing in 22. Yeah. I do want to ask you, when you think about like speed, speed of execution, winning deals, is venture today a game of picking or access, do you think?
13:43 Speaker 02 I would offer that those aren't the bookends. There's more convexity to it than that. There's other vectors and dimensions on which to play and on which to compete. I mean, listen, if picking is important, it's nothing without access. You could just sit there and put your finger in there and say like, oh, that company's going to be great. But like, if you can't get in touch or a founder doesn't buy into your being a thought partner or a sounding board, then he or she, it doesn't matter. And then access, I think is, can be a bit overrated because you can figure out, you know, you can't teach picking. I think that's something that's innate and comes with pattern recognition. Access can be achieved in different ways, but I think honestly, the way that we strive to compete is on discoverability, right? And sourcing and of parsing and sifting through the sand to find that gem that no one else saw.
14:25 Speaker 02 A lot of the deals that we do are proprietary or bootstrapped. They don't need money. They're profitable. Mastworks is a great example of that. There's plenty in our first fund and our second fund that behaved like that. And I think that's something we pride ourselves on. And again, the world, especially the internet consumer technology world, which is where we focus, exists outside of the coast, right? Every ecosystem is getting more and more robust. And I think we play there and spend a lot of time there. And so picking is important. Sure, access is critically important, but finding something before it's obvious, before it's apparent to the naked eye or even known to others, I think is the paramount to success.
14:55 Harry Stebbings? You said about kind of finding the gem there. Most investors speak of conviction today. Brilliant word. The fact that you would do a deal without conviction always makes me laugh slightly. But my question to you is, what does conviction actually mean to you? And how do you think about getting there so? Quickly, given actually the speed at which you do come to conviction.
15:13 Speaker 02 I mean, listen, I think to me, true conviction means that nobody can tell me I'm wrong because I'm so resolute, unwavering in my belief that there's nothing and no one that can unseat that, right? It has to be formed quickly from a decision making standpoint. By no means is that something that happens fast, right? That's a lifelong pursuit to build up to that and give yourself enough exposure and repetition to even put yourself in a position to form conviction quickly.
15:37 Harry Stebbings? Can you give me an example where you've gained conviction super, super fast from meeting one or the first couple of days? And then one where it took actually quite a lot more time, quite a lot more work, maybe months, maybe even years, maybe you passed on the first round and did the second. Can you provide an example of each?
15:54 Speaker 02 In general, I feel like I know within five or 10 minutes of meeting an entrepreneur, whether I would work with him or her. It's something instinctual about that. And then in a way, I start to work backwards to pressure test those assumptions of is this the right race? Is this a worthwhile race, meaning the space that you're playing in? Is this the right horse or jockey or team to bet on? I mean, that's the calculus constantly. I think there's been times in my career where I've probably been impetuous, right? And rash, jumped to conclusions about this is a deal I want to do. I can talk about deals where it was certainly wasn't obvious, right? I remember pounding my fist to, to invest in HelloFresh. Still not too shabby at a $10 billion market cap, right? It was a lot more six months ago, but nonetheless, it's company and it was space that was still nascent. And a lot of people that I would talk to about it dismissed it as, you know, mate, you're out of touch. Like no one cooks anymore.
16:39 Speaker 02 I was like, wow, okay. Let me go talk to my family and friends in the suburbs of Pittsburgh or other parts of the middle of the country for whom it's an incredibly powerful product. They live and swear by it and use it a handful of times a week for months on end and years on end. My parents were actually early customers of HelloFresh. And that customer ethnography is, I think, about innate curiosity to live your life through the lens and seeking opportunities and how can that be addressable in, in your work? I think there's a lot of examples where it certainly wasn't so obvious. And I knew whether it was the founder's mission or purpose, the business model mechanics, how impactful it could be for millions or tens of millions of households, right? So listen, conviction is fluid, right? It evolves over time. Sometimes you know it immediately and then you work backwards just to pressure. To test that you're not wrong. And sometimes it's that kind of tape up and it accumulates,
17:24 Speaker 02 right? And I'll come back as I can think about maybe examples on the latter, if that's fair.
17:28 Harry Stebbings? Yeah, I'm so pleased you said about HelloFresh there because I spoke to Devon at Insight about you and your time working at Insight. And he said Harley was unique in many ways, but he was unique in his enthusiasm and confidence with which he would bring deals to the table, even in the earliest of days. Now, clearly you excelled in an exceptional way in rate. My question to you is, when you look at younger investors today, how would you advise them on scaling their careers internally within large funds?
17:58 Speaker 02 It's not just get deals done. It can't be that. It can never be that. That proverbial one-way option where you credit monger if it's great, and you parry it off and say, well, the buck didn't stop with me. There are quite literally this concept of supervisors, which is what managing partners are. Even if someone else is a partner, right, or a senior investment professional, if there is someone above them to say yea or nay, or sort of bless that, even if they're not principally involved in decision-making or management thereafter, you, as a junior or mid-level person, are able to parry that off and sort of suggest that it didn't go, it went wrong for X, Y, Z reasons, or it wasn't purely you who was putting it all on the line there. So it can't just be that. You have to think like an owner at all times. Even if yourself are not principally an owner, you're still early in your career. Talk about finding that conviction, but you have to be a strong and original thinker.
18:40 Speaker 02 More so than conviction, it's about being an original thinker and being resolute in those beliefs. And then working to pressure test and substantiate that with a very cogent argumentation with facts and data, especially if people aren't seeing eye to eye with you, are not aligned with you. You can't just kill them with persistence or perseverance, or with kindness. You have to kill people with substance, proverbially, as far as kind of beat it over, right? And when you do that, more often than not, you will get, it'll be efficacious, and you'll get what you want out of that. And then time will tell if that's right, right? You can't be fear mongering or credit mongering, right? I think you need to cut and toe the line. With respect to what Devon said, which I flatter by, I think I had a good nose instinctually and then worked to develop the skillset to pressure test those assumptions empirically, right? I think that's what was sort of the genesis led up to Left Lane.
19:23 Speaker 02 It went from gut and instinct to that. You always, you need to have that. If you don't have that, I think you're shit out of luck in this industry because It's a lot of that and then really pressure test that with the what you need to believe from sort of a number standpoint.
19:35 Harry Stebbings? And speaking of kind of team members bringing investments to the table and the decision making that comes. You had a canvas that was blank when you started Leftlane in terms of how you structured decision making. How did you think about taking the lessons that you had learned and optimizing your decision making at Leftlane? How do you structure it and why is it that way?
19:53 Speaker 02 I won't go into like the ins and outs of our decision making process. I think there's a mechanical way, which is there's an investment committee of the four managing partners, right? And it needs to be a certain ratio and I think we strive for simplicity there. I think in practice, it's about accountability and sponsorship and true ownership. Whether that's one of the partners, whether that's one of the other senior members or even mid-level people who really want to step up and swing the bat. I am in the business as a founding managing partner and CEO. Sure, I do deals and I do a lot of deals that will always be a part of my job. It's a muscle that if I ever have to stop exercising, I will go insane because it's arguably what I grew up with professionally. It's what I love, but I've now also had to be in the business of rewarding conviction. And I think you have this natural tension from a decision making standpoint of junior investment professionals who are pushing up to do deals.
20:38 Speaker 02 And sometimes with that sort of proverbial perceived one-way option, right? If it goes well, it's great. If it doesn't go well, I sort of get to brush it off. And you have the senior partners pushing down to do good deals. And it's that in the middle point where that healthy tension, right? And that sort of sparring partnership, that dance that occurs is where magic happens. I think that's culturally what we strive for. It's a compulsion. It's not an expectation. It's a prerequisite that we have junior people who push up the curve. It's a bottoms-up led motion and I think that's what we believe in.
21:05 Harry Stebbings? It's interesting. You said there obviously about founder and obviously managing partner. And you are the founder of Leftlane and it's very much like a CEO of a business. How have you had to change what you do and how you do it with the movement from investor to founder and firm leader?
21:21 Speaker 02 You have to be mindful about now 25 other people that I'm proud to call colleague. Tactically, are they getting paid on time? Are they fulfilled and gratified? Are they learning, right? Are you learning from them? It's like starting a family where it was just you as a bachelor, running around the city, being social, whatever it is. You were somewhat carefree, same way like being just. An investor at another firm that's not yours, or you don't have to be mindful about the business of running the fund. And that's the crux of it. It's the business running a fund and the multifaceted job that comes along with that. And so I think that was a big learning curve for me and it still is. It will always be like, there is no time off, right? It's an omnipresent thought.
21:56 Harry Stebbings? What is the biggest challenge to you in terms of that firm management?
22:00 Speaker 02 What's the biggest challenges as you scale? The first couple of years, there's a lot of proximity and fidelity between you and the people that you're bringing to work with. As that evolves, there's naturally more hierarchies and sort of kinks in the funnel between that. I'm terrified of the notion of not knowing people's names that might come work for us. Like the same way that a CEO of a bigger company might not do that. I don't know that a company that's an investment firm should behave the same as a tech upstart. Right. I think that you can have that intimacy of relationship and proximity still.
22:28 Harry Stebbings? I'm worried about being a bottleneck. Our calendars get so busy and so full. And then you have more junior people in the team bringing you deals, wanting to do deals. And the truth is I'm slammed today. I have board meetings all afternoon. Tomorrow is even worse. I can do Thursday and that's a bottleneck. If we're trying to do a great deal, if we're trying to do something and move fast, I am holding the team up now. How do you prevent yourself from being the bottleneck to great people pushing?
22:53 Speaker 02 I literally take myself out of the equation. One, if it requires the immediacy with which we need to respond now, it doesn't matter whether we need to speak at seven in the morning or at 11pm at night. We will create that space for us to do that. Privileged to have three other managing partners and a lot of other great senior folks at Leftlane, who do deals and do them incredibly well. So I'm by definition, not the bottleneck. There's a lot of latitude and surface area and sort of different permutations of how a deal could get done. And then ultimately, the way that we scale, like our fund size grew. We just closed our second fund very recently at 1.4 billion from our first fund, 630 million, which I'm tremendously proud of. And that was again, a lot of pounding pavement, a lot of groundwork and ground game laid over, over the last couple of years. But it's not like we're going to all of a sudden start doing investments that are double or triple the size.
23:38 Speaker 02 Like we want to keep doing more of the same. And the only way to do that is to provide the leverage for yourself and your partners organizationally, which means get people up the curve quickly, drive that upward career mobility. Make sure the people at a Young age, get the reps in exposure to do deals. Sure, they will make mistakes. They will have their successes. You have to be that sounding board and thought partner and let people fail. You can't be afraid to do that. Now, I don't want anyone to be failing frivolously on our dime. I think that's certainly bad form. But at the end of the day, we won't be able to scale. We I, we will be a bottleneck unto ourselves if we don't let other people step up, do deals, take board seats, right, empower them. And I was afforded a lot of those opportunities as a young investment professional for which I'm very grateful and it's something that we also hold with the utmost respect here.
24:22 Harry Stebbings? I'm always in the mindset that training people is bluntly a nightmare. It takes time. It takes huge amounts of energy. And then in the majority of cases, they churn out and leave you to go join another firm and take everything that you've given them. And so I'm like, nope, I want check writers. I want people that come in, give me leverage and let's fucking roll. Why am I wrong? And why to you was building this model and this team so important?
24:46 Speaker 02 There's the cliche answers of it's the lifeblood of the firm or all that, which for what it's worth is true. I sort of just touched on it anecdotally of as the firm and the fund size or AUM grows and the deal count gets wider, right? We do more deals per fund as opposed to the same number of deals, but we drift into a different asset class. By definition, you need to have more people. So if one provides a space at the top for other people to climb the ranks and make partner and stay. And we want people to come in and build them from the ground up. It's something that we invest heavily into. The training from the outset, before you're allowed to get on the phone with entrepreneurs, and we probably speak with a thousand companies per month, right? Really rigorous, robust sourcing. So the best learning curve for a young, early, mid 20 something is to get that level of repetition, right? Of putting the reps there and all of a sudden they became really dangerous in the field.
25:32 Speaker 02 And I think one of our mantras is don't consume. If you're a consumer, no one's going to take you seriously. You need to be contributory in everything that you do and respect that bilateral value exchange, right? You give something to get something. And if that's means you have a good comportment and temperament and you have something to offer a founder. I don't mean in the business of horse trading information. I mean, in the business of giving them tips and tricks about things that you see or having just relevant expertise. That's what gets responded to. But again, before you're allowed to do that as an associate at Leftlane, we're putting you through a pretty rigorous training process. You're reading through and canvassing every investment memorandum we've ever produced. You're speaking with every senior deal person lead and going through each deal, breaking that down.
26:13 Speaker 02 You're learning how to cut through raw data sets of tens of millions of rows to make sense of unstructured data so that you can play that back. Like, that's the edge that allows us to move fast without breaking stride on that rigor or comprehension. We expect people to stay, not because you force their hand to, but because you provide them with the opportunity set, exposure, and ultimately, sort of the latitude to build their personal brand, right? And track record on our dime and on our platform.
26:36 Harry Stebbings? I do want to touch on the fund you mentioned there, the new fund. Incredible, by the way. But for me, I'm obviously a massive nerd on like portfolio mechanics and portfolio construction. You said there about not like writing larger checks later, actually just doing more deals. Talk to me, how does it change the portfolio construction from fund one to fund two? And with the increased levels of diversification, if you're not writing the bigger checks, does that not mean compressed multiples?
27:00 Speaker 02 No, so I think in our first fund, again, we adhere to exactly as we said we would. We lead deals, we'll position build into those winners, and we have outsized ownership. I think when I came through the ranks at my previous firm, it was a much bigger fund. And so you were somewhat irrelevant if you couldn't produce large capital gains outcomes. And so no one got excited about our writing a $10 million check into something. But we're able to do that and achieve good ownership out of the gate, and then stay the course and earn the right, coupled with the company doing well, but earn the right with a founder or a founding team to double down and lead or co-lead a subsequent round and really build that outsized ownership. And then have big outcomes into companies that are multi-billionaire outcomes. That's how you really move the needle, even in a large fund. That discipline and sort of portfolio construction framework is how we've modeled Leftlane.
27:43 Speaker 02 So when I talk about the fund size, our first fund of $630 million, our second fund at $1.4 billion, it's more than double the size. If I were to do the same amount of deals, but at commensurately higher valuations, as opposed to the same entry point, the same ownership targets. So we lead deals, we want to achieve 15% to 20% ownership out of the gate and keep position building from there. We've done that. The only variable that changes is that it's not simply the four managing partners who are leading those deals and taking every board seat, it's the principals. And vice president, it's the senior associates who have now transacted on half a dozen deals over the last couple of years who have learned the temperament and comportment and that sort of proverbial carrying the bag exercise where we invest heavily. So that they learn how to fish and they can ultimately go and do that on their own. So when I talked about the fund getting wider, I didn't mean we're all of a sudden putting option bets left and right and center.
28:27 Speaker 02 We lead every deal that we do, or at least we purport to. And in doing so, you have a meaningful ownership stake. So ownership stake relative to cost basis, what ultimately drives and governs a portfolio construction. Otherwise, you have to create $200 billion of enterprise value aggregate across your portfolio of which you would have a de minimis ownership stake to achieve a four or five X net M O S C returns. Like that's what we strive for. The way that you keep that that sort of top level figure, never going to be totally modest, just as we get into these values, but not at that sort of astronomical quantum that I recited. You have to be leading rounds and having real ownership, right? This is not passive. Is that, I'll pause there, does that kind of clarify?
29:04 Harry Stebbings? It totally does. My question to you is especially given the consumer focus. Whenever I speak to a lot of them, who are not consumer specialists, but they're generous, they say, but Harry, it's consumer. So if it works, it could be 100 billion. And you don't have that same kind of upside maximization thinking when you're looking at security or login enterprise software where you're like, okay, where's this the eight to 10 billion dollar? And so what I find is the price sensitivity on consumer deals is much less because the upside scenario planning in a lot of people's heads is so much more. How do you think about your own price sensitivity today? And have you had some big lessons on it over time?
29:39 Speaker 02 I'll offer a couple of things. One, I think the challenge and the pushback I always received was that, no, this is too early or it's too variable or unpredictable. And I would challenge that somewhat instinctually of understanding the actual underlying inputs and mechanics and drivers. How can you actually take growth equity analytical rigor and sort of principles and frameworks and apply that earlier stage in internet consumer tech? The, the simple answer is there's lots of littles, right? Even a company at, at a nascent stage of a million or $2 million of annualized revenues, probably thousands or tens of thousands of customers that have purchased a product, used it, liked it or not, taken out their wallet and come back. All the hallmarks of product market fit can actually be ascertained and deduced at a much earlier point in that company's evolution as compared to. A infrastructure software enterprise security company that it's at a million of ARR with
30:24 Speaker 02 half a dozen or a dozen customers, half of which are pilots or introductions from their their seed network. Like, it's just not predictive. And so that was the mantra of can we apply growth equity principles but in a venture context in the internet consumer? So minimize downside, have the same sort of proverbial hit rate as you would have or expect to have in growth equity, but at the cost basis and entry point of venture.
30:43 Harry Stebbings? The thing that I find so hard with consumer, I'd love your help here. It's like the two things which I just find so unpredictable and unpredictable is consumer buying patterns. You look at the first 1,000, often it's the biggest hero fans, users, lovers of it. And actually, there's this kind of asymptotic point where then you just get into the messy middle, so to speak. And they kind of like it, but don't love it as much first. And it's not the 100 true fans or 1,000 true fans, one. And then two, CACs are not the same. And so if you take the predictive assumption that it's going to continue being this customer acquisition cost for in perpetuity, it's not reality. So that's my challenge with the variability of both. Can you just help me actually investing wise? How should I think about that?
31:24 Speaker 02 Yeah, in internet consumer, right? Not all revenue is created equal. I think there's something nicely codified about enterprise software. Everyone has a principally similar spreadsheet. You can kind of put it in, you get this magic number, which seemingly governs and dictates the entire industry at large, which went a little bit bananas over the last half a decade or in specific last couple of years. It's now retreated clearly, but 100 times ARR was like the new norm or that was considered fair or cheap. And everyone was doing that. In internet consumer, you have a huge range of multiples, right? And you have to understand and appreciate that not all revenue is created equal. There is different margin profiles, retention profiles, so many different more kinks in the conversion funnel. So you have to be able to look into these second and third order derivative layers that inform sort of unit economics.
32:06 Speaker 02 There is no standardized playbook or a button that you can push to kind of ascertain economics or other surplus economics, will this break in the right way, in the wrong way, will this hold? There's so much more variability and I think it can never be plugged into a spreadsheet with like a thumbs up or thumbs down. That just will be definitely impossible in consumer. But to the extent anyone has, I don't want to say automated, but has streamlined that process and have been able to account for the inherent variability. Across spaces or categories, I think that we've done that. As it relates to valuation or these broader concentric circles of like, do you have reverse network effects? Do you get sort of diminishing returns of efficiency? Sometimes short, if that's something that we think is okay, this has been propagated by hardcore enthusiasts or that immediate inner concentric circle. And this is going to get meaningfully worse. And it's already only average at best right now.
32:51 Speaker 02 It's probably not a fit for us. And we're not doing that anecdotally or doing it with guesswork. We're running pretty rigorous, robust surveys, tying back self-imputed consumer demographic data with their behavior, economically, their self-reported behavior. We're trying to really drive these third and fourth derivative insights based on above and beyond what we might get provided by a company to help us ask ourselves and answer the very questions that you posited.
33:13 Harry Stebbings? Can you do that same level of work in today's compressed fundraising timelines? With soft banks, with tigers, with your crossovers, doing checks on coffee meetings? Are you still able to do your process to the quality and level that you need to?
33:27 Speaker 02 A hundred percent, and we never sacrifice on that. Well, one, first and foremost, we don't see those groups often or hardly ever. I think we're generally earlier by nine out of 10 times. We pride ourselves on being at the earliest semblance of product market fit. And then again, before it's obvious is when you strike, because when it's obvious, it tends to be expensive. And then you talked about, is that even possible in this environment? Listen, I think there are certain pockets of the world where an entrepreneur says, give me the money as fast as possible in the path of least resistance. And by and large, that's not a fit for us. I think we don't want to be passive like that. Right? We want to put our name next to something. We want to spend the time and spend the time to get to know someone before investing. Now, that doesn't mean, that can be speed dating and it's crash course work, the way which I described. The trick is when you come at it with that contributory mentality.
34:12 Speaker 02 I don't want to say like bedside manner with a founder or a founding team, but it's that consultative sort of expectation management of, this is not just for us to check the box. We're going to teach you things about your business in really short order that you didn't appreciate. And we won't be learning on the job, post diligence, post term sheet, post first board meeting, like I see so many other firms do, right? Where they might come in and ask rather rudimentary questions, three, six months into their tenured working relationships like me. Where were you when you had the chance to actually get up to speed? Because you rarely do it ad hoc. To the extent you can convey that appropriately to founders, they'll really buy into that. And if they don't, then then maybe it's not the right group for us to work with. And that's okay. And you have to be, again, if you're super rigid, then you'll miss some of those opportunities where being perhaps a little bit more flexible
34:54 Speaker 02 or the sequence of how you do things or the pace at which you do things shouldn't preclude you or forcibly push, relegate you to the sidelines. Increasingly more, there are pockets in the consumer and internet ecosystem that not only appreciate that, but seek that, right? They haven't had their sort of smorgasbord or menu of funds institutionally, top to bottom. There's pockets of partners here and there at certain other firms, but funds that are purpose-built and architected, top to bottom, side to side, to speak to their business and their space, right? And sort of think about that constantly as opposed to it being an exception to an enterprise software practice. And so it's not something that you'd be surprised when I talk about what that process looks like. We don't get pushback on it. And it's also the path of least friction. It doesn't entail them doing, Harry, 20 different data cuts that are bespoke to us.
35:37 Speaker 02 We ask for that raw data anonymized, we cut it, we make sense of it, we play it back to them. And we say, listen, we know you're not fundraising right now, but thank you for doing this with us. We never fade away. You have to be contributory in everything that you do. And we'll give that to them and say, we rendered this to you. You can use this for fundraising in the months forthcoming when you're ready to go. We walk away with sort of a really nice relationship. And we've had our work come back to us with other funds dozens of times. It's somewhat flattering to see us be able to even put a small imprint on a space that I think has been highly misunderstood.
36:05 Harry Stebbings? Final one before the quick fire. The references told me that you and me were quite similar in the way that we're both incredibly ambitious, incredibly dogmatic, very intense. Don't let up. My question to you is, how do you think about maintaining your position, being so good at what you do, but also having a family and having a great relationship?
36:24 Speaker 02 Make no mistake, I go home to Pittsburgh to see my parents, my grandparents, right? Or my aunts and uncle and cousins five or six times a year. You have to create the space for yourself and that has to always be first, second and third priority. There ultimately is nothing more important in this life than that. To the extent even sometimes infuse them into your your professional life, right? And like I said, I have family or friends that are my intimate sort of customer ethnography board, right? So sometimes it's not like the most quality family time. Is sparring about a potential space or the merit or demerit of this company or this toy or this ed tech business, whatever it might be, but they themselves are also understand that this is our passion. This is my passion. My work is my life and my life is my work. And if they love me, that's something they will subscribe to and it's not burdensome to them.
37:07 Speaker 02 So I don't want to purport that like the lion's share of my time spent with family or friends is sparring about deals, far from it. But again, sometimes those two worlds are not mutually exclusive. I want to offer. And at the end of the day, your ultimate legacy on this earth is, is how do you perpetuate yourself, right? And so for me, that is having children, having a family. I was privileged enough to grow up with model parent in a tight familial household. And that's something that I have always had the utmost reverence for, and I will have the same.
37:33 Harry Stebbings? Right. Man, I would love to see the conversation with your mom. How many times did you buy HelloFresh? What did you order this week? Have you bought it much this month? How did your fans buy it? Oh, lovely to see you too, Harley.
37:42 Speaker 02 Yeah, I mean, something along those lines, right? So again, if you knew my mother, she's world-class human. I mean, truly, like universally, I think what she's taught me is how do you have the surface area and range to connect with people and have that fundamental respect for the human condition. I think that's actually what has made me earnestly a good investor and someone that can connect with founders, right? And not just a founder that's intense in the conventional sense or ambitious in that conventional sense. I think you have to be able to have different speeds, different tempos, and that's ultimately from her. And so most of my conversation talks about just being a better human, which I think in turn makes me a better investor.
38:18 Harry Stebbings? Listen, I do want to do a quick fire round because I could chat to you all day, Harley, but a quick fire. I say a short statement, you give me your immediate thoughts. Does that sound okay?
38:25 Speaker 02 Let's do it.
38:26 Harry Stebbings? Okay. So what have you recently changed your mind on, Harley?
38:29 Speaker 02 That we should do more media more often. There was some element of no one wanted to see four guys in their early 30s or at the time 30, raise a large inaugural fund. I think just emotionally, instinctually, that rubbed a lot of people the wrong way, or they perceived us to be playing for something of getting rich off of fees or whatever it was, as opposed to objectively sizing us up and realizing like, that was the asset class in which we were raised professionally that we best knew how to navigate and anything but that would be counterproductive. And so I felt like doing media would draw attention and negatively buy That if people didn't want to root for our success, and I think that we've changed our tune there recently. Case in point with even wanting to finally be able to have the opportunity set to speak with you.
39:09 Harry Stebbings? I'm obviously a long term believer in the power of media, so that makes me very happy to hear. Tell me, what's the secret to a happy relationship working with your bro?
39:17 Speaker 02 I'll start with the following. He's my best friend now and forever. We live together. I mean, really powerful thing. If harness the right way and if boundaries are respected, which I think is first and foremost rule of thumb. Second would be let him be his own man. He needs to be, can't live in my shadow, empowering that and respecting that. And then ultimately you have to treat him the same as anyone else, whether that be with positive reinforcement where deserved. And then harsh constructive criticism as appropriate and make no mistake, I've towed that line appropriately over the last few years. And even predating our working together at Left Lane. And that was a thing. That was a real thing that people glommed on to. And they had to diligence it and get comfort with that because it's not going to be neutral. It can't be neutral.
39:58 Speaker 02 It either is a negative or it's a huge positive. And I think suffice it to say, it's clearly found its way into that that latter camp. But that's not something you ever take for granted. You have to keep working at.
40:07 Harry Stebbings? What's your biggest investing miss and how did it change your process and mindset?
40:11 Speaker 02 If I had to say, it was probably Airbnb circa 2011, 2012, right as I was getting my footing in this industry and having done some deals. Again, I was a total consumer and I mean that in, I don't do it in a contrived way. I do what I feel like is natural to me. And I don't view myself either as an early adopter per se, right? I actually think being a bit of a later adopter. As you made a commentary, Harry, about like concentric circles of fervent inner circle, early adopter versus as you broaden that, does the fidelity get worse? So I actually perceive myself to be kind of in that middle of that cycle. Therefore, I typically, if something that resonates with me, it'll probably be resonant with tens of millions of people across the country or hundreds of millions across the globe. I was a fervent user of Airbnb on both sides of the marketplace.
40:55 Speaker 02 I would represent what you call symmetry in a two sided marketplace. I'm both a seller and a consumer. I would travel and stay in alternative accommodations on Airbnb when I would travel to Europe for work. And I would rent out my loft in Brooklyn. I was seeing how powerful it was and it was highly misunderstood. Understood. I think that an older generation didn't appreciate that this would not only supplant, but massively grow and expand the space of travel and alternative accommodations. I had the instinct, but I didn't have the cogent argumentation sort of substantiated and rooted in fact and data to be able to push for that. And again, I was also too early. I don't want to purport and say that like we had it. It was at a term sheet level and I was driving that, right? It was not that, but the idea was there and if I had been a bit more mature or my investor acumen had been more mature at the time,
41:38 Speaker 02 I perhaps could have given my voice the same way that I had in subsequent, be it the Deliver Here or the Hello Freshes or Udomies or other deals that went on to be rather successful that I had a very strong point of view on and was unrelenting in my conviction thereof.
41:50 Harry Stebbings? What's the most memorable first founder meeting you've had? Mine was Johnny at Hoppin. It was terrifying. It was like, we're going to build the fastest growing company in the world in 12 months. I was like, I'm in.
42:01 Speaker 02 So mine was probably two weeks in my job, June 2010. I was meeting with Lukas and Colia of Lieferheld, which means delivery in German. This is the precursor to Deliver Here before they acquired and expanded and merged with online Pizza Norden and Niklas Osberg, the current CEO to form Deliver Here Holdings. So the company was principally in just the Dach region or in Germany at the time. I had obsessed, first week on the job, I looked at online education, online travel and online food, right? I was told not to, and that's where I spent my time. And so they happened to be in New York. I remember showing up to Soho House. Now I wear black and people think I dress like a pirate and that's just me. But at the time I was dressing to the nines, right? With a nice suit, a fish hook on my lapel, right? Or something.
42:44 Speaker 02 I was trying to obfuscate my age or my tenure or lack thereof and trying to be serious and not convey that I'd been on the job for all of 10 days. But they gave me the time of day and I had spent enough time thinking through the space and had started a company actually in college in the mobile food. I had a native BlackBerry app. It was way too fucking early or it was just whatever. At least I could say I was just too early for the space. Reality is I didn't have the execution chops to see it all the way through. It was memorable and not in the sense that it was awkward. Believe me, I got reamed out in the first month of the job ever. A founder absolutely put me in my place because I wasn't prepared enough for that meeting. And maybe that person was a bit too ego, but this was different. And maybe it was because I was renting the paper and the balance sheet of the firm that I represented at the time, which certainly speaks for something, but it was incredible. And I knew right then and there, I was like, this space is so real.
43:29 Speaker 02 There's going to be a lot of, it's going to be hundreds of billions of dollars of market cap created here. And I was pushing for that. That was a series A and that was in 2010. We ultimately didn't invest into the company for another three years and watched many rounds go by, right? And that was frustrating, but eventually when you spend long enough at it and you stick with that and your conviction is unyielding, the proof points continue to corroborate that you're likely right. It works out. And so one of my first probably dozen meetings are people that I met in this industry. And on paper, it probably remains one of the most successful investments that I've ever participated in.
43:59 Harry Stebbings? My man, do you ever feel the weight of expectation?
44:02 Speaker 02 There are good days and there are less good days when you're in the throes of fundraising and it feels like that's existential. And there's so many people relying on you to get that done. And it's not like I carry that entirely on myself, but I talked about the amount of groundwork that we laid and the foundation that we laid, how many meetings we took, whether it was a $50,000 check or a $50 million check to bring the same, right, wrong or indifferent, I would bring the same fervor, intensity and passion to that meeting, day in, day out, bar none. That's how I'm wired and I kind of thrive and get off on that. So it's not something like I know it, I recognize it. I also sort of bottle my emotions up, right? It's something that I, or I'll speak with my mother about it as my confidant, if I need to have a familial therapist, so to speak, but it's, it's not something that, I don't feel that weight on my shoulder.
44:44 Speaker 02 This is my sport and I play the game on the field, except the clock never stops. It's not like, okay, it's a 40 minute match and you're off and you take a break. For me, this game is omnipresent and it's something that I live for. It's not something that weighs on my soul or my heart.
44:58 Harry Stebbings? Man, that is such a good Twitter clip. You see, this is how our minds differ. I think in media clips, like boom, that was like gold dust. Final one, and I'm super excited for this. I'm actually changing it because I'm more interested by this one actually, which is, your ambition is, is incredible. It's very tangible. You feel it when you talk. Man, what do you want to build with Left Lane in 30, 40 years' time, grandchildren running around? What does Left Lane look like? What have you built?
45:22 Speaker 02 I don't have a crystal ball to say this will be the size or this is where we'll play. It'll be a lot larger than this today. It will have cultivated some of the world's foremost investment professionals in the internet consumer space. And we will evolve, we will iterate as long as humans walk and grace this earth and need to eat and sleep and learn and keep learning and manage. Like everything that's fundamental theme and condition, we will be highly relevant and we wanted to find that space. And so when people think about what is greatness there, our name will be synonymous with that. We will grow, we will have global presence. We already have global presence across Brooklyn, New York, our headquarters and our London office, right? And this needs to be, it must be a firm. I will work for the next 30, 40 years or as long as I have a sound mind, body and spirit.
46:03 Speaker 02 But this will be a firm that transcends that, that withstands the test of time, you know, long after I'm gone.
46:08 Harry Stebbings? Harley, this has been so much fun to do. I've wanted to do it for a long time. I really appreciate you giving up the time and thank you so much.
46:15 Speaker 02 Mate, it was a pleasure sincerely. Thank you for having me on. I'll ping you when I come to London, probably in the coming weeks or month. Or if you make it to New York, we'd love to have you by. It means a lot to me that you allowed me the opportunity and forum to share some of that with you and your viewership.
46:30 Harry Stebbings? I think what I so loved about Harley there, especially in the last five minutes, is you really just feel the passion. It is so tangible hearing him describe what he's trying to build with Leftlane. I could not be more excited for the times ahead with Leftlane and the team. If you'd like to see more from us behind the scenes, of course you can on 20vc.com. We always love to see you there. But before we leave you today. Harvard Management Company is constantly seeking out the next generation of great investors and entrepreneurs. HMC has managed Harvard University's endowment for nearly 50 years and was one of the first institutional investors in venture capital. Their experience and long-term investment horizon makes them ideal partners to get world-changing ideas on a path to viability and success. They work as a true partner, providing insightful perspectives to help managers succeed.
47:14 Harry Stebbings? I personally have had the pleasure of working with the HMC team and can say that they're truly exceptional partners, people and incredibly savvy investors. Whether you are launching your first fund or your fifth, HMC welcomes the opportunity to partner with both developing and established managers. Have an idea you want to share with the team? Just send it to ven. At hmc.havered.edu. And speaking of amazing partners with HMC there, Mercury is building full stack banking for startups. Apply in under 10 minutes from anywhere for FDIC insured bank accounts, physical and virtual debit cards, domestic and international wires, and integrations with Gusto, Stripe, QuickBooks, Plaid, and basically every other tool your startup uses. They also offer unusual features like API access,
47:58 Harry Stebbings? custom team management, and their newly launched Mercury Treasury, a cash management product for high-growth startups. They'll even help you build your startup with Mercury Raise, a program to connect you to Silicon Valley's top investors. Head over to mercury.com/signup to apply. And finally, automated investing strategies. They were only available to millionaires, and now the Bots platform has made the most successful strategies available for everyone using their superior Bots technology. In the Bots store in the app, you can choose from a number of automated trading bots. These trading bots grow your portfolio by buying low and selling high, making informed decisions based on data, mathematics, and science 24/7. Join the 1 million people who've already downloaded the easy-to-use Bots app and discover this new way of investing.
48:43 Harry Stebbings? Bots is already available on Google Play and in the App Store in 35 countries in Europe, and will be expanding to more than 100 by the end of the year. Go to bots.io/20vc. Try the Bots app now and let the Bots do the work for you. And as always, I so appreciate all your support. Stay tuned for Wednesday's episode on what it means to be a great parent and what great parenting teaches you about great leadership with Chris Sacker, Harley Finkelstein, Dina Shakir, and many more incredible names.
Previous 20VC: Scaling to $122M ARR IPO with $6M in Net Burn, Olo. The Ultimate Journey of Capital Efficiency, What Worked, What Did Not Work and How Leaders Need To Reshape Thinking Around Resource and Attention Allocation Next 20VC: The Memo: Chris Sacca on Why We Are Breeding a Generation of Entitled Assholes, Harley Finkelstein on What Great Fatherhood Really Means, Deena Shakir on How Kids Make You a Better Investor and Anne Wojcicki on How Children Change Your Approach to R Page updated September 29, 2026 · transcript and summary are machine-generated
