20VC: The Founding of General Catalyst, What it Takes to Build a Firm That Stands the Test of Time, Why VCs Need to Give Founders Greater Permission to Go For It & Why Venture Capital is Like Tennis with David Fialkow, Co-Founder @ General Catalyst

David Fialkow is the Co-Founder and Managing Director @ General Catalyst, one of the leading venture firms of the last decade with a portfolio including Stripe, Snap, Airbnb, Anduril, Canva and many more amazing names. Prior to founding General Catalyst with Joel Cutler, David was a serial entrepreneur building and selling 4 successful companies. In Today’s Episode with David Fialkow: 1.) Everything Great Starts Small: How did David and Joel decide on a Hawaiin beach that they wanted to start General Catalyst? Why did they decide to name it General Catalyst? How did the first fundraise go for GC Fund I? 2.) Creating a Firm: The Early Days What design objectives did Joel and David have when they started the firm? How did Joel and David think about firm expansion; going to the West Coast? Coming to Europe? Going multi-stage? What drives their decision to do new products? On reflection, what were some of the toughest elements of the early days with GC? What does David believe they got right? Why? What did they get wrong? How would he change it? 3.) The Partnership: What does David believe makes for a truly successful venture partnership? How does a great venture partnership align to what makes a successful marriage? How does David approach trust? How does he build it with people? What situations would cause David to lose trust? Why do so few people understand it? What does David believe is the true secret to authentic relationship building? 4.) Doing the Impossible: Generational Transition: What does David believe they did so right in their generational transition at GC? What do many firms get wrong in handing over the reins to the next generation? What are the biggest commonalities between venture partnerships and filmmaking? Mentioned in Today’s Episode with David Fialkow: David’s Favourite Book: The 7 Habits Of Highly Effective People

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

• 0:00Harry Stebbings?

  Alrighty, we are back. This is 20 VC with me, Harry Stebbings. And today, we have one of the founding fathers of one of the most renowned venture firms of the last decade. I love these types of episodes. I find the wisdom and insight here just unparalleled. So with that, I'm thrilled to welcome David Fialcao, co-founder and managing director at General Catalyst, one of the leading venture firms of the last decade with a portfolio including the likes of Stripe, Snap, Airbnb, Android, Canva, and many more amazing companies. Prior to founding General Catalyst with Joel Cutler, David was a serial entrepreneur. Check this out, building and selling no less than four successful companies. I do also want to say a huge thank you to Adam Balkin, Hemant Nejha, Quentin Clark, Nico Bonatsos, and many more from the GC team. Such a team effort on the schedule and really did make it so special.

• 0:43Harry Stebbings?

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• 1:27Harry Stebbings?

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• 2:10Harry Stebbings?

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• 2:55Harry Stebbings?

  But enough from me, so now let's dive into this incredible show with David Fialcao at General Catalyst.

• 3:05Speaker 01

  You have now arrived at your destination.

• 3:08Harry Stebbings?

  David, this is such a joy to do. I've heard so many great things from Hemon, from Joel, from Nico, from Quentin. I mean, the list goes on, but thank you so much for joining me today.

• 3:17Speaker 02

  Thank you. I paid all of them off to say very nice things about.

• 3:20Harry Stebbings?

  I mean, they did tell me about the ride. Not a cash to buy, Adam. It's a 20 year journey with GC. Take me back, what was that founding aha moment for you with Joel? You decided you wanted to do venture post companies that you'd done with him before.

• 3:35Speaker 02

  What really happens is that Joel has been my best friend and my business partner. We met when we were five or six years old and we've been just great friends ever since. And I have always loved the fact that I met my wife when she was 17. I was only a couple of years older. I met Joel when I was in single digits. A lot of the relationships in my life have been very, very long term. But our road to venture capital is a quite unusual one. Joel and I built a business over the first eight or nine years of our business life and travel, and we built a whole bunch of travel businesses. It was a fantastic start of business because the beauty of travel, which is the exact opposite of venture capital, is that travel people pay upfront and then travel later. So you build this massive cash balance that allows you to build your business and we built.

• 4:20Speaker 02

  Built a business with several hundred million dollar business without ever having to raise venture capital. Now, that's the public answer. The private answer, since you and I were talking privately, is that nobody was ever going to fund us. We had no experience, but in that building that business and in funding it through self-funding. And even still today, most VCs want to bet on something empirical, a track record, or something that they can point to that says, Harry, if they did this, then they could do that. And there was no way in the world that that was going to be the case in our travel business. But where it all turned is, one day after Joel and I sold our business, Joel has Crohn's disease, which is an inflammatory bowel disease he's had his whole life. He's basically beat it and he's been a great crusader for Crohn's. But we raised a lot of money when we were younger for Crohn's.

• 5:04Speaker 02

  And when we sold our business, somebody challenged me to do the Hawaiian Ironman without training. And the idea was is that I would do it only if I could bet these guys who were challenging me a million dollars. The million dollars that I would get would go to Crohn's. And if I didn't do it or I didn't finish it, my million dollars would go to them. In doing training for a couple of months and going over and doing it, it was really a first time in my life that I had had some time to think about what lies ahead. And when Joel and I got to Hawaii, Joel and I were sitting on the beach. One of the ideas that we had was to start a venture firm. Joel said, well, why do you want to start a venture firm? And I said, well, I mean, it's a way to be around the smartest founders and entrepreneurs in the world. And we argued whether we were A or B founders. We came, we figured we were like B minus entrepreneurs.

• 5:49Speaker 02

  We're smart, we're hungry, we're gritty, business had a thousand employees, we enabled young people. We learned a lot in doing it. And I said, we should take all that because then we can meet all these great founders. And then Joel, looking out at the Hawaiian sun, said, that's a great idea, except we lack two things. One is we have no investment experience and we have no tech experience. And I said, that's exactly right. We have no bad habits. And laughing, we agreed to start General Capital. So we really did it, not as a wealth creator, not as a way to build cachet or anything. We didn't know anything about that. All we wanted to do is be on the journey with founders the same way we had been together under our own journey.

• 6:28Harry Stebbings?

  I mean, I absolutely love that. And I love this vision I have of you and Joel on a beach in Hawaii deciding to found it together. Before we go to GC, though, you mentioned knowing Joel since you were five. This partnership is something that I heard from Hemon, from Adam, from Nico, from Quentin. And they all said about just how truly unique it is in any where in Bancho. I wanted to ask, what makes you guys such good partners? Like, what is the fabric that makes you so good together?

• 6:52Speaker 02

  One thing we did, which I think was a very good idea, is most people who start business with their friends, I think can make a mistake. They say, let the business never get in the way of the friendship. We said the exact opposite. Let the friendship never get in the way of business. We are dear friends, but we are business partners. And our role in bringing these businesses to market and in starting first few companies. And now General Catalyst was always, and we had to really focus on the business issues. Which means that if I'm doing something that's either pissing Joel off or wrong, he not only has the obligation, immediately is going to come and say, hey, I think this, I think that. And there's no pretense that it's going to hurt our friendship. On the contrary, our friendship is going to be stronger because we have this integrity of real transparency.

• 7:37Speaker 02

  So that's a very important part of it. The second thing, which is harder at scale, it was easier when we were smaller. Sounds crazy, that Joel and I were classic divide and conquer. Very, very different skill sets. The things that I like to do are very different in the business that Joel likes to do. And as a result, we don't overlap a lot. So we don't have conflict. On the contrary, we started the business by being able to divide up the opportunities and go execute. And since we trust each other, we don't have to second guess or check in on each other. And I think that was a fabulous start. The second thing, everybody knew that they couldn't get in between us. There was no way that anybody was going to pull against me or me against Joel. And then the third thing is I knew, the same way he knew, that he always had my back. So if he said, hey, listen, I'm going to go do this deal, I got to go work on this.

• 8:21Speaker 02

  I never had to say to him, like, oh, get back to me, let me know what you're doing. I know that he'd make the right choice. And as a result, he gave us enormous amount of agility and speed at the beginning.

• 8:31Harry Stebbings?

  So let's go back to the beginning then. When we have that decision to found GC on that beach in Hawaii, we have a blank canvas and we can design the fund and the principles in the way that we want to. When you think about the design objectives, what did you want to build back then? And how did the name General Catalyst come about?

• 8:48Speaker 02

  Well, the name General Catalyst, there's a fabulous friend of ours named Brian Beedall. And sitting around one day, we were trying to decide, just as a friend, what were we? There were a lot of different names started around, but the name came up is that we're kind of a catalyst. We're kind of a catalyst in many different ways. We could have called the firm Catalyst, I mean, there is Catalyst. But what we wanted to be is, we wanted to be catalysts, but in a way that was just around one thing, the journey of founders. So that's how we came up with the name. It wasn't a very creative way, but it seems to have stuck and then obviously it's worked out well.

• 9:20Harry Stebbings?

  And when you think about design objectives for the firm, did you always want to build a multi-stage, multi-geo, global firm? What was the initial ideas and how did that change over time?

• 9:32Speaker 02

  Well, people can't see because you and I are on video, but I'm laughing. Absolutely not. We had no plan. We had no strategy. We had no business model. All we knew is that we were going to take some of the money we just made selling our travel business and we were going to hatch companies in Boston. The original slide that we had, which was just a photograph of a drive or a board that we had, was very simple. Pick industries that were predominantly consumer because we knew nothing about enterprise or healthcare. But what we knew is, is that, this is in the early 2000s, that there were so many transformations that were going to happen around consumer, that we had had experience building consumer business. So we just want to hatch the next generation of great consumer companies.

• 10:13Speaker 02

  So it wasn't just getting other founders, which of course we wanted to do. It was the fact that we were going to hatch a bunch of our own companies. We're very clear not to call it an incubator because to us, an incubator is where you put sick babies, unfortunately. And it never really worked for us to call it an incubator because an incubator also means throw a little money around and see what sticks. Our goal was from the start to be able to sit down with founders or our own team and hatch the next great generation of companies. And that's what we did at the beginning. And then what we realized is our ideas weren't as good as other people's ideas. And why not hatch some and invest in others? And that's really where it started.

• 10:53Harry Stebbings?

  How big was the first fund and was it easy to raise?

• 10:56Speaker 02

  Yeah, we used our own money.

• 10:59Speaker 02

  Well, the first fund was probably seventy million dollars and it wasn't even in GPLPO, it was in LLC because of course we were building a company, which is the only thing we thought we knew how to do. It was seventy million, most of it was from us and then a handful of checks from some of our friends in Boston who would become mentors to us, mostly investors in other funds, because we had no investment experience. And we went to some of our friends and said, hey, we would help us. And they said, sure, can we put money in? So our first fund was all friends and family, but the majority of the money came from Joel and me.

• 11:30Harry Stebbings?

  When you had to go out to institutionals for the first time, how did that go?

• 11:33Speaker 02

  Well, there were a couple of fun ones. One was Joel and I left leaving an endowment, which was one of the Ivy Endowments. And we were driving in my convertible back to Boston from visiting this endowment. We were really excited because we got our first commitment from the endowment. And I said, hey, that's a tremendous donation that they all made to us. And Joel looked at me and said, it's not a donation. They actually want their money back with a return. Because the only money that Joel and I had ever raised, knowing our backgrounds, was that we've built huge foundations around philanthropy our entire lives. So the only time I'd ever asked anybody for money, our original business didn't require investor money, and this was the first time. And my mentality was raising money to make

• 12:14Speaker 02

  the world a better place, not necessarily to build companies. But the response was quite mixed. One endowment that I sat down with, they asked us a very important question. What's our investment experience? We said, none. And what's your tech experience? And we said, well, we built a tech-enabled business. That group turned around and said, I can't believe it. I will never get this thirty minutes back that you just took from me. Please leave. So we got back in the car and agreed that didn't go so well. But where we found a sweet spot was there was two people in particular that really believed in this early. One was David Swenson from Yale, who's unfortunately passed, and then Andy Golden, who ran the

• 12:54Speaker 02

  endowment at Princeton. And what I think they saw in us, I think, was the fact that we were going to tack in helping founders in their journey, having empathy for the process of building a company. And also, I wouldn't say it was easier in those days, but our message really resonated because most of the VC funds of those days were financially driven. They weren't necessarily people or funds.

• 13:18Harry Stebbings?

  I want to touch on that because I obviously spoke to many of your partners before. I spoke to many of the founders that you've worked with before. The interesting thing is I always ask like, what's David's biggest strength? And the commonality amongst everyone's answers was incredible here. They said, David is truly the best in the world when it comes to unique relationship building. When you reflect on that, what do you think you do that makes you so good at authentic, genuine relationship building with the companies and founders that you work with?

• 13:44Speaker 02

  So what you probably ask people, how good are David's financial skills? And they went, not so good. How good are his tech skills at evaluating product? Not so good. Is there anything that this guy does that's good? And they said, yeah, he gets along well with people and he creates opportunities through relationships. So I think, Harry, we're all given some strengths, some weaknesses, and I'm a filmmaker, right? I mean, my background later is, yeah, I'm a documentary filmmaker. I love the art of a story. So what I really want to try to understand when I meet founders is what's their journey going to be like? And most importantly, where can we be helpful in that journey? In that journey, it's going to be relationship driven. You and I mentioned before that your mom has MS, okay?

• 14:27Speaker 02

  And the first thing that I would talk to you about if I met you, you were a founder, is I'd really try to understand, is your mom getting the healthcare? I would be biased. I'd say, is your mom in the UK, which I know has good healthcare, but is there something in the United States that may be better? No, I'm not doing that because I'm trying to gratiate myself to you. I'm doing it because I'm trying to develop a bond with you that's bigger than just making money. The second thing is, is that I realize that any one of us, including me, there's a limited amount that I can bring anybody. But I can bring an enormous amount of people to you as a founder who have skill sets or relationships or desires to help you.

• 15:06Speaker 02

  So instead of me talking to Harry and saying, Harry, this is what I could do, or even this is what GC can do for you. I can say, we can bring you an entire force of nature that can help you in your journey as a founder. So I'm immediately trying to figure out. Who in our network and ecosystem would you enjoy being with and who can help quickly? For three reasons. Number one, I want you to know I care about this journey that we're on. And I want to include other people in that journey who can be helpful to you. Number two is I want other people's feedback on Harry. And I want to know how people that I trust, I say, hey, meet this guy. Building a business, I think we can be helpful. What do you think? Expanded the pie. So now instead of me trying to help you

• 15:49Speaker 02

  or me and General Catalyst helping you, I've brought you an enormous amount of intellectual capacity that can help you on your journey. And that's what we love about venture capital. That's what we love about our roles with founders. So that's the reason why I think people mention that relationships really matter to us.

• 16:08Harry Stebbings?

  Can I ask, how do you retain that quality and that authenticity at scale? You've done 3,000 shows. That's a lot of relationships. But I used to be brilliant. Now it's just tougher. There's too many. There's too much. I've got 150 portfolio companies.

• 16:24Speaker 02

  Yeah, well, you're getting older and that happens. You're going to hit 30 pretty soon. And God knows what's going to happen.

• 16:28Harry Stebbings?

  Five years, David. Five years.

• 16:31Speaker 02

  So let me say this. So you just mentioned it. I'm going to answer it by saying to you, you've had 3,000. If I ask you what your five best ones are, you'd go boom, boom, boom, boom, boom. Why? Well, there was some interconnectivity between you and them. There was some problem that you solved together. There was something unique. It wasn't their IRR, their MOI, all that. It wasn't that. It was this interconnectivity between you and that person. You asked me a strategic question, why? And then a tactical question, which is how? The why is, is that the network centricity of what it takes to build a philanthropic initiative of film or a company is all people driven. Okay, 100%. So, so important to me that I deeply understand a group of people

• 17:16Speaker 02

  and have a variety of different people in my life. Bring groups of people together on a regular basis. And I always do it in places people can relax and enjoy the relationship part of this. And I always bring people that don't know each other. They've never met. Now, why? Because if I bring two people that know each other, they're immediately going to change the dynamic of the group. They're gonna either talk among themselves, remember when we did this and that. Be open, because I want Chatham House rules when we do these, which means what gets said here stays here. If two people know each other, you're on the risk that they won't do that. And what you find, Harry, is when you put people who are smart, engaged, open, together, the enormity of the group expands tenx. We did one, um, two years ago, right before Covid.

• 18:00Speaker 02

  We brought a group of people together and one of the subject matters we wanted to talk about was mental wellness. And in particular, the group in this case wanted to talk about depression. At one of our dinners, okay? It went around the table and it sounds like a morbid discussion, but open and honestly, everybody around the table had some experience, whether it was personal or with their spouse or with their family or kids or whatever it was. And I remember staying up till three in the morning, sharing ideas and being creative about how to deal with stuff like this. Well, that could never happen if it wasn't people coming together and being honest and talking through things that are deeply important to them. So when you say, how do you build relationships? You don't really build them. People build relationships with each other that we help facilitate.

• 18:41Harry Stebbings?

  Do you know what I find tough, honestly, David? Is I think we're very similar and aligned in, in everything in our approach in many ways. I think the trouble is I often find people aren't willing to let their guard down. Like, I want to have a connection with you and I know that to do that, I have to show more of myself than just, we're killing it and yeah, life's great, thank you so much. But I often find this barrier of unwillingness to open up, which means I'm kind of just pushing against a brick wall sometimes. Do you ever feel this and how do you approach it when you do?

• 19:10Speaker 02

  Part of developing a relationship with people is vulnerability. If you're self-confident, which you are, and you have the ability to deal with adversity, which you do, and you understand that the ups and downs make life fun and challenging at the same time, then your own vulnerability. So let's just say you're either one up or one down in most relationships. We try for parity, but you and I. So let's imagine, like, I probably four or five times a week will meet people, kids, either friends of my kids or kids of my friends. Or just people in the G C network insight about what they should do next. The first thing I'm going to realize is it's a little bit overwhelming for them to talk about this. Okay, they don't know me and I've asked them to just share their inner secrets.

• 19:55Speaker 02

  What the hell do you want to do with your life? Who are you? So I don't do it that way. I often begin, I say, wow, this is really exciting. Can I tell you what life was like for me when I was twenty four? Yeah, I was a filmmaker trying to make documentary films and it was like I couldn't make a living. I wasn't sure what I wanted to do and had a couple of ideas. And you can see, Harry, people's body language completely changed. They go from being uptight. Maybe this guy was a screw up when he was younger too. Or he doesn't know what the heck was going on next. The reason why I'm doing this is A, it's true. It's authentic. But B, I don't want people to feel like they have to have the right answers all the time. Cause I don't. So what I want to do is develop a dialogue with people. That's going to allow me to address what they're most vulnerable about without making them feel vulnerable.

• 20:38Harry Stebbings?

  I think it's kind of humanizing in many ways because they look.

• 20:40Speaker 02

  Yeah, the more you make this about business and numbers and outcomes. Some people respond very, very well to that. A lot of people, especially elite founders, they say, great. I'm happy to talk to you about these things, but what I really need is your help in X, Y, and Z. And in those scenarios, what I'm really trying to figure out is where are the places that they really need the most help? Building a business is not like playing tennis. To be a tennis player, you have to learn how to hit a backhand. You can't get away with it. Business is not like that. You don't have to be well rounded. I mean, obviously I'm a good example of that, right? What you have to be able to do is have an ability to attract talented people around you and bring those different skills together. So if I'm talking to a young person, I'm telling them exactly that.

• 21:24Speaker 02

  You don't have to impress everybody that you know everything. What are the one or two things that you're deeply good at, love doing, passionate about? And then surround yourself with people who are going to complement you. Even when we're talking to a founder who says, I want to go build a company. What's the team? We'll always address it as how do we put together with people that have different skill sets? So that the team is a lot stronger.

• 21:45Harry Stebbings?

  It's an interesting one when you apply it to founders because I kind of have oscillated on this over time. And I think actually where I sit is like so much of company. Building is playbooks in many ways around hiring, around team building, around culture building. And actually you learn by doing the reps. And bluntly, David, I've worked now with quite a few first time, young, young founders. And they fucked up on things that shouldn't be fucked up on. And I'm now kind of going back to this mindset of work with the thirty five, forty year olds who've done it. Been there, made the mistakes on someone else's dime, and they're not going to make them again. But then I kind of feel bad for that. And I'm like, really? How would you advise me with that kind of investment quandary?

• 22:22Speaker 02

  So I think that if you are going to be an investor in a company, whether you're a venture investor or whether you are a, an angel. I think that we have to understand that with power comes responsibility, something we'll talk about later. And I think that if you are going to take the role of helping that founder, you need to help them candidly understand their strengths and what else they need. Number one, part of it is avoiding this issue that you have to be super well rounded as a founder. And instead complimenting or supplementing their team with co-founders or other people. If I'm a really strong product person, maybe I don't know how to sell or vice versa. So instead of forcing that person to do things that they can't do. The second thing is what's the definition of success and failure? A very metaphysical rhetorical question, right?

• 23:07Speaker 02

  In our minds, a business that does not work out that most people would characterize as a failure is not a failure. It's a startup going. What I mean by that is we got to give people permission to go for it. And the biggest mistake and the biggest definition to us or me of failure is not going for it. Not taking all of your intellectual and physical and mental resources and putting it and going for it. Forgiveness is a lot easier than permission. Push people around you hard to get the right answers. Push them to be curious, push people to be better at things. And we need as investors or angels or whatever it is, direct answer to your question. That's the definition of success.

• 23:50Speaker 02

  It isn't an up round, God knows, isn't even the exit, which is of course important. Because there'll be a lot of revisionist history once there's an exit, like what cherry made the pie taste good. Get there, we need to give founders permission to go for it and to be there when it doesn't work out and not call it a failure. But just call it a pivot or a readjustment and be there for them and not be judgmental. Those are the best VCs.

• 24:16Harry Stebbings?

  How does one give founder a permission to open their mindset to a new level of risk that maybe most others don't allow them permission? How do we let them see the uncapped upside and really allow them to expand their mental plasticity to it?

• 24:30Speaker 02

  Storytelling, do it by analogy. You need to tell them, I've seen this before and these are the things that work. It's not that complicated. It's hiring great people. Well, let's talk about a couple of things. The first thing you've got to evaluate is, is this person that's sitting in front of me capable of the emotional, physical and mental stress that it's going to take to build a business? Binary. If they're not that person, regardless of how good their ideas are, they're not going to do it. Number one. Number two, are they going to attract talented people to work with them? Nobody has ever done this on their own. Are people going to want to work for them? Are they people that are going to gratiate themselves to others and inspire them through their leadership or their vision to want to work?

• 25:11Speaker 02

  We all know that. Great early stage companies are like cults. They all believe, they believe with a capital B. The third thing is, this sounds crazy, okay? In order to get a job, in order to get a date, in order to get into school, in order to get your first customer, in order to get people to want to work for you. All those skills require you to sell. Now, selling may not be dare to win, take the mountain selling or commitment selling. But you've got to have founders that so believe in their company or so believe in their product that they can't believe that people would not agree with them. So they sell right through the objections. They sell right through people turning them down. It isn't even an issue for them. So those are the things you've got to evaluate early on in a relationship with a founder.

• 25:56Speaker 02

  And if they can't do those things, they're not curious, I mean, they listen, they're not going to attract talent. If they're not great at selling in order to get the next stuff done. And then number four, is this person somebody that I'm going to work with for a long period of time? Then it's very hard to back a founder. Those are my like quick lessons.

• 26:15Harry Stebbings?

  I love that. I want to double click on the storytelling. Honestly, David, I meet fifteen, twenty founders a week. I think we've lost the art of storytelling. I think the proliferation of capital means that founders don't need to tell a story to fundraising markets like they used to. I always ask, if you had a billboard on Times Square, what would you put on it? What does that company message say? Inspire me, inspire everyone in New York. And I would say five percent can even give an answer, let alone a good answer. Would you agree with me? And I guess, how do you advise founders on the art of storytelling for their company?

• 26:46Speaker 02

  So the first thing I would say is, forget about markets, forget about TAM, forget about CAC LTV. Forget about all the things that you think traditional people are going to ask you. Paint a picture for me. What do you want to build? You asked me, what did I want to build the general catalyst with Joel, would look like it is today? I just wanted to be on the journey with founders. That was good enough for Joel and me to get a mission straight that the two of us were going to go do. So I'm asking the same question of a founder. Forget about all the BS and all the buzzwords. And then what I'm going to do with you is I'm going to use that and I'm going to build from that into the storytelling of what this business looks like.

• 27:24Speaker 02

  And if we do it together, which is going to be fantastic, then what we're going to have the ability to do is understand in our first or second or third meeting, what the long-term vision looks like of the business. Who do we want to sell this product to? What's the product going to look like? I ask people a question, who do you want around you on your team? If somebody says, well, I can do it all myself. I'm just going to hire a bunch of low-level people to help me. That's less inspiring to me, of course, than saying, hey, I need a co-founder that can do this or that, or I need people around me to do this. So I want people to take the ingredients of the story and go build it for themselves. So instead of having an empirical discussion, we're having more of a creative discussion. And that storytelling is what they're really doing with me.

• 28:07Speaker 02

  And then at the end of an hour, two hour, or maybe it takes a couple of sessions to do this, I'm understanding what they're doing. And then we can decide as a group whether we should do it versus, here's a quick pitch, you got to do it now. That's your billboard. We're in a deal. If we can't have a discussion as to what that person really wants to build, it doesn't. Doesn't matter how good the business is, we're not gonna go back.

• 28:27Harry Stebbings?

  When you think about kind of trust, I think trust is crucial when you think about building these relationships and the stories that they tell. One thing that I always struggle with trust is, funny, I've been burned before and it's hurt me a lot. I don't really think I've probably got over it really since then, so I don't really trust many people. Point being to me, do you start from a relationship of full trust when you have new relationships? Do you start with no trust and it's there to be gained? And how do you evaluate trust in new relationships?

• 28:52Speaker 02

  Great question. I have certain things that I try to evaluate and kind of as a message to people. And let me try these out on you, okay? And these are kind of like what I consider just like my core things. What makes a purposeful, thoughtful life? And this will give you some insight on trust. The first thing, and again, I don't want to be gender specific on this, is happy wife, happy life, whoever your spouse is. You've got to make sure that the people around you, in particular the people that you love and love you, that's first and foremost. And one of the things I look for when I meet people early in relationships, do they have deep, sustaining, fulfilling friendships? Or relationships with family members?

• 29:33Speaker 02

  Somebody who's a loner and somebody that doesn't like to get along with people, who has shitty relationships with their family. Not as a rule, but it's pretty hard to imagine that they're gonna be a great leader and a great person to do it. The second thing, and this is a very important one, Harry, is nobody's spared. Everybody runs into shit in their lives, families, marriages, partnerships, companies, it rains everywhere. When you realize that the issues that you're dealing with are not unique to David and Harry, but everybody else has those issues, you become less stigmatized and it becomes easier for you to talk about the things that bother you or the things that are on your mind. Because what you realize is everybody's dealing with the same thing. You know, I have a partner, usually spend the first three minutes or five minutes of a partner meeting, talking about outrageous things that happened in our world the week before.

• 30:17Speaker 02

  And a lot of it's around kids and behavior and you just kind of talk about, destigmatize it. The third is the guiding principle, adversity does not teach character, it reveals it. You learn a lot about people when the shit hits the fan. I hope it doesn't happen all the time, but it does. When you really need people, that's when they start. Step up. It could be an LP. We had a tough fundraise. The market was off. We didn't have a lot of liquidity. And we went to our LPs and said, hey, things aren't great right now. We're really like, feel like we underperformed the market over the last couple of years. But, and they all said, you're in the same situation as everybody else. We're gonna be supportive of you. Instead of saying we're great, we acknowledge things weren't terrific. I think you learn a lot about people when you need them.

• 31:00Speaker 02

  Personal situation or in a health situation or family situation. The fourth is with power comes responsibility. When you do what you and I do, we have the capacity to really be impactful. Impactful in business, impactful philanthropically, impactful in people's lives. You have got to fucking take that seriously. That's the reason why you got what we got. And if you don't do that, you are missing an opportunity that's extraordinarily powerful. The joy that comes from being able to take care of and deliver for other people is absolutely mind blowing. And that's a very important core part.

• 31:35Harry Stebbings?

  Do you find trusting people hard now you are who you are? And I don't mean this kind of arrogantly to either of us, but like, obviously you've done very well. I've done well. I know you mean same strategy, but like, there's always a reason and it's not, they just like Harry. They want something. And I don't trust people anymore because of that, which I find really sad.

• 31:53Speaker 02

  So I think part of it is evaluating relationship. You said about trust. Trust to me is sometimes curating. There are a lot of good people in the world, but maybe a lot of people that are so great, do you really want them in your lives? So I think part of it is curating. It's hard to curate out your family, but I think it's an important thing to say, there's only a handful of people in any given scenario that I'm going to be able to relate with and take care of. And I've got to evaluate that based upon the issue of will these people be there in times of adversity for me? That's why this whole power with responsibility, yes, it comes to you, but just because you can, here's my fifth one. Just because you can doesn't mean you should or will, a kind of a funny one. But my last one is pay forward. This is a big thing that you and I are talking about right now.

• 32:37Speaker 02

  Trust comes from somebody often paying forward, and I don't mind beating that. I will trust that you and I will build a relationship. And I will do an introduction for you. I will invest time and energy with you to help you solve things. Not expecting that you're going to pay me back, but expecting that I want you to pay somebody else back. That's what I want. I want you to pay me back. I need to empower you to realize that because of the help that me or other people provided to you, I want you to be that person for others. And if I do that, we're building a culture that magnifies and multiplies enormously our capacity. So if I start with it and I empower and inspire 10 people to do this in any given time,

• 33:21Speaker 02

  and those people do 10 people, you can see the way the world goes. So that's a very rigorous process by which I'm trying to find how I evaluate trust, the ones I just went through.

• 33:31Harry Stebbings?

  We've spoken about trust. You've mentioned your wife a couple of times. I'm really interested, you've had an incredible marriage, you have an incredible partnership with your wife. What have been some of the biggest lessons to you, and I know this is a broad one, but of what makes a truly great marriage? As you said, you met when you were 17, when she was 17?

• 33:46Speaker 02

  I think the key to marriages or partnerships, one is full transparency. You have to trust that everything that everybody tells you and everything they need to know is happening all the time, number one. Number two, I think the divide and conquer strategy in life is really an important one. Let's decide what you want to do, let's decide what I want to do. You trust me to get this done, I trust you to get that done. And let's collaborate that way versus like everybody, because ego is the biggest undoing of people. And if I feel like my ego is uncompromising, you feel your ego is compromised, there is no solution to that. The third thing, we can marry people who are different. Joe and I have very little outside the office in common.

• 34:31Speaker 02

  I mean, we have multiple different interests, but the things we have in common bring us together. At home, it's the same way. I're deeply both filmmakers, but she runs our film business. Why? She's enormously competent, she's tremendously empathetic with filmmakers. She's so good at what she does, I trust her decisions. And as a result, we have this ability to create things that are really great because she's able to lead me and my thinking in a way that's fantastic. And it permeates every part of our relationship. So, and she's very right brained, something that's really important.

• 35:06Harry Stebbings?

  How do you think about enjoying an amazing relationship on the personal side while also not losing an inch of performance on the professional and the work side? What does that look like to you?

• 35:15Speaker 02

  Wait, well, you're using different definitions. You're putting activity and hours against process and outcome and success. I think being a well-rounded human, which includes having relationships with people, more empathetic, it makes you more creative, it makes you a fuller human being because you're not just dealing with your own shit, you're now including other people in your life, which is very, very powerful. The second thing is it's very important that you have a safe zone with people. Could be your girlfriend, could be your wife at some point, it could be just friends. You need people, and if you're alone, and you're alone at work, other than doing podcasts with me and others, but you don't have the benefit, your insecurities, your insights,

• 35:59Speaker 02

  your concerns about things with others. And I think because you don't have that at work, I think the interpersonal, I'm not a shrink, but I play one on TV, but I think having that relationship with your girlfriend is really important, maybe easily solvable and they can't be done on your own. I think having a full life then includes fun, friends, sports, philanthropy, a loving relationship with somebody gives you a much better business person, an investor, and a much better mentor for founders. So I don't think you're less of a machine, I think you're more of a human being.

• 36:30Harry Stebbings?

  I do want to ask you, speaking of those partnerships and the longevity of them, I spoke to Hamon in particular before, and he said you have to ask David about the conversation we had where he transitioned the firm over to me into the next generation, and ask him about that for him and how he felt and what it meant to him. I'd love to ask you that.

• 36:49Speaker 02

  Great. Well, it starts with a relationship that I have with several of the people that we're going to talk about, and I've been very lucky. I've had a fabulous mentor, which is crazy when I tell you who it is in venture. He's from a firm that's a collaborator and a competitor with me. His name is Jim Schwartz, and he's the co-founder of Excel. And whenever I needed to figure out, wow, this is a batshit crazy industry, how do I navigate things? Schwartz, who's a really crisp thing. Over the last ten, twelve years, it's been my great mentor. So, let's talk about two different things. One is that it's less of a transition than it is an ascension for others. Joe and I are not going anywhere, full-time working at the firm.

• 37:32Speaker 02

  However, what we realized is there was a handful of people that were so good, so well trusted, so unbelievably capable, that to not let them lead was a mistake for three reasons, Harry. One, we would build a much better firm with them leading. Number two, they could do things that Joe and I just could not do. We just didn't have the skill set. And number three, think about it, we're a venture firm. We enable young people to lead. That's what a venture firm should do. So why the heck do it in our own firm? Then, we got lucky. The leadership team that we have was extraordinary. Let me start with a couple of people in particular. Jim Schwartz told us in the summer of 2011, that if we didn't open a presence in California,

• 38:15Speaker 02

  because we were only in Boston, we would never survive as a firm. We had a young guy who was brilliant, was starting to build his own track record. He had been with us since inception. His name was Amant Tinasia. And we went to Amant and we said, listen, we want you to move west and we want you to build the future of General Catalyst in the west. However, you need to understand that you need to build it in the image and the vision of what you want, because this is one day going to be your firm to lead. And if you're willing to go west and do that, we are going to give you the opportunity to lead, but you've got to prove it to yourself and others. So, he took that task on ten years ago and did an unbelievable job. Built General Catalyst into the firm it is today.

• 38:57Speaker 02

  So, it was not Joe and I stepping back as much as it was his time to lead. A few years later, we added another brilliant guy named Adam Vulcan, who you know. And Adam was living in London with a wife in Boston. How long was it last? And we convinced Jim Schwartz from Excel to let us take Adam, who was a partner at Excel, and move him to Boston to lead our next generation in Boston. So, what we did very early on, ten years ago, is we had two people who Over the next ten years would help build the firm and get it to the point. So we realized that last year, which is what you're referring to, to let other people lead, not because we did not want to continue to lead, but we felt A, they were better,

• 39:41Speaker 02

  B, their vision was really strong, and C, they had earned it. And it seemed like, be hypocritical, that we are in the business of empowering young people to build great things. Why wouldn't we empower our own people to do it? And in making Hamon the CEO and Adam and Deacon to share. So instead of saying it was time for us to get out of the way, it was more time for them to lead, and they've done an extraordinary job. And in the years since, they've all really taken on the day-to-day management of the firm. It's a much better place. I don't hate to admit. They have done a much better job than Joel and I ever did.

• 40:13Harry Stebbings?

  I do want to move to my favorite though, which is a quick fire. So I say a short statement, David, and you give me your immediate thoughts. Does that sound okay?

• 40:19Speaker 02

  Yeah, fantastic.

• 40:20Harry Stebbings?

  So tell me, what's the favorite book and why?

• 40:22Speaker 02

  I would say Danielle Pink, Right Brains Will Rule The World. For many years, creative people were looked at weird or incapable of building businesses. I think we've seen over the last many years that the creative people have extraordinary vision and capacity to build businesses. So that's one of my favorite books and I read it all the time. The other one, completely unrelated, because I need structure, is Seven Habits Of Highly Effective People, which of course is, gives you all the need to do to build the ladder of leadership.

• 40:48Harry Stebbings?

  What was the hardest fundraiser and why?

• 40:50Speaker 02

  Two thousand and eleven. Markets sucked. We hadn't had liquidity in a while. We made major transitions in our team, decided to tell our LPs we were moving to the West Coast. And they were like, what? Aren't you a Boston-based firm? What are you doing on the West Coast? What advantage do you have? That was a hard one, but go back to rule three. Versity Doesn't Teach Character reveals that our five cornerstone LPs all stepped up in a big way. And they all said, we're all in on GC and we're going to be supportive of it. It turned out to be a great move.

• 41:17Harry Stebbings?

  What was the hardest element of building GC?

• 41:19Speaker 02

  Realizing that there's a limit to any one person's capacity to work, create, or innovate, and that a team approach is harder. For example, you asked me about Hamon. One of the reasons why Hamon and I get along so well, Hamon and I have always had this great relationship where I find. Find the people and he finds and evaluates the ideas. So what took us a while to be able to do, which was really difficult, understanding that this had to be a team build and not an individual build.

• 41:47Harry Stebbings?

  Tell me, what three traits would you most want your children to adopt?

• 41:51Speaker 02

  Well, number one, I think that I'd love to have them have a love of life and a generosity of spirit. Nina and I have hopefully built a family and with Olivia and Julian, with power comes responsibility. To be able to give back and create a spirit of capacity to help other people, at the same time having a love of life and an empathy for people going forward. The second thing, the joy of seeing other people succeed and being a person that successes is a really, really fulfilling thing. I think if our kids had those and then they were able to surround their lives with really wonderful people. In my daughter's case, I got great blessing in the cheek. Got married this summer to Streeter, who's a great fabulous guy who I love dearly. Julian said it at their wedding, I finally got an older brother.

• 42:36Speaker 02

  And having my kids love the people in their lives and having that joy is extraordinary. But having them be part of other people's successes is a month that lasts a lifetime.

• 42:46Harry Stebbings?

  I had Jim on the show for McSal and it was one of the most incredible discussions. I'm fascinated. From your relationship, what's been one of the biggest takeaways?

• 42:54Speaker 02

  He is true to power. And by the way, I know we haven't spoken much about film, which is a big part of my life, but Jim Schwartz is also my film partner. So what I've learned from Jim is you use the word machine before. Jim's a processing machine with empathy. He can get to the issue faster in any scenario than anybody I've ever met and then have empathy of getting it done. An amazing guy.

• 43:15Harry Stebbings?

  Tell me, what do you know now that you wish you'd known at the start of G C twenty two years ago?

• 43:21Speaker 02

  It's a hundred percent about the founders. Not ninety nine, it's a hundred percent. Forget about markets, forget about TAM, forget about even other co-investors. Myopically focus on your relationship with founders in choosing people who are going to build the next generation great businesses. The second thing, a very tactical thing, compounding your winners over a very long period of time, continuing to reinvest in your greatest businesses and your greatest founders. Produces the best outcomes. And the third is being super honest with your partners. Instead of promoting a company is doing well when it isn't, or having a situation where people get misinformation, always make sure that your partners have all the information they need to make the right decision.

• 44:03Harry Stebbings?

  Final one, David. What are the next five years hold for you? If we have a discussion in five years, what do you want to be doing then?

• 44:09Speaker 02

  Number one, enjoying the leadership team at General Catalyst, blossom and prosper, and build the kind of firm that we're really proud of with the founders. I want to continue to make films with Nina that bring truth to power. And the third one, since you said five years, is celebrating my dad's 100th birthday.

• 44:27Harry Stebbings?

  That would be amazing. Listen, David, these episodes make me realise why I love what I do so much. You saw we kind of threw the schedule out the window, which is perfect. I'd love to ask David, given your life in storytelling and filmmaking, what are storytelling and filmmaking, particular filmmaking, have in common with venture capital?

• 44:44Speaker 02

  Great. It's about the arc of the story. How does one person tell a story that enables everybody around them to be inspired toward an outcome? So all of our films that we make, hopefully are telling you a story about something that you really want to know. Icarus was the story of the Russian doping scandal, but it didn't start out that way. It started out as a film that a buddy of ours wanted to make about doping and biking. And when that didn't work out, it was just like venture capital, it was a pivot. We said, okay, that didn't work out. What's the next step? And he said, well, I want to go to Russia and find out how the Russians cheat. And we said, that's a fabulous film. And it ended up being a great film, win the Academy Award and all that. But for the director, Ryan Fogel, who's one of the best filmmakers in the world, it was like a venture capital outcome. It

• 45:27Speaker 02

  was down round that ended up being a multi-billion dollar outcome. The Great Hack, which is a story of Cambridge Analytica, that story helped break the scenario to the world about how bad some social media companies were rigging elections, abusing people's data. And that was a great story of truth to power. The Dissident, The Dissident is a story we made two years ago, which is how the Saudis killed Khashoggi. And out of that story came two things. Number one, discovery about this. Called Pegasus, which certain governments were using to hack people's phones for data. Also couldn't get the film sold. It was one of the best films that we ever made and no film company would buy it. No film company would distribute it because they honestly were all scared of the Saudis.

• 46:12Speaker 02

  And it taught me a lesson. Right after winning an Academy Award with the same team, nobody would buy. The most important film of that year was the story Kashegi being killed. I couldn't get anybody. Now you can still get it, but we had to self distribute it. Then there was a story about Burning Man that we're making right now. Cause so many people are interested in what is Burning Man? What's really going on there? And it's one of the great joys of my life that I'm able to do this with a very, very brilliant partner. Nina and some of the best filmmakers in the world. So it's just like venture capital.

• 46:41Harry Stebbings?

  I have to say, I fucking loved Icarus. Icarus was my. I didn't know distant was hard to sell because I obviously see it on Amazon in the UK and it's like front page of Amazon. I'm like.

• 46:50Speaker 02

  Not hard to sell. Nobody would buy it. Everybody would say, I'm a little hot. We're getting this and that. You know what? I was disappointed, but we got it made and we got it out anyway. And the team from the Human Rights Foundation who backed us and Brian Vogel is a director. We're happy that we got it done. It just taught me a very important. Understand the dynamics of the politics because where you sit is definitely where you stand or vice versa, whatever it is. And that taught us a bit of a lesson about that.

• 47:18Harry Stebbings?

  You are a hero, David. That is fantastic.

• 47:20Speaker 02

  Thank you.

• 47:22Harry Stebbings?

  I just love that discussion with David. I think he should invoice me for the therapy. What an incredible journey with GC and such exciting times ahead with Adam and Monty, the leadership helm. If you'd like to see more from us behind the scenes, of course you can on two zero V C dot com. 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. I personally have had the pleasure of working with the HMC team and can say that they're truly.

• 48:06Harry Stebbings?

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• 49:36Harry Stebbings?

  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. But that's all we have for you today. We have an incredible 20 growth on Wednesday with Luke Levesque, Head of Growth at Shopify, not one to be missed.