Jul 3, 2024 · 1h 5m · news
Avi Eyal: Making $2.3BN on Monday, Stripe & PillPack from Entrée Capital MP | E1173 · 20VC with Harry Stebbings
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In this extensive interview with Harry Stebbings, Entrée Capital Co-Founder Avi Eyal outlines his contrarian, highly aligned venture capital philosophy, highlighted by massive outlier returns from monday.com, Stripe, and PillPack. Eyal pairs deep business insights on liquidity strategy, 'angel-to-core' fund mechanics, and the 'Four Ts' framework with profound personal reflections on childhood adversity, surviving the 2004 tsunami, and Israel's sociopolitical path forward.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 22% of the talking time here. How this is scored →
Harry as informed peer 4.5 Guest teaching 4.3 Guest disagreement 2.1 Harry pushing back 3.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:39 Guest calls VC public stock edge 'Bullshit'
When Harry asks if VCs have asymmetric information that justifies holding public stocks past lockup, Avi bluntly rejects the premise with 'Bullshit' and explains public market dynamics.
Hardest push from Harry ▶ 17:02 Host challenges Israeli seed round dilution mathHarry forcefully pushes back on high valuation Israeli seed rounds, interrupting Avi to argue that rounds structured as 'six on 12' take far too much dilution.
Biggest teaching moment ▶ 28:36 Guest reveals $1.5B return on Monday.comAvi educates Harry on how a non-consensus $15M investment in Monday.com yielded over $1.5B in distributions, reframing the extreme power law distribution of venture returns.
Harry holds his own ▶ 15:15 Host demonstrates valuation expertiseHarry brings deep market knowledge to the conversation, quoting Peter Fenton, referencing team member conversations, and detailing specific seed round deal terms.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcoming Avi and Shaping of Childhood | 3 | 4 | 3 | 2 | Harry opens by sharing personal hardships (mother's MS, bulimia) to prompt Avi on childhood challenges. Avi reflects on moving to South Africa and surviving the 2004 tsunami. When Harry asks for a lucky moment in business, Avi refuses the premise, telling Harry he won't give a business answer. | |
| Speed of Conviction and the "Four Ts" Framework | 4 | 4 | 2 | 4 | Harry asks about Avi's fast conviction and the 'Four Ts' framework. When Harry tries to summarize the formula, Avi corrects his math on TAM vs team exponentiation. Harry pushes back on patient capital, asking how funds carry startups through multiple financing droughts. | |
| Inside vs. Outside Founders and Portfolio Construction | 5 | 4 | 2 | 4 | Harry probes insider vs outsider founders, bringing up specific deal math like Founder Collective's PillPack round. Harry challenges Avi's small fund model of doing only 10 seed deals, claiming he isn't a good enough picker for that. Avi confidently replies that Entrée's approach and value-add model are simply different. | |
| Graduating Angel Deals and Signaling Risk | 5 | 3 | 1 | 4 | Harry asks how Entrée handles losing deals and requests an example of low initial conviction, prompting Avi to recount BreezoMeter's growth from a $250k check to a $250M exit. Harry challenges whether small funds can truly concentrate capital when tier-1 funds like Sequoia step in. | |
| Signaling Risk and Price Sensitivity in Seed Rounds | 7 | 4 | 3 | 6 | Harry displays high domain knowledge, citing Peter Fenton quotes, team conversations with Saul, and high-valuation examples like Andreessen's Flo investment. Harry aggressively challenges Israeli startup seed dilution, while Avi argues that high valuations lead to bad decision-making. | |
| Alignment of Capital: Being Your Own Largest LP | 6 | 4 | 2 | 5 | Avi explains LP alignment, noting partners are their own largest LP and don't need to chase AUM. Harry aggressively pushes back on conventional wisdom regarding competitive markets, calling the idea that 'any worthy market is competitive' bullshit. | |
| The Monday.com Conviction Story and Returning $1.5B | 5 | 5 | 1 | 3 | Harry asks about Avi's early non-consensus conviction in Monday.com despite SMB/CRM market drawbacks. Avi breaks down the trajectory from a $1.5M early SAFE to a $15M total deployment that returned over $1.5B. | |
| Liquidity Strategy: When and How to Sell Down | 5 | 7 | 7 | 4 | Avi details Entrée's disciplined liquidity rules for selling down holdings at 6-8x and post-lockup. When Harry asks if VCs have asymmetric information that justifies holding public stock longer, Avi forcefully shuts down the premise with 'Bullshit.' | |
| Artisanal VC vs. Institutionalized Assets and Post-Investment Value | 6 | 3 | 1 | 4 | Harry cites Doug Leone on institutionalized VC and Jason Lemkin on founders wanting VCs to 'sod off'. Harry presents his own strong argument on how VCs help pre-PMF founders tighten ICP and acquisition channels, which Avi agrees with. | |
| Biggest Mistakes, Portfolio Zeroes, and Fund Performance | 6 | 5 | 1 | 4 | Harry asks about investing blunders, prompting Avi to share his $4.5M loss in Harvest Automation. Avi shares LP feedback showing Entrée has PE-level loss rates (12-15%) with top 5th percentile VC returns, and Harry criticizes young managers boasting paper DPI. | |
| Sourcing, Weaknesses, and the Parenting Journey | 2 | 2 | 0 | 1 | A introspective segment where Avi admits to always feeling he isn't good enough, tracing it back to strict parenting. Harry and Avi discuss parenting adult children and the fine line between giving wisdom versus trying to maintain control. | |
| Misses and Lessons: The Lemonade Safe | 3 | 4 | 0 | 2 | Avi tells the story of missing out on Lemonade after the Series A due to forgetting to follow up. He distills his lesson into the 'Three Ws' framework (Who, What, When) for organizational execution. | |
| Israel's Civil Society and the Impact of October 7th | 2 | 5 | 0 | 1 | Harry asks Avi why he chose to speak up publicly about Israel following October 7th. Avi gives a somber breakdown of how Israeli civil society and government services have broken down over the last decade. | |
| Leadership and Israel's Young Generation | 5 | 5 | 3 | 4 | Harry observes that international sympathy shifted against Israel, and suggests US collegiate protests are just a trend or 'topic du jour'. Avi counters with historical context on antisemitism and Zionism, while Harry quotes Niemöller. | |
| Seeking a Path Forward for Israel and Palestine | 3 | 4 | 2 | 5 | Harry asks a direct political question about whether Israel's military response is breeding a new generation of Palestinian hatred. Avi argues that peace requires fixed borders and mature leadership on both sides. | |
| The Quick-Fire Round | 5 | 5 | 5 | 3 | Harry runs a rapid-fire round touching on David Sachs, Israeli tech resilience, and ZIRP sins. Avi delivers strong opinions, calling David Sachs' foreign policy inscrutable and describing contracted ARR as 'community-adjusted EBITDA'. |
Statements from this episode (34)
Avi Eyal: Entrée Capital distributed over $1.5B from $15M monday.com investment
“Since the beginning of Monday, we invested approximately fifteen million dollars. The distribution from that was over one and a half billion dollars.”
Avi Eyal: Entrée's next 10 successful investments didn't equal monday.com gain
“I'll tell you that the next 10 investments that were successful didn't equate to the gain on Monday.”
Stebbings: Relocating in childhood is a major commonality among successful founders
“One of the biggest commonalities in successful entrepreneurs is they moved in childhood because you're forced to assimilate with new people, new environments, new cultures, and you have to make it work.”
Eyal: Success in business and venture capital is only 20% to 30% luck
“I would say it's 20, 30% luck.”
Avi Eyal survived the 2004 tsunami that killed 2,000 on Ko Phi Phi
“I survived the tsunami in 2004. Co-PP where two thirds of the island, 2000 people died that day.”
Eyal: Small venture funds do not need high ownership in giant outcomes
“One doesn't need a large ownership in large outcomes when you have a small fund.”
Eyal: Entrée gained $15M-$20M on PillPack exit from $80M fund
“That fund was an eighty million dollar fund, and I think our Proceeds from the sale was 15 or twenty million dollars gain, something like that.”
Entrée Capital returned over $30 million from its BreezeMeter acquisition
“So that return gave us around 30, 30 something million back.”
Eyal: Founders should choose Series A leads capable of leading Series B
“I think today you want to generally get the next round done by a fund that can do that, the round after that. So if you get a fund in to do the A, you want to know as a founder that the fund that's doing your A can do your B, can lead your B, because you don't…”
Eyal: Andreessen Horowitz and Sequoia have become BlackRocks for startups
“And that's part of the challenge with what's happened today within the, what I call the institutionalization of VC, where Andreessen and Sequoia have become such big funds, the investment managers you know, the multiple targets are different. The RR targets ha…”
Eyal: $6M–$8M seed rounds are unnecessary for asset-light startups
“For asset-like businesses, for businesses that today you can get MVPs out the door in three months with, you know, three or four chaps can sit in a garage and or a basement and can write some code and get some POCs with initial clients at very little cost, rea…”
Avi Eyal: Entrée partners are top three largest LPs in their funds
“Our personal money is probably first, second, or third in size and in, in our various funds.”
Avi Eyal: Entrée GPs pay management fees on their own fund commitments
“We pay management fees so we, we're pretty aligned with our LPs.”
Eyal: Three reasonable venture returns can make an entire fund
“We don't shy away from smaller markets. We want to make sure that you can absolutely be number one or number two in the, in that market. And then, you know, you'll get a reasonable return and three reasonable returns make a fund.”
monday.com had only six customers and six months runway before PMF
“The first eight, nine months of Monday, we didn't have product market fit. I remember we had like six customers and we had six months of cash left and then there was the breakthrough of hitting product market fit.”
Eyal: monday.com should have targeted enterprise a year earlier
“In retrospect, we should have gone off to the enterprise maybe a year earlier than we did”
Avi Eyal: Entrée Capital sells down investments across three systematic stages
“We decided that the minute that the price per share of a current round is I won't tell you exactly, but six or eight times your price that you came into the round try sell a third. And when you get to the pre IPO round or in the IPO across that kind of timefra…”
Entrée Capital and Designer Fund have sold nearly 50% of Stripe holdings
“I think we've both exited close to 50% or just on 50% of our holdings in Stripe to date.”
Eyal: Private VC insight provides no edge in public market trading
“The fact that you've known how the company operates in the private sector does not mean that you know how the company trades in a public market, where it's at the whims of trading machines, of hedge funds of other people that can manipulate the stock price and…”
Eyal: Fundraising skill does not define whether a founder is a good CEO
“I don't think that if you can't raise, you're not a good CEO. I think there are, depending on the business, again, there are businesses where, you know, the primary day-to-day job is not raising money. The primary day-to-day job is building a product and closi…”
Avi Eyal: Entrée Capital lost $4.5 million in Harvest Automation
“Over the period of time, we put about four and a half million dollars in and we lost the money. All of it. To the cent.”
Eyal: Entrée's mature funds have loss rates of 12% to 15%
“You know, we've got three funds that are over 10 years old, or two are 12 years old now, 13 years old, and one is about nine, 10 years old, and at that stage, you know what the, you've pretty much the loss rate has matured, and the loss rate has been around 15…”
Eyal: Entrée Capital's two $80M funds returned 5x to 6x DPI
“A small fund, it's a forty-five million dollar fund, but the other two funds, which are eighty million dollar funds, the DPI is around five, six, six.”
Eyal: VC fund returns do not count before year 8 or 10
“I kind of look at how many X's is the fund after year eight or year 10. Before then it just doesn't count.”
Eyal: Entrée missed investing in Lemonade by forgetting to follow up
“At Lemonade, they had done the A, and I remember I was driving home, and I was speaking to the founder of Lemonade, and we didn't do the A, and I said to him, well, you know, can I give you a, can I give you a safe because we want to be involved with you, we w…”
Eyal: Enforcing who, what, and when builds a stronger execution culture
“There's three W's who, what, and when, that everything they do has to be who, what, and when. So when you start a business and when you running after your client and or trying to get a customer or trying to develop a feature or everything else, it's very simpl…”
Avi Eyal: Israel has learned very little from October 7th
“I really fear that very little has been learned from the seventh of October and the events leading to seventh of October.”
Avi Eyal: Most of Israel's 120 Knesset members should step down
“And most of the a 120 members of parliament, members of the Knesset in Israel should go home.”
Eyal: Israel and antisemitism are the canary in the coal mine for Western society
“Israel and anti-Semitism are we, we're the canary in the coal mine. We, we're the front line.”
Avi Eyal: Israel must establish fixed borders for sovereign legitimacy
“There has to be a change. You know Israel has to have fixed borders because set and fixed borders enables you to operate legitimately in a, in, as a nation state, right?”
Avi Eyal criticizes David Sacks' isolationist foreign policy views
“Honestly, for the life of me, I can't work out what he believes America stands for, if it stands for even anything. You can't look after your own interests and not understand that the world is connected. And others, you need to find commonality of interest, an…”
Avi Eyal: Inflated contracted ARR is just 'community-adjusted EBITDA'
“Contracted ARR. Folks tell you how they've signed a client, a customer, which has given them, like, 50 users, or, you know, or 50 deals, but that customer represents potentially 500,000 deals, or it represents 20,000 users, or something like that, and so they …”