Mar 7, 2026 · 1h 4m · 20vc
Mitchell Green: Why 50% of VCs Should Not Exist · 20VC with Harry Stebbings
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In this episode of 20VC, Harry Stebbings interviews Mitchell Green, Managing Partner of Lead Edge Capital, who critiques modern venture capital fund sizes and outlines his contrarian value-investing strategy in volatile public software markets.
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 19.4% of the talking time here. How this is scored →
Harry as informed peer 5.1 Guest teaching 5.7 Guest disagreement 3.2 Harry pushing back 4.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:00 Mitchell rejects power-law price elasticity
Mitchell forcefully rejects Harry's suggestion that VCs should pay any price due to uncapped power-law upside, arguing that paying asinine valuations fails basic fund math and that half of VCs add negative value.
Hardest push from Harry ▶ 16:35 Harry refuses 2008 macro comparisonHarry directly refuses Mitchell's macro framing by insisting that 2008 featured no underlying technology inflection point comparable to AI's ability to displace entire incumbent software sets.
Biggest teaching moment ▶ 45:20 Mitchell breaks down Gross Dollar Retention vs Net RetentionMitchell reframes Harry's question about growth rates by demonstrating why Gross Dollar Retention (GDR) without upsells is the single true determinant of whether a SaaS co survives scale.
Harry holds his own ▶ 48:36 Harry cites specific market disconnects in software valuationsHarry demonstrates deep market domain expertise by citing Figma's private pricing surge alongside Atlassian's 76% public stock drop despite posting accelerating revenue numbers.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Show Montage and Title Card | 6 | 6 | 2 | 5 | Harry presses Mitchell on whether the software stock crash is justified, citing Workday's 6.8% growth and seat model cannibalization. Mitchell explains that Workday generates $10B revenue and $3B free cash flow, noting incumbents hold distribution and balance sheets. | |
| Hindsight on the Software Stock Sell-off | 3 | 6 | 2 | 2 | Mitchell outlines how sell-side analysts and public market hedge funds drive software stock sell-offs when street numbers are set too high. Harry mostly listens as Mitchell breaks down Wall Street analyst psychological cycles. | |
| How to Safely Invest in Volatile Markets | 5 | 5 | 2 | 4 | Harry quotes Howard Marks on falling knives and references Duolingo's lack of stock floor. Mitchell offers practical dollar-cost averaging rules for buying dipping stocks with actual EBITDA. | |
| Leverage and the Risk of Disruption | 6 | 5 | 3 | 5 | Harry questions whether non-founder-led companies face an inherent disadvantage in AI, citing Meta's heavy CapEx burn under Mark Zuckerberg. Mitchell draws parallels to levered vs non-levered retailers during the 1999 e-commerce wave. | |
| ByteDance and the Future of AI Innovation | 4 | 5 | 2 | 4 | Mitchell asserts ByteDance is the most advanced AI company in the world. Harry asks whether investors should play the active game or sit conservatively amidst shifting market sands. | |
| Sourcing Opportunities: The Secondary Market and Cold Calling | 5 | 5 | 2 | 3 | Mitchell explains Lead Edge's sourcing engine of young callers pounding phones, citing Insight Partners. Harry highlights Jerry Murdoch, while Mitchell gives Pacemate as a concrete example of tech-enabled growth. | |
| AI-Driven Productivity Boom in Software | 6 | 6 | 4 | 6 | Harry brings up the Citrini research piece that knocked billions off software market caps and questions if public markets are purely casino-ized. Mitchell dismisses viral Twitter research reports compared to legendary macro investors. | |
| Why Legacy Tech Incumbents Will Persist | 6 | 7 | 5 | 7 | Harry pushes back on Mitchell's optimistic historical comparison, arguing 2008 had no tech inflection point capable of rendering incumbent software redundant. Mitchell counters by pointing out mainframes, Oracle, and SAP still generate billions. | |
| Real Timelines of AI Disruption and Local Regulation | 5 | 5 | 3 | 4 | Harry asks if the financial world is becoming calcified into Polymarket-style meme dynamics. Mitchell agrees social media accelerates volatility and points out how unaddressed stock-based compensation dilutes public shareholders. | |
| The Silicon Valley Dilution Norm | 6 | 5 | 3 | 5 | Harry asks why excessive stock-based compensation is ignored, citing Evan Spiegel's Snap gifting program and ServiceNow's CEO stock buy. Mitchell argues companies with real buyback discipline provide much better bullish signals. | |
| Evaluating ByteDance and the "China Discount" | 5 | 6 | 4 | 5 | Harry questions how the ByteDance discount chasm can close given geopolitical tensions and de-globalization. Mitchell boldly predicts China will win the AI race due to rapid energy infrastructure construction. | |
| AI Infrastructure, Power, and Public Pushback | 5 | 6 | 3 | 4 | Harry asks how acknowledging Chinese AI power alters go-forward investing. Mitchell highlights US AI power constraints, predicting severe local community pushback against data centers over power price spikes. | |
| Selling, Sizing, and Re-Underwriting Positions | 4 | 6 | 2 | 3 | Harry asks Mitchell for selling discipline advice and position sizing guidelines. Mitchell shares his core mantra 'buying is glamorous, selling is the job' and outlines his 18-month in-the-money test. | |
| Price Discipline vs. The Power Law | 5 | 7 | 6 | 5 | Harry brings up standard venture thinking that price elasticity is justified by power-law upside. Mitchell forcefully rejects this framing, calling power-law justifications an excuse for paying asinine valuations, asserting 50% of VCs should not exist. | |
| LP Sentiments and Being a "Trader" VC | 5 | 5 | 3 | 4 | Harry asks if Mitchell worries about being labeled a 'trader' VC or creating negative signaling when selling early. Mitchell defends generating real DPI for LPs and references Fabrice Grinda's strategy. | |
| Operational Expertise vs. MBA Knuckleheads | 4 | 6 | 5 | 3 | Mitchell criticizes venture investors who act like operational experts despite only having MBA degrees or brief startup experience. Harry humorously describes himself as just a switchboard operator connecting experts. | |
| Is "Triple, Triple, Double, Double" Dead? | 5 | 7 | 3 | 4 | Harry asks if 'triple, triple, double, double' SaaS growth expectations are dead. Mitchell reframes the debate around Gross Dollar Retention (GDR), proving that high GDR allows capital-efficient scaling while low GDR creates living dead companies. | |
| The Public vs. Private Market Dilemma and M&A Dynamics | 7 | 5 | 4 | 6 | Harry lists specific public/private disconnects (Figma, Atlassian down 76%, Canva, Stripe) and analyzes M&A dynamics like a hypothetical Stripe acquisition of PayPal. Mitchell details how EquipmentShare secondary deals worked. | |
| The Valuation Disconnect and Public Market Opportunities | 6 | 5 | 3 | 5 | Harry compares Wix at $4.5B to Replit at $9B to showcase public vs private valuation disconnects. Mitchell questions whether private VCs even look at public market comparables before pricing rounds. | |
| Mega-Funds, Fund Math, and Mid-Market VC Survival | 6 | 6 | 5 | 6 | Harry pushes back on Mitchell's critique of mega-funds ($15B Andreessen, $9B Thrive), arguing Thrive can write $2-3B checks into breakout winners like Cursor or Databricks. Mitchell counters with steady-state P/E fund math. | |
| Quickfire Round: AI, Investment Regrets, and Career Lessons | 4 | 5 | 2 | 3 | In the quickfire round, Mitchell selects Benchmark for Series A and Iconic/Founders Fund for growth, reflects on selling Shopify early, and expresses enthusiasm for investing during an upcoming major market downturn. |
Statements from this episode (67)
Mitchell Green: 50% to 60% of VCs add negative value
“I think 50% of people in the venture business should not actually be in the business. There's too much money and there's like too many tourists. 50, 60% of people in this industry that actually probably add negative value to companies.”
Mitchell Green: $2B valuations for AI spinout ideas are complete lunacy
“People that spin out of Like, Anthropic or OpenAI and raise money at, like, two billion dollars for a freaking idea. Like, there's nothing more than an idea and a napkin. To us, that seems complete lunacy.”
Mitchell Green: Buying is glamorous, but selling is the real job
“Buying is glamorous. Selling is the job.”
Mitchell Green: China will win the global AI competition
“Don't count China out. I bet they win the AI world.”
Mitchell Green: Lead Edge Capital is buying public software stocks like Procore, Workday, Appian
“We are buyers. We're buying software stocks right now. You know, a portion of our funds can be invested in public equities, so we're buying companies like Procore, Workday, Appian.”
Mitchell Green: Lead Edge Capital is rebuying Toast stock after selling
“We're big investors in Toast, which we've been buying back. We were early investors in it, and sold, and are rebuying.”
Mitchell Green: Believing software incumbents will disappear is a fool's errand
“These companies aren't going anywhere. Like, the incumbents have distribution, Data and balance sheets. You know, it's a fool's errand to think all these companies are going to go away.”
Harry Stebbings: Seat-based SaaS pricing models are being cannibalized
“We're seeing the cannibalization of the seat model.”
Harry Stebbings: Software incumbents lack impressive AI agent products
“We're seeing, bluntly, no impressive use of any agent products within the existing incumbent set.”
Green: ByteDance grows 30% annually with massive profits
“ByteDance Grows at, you know, 30% a year with massive profits.”
Green: Software stocks will remain dead money for a quarter or two
“What you're going to see is they're going to take numbers down at a bunch of companies. Give it a quarter or two. Companies will start to then, you know, beat numbers. Then they'll raise the numbers, and the stocks will start to work. But it's probably dead mo…”
Mitchell Green: Stocks without earnings or EBITDA have no valuation floor
“If you don't have earnings or EBITDA, there is no floor in a lot of these things.”
Harry Stebbings is negative on non-founder-led companies during AI transformations
“I'm unwaveringly negative on companies where the founder is not the CEO, and we're in this AI transformation.”
Mitchell Green: Tech transformations require backing growth-focused management over margin-focused leadership
“I believe in any time you have big technological transformations, that you want the entrepreneur, you want the management team that is run by the company That, that is focused on growth.”
Mitchell Green: Heavily leveraged incumbents are the primary targets for disruption
“Where I think the biggest opportunity to disrupt incumbents today is Soft software, tech enabled services, any company, it actually can be a manufacturing company, it doesn't matter, any company with a bunch of leverage on it, because those companies don't hav…”
Mitchell Green: Most top US e-commerce companies are traditional retailers
“If you look today at the 10 largest e-commerce companies in the United States, You know, six or seven out of 10 of them are traditional retailers.”
Green: Apple spends far less on AI CapEx than tech peers
“And, you know, like Apple's spending very little right now, you know, and those other three or four companies are spending insane amounts of money.”
Mitchell Green: Mark Zuckerberg is right to bet big on AI spending
“Mark Zuckerberg deserves to go for it. Like, he's, it's his business. He built the damn business. Like, I don't think you really have much to say to be like, oh, don't bet on the guy. And by the way, he kind of has to because his competitors are doing the same…”
Green: Lead Edge Capital has had only one or two write-offs ever
“I think we've had, like, two 10 X's ever, or something like that, but we've only had, like, you know, One or two zeros ever.”
Lead Edge employs 18 young associates to cold call prospective investments
“So we have a team of 18 22 to 24 year olds, like pounding the phones, calling companies all day long,”
Mitchell Green: VCs should avoid easy responses and target hard-to-reach CEOs
“So if you, if the company calls you back, it's like, hang up the phone. It's the CEO you call every two days for a month. That's who you want to get on the phone.”
Mitchell Green: Average public software company spends ~30% cumulative on R&D
“So if you were to look at your average software company that goes public, You know, if you look at cumulative spend since inception, it's usually around, like, 30% is R&D. So like, a huge amount of these businesses are about, like, sales and marketing, distrib…”
Green: Markets irrationally heed random online research over top tech leaders
“It's incredible, like, why don't, it's amazing that people are listening to some random research firm versus listening to people like Stan Druckenmiller, Howard Marks, Ken Griffin, Steve Cohen, like, Mark Benioff, people like Mark Zuckerberg you know, Jensen W…”
Mitchell Green: Current market volatility is amateur hour compared to 2008
“This is nothing like this. This is like amateur hour. This is like nothing. Like, this isn't even volatile compared to like what was going on back then.”
Mitchell Green: The mainframe business remains a $5.5B market
“The mainframe business is still a five and a half billion dollar market.”
Mitchell Green: AI's biggest disruption will be in manufacturing and healthcare
“I actually think the biggest disruption you're gonna see is in, like, manufacturing, is in, like, healthcare, is in you know, think about, like, the companies that can figure out how to get drugs to market much faster than anybody else. Like, I think AI could …”
Mitchell Green: Companies will retrain workers displaced by AI
“A lot of these, like, companies will retrain people. They'll do different things. It's a, it's remarkable throughout history. There's been, like, lots of technological disruption over the last hundred years, and, like, people find new things.”
Green: Most regulated companies block access to Claude and ChatGPT
“Most big companies that are, like, financially regulated, you can't even go on to Claude or ChatGPT. Like, you can't even, like, get on the system to do work.”
Mitchell Green: Internet stocks stay expensive due to stock-based compensation dilution
“Well, the reason a lot of these stock or stocks and internet stocks are actually still not cheap is because the stock-based comp, like, the stock-based comp in a lot of these companies is totally nuts. Like, the amount of equity compensation and dilution of, l…”
Green: Stock option dilution is significantly higher in Silicon Valley tech firms
“Just look how much, like, stock option dilution there is at a bunch of these big Silicon Valley companies. It's not as bad outside of Silicon Valley, but, like, the dilution is real.”
Green: Founder purchases and big buybacks make companies much more bullish
“The companies that, the found, that, where the, like, founders are buying, or the companies are buying huge amounts of stock back, like, that, that to us would make one more bullish on that company versus, like, another company, a hundred percent.”
Green: More tech companies will launch major stock buyback programs
“I would suspect over the next, you will, as our names come through, you know, you will see more things like sales, like Salesforce, people put in place big buyback programs to start buying back stock here. I think you'll see it.”
Green: ByteDance could reach $70B to $100B in earnings within five years
“I think it is possible to see in a few years that this company's doing, you know, 70, eighty, hundred billion of earnings in the next five years.”
Mitchell Green: ByteDance will list in Hong Kong, not the US
“Zero percent chance it'll list in the US. No, I mean, just to answer it, I have no clue, but no, it'll list in Hong Kong.”
Mitchell Green: Lead Edge Capital bought ByteDance stock at a sub-$200B valuation
“When we were buying ByteDance stock, like, you know, we were buying it at prices, like, sub, you know, around two hundred billion dollars.”
Mitchell Green: US will face major power infrastructure bottlenecks for AI
“We, in the US, we are gonna run into major issues around power.”
Green: Lead Edge struggles with climate tech due to capital inefficiency
“Look, it's, we've always struggled with how to invest there because of how capital inefficient a lot of those businesses are.”
Green: The biggest internet innovations of the last decade came from China
“Look, if you look at the internet, the biggest innovation in internet is usually over the last decade or 15 years to come out of China.”
Green: China can engineer and reverse engineer tech cheaper than Americans
“Don't underestimate, like, Chinese creativeness and, like, ingenuity to, like, figure out how to, like, reverse engineer and engineer things in much cheaper ways than Americans can do.”
Mitchell Green: A good company and a good investment are fundamentally different
“Good investment and good company are two very fundamentally different things too. And you're trying to like get the union of both of them.”
Green: High 2020-2021 Valuations Destroyed Returns for Good Companies
“There are a lot of people that invested in good companies or great companies in twenty-twenty and twenty-twenty-one at really stupid prices and didn't make money.”
Green: Investors Will Still Hold Unsold 2012 Stakes in 2030
“At some point, I don't know if it's three years, or five years, or seven years, for sure. People are gonna wake up in 20, in 2030, in 2032, and realize it's, oh my god, they're still all in this stuff from 20 12 and 20 15.”
Green: Only VCs Who Continually Return Capital Will Survive Long-Term
“LPs want money back, and the people that stay in, they're gonna be in business 1015, 20 years from now, are people that will continue to give money back to their investors.”
Mitchell Green: Secondary sales account for roughly a third of Lead Edge deals
“Probably a third of our deals have been secondary sales.”
Mitchell Green: VC LPs are hyper-focused on cash distributions over paper gains
“I do think that investors are very, very, very focused on DPI now.”
Mitchell Green: Emerging VCs can deliver strong DPI using early secondary sales
“As a new relative upcomer in the first couple funds, you can actually generate amazing APIs. It's a game you can play.”
Mitchell Green: 98% of VC and PE investors have never run a company
“I've never run a company in my life. By the way, nor have, like, 98% of venture investors or private equity investors.”
Green: VCs add the most value by connecting founders to operators
“So I actually think that's the best way that VCs and private active people can help founders and entrepreneurs is connect them with people who have done it before and help them recruit.”
Green: Sequoia, Benchmark, and Index succeed because they excel at recruiting
“I truly think that's why Sequoia and Benchmark are great and Index are great because they help founders and entrepreneurs recruit amazing talent and people want to work for those funds portfolio companies.”
Stebbings: Dustin Moskovitz will make more money from Anthropic than Asana
“Dustin will make more money from his anthropic investment than he will from definitely from Asana.”
Mitchell Green: Gross dollar retention is the most important tech metric
“It's the most important number in tech companies. Gross dollar retention.”
Mitchell Green: Lead Edge Capital rejects companies with under 90% retention
“18 is good. Like, you want like 90%. Anything less than 18, we won't touch.”
Mitchell Green: 95% dollar retention enables fast growth with low burn
“The company that's got 95 gross dollar attention can grow really fast and not burn much money. Because they're not spending money on sales marketing to fill up the bucket.”
Mitchell Green: Tech buyout firms boost EBITDA margins from 5% to 40%
“If I was them, like, I know that all these companies, they drive EBITDA margins from five percent to 40%.”
Green: VC liquidity crisis will persist until LPs refuse re-ups
“When LPs go to the biggest venture funds in the world, and private equity funds, and say, we're not investing in your next fund until you get liquidity in these names.”
Green: Lead Edge rejects founders who refuse to ever go public
“Listen, if your plan is to try to stay private forever, you're just not for us. Like, we just don't want to invest in you.”
Green: Late-stage startups stay private only because of massive balance sheets
“By the way, you know how many more public companies there would be right now if these companies didn't have six hundred million dollars of cash in the balance sheet or a billion dollars of cash. If they only had thirty million, they'd all be public companies.”
Green: Private equity funds cannot write single $40 billion checks
“Private equity funds don't have enough money to write like, forty billion dollar checks in the companies.”
Green: Private tech valuations are irrational compared to public market comps
“I mean, it's kind of silly. It's like, do these private market investors look at the public markets?”
Green: Growth VCs should re-invest in public shares of former portfolio wins
“But what surprises me is that more funds, like, you know, if you were an early investor in Toast, and you're fully out of it, and you love the company, and the stock's down, like, 60%, like, why not go buy it again? Like, it surprises me more people don't do t…”
Green: $5B–$10B IPOs remain fully viable despite growth of ETFs
“In the world where, like, ETFs and passives have become huge and the number of fundamental investors is, like, shrinking, I don't think you want to be a two to, ideally, you don't want to be, like, a two to three billion dollar company, but I don't think there…”
Green: Sub-$2B IPOs offer strong 10-year holding opportunities
“I think when you get, like, sub a billion or two billion, it's, like, it's kind of just, like, a pain in the ass to be a public company investor, but you can do it. Like, who says you can't do it? I actually, we wish probably more would. Why? Because they'd be…”
Mitchell Green: Multi-billion VC funds are insane and require hitting next Google
“I think it's insane. I think these funds are way too, and they, just do the math, the fund math on like how, they're clearly, you have to have the next open, you have to have the next Google, effectively, or the math doesn't work, I don't think.”
Mitchell Green: Doubling a $100B VC investment requires $25B in earnings
“And you invest in something that's worth, like, it's worth a hundred billion dollars. You're effectively saying to make a double with dilution, it's probably two hundred and fifty billion dollars. Like, that's making the bet it's gonna do twenty-five billion d…”
Green: Lead Edge Was Wrong Refusing 10X Revenue Software Multiples
“And so, like, the hardest decision is, actually, the hardest decision was, did we, should we have in, like, nine, 2017 and 18, like, and 16, like, paid, like, when everybody, when we were paying five to seven times revenues for software companies, and Iconic c…”