Sep 12, 2022 · 1h 8m · news
Will Quist: Why 95% of Venture Capital is Not Really “Venture Capital” | 20VC #924 · 20VC with Harry Stebbings
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, Harry Stebbings interviews Will Quist of Slow Ventures, exploring why the vast majority of modern venture capital is actually growth equity, how to apply rigorous non-consensus frameworks to early-stage investing, and key strategies for fund design.
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 23.1% of the talking time here. How this is scored →
Harry as informed peer 4.6 Guest teaching 4.0 Guest disagreement 2.6 Harry pushing back 4.1
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 20:09 Will rejects Harry's market creation argument
Will directly dismisses Harry's premise that backward-looking spend checks kill market-creation investments, telling him 'No, you don't have to say no'.
Hardest push from Harry ▶ 26:41 Harry refuses Will's focus on product value propositionHarry forcefully interrupts Will's assertion that product value prop is all that matters, arguing that macro devaluations and political shifts destroy businesses regardless of product strength.
Biggest teaching moment ▶ 20:05 Will re-educates Harry on underwriting frameworksWill corrects Harry's misunderstanding regarding market creation, demonstrating that asking backward-looking TAM questions yields an input data point to calculate a valuation discount rather than a deal refusal.
Harry holds his own ▶ 14:31 Harry demonstrates deep knowledge of multi-stage behaviorHarry uses concrete deal terms and firm behaviors to challenge Will's thesis, arguing multi-stage funds do not fear conflicts or seed losses because twenty million dollar seed checks are rounding errors.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Opening Title Sequence | 1 | 1 | 1 | 0 | Harry welcomes Will and asks friendly introductory questions about his journey from water polo to venture capital. Will recounts his background and jokes that Harry isn't nerdy enough to remember Red Herring magazine. | |
| Why 95% of Venture Capital is Not Venture Capital | 5 | 4 | 2 | 3 | Harry brings up Will's provocative claim that 95 percent of VC isn't venture capital, bringing up real-world valuation drops like Bird and Casper. Will frames the distinction between Venture Classic and New Venture. | |
| The Non-Consensus Strategy: Going One Click Out | 6 | 4 | 3 | 7 | Harry aggressively pushes back on Will's theory that multi-stage funds care about seed conflicts or losses, pointing out that they view seed checks as minor option bets. Will explains his concept of going one click out from consensus. | |
| The Five Levers of Enterprise Value and Four States of Answers | 5 | 6 | 4 | 6 | When Will outlines his TAM evaluation questions, Harry interrupts to argue that looking backward excludes market creation. Will quickly corrects him, explaining that a zero spend response acts as an enterprise value discount rather than an automatic pass. | |
| Underwriting Risk and the Reality of Market vs. Founder | 6 | 5 | 5 | 7 | Harry shares a personal investment failure to argue that market conditions trump founder quality, but Will claims product value prop is paramount. Harry forcefully interjects that macro and political black swans can invalidate even the best value props. | |
| Fund Mechanics: Portfolio Management, Secondaries, and Firm Design | 6 | 5 | 2 | 4 | The pair engage in a peer-level peer discussion on LP incentive structures, secondary sales dynamics, and reserve strategies. Will offers mental models like special forces versus infantry and elk hunting to illustrate firm operations. | |
| Quick-Fire Round: Underrated Angels, Branding, and Medicare | 3 | 3 | 1 | 2 | Harry leads a rapid-fire sequence touching on books, underrated angels, Tiger Global, startup branding, and Will's recent investment in Fair Square Medicare. |
Statements from this episode (17)
Quist: Venture capital exists to fund testable high-upside experiments
“I fundamentally believe the point of venture capital, right, is to allow a founder to run an experiment against a hypothesis that is knowable, testable, right? Where a true answer dramatically changes the enterprise value of the company.”
Quist: Only 5% of venture capital funds classic early-stage venture bets
“Five percent of the industry or the capital of the industry, I think is really seeking out classic venture bets and the rest of it is piling on into growth”
Quist: Venture capital follows the evolutionary path of private equity
“When I look at whether it's investment banking, mutual funds, hedge funds, private equity, and now venture, they've all followed a very similar curve where early on in the assets class lifestyle or business model lifestyle, it's really subscale and it's volati…”
Stebbings: Sequoia is the only major multi-stage VC honoring portfolio conflicts
“I think the only big multistage fund that does care and honor it really well is Sequoia.”
Quist: Slow Ventures avoids consensus seed deals to back non-consensus ideas
“I think we would say we concede the consensus game at the earliest stages. We think our job is to go a click out further on a belief system than in other people.”
Quist: Effective TAM analysis focuses on past spending on inefficient solutions
“I think a lot of TAM analyses, like, starts off on the wrong foot. I like to ask, and I think the question you want to have about marketizing is, most products are built to solve a problem. Most problems are solved, but inefficiently. And so the question I hav…”
Quist: All competitive startup moats eventually erode over time
“I think as soon as you begin talking about a product, there's only a few ways people have ever created defensibility. And I know it all erodes. There's no sure thing modes, but there are higher walls than others, right? Around network effects, intellectual pro…”
Stebbings: Market dynamics matter more than founder quality in startup success
“I lost money recently because I invested in a company And the founder was world class. Fantastic founder. But in a market that, hell or high water, you could not make money, and then the business was no longer able to exist. And I learned, actually, market win…”
Quist: Underwriting startups with multiple novel theories is exponentially riskier
“Being novel, having a novel theory and being correct, having one of them in your life is a low odds proposition. There just aren't that many. Having two isn't linear risk or the odds of being right on two vectors is exponentially lower. And I think that there'…”
Quist: Mid-sized VC funds will struggle to find alpha by 2027
“I think the pie gets bigger. But unfortunately it subsists less people. Goldman and Morgan are much more profitable than a lot of other investment banks. And so I think you'll see firms that have picked a quadrant and set up their organization and strategy wor…”
Quist: Industry Ventures returned 10-12x on LiveRamp's Series B acquisition
“There's a company called LiveRamp that Oren Hoffman founded, that I was lucky enough to lead the Series B. And this was at a time when ad tech related products were kind of written off, right? As hard to differentiate, hard to find novelty, hard to find defens…”
Quist: Slow Ventures passed on leading Deel's seed round over valuation
“We were negotiating to be the lead of the seed, and I literally were like this far apart and decided that was too far apart.”
Stebbings: Regrets not selling secondary stakes in startup investments in 2021
“Last year I had a chance to get out on a load of different options, well, you know, investments and I didn't. I always believed the hold on to your winners, hold on to your winners. I should have sold.”
Quist: Accumulating top companies beats holding a diversified venture portfolio
“You're almost always better off accumulating stock in those companies over the first eight years of their life than you are in any diversified venture portfolio.”
Quist: Slow Ventures will not pursue a multi-stage fund strategy
“I think the amount of human capital and what it means on a daily basis to be a competitive multi-stage firm is not what we do. It's not our strength. It's not our DNA.”
Quist: Every venture capitalist should read Michael Mauboussin's The Success Equation
“Professionally, it's the success equation by Mike Mabusian. No, no, no, no full stop. Everyone in venture should read it. It's, it changed how I operate day to day.”
Quist: Tiger Global will retrench and deploy less private capital annually
“I think they retrench probably at slightly smaller scale on the private side, the public book. I don't know. There aren't a lot of firm, not a lot of public books that have recovered from being down that far. But they're kind of an unprecedented institution in…”