Sep 7, 2022 · 1h 5m · news
Michael Mignano: How I Founded Anchor; Why TikTok could be a $2 TRILLION Company | 20VC #923 · 20VC with Harry Stebbings
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In this episode of 20VC, Lightspeed Venture Partners' newest partner Michael Mignano discusses his career transition from building and pivoting Anchor to institutional investing, while sharing deep insights on the collapse of social graphs, the dominance of algorithmic recommendation media, and strategic advice for founders and angel investors alike.
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 26.3% of the talking time here. How this is scored →
Harry as informed peer 5.1 Guest teaching 4.2 Guest disagreement 1.1 Harry pushing back 2.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 7:48 Michael insists VCs should explicitly tell founders they lack faith in them
Michael directly rejects Harry's defense of VC optionality, arguing VCs should bluntly inform founders when they don't believe in them.
Hardest push from Harry ▶ 7:15 Harry challenges Michael's call for complete VC rejection transparencyHarry directly pushes back on Michael's request for complete VC feedback candor, explaining how multi-stage funds must retain optionality for future rounds.
Biggest teaching moment ▶ 28:31 Michael explains the commoditization of the social graph versus algorithmic feedsMichael educates Harry on why social graphs became a liability for platforms, breaking down the mechanics of phone contact ingestion and feed optimization.
Harry holds his own ▶ 21:21 Harry outlines a product moat thesis for BeReal using photo archivesHarry counters Michael's skepticism about BeReal by delivering an informed analysis comparing its photo history lock-in to Airbnb's review system.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Michael Mignano Joins Lightspeed Venture Partners | 2 | 1 | 0 | 0 | Harry welcomes Michael to the show and asks about his announcement joining Lightspeed Venture Partners as a partner. Michael outlines his rationale for choosing Lightspeed, highlighting its global platform, operator-investors, and full-stack support. | |
| Transitioning to VC and Boardroom Improvement | 4 | 2 | 1 | 2 | Harry shares that out of 15 boards he has served on, only one provided real value, asking how VC board governance can improve. Michael responds by advocating for more directness, transparency around passing reasons, and clear expectations between founders and investors. | |
| The Importance of Candor in the Pitching Process | 6 | 4 | 3 | 6 | Harry pushes back on Michael's call for complete pitch candor, explaining that VCs deliberately stay vague to preserve optionality for future rounds. Michael maintains that VCs should explicitly tell founders if they lack faith in them, sparking an engaging debate on fundraising optics and transparency. | |
| Advice on Investment Pace and Strategy | 6 | 3 | 1 | 3 | Michael shares contrasting advice on whether new VCs should deploy within 60 days or wait a year, favoring fast execution. Harry provides nuanced pushback based on his own experience, noting how an early bad investment severely damaged his confidence and suggesting a safer Series C deal first. | |
| Navigating Hype: Lessons from Anchor's Early Days | 3 | 5 | 0 | 1 | Harry asks Michael how he handled intense Silicon Valley hype during Anchor's early days. Michael candidly reflects on how easily first-time founders mistake investor speculation for true product victory before metrics force a humble pivot. | |
| Next-Gen Social Giants and Recommendation Media | 6 | 4 | 2 | 4 | Harry questions whether new social networks can survive incumbent copying, presenting a specific product thesis on BeReal's photo archives as a sticky moat similar to Airbnb reviews. Michael explains his recommendation media thesis, noting how platforms like Meta are abandoning the social graph in favor of algorithmic feeds. | |
| Why Live Audio and Clubhouse Failed to Sustain Growth | 6 | 5 | 1 | 3 | Michael explains why Clubhouse failed due to the math problem of live, synchronous content compared to asynchronous audio. Harry complements this by introducing his 'word to value ratio' content rule and pointing out how COVID lockdowns artificially distorted live audio adoption. | |
| The Commoditization of the Social Graph | 3 | 7 | 0 | 1 | Harry brings up Snap shutting down Zenly, asking why platforms are abandoning the social graph that built their businesses. Michael provides a comprehensive breakdown showing how contact list ingestion commoditized the social graph while algorithmic feeds optimize content moderation and ROI. | |
| TikTok's Dominance and Creator Economy Dynamics | 5 | 6 | 2 | 2 | Harry expresses extreme bullishness on TikTok, accidentally asking if it could be a '$2 billion company', which Michael amusingly corrects to $2 trillion. Michael analyzes the impending 24-month battle between Meta and TikTok around machine learning power and content depth. | |
| Algorithmic Shifts and Monetization for the Long Tail | 6 | 4 | 0 | 3 | Harry explains why he is bearish on creator economy startups, arguing that Pareto dynamics concentrate 99% of revenue in 1% of top creators while tools overcharge the tail. Michael validates Harry's analysis, noting that algorithmic shifts have stripped creators of guaranteed distribution, requiring new monetization infrastructure. | |
| The Rebundling of Creator Tools | 6 | 4 | 1 | 3 | Harry admits missing out on investing in Riverside and Descript, asking how creative tools can scale into major platforms. Michael frames them as modern Adobe competitors, while Harry provides empirical counter-examples like Twitter Super Follows generating negligible revenue for top creators. | |
| Spotify's Strategic Advantage in Recommendation Media | 5 | 5 | 0 | 2 | Harry asks if Spotify missed the social wave, but Michael contends Spotify is perfectly positioned for recommendation media through ML and Anchor's creator top-of-funnel. Harry offers product UX critiques on Spotify's radio feature and transitions to discussing angel check size strategy. | |
| Angel Mistakes and Vetting Mission-Driven Founders | 6 | 3 | 0 | 3 | Harry opens up about his worst investment mistake—relying on a co-investor's thesis rather than doing independent diligence—and asks Michael for his biggest blunders. Michael shares his regret backing a 'spreadsheet startup' without passionate founders and wasting money on early legal fees. | |
| The True Power of NFTs and OpenSea | 6 | 5 | 3 | 5 | Harry challenges Michael's enthusiasm for OpenSea and NFTs, arguing that NFT purchases are driven primarily by social status and speculation rather than true art appreciation. Michael rejects this framing, citing a friend's success to argue that NFTs democratize artist monetization beyond traditional gallery gatekeepers. | |
| Lessons from Pivoting Anchor: Ego vs. Market Needs | 6 | 5 | 2 | 6 | In the quickfire round, Michael discusses lessons from Anchor's pivot, fatherhood, and his recent investment in Stardust. Harry puts on his VC partner hat to aggressively challenge Stardust's market size, forcing Michael to explain how femtech apps can scale beyond niche period tracking into comprehensive health platforms. |
Statements from this episode (24)
Stebbings: Only one of 15 venture boards he joined provided value
“I've sat on many boards. I've only sat on one that has actually provided any value at all out of about 15.”
Stebbings: VCs give vague rejections to preserve optionality for future rounds
“The reason that investors aren't as directors, they should be most often in terms of the feedback is because they want to retain the optionality. If you're a multi-stage fund, You don't want to say, Mike, I'm turning you down at the seed because I really don't…”
Mignano: Defining startups create massive markets rather than fitting pre-existing TAM
“The reality is all of the biggest markets were never as big as they were until the defining companies made them that way.”
Mignano: Investor praise during startup hype cycles is speculation, not actual validation
“But the reality is, which we didn't know at the time, is that They are, they actually speculating and they are betting that you will win, not that you had already won.”
Mignano: Anchor's initial hype cycle lasted two months before stagnating
“So I think when we first launched, it probably lasted two months. And then I think we spent, you know, a good six to eight months constantly trying to recreate it and bring it back and do these little things to get that spark back. And it never did.”
Mignano: Facebook's pivot to recommendation media creates room for new social giants
“And I think as a result, there's going to be sort of this vacuum of social experiences, true social experiences. And so I think if ever there was a time for a new startup to emerge, to create a great new groundbreaking social network or social experience, now …”
Mignano: BeReal's format is too easily copied by Meta's Instagram
“Yes, a hundred percent. I think it is a worry. And admittedly, I think it is a worry for B-Real. I think B-Real is a great product. The reality is I don't think their format is, is, is something that Instagram can't copy easily, right? It is a photo at a speci…”
Mignano: Social networks need novel toolsets to delay incumbent copycats
“And so I think the key for a new social network to break out is it has to do something different That is hard for another platform to travel to, and arguably no platform did this better than TikTok, right? They built a new tool set which ended up creating a ne…”
Mignano: Clubhouse failed due to a flawed format, not community neglect
“I see a lot of criticism on, of Clubhouse online that I don't fundamentally agree with, which is, oh, they didn't focus, focus enough on the community. They didn't nurture the community enough. I actually don't think that's the case. I think the format was fla…”
Mignano: Podcast listening habits are sticky and users rarely switch platforms
“The thing that we saw in the early days of anchor and still saw, you know, up until when I recently left Spotify was listening habits of podcasts are very, very hard to break. If you are an apple podcast listener, you're almost definitely never going to switch…”
Mignano: Social graphs are commoditized and inefficient for content distribution
“The social graph, as I said, is completely commoditized. Now, every social product that comes out can instantly have a social graph just by ingesting your contacts list, right? So you and I meet on the street somewhere. You say, Hey, Mike, what's your phone nu…”
Mignano: Meta has equal chance to displace TikTok within 24 months
“I think Meta has just as good a chance as them or anyone else to displace them Over the next couple of years. So I think this battle sort of will be won over the next, let's call it, 24 months.”
Stebbings: Bearish on creator economy due to extreme 99/1 Pareto distribution
“I'm not bullish on the creator economy and I'm not bullish on the creator economy for the simple reason that I think it follows the most extreme version of Pareto's principle. Where 99% of revenues accrue to one percent of creators.”
Mignano: Bullish on tools giving creators direct business models outside algorithms
“And so I'm excited about platforms That enable influencers or creators to take control over their entire their entire business and not be reliant on algorithms and advertising that comes out of those algorithms to get paid because as we've seen now, Meta can j…”
Mignano: Web3 platform take-rate focus solves the wrong creator economy problem
“The other thing I'll say is, and I think to your point, you know, there's a lot of talk about how web three, Will enable creators to increase their take rate because the platforms are, you know, the platforms are taking too much. I will be honest. I think this…”
Stebbings admits passing on early investments in Riverside and Descript
“I turned down Riverside. This company is fantastic. The product is amazing. What a mistake. I also turned down Descript, the editing tool, which Andreessen did.”
Mignano: Unbundled creator tools will inevitably rebundle into new verticals
“So I think it has to get unbundled and then rebundled again. Like I think one of these companies will successfully take a strong position in say video or audio editing, and they will never inevitably need to ladder up into a new, you know, leverage that streng…”
Mignano: Spotify leads competitors in recommendation media due to early ML adoption
“I think Spotify is sort of ahead of the curve of this recommendation media thing that they've sort of been doing it for a really long time.”
Mignano: Angel investors should write identical check sizes for every deal
“So, so I wrote the same check size every single time, and the reason that I did this was You know, I think you can get into a trap of altering the check size based on your conviction, but the reality is like at this stage, the angel stage, they're all super ri…”
Stebbings: 20VC Fund I's biggest mistake was blindly following another investor
“I look back at the fund one in particular, 20 VC fund one, biggest mistake I made was one specific check went terribly wrong very quickly. And it went terribly wrong. And I blame myself. I relied so heavily on someone else who knew the market so well and just …”
Mignano: Small angel investors should not waste money reviewing legal docs
“I, in the early days of writing checks, I wasted my time and money on reviewing the legal docs. Like I would hire lawyers and get them to review it. And then I pretty quickly learned that like, these are all pretty standard docs. And as a tiny check writer, I …”
Mignano: OpenSea was a major missed early angel investment
“I really wanted to invest in OpenSea early on. You know, this was sort of like right, right up my wheelhouse. You know, I naturally, you know, founding anchor, I'm a big believer in, in platforms that lower the friction to enable people to create and distribut…”
Mignano: Social capital NFTs like profile pictures lack long-term value
“So I actually, the reason I like OpenSea and NFTs is not because of what you just said. I am not long-term bullish on the social capital aspect of the NFTs. I'm more bullish on sort of the creator based use case of it.”
Mignano: Single-vertical apps must ladder into new verticals to scale
“In order to build, you know, a 10 or twenty billion dollar business, that business then needs to ladder into new categories and new verticals, establish strength in that vertical. And then again, ladder up into the new strength and the new vertical and establi…”
Shorts cut from this episode
▶ What does Instagram's new algo mean for the Kardashians? 🤕 (@36:52)
▶ Anchor founder: They told me podcasts had already been done (@10:48)
▶ Why Clubhouse failed - Reason #3 🤔📉 #shorts · 20VC with Ha (@26:40)
▶ Why Clubhouse failed - Reason #1🤔📉 #shorts · 20VC with Har (@26:08)
▶ Mike Mignano: How Tiktok Won 🏆 #shorts · 20VC with Harry St (@22:46)
▶ Why Clubhouse failed - Reason #2🤔📉 #shorts · 20VC with Har (@23:39)
▶ Spotify Podcasts #shorts · 20VC with Harry Stebbings (@43:49)
▶ Can Facebook copy BeReal? - Part 1/2 #shorts · 20VC with Har (@20:34)
▶ Can Facebook copy BeReal - Part 2/2 #shorts · 20VC with Harr (@21:23)
▶ Tiktok vs Meta: First to hit $2 TRILLION #shorts · 20VC with (@33:06)
▶ Could a new social network arise? 🧐 #shorts · 20VC with Har (@19:38)
▶ How to tell someone you don't believe in them 🧐 #shorts · 2 (@10:03)
▶ How TikTok is crushing competition #shorts · 20VC with Harry (@29:41)