Oct 5, 2022 · 47m · news
Geoff Lewis: Why I Put $200M into Rippling; Uncapped Notes; "Compound Startups" | 20VC #933 · 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, host Harry Stebbings interviews Geoff Lewis of Bedrock, who details his firm's strategic $200 million investment in Rippling, the mechanics of "compound startups," and Bedrock's highly concentrated capital allocation framework.
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 18% of the talking time here. How this is scored →
Harry as informed peer 2.8 Guest teaching 2.3 Guest disagreement 1.6 Harry pushing back 2.1
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:39 Deflecting Host Psychoanalysis
Lewis firmly shuts down Stebbings' personal line of questioning about his edge, pointing out that the podcast should focus on Parker and Rippling rather than psychoanalyzing the two of them.
Hardest push from Harry ▶ 15:29 Pushing Back on European ExpansionStebbings directly challenges Lewis's thesis that Rippling can easily displace European payroll competitors, highlighting country-by-country regulatory hurdles.
Biggest teaching moment ▶ 36:03 LP Psychology on Distributions vs RecyclingLewis educates Stebbings on LP behavior, sharing that sending back a 10x cash return produced no LP gratitude, which informed Bedrock's decision to recycle crypto gains into Rippling.
Harry holds his own ▶ 15:29 Stebbings Demonstrates Market ExpertiseStebbings demonstrates domain expertise by citing local European compliance barriers and applying Frank Slootman's strategy on focus versus expansion.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Meeting Parker Conrad and the Early Years | 1 | 1 | 1 | 0 | Stebbings introduces the episode warmly and prompts Lewis to share his long-standing history with Parker Conrad. Lewis provides a detailed account of early pitches, passing on Zenefits, and founding Bedrock. | |
| Parker Conrad's Vengeance and Entrepreneurial Motivations | 2 | 2 | 2 | 3 | Stebbings pushes Lewis on whether overcoming vengeance causes an entrepreneur or investor to lose their edge. Lewis gently pivots the psychoanalysis back to Rippling and Parker. | |
| The Compound Startup Model and Disrupting SaaS | 4 | 3 | 2 | 4 | Stebbings questions Lewis's thesis on global expansion, citing European regulatory complexities and referencing Frank Slootman. Lewis acknowledges the challenge and suggests asking Parker directly. | |
| Investment Strategy: Underwriting 10X and Capital Risk | 2 | 2 | 2 | 1 | Stebbings asks about outcome scenario planning, giving Lewis space to outline Bedrock's 10x underwriting model and the preferred equity stack versus revenue curve. | |
| Underwriting Losses and the Strategy Behind Uncapped Notes | 3 | 4 | 2 | 2 | Stebbings confronts Lewis about breaking his own firm's rule against uncapped notes. Lewis explains how Parker's fundraising mastery made uncapped notes a tactically cheaper entry point. | |
| The Series B Screw-Up: Analysis Paralysis in March 2020 | 2 | 1 | 1 | 2 | Stebbings prompts Lewis to reflect on Bedrock's Series B mistake. Lewis candidly recounts their analysis paralysis during the March 2020 COVID lockdowns and getting kicked to the curb. | |
| Series D, Macro Shifts, and Recycling Crypto Profits | 4 | 4 | 2 | 3 | Stebbings asks sharp questions about pricing uncertainty and recycling crypto gains instead of returning cash to LPs. Lewis reveals that LPs didn't react to earlier cash distributions, justifying full recycling. | |
| Navigating a Downturn: Doing More with Less | 3 | 2 | 1 | 2 | Stebbings asks whether venture capitalists must be inherently optimistic to succeed. Lewis reframes the point, arguing that durable success requires balancing optimism with sharp internal pessimism. | |
| Growth Investing, Capital Concentration, and Team Culture | 4 | 2 | 1 | 2 | Stebbings questions the true value added by growth VCs at Series D and cites Brian Seaman on capital concentration. Lewis freely admits that growth VCs add very little value at this stage. |
Statements from this episode (19)
Parker Conrad Was Fired from SigFig Before Co-Founding Zenefits
“And this was actually the first company that Parker co-founded. But Parker had been fired from Sigfig right before I took the pitch.”
Lewis: Vengeance is a crucial motivator for historic entrepreneurs
“I think the greatest entrepreneurs in history, and this is a sort of declassé thing to say, it's not really a appropriate thing to say, but I'm going to say it anyways. I think the greatest entrepreneurs in history, it's this combination of a life's work surfa…”
Lewis: Parker Conrad is the most vengeance-driven founder he has backed
“And Parker has that in spades more than any entrepreneur I've backed. He's got it.”
Bedrock quadrupled down on Rippling by co-leading its Series D
“And the value proposition is uniquely suited, I think, to our times, which was part of why we decided to, you know, Quadruple into the company by co-leading that Series D round earlier this year.”
Lewis: Rippling will become the AdWords for SaaS software distribution
“In March of twenty-twenty-two, Parker and the company articulated a very specific and detailed product roadmap around how they can really become, through their employee graph, over time, I don't think he would phrase it this way, but I'm going to, the AdWords …”
Lewis: Rippling will dominate globally without leaving room for European clones
“Why does some of these European payroll and HR, workforce management companies, not knocking on Europe, but why do you need a rippling for Europe? There's no Airbnb for Europe. There's no Google for Europe. Why do you need a rippling for Europe? Why do you nee…”
Lewis: Bedrock underwrites for a 10x return without projecting beyond that
“First question always, is there a 10 X from here? Can we gain conviction through a bust analysis that if things go right, there is a 10 X from here? So that's our work. We don't try to project beyond that, but we do always ask the question, is there a 10 X fro…”
Lewis: Rippling's preferred stack will grow linearly or sublinearly relative to revenue
“Because of their approach to product building and go to market, I believe the preferred stack Grows either linearly or sub linearly versus revenue over time versus hyper linearly.”
Lewis: Rippling reached nine-figure ARR with nearly 3x annual growth
“Now they're already at, you know, nine figures of air are growing extremely fast. They grew almost three acts over the past. 1212 months.”
Lewis: Bedrock's VC loss ratio is under 50 basis points
“We at Bedrock have only lost a few million dollars. You know, we've invested hundreds of millions of dollars over almost five years at this point. I think our loss ratio is less than 50 basis points, so we, we've lost almost no money.”
Lewis: Deploying capital via uncapped notes is not real investing
“Uncapped notes aren't actually investing. That's why I hate them. Investing is You know, you should know the price you're paying. That's what an investment is. It's not an investment if you don't know what the price you're paying is for the security.”
Lewis: Bedrock refuses to participate in competitive VC fundraising processes
“By the time a company's in a formal financing process, it's kind of dead to us. Like, we still love it, we still love the entrepreneurs, but once they've circulated a memo to 12 VC firms, we're not engaging.”
Lewis: Bedrock lost Rippling's Series B after trying to lower agreed valuation
“We agreed on evaluation with Parker. He's like, send me the term sheet. I'm ready to sign. And we were like, wait, Like all of their business at the time was SMBs. Now, since then they've extended, expanded surface area phenomenally into mid-market. They're st…”
Bedrock accumulated Rippling secondary shares leading up to catalyzing its Series D
“And after that screw up, we opportunistically bought secondary. Predominantly preferred secondary, because part of our thesis is this is going to be a relatively small preferred stack for the scale of the company that they're building at several junctures, and…”
Bedrock exited Bitcoin and Ethereum to fund its investment in Rippling
“And so we traded out of Bitcoin and Ethereum via our second fund and for it, right before the crash for a great multiple and recycled those proceeds to fund our rippling investment.”
Bedrock returned over 10x cash to Fund One LPs from crypto
“So we returned a 10 plus X life to date multiple on our Bitcoin and Ethereum investments on fund one. To our LPs in cash. Nobody even emailed us to thank us.”
Lewis: Rippling customers need no payroll admins under 1,000 employees
“Rippling customers don't need to hire dedicated payroll administrators until they're over a thousand employees.”