Aug 22, 2022 · 53m · news
Wesley Chan: How I Created Google Analytics; The Founding Story of Gmail & Canva | 20VC #919 · 20VC with Harry Stebbings
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Legendary investor Wesley Chan shares invaluable product and venture capital insights forged during his tenures at Google and Google Ventures, detailing his non-consensus investment philosophy, iconic startup stories like Gmail and Canva, and how he structures FPV Ventures to support generational founders.
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 15.5% of the talking time here. How this is scored →
Harry as informed peer 4.3 Guest teaching 3.1 Guest disagreement 2.1 Harry pushing back 3.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 31:32 Rejection of the GP narrative on market timing
Wesley forcefully corrects Harry's question about whether now is the best time to invest, arguing that while it is a great time to hold a fund, investing in treacherous falling markets is extremely dangerous.
Hardest push from Harry ▶ 9:15 Challenge to initial scale requirements using wedge examplesHarry directly challenges Wesley's requirement that products must be 'big enough' from day one, citing successful companies like Uber and Tesla that started with extremely small wedges.
Biggest teaching moment ▶ 34:10 Explaining the expert trap in venture capitalWesley educates Harry on how deep domain expertise creates negative cognitive bias and cynicism, recounting how his telecom expertise caused him to pass on Twilio's seed round.
Harry holds his own ▶ 35:45 Harry relating expert bias to podcast tech missesHarry demonstrates his domain knowledge by applying Wesley's expert trap concept to his own eight years of podcasting experience, explaining how it caused him to miss investing in Riverside and Descript.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Wesley's Path from Google to Venture Capital | 1 | 2 | 1 | 0 | Harry opens with a conversational question about Wesley's transition from Google to venture capital and FPV's origin. Wesley delivers a detailed narrative about his time at Google, Larry Page's advice, and founding GV and FPV. | |
| Product Insights from Google and the Gmail Origin Story | 2 | 3 | 1 | 0 | Harry prompts Wesley with a question from mutual friend Don Stalter regarding early product insights from working with Larry Page and Sergey Brin. Wesley explains Google's requirement for world-changing scale and recounts the Gmail origin story. | |
| The Fallacy of "Wedges" vs. 100-Year Vision and the Market Dilemma | 6 | 4 | 3 | 7 | Harry pushes back on Wesley's insistence on massive initial scope by citing small wedges like Uber's SF black cabs and Tesla's roadster. Harry also challenges the feasibility of 100-year founder plans and quotes Felicis founder Victoria on market dynamics. | |
| Market Types and the Fallacy of Market Sizing (TAM) | 5 | 3 | 2 | 3 | Harry outlines a taxonomy of three market types—creation, expansion, and theft—and questions the practical utility of TAM exercises. Wesley agrees TAM slides are often fallacious and explains how founders confuse feature markets with product markets. | |
| Fund Math and Portfolio Planning at FPV | 3 | 3 | 1 | 1 | Harry asks about outcome scenario planning models used by VCs to evaluate potential fund returners. Wesley explains FPV's back-of-the-napkin approach, fund size math ($450M), LP mix, and hit-rate assumptions. | |
| Concentration Limits, Board Dogma, and FPV's Investment Flexibility | 7 | 4 | 4 | 6 | Harry challenges Wesley's portfolio construction by citing Brian Singerman's view that capital concentration limits harm returns and questions ownership requirements. Wesley counters with his preference for more shots on goal and recounts waving VC dogma to invest in Canva. | |
| Strategic Fundraising Advice for Founders | 4 | 3 | 1 | 2 | Harry references a specific LinkedIn post written by Wesley advising founders to wait and stay put rather than raise during market turbulence. Wesley justifies the advice by describing the wave of desperate founders seeking capital in falling markets. | |
| Treacherous Markets, the Twilio Miss, and the "Expert" Trap | 6 | 4 | 4 | 5 | Harry questions the common GP narrative that market downturns are the best time to invest, prompting Wesley to forcefully clarify that it is the best time to have cash, not to invest recklessly. Wesley shares his miss on Twilio due to expert bias, and Harry shares his own misses on Riverside and Descript. | |
| Evaluating Product Visionaries and FPV's Core Product | 4 | 3 | 2 | 4 | Harry presses Wesley on how he identifies true product visionaries if he avoids asking direct technical product questions. Wesley explains his strategy of asking questions indirectly ten different ways to uncover authentic vision. | |
| FPV's Fundraising, the Mechanics of Learning, and Quick Fire Round | 5 | 2 | 2 | 2 | Harry explores Wesley's piano background, contrasting mechanics with mastery to draw a parallel to venture capital before executing a quickfire round. Wesley shares contrarian views on crypto and outlines his five-year vision for FPV. |
Statements from this episode (24)
Wesley Chan: Founders Hate Corporate VC Due to Divergent Interests
“Corporate venture capital has been an utter distaste and a success and founders hate it because, you know, the interest of the company that's investing in the interest of the founders diverge.”
FPV Ventures Makes Investment Decisions in Under 12 Hours
“It's Peg and myself and a couple. Folks were five people. We move really fast. You know, we can decide on things in less than 12 hours.”
Wesley Chan Wrote First Checks Into Robinhood, Plaid, Gusto, and Flexport
“And, you know, I was able to write the first check in the, you know, companies like Robinhood or Platt or Gusto or Flexport.”
Wesley Chan Seeks 'Two Gigabyte' Product Breakthroughs Over Incremental Features
“I ask founders and I tell the story, what's your two gigabyte moment? Like, you know, you're telling me something that's incremental and I'm looking for the two gigabyte when everybody else has 25 megabyte moment.”
Wesley Chan Refuses to Invest Without a 100-Year Company Vision
“If the founder comes to me and doesn't have a hundred year plan, I don't want to, I don't care. I don't want to be involved. We don't just do wedges, right?”
Wesley Chan: Unfavorable markets defeat great founders unless they adapt
“A market will beat out a great founder, but the best founders understand how to adapt to the market and find the bigger piece, right?”
Wesley Chan: Outlier returns come from market-creating companies
“My outlier returns the companies that I've had the privilege of working with Are ones that create new markets.”
Wesley Chan Ignores TAM and Market Size When Making Investments
“I don't do it. I don't actually, you know, look at the say, is the market big enough? I just say, does the founder have a unique insight on a market that hasn't been created yet or that, you know, they're about to expand into.”
Wesley Chan: Market sizing fails by conflating features with products
“So that's the fallacy of market sizing, right? Is that people conflate that people conflate the feature part of their things in the market size for that feature for that of the product, right?”
Wesley Chan Caps FPV Ventures' $450M Fund at 20 Core Positions
“I can only do maybe 20 at most core positions in my fund.”
Over 80% of FPV Ventures' LPs Are Charities and Foundations
“I think like, you know, 80% plus are charities and foundations and, you know, the rest of our friends, kids, college funds, right?”
Wesley Chan Claims a 30% Hit Rate on Early-Stage Unicorn Investments
“My hit rates around, around 30%. Right. So, you know, one in every, you know, three or four companies I've hit, you know, are a billion dollar plus, and I've been an early investor.”
Wesley Chan Led Canva's Series A Without 20% Ownership or Board Seat
“I did not have 20% ownership of Canva when I led the Series A. I did not have a board seat. In fact, so many people said no to them because they said, we're not giving you a board seat. Or they said, we're not giving you 20% ownership.”
Wesley Chan: Dogmatic venture capitalists usually get knocked out quickly
“In fact, the VCs that subscribe to hard and fast rules that have dogma are usually the ones that get knocked out very quickly.”
Guild Education Quietly Raised an Up-Round Despite the Tech Downturn
“Guild was able to raise a great round from investors they knew without being on the market. And they were one of the big success stories of being able to get up rounds, even when everything was falling.”
Wesley Chan: Market Downturns Are Treacherous Times to Actually Invest Capital
“No, it's the best time to have a fund. It's not the best time to be investing, right? There's a lot of treacherous deals out there.”
Wesley Chan Passed on Twilio's Seed Round Due to Expert Bias
“And I passed on it because, you know, I looked at it and, you know, talked to my team at Google voice and everybody looked at it. It's like, oh, this is easy to do. Like, you know, once the company gets big enough, they don't need toilet anymore. Boy, I didn't…”
Wesley Chan Avoids Taking Pitches in Domains Where He Has Expertise
“So I try not to take any pitches in the areas I know too much about because I have a natural bias to pass on it and say, say no. And I'd rather, you know, have one of my colleagues or partners who don't know enough about it, take the pitch and then like be rea…”
Chan: Evaluate early startups on a founder's ability to evolve products
“My biggest lesson learned on investing is that what you see today is not what, if the founder truly visionary will not be what the company is a year or two years or five or 10 years from then. So you have to really believe that the founder is capable of morphi…”
Identifying Product Visionaries Requires Asking Non-Gameable Questions Ten Different Ways
“You have to ask it 10 different ways. In ways that make sense. And, you know, again, that's one of those things I want to give away the trade secret to how I do it, but like you, you're, you have to ask it 10 different ways and listen carefully. And if the ans…”
Wesley Chan: Sales Leaders and CMOs Often Make the Best Product Managers
“Some of the salespeople, some sales, you know, leaders and CMOs have lots of product expertise. You have to remember, they're close to the customer. They've explained to the customer what the product does. They, you know, in their previous jobs have learned wh…”
FPV Ventures Closed Its $450M Inaugural Fund in Under Two Months
“We were able to close in, you know, less than a couple months. And we were, you know, almost two, if not three X oversubscribed in the commitments that we were able to take room for them. We capped it at four 50, right?”
Wesley Chan: More Than 75% of the Crypto Industry Is Scammy
“I was one of the first to like boohoo crypto. You know, some of it's unwell, but like I said, like, I can't be involved in a bunch of stuff where like, I think more than three quarters of it is scammy.”
Larry Page's Rule at Google: Bring Data or My Opinion Wins
“There's this famous saying when I would pitch stuff to Larry, where he goes, Wesley, if you have the data, you're right. If you don't have the data, then I'm right, and you don't want me to be right, because I'm often wrong. So, bring the data.”
Shorts cut from this episode
▶ How Google became the #1 search engine · 20VC with Harry Ste (@14:18)
▶ Most Contrarian Opinion in Venture Space today #shorts · 20V (@50:41)
▶ Does market size matter? #shorts · 20VC with Harry Stebbings (@16:53)
▶ All great founders have this ONE THING in common 🤔 #shorts (@10:11)
▶ Elon Musk's Master Plan #shorts · 20VC with Harry Stebbings (@37:21)
▶ How I became an investor in Canva #shorts · 20VC with Harry (@19:51)
▶ How Google became the #1 search engine · 20VC with Harry Ste (@14:18)
▶ Is now the best time to be investing? #shorts · 20VC with Ha (@31:43)