Jul 13, 2016 · 24m · 20vc
20VC: USV's Brad Burnham on Co-Founding USV with Fred Wilson, What They Look For In Potential Partners & Whether We Are Entering a Period of Consolidation or Expansion
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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 The 20 Minute VC, host Harry Stebbings interviews Brad Burnham, co-founder of Union Square Ventures. Burnham discusses the founding history of USV, their thesis-driven investment philosophy, board stewardship, partnership culture, and perspectives on tech market cycles and consolidation.
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 26.4% of the talking time here. How this is scored →
Harry as informed peer 1.7 Guest teaching 2.7 Guest disagreement 0.8 Harry pushing back 1.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 15:24 Brad pushes back on 'optimal' premise
When Harry asks why thesis-driven investing is optimal, Brad gently rejects the absolute framing by stating he does not know if it is optimal, only that it worked specifically for USV's focus on the application layer.
Hardest push from Harry ▶ 14:35 Harry presses Brad to take a stand on tech consolidationHarry steps beyond asking open questions to directly prompt Brad to take a clear stance on whether he agrees that tech is in a continued phase of consolidation.
Biggest teaching moment ▶ 10:03 Brad explains the shift from 90s hardware VC to application layerBrad provides a masterclass on how 1990s hardware VC models failed when applied directly to 2000s web application startups, illustrating how VCs must evaluate market shifts from first principles.
Harry holds his own ▶ 9:40 Harry quotes USV research to challenge Brad on market cyclesHarry demonstrates strong preparation and industry knowledge by quoting USV analyst Joel Monegro's research on Mark Twain's market cycle analogy to lead into tech adoption trends.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Brad Burnham's Path to Venture Capital and Founding USV | 1 | 1 | 0 | 0 | Harry introduces Brad and asks standard setup questions regarding his career path and the founding of USV. Brad provides a conversational narrative about AT&T Ventures and meeting Fred Wilson without any dynamic tension. | |
| Building the USV Partnership and Cultivating Team Culture | 1 | 2 | 0 | 0 | Harry asks an open-ended question about character traits looked for in partners. Brad explains the deliberate, slow process of adding partners like Albert Wenger and Andy Weissman in a completely collaborative tone. | |
| Defining the Qualities of Exceptional Board Members | 3 | 4 | 1 | 4 | Harry demonstrates research by citing USV analyst Joel Monegro and Mark Twain on market cycles, pushing Brad directly to agree on whether tech is in a consolidation phase. Brad provides detailed historical analysis of 1990s hardware VC vs 2000s application layer investing. | |
| The Strategic Advantages of Thesis-Driven Venture Investing | 2 | 4 | 2 | 1 | Harry asks why thesis-driven investing is optimal for early stage startups. Brad mildly rejects the premise, clarifying that while it worked for USV in the application layer, it may not be universally optimal across all VC sectors. | |
| Major USV Inflection Points and the VC Learning Curve | 2 | 3 | 1 | 1 | Harry asks about key inflection points for USV. Brad humbly notes that venture capital firms often receive too much sustained credit for a single great fund (their 2004 fund) from ten years prior. | |
| Quick-Fire Insights with USV Co-Founder Brad Burnham | 1 | 2 | 1 | 0 | Harry runs a friendly quick-fire round where Brad candidly admits to reading academic papers over blogs and explains the rationale behind his OB-One investment. |
Statements from this episode (13)
USV Took 80 Pitch Meetings to Raise First Fund in 2004
“It took us about 80 meetings and a heck of a lot of air travel to get that done, but we finally got the fund done in the early part of, I guess, 2004”
USV Created Venture Partner Role for Albert Wenger for Sourcing Etsy
“Been very actively involved in Etsy early on and brought Etsy to the partnership. And we created a venture partner role for Albert to, you know, to sort of compensate him for having brought Etsy to the partnership.”
USV Will Add Partners Slowly and Remain in a Single Office
“It'll always be a slow process for us. We think these partnerships are, you know, the dynamics of the partnerships are very, very important, and we'll continue to, you know, as we Add people. We'll do it very slowly, and we'll do it in a single office, and we'…”
Fred Wilson Managed Flatiron's Portfolio Post-Crash Into USV Launch
“Thing about Fred, most impressive things I've ever seen anybody do is the amount of effort that he put into managing out the Flatiron portfolio after the crash in 2000 which I got to watch, you know, up close and personal because he was very much still doing i…”
VCs Spend More Time on Struggling Startups Than Winners
“It turns out that this is probably a truism in the business that you end up investing more time in your losers than your winners.”
Supporting Failing Startups Earns VCs Entry Into Future Winners
“And the willingness to do that is what gets you invited into the next winner.”
Expecting Past VC Investment Models to Repeat Is a Major Failure Mode
“I think one of the failure modes of venture capital is to assume that the past is the future and that you'll consider it, can you continue to see the same models?”
Late-Stage Private Valuations Are Unsustainable and Face a Market Correction
“I'd argue it's probably not that healthy, and that you're actually seeing some very weird dislocations when, you know, the scarcity of equity in the private capital markets for the real dominant market players, you know, you end up bidding up the, in the price…”
Big Tech Dominance Makes Creating New Consumer Web Unicorns Difficult
“We're now in a world where, you know, we're seeing really dominant market power, Google, Apple, Facebook, Amazon, you know, creating a new set of unicorns in the face of that market power is going to be very difficult, certainly in the consumer-facing web serv…”
Infrastructure VC Relies on IP; Application Layer Requires a Thesis
“When you move from the infrastructure layer, where I think Investing is really defined by technical differentiation and intellectual property defensibility. You know, they're, I think, being more opportunistic, more deal flow driven, made perfect sense. When y…”
Publicly Sharing Investment Theses Attracts Aligned Founders
“Putting that thesis out there and being open about it and being open about all of our thinking about markets has proven to be very helpful. Introducing us to entrepreneurs who are working in the areas that we have been thinking about.”
USV Avoids Direct Competitors to Enable Peer Collaboration
“Because we make an effort not to invest in direct competitors, they, they're perfectly comfortable sharing ideas with each other. So we've been able to organize, you know, because we don't do biotech For instance, you know, we can have a CEO summit where every…”