Oct 17, 2016 · 30m · 20vc
20VC: Investing Lessons From Fred Wilson & Brad Feld and Why Fundraising Is An Art & Not Everyone Can Be An Artist with Howard Lindzon Founder @ Stocktwits & Managing Partner @ Social Leverage
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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 Howard Lindzon, Managing Partner at Social Leverage and founder of StockTwits, discussing early-stage venture strategy, public versus private market dynamics, and crucial investing lessons from past deals.
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 28.6% of the talking time here. How this is scored →
Harry as informed peer 4.2 Guest teaching 4.6 Guest disagreement 2.2 Harry pushing back 2.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 7:44 Calling out Naval Ravikant's thesis
Howard directly pushes back on Naval Ravikant's assertion that an angel's first 30 investments go to zero, noting that Naval is 'talking his own book' to market AngelList's broad asset-class strategy.
Hardest push from Harry ▶ 13:17 Harry presses on trend-following vs convictionHarry directly confronts Howard with a conflicting premise, asking whether it is genuinely possible to claim to be a conviction-driven investor while simultaneously operating as a trend follower.
Biggest teaching moment ▶ 18:46 The Zynga valuation lesson from Fred WilsonHoward educates Harry on the fundamental difference between public and private pricing discipline, explaining how Fred Wilson showed him that passing on a top-tier startup solely over valuation is a critical error.
Harry holds his own ▶ 2:57 Connecting historic hedge fund critiques to VC mega-fundsHarry demonstrates deep host expertise by citing a specific interview Howard gave three years prior to Jason Calacanis and challenging Howard to apply his critique of hedge fund asset-gathering to modern mega VC funds.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome and Guest Background | 5 | 3 | 2 | 2 | Harry demonstrates strong preparation by recalling a three-year-old interview Howard did with Jason Calacanis about hedge fund asset gathering, asking if mega VC funds suffer from the same dynamics. Howard agrees with the context and details how index funds like Vanguard destroy public market creativity while driving capital into private angel investing. | |
| Trend Following and Strategy in Startup Investing | 4 | 5 | 3 | 2 | Harry introduces Naval Ravikant's rule that an angel's first 30 investments go to zero. Howard counters that Naval is 'talking his own book' to promote AngelList's index model, educating Harry on why broad diversification works in early-stage tech despite his own early streak of luck. | |
| Conviction, Discipline, and Public Market Awareness | 5 | 5 | 2 | 3 | Harry challenges Howard with a potentially conflicting question regarding whether trend-following contradicts conviction-driven investing. Howard clarifies the difference between public market trend trading and private market conviction, noting that tech investors' lack of public market experience gives his firm an edge. | |
| Valuation Lessons and the Zynga Miss | 4 | 6 | 2 | 3 | Harry brings up rumor that Howard passed on Zynga, prompting Howard to share a major lesson learned from Fred Wilson. Howard explains how holding strict valuation limits in private markets for rocket-ship companies is a mistake, educating Harry on valuation elasticity. | |
| Quickfire Round: Facebook, Books, Networking, and Fundraising | 3 | 4 | 2 | 2 | In a quickfire sequence, Harry guides Howard through topics including Facebook, favorite books, and networking into VC. Howard offers a thoughtful reframe on fundraising, describing it as an unteachable art form rather than a simple mechanical skill. |
Statements from this episode (15)
Lindzon: Passive index investing will trigger massive corporate fallout
“And so it's destroying creativity and it's also you're going to start to see some massive fallout i can't predict when but you're starting to see cracks companies misbehaving again because you know it's okay for wells Wells Fargo as part of the S&P 500 to misb…”
Lindzon: Angel investing boom driven by passive market flows, not bubble
“This whole angel investing phenomenon is partly due to this Vanguard S&P 500 and the way the public markets are working. So people that call this a bubble I don't really understand the full scope of money and money flows and the whole ecosystem of investing, b…”
Lindzon: Angel investors should draft behind smarter co-investors
“First rule of thumb, follow smart people, right? Because just like in sports, in the Tour de France, if you can keep up with the smart people, then you can just draft behind them.”
Howard Lindzon backed AngelList in 2010 as an early investor
“We were actually, Tom and I, my partner, were one of the first checks into AngelList in 2010.”
Lindzon: 50% of his 2006-2008 angel portfolio succeeded fantastically
“Luckily for me, I probably lost on my first four back in 99 when everybody lost money in the bubble. But when I really started investing after I sold Wallstrip I caught a great crop of entrepreneurs in 2006, 2007, 2008, and I would say 50% of the companies wor…”
Lindzon: Public market investors only need around 12 core brand stocks
“Where startups versus the stock market differ is that in the stock market, I don't think you need 500 stocks, the S&P 500. I think an average person can own 12 companies. I call them eight to 80 brands that you use from eight years old to 80 years old have a d…”
Lindzon: Early-stage venture investors should hold roughly 100 startup investments
“In the private markets, I totally believe that the more the merrier, and not so much spray and pray, but having a hundred startups is not bad.”
Lindzon: VCs like Fred Wilson would have sold before 2001 crash
“In 99, 2000, I'm sure Fred Wilson and Brad Feld and a lot of the VCs wish they understood the stock markets because they would have sold, because they could have sold. Instead, they wrote everything to zero in 2001.”
Lindzon: Investors cannot understand down cycles without personally losing money
“People need to lose money to really understand how the markets work, and you can lose that money in a private deal or in the public markets, but until you're cut and bleed and see how co-investors behave with you and how the entrepreneur feels, I don't think y…”
Howard Lindzon says public markets taught him never to experience FOMO
“I never have fear of missing out. The stock market's taught me never to chase.”
Howard Lindzon passed on early-stage Zynga over a post-commitment price hike
“And so I really had committed to Zynga, passed a month later based on the price that was set. A big mistake.”
Lindzon: Investors should write the check if price is the only objection
“If you like the CEO, and you like the opportunity, and you like the market, and every single thing about this says yes, and the only reason you say no in a private, this is private stuff, not public check, and the only reason you say no is the price, well, you…”
Lindzon: High entry valuations severely penalize angels without follow-on capital
“The difference between, between paying two pre and 20 pre can be massive, especially if you're not going to have the capital to follow on.”