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Dec 12, 2016 · 27m · 20vc

20VC: Reddit's Alexis Ohanian on How It All Started With Paul Graham @ YC, The Biggest Surprises About Making The Move Into VC & Why Alexis Believes All The Best Investors Have Operating Experience

Alexis Ohanian · 18m spoken Harry Stebbings · 7m spoken
0:00 / 0:00

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In this episode of The 20 Minute VC, host Harry Stebbings interviews Reddit co-founder Alexis Ohanian on his transition to venture capital, the founding and scaling of Initialized Capital, and why operational experience makes better investors.

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 27.7% of the talking time here. How this is scored →

Harry as informed peer 2.0 Guest teaching 3.4 Guest disagreement 0.6 Harry pushing back 0.6
05100:0010:0020:002:57–6:41 · Harry as informed peer 1/10 Transitioning from Founder to Venture Capitalist Harry sets up the interview with standard intro questions about Alexis's move from Reddit founder to VC. Alexis provides a friendly explanation of how Paul Graham encouraged him to raise Initialized Capital and how founder experience creates an advantage in seed investing.6:41–11:13 · Harry as informed peer 1/10 Operational Experience and Relentless Metric Focus Harry relays questions from a mutual connection asking about operational takeaways. Alexis details his hands-on methodology for drilling founders down to a single growth metric and keeping relentless focus.11:13–14:13 · Harry as informed peer 4/10 Benchmarks, Fundraising Goals, and Business Health Harry demonstrates industry knowledge by citing Jason Lemkin's theory on VC round benchmarks. Alexis gently reframes the premise, clarifying that fundraising is not the goal and that focusing purely on business health matters more.14:15–19:36 · Harry as informed peer 2/10 Scaling VC Infrastructure and the Power of Software Harry asks how Initialized scales its operations through technology. Alexis details their custom software stack for portfolio support and tracking office hours history.19:39–25:39 · Harry as informed peer 2/10 Quickfire Round: Books, Kindness, Elon Musk, and WorkRamp Harry runs a friendly quickfire round, asking whether kindness can win in competitive VC negotiations. Alexis passionately defends kindness as a long-term investment strategy and offers personal advice to Harry about health.2:57–6:41 · Guest teaching 3/10 Transitioning from Founder to Venture Capitalist Harry sets up the interview with standard intro questions about Alexis's move from Reddit founder to VC. Alexis provides a friendly explanation of how Paul Graham encouraged him to raise Initialized Capital and how founder experience creates an advantage in seed investing.6:41–11:13 · Guest teaching 4/10 Operational Experience and Relentless Metric Focus Harry relays questions from a mutual connection asking about operational takeaways. Alexis details his hands-on methodology for drilling founders down to a single growth metric and keeping relentless focus.11:13–14:13 · Guest teaching 5/10 Benchmarks, Fundraising Goals, and Business Health Harry demonstrates industry knowledge by citing Jason Lemkin's theory on VC round benchmarks. Alexis gently reframes the premise, clarifying that fundraising is not the goal and that focusing purely on business health matters more.14:15–19:36 · Guest teaching 3/10 Scaling VC Infrastructure and the Power of Software Harry asks how Initialized scales its operations through technology. Alexis details their custom software stack for portfolio support and tracking office hours history.19:39–25:39 · Guest teaching 2/10 Quickfire Round: Books, Kindness, Elon Musk, and WorkRamp Harry runs a friendly quickfire round, asking whether kindness can win in competitive VC negotiations. Alexis passionately defends kindness as a long-term investment strategy and offers personal advice to Harry about health.2:57–6:41 · Guest disagreement 0/10 Transitioning from Founder to Venture Capitalist Harry sets up the interview with standard intro questions about Alexis's move from Reddit founder to VC. Alexis provides a friendly explanation of how Paul Graham encouraged him to raise Initialized Capital and how founder experience creates an advantage in seed investing.6:41–11:13 · Guest disagreement 0/10 Operational Experience and Relentless Metric Focus Harry relays questions from a mutual connection asking about operational takeaways. Alexis details his hands-on methodology for drilling founders down to a single growth metric and keeping relentless focus.11:13–14:13 · Guest disagreement 2/10 Benchmarks, Fundraising Goals, and Business Health Harry demonstrates industry knowledge by citing Jason Lemkin's theory on VC round benchmarks. Alexis gently reframes the premise, clarifying that fundraising is not the goal and that focusing purely on business health matters more.14:15–19:36 · Guest disagreement 0/10 Scaling VC Infrastructure and the Power of Software Harry asks how Initialized scales its operations through technology. Alexis details their custom software stack for portfolio support and tracking office hours history.19:39–25:39 · Guest disagreement 1/10 Quickfire Round: Books, Kindness, Elon Musk, and WorkRamp Harry runs a friendly quickfire round, asking whether kindness can win in competitive VC negotiations. Alexis passionately defends kindness as a long-term investment strategy and offers personal advice to Harry about health.2:57–6:41 · Harry pushing back 0/10 Transitioning from Founder to Venture Capitalist Harry sets up the interview with standard intro questions about Alexis's move from Reddit founder to VC. Alexis provides a friendly explanation of how Paul Graham encouraged him to raise Initialized Capital and how founder experience creates an advantage in seed investing.6:41–11:13 · Harry pushing back 0/10 Operational Experience and Relentless Metric Focus Harry relays questions from a mutual connection asking about operational takeaways. Alexis details his hands-on methodology for drilling founders down to a single growth metric and keeping relentless focus.11:13–14:13 · Harry pushing back 2/10 Benchmarks, Fundraising Goals, and Business Health Harry demonstrates industry knowledge by citing Jason Lemkin's theory on VC round benchmarks. Alexis gently reframes the premise, clarifying that fundraising is not the goal and that focusing purely on business health matters more.14:15–19:36 · Harry pushing back 0/10 Scaling VC Infrastructure and the Power of Software Harry asks how Initialized scales its operations through technology. Alexis details their custom software stack for portfolio support and tracking office hours history.19:39–25:39 · Harry pushing back 1/10 Quickfire Round: Books, Kindness, Elon Musk, and WorkRamp Harry runs a friendly quickfire round, asking whether kindness can win in competitive VC negotiations. Alexis passionately defends kindness as a long-term investment strategy and offers personal advice to Harry about health.

speaking balance: gold is Harry, purple is the guest (3 minute bins)

0:00 · Harry 98.6% · guest 1.4%0:00 · Harry 98.6% · guest 1.4%3:00 · Harry 11.5% · guest 88.5%3:00 · Harry 11.5% · guest 88.5%6:00 · Harry 11% · guest 89%6:00 · Harry 11% · guest 89%9:00 · Harry 15.4% · guest 84.6%9:00 · Harry 15.4% · guest 84.6%12:00 · Harry 11.4% · guest 88.6%12:00 · Harry 11.4% · guest 88.6%15:00 · Harry 1.7% · guest 98.3%15:00 · Harry 1.7% · guest 98.3%18:00 · Harry 8.9% · guest 91.1%18:00 · Harry 8.9% · guest 91.1%21:00 · Harry 21.1% · guest 78.9%21:00 · Harry 21.1% · guest 78.9%24:00 · Harry 53.3% · guest 46.7%24:00 · Harry 53.3% · guest 46.7%27:00 · Harry 100% · guest 0%27:00 · Harry 100% · guest 0%
Sharpest disagreement ▶ 11:30 Challenging the benchmark-centric view of VC success

Alexis gently pushes back against the premise that knowing round benchmarks is what defines a great investor, insisting that fundraising is not the metric for success.

 Hardest push from Harry ▶ 21:10 Challenging kindness in macho VC negotiations

Harry pushes Alexis on whether kindness can realistically prevail in the typically aggressive and macho world of venture capital negotiations.

 Biggest teaching moment ▶ 11:30 Educating on business health versus fundraising goals

Alexis educates Harry on how prioritizing next-round fundraising benchmarks can delude founders, teaching that true investor value lies in focusing on fundamental business health.

 Harry holds his own ▶ 11:03 Citing Jason Lemkin on fundraising benchmarks

Harry shows strong familiarity with venture ecosystem principles by referencing SaaS investor Jason Lemkin's benchmark theory.
the scores for every segment, with the reasoning behind each
ChapterTopicHarry as informed peerGuest teachingGuest disagreementHarry pushing backWhy
Transitioning from Founder to Venture Capitalist 1300 Harry sets up the interview with standard intro questions about Alexis's move from Reddit founder to VC. Alexis provides a friendly explanation of how Paul Graham encouraged him to raise Initialized Capital and how founder experience creates an advantage in seed investing.
Operational Experience and Relentless Metric Focus 1400 Harry relays questions from a mutual connection asking about operational takeaways. Alexis details his hands-on methodology for drilling founders down to a single growth metric and keeping relentless focus.
Benchmarks, Fundraising Goals, and Business Health 4522 Harry demonstrates industry knowledge by citing Jason Lemkin's theory on VC round benchmarks. Alexis gently reframes the premise, clarifying that fundraising is not the goal and that focusing purely on business health matters more.
Scaling VC Infrastructure and the Power of Software 2300 Harry asks how Initialized scales its operations through technology. Alexis details their custom software stack for portfolio support and tracking office hours history.
Quickfire Round: Books, Kindness, Elon Musk, and WorkRamp 2211 Harry runs a friendly quickfire round, asking whether kindness can win in competitive VC negotiations. Alexis passionately defends kindness as a long-term investment strategy and offers personal advice to Harry about health.

Statements from this episode (10)

Disclosure
Ohanian: Initialized Capital raised $7 million for its first fund
“And so Gary and Harge and I sat down and said, okay, let's start a fund. Let's raise a little bit of money. We raised about seven.”
Alexis Ohanian Dec 12, 2016 ▶ 4:34
Opinion
Ohanian: Most seed investors lack founder and operational experience
“Turns out there were not a ton of people doing this kind of early stage seed investing who were willing to do the work or even could do the work. Because they just hadn't been founders before. They hadn't been makers or doers before.”
Alexis Ohanian Dec 12, 2016 ▶ 5:46
Insight
Ohanian: Early-stage startups should only write code and talk to users
“Because the only two things they should be doing is either writing code or getting slash talking to users.”
Alexis Ohanian Dec 12, 2016 ▶ 9:05
Opinion
Ohanian: Investors with founder experience yield better venture results
“And the ones who can do that best are the ones who have actually done this stuff before, because they're coming at it from a place of being a practitioner. So there's automatic empathy. There's automatic respect from both parties. And I think it just yields, i…”
Alexis Ohanian Dec 12, 2016 ▶ 10:38
Insight
Ohanian: Early-stage founders must limit focus to two key metrics
“Driving home that relentless focus on the key metric or Maybe two key metrics tops is so important for early stage founders because that is the only thing that will matter.”
Alexis Ohanian Dec 12, 2016 ▶ 10:52
Insight
Ohanian: A startup's goal is business growth, not securing funding
“So again, I want to stress the goal is not getting the next level of fundraising. The goal is growing the business so that that next round of fundraising could even be plausible.”
Alexis Ohanian Dec 12, 2016 ▶ 13:45
Assertion Supported
Ohanian: Gary Tan wrote almost all of Y Combinator's modern software
“Gary, in fact, wrote just about all of the modern code that powers Y Combinator.”
Alexis Ohanian Dec 12, 2016 ▶ 15:07
Disclosure
Ohanian: Initialized Capital invested in Coinbase's seed funding round
“There's a great Gary Tan story about Coinbase where we had done their seed round”
Alexis Ohanian Dec 12, 2016 ▶ 18:05
Insight
Ohanian: Kindness in venture capital is a smart long-term investment strategy
“A hundred percent. Yes, because kindness is a long-term investment, and if you're a smart investor, you are thinking about the long-term. Kindness does not mean being weak or being dumb. It just means looking at the world as though it is not this purely zero-s…”
Alexis Ohanian Dec 12, 2016 ▶ 21:21
Disclosure
Ohanian: Initialized invested in WorkRamp for its unsexy, mandatory software
“The most recently publicly announced one would have been WorkRamp. And the reason why is because it's so unsexy and so mandatory. Basically, it's the easiest way to train and develop an employee.”
Alexis Ohanian Dec 12, 2016 ▶ 24:23
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