Jul 19, 2017 · 26m · 20vc
20VC: Why It Is BS That You Never Regret Paying A High Price To Get Into A Good Company, Why There Are Only 2 Price Points That Work in SaaS and Why eSports Will Be Bigger Than Traditional Sports in 5 Years Time with Jason Pressman @ Shasta Ventures
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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 Twenty Minute VC, host Harry Stebbings interviews Jason Pressman, Managing Director at Shasta Ventures, about enterprise SaaS pricing models, venture capital valuation discipline, and the explosive growth of vertical social networks and esports.
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 29.5% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 4.2 Guest disagreement 2.7 Harry pushing back 2.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 11:37 Rejection of VC high-price dogma
Jason forcefully dismisses the prevailing venture capital belief that high entry prices don't matter for good companies, explicitly calling the idea bullshit.
Hardest push from Harry ▶ 7:51 Questioning low-growth IPO sentimentHarry pushes back on Jason's optimistic narrative regarding the IPO window by highlighting that companies like Yext are going public with concerningly low growth rates.
Biggest teaching moment ▶ 13:50 SaaS unit economics breakdownJason educates the listener and host on how ACV dictates sales compensation, travel budgets, lead generation, and feature development in SaaS companies.
Harry holds his own ▶ 7:51 Pointing out market anomaliesHarry demonstrates strong market awareness by challenging Jason's broad bullishness on enterprise IPOs with specific counter-evidence regarding Yext's growth figures.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Jason Pressman's Path from Walmart.com to Shasta Ventures | 2 | 3 | 1 | 1 | Harry introduces Jason and asks about his transition from Walmart.com to venture capital. Jason explains how early e-commerce and ASP experience provided a strong foundation for investing in consumer internet and SaaS. The dynamic is conversational and welcoming without friction. | |
| Analyzing the Enterprise IPO Surge and Market Cycles | 4 | 4 | 2 | 4 | Harry asks about the catalysts behind recent enterprise IPOs and directly challenges Jason by pointing out Yext IPOing with lower growth rates. Jason articulates market dynamics around pent-up institutional demand and M&A removing growth stocks from portfolios. | |
| Herd Mentality, Entry Pricing, and Investment Pacing | 3 | 5 | 5 | 2 | Jason strongly rejects the common venture capital trope that 'you never regret paying a high price for a good company', calling it bullshit. He outlines Shasta's disciplined pacing and stage-shifting strategy to navigate herd mentality in early-stage investing. | |
| SaaS Pricing Models: The $10k vs. $100k ACV Framework | 4 | 6 | 3 | 3 | Jason details his framework for why only two price points ($10k and $100k ACV) work in SaaS due to sales team economics and product complexity. Harry probes on whether startups can start directly selling $100k enterprise tickets in their early days. | |
| Vertical Social Networks and the Growth of Esports | 3 | 5 | 4 | 3 | Jason pushes back on the narrative that social networking is dead, advocating for vertical social networks like Nextdoor, Smule, and Plays.tv. Harry interrupts to press Jason on his bold claim that eSports will become larger than the NFL within five years. | |
| Quick Fire Insights with Jason Pressman | 2 | 2 | 1 | 1 | A quickfire round covering Jason's favorite management book, memorable pitches, VR optimism, and investment rejections. The exchange is fast-paced, collegial, and lighthearted. |
Statements from this episode (12)
Only 15 percent of software is delivered as SaaS
“Even today, only fifteen-ish percent of total software is delivered as SaaS, so we're still early in that transition”
Late-stage $50M to $200M mega-rounds dried up in 2015 and 2016
“The very late stage private market valuations and private rounds have largely gone away. So in 2013, 14, even early 15, there were very large rounds done fifty hundred, two hundred million dollars in late stage private companies. And a lot of those investors d…”
Strong institutional demand will keep the tech IPO market open long-term
“There's certainly demand, and we hear from the bankers and from institutional investors that there's tremendous pent-up demand right now, so I see no reason that the market's not going to stay open for quite a while and that the demand is going to be there.”
IPOs for tech companies with 20% growth are a healthy market sign
“There are really good companies that grow at twenty-ish percent a year, and the fact that they are able to get public actually doesn't alarm me. I actually view it as a really healthy sign that good companies that are growing at reasonable rates, but not some …”
A robust IPO market inflates VC valuations and depresses overall returns
“There's just a good chance that With a robust public market, you'll see more dollars coming in to venture, and more dollars coming in means higher valuations at every round, and it just overall can drive returns down.”
Early-stage VCs reacting to current public IPO markets is stupid
“What's going on in the public markets today has absolutely no bearing whatsoever on what a liquidity market's going to look like when those companies are ready to either go public or be acquired. So I think it's really stupid, but it's quite commonplace”
The VC adage that you never regret paying high prices is bullshit
“Some VCs say that you never regret paying a high price for getting into a good company, but I think that that is a bullshit. I think that you never regret paying a high price for an extraordinary company like Facebook, but there's only really one like that eve…”
SaaS startups with $10k to $100k annual contract values usually fail
“When you get caught in the middle, Somewhere between the 10 and a hundred K, you almost always end up on this slippery slope where your gross margins suck and you're upside down on your customer acquisition costs and the ultimate SAS model just doesn't work. A…”
Esports will draw a larger global audience than the NFL by 2022
“I do. Based on the underlying data today and how accessible it is to people, I do believe it will be larger, certainly, than the NFL.”
Social networking innovation is not dead post-Snapchat IPO
“So I don't think social is dead. I think we'll continue to see really powerful applications of social, and we're absolutely continuing to look for them.”
Zuora CEO Tien Tzuo delivered the most impressive Series A pitch
“I have to say the Series A pitch that Teen Sue, the CEO of Zawara, did. He is an amazing storyteller, and at the time, he painted a vision for the subscription economy and how Zawara was going to be the leader in that category, and he has executed against it b…”
VR is a next-generation platform that will blow everyone's mind
“It is an earth-shattering experience, and we're in the early innings of it. It is truly Extraordinary, life-changing, and it's a next-generation platform. Things that are going to, the amazing things that entrepreneurs are going to do in VR are going to blow e…”