Aug 25, 2017 · 29m · 20vc
20VC: Nuzzel's Jonathan Abrams on Why The Top VCs Do Not Have A PlayBook For Startup Success, Why Most Boards Are Not Successful & Why He Is Bored Of Hearing "I Fell Into VC"
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In this episode of The 20 Minute VC, host Harry Stebbings interviews serial entrepreneur and Nuzzle CEO Jonathan Abrams about venture capital dynamics, investor misconceptions, and startup governance. Abrams shares candid perspectives on VC playbooks, valuation sensitivity, board effectiveness, and Nuzzle's evolution as a news curation platform.
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 28.9% of the talking time here. How this is scored →
Harry as informed peer 4.0 Guest teaching 5.1 Guest disagreement 3.8 Harry pushing back 3.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:08 Critique of VC 'Conviction' Buzzword
Jonathan dismisses the omnipresent VC claim of investing with 'conviction' as a trite cliché, questioning whether it masks internal insecurity or lack of real differentiation.
Hardest push from Harry ▶ 17:34 Challenging VC Brand Value SkepticismHarry directly counters Jonathan's skepticism regarding VC brand equity by asserting that backing from firms like Sequoia provides concrete social validity for enterprise startups.
Biggest teaching moment ▶ 11:54 Correcting Seed Market TrendsJonathan educates Harry on venture market data, debunking the host's premise that seed funding volume and valuations are currently expanding.
Harry holds his own ▶ 25:03 Thesis on Thematic Specialization vs ReturnsHarry demonstrates deep venture insight by offering a contrarian thesis that thematic specialization serves primarily as an LP fundraising narrative rather than a return maximizer.
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 Back Banter and the Genesis of Nuzzle | 3 | 5 | 4 | 4 | Jonathan critiques the common VC narrative of 'falling into VC', arguing it reflects privilege and contradicts diversity commitments. Harry offers a playful yet strategic counter-scenario about hyper-planning his own career into VC from age 13 to test Jonathan's perspective. | |
| Do Founders or Operators Make Better Investors? | 2 | 6 | 3 | 1 | Jonathan argues that founder-investors hold an empathy advantage, while dismissing the ongoing debate over founder vs operator VCs as outdated history. He educates on real fund returns, noting most VC funds achieve modest 1-2x TVPI regardless of background. | |
| Valuation Sensitivity and Data in Venture Investing | 5 | 4 | 2 | 5 | Harry quotes Peter Fenton on valuation sensitivity and presses Jonathan on whether VCs can afford price sensitivity in a frothy YC valuation environment. Jonathan notes the lack of empirical data driving VC valuation philosophies and explains the mathematical focus on outliers. | |
| Evaluating the Expansion of Seed and Micro VCs | 3 | 6 | 4 | 2 | Jonathan reframes Harry's question about an over-expanded seed market by citing data that seed funding is actually decreasing and valuations peaked in 2015. He rejects the notion that 300 micro VCs truly compete once filtered by sector and region. | |
| Critiquing the Overuse of 'Conviction' in VC | 5 | 5 | 5 | 4 | Jonathan mockingly critiques the proliferation of the word 'conviction' in venture capital pitches, calling it a trendy cliché. Harry defends the concept, asking how Jonathan would reframe investing intent without relying on buzzwords. | |
| The Myth of Repeatable Startup Playbooks and Branding | 6 | 5 | 4 | 6 | Jonathan rejects the existence of a repeatable startup playbook among top VCs and downplays firm branding. Harry pushes back firmly, arguing that backing from top-tier brands like Sequoia provides irreplaceable social validity for enterprise clients. | |
| Corporate Board Effectiveness and Governance Dynamics | 2 | 6 | 5 | 2 | Jonathan delivers a strong critique of startup board governance, claiming most boards fail and suffer from over-boarding and celebrity investor stacking. Harry humorously refrains from commenting to avoid alienating potential future VC guests. | |
| Software Investing vs. Frontier Tech and Quick Fire Round | 6 | 4 | 3 | 4 | Discussing frontier tech vs software, Jonathan agrees with Elad Gil's warning against generalist VCs chasing deep tech trends. During the quickfire round, Harry demonstrates strong industry expertise by offering his own thesis on thematic specialization being an LP marketing tool rather than a return driver. |
Statements from this episode (22)
Abrams: VCs claiming to 'fall into VC' contradicts firm diversity excuses
“When you hear venture capital, you know, famous VCs sometimes in the media talking about the lack of diversity in their firms and being challenged about it and saying that they can't relax their standards, and fair enough, but when then you hear people saying …”
Abrams: Claiming to 'fall into VC' is usually masking unacknowledged privilege
“Really it does sound like the benefit of privilege when a family member or a former college roommate or somebody gives you this lucky break that is an entree into that world. It's a weird way of saying that you fell into it. It just doesn't sound like somethin…”
Abrams: Investor empathy and founder experience provide a key VC advantage
“For me, an investor that has an entrepreneur background that has been in my shoes, that's a big advantage to me because I think they're going to be able to understand my side of things better. And contrary to somebody who's been recently in the news, I actuall…”
Abrams: Most venture capital funds deliver mediocre returns under 2x TVPI
“The reality is most funds have pretty mediocre performance between one and two TVPI. So most investors are not doing that great.”
Abrams: VC stances on valuation sensitivity are personal religion, not data
“When it comes to this idea of whether you should be price sensitive or not, there's a lot of different opinions, and none of them really seem to be backed up by data, so it'd be interesting if a venture capitalist came on the show and said, look, we analyzed o…”
Abrams: Higher-priced angel investments performed better than cheaper deals
“In my case, the angel investments that I've made that were a little high in price have been ones that I was glad that I've made. And when I see ones that are sort of below market or really on the cheaper side, usually they're not the deals I want to do.”
Abrams: Seed funding volume is going down, not up
“Well, first of all, I think seed funding is actually going down, not up.”
Abrams: Seed valuations peaked around 2015 and stopped rising
“In terms of valuations, I think those might have already hit their peak in 2000 and maybe 15. So the idea that the valuations have just, you know, as they went up throughout 2000, maybe 10 to 2015, I don't think they've continued to go up in 16 and 17.”
Abrams: Overvaluation was a late-stage unicorn problem, not a seed problem
“I think the biggest problem with valuation was the later stage valuations of so-called unicorns. That was, I think, a bigger problem, and it's, that's still, to some extent, sitting around in some companies, some overvalued companies having raised hundreds of …”
Abrams: Many new micro VC funds will fade away due to lack of focus
“There are ones that I think are going to go away because I think there are some folks in the, so I don't even like the term micro VC because it's really just early stage venture capital back to the roots. There's some that are going to be real permanent instit…”
Abrams: Large VC funds face a much harder path to strong returns
“The amount of capital going into the Cedar Micro VC is still pretty small compared to some of the money that's been flowing into really huge venture capital firms, where it's still much harder to get a good return.”
Abrams: Statistical analysis proves larger VC portfolio size correlates with solid returns
“The reality is there are people who've actually done the math. I've actually seen, you know, a bunch of people who've done the math and proven that a portfolio that has a certain size statistically can be correlated with decent returns.”
Abrams: 'Spray and pray' label is weaponized by lead investors chasing ownership
“So I think spray and pay can be a bit sometimes a pejorative by folks who want to say, okay, we lead our deals because they're looking to get a certain minimum ownership or whatever they're looking for.”
Abrams: Forcing previous success playbooks onto new startups leads to failure
“Trying to take what worked for one successful company and then apply it to a later startup is, in fact, one of those patterns of failure that can be imposed”
Abrams: Top VC repeatable playbooks for startup success are a myth
“I actually think that's sort of a myth, that there's some sort of playbook for startup success that the top VCs have that they can do again and again”
Abrams: Top VC brand signaling matters much less than people pretend
“The idea that, that being a Sequoia company is going to be this huge advantage in terms of the branding, there's a lot of great investors these days that have great reputations, so chances are, if you have a bunch of Competitors. They probably have great names…”
Abrams: Most startup boards are fundamentally ineffective
“This is an unpopular opinion, but I think most boards are just not very successful, and you look at some of the things that you read in the press about very famous companies sometimes, and some of these companies have some of the most famous venture capitalist…”
Abrams: VCs cannot effectively serve on 10 to 15 boards simultaneously
“I think a lot of people are on too many boards. So even if you are a fantastic board member, I don't know how you can be a fantastic board member at 10 companies or 15 companies at once. I just think that requires sort of a superhuman attribute.”
Abrams: Startup boards need operational executives over celebrities and investors
“And I think more boards should probably have more nerdy Choices like more CFOs, more CIOs, CTOs, CMOs. I think there should be just more boring operational people on, on some of these boards than the, you know, quite as many celebrities and investors, but ulti…”
Abrams: AI is currently overhyped in startup pitches and VC focus
“I think one of the things I think is overhyped now is AI, and, or really, or maybe talking about AI, because I'm sure a lot of the, you know, I've invested as an angel in over-fifty startups, I'm sure plenty of them are using AI, but when I hear everybody talk…”
Abrams: VC GPs pitch fund strategies that contradict their actual execution
“A lot of managers, GPs, are coming to them And pitching a certain strategy for their fund that is not at all what they've actually been doing or not what they end up doing, and they're pitching that they're going to have a certain specific type of strategy and…”