Sep 27, 2017 · 22m · 20vc
20VC: Why VCs Have Forgotten Their Job To Invest In Entrepreneurs not Technologists, How To Know When Growth Creates Value and When It Destroys It & How To Bootstrap Learning Most People Acquire Over Decades with 8VC Founding Partner, Drew Oetting
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In this episode of The 20 Minute VC, 8VC founding partner Drew Oetting joins Harry Stebbings to discuss the evolution of venture capital, sound business fundamentals, firm structure, and career acceleration for young investors. Oetting emphasizes the importance of governance, true unit economics over growth hype, and collaborative internal fund cultures.
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 29.9% of the talking time here. How this is scored →
Harry as informed peer 4.0 Guest teaching 4.5 Guest disagreement 1.8 Harry pushing back 2.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:07 Critiquing tech hype and lazy VC language
Drew firmly rejects the premise that VCs should invest in tech buzzwords like AI or big data, calling it lazy language that misses core business fundamentals.
Hardest push from Harry ▶ 9:16 Harry questioning proprietary deal flowHarry directly refuses the premise that proprietary deal flow still exists, challenging Drew by pointing to modern data sourcing tools used across multi-stage funds.
Biggest teaching moment ▶ 16:14 Value-destroying growth vs unit economicsDrew uses the vivid analogy of selling dollar bills for 50 cents to educate listeners and the host on how unexamined top-line growth destroys enterprise value.
Harry holds his own ▶ 15:48 Harry citing Swift Nav founder on unit economicsHarry demonstrates strong industry expertise by referencing Tim Harris's insights on how pursuit of top-line growth compromises unit economics, setting up the segment's core discussion.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Drew Oetting's Path into Venture Capital | 2 | 4 | 1 | 1 | Drew outlines his background and reframes VC as fundamentally similar to PE, educating the host on how operational dynamics work in private investing. Harry asks standard introductory questions with minimal pushback. | |
| Balancing Founder-Friendly Attitudes with Corporate Responsibility | 4 | 5 | 2 | 2 | Drew clarifies board member legal obligations, distinguishing actual company duties from founder-friendly marketing slogans. Harry shows domain knowledge by citing specific hold period metrics across PE and VC. | |
| Internal VC Fund Structures and Proprietary Deal Flow | 6 | 4 | 2 | 6 | Harry directly challenges Drew on whether proprietary deal flow exists given multi-stage data tools. Drew responds by differentiating seed and Series A dynamics from later stages. | |
| Accelerating Career Growth and Learning for Young Investors | 2 | 4 | 1 | 1 | Drew offers reflective career advice regarding self-awareness, focus, and avoiding using one's career as therapy. Harry largely listens and agrees with the guest's observations. | |
| Evaluating Business Fundamentals Over Technology Hype and Growth | 7 | 6 | 3 | 5 | Harry brings informed context from previous guest Tim Harris regarding top-line growth vs unit economics. Drew responds with an extensive breakdown on when growth creates versus destroys value. | |
| Quickfire Insights on AI, Books, Media, and Investment Criteria | 3 | 4 | 2 | 1 | Harry steers a rapid quickfire round. Drew delivers concise perspectives on functional AI prerequisites and media coverage flaws. |
Statements from this episode (15)
Oetting: Venture Capital and Private Equity Are Identical Businesses
“Venture capital is so distinct, at least culturally and, you know, in the media from private equity, because fundamentally they are very similar and really they're identical businesses done at different scale and at different times in a company's life cycle.”
Oetting: Private Equity Is More Operationally Focused Than Venture Capital
“Private equity actually has been incredibly entrepreneurial for a long period of time and really actually much more operationally focused than venture capital.”
Oetting: Board Members Violate Fiduciary Duties By Prioritizing Founders
“As an investor, you are legally, if you're on a board, you are legally responsible for being company friendly. You are violating your obligations if you are founder friendly or if you are investor friendly. You're supposed to be company friendly to all stakeho…”
Oetting: VCs will shift from founder-friendly to company-friendly as companies stay private longer
“But as companies stay private longer and longer, I think that that's going to change. I think what you're going to see is investors become more company friendly. And what that manifests itself in is looking at all shareholders, not just the founders.”
Oetting: Standard VC fund structures barely fit modern startup exit timelines
“I think they are, but just barely. And I'm not sure that on the sort of for the best companies, they will be set up.”
Oetting: Deal-By-Deal Carry Is Poisonous To Internal VC Fund Culture
“Most venture funds are set up to be highly internally competitive, which I think is crazy in a market that's as externally competitive as venture. So things like deal by deal carry, things like giving credit based off sourcing deals or serving on a board, thes…”
Oetting: 8VC eliminated deal-by-deal carry and individual deal rewards
“So ABC, we've done away with all that. We've incentivized collaboration. So there's no concept of this is my deal or your deal. I might have responsibility for certain aspects of it because of course there needs to be Delegation. But there's no concept of rewa…”
Oetting: Proprietary deal flow genuinely exists at Seed and Series A
“At the C and Series A, and even sometimes Series B, these companies may not even have been written about in TechCrunch. They don't even know who they are. So I very strongly believe in proprietary deal flow at the earlier stages of the stack.”
Oetting: Young VCs Have An Advantage Because Incumbents Aren't Threatened
“The real benefit of being young, and I'm sure that you've experienced this, is that people are really willing to help you. Partially, that's because they probably don't see you as that competitive. And so they don't see you as threatening, which is probably tr…”
Oetting: Deep focus early in a career generates exponential returns over preserving optionality
“The reality is doubling into something you, especially early on in career, you get exponential return to your time. So focusing on one thing, you're going to get an exponential return on that.”
Oetting: VCs Are Too Obsessed With Technology Over Business Fundamentals
“Venture capitalists have become a little bit too obsessed with the technology itself versus the way the technology accomplishes creating a highly compelling business.”
Oetting: Business Growth Creates Value Only With Operating Leverage
“Growth creates value when there's an argument or there is evidence of operating leverage, because then it creates more profitability.”
Oetting: Midwest Founders Prioritize Unit Economics Due to Capital Constraints
“If you're starting a business in the Midwest, you probably had to think a lot about this because it was very expensive for you to raise money, and so you probably thought a lot more about it.”
Oetting: Functional AI Requires Vertical Enterprise Data Structures First
“In order for functional AI to exist in applications, especially in the business world, we need there to be data in software systems, which means we need enterprise software with highly complex and vertically focused data structures before AI can have very much…”
Oetting: Systemic US Racism Lies in the Court System, Ignored by Media
“On the left, there's very little talk in the mainstream media about the fact that the real prejudice and racism, in my opinion, that exists in the United States exist in the court system, not necessarily as much in other parts of the world.”