Dec 4, 2017 · 26m · 20vc
20VC: Accel GP, Rich Wong on When Is The Right Time To Scale A Startup, Optimising Initial vs Follow-On Investment Decision-Making & The Globalisation of VC In Recent Years
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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 Accel General Partner Rich Wong to explore early-stage venture capital mechanics, global deal sourcing, startup scaling indicators, and effective board governance.
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 30.5% of the talking time here. How this is scored →
Harry as informed peer 4.0 Guest teaching 3.3 Guest disagreement 0.9 Harry pushing back 2.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:23 Pushback on Peter Fenton's valuation quote
Rich explicitly rejects the premise that valuation should be ignored, arguing that price discipline is essential outside of rare uncapped upside opportunities.
Hardest push from Harry ▶ 7:53 Harry challenging valuation mindset with Fenton quoteHarry directly confronts Rich using Peter Fenton's quote about valuation being a mental trap and forces Rich to justify Accel's pricing posture.
Biggest teaching moment ▶ 8:23 Reframing valuation dynamics across fund typesRich systematically breaks down the distinction between early-stage team bets and growth-stage price sensitivity, offering a nuanced correction to blanket investment axioms.
Harry holds his own ▶ 7:53 Harry introducing Fenton counter-perspectiveHarry demonstrates high industry fluency by bringing up famous investor quotes and pressing on multi-stage VC loss ratios.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Rich Wong's Journey into Venture Capital | 2 | 3 | 0 | 0 | Harry sets the interview roadmap and prompts Rich on the shift toward global venture capital. Rich cordially details his transition from tech executive to VC and explains how global distribution tools rendered the old local-only VC mindset obsolete. | |
| Sourcing Standout Deals Outside Silicon Valley | 4 | 3 | 1 | 1 | Harry demonstrates good domain knowledge by citing Atlassian and Qualtrics as non-Silicon Valley successes. Rich explains how deal sourcing outside Silicon Valley requires proactive relationship building and willingness to make long trips rather than relying on local networks. | |
| Valuation Dynamics and Investment Strategy | 7 | 4 | 3 | 7 | Harry presents strong informed pushback by citing Peter Fenton's advice that rejecting deals on valuation is a mental trap. Rich respectfully disagrees with Fenton's broad premise, clarifying that price discipline remains vital for categories without uncapped upside. | |
| Follow-On Capital Allocation and Reserves | 4 | 3 | 0 | 2 | Harry asks detailed questions about reserve management and follow-on allocation across early vs growth vehicles. Rich outlines Accel's evolution from standard pro-rata reserves to aggressively taking super pro-rata positions in outlier investments like Qualtrics. | |
| Navigating Competition and the Prepared Mind Approach | 4 | 3 | 1 | 3 | Harry questions how Accel maintains an edge amidst intense Bay Area fund competition. Rich candidly notes internal partnership debates and explains Accel's 'prepared mind' thesis-driven strategy to win competitive deals. | |
| Identifying the Right Time to Scale | 5 | 4 | 1 | 4 | Harry relays a question from Manu Kumar on when to scale and pushes Rich to define specific metrics for repeatability. Rich breaks down cohort expansion land-and-expand dynamics and shares an operating mistake from his OpenWave days. | |
| The Evolution of Effective Board Leadership | 3 | 3 | 0 | 1 | Harry inquires about Rich's growth as a board member over his decade-plus at Accel. Rich describes moving away from over-active tactical micromanagement toward providing high-level market perspective. | |
| Quick Fire: Board Dynamics, Insights, and Partner Growth | 3 | 3 | 1 | 2 | Harry conducts a quickfire round covering board syndicates, industry trends, and recent investments. Rich criticizes herd-mentality investing in hyped categories and praises co-investor diversity. |
Statements from this episode (17)
Rich Wong was Atlassian's first outside board member and lead investor
“Rich also sits on the boards of the likes of Checker, Osmo, Rovio, and Atlassian, where, fun fact, he was the first outside board member and lead investor.”
Restricting VC investments to driveable Silicon Valley startups is outdated
“I think it's pretty obvious now, whether it's companies like Spotify or Supercell or Atlassian or other companies of that form, that that is now an outdated view.”
Silicon Valley has evolved from a geographic location into a mindset
“And so I think it's a true renaissance that's been happening of Silicon Valley going from being a physical place to being, in some cases, an entrepreneurial mindset that's not physically based here.”
Accel sourced Qualtrics early by building relationships in Salt Lake City
“Qualtrics, is a good example of that. Hiding in Salt Lake, you didn't think that there was going to be a multi-billion dollar company in the area of market research surveys, but we were lucky enough to find that company relatively early on and spend the time b…”
VCs should spend 90% of their time pursuing high-bar distant deals
“Trying to have that high bar, that high standard is where you should spend 90% of your time, even if that company you identify as a long ways away from where you work or where you live.”
Accel offered a high-end valuation term sheet to win the Atlassian deal
“So, a company like Atlassian, I think we were not on the low end of how we put in our term sheet in terms of the valuation that we ascribed to Atlassian at the time.”
VCs must maintain price discipline in categories with bounded upside
“That said, I think there are other companies that the category or the nature of the competitive set, you have to have some amount of price discipline in order to achieve true good returns. And I think those are in categories that you, there's just simply not a…”
Accel invested in Qualtrics, Rovio, and Atlassian via its growth fund
“The Qualtrics, the Rovios, the Alassians are all bets out of the growth fund, as it turns out.”
Accel reserves at least 1:1 follow-on capital for Series A investments
“When you do an early stage investment, On average, we at least reserve an equal amount of capital. So if you put in an eight million dollar series A, one might reserve eight, 10, eleven million dollars, you know, for follow-on rounds to support the company as …”
Non-Bay Area markets offer better deal signal-to-noise ratios
“If you actually spend your time in Salt Lake, in Austin, in Dallas, in Seattle, other markets, and then of course, internationally, whether it's Finland or Australia or other markets, there actually is less noise in those areas relative to the amount of intere…”
Most Silicon Valley startups make the mistake of scaling too quickly
“In general, I think most companies, especially in a capital rich VC environment in Silicon Valley, most of companies are largely make the mistake of stepping on the gas too quickly. And I think wasting precious capital or founder dilution, depending which way …”
Startups need three to six months of repeatability before scaling growth
“Generally, I would say, you know, on median, it's a couple of quarters, three to six months of repeatability, and more important than just the time dimension is whether you can see the, you know, the atomic level of the unit economics working.”
Openwave could have built Skype or Twitter by diversifying beyond telecom carriers
“If we had taken the time to think carefully about who our customer base should be, you know, we could have built technologies like Skype, like Twitter as opposed to just continuing to build technology, selling to Orange or Singular or Nextel or AT&T, the custo…”
VCs excel at market strategy, not day-to-day operational tactics
“You, as a venture capitalist, get to see the entire industry and all of the companies that surround your portfolio companies. You're probably better, or should be better, at understanding competitive dynamics and how the shape of the market is developing overa…”
Investing just to 'have a play' in hot sectors is bad advice
“So whether that's cryptocurrency, or Google Glass, or whatever the hot category is of that year, of that couple of years, I think it's not good advice to quote-unquote have a play in X category. Because if you are able to pick the best, that may be the company…”
Diverse board syndicates with differing viewpoints drive long-term startup success
“Having a diverse syndicate that has different points of view to the board, even if you don't a hundred percent always agree with the other members of that board, can actually make a dramatic difference in helping the company be successful long-term.”