Jun 18, 2018 · 25m · 20vc
20VC: General Catalyst's Hemant Taneja on Why We Are In A Golden Age For VC, Why Pro-Rata Is A Lazy Posture and Why He Does Not Focus On Price
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
General Catalyst Managing Director Hemant Taneja shares insights on the evolving venture capital landscape, detailing his macro investment thesis of 'unscaling,' his unconventional approach to valuation and pro-rata reserves, and his philosophy on 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 37.8% of the talking time here. How this is scored →
Harry as informed peer 3.8 Guest teaching 3.7 Guest disagreement 2.0 Harry pushing back 2.2
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:00 Dismissing end-of-cycle thesis
Hemant explicitly rejects Elad Gil's thesis on tech cycles ending, stating he holds a very contrarian view that VC is actually in a golden age.
Hardest push from Harry ▶ 15:06 Challenging negative signaling in follow-onsHarry pushes back on Hemant's non-standard follow-on strategy by raising the multi-stage negative signaling issue that arises when a lead firm doesn't take up its full pro-rata.
Biggest teaching moment ▶ 14:11 Calling pro-rata a lazy postureHemant reframes standard VC reserve allocation, explaining why blindly taking pro-rata is a lazy posture and advocating instead for active conviction decisions.
Harry holds his own ▶ 15:43 Citing extensive founder researchHarry demonstrates strong preparation by noting Hemant's 1,800 board hours and citing specific insights collected directly from four of Hemant's portfolio founders.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Hemant Taneja's Path into Venture Capital | 2 | 2 | 0 | 0 | Harry introduces Hemant and asks a standard biographical question about his career path. Hemant smoothly describes his accidental transition from founder to venture capitalist, framing VC as a platform that feeds his curiosity. | |
| Building General Catalyst's West Coast Presence | 4 | 3 | 1 | 2 | Harry brings up specific founder questions and notes common partnership failure patterns in multi-office firms. Hemant outlines GC's strategy of shipping existing trusted partners rather than trying to buy local networks on the West Coast. | |
| Macro Investment Thesis: The Golden Age of VC and Unscaling | 5 | 6 | 5 | 4 | Harry challenges Hemant with quotes from prominent VCs about tech cycles ending and distribution drying up. Hemant explicitly rejects these premises, arguing that venture capital is in the middle of a 30-year secular transformation and explaining his unscaling thesis. | |
| Valuation Philosophy, Insertion Points, and Pro-Rata Strategy | 5 | 6 | 4 | 4 | Harry probes Hemant on valuation discipline and multi-stage signaling risks. Hemant takes a strong stance against industry norms, calling valuation an excuse and describing standard pro-rata participation as a lazy posture. | |
| Board Governance, Value Add, and Founder Dynamics | 5 | 3 | 1 | 3 | Harry shows extensive prep by reaching out to four portfolio founders and citing Hemant's 1800+ board hours. Hemant articulates a founder-centric, adaptive board governance framework. | |
| Quick-Fire Round with Hemant Taneja | 2 | 2 | 1 | 0 | Harry runs through rapid-fire questions covering personal habits, books, and recent deals. Hemant gives concise, agreeable responses without tension. |
Statements from this episode (12)
Taneja: General Catalyst combines company incubation with traditional venture investing
“Our firm is the partnership encourages each other to get excited about starting companies from scratch with great founders as well, so we do so much incubation, and we do investing alongside that, that I felt like this was a great hybrid way to spend time.”
Taneja: Stripe was General Catalyst's first West Coast investment
“Luckily, my first investment ended up being Stripe because I had met the Colisons while I was teaching at MIT.”
Taneja: General Catalyst should have aggressively backed 2011–2013 mega-cap companies
“You know, this notion that we are in this era where you can create 10, fifty, hundred billion dollar companies, and there were so many of them created in the 2011, 2012, 2013 time frame, or a couple years before that, that we would have been a lot more aggress…”
Taneja: VC expansion requires relocating existing partners over hiring local networks
“Everybody would try to find a couple of emerging investors on the West Coast that were well-connected and give them a little bit of latitude to try to build a practice. And we decided that was not what we're going to do just given the failure of that approach.…”
Taneja: Tech VC is a decade into a 30-year golden age
“I think we're in the golden age of venture capital, and we're probably a decade into a 30 year secular shift as opposed to being in another cycle.”
Taneja: AR, VR, CRISPR, and crypto reach iPhone moment in 3-5 years
“If you think about all the technologies that are in development today, like AR, VR, genomics, and things like CRISPR, if you think about blockchain and cryptocurrencies, these technologies are also being developed on and approaching their iPhone moment, so to …”
Taneja: Snapchat was General Catalyst's last large media company investment
“In fact, as you said, Snapchat was actually the last large media company we've invested in.”
Taneja: Price sensitivity is an excuse for missing out on great companies
“Price is an excuse that makes you rationalize not getting into great companies in my experience.”
Taneja: Exercising default pro-rata in follow-ons is a lazy posture
“And my general posture is that when you're looking at a follow-on investment in a company, you should either have the bias to do more than your parata, or you should have a bias to do less than your parata for whatever the reasons are. I think parata is a lazy…”
Taneja: Board members must adapt to founder culture, not impose playbooks
“First and foremost is to be adaptive. I believe every great company has its own culture, its own way of doing things. The founders like to run their meetings a certain way. It's our duty to adapt to it as opposed to saying, here's my playbook and change the co…”
Taneja: General Catalyst advised Gusto not to copy Zenefits' scaling playbook
“In the very first board meeting, Josh said, we have this competitor called Zenefis, who I had met. I knew what the company was doing. They're going exceptionally fast. They've got a business model that's working really well, and they're outpacing us significan…”
Taneja: VCs should only spend time where they can impact outcomes
“I only want to spend time where my time can have a true impact. Instead of spending time with companies because they're very successful and makes me feel good or trying to protect companies from failing, if my time can't make a difference in either of those, I…”