Nov 12, 2018 · 34m · 20vc
20VC: Why Warm Intros Are Mostly Dumb, Why Ownership is Built On First Check and 4 Crucial Elements To Make Cold Inbound Attractive with Leo Polovets, General Partner @ Susa Ventures
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In this episode of The 20 Minute VC, Harry Stebbings interviews Leo Polovets, General Partner at Susa Ventures, to discuss early-stage venture capital mechanics, outbound cold pitch evaluation, competitive moats, and founder-investor dynamics.
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 42.6% of the talking time here. How this is scored →
Harry as informed peer 3.3 Guest teaching 3.7 Guest disagreement 1.3 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 24:02 Rejection of price insensitivity at seed
Leo firmly rejects the common venture belief that seed valuation is irrelevant, demonstrating mathematically that overpaying on a portfolio cuts fund returns in half.
Hardest push from Harry ▶ 16:55 Harry challenging moat theory via platform shiftsHarry intentionally plays contrarian, raising technological platform shifts as a force that renders existing moats and defensibility arguments obsolete.
Biggest teaching moment ▶ 7:14 Deconstructing the warm intro dynamicLeo breaks down why warm introductions often act as superficial friction that artificially restricts dealflow diversity and delays early founder conversations.
Harry holds his own ▶ 16:55 Harry challenging defensibility assumptionsHarry uses informed industry context regarding technology platform shifts to challenge Leo on whether early defensibility planning holds up against market shifts.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Leo Polovets' Career Journey from Engineering to Venture | 2 | 3 | 1 | 1 | Harry introduces Leo and asks about his background transitioning from engineering to venture. Leo explains his journey and highlights how an operational background gives him empathy for founders rather than prescriptive authority. The tone is highly collaborative and courteous. | |
| Debunking the Value of Warm Introductions | 3 | 4 | 2 | 1 | Harry references a prior chat where Leo described warm introductions as overrated. Leo breaks down why warm intros are often superficial friction that restrict access and delay early conversations. Harry agrees and asks how Susa manages cold inbound filtering. | |
| Example of a High-Impact Cold Pitch Email | 3 | 4 | 1 | 2 | Leo constructs a hypothetical high-impact cold pitch email for Robinhood to illustrate concise outreach. Harry gently pushes on when unit economics become critical for early-stage evaluation, leading Leo to define moats in terms of long-term profit margins. | |
| Incorporating Defensibility Planning From Day One | 5 | 4 | 2 | 4 | Harry picks up on Leo's emphasis on thinking about moats 'upfront' and plays contrarian by asking whether major platform shifts render early moats obsolete. Leo explains that while moats evolve, considering them from day one prevents wasted effort. | |
| Defensibility and Self-Disruption During Platform Shifts | 4 | 3 | 1 | 4 | Harry brings up Netflix's self-disruption model and challenges Leo with a practical scenario regarding combative founder responses to rejection emails. Leo notes that aggressive pushback is rare and serves as a useful diagnostic signal. | |
| Implementing Founder Feedback to Improve VC Process | 3 | 3 | 0 | 1 | Leo explains how he collects structured feedback from founders after pitch meetings to improve his own process. Harry guides the narrative towards the upcoming controversial topic section. | |
| Controversial Caption: Valuation and Price Sensitivity at Seed | 5 | 5 | 3 | 4 | Harry presents provocative statements on ownership, seed valuation sensitivity, and portfolio company prioritization. Leo firmly disagrees with the notion that seed valuation does not matter, explaining how overpaying across a portfolio halves fund returns. | |
| Quickfire: Book Recommendation and Picking vs. Access | 3 | 4 | 2 | 1 | In the quickfire round, Leo recommends Elad Gil's book and argues that stock picking outweighs access in venture capital. He also reframes VC expertise, noting VCs possess broad rather than deep industry knowledge. | |
| Highlighting Susa's Investment in Interviewing.io | 2 | 3 | 0 | 0 | Leo shares the core investment thesis behind interviewing.io, praising team background and product elegance. Harry closes the interview with appreciative remarks. |
Statements from this episode (22)
Leo Polovets: Operational background is not required to be a successful VC
“I think you can be a really good or really bad investor with either background.”
Polovets: Most VC warm intros add friction without providing real signal
“I think the truth is most intros aren't actually that warm.”
Polovets: Solely accepting warm intros excludes non-traditional founders
“If you only meet people through introductions, you're going to be shutting yourself off from people who come from different backgrounds or spend time in their social groups or different settings.”
Polovets: Relying on warm intros prevents VCs from being first check
“If you only meet people via introduction, you're Almost never going to be the first person to talk to a founder, almost by definition, because, you know, you're waiting for somebody else to talk to them first”
Leo Polovets: Multi-page pitch emails signal a founder lacks clarity
“I think there's a sync that shows that you know how to pitch your product well, and you have a really good grasp of it. And if you need three pages, I think that means that you still aren't sure exactly how to do that. And you don't know how to engage, you kno…”
Polovets: Moats determine long-term margins and prevent zero-margin decay
“Well, I think the reason that moats are important is that they basically determine your profit margin over time. So if you build something that no one else can build, you can make 20 or 50 or maybe even 90% margins. But if what you're doing is easy to copy, th…”
Polovets: Early-stage unit economics only need to be in the ballpark
“You know, in the early days, I think unit economics, it's important that you're kind of in the right ballpark. So if it takes you a million dollars to acquire a customer that brings you 10,000 in revenue, like that's not good. But if it costs you 5000 dollars …”
Polovets: Founders must plan for moats starting on day one
“I really think it's important to think about moats from day one, and you might not actually develop a good moat until year two or year five or even year 10, but I think it's at least important to think about, you know, whether you could build a moat over time …”
Polovets: Data network effects build continuously, not overnight
“And I also think that most, like you mentioned, proprietary data and like data network effects, those things are not binary. So it's not like you don't have them on day 1000 and then you suddenly have them on day a 1001. And so they grow over time and the more…”
Polovets: Hard work and domain expertise are not sustainable moats
“And the truth is like, those are nice things to have and they'll help you get a headstart for a couple of months or maybe a year or two, but those are not sustainable competitive advantages. Like you can't outwork every company in the world forever.”
Polovets: Constructive rejection feedback builds long-term founder relationships
“And in my experience, it's best to send a thoughtful pass rather than disappear, and if you give constructive feedback about what you like about somebody's pitching company, and where are your hesitations, or where you see the risks, and you can give that feed…”
Polovets: Only a couple percent of founders argue with rejection feedback
“And I've actually learned that this pushback happens pretty rarely. So I'd say maybe, you know, a couple of percent of the founders where I send them some feedback, you know, most of the time people just say, thank you.”
Polovets: Defensive responses to rejection feedback signal difficult founders
“And if instead their response is more like, well, I think you're dumb and you're just not seeing it, then it's a good signal that maybe this person would be a little bit hard to work with or that they don't take it back well. So that's, you know, that's a grea…”
Polovets uses post-meeting surveys to gather founder feedback on pitch meetings
“I actually got this idea from Finn at first round where he started sending a survey to founders he met with to basically ask them what they thought of the meeting. So I've been doing that for the last year or two, and it's a really short survey.”
Polovets: Fund returns depend far more on initial seed checks than follow-ons
“Yeah, you know, I do believe, actually, that you make most of your money on the right initial bets, And the key is just to make those bets meaningful and trying to double down later helps, but I really think it's secondary.”
Polovets: Helpful seed investors usually get follow-on investment access
“And I will also say, I think following on is not a fantasy in my experience. I think if you're helpful and you work hard and founders enjoy working with you, they'll usually give you a chance to follow on, you know, not always, but usually.”
Polovets: Overpaying across a seed portfolio cuts overall fund returns in half
“I do believe price is important. I think everybody talks about if you invest in Uber, then the seed price doesn't matter. And I think if you invest in Uber, that's true. The seed price doesn't matter. But I think the challenge is that most investors think most…”
Susa Ventures tolerates 10-20% seed valuation premiums but reevaluates at 70%+
“We're not religious about it. I think if we're off by 10 or 20%, it's not a big deal. But if it feels like the price is off by 70% or 200%, then we really evaluate, like, how much we actually want to invest in a company.”
Leo Polovets: Susa Ventures will not abandon struggling portfolio companies
“I strongly disagree with this. The first reason is, and this is actually kind of a personal reason, but, you know, my fund, Sousa Ventures, we talk about the investors and founders in our fund being a little bit like a family, and I know it's kind of corny, bu…”
Leo Polovets: VC reputation is built on handling struggling portfolio companies
“There's a really great Fred Wilson quote where he talks about VCs making their money on their big winners, but the reputations on the companies that struggle. And I think building that good reputation is what gives you a chance to work with the next generation…”
Polovets: Deal picking matters more than deal access for venture returns
“I definitely think picking is more important, you know, because if you don't pick well, then it doesn't really matter if you get in or not, like you're not going to have a good portfolio, but if you can pick well, then access may or may not be important. And I…”