Dec 3, 2018 · 40m · 20vc
20VC: Index's Danny Rimer on His Biggest Lessons On Price, Ownership, Board Dynamics & Building Consumer Businesses from Backing The Likes of King, Skype, Farfetch, Glossier and more...
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In this episode of 20VC, host Harry Stebbings interviews Index Ventures partner Danny Rimer about his career journey, consumer brand strategies, venture firm culture, board dynamics, and early-stage investment philosophies.
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 30.9% of the talking time here. How this is scored →
Harry as informed peer 2.4 Guest teaching 2.8 Guest disagreement 1.0 Harry pushing back 0.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:21 Rejecting huge capital advantage
Danny pushes back on the popular industry narrative that mega-funds and capital war chests guarantee success, arguing that excess capital causes laxity and repeated mistakes.
Hardest push from Harry ▶ 7:00 Challenging consumer downturn premiseHarry confronts Danny with direct quotes from prominent rival VCs Jeremy Levine and Peter Fenton asserting that consumer tech is in a deep downturn.
Biggest teaching moment ▶ 7:14 Educating on consumerization of enterpriseDanny educates Harry by reframing the host's premise, demonstrating that consumer growth paradigms are actually expanding directly into enterprise software platforms.
Harry holds his own ▶ 29:07 Citing board hours and price mechanicsHarry shows strong host preparation by estimating Danny's 3,000 cumulative board hours and framing a precise question on balancing price sensitivity against early-stage flexibility.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Danny Rimer's Career Path from Tech Research to Index Ventures | 1 | 3 | 1 | 0 | Harry introduces Danny Rimer and asks a broad background question about his entry into venture capital. Danny gently corrects the setup by clarifying he was not a co-founder of Index Ventures, though his brothers were, before detailing his career transition from an art-tech startup to internet equity research. | |
| Re-evaluating Consumer Tech and the Consumerization of Enterprise | 3 | 4 | 2 | 1 | Harry introduces quotes from Jeremy Levine, Peter Fenton, and Benedict Evans regarding a consumer downturn and platform shifts. Danny polite re-frames the host's premise, arguing that consumer principles are instead driving the consumerization of enterprise software like Slack and Dropbox. | |
| Theme-Based Investing versus Pinpoint Market Timing | 4 | 3 | 1 | 2 | Harry probes market timing, Amazon's dominance, and market sizing by citing Fred Destin, Rebecca Caden, and Peter Fenton. Danny explains Index's thematic portfolio strategy versus pinpoint timing and highlights Etsy as proof that connected online niches explode far beyond initial VC market size calculations. | |
| Optimizing Customer Acquisition Costs and Channel Wedges | 3 | 3 | 1 | 1 | Harry cites Christina from Naspers regarding geographic versus product expansion when customer acquisition channels saturate. Danny breaks down marketing wedge decay using early Google AdWords as an example, stressing community organic acquisition. | |
| Measuring Brand Love and Non-Quantifiable Growth Channels | 2 | 3 | 0 | 0 | Harry relays a prompt from Glossier's Henry Davis regarding acquisition models. Danny details how Index measures non-quantifiable channels like brand love and cult followings, then outlines global scaling principles. | |
| Overcapitalization and Diversity in Startup Scaling | 2 | 3 | 2 | 1 | Harry asks about common mistakes in international expansion and Index's move into San Francisco. Danny offers a contrarian view on overcapitalization, stating that excess funds lead to laxity and multiplied mistakes, while detailing Index's push for US mindshare. | |
| Generational Transition and Partnership Stewardship in VC | 3 | 2 | 0 | 1 | Harry asks about partnership stewardship and generational transition, pointing to Sequoia's model. Danny articulates Index's shared-credit philosophy where returns and partner contributions are distributed rather than concentrated on a single star. | |
| Key Founder Qualities: Relentless Passion and the 'Sponge' Mindset | 2 | 3 | 2 | 0 | Harry conveys a question from partner Martin Mignot about founder evaluation criteria. Danny playfully teases the question's generic nature before explaining his preference for relentless industry frustration and continuous learning, citing Patreon's Jack Conti. | |
| Valuation Flexibility and Stage Focus at Seed and Series A | 3 | 2 | 1 | 1 | Harry references calculating Danny's 3,000 board hours and asks about price sensitivity versus flexibility. Danny dismisses valuation discipline at Seed/Series A as a secondary worry, emphasizing that great companies redefine their own total addressable markets. | |
| Lessons from Failure: Ownership Dynamics and Nasty Gal | 2 | 4 | 1 | 0 | Harry asks for pivotal board lessons and how VCs balance time between top performers and struggling companies. Danny delivers a candid post-mortem on Nasty Gal, explaining why optimizing for sole ownership backfires without strong co-investors. | |
| Quickfire Round: Books, Quotes, and the Good Eggs Investment | 1 | 1 | 0 | 0 | Harry conducts the standard quickfire round covering books, quotes, and recent deals. Danny shares insights on Haruki Murakami's novels and the Good Eggs turnaround deal co-led with Bill Gurley. |
Statements from this episode (29)
Danny Rimer Clarifies Index Ventures' Founding History and Initial Investors
“Yeah, so to be clear, I wasn't one of the founders of Index, though many members with my last name were. So probably my dad gets the original credit because his investors and his bond brokerage business ended up being the first investors at Index, and two of t…”
Danny Rimer Maintained Buy Ratings on All 1990s Internet IPOs
“So I co-authored one of the first reports, if not shamefully the first report on the internet, And then was an internet analyst for the first wave of the internet, so from 94 to 99, and I had all buys on all my universe of stocks, so we took Amazon public, and…”
Danny Rimer: Enterprise Software Is Adopting Consumer Selling Metaphors
“So whether it's Dropbox, or Slack, or the Microsoft, the three, six, five efforts, or what Adobe is magnificently doing, a lot of the enterprise is actually moving towards the consumer metaphor to sell software.”
Danny Rimer: VCs Are Poor at Predicting Dramatic Platform Shifts
“It's really difficult to call when there's going to be a dramatic shift from the current mainstream platform to the next, and actually, I don't think it's necessarily something that VCs do really well in predicting.”
Index Ventures Approaches Fintech via Broad Portfolio Bets Over Single Picks
“Jan and Neil and Mark and our team have been very proactive in investing in fintech. And so we decided we're not going to call the company that's going to be successful, but we're going to invest across a whole roster of companies because we think that financi…”
Danny Rimer: Amazon Spends More on R&D Than Any Tech Company Historically
“I guess they're spending more on R&D than any other company in the history of technology at this point.”
Danny Rimer: Amazon Is Poorly Positioned to Capture Niche Consumer Markets
“As much as Amazon is fantastic on the mainstream, we think that when it comes to niches, Amazon is not particularly well positioned to go after it.”
Danny Rimer: Global Connectivity Causes Niche Markets to Explode in Scale
“I think that if there's something that we've gotten wrong repeatedly is underestimate the size of specific niches, and what we tend to forget is when you're connecting most of the world's population, there are going to be niches that explode in size as a resul…”
Danny Rimer: Etsy Scaled From 250k to Over 3M Merchants, Defying Critics
“I'll never forget investing in Etsy and folks saying, well, it's crazy. You know, they already have 250,000 merchants online, all these arts and craft stores. Like, how many more can there be? And I think we're three million plus at this point in counting.”
Danny Rimer: Startups Should Have Maximized Spend on Early Google AdWords
“And of course, at that time, all we should have done is plowed as much money as we could against that platform.”
Danny Rimer: Organic Community Connection Is the Most Valuable Long-Term Asset
“Because from a longevity standpoint, that community connection is going to be the most valuable, no matter what.”
Danny Rimer: Consumer Startups Must Measure Organic Marketing Channels Early
“In the areas that companies take for granted, because usually they found product market fit, and so there's going to be a number of elements on the marketing side that just happen, but the earlier you start measuring them and predicting them, the more successf…”
Danny Rimer: Founders Rarely Grow Into the Ambition Needed for Global Scale
“It's really rare that folks grow into it. They actually have to start with that level of ambition.”
Danny Rimer: European Startups Must Master Regional Markets Before Global Expansion
“European entrepreneurs have that discipline because they're required to have that discipline, that you don't have the size of market and the cohesion of market that you have in the U.S. And so you really have to nail that regional example and experiment first.”
Danny Rimer: Excess Capital Leads to Operational Laxity and Repeated Mistakes
“In our experience, the more money you have, the more lax you are, the more likely you are to make repeated mistakes across multiple places at the same time.”
Danny Rimer: Diverse Teams Protect Scaling Startups From Groupthink
“And what I mean by diverse team is backgrounds, ages, obviously genders, experience, culture, so that you're sheltering yourself from the groupthink that sets in when you hire people from the same university or the same generation with very similar experiences…”
Danny Rimer: Index Ventures Lacks Top-of-Mind West Coast Entrepreneur Mindshare
“So the big challenges then are still challenges that we have today, which is we have not the type of mindshare with entrepreneurs that we'd like to have on the West Coast, that we're not the first necessarily the first name or venture firm that you think of wh…”
Danny Rimer: VC Partners Must Act as Temporary Stewards for Future Generations
“The mindset is that you're not here for the rest of time, but you're here for a short period of time, and you have to make it matter as much as possible. Make sure that you're not letting down your partners, and make sure that the next generation see you as an…”
Danny Rimer: Generational Transition Is the Single Biggest Trap for VC Firms
“Being a student of history, it's probably, from an industry standpoint, the biggest amount of quicksand that there is there for firms that have been great and have failed over time, and so, given the fact that we're not great yet, we're going to make sure that…”
Danny Rimer: Founders Passionate About General Business Rather Than Specifics Fail
“I probably would say that with me, everything starts with a passion that folks around here joke, because if someone comes to me for wanting to work at index or starting a business and they're passionate about business, they're not going to go very far. You kno…”
Danny Rimer: Only a Musician Like Jack Conti Could Have Built Patreon
“I would say that Jack Conti at Patreon is in fresh in my mind right now because we had a board meeting recently, but Jack is a musician, right? His passion for what he's doing at Patreon to enable creators to not live hand to mouth, but actually have a platfor…”
Danny Rimer Cares Least About Valuation and Initial Market Size
“So if my partners were around the table, they'd probably tell you that I'm probably the partner who cares least about price, that if I think that the entrepreneur and the opportunity is large enough, I just want to be an investor in that company, and that I'm …”
Danny Rimer: Board Members Should Listen More and Deliver One Key Point
“Probably what I've realized is I end up spending a lot less time talking and spending a lot more time listening and figuring out what is the one piece of key advice that I want to provide.”
Danny Rimer: VCs Get Paid for Finding Winners, Not Dodging Failures
“We don't get paid for dodging companies that are not successful. Most companies are not going to be successful. So the schadenfreude or The pat on the back for having missed or not invested in something that could have been a disaster, that's not really helpfu…”
Danny Rimer: Nasty Gal Was His Worst Investment to Date
“So a big lesson was in the worst investment that I've done today, which is Nasty Gal, which was an e-commerce brand that we invested in.”
Danny Rimer: Nasty Gal Could Have Succeeded With Co-Investor Board Support
“And I often think that what I should have done was share the workload with Someone else who's super competent and who would have been really helpful in the journey, because there were a lot of reasons why nasty gal could have been a phenomenal investment, but …”
Danny Rimer: VCs Shouldn't Prioritize Equity Ownership Over Helpful Syndicate Partners
“So that, that was a big lesson that I learned relatively recently, which is never really focused so much on ownership and make sure that you have people around the table who are going to be really helpful in the journey of making a successful company.”
Danny Rimer: VCs Must Spend Most Time With Companies Needing Them Least
“I mean, I would say that this is the biggest difference between a venture capitalist and an operator. You have to figure out how to spend the most amount of time with the companies that need you least, and the least amount of time with companies that need you …”
Danny Rimer: Index Ventures Restructured Good Eggs After Other Investors Bailed
“The second one was, Good Eggs was an example of a company that we invested in. It basically went under. We had to restructure it. The other investors decided to bail. We brought in a new CEO who He, as Jeff Wiener talks about with Reid Hoffman, had a founding …”