Dec 17, 2018 · 33m · 20vc
20VC: A Framework For Approaching Risk and How It Affects Portfolio Construction | Lessons and Advice From Working with Dropbox's Drew Houston | Why Being A Learning Animal Is The Most Important Factor For Success with Ted Wang, Partner @ Cowboy Ventures
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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, Harry Stebbings interviews Ted Wang, Partner at Cowboy Ventures, about his transition from legal practice to venture capital. Wang outlines frameworks for navigating startup risk, building seed portfolio ownership, delivering contextual advice, and evaluating high-velocity 'learning animal' founders.
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 32.7% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 3.1 Guest disagreement 0.9 Harry pushing back 1.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 5:55 Nonsensical nature of startup risk mitigation
Ted rejects the common founder pitch premise around risk mitigation, calling it nonsensical and insisting that startups are inherently audaciously risky like rowing to Japan.
Hardest push from Harry ▶ 12:31 Harry pushing back on securing ownership earlyHarry directly challenges Ted's view on building ownership over time, arguing that ownership is fundamentally won on the first check because top-tier funds take over later rounds.
Biggest teaching moment ▶ 5:55 Ted reframing risk management logicTed educates on portfolio risk management, explaining that avoiding one risk (like fast hiring) creates an equal and opposite market risk that founders ignore.
Harry holds his own ▶ 24:58 Harry proposing data usage for follow-on decisionsHarry demonstrates sharp VC operational insight by asking if Ted's evaluation tracking will inform follow-on investments, surprising Ted who admits he had not considered it.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Ted Wang's Journey from Law to Venture Capital | 1 | 2 | 0 | 0 | Harry asks standard background questions regarding Ted's transition from a 20-year legal career at Fenwick & West into venture capital. Ted explains his background and why he selected seed-stage investing to work closely with founding teams. | |
| A Framework for Approaching and Evaluating Risk | 3 | 4 | 2 | 2 | Ted reframes Harry's prompt on risk mitigation, calling the idea of a low-risk startup nonsensical and comparing it to rowing to Japan or learning to ski downhill. Harry pushes back by highlighting founder character risk and market timing risk. | |
| Handling Startup Failure and Lessons from Jet.com | 2 | 3 | 1 | 1 | Harry prompts Ted with insider context regarding Jet.com and founder failure. Ted describes how Jet.com founder Mark Lore intentionally ran extreme capital risks to compete with Amazon, illustrating deliberate risk choice. | |
| Portfolio Construction and Ownership Strategy | 5 | 4 | 2 | 5 | Ted admits he used to think VC ownership focus was stupid as a lawyer before learning its mathematical necessity. Harry pushes back firmly, asserting that ownership must be secured on the first check because late-stage tier-one funds take future allocations. | |
| The Nuance of VC Advice and the Animal Story | 3 | 4 | 1 | 1 | Ted uses Drew Houston's animal parable (lion, elephant, mouse) to show how VC advice is often biased by individual experience. He emphasizes Ray Dalio's idea meritocracy and remaining deferential to founders. | |
| Evaluating Founder Learning Curve and Reference Checks | 4 | 3 | 1 | 2 | Harry references Adam Goldberg and Elad Gil to guide the conversation on founder learning curves and reference checks. Ted details his 30-day change question and clarifies how to interpret negative reference feedback. | |
| Personal Growth, VC Decision Frameworks, and Feedback Loops | 4 | 3 | 0 | 3 | Ted explains his systematic evaluation process inspired by Super Forecasting to shorten feedback loops. Harry demonstrates strong expertise by suggesting Ted apply this evaluation tracking to follow-on reinvestment decisions, catching Ted off guard. | |
| Quickfire Round: Books, Sales Operations, and Mindset | 2 | 2 | 0 | 0 | Harry leads a rapid quickfire covering book recommendations, early sales experiences, government efficiency, and recent investments. Ted answers fluidly with zero friction. |
Statements from this episode (12)
Wang created open-source seed financing documents used by thousands globally
“And Ted also created The Series C documents, a set of open source financing documents posted on GitHub, and still used today by thousands around the world.”
Startup risk cannot be mitigated or eliminated, only chosen
“So I think the biggest miscalculation people make about risk is that they think that there are ways to mitigate certain risks when actually it's just a matter of which risk you're going to choose to take.”
Lean startup methodology fails when trying to compete against Amazon
“There's no lean startup methodology that's going to get you into competing with something like Amazon”
First-time founders cannot execute Jet.com's hyper-capital-intensive playbook
“I don't think that, you know, a first time founder is going to be able to pull something like that off”
Wang admits he was "dead wrong" thinking VC ownership targets were stupid
“When I was a lawyer watching other venture capitalists amass their portfolios, I really didn't understand, you know, why they were so focused on percentage ownership. And I sort of thought it was, it sounded pretty stupid to me, to be honest with you. And now …”
VCs add value primarily through alternative perspectives and portfolio benchmarking
“Yeah, well, look, I mean, I think first thing is understanding the limits of what you know, and so I think there are really kind of two core value adds that venture capitalists can have for When, as they give advice, you know, one is sort of, Hey, here's a dif…”
Founders bear total accountability for failure, even if following investor advice
“You know, ultimately for founders, if you do exactly what you're told to do by your investors and the company fails, you're a failure. If you don't do what they say and it's successful, you're a success. So ultimately the decision is in the hands of the founde…”
Wang estimates he has completed around 10,000 venture financing transactions
“Now, if we're talking about something like venture financing and, you know, I've probably done 10,000 of those, I may lean in a little bit more heavily, heavily on my advice and say, gee, you know, I hear what you're saying, but you really might want to listen…”
A founder's ability to learn is most highly correlated with startup success
“Yeah, well, look, I think if there's one factor that is most highly correlated with success of a Startup companies. It's the founder's ability to learn, and I just think it's the most critical thing, because ultimately, as they take on the company, as the comp…”
Improving predictive skill requires breaking problems down and shortening feedback loops
“What that book says is if you want to, the first answer is yes, some people are better at predicting the future, and the people who are tend to take these complex problems and break them down into subparts, and then the best way to improve your ability to pred…”
Wang evaluates venture deals using a 10-category spreadsheet scoring system
“You know, so I'm, what I'm trying to do is for companies that go into a longer process, I am recording all this data. So it's, when I say data, it's on a spreadsheet and it's 10 entries scaled on a scale of one to 10.”
Government can be a force for good despite Silicon Valley libertarianism
“I believe the government can work for us. Being here in Silicon Valley, there's a very strong libertarian ideology, and there's a very strong notion that, oh, government's just this terrible thing, and it can never work, and it's always screwed up, and I worke…”