Jul 8, 2019 · 32m · 20vc
20VC: Bessemer's Byron Deeter On Lessons From Investing in 14 $Bn Companies, What The Heck Is Going On In Cloud Today and Why Cloud IPO Floodgates Are About To Burst Open
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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 Bessemer Venture Partners' Byron Deeter about the evolving cloud landscape, upcoming cloud IPO waves, and essential strategies for building high-trust founder-VC partnerships.
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 34.5% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 3.7 Guest disagreement 0.6 Harry pushing back 0.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 9:13 Challenging the premise of an IPO drought
Byron directly rejects Harry's premise that there are no clear impending cloud IPOs, calling it a point-in-time comment and declaring that floodgates are about to burst open.
Hardest push from Harry ▶ 8:53 Questioning cloud IPO pipeline concernsHarry presses Byron on whether a quiet IPO pipeline is a sign of broader structural issues and extended privatization windows rather than a normal macro cycle.
Biggest teaching moment ▶ 10:58 Reframing public markets as lagging indicatorsByron reframes Harry's question about public market influence, educating him on why early-stage venture investors must look five to ten years ahead rather than react to public market indicators.
Harry holds his own ▶ 6:54 Synthesizing recent macro tech movesHarry demonstrates strong industry expertise by contextualizing market volatility through major industry deals, including IBM's acquisition of Red Hat and executive changes at Google Cloud.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome and Transition to the Interview | 2 | 3 | 0 | 0 | Harry welcomes Byron and asks standard background questions regarding his transition from founder to VC and his experience with market cycles. Byron collaboratively explains empirical observations about market timing, founding dates, and exit windows without friction. | |
| Macro Shifts and Key Movements in Today's Cloud Landscape | 4 | 5 | 2 | 2 | Harry demonstrates good industry knowledge citing the Red Hat acquisition and executive shifts at Google Cloud. When Harry questions whether a lack of cloud IPOs indicates broader market concern, Byron politely counters the premise, noting that the floodgates are about to open with unicorns like PagerDuty, Zoom, and Slack. | |
| Public Markets as Lagging Indicators & Valuations | 3 | 4 | 1 | 2 | Harry asks about public market influences and rich valuation multiples. Byron gently educates Harry on why public markets serve as a lagging indicator for VCs, who must operate five to ten years ahead of public sentiment. | |
| Building Capital-Efficient Businesses and Founder Trust | 3 | 4 | 1 | 1 | Harry asks for lessons from top cloud IPOs and cites a question from a mutual peer about Byron's track record. Byron humorously corrects the count of seven versus eight IPOs due to Twilio acquiring SendGrid, before explaining his shift toward prioritizing founder alignment. | |
| Tactics for Stronger Founder-VC Partnerships | 3 | 3 | 0 | 0 | Harry asks tactical questions on how VCs can build genuine trust with founders. Byron offers nuanced advice on low-friction communication, encouraging founders to reject 80 percent of VC introductions. | |
| Boardroom Governance, Strategy, and Learning from Jeff Lawson | 3 | 4 | 0 | 0 | Harry shares that he joined his first institutional board and asks for guidance. Byron shares best practices around board prep, strategic time management, and lessons learned watching Twilio CEO Jeff Lawson. | |
| Lessons in Team Building from Cal Rugby's Jack Clark | 3 | 3 | 0 | 0 | Harry guides Byron through quickfire questions about mentorship, team building, and investment anti-portfolios. Byron warmly reflects on Cal Rugby coach Jack Clark and explains Bessemer's famous anti-portfolio miss on Tesla. |
Statements from this episode (17)
Deeter has 14 billion-dollar investments including eight IPOs
“14 won four of Byron's investments are valued above one billion dollars, including eight IPOs and counting.”
Bessemer avoids market timing to pay fair prices for visionaries
“Great companies are built in all markets, and so I've really given up trying to time markets either as a founder or as an investor, and my point of view is Find great people with big vision and pay the fair market price, and generally, really good things happe…”
Bessemer data shows tech foundings are evenly spread while exits cluster
“And we've actually empirically modeled this. If you look at founding dates of the great companies that we think of across tech, and it's amazingly even across cycles, what you tend to see those that exits do cluster.”
IBM acquired Red Hat because AWS was crushing them in public cloud
“This record acquisition by IBM of Red Hat is really all about Amazon Web Services crushing them in public cloud, them trying to make a play for hybrid cloud more aggressively and essentially draw a buffer line where they can be relevant and aspirationally they…”
Microsoft is aggressively gaining market share in enterprise public cloud
“They are several years into this transition and as Microsoft generally does, they're doing a great job of being a fast follower. And are very aggressively gaining share and making strides on the enterprise segment of public cloud specifically.”
Cloud macro battle will result in fatalities among legacy tech vendors
“And so there's this macro battle of risk going on with the legacy vendors, and there will be some fatalities there, but it's enabling the infrastructure service layer that now the pure place can continue to benefit from.”
Bessemer is tracking 53 private cloud unicorns globally as of 2019
“I think that the floodgates are about to burst wide open, and as we look at the private cloud landscape, we do the cloud 100 event every year with Forbes, and it'll be in the September issue this year from the cloud 100 list, but right now we're tracking 53 pr…”
Multiple $10B+ private cloud companies will soon transition to public markets
“You're going to see these Ten billion dollar plus caliber companies starting to flip from private to public, and the lights will turn on on this segment in a way that public market investors and, frankly, the community more broadly doesn't yet fully appreciate”
Enterprise software valuations in 2019 are at 20-year highs
“These valuations are certainly the highest we've seen for an enterprise company in the last probably two decades.”
High cloud valuation multiples today will look cheap in the long term
“Whatever rich prices we're paying today, We will get rewarded many times over if we pick the winners and hold onto them long term, and so we're certainly anxious as everyone else is around the multiples. They are rich, but at the end of the day, I absolutely b…”
Capital-efficient startups pull away from competitors in down markets
“However, in the medium to down markets, you will be disproportionately rewarded, because investors will flock to quality, and you will have the ability to invest in your model when others don't. As the cost of capital spikes in the market, the efficient busine…”
Adaptive Insights took a $1.6B Workday acquisition three days pre-IPO
“Including Adaptive Insights, by the way, last year, who was three days away from going public, and then instead chose to take the Workday offered a 1,000,000,006 instead.”
Team misalignment causes Bessemer's most painful investment losses
“The team really is our number one factor and where we've lost money or where we've had very painful experiences along the way is where We just got out of sync with the team or didn't fully understand where the team was headed.”
Public company boards should spend half their time on strategy
“Preserving the time for the strategic stuff is the most important actual use of the boardroom members, and so, for private companies, that ratio tends to be the vast majority, and the update part is very modest, and when you get to the public side, at least tr…”
AI and China will disrupt the tech sector over the next decade
“The first talks about AI and China specifically, two of the macro forces that will totally disrupt tech in the next decade”
Bessemer passed on Tesla after failing to foresee its financial viability
“Tesla is the one that is front and center for me. I'm a car geek at hard. I love hardware products, and spent a lot of time with them early on, and just couldn't see the path to viability of the high-end car in a tough automotive time, so I bought the first ca…”