Jul 15, 2019 · 40m · 20vc
20VC: Zoom From Series A to IPO, How VCs Can Provide CEOs with Additional Leverage and Why The Negative Effects of Signalling Are Very Real with Santi Subotovsky, General Partner @ Emergence Capital
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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 Santi Subotovsky, General Partner at Emergence Capital, discussing his career path, Emergence's concentrated enterprise SaaS strategy, and practical insights on supporting portfolio executives and backing market-defining companies like Zoom.
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 31.9% of the talking time here. How this is scored →
Harry as informed peer 2.8 Guest teaching 3.2 Guest disagreement 0.8 Harry pushing back 0.6
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 26:15 Pushback on pricing optimization
Santi explicitly rejects Harry's premise about pricing strategy, stating 'I'll push back on that assessment' and clarifying that they aim for the right deal rather than maximizing valuation.
Hardest push from Harry ▶ 19:47 Challenging thematic focus via SaaS consumerizationHarry pushes back against Santi's thesis on strict enterprise focus by citing the overlap between consumer playbooks and bottoms-up enterprise SaaS adoption.
Biggest teaching moment ▶ 17:42 Flipping the script on VC strategySanti educates Harry by reversing his question on focus, exposing the industry hypocrisy where VCs demand tight focus from founders while operating multi-stage, multi-sector funds themselves.
Harry holds his own ▶ 29:41 Statistically comparing board tenure to marriageHarry showcases deep industry knowledge by citing exact statistics showing that average US board member tenure (10 years) exceeds average marriage length (8 years).
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcoming Santi Subotovsky and Podcast Opening | 1 | 1 | 0 | 0 | Standard welcoming remarks and intro monologue. Harry introduces Santi's impressive background, followed by Santi sharing his initial journey from Argentina into venture capital. | |
| The Transition from Senior Associate to General Partner | 1 | 2 | 0 | 0 | Harry asks a standard inquiry about the transition from associate to partner. Santi reframes the question into three distinct decision phases regarding job love, aptitude, and long-term platform. | |
| Overcoming Biases and Early Challenges in VC | 2 | 3 | 1 | 0 | Harry asks about early career challenges. Santi educates on the overt biases he encountered in 2010 and how he transformed his background into an 'immigrant advantage' that helped spot Zoom. | |
| Eric Yuan's Customer Obsession and Zoom's Early Days | 2 | 3 | 0 | 0 | Harry asks about Eric Yuan's leadership and portfolio time allocation. Santi provides insights into Zoom's product-first demo style and his proactive approach to founder support. | |
| Building Direct Relationships with Executive Leadership | 2 | 4 | 0 | 0 | Harry asks for practical advice on building executive relationships as a junior investor. Santi outlines his monthly check-in strategy and reframes traditional board dynamics. | |
| Emergence Capital's Thematic Focus Strategy | 3 | 5 | 2 | 1 | Harry asks why thematic focus is superior. Santi cleanly turns the question around, highlighting the contradiction where VCs preach focus to startups while remaining multi-stage and multi-sector themselves. | |
| Navigating the Consumerization of Enterprise SaaS | 4 | 4 | 1 | 2 | Harry challenges the thematic thesis by citing the rise of consumerization in enterprise SaaS. Santi agrees in part but clarifies that enterprise tools must solve core business problems rather than just end-user desires. | |
| Reserve Allocation and Primary Check Optimization | 5 | 3 | 0 | 1 | Harry demonstrates sector expertise by raising signaling risks from multi-stage funds in the UK/European tech ecosystem. Santi validates Harry's analysis and expands on Emergence's concentrated check strategy. | |
| Valuation, Ownership, and Unanimous Enthusiasm | 4 | 5 | 5 | 2 | When Harry suggests VCs optimize for price, Santi explicitly pushes back, stating Emergence focuses on getting the right deal rather than the highest valuation, forcing Harry to acknowledge the counter-perspective. | |
| The Risks of Compressed Fundraising Cycles | 5 | 3 | 0 | 1 | Harry presses on compressed 2-week fundraising processes. He demonstrates expertise by citing US stats comparing board tenure (10 years) to marriage tenure (8 years) to emphasize the gravity of choosing investors. | |
| Quickfire Round: Books, Mentors, Misses, and OpenPath | 2 | 2 | 0 | 0 | A friendly quickfire round covering book recommendations, mentors, missed deals, and OpenPath. Santi shares insights on unglamorous productivity software disruption. |
Statements from this episode (24)
Subotovsky: VCs rejected him in 2010 due to demographic background
“I talked to a number of venture firms, and the message that I got from a lot of venture firms was that given my background, I was not a perfect fit for venture. And when I double clicked on what they meant by that, it was more that there were not a lot of Lati…”
Subotovsky: Venture capitalists are fundamentally sales reps
“I mean, if you distill everything down to the essence, we're sales reps as venture capitalists.”
Subotovsky: VC demographic biases dictated which entrepreneurs received funding
“People had very strong biases in terms of who's the right person to be in venture, who's not. And that translated into who's the right entrepreneur that I want to back and who's not.”
Subotovsky: Silicon Valley consensus believed video conferencing was a solved market
“I don't fault people here in the Valley for saying video conferencing is done. It's not going to happen again. It's a race to the bottom. There's no room for a new player.”
Subotovsky: Founders usually avoid live product demos during pitch meetings
“When someone's pitching, they typically try to stay away from demos because they don't work.”
Subotovsky: Zoom founder Eric Yuan prioritized fit over maximizing valuation
“Eric has always been this incredible human being focused on the right thing and not focused on, oh, I want to get the best customer or the best deal or the best valuation or the best pricing. He's always focused on finding the right customer, the right valuati…”
Subotovsky: Supporting full executive teams creates maximum leverage for CEOs
“Because what I realized is for a CEO, if you can help them build stronger relationships, and if you can help the executives be better at what they do, that helps the CEOs, and that helps the company. So I make it a priority to give the CEO leverage by helping …”
Subotovsky: Key startup board decisions happen in one-on-ones, not meetings
“And over time, what I realized is that those board meetings are great opportunities to align everyone, but most of the work gets done outside of board meetings. So the big decisions come up when you're having this one-on-ones with the CEO, the CMO, the head of…”
Subotovsky: Emergence's focused SaaS strategy outperforms diversified VC firms
“So for us at Emergence, we all love that phase, and that's why we should be a lot better than more diversified firms because we have a very targeted approach.”
Subotovsky: Enterprise SaaS requires solving business problems, not just pleasing users
“If you don't do that, if you're not solving a real business problem, and you're just solving something that the end user wants, but that's it, you're not going to be able to build a true enterprise company.”
Subotovsky: Emergence Capital partners average one new investment per year
“So we invest in anywhere between five to seven new companies a year. That means that each partner here will do about one new investment a year.”
Subotovsky: Emergence Capital targets 20 to 22 companies per fund
“We typically have about 20 to 22 companies per fund, and that works incredibly well, because over three to four years, we're gonna partner with five to seven new companies a year, and we're gonna build incredibly strong relationships.”
Subotovsky: Emergence Capital generates most fund returns from first two checks
“What we realize for our fund and our strategy, we typically generate most of the returns when we write that first and second check. Then everything else we do afterwards, it's not in line with the initial returns that we're generating.”
Subotovsky: Emergence Capital will not blindly exercise pro-rata rights
“So our strategy has shifted over the years from we want to participate in every round until the company goes public and beyond, to we're going to Be incredibly concentrated early on, and then we're going to help those companies find the right partners to suppo…”
Subotovsky: Multi-stage VC funds follow on in only 30% of early investments
“A lot of entrepreneurs underestimate the negative effect of signaling. They raise from this multi-stage funds, and this multi-stage funds are incredibly focused, and typically they follow on on about 30% of their earlier stage investments, and that's an incred…”
Subotovsky: Emergence Capital prioritizes ownership targets due to portfolio concentration
“At emergence, given that we're focused on early stage, we're going to write a check and we're going to focus on ownership. Given that we have this concentrated portfolio, we need to get paid if things work out, because we're going to do a lot of work for those…”
Subotovsky: Emergence Capital requires unanimous partner enthusiasm to make investments
“We want to make sure that we have what we call unanimous enthusiasm, meaning that everyone around the table is excited, not just supportive, to partner with this entrepreneur.”
Subotovsky: Two-week fundraising cycles are problematic in most cases
“It's like getting married after meeting someone online for two weeks, chatting, and then the next thing you do is you get married. That's, I mean, the majority of the cases, that's going to be problematic. You might get lucky every now and then, but it's going…”
Subotovsky: Ending an investor relationship is harder than getting a divorce
“At least if you get married, you can get a divorce. Here, divorces are much harder to pull off.”
Stebbings: Average US board tenure is longer than average marriage
“As I think it's stated, the average tenure for a board member in the US is 10 years, and the marriage is eight, so .”
Subotovsky: VC will be disrupted by specialized capital, not mega-funds
“I feel that venture capital is going to get disrupted, and I feel it's not going to get disrupted by humongous funds. It's going to get disrupted by people who are funding businesses and are providing the right capital for the right needs.”
Subotovsky: VC should only fund early risk, not proven models
“Venture capital should be used For discovery, for product development, early on when you're taking a risk, then when the model is working out, you should be able to access a different type of capital, and we're gonna start seeing those distinctions for differe…”
Subotovsky: Next-gen startups will disrupt legacy email, CRM, and calendar incumbents
“Email, calendar, CRM, marketing automation, those haven't changed significantly in decades. So I believe that in the next 10 years, we're gonna see a lot of the leading companies in those categories disrupted by new generations of companies that are rebuilding…”
Subotovsky: Emergence Capital missed out on investing early in Cloudflare
“So the biggest miss that I've had is when I first joined Emergence one of my good friends and classmates, Matthew Prince and Michelle, were getting started with Cloudflare, and I invited them to present here at Emergence, and I didn't know how venture worked, …”