Sep 30, 2019 · 50m · 20vc
20VC: Brad Feld on Why Market Size At Early Stage Is Not Helpful, His Biggest Learnings From The Boom & Bust of The Dot Com and How The Best VCs Work For Their CEOs
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In this episode of The 20 Minute VC, host Harry Stebbings interviews legendary investor Brad Feld, co-founder of Foundry Group and author of 'Venture Deals'. Feld shares key insights on surviving economic cycles, building effective board dynamics, eliminating operational distractions, and supporting founders through vulnerability and radical self-inquiry.
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 23.7% of the talking time here. How this is scored →
Harry as informed peer 3.3 Guest teaching 4.0 Guest disagreement 2.0 Harry pushing back 1.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 13:58 Dismissing market predictions
Brad forcefully rejects the host's framing of macro cycles and market predictions, stating bluntly 'I have no idea. And more importantly, I don't care.'
Hardest push from Harry ▶ 20:37 Questioning high valuationsHarry challenges Brad by citing Bill Gurley on the oversupply of capital and asking if current high pricing makes him feel deeply uncomfortable.
Biggest teaching moment ▶ 8:14 Reframing TAM metricsBrad educates Harry on early-stage investing realities, dismantling the standard VC concept of TAM as unhelpful because early market opportunities are either zero or infinite.
Harry holds his own ▶ 20:12 Raising capital oversupply and valuation concernsHarry demonstrates market expertise by quoting Bill Gurley on capital oversupply and bringing up his own observations regarding inflated valuation pricing.
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 Brad Feld and His Path to Venture Capital | 2 | 3 | 0 | 0 | Harry warmly welcomes Brad back to the podcast and asks a standard background question about his path into venture capital. Brad provides a conversational overview of transitioning from entrepreneur to angel investor and co-founding SoftBank Technology Ventures and Foundry Group. | |
| Transitioning from Angel to VC and Product vs. Market Dynamics | 4 | 5 | 3 | 3 | Harry draws on his own experience transitioning from angel to VC and steers the conversation toward evaluating product versus market. Brad challenges conventional VC metrics, explaining that early-stage TAM calculations are unhelpful and reframing product focus as evolving into company focus. | |
| Mistakes in Scaling and Learning from the Dot-Com Crash | 4 | 4 | 2 | 2 | Harry cites another VC guest's view that experiencing market crashes breeds conservatism. Brad gently reframes the point, arguing that surviving booms and busts creates pragmatism and critical thinking rather than conservatism. | |
| Navigating Market Cycles and Macro Uncertainty | 3 | 5 | 5 | 2 | Harry sets up a debate between perpetual tech growth and inevitability of downturns. Brad forcefully rejects the premise of making macro market predictions, stating he does not know or care, and advises focusing on building enduring companies instead. | |
| Fund Pacing, Capital Oversupply, and Valuation Normalization | 5 | 5 | 4 | 4 | Harry pushes Brad on valuation pricing and quotes Bill Gurley regarding capital oversupply. Brad counters that oversupply is not his main challenge, detailing Foundry's consistent 10-deal annual pacing and recounting historical market adjustments like the 2013 SaaS valuation correction. | |
| Operational Focus and Avoiding 'Fake VC' and 'Fake CEO' Days | 4 | 4 | 3 | 4 | Harry probes Brad's operational philosophy of 'run your fucking business' and asks what constitutes a 'fake VC day'. Harry gently pushes back on whether pre-deal networking is necessary, while Brad criticizes hollow VC pleasantries and low-impact networking. | |
| Effective Board Dynamics and Supporting Executive Leadership | 3 | 4 | 1 | 1 | Harry asks for practical guidance as a new institutional board member. Brad offers mentorship, advising Harry to view his primary job as supporting the CEO rather than adopting an adversarial or overly formal governance posture. | |
| Building Founder Safety, Relationships, and Radical Self-Inquiry | 3 | 4 | 0 | 0 | Harry asks how board members can foster psychological safety for founders. Brad discusses personal openness, emotional engagement, and references Jerry Colonna's principles of practical skills paired with radical self-inquiry. | |
| The Evolution and Impact of 'Venture Deals' | 2 | 3 | 0 | 0 | Harry highlights the personal impact of Brad's seminal book 'Venture Deals'. Brad shares the story of how a frustrating transaction with an inexperienced lawyer led him and Jason Mendelson to blog and eventually write the book. | |
| Quick-Fire Round: Advice, Recommendations, and Boundless Investment | 3 | 3 | 2 | 1 | Harry conducts a quick-fire round covering saying no, favorite books, venture noise, and Brad's latest deal in Boundless. Brad delivers direct responses emphasizing blunt communication and rejecting declarative advice. |
Statements from this episode (17)
Brad Feld: Early-stage TAM metrics are not helpful for VC investing
“And it was one of these things where the venture cliche of total available market, especially at the early stages is really not that helpful, especially when you're coming into a world with a product obsession, even if you're to Displacing an existing incumben…”
Brad Feld: Great founding CEOs treat the company itself as the product
“The interesting trajectory of that is that early in the life of a company, the product does matter a ton. As the company starts to grow and develop, the great founding CEOs start to view the company itself as the product. So they evolved from being product foc…”
Brad Feld: Mega-cap valuations require underlying long-term profitability
“The idea that you'd be one of the world's most valuable businesses and your fundamental economic characteristics don't generate a long-term profit cycle, well, that's not going to work.”
Feld: Individual macroeconomic forecasts are almost guaranteed to be wrong
“The interesting thing about where we are is it's very easy to prognosticate about what's going to happen with certainty, and it's almost guaranteed that those prognostications are going to be incorrect, and any one individual prognostication will be incorrect.”
Feld: Record holiday retail orders vanished overnight in 2008 crisis
“There's a whole bunch of companies that have already forgotten that in 2008 Christmas literally didn't happen. And it didn't happen because of the global downturn, recession, whatever, financial crisis. And the interesting thing was, I think like two months be…”
Feld: VCs who react fearfully in downturns harm portfolio companies
“When things change, you have to be pragmatic. If you're reactionary and fearful, and, you know, all of a sudden, everybody says, oh, my God, the world is ending. You know, you must do these things. As a VC, that's not that helpful. It's more helpful to have a …”
Foundry Group averages ten investments per year since 2007
“At Foundry Group, we've had a strategy of always invest at roughly the same cadence all the time. So we make about 10 new investments a year, and we've been making about 10 new investments a year since 2007 when we started Foundry.”
Feld: 20x forward revenue B2B SaaS valuations will normalize
“Like, does anybody really believe that a B to B SaaS company should be valued at 20 times forward revenue? Maybe, I suppose, and the public markets value some that way, but that's not a logical construct long term. That's going to normalize.”
Feld: Founders and VCs waste time on performative 'fake' work
“CEOs spend a lot of time having fake CEO days, and I think VCs spend a lot of time having fake VC days. And if you really want to be successful, by the way, that translates to everybody on the leadership team, everywhere throughout a company, don't have fake f…”
Feld: 'Let's do a deal together' is a hollow VC cliché
“Hey, let's do a deal together someday is one of the most hollow statements in the world of VC, because that's so different than, Hey, I'm working on this thing that I'd really love to get you other VC involved in to help.”
Brad Feld: The only way to know business partners is to work together
“The only real way to get to know someone is to do something with them. So the first of your evaluative criteria is a decision that you want to work with somebody else based on whatever external information you have. And then the second piece of evaluative crit…”
Brad Feld: VCs excel at self-promotion, but crisis behavior reveals true quality
“Most VCs are really good at selling themselves. That's not where it matters. Where it matters is when things get all screwed up or when you're having tension or when there's exogenous pressures on the other person that have nothing to do with you or the compan…”
Feld: A board's only real decision is whether to support the CEO
“I and my partners at Foundry like to carry around Sort of one decision we have to make at a board level. And we talk about it as the only decision we want to make is whether or not we support the CEO. And if we support her, our job is to work for her.”
Brad Feld: VCs cannot have purely professional relationships with founders
“I don't actually think you can have a solely professional relationship with an entrepreneur in a startup”
Brad Feld: Leaders practicing radical self-inquiry improve; others hit ceilings
“Great leaders who do their work get better over time, and leaders who don't do that work hit ceilings”