Jun 22, 2020 · 38m · 20vc
20VC: Andrew Wilkinson on Building The Berkshire Hathway of Tech, Sustainable vs Unsustainable Growth and The Relationship Between Money and Freedom
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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 20VC, host Harry Stebbings interviews Andrew Wilkinson, co-founder of Tiny Capital, about building a decentralized holding company for internet businesses modeled after Berkshire Hathaway. Andrew discusses Tiny's investment criteria, criticizes capital-inefficient venture models, and shares insights on executive delegation, board governance, and personal freedom.
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 28.3% of the talking time here. How this is scored →
Harry as informed peer 2.8 Guest teaching 5.0 Guest disagreement 1.3 Harry pushing back 1.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:33 School is a waste of time for tech
Andrew forcefully rejects traditional educational paths and MBAs for tech founders, arguing that going to business school is as absurd as going to running school instead of just running.
Hardest push from Harry ▶ 17:07 Challenging non-venture approach on breakout assetsHarry pushes back on Tiny's conservative growth model by pointing to Dribbble as a clear venture-scale asset that could warrant aggressive venture capital backing.
Biggest teaching moment ▶ 19:02 Explaining network effect moats vs platform absorptionAndrew educates Harry on how major platforms absorb niche products using Yelp vs Google Maps as an example, reframing how to evaluate platform risk.
Harry holds his own ▶ 14:11 Framing growth versus profitability leversHarry demonstrates domain knowledge by drawing on prior founder interviews to challenge Andrew on whether hypergrowth and profitability are fundamentally opposed.
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 Opening Greeting with Andrew Wilkinson | 1 | 4 | 0 | 0 | Harry introduces Andrew and asks a broad opening question about his career path. Andrew monologues at length, detailing his journey from running a high school tech site to building MetaLab and founding Tiny as a Berkshire Hathaway equivalent for tech. | |
| The 'New Zealand' Philosophy for Evaluating Acquisitions | 3 | 5 | 1 | 2 | Harry asks targeted questions about Tiny's 'New Zealand' acquisition philosophy, pricing sensitivity, and COVID-19 margin impacts. Andrew educates on evaluating risk-adjusted cash flow multiples rather than chasing venture hype. | |
| Sustainable Growth versus Burning Capital | 4 | 5 | 2 | 3 | Harry pushes on the trade-off between growth and profitability and asks if Dribbble should be a venture play. Andrew counters the VC narrative by arguing that burning capital to buy 30-cent dollars is unsustainable and unnecessary for steady 30-40% annual growth. | |
| Niche Community Platforms: Unbundling versus Platform Absorption | 4 | 6 | 2 | 2 | Harry brings up the strategic unbundling vs bundling debate for niche platforms. Andrew provides a detailed breakdown of platform risk using Google Maps vs Yelp, explaining when a community platform has a true defense versus when it is merely a feature. | |
| Founder Executive Realities, Board Governance, and Decision Making | 3 | 6 | 1 | 2 | Harry asks Andrew about his executive limitations and board governance best practices. Andrew offers sharp board insights around two-way doors, aligning incentives, and letting CEOs occasionally stick a fork in the socket to learn. | |
| Doubling Down on Superpowers and Outcome-Based Hiring | 3 | 5 | 1 | 1 | Harry asks how to evaluate executive talent in areas outside the host's expertise. Andrew explains his transition from hiring for potential to hiring strictly for proven past outcomes. | |
| Relationship with Wealth, Personal Freedom, and Anti-Goals | 2 | 5 | 1 | 1 | Harry prompts a discussion on personal philosophy regarding wealth and happiness. Andrew shares how achieving baseline financial security reframed his view of money as a tool to protect personal freedom and build anti-goals. | |
| Quickfire Round with Andrew Wilkinson | 2 | 4 | 2 | 1 | Harry runs through the quickfire round. Andrew takes a contrarian stance against higher education and MBAs for technology entrepreneurs, urging direct business practice instead. |
Statements from this episode (26)
Stebbings: Tiny Capital has invested in Superhuman, SpaceX, Pitch, and Buffer
“Tiny does also invest in businesses, including the likes of Superhuman, SpaceX, Pitch, and Buffer, to name a few.”
Wilkinson: Agencies are usually terrible, low-margin businesses
“Agencies are usually terrible businesses. They don't really make very much money.”
Wilkinson: MetaLab designed Slack and worked with Shopify, Coinbase, and Pinterest
“Also worked with a lot of startups really early on, Shopify, Tumblr, Coinbase, Pinterest. We designed Slack.”
Wilkinson: No tech holding company had truly copied Berkshire Hathaway's decentralized model
“Anyone that's done this for tech had built kind of a synergized conglomerate like GE, where everything's interdependent, but nobody had truly copied the Berkshire model of running all these distributed businesses and leaving them to do their thing.”
Wilkinson: Most tech acquirers flip companies within two to four years
“Our focus is on buying wonderful businesses that'll be profitable, and being able to really have them be sustainable and exist in 10 years, whereas most other acquirers have a thesis around slamming them into another company, or they're gonna flip them in two …”
Wilkinson: Direct customer relationships eliminate Google and Facebook platform risk
“In a technology business, there's no middleman, so there's no Google or Facebook risk. There's no algorithm between Us and the community or the customer.”
Wilkinson: Tiny Capital targets $10M to $100M opportunities in sleepy markets
“We don't want to be in a situation where we're buying a company where billions of dollars are going to flow into competing with it tomorrow. We just think that's too difficult. So that's why we like to choose industries that are sleepy, where nobody really car…”
Wilkinson: Tiny Capital prices acquisitions on 5-to-10-year earnings and risk
“What we do is we basically pay a fair price based on where the business is at. And that's typically based on what earnings are expected to come out of the business over the next five to 10 years. And then the other way we think about price is just risk. So yes…”
Wilkinson: Tiny Capital exclusively buys or immediately pivots to profitable businesses
“Because that's so part of our DNA, we really exclusively buy profitable businesses or at the very least businesses that can be immediately pivoted to profitability.”
Wilkinson: Too many venture-backed startups buy unsustainable growth for funding
“However, if it's one dollar turning into 30 cents over two years, I really don't think that's a good use of capital, and I see way too many venture-backed Buying 30 cent dollars to show growth and get their next round of funding.”
Wilkinson: Almost all Tiny businesses grow top and bottom lines 30-40% annually
“And, you know, regardless of our focus on profitability, almost all of our businesses are growing their top line and their bottom line at 30 or 40% a year and doing it profitably.”
Wilkinson: Tiny expects soft returns rather than total write-offs
“In terms of loss ratios, I'm not counting on having losses. We occasionally will, and we will have business failures, but they'll more look like softness and bad returns. I doubt we're going to have zeros. It's just not like a venture game. These are generally…”
Wilkinson: Tiny would raise VC if a portfolio company needed $100M burn
“So I would say that if we had a business that was obviously in need of a large amount of capital, And we needed somebody at the table who was willing to take a big risk where we knew that in order to grow it into a billion dollar business, we'd need to burn a …”
Wilkinson: Hundreds of thousands of designers visit Dribbble directly daily
“Every single day, hundreds of thousands of designers wake up Every morning, and they punch Dribbble into the URL bar. You know, we don't need to go out and buy customers. They just naturally organically appear, and because Dribbble is the largest network is ge…”
Wilkinson: Tiny Capital considered buying Meetup.com but passed
“You think about meetup.com, for example, which is a business that we looked at buying, and we just couldn't wrap our heads around it, because ultimately, when it comes to social networks, usually the largest network always wins.”
Wilkinson: Google Maps blew Yelp out of the water using Android
“Turns out with Google, having Android and Google Maps, they can just ask every single person on earth how the restaurant was that they went to last night, because they know that they'd visited it via Google Maps, and suddenly Google Maps has better data and bl…”
Wilkinson: Tiny's remote job board is a feature vulnerable to LinkedIn
“We also own the remote job board business. I have no idea how long that'll exist because LinkedIn can easily come along and start adding remote jobs as a feature. And at the end of the day, our business is kind of a feature, not a product.”
Wilkinson: Board members are not there to be the CEO's friend
“Well, I think the biggest thing to remember is that you're not the CEO's friend, that you're not there to be a buddy. You're there to actually ask probing questions. And to rub their nose in the consequences of what could go wrong.”
Wilkinson: Boards cannot dictate execution, only whether to keep the CEO
“One of the things I've also learned is that on a board, even when you own the entire company, you can't dictate what they need to do. You can only guide and you can set guide rails. And so at the end of the day, you're ultimately deciding, is this the right pe…”
Wilkinson: Tiny allows portfolio CEOs to make reversible mistakes
“In the businesses that we own, I'm never going to let a CEO make a sink the boat decision, right? But if it's a two-way door, if it's something where, look, I think this business model idea is hokey, but they've got it in their head as the greatest idea ever. …”
Wilkinson: Hiring executive candidates for unproven potential always fails
“Whereas if you hire somebody for potential, which is what I used to do, I'd meet somebody and go, I love this person's moxie. They're really sharp. They move really fast. They seem to kind of understand marketing. I think they can be a good CMO. We'll grow the…”
Wilkinson: Use 'anti-goals' to design your life around avoiding worst-case days
“Just doing things I want to do, and I have a system that I call anti-goals, where every year my business partner and I sit down and we say, what does our worst possible day look like, and how do we design our day to avoid that?”
Wilkinson: Podcasting total market cap was only $500M in 2018
“There was only five hundred million dollar market cap in podcasting two years ago, and so I went out and I bought a top indie podcast player We ended up starting a business in that space”
Wilkinson spent only four hours total launching multiple companies via delegation
“Over the last couple of months, I've started multiple companies and I've spent probably four hours in total on them coming up with a high level idea and then delegating everything.”