Oct 12, 2020 · 47m · 20vc
20VC: CRV's George Zachary on His Relationship To Money and How it has Changed Over Time, Why The Best Founders Have Often Experienced Parental or Home Instability and The Stories Behind Investing in Unicorns; PillPack, Yammer and Udacity
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In this episode of The 20 Minute VC, veteran investor George Zachary of CRV shares insights from his 25-year career, covering investment discipline across market cycles, the psychological drivers of exceptional founders, and candid reflections on wealth and personal transformation.
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 29.7% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 4.0 Guest disagreement 1.6 Harry pushing back 1.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:25 Refuting founder charisma thesis
George directly refutes the premise presented by Harry's angel investor friend, pushing back to argue that force of will matter far more than superficial charisma.
Hardest push from Harry ▶ 9:53 Host counter-arguing founder charismaHarry refuses to accept George's focus on founder energy, citing a prominent angel investor's counter-thesis that charisma inversely correlates with venture success.
Biggest teaching moment ▶ 18:25 Psychological theory on elite founder driversGeorge educates Harry on developmental neuroscience and psychological drivers, laying out his theory that top founders are shaped by home instability.
Harry holds his own ▶ 13:22 Demonstrating venture math misalignmentHarry demonstrates keen fund economics expertise by breaking down the structural return conflict between a $30M founder payout and VC fund returns.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| George Zachary's Origin Story in Venture Capital | 2 | 3 | 1 | 1 | Harry introduces George's VC entry in 1995 and asks how macro boom-and-bust cycles shaped his mindset. George explains how experiencing the 2000 and 2008 crashes made him naturally skeptical of inflated valuations. | |
| Bringing Downside Realism to Investment Committees | 3 | 4 | 2 | 2 | Harry asks an off-schedule question about how to bring downside realism to investment committees without coming across as overly negative. George notes the shift in valuations over 20 years and emphasizes relying on personal conviction rather than TAM reports. | |
| Force of Will vs. Founder Charisma in Startup Success | 5 | 5 | 4 | 4 | Harry challenges George by quoting a successful angel investor who claims founder charisma is inversely correlated with success, citing Zuckerberg and Bezos. George explicitly disagrees with the friend's thesis, distinguishing between superficial charisma and relentless force of will. | |
| Managing Incentive Misalignment Between Founders and Investors | 4 | 4 | 2 | 3 | Harry lays out the mathematical misalignment between a founder netting $30M on a $150M exit versus a large fund needing fund-returning outcomes. George contextualizes how cost of living and fund sizes have shifted over 25 years. | |
| Backing Yammer and David Sachs During the 2008 Financial Crisis | 2 | 3 | 1 | 0 | Harry asks about George's decision to double down on David Sachs when Genie pivoted to Yammer during the 2008 financial crisis. George recounts meeting David via Elon Musk and recognizing David's deep understanding of enterprise communication. | |
| Psychological Drivers of Top Founders and Parental Instability | 2 | 5 | 2 | 1 | Harry asks George to clarify the difference between a founder who 'wants' vs 'needs' to build a business. George shares his psychological theory that elite founders often experienced parental instability, driving a compulsive biochemical need to master chaos. | |
| Conviction-Driven Investing: The $30M PillPack Investment | 2 | 4 | 1 | 2 | Harry asks about George writing a massive $30M check into PillPack from a $300M-$400M fund. George explains how human alignment with founder TJ Parker allowed him to bypass conventional data diligence and offer a deal in four days. | |
| Flaws in Market Size Metrics and the Evolution of VCs | 3 | 5 | 2 | 2 | Harry expresses guilt over relying on intuition rather than data cohorts, asking about the centrality of market size metrics. George explains why TAM metrics are often fabricated and notes how traditional VCs missed Yahoo and eBay due to rigid market sizing. | |
| Pivoting to Bioengineering Following a Personal Health Scare | 2 | 4 | 1 | 1 | Harry asks how George successfully reinvented himself by pivoting from consumer software to bioengineering. George discloses a personal cancer scare that motivated the transition and explains his strategy of partnering with PhD domain experts. | |
| Board Directorship Philosophy: Nose In, Hands Out | 3 | 5 | 1 | 1 | Harry asks for board directorship advice. George summarizes his core board philosophy as 'nose in, hands out' and reveals the behind-the-scenes decision to let Evan Williams spin Twitter out of Odeo. | |
| Generational Transition and Firm Longevity at CRV | 3 | 4 | 2 | 1 | Harry inquires about generational succession in VC firms. George argues that firm 'immortality' is counterproductive and explains that senior partners must empower younger generations through sink-or-swim responsibility. | |
| Personal Relationship to Money, Wealth, and Isolation | 4 | 4 | 1 | 2 | Harry asks a deep question about George's personal relationship with money over time. George describes growing up lower-middle class, the anticlimax of sudden wealth, and how suspicion over people's financial motives forced him into self-isolation. | |
| Quick Fire Round: Books, Elon Musk Stories, and Glimpse | 2 | 2 | 1 | 0 | Harry runs through the quick-fire round covering books, stories about Elon Musk, memorable board members like Jim Clark, and CRV's latest bioengineering deal in Glimpse. |
Statements from this episode (23)
Zachary initially rejected VC offer thinking it was about country clubs
“Sooner or later, that led up to the year 1995 when someone asked me if I wanted to be in the venture business and I had no idea what that meant. And I kind of thought it was about country clubs and playing tennis. And I initially turned down what the job was b…”
Investors should avoid capital-intensive startups late in market cycles
“It's made me think about being careful about getting involved in capitally intense projects, that the further on you are in the cycle, the more careful you should be about financing companies that will take lots of rounds of capital.”
Seed rounds in 2000 were $300,000 and required a working prototype
“When I was in the business 20 years ago, a seed deal was 300,000 dollars. And a C deal meant that there's actually a deck with probably a prototype, what people might call a Series A today.”
VCs should back founders who want capital but reject investor coaching
“You want to go after the founders who just want you out of their way. They don't want help. They don't want coaching. They basically want the money and they just want you out of the way.”
Exceptional founders succeed through intense willpower rather than superficial charisma
“Most of the great founders that I've met, they will listen to the data and act differently. And they will also listen to you, but they'll take your input into account, but they're not going to necessarily do what you want. And I haven't found them to be partic…”
VC and LP incentives diverged in the 1990s due to management fees
“And a lot of this thinking started when the fund sizes started to become large and people started living off of the management fees. So the incentives started to diverge from the limited partners incentives, and people started thinking of it as an investing bu…”
Venture capital fund sizes grew too large following Google and Facebook
“So I think in terms of fund size and returns, I do think fund sizes have gotten too large, and it really took off after Google and predominantly after Facebook.”
Social network Genie failed because Facebook expanded into users over 30
“The thesis behind Jeannie was that there would be a social network for people above 30. Unfortunately, Facebook Expanded into that segment. So that didn't work out.”
Great founders have a psychological need to build large companies
“And that's one of my key criteria with founders is does this person need to create a big company? Not just want, but need to, which will create a persistence that follows through their entire life almost to build and create companies.”
Childhood instability drives the best founders to master chaos
“And I do believe that parental instability or home instability leads to a situation where the smartest and most interesting founders who are strong enough, I would add, sooner or later learn how to master chaos because they had to survive in it.”
Zachary deployed only $240 million across his first 23 years in VC
“Up until that point in my career in roughly 23, 22 years, I had invested about two hundred forty million dollars, so I've never been a person just to write a ton of checks and throw darts at a wall and see what happens.”
Zachary agreed to a $30 million PillPack check after four days
“On day one that I've met him by day four, I was shaking hands with him on a thirty million dollar check.”
Only five of 50 venture capitalists from the 1995 cohort survived
“In 1995, 96, when I got in, there were about 50 people that entered into venture. And as of several years ago, there were about five of us left. Most of the people were exited out of the business in the first four or five years.”
Older venture capitalists exit the industry because they cannot learn new models
“And I think that's probably why venture investors that are younger tend to enter and think about and go along with new innovative models. And I also think that's why venture people at a past a certain age point exit out of the business. They can't learn enough…”
Biotech investing requires significantly deeper technical expertise than software venture capital
“Unlike investing in enterprise software or consumer investing, the depth of knowledge needed to invest in the area is extremely, extremely deep and usually involves a PhD in some one of the areas that you're gonna invest in, in bioengineering or biotech.”
Venture firms can spend $1 million solely on diligence for biotech deals
“It's not unheard of to spend a million dollars on a deal and a large deal just on diligence.”
Zachary wrote a $5 million check to Udacity without a business plan
“And after that, I basically gave him a check for five million dollars within an hour of him presenting at our firm with basically no business plan.”
Venture board members should operate 'nose in, hands out'
“They told me a simple phrase, nose in, hands out. So pay attention to what's going on in the business, but don't get involved in the company and screw it up unless the founder wants you to get involved.”
A venture board member's only true control is hiring and firing CEOs
“There's really only two control points you can do, which is hire and fire the CEO. Everything else you have influence over, but that's the only real control points that you have.”
Twitter would not exist as a company without co-founder Evan Williams
“Evan basically made the company what it is. Without Evan, there would be no Twitter as a company.”
Developing new venture capital partners requires a harsh sink-or-swim environment
“A lot of the growing, I think, has to be sink or swim. That's my opinion. And the sink or swim sounds a bit harsh, but that's how I survived in the business.”
Wealthy individuals socialize within their economic bracket to avoid financial motives
“I just started hanging out with people in approximately the same economic zone because I knew they had no interest in wanting to get any money like zero. I think that's why a lot of times people in the same socioeconomic zone end up hanging out with one anothe…”