Feb 8, 2021 · 44m · 20vc
20VC: Aleph's Michael Eisenberg on Why Generalists Over Specialists, Why Boutique Smaller Firms Over Multi-Stage Firms, Portfolio Construction Theory, Capital Concentration Limits and How To Think Through Reserve Allocations with Market Cycles in Mind?
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In this episode of 20VC, host Harry Stebbings interviews Michael Eisenberg, co-founder of Aleph, discussing venture capital portfolio strategy, boutique versus multi-stage firm structures, and navigating market cycles. Eisenberg details his generalist investment philosophy, board governance, and how embracing uncertainty guides both venture investing and personal life.
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 26.1% of the talking time here. How this is scored →
Harry as informed peer 4.1 Guest teaching 4.5 Guest disagreement 2.5 Harry pushing back 2.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:48 Rejection of work-life balance construct
Michael strongly rejects mainstream cultural consensus, declaring work-life balance a flawed pursuit and a failure of modern culture because life is inherently unbalanced.
Hardest push from Harry ▶ 13:36 Challenging capital efficiency adviceHarry directly presses Michael on whether advising portfolio founders to preserve cash and be capital-efficient at the start of COVID was fundamentally wrong given the ensuing market rally.
Biggest teaching moment ▶ 14:40 Explaining long-duration assets and macro shiftsMichael breaks down how zero interest rates and technology shifting into long-duration assets completely broke traditional DCF valuation models for global asset managers.
Harry holds his own ▶ 21:54 Citing Founders Fund concentration thesisHarry uses specific institutional knowledge regarding Founders Fund's investment thesis on capital concentration limits to challenge Michael on fund sizing and strategy.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Michael Eisenberg's Early Career and Founding Aleph | 2 | 2 | 0 | 0 | Harry welcomes Michael warmly and asks about his unconventional path into venture capital and founding Aleph. Michael details his early career in Israel, Montgomery Securities, Benchmark Israel, and his core motivation to create jobs. | |
| Navigating Market Cycles and Managing Reserves | 4 | 5 | 3 | 2 | Harry cites Josh Koppelman's perspective that market busts make investors conservative. Michael rejects the premise, explaining that market downturns actually made him more aggressive because innovation remains constant while capital becomes scarce. | |
| Capital Efficiency, Long-Duration Assets, and Market Shifts | 6 | 6 | 2 | 6 | Harry pushes back on the initial pandemic playbook, questioning whether advising founders to be lean and capital-efficient was wrong in hindsight given the market boom. Michael breaks down zero-interest rates, expanding TAMs, and technology becoming long-duration assets. | |
| Risk vs. Uncertainty and Portfolio Construction Theory | 5 | 6 | 4 | 3 | Harry introduces the concept of risk versus uncertainty and asks if uncertainty favors portfolio diversification. Michael dismisses 'diversification' as corporate jargon poorly applied to venture, emphasizing instead taking concentrated 'shots on goal' with outlier founders. | |
| Small Boutique Funds vs. Multi-Stage Firms and Generalist Mindset | 6 | 5 | 3 | 4 | Harry cites Founders Fund partner Brian Singerman regarding capital concentration limits driving mediocre returns. Michael clarifies that Singerman's logic applies to multi-billion dollar funds, whereas boutique early-stage funds like Aleph maximize returns by staying small and acting as true company builders. | |
| Price Sensitivity and Board Governance Dynamics | 5 | 4 | 2 | 2 | Harry brings up valuation sensitivity and quotes Bill Gurley describing Michael as a dogged board member. Michael shares lessons learned from Bruce Dunleavy on board governance and influencing founders to reach their own conclusions. | |
| Managing FOMO, Family Life, and Embracing Uncertainty | 3 | 5 | 4 | 2 | Harry asks how Michael manages time and priorities while raising eight children. Michael forcefully rejects the concept of work-life balance as a flawed cultural pursuit, arguing that life is never in balance and requires embracing uncertainty. | |
| Quickfire Round: Books, Writing, and Recent Investments | 2 | 3 | 2 | 1 | In a quickfire round, Michael cites the Bible as his favorite book due to its unmatched active users and timeless wisdom, advocates for relationship-driven VC over transactional deals, and discusses his investment in Melio. |
Statements from this episode (16)
Benchmark partners all invested in Michael Eisenberg's Aleph at launch
“My agreement when Benchmark, as Peter Fenton has so famously said, decided to get out of the imperial era of venture capital and focus locally, the partners at Benchmark were super supportive and went out on my own, so to speak, found a partner, Eden Shohat, a…”
Early-stage VCs must maintain a steady investment pace through market busts
“But it turns out that the best time to invest is when it busts. And so you need to maintain a constant investment pace, no matter what the external circumstances are around the bust in early stage venture capital.”
Aleph remains a single-stage fund to avoid multi-stage signaling risks
“We are a single stage, basically C to A fund. We're not doing the big, big fund with the multi-stage thing where I think you have a lot more risks around reserves and around signaling risk when times go get bad.”
Aleph doubled down on travel startup BookAway during the COVID-19 crash
“We have a company in the travel space that was Slaughtered by COVID. We got a pile of money reserved for it. We plowed in. We think this is going to come back, and when everyone else was not there, we are. And I think that's enabled us to be nimble. A company …”
Overcapitalizing lean founders causes them to explode, says Michael Eisenberg
“When you overstuff founders who are better at lean with capital, they explode. And conversely, if you've got guys who can press on the gas and play the game on the field when everyone's got capital, you ought to load them up.”
Eisenberg: Lemonade proved insurance is fundamentally a technology business
“So no one invested in insurance before and called it a tech investment, but lemonade has proven that insurance is really technology at the end of the day.”
Tech companies have become long-duration assets like bonds, argues Eisenberg
“But the second thing is technology has become a long duration asset, which it never was before. So you used to think of bonds as long duration assets or Refrigerators is long duration assets. Houses. But now people look at Amazon and go, whoa, 30 years plus so…”
Venture funds should target 15 to 25 portfolio companies, says Eisenberg
“In the venture business, I think about it as shots on goal, which is a portfolio should have somewhere between 15 and 25, call it, shots on goal.”
Traditional portfolio diversification theory fails in venture capital, argues Eisenberg
“Kind of traditional notions of portfolio diversification, which is where I think diversity comes from, are poorly applied in venture.”
Eisenberg: Partner time, not money, is a VC's most precious commodity
“And the reason you need to stay small and focused is your most precious commodity is not your money. It's your time.”
Domain specialization blinds venture investors to disruptive insights, argues Eisenberg
“When we think we're specialists, we think we know a lot about something. If you think you know a lot about something, you have really expert questions, so to speak, to ask a lot of the founders. But my guess is if you were that knowledgeable in And specialized…”
Aleph took half of Lemonade's $13 million seed round
“It's a thirteen million dollar seed round. We put six and a half in the term sheet.”
Benchmark's Bruce Dunleavy is the biggest gentleman in venture capital
“The guy is the biggest gentleman and mensch in this business by a long shot, and has unbelievable wisdom.”
Aleph's motto: being different is better than being better
“Our motto at Olive is different is better than better. Everything we do should be different, not better. Everything our companies should do should be different and not better.”