Apr 19, 2021 · 42m · 20vc
20VC: Greylock's David Sze on His Biggest Lessons Working with Mark Zuckerberg and Reid Hoffman, The Rise of Pre-Emptive Rounds, How To Think Through Price Discipline Today and How Truly Strong Venture Partnerships Function
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of TwentyVC, host Harry Stebbings interviews David Sze, General Partner at Greylock, exploring his career investments in consumer technology, market cycle navigation, and internal firm governance. Sze shares foundational insights on founder relationships, valuation discipline, partnership dynamics, and managing long-term venture success across changing economic landscapes.
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 25.4% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 3.0 Guest disagreement 0.6 Harry pushing back 1.1
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 28:33 Redefining founder-friendly away from passive agreement
David directly rejects the popular premise that founder-friendly investing means blindly agreeing with everything founders say, arguing instead that true partnership requires tough love and challenging them.
Hardest push from Harry ▶ 12:55 Harry highlights the unrealistic speed of modern funding roundsHarry pushes back on the romanticized process of building deep founder trust by pointing out that modern venture velocity leaves virtually no time for relationship building prior to term sheets.
Biggest teaching moment ▶ 7:20 Deconstructing historical venture stage silos and rigid rulesDavid educates the host on how legacy venture firm rules against multi-stage entry and following top-tier firms caused firms to miss generational winners like Facebook and LinkedIn.
Harry holds his own ▶ 14:57 Harry cites specific market data on extreme preemptive roundsHarry demonstrates active market knowledge by bringing up a specific real-time example of a company with $100k ARR being preempted at a $100M valuation.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| David Sze's Career Origins and Entry into Greylock | 1 | 1 | 0 | 0 | Harry introduces David and asks about his career origin story and path to Greylock. David recounts his time in gaming at EA and Crystal Dynamics before joining search engine Excite and eventually being recruited to Greylock by Aneel Bhusri. | |
| Navigating the Dot-Com Bust and Defending Consumer Investing | 2 | 4 | 1 | 1 | Harry asks how entering venture during the dot-com bust shaped David's investing mindset. David explains how he had to convince Greylock to stay in consumer investing by debunking defensibility myths and challenging old VC dogmas against multi-stage flexibility. | |
| Price Discipline and Valuations in Tech Investing | 4 | 3 | 1 | 1 | Harry demonstrates context knowledge by comparing historical high-valuation deals like Facebook and Yuri Milner's investments. David details how price flexibility must be balanced with price discipline when evaluating potential market-monopolizing leaders. | |
| Building Trust with Founders in High-Velocity Markets | 3 | 3 | 1 | 2 | Harry raises a realistic friction point regarding compressed deal timelines and the difficulty of building true trust quickly. David responds by contrasting the chaotic velocity of the deal wedding with the long-term reality of the startup marriage. | |
| Reflections on the Rise of Pre-Emptive Rounds | 4 | 4 | 1 | 2 | Harry pushes on preemptive rounds by highlighting extreme current deal terms ($100k ARR at $100M pre) and brings in partner prompts on partnership design. David provides a deep look at Greylock's culture of individual deal ownership and conditional yeses. | |
| Fostering a Culture of Champion and Challenge | 3 | 3 | 0 | 1 | Harry asks how partnerships maintain a culture of champion and challenge and how senior leaders avoid overwhelming boardrooms. David shares advice on quiet authority, citing Peter Chernin's boardroom presence as a model. | |
| Navigating Generational Transition in Venture Firms | 4 | 4 | 1 | 2 | Harry poses sharp LP-style questions on how venture firms execute generational succession and why junior partners fail. David illustrates Greylock's egalitarian anti-king culture through founder Bill Elfers stepping down as CEO. | |
| Head vs. Heart Decisions and Controlling the Venture Journey | 3 | 3 | 0 | 1 | Harry probes the balance between analytical reasoning and gut instinct in venture bets. David breaks down his heart-head-heart decision framework and emphasizes that investors only control which journeys they choose and who they go with. | |
| Redefining Founder-Friendly and Multi-Stage Flexibility | 3 | 4 | 1 | 1 | Harry relays team questions regarding learnings from failed investments like Digg and multi-stage entry points. David redefines founder-friendly investing as providing constructive challenge and tough love rather than passive compliance. | |
| Maintaining Humility, Managing Paranoia, and Avoiding FOMO | 3 | 3 | 1 | 1 | Harry asks how David handles the Kingmaker reputation and whether he experiences FOMO. David candidly admits to feeling FOMO, detailing major missed opportunities like Baidu due to rigid travel rules. | |
| Quickfire Insights: Roblox, Mentors, Sleep Kit, and Lessons | 2 | 1 | 0 | 0 | Harry guides David through rapid-fire questions covering the Roblox pre-mortem, sleep tracking gear, chasing Reid Hoffman in Hong Kong, and key company builders. The tone is casual and warm throughout. |
Statements from this episode (27)
David Sze: Domain-focused VC investors must be stage-agnostic
“The business was becoming very specialized and much more focused, and so I was pushing to say, we need to have people that have expertise in a domain, and as a result, if you're going to narrow down your domain focus, we need to have to give them the freedom t…”
David Sze: VCs should back category leaders over second-best alternatives
“If you think that the best company is Is this other company, and you believe that the economic rents and returns will accrue to that winner, then you should really go and back that company.”
Greylock's $500M Facebook valuation check faced intense internal and external criticism
“Facebook was very controversial, both internally and externally at Greylock when it was announced, because we invested at a five hundred million plus pre and wrote one of the biggest Checks that Gerlach had ever written at that time, and that was considered in…”
Sze: Valuation flexibility is justified for winner-take-all markets with great leadership
“So I do think that you need to have price discipline, and so you need to think about, does this have the ability to run to a huge outcome? Does this Show the potential to be a winner takes most or winner takes all kind of business. If that's the case, and you …”
David Baszucki predicted early on that Roblox would surpass Minecraft
“I remember him saying, we're going to be bigger than Minecraft someday, and at that time, that was like the most laughable statement in the world, but Dave was convinced, and I just remember I'd check in with him, and he'd chip away at it, and eventually it be…”
Sze: Founders scaling to multi-billion-dollar companies must continuously evolve
“You can't be the same person That is doing that small physics engine project test at the School of Science Fair that now leads the forty billion dollar public company. You just can't be that same person, so you need to evolve and always be curious, but you als…”
Sze: Founders should prioritize long-term partner alignment over fast funding deals
“Be really careful that you get too wrapped up on the wedding because it's a long-term marriage.”
LinkedIn, Facebook, and Roblox took between 8 and 17 years to IPO
“LinkedIn was eight to 10 years to going public. Facebook was 10 to 12. You know, Roblox, 17 years.”
Investors doing aggressive preemptive rounds will get burned when the market turns
“On the flip side, I think it's very dangerous, and I think there's going to be people that get extremely burned when the music stops, and the music will stop.”
Sze: Greylock partners can pass almost any deal if they push hard
“The reality is, at Greylock, if you do your work, you can get most deals through the partnership if you really believe in it, and the way we are. You'll get challenged, but if you do the work, and you push, and you believe in it, most of the cases, and the vas…”
Sze: Walking away after conditional deal approval builds maximum partnership trust
“The most powerful moment is when the partnership gives the conditional yes. And when the partner who owns the deal goes away and thinks about it, when they come back in those cases, when they come back and they go, you know what? I took the feedback. I did som…”
Sze: New Greylock partners hold high relative power in firm decisions
“But I would say on average, on basis, someone who is new to the partnership on a relative basis has an incredible amount of power to say things. And so we really work as a team where we empower every partner to say what they mean, do what they say, and to own …”
Experienced board members should speak less and communicate more quietly
“The more confident you are, the more experienced you are, the less you should say, and the more quiet you should say it.”
Sze: Board members should empower founders rather than impose decisions
“The most powerful thing I can do is to both empower, support, encourage, also help educate with perspectives my founders, rather than trying to make something happen myself and impose it.”
Senior venture capital partners must actively aim to become obsolete
“And the partners who are senior, one of their biggest goals is to get out of the way, to become obsolete, because that is the definition of success for the next generation, and it'll be the definition of success for Greylock in the long run.”
Sze: Ignoring team feedback is a fast failure mode for VC partners
“I mean, we've had folks fail because they didn't understand how to navigate the dialectic between team and individual. Usually more too individual in the sense of like running over people or not listening to feedback or not learning. That's something that I th…”
Sze: Analytical VC partners fail if they cannot make decisive investment calls
“So there's so much uncertainty prospectively, and one of the most important things for a young partner is to have the ability to do the work, but then make the call, to put down some bets. And one of the other failures we've seen in a partner is they can be re…”
David Sze: Venture investment decisions require a three-step heart-head-heart process
“I tend to start with the heart, which is, I have to, like, sort of fall in love with the idea, or fall in love with the founder, or some combination of that, and what it could be. Then you go to the head, and you do all your work, and you crunch all the number…”
David Sze: VCs only truly control investment journeys and team selection
“The two things you do control are what journeys you go on and who you go on them with. So make sure that the journeys you go on are ones that you really want to be on through the bad times and the good times, whether it works out or not, that you don't say, oh…”
David Sze: Founder-friendliness isn't blindly backing whatever founders say
“I came in early on, like I said, believing that founder-friendly meant you backed the founder, whatever they said you did and whatever they said you backed. And what I learned is that's not always the case, that you need to help founders be better. You need to…”
Digg failed because its community became toxic while Reddit successfully evolved
“That was part of his success, but I think that that group of individuals actually became pretty trollish, quite honestly, by the end of it, and navigating how to succeed through that was very hard for Digg and for Kevin, and you watched someone like a Reddit c…”
Sze: Nextdoor originally launched as Fanbase, an amateur sports data company
“Take Nextdoor. It started out as a company called Fanbase that was going to do sort of like ESG SPN and data for amateur sports, and it pivoted.”
Greylock passed on Baidu at a $14M valuation over travel requirements
“I looked at Baidu at fourteen million pre. And because we had this rule of thumb that said we had to be boots on the ground all the time at that time, it was that narrow a definition again back in those days, I was told that I was going to be going to China ev…”
Sze: Investors underestimate how platforms age up with young users
“One of the reasons that I was overcome some of the downside potential on, say, roadblocks around age, and I still believe this, is we underestimate that those kids that are nine, 10, 1112, and 13 today are the kids that are 1415, 1617, 18 of tomorrow.”
Sze: Bonding with Reid Hoffman in China led to LinkedIn investment
“We sat at the back of the bus each time on every stop on this tour through China, and we just mind melded. It was great. We got along so well. We were fast friends, and that led to the investment in LinkedIn and me inviting him to come to Greylock”