Aug 2, 2021 · 46m · 20vc
20VC: Mike Lazerow on Why How You Operate As a VC Is More Important Than Who You Are and What You Have Done, Why Boards Are More Important for the Entrepreneur than Investor & How The Best Entrepreneurs Prep Their Boards & Extract Value From Them
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In this episode of 20VC, serial entrepreneur and Velvet Sea Ventures co-founder Mike Lazerow shares key insights on venture capital philosophy, board governance, founder resilience, and the operational principles behind building generational tech companies.
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 2.2 Guest teaching 2.4 Guest disagreement 0.4 Harry pushing back 0.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 35:59 Rejecting sharp elbows in competitive VC deals
When Harry asks if writing larger checks turns former angel collaborators into competitors, Mike rejects the framing of using sharp elbows for allocation, insisting that long-term service to founders beats aggressive deal maneuvering.
Hardest push from Harry ▶ 35:41 Challenging the collaborator vs competitor dynamicHarry directly challenges Mike's gentle collaborative framing, pressing him on whether moving from small angel checks to leading multi-million dollar rounds inherently creates friction with former venture friends.
Biggest teaching moment ▶ 8:00 Fundamental rules for surviving market downturnsMike educates the host and listeners on surviving financial crashes, offering concrete operating wisdom about doubling cash reserves and explaining why losing money cannot function as a long-term strategy.
Harry holds his own ▶ 37:47 Sharing personal $8B anti-portfolio lessonHarry showcases his own venture expertise by explaining how over-indexing on a negative reference cost him an 8-billion-dollar investment, illustrating how he refined his own diligence process.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Mike Lazerow's Career Path and Transition to Venture Capital | 1 | 2 | 0 | 0 | Harry introduces Mike warmly and asks how he transitioned from operating startups into investing with Velvet Sea Ventures. Mike explains his career path from journalism school at Northwestern to founding multiple successful ventures like Golf.com and Buddy Media. | |
| Overcoming Early Health Challenges and Developing Fearlessness | 1 | 3 | 1 | 0 | Harry asks about Mike's early open-heart surgeries and how surviving the dot-com crash shaped his approach. Mike outlines core operational rules for downturns, including over-capitalizing and prioritizing fundamentals. | |
| The Art of Venture: How You Operate vs. Who You Are | 2 | 3 | 0 | 0 | Harry quotes Mike on why investor operating style matters more than credentials and asks about lessons from home-run investments. Mike explains that founders remember how investors made them feel during critical moments rather than tactical tasks. | |
| Trusting Gut Instincts and Identifying Winning Founders | 3 | 2 | 1 | 2 | Harry asks how Mike spots winning founders and probes into his dynamic co-founding Velvet Sea with his wife Cass. Harry gently presses on how they manage personal arguments from bleeding into investment decision-making. | |
| Failed Retirement, Relationship with Wealth, and Parenting | 1 | 2 | 0 | 1 | Harry asks about Mike's failed attempt at retirement and his relationship with wealth while raising teenagers. Mike emphasizes that modeling behavior is the only effective way to instill strong values in children. | |
| Board Member Dynamics and Pre-Meeting Preparation | 3 | 3 | 1 | 2 | Harry cites GGV board memo practices and asks how Mike approaches board governance. Harry presses on what happens when board members show up unprepared, and Mike details embedding hidden personal references in 10-page pre-board memos. | |
| Transparent Communication and Safe Spaces for Founders | 2 | 2 | 0 | 1 | Harry asks how board members can foster a safe space for founders to communicate bad news. Mike stresses that experienced investors handle bad news well but cannot tolerate sudden surprises. | |
| Overcoming VC Insecurities and Maintaining Collaboration | 3 | 2 | 1 | 2 | Harry pushes Mike on his current imposter syndrome as an institutional VC and challenges whether larger fund check sizes create competition with former angel peers. Mike rejects using sharp elbows, arguing that venture is inherently collaborative. | |
| Investment Mistakes, Selling Too Early, and Double-Down Strategies | 4 | 3 | 0 | 1 | Harry demonstrates expertise by sharing a personal mistake passing on an 8-billion-dollar company due to a bad employee reference. Mike shares his anti-portfolio regrets around selling winner shares too early. | |
| Quick-Fire Round with Mike Lazerow | 2 | 2 | 0 | 0 | Harry guides a quick-fire round covering book recommendations, wealth delusions, and trusting intuition. Mike highlights Viktor Frankl's Man's Search for Meaning and warns against assuming wealth makes someone an expert. |
Statements from this episode (19)
Lazerow: Growing a tech startup is far harder than investing
“And although investing seems different, I would never compare it to how difficult it is to growing a tech startup.”
Lazerow: Founders Should Raise 1.5x to 2x Capital Calculated in Plan
“Figure out how much you need to execute your plan, and then raise two times that number, one and a half times that number. It almost always takes more money and more time than you think.”
Lazerow: Capital Is Fungible, But Investor Experience and Reputation Drive Returns
“Well, I think what I meant is that money in today's market is fungible. You can get it anywhere. Experience and reputation are not. So in venture, if you look at the great returns, Experience and reputation drive results for the funds”
Lazerow: Great Venture Investing Is Part Therapy, as Founders Know Answers
“And so being a great investor is part therapy. It's part advisor. I find that many of the entrepreneurs know the right answer. They just need someone to talk to.”
Lazerow: Startups only go out of business when running out of capital
“The only way a company goes out of business is they raise money. Show me a failed product and twenty million in the bank. They still have a shot. Show me a successful product that can't raise money and you know, it'll go out of business.”
Lazerow: Initial gut feeling about founders is usually correct
“Your gut reaction is usually right about people. And so that's The first gut reaction that you have is so critical. The problem is the next two weeks, you try to talk yourself out of that gut reaction.”
Velvet Sea Ventures requires unanimous approval from all four partners on deals
“We are a firm that is unanimous. They're four partners, and so it's a family firm, Cass and me, John, Jim Petroni, and Matthew, Jim Petroni. We're all in with deals that we like. I have to first convince myself that I like the deal. Cass has to convince hersel…”
Lazerow: Worked harder at Salesforce than at Buddy Media
“Salesforce is an incredible company. I was working, you know, probably harder at Salesforce than I was at Buddy Media, and I was working really hard at Buddy Media.”
Lazerow: Velvet Sea Ventures Does Not Require Board Seats
“We don't say we need a board seat. We don't say that we don't need it. And so if an entrepreneur invites us on the board and we think we can contribute, we'll be on the board.”
Lazerow: Relying on downside control provisions means a startup is already failing
“If there's a decision that you have to make at a venture company that everyone isn't on the same page, it's usually an issue, right? You know, ventures kind of binary. These things go or they don't. And if you're really looking at financial engineering and you…”
Lazerow: Great VCs accept bad news but hate unexpected surprises
“Let's just say great venture investors have no problem with bad news. Our day is loaded with bad news. We have a huge problem with surprises.”
Lazerow: Founder depression stems from the gap between expectations and reality
“You know, founder depression is really a big issue, and a lot of it is because of the gap between what they think the expectations are, and the reality of their situation.”
Velvet Sea Ventures' largest check size to date is $50 million
“Can we get fifty million? Which is, you know, the largest deal that we've done.”
Velvet Sea reduced its investment allocation to bring in Mark Benioff
“We cut back our allocation significantly in order to make room for Mark Benioff and a bunch of our friends who wanted to be investors, right?”
Stebbings passed on an $8B company at a $6M seed valuation
“It was because I listened to a reference From a former boss, and it said what a terrible employee they were, and what a terrible employee they were, and I was like, oh no, and I took that very seriously, and I didn't make the investment. Six million pre, now i…”
Lazerow passed on early angel investments in Instagram and Uber in 2011
“So, my biggest misses were really as a personal investor, you know, sitting in a hotel room in 2011 with Kevin Systrom and Travis from Uber and, you know, having the opportunity, but not raising my hand and saying like, hey, I'd love to invest, right?”
Velvet Sea Ventures avoids raising oversized funds that are difficult to deploy
“We're not interested in putting together massive funds that would be hard for us to deploy right now.”
Lazerow: Financial success usually means you worked hard and got lucky
“Just because you made money doesn't mean you're an expert in anything, let alone everything. It usually means you worked hard and got a little lucky.”
Lazerow: VC returns depend on deals completed, not missed opportunities
“What matters is not what deals you miss. It's easy to sit back and look at all the success that your friends are having. You know, what matters is what deals you do, and that drives how you spend your day, and most importantly, it drives the size of your retur…”