The Exchanges

Q What do you mean by managing your career, not your investments? Just so I understand.

A Well, if you're, if you're a, If you're a mid-level person, if you were a mid-level person at Apex, you would do the right thing in order to look good, further your career rather than optimize returns. Sometimes the two completely coalesced and overlapped, but sometimes they, they didn't. For example, there were winners that I invested in, in 2000 or 1999. And as this sort of upswing in the market happened a few years later, and I remember very distinctly suggesting that we reinvest in one of those businesses, but sort of, I don't know, eight or ninety million euros was the valuation, I think. And the answer was no, like we're really, we're past that. We've left that one behind. We've moved on. And that ended up as a one and a half billion Euro outcome that APAC's missed on because it sold. And I sort of didn't fight my corner, even though I had conviction, I just sort of went with it as an example of, you know, managing my career rather than sticking to my guns.

AI assessment note: “you would do the right thing in order to look good, further your career”

Q Okay, so what does that look like on a capital concentration per company basis? I remember having Brian Singerman on the show, and he said the great line of capital concentration limits, the enemy of great returns. What does that look like?

A Well, within the sort of day one to series A kind of bracket, um, you know, day one, it might be a Sort of one to three million dollar first investment and a series A could be up to eight from my funds. And, um, the, so that's the first thing. The second thing is from a follow on perspective, um, how quickly can you learn whether to really concentrate on On one business. So I think you wouldn't want to get over, you wouldn't want to get over, I don't know, 10% of the fund, 10, 11% of the fund with the first check, my view. But if you can pick two businesses which you want to become 15 to 20% of the fund, then that's, that's sort of a very positive outcome.

AI assessment note: “pick two businesses which you want to become 15 to 20% of the fund”

Q Have there been one to two professional things that have changed the way you are as an investor? Often it can be the most painful or challenging, the catalysts.

A Yeah. So I think, I think, um, the.com crash that being faced with is what you have invested in actually a good business. Like that was very, very tricky. That was a very, very important question. Um, And as part of that, I remember turning down, in fact, not one, but two entrepreneurs. Um, so there's this company that was being, these two companies that were competing, they decided the best comp, the best ideas to combine. And it was two entrepreneurs, um, who were good and would be complimentary. And for the combination to happen, all it was going to take was for Apex to say, yes, we would put From a very large fund from a 1.8 billion euro fund that we put a million euros in. And these two entrepreneurs were Mark Schuster from upfront now, and a guy called Matthew Negrin, who I respected a lot. Um, and we said, no, and that was my recommendation was not to put A dollar in. And it wasn't, it was a mistake in the sense that Mark built a business. And it was probably not a mistake in the sense that where we did concentrate capital ended up as bigger, more valuable businesses. That's a very hard discussion with entrepreneurs who were very good. So that was a sort of painful moment.

AI assessment note: “I think, um, the.com crash... So that was a sort of painful moment.”

Q Having seen the prior busts in the way that you have, and having lived through them as an investor, how does that impact how you think about investing today? And actually, Steph Kurgan, a mutual friend of ours, said, how does that change how you deploy today?

A Okay, it's two, obviously, two different questions. So, I think my reflection on the sort of early busts is that Good companies are still good companies, but it might just take longer and maybe more dilution for them to sort of come out the other side. And so it means that I no longer, you know, I, I don't believe in sort of the fast payday. So that's sort of one I've sort of mentally just don't count on timing. I can't, you can't time a winner. Um, secondly, And this is very fundamental, actually, very fundamental lessons. So one of my, I had two great mentors at Apex, wonderful people, Barbara Manfrey and Peter Englander. And Peter was my direct manager. Um, and in 2001, when we were sort of catching our breath and wondering what to do next, which portfolio companies to save, he said the first question Is would you put a single dollar into each of these companies at a zero valuation? And what he was asking was, is this a fundamentally good business or was, were you just playing the market? Were you just playing the.com boom? And that has always stayed with me. And that definitely has affected how I invest and how I think of, um, Which in which businesses to invest in as a, you know, that may not be fashionable, may not benefit from some of the sort of momentum in the wider market. If there's a sort of bubble growing, but you know, you know, you're building real value. So that…

AI assessment note: “would you put a single dollar into each of these companies at a zero valuation?”

Q there are some questions I, I would love to ask on the back of that. I feel like a vulture journalist now, but it's like, you mentioned like Prince to pauper and like being in the heyday of heydays. Was ego management a problem for you? You were young and you were doing really, really well. Was ego management challenging and how have you learned to control ego over time?

A It was definitely a problem. Um, you know, there were very tiny differences between me and other people who were on the way up in the organization. And I'm not sure I always wore that. Those, you know, I think I'm, those people felt the differences more than they, more than, more than was appropriate. And I probably also did. So that created tension. Um, You know, I was, I was dealing with more volume than anyone in the building had ever experienced, you know, in the dot-com like this, the pace of company creation was pretty intense. And, um, that was, uh, you know, I was under a fair amount of pressure. Um, I had two small kids. My marriage wasn't great. Like I was definitely not sort of optimally placed to Um, sort of have perspective on life at that time. And I'm, it was definitely, it was definitely a problem. And what made the difference was actually one of the most experienced people in the business, actually an operator who became a very, very good investor, a telecom investor called John Montmodigal. He's called me into his office and said, I just want to talk to you because I think you're very good, but if you continue as you are, that will be less important than Sort of whether we want you to stay here.

AI assessment note: “It was definitely a problem.”

Q Uh, no, this is true. Um, tell me that, like, you know, we, we mentioned kind of the advice you've given me over time. We think about, you know, this new generation of investors who are seeing this crash for the first time. How do you advise them? How do you talk to them in seeing this crash for the first time, and how do you solve their insecurity?

A Um, if you probe carefully enough, most people were feeling insecure before the crash, but obviously it's come to the fore. But I, I enjoy mentoring, so, um, You know, I had these live conversations I have not only with you, I don't want to sound sort of promiscuous as a mentor, but, um, I do enjoy it. And sort of what I've been trying to communicate is you're not alone and that there's a big difference between being uncertain, which is completely natural. And in fact, it's built into the experience of being a VC. Or an early stage entrepreneur. Like there's a difference between being uncertain and insecure or anxious, and you can embrace your uncertainty and actually that, if you face up to it, can reduce the level of anxiety. So that's the first point. The second point I think is that you need a framework. You need, everyone needs a framework. You need, but you need a framework to figure out which way is up, which companies am I going to spend time with and why? And again, if you look at, if you create a framework that makes sense to you, everything else flows from that and you no longer have to look at every single decision by itself and sort of be a first principles thinker every single time. Now you'll still find that there are some situations that don't easily fit into the framework. And it's not a bad thing. It just means it's forcing you to acknowledge you might be abou…

AI assessment note: “you can embrace your uncertainty and actually that, if you face up to it”

Q the mentors I have, and I wouldn't have been able to get through, I think, honestly, the hardest times without them. The good times, you know, you can always do with advice, but I needed them in the bad times, um, and so I totally agree with you. I want to finish, Mike, on the most recent publicly announced investment, and why did you say yes and get so excited?

A Sure, um, so the company is called, uh, Ockley. Um, and Oply, uh, is creating on the face of it, just an ingredients marketplace where manufacturers of, um, small manufacturers of, uh, food brands or drinks brands source the ingredients they need to manufacture their products. But the team views it not just as a sort of how to enable commodities people and sold, but as a messy data problem. And they won't believe that they can create the most transparent, predictive supply chain. So I love that because it's not just operating on one level, but on the level of sort of data and what that accumulated data With the right sort of analytics, uh, applied can enable. Um, so that's very interesting to me. You know, what excited me is not just that sort of multiple playing on multiple levels, but the team is this young team of, uh, you know, two people who are really yin and yang, um, you know, Helen and, and, and Martin and, You know, Helen's just raw intelligence drive capacity to get an enormous breadth of stuff done well is, is really remarkable. And then Martin's this completely different character who, um, you know, covers a lot of ground as well, but in a very different sort of different way. And it's just exciting watching them evolve, um, and addressing this really very, very large sort of multi-trillion dollar opportunity.

AI assessment note: “what excited me is not just that sort of multiple playing on multiple levels, but the team”

Q What do you mean by managing your career, not your investments? Just so I understand.

A Well, if you're, if you're a, If you're a mid-level person, if you were a mid-level person at Apex, you would do the right thing in order to look good, further your career rather than optimize returns. Sometimes the two completely coalesced and overlapped, but sometimes they, they didn't. For example, there were winners that I invested in, in 2000 or 1999. And as this sort of upswing in the market happened a few years later, and I remember very distinctly suggesting that we reinvest in one of those businesses, but sort of, I don't know, eight or ninety million euros was the valuation, I think. And the answer was no, like we're really, we're past that. We've left that one behind. We've moved on. And that ended up as a one and a half billion Euro outcome that APAC's missed on because it sold. And I sort of didn't fight my corner, even though I had conviction, I just sort of went with it as an example of, you know, managing my career rather than sticking to my guns.

AI assessment note: “you would do the right thing in order to look good, further your career”

Q Having seen the prior busts in the way that you have, and having lived through them as an investor, how does that impact how you think about investing today? And actually, Steph Kurgan, a mutual friend of ours, said, how does that change how you deploy today?

A Okay, it's two, obviously, two different questions. So, I think my reflection on the sort of early busts is that Good companies are still good companies, but it might just take longer and maybe more dilution for them to sort of come out the other side. And so it means that I no longer, you know, I, I don't believe in sort of the fast payday. So that's sort of one I've sort of mentally just don't count on timing. I can't, you can't time a winner. Um, secondly, And this is very fundamental, actually, very fundamental lessons. So one of my, I had two great mentors at Apex, wonderful people, Barbara Manfrey and Peter Englander. And Peter was my direct manager. Um, and in 2001, when we were sort of catching our breath and wondering what to do next, which portfolio companies to save, he said the first question Is would you put a single dollar into each of these companies at a zero valuation? And what he was asking was, is this a fundamentally good business or was, were you just playing the market? Were you just playing the.com boom? And that has always stayed with me. And that definitely has affected how I invest and how I think of, um, Which in which businesses to invest in as a, you know, that may not be fashionable, may not benefit from some of the sort of momentum in the wider market. If there's a sort of bubble growing, but you know, you know, you're building real value. So that…

AI assessment note: “that definitely has affected how I invest and how I think of, um, Which in which businesses to invest in”

Q want to dig in on something in particular, which a lot of, like, our mutual friends said, I mean, specifically Richard, Trey and Charlie, but it's plenty, when a lot of others pass, you dig deeper, and so I just want to understand, really, your mindset around what Does it take for you to turn over another card when others don't want to and will go, no, on first glance?

A So, sort of, diligence-wise? Yeah. So, to me the question is, sort of, when something's not obvious, can I imagine how it could become very, very interesting and possibly dominant? So very different and possibly dominant. And, um, you know, that is a, that's always worth, to me, that's always worth, worth a look. So I probably wouldn't take another look if it looks like it's the 10th business making Um, you know, Salesforce data more freely available to salespeople. I mean, or, or, or whatever it may be that's a sort of, where there's a low barrier to compete. But if I think that a business is genuinely has a different view of the world, ideally both in terms of its technology choices and the business outcome that's possible for customers, that's worth a look.

AI assessment note: “when something's not obvious, can I imagine how it could become very, very interesting”

Q How do you think about outcome scenario planning? The big lesson I have from speaking to some of the best is you can never predict the size of your winners, in which case, surely outcome scenario planning leads you to the wrong decision.

A Very acute question. Um, I think that's true. However, I think that there are two different kinds of Good businesses that broadly that we could, we could invest in and support. One is a business that you just don't know how big it will be, but the economics are going to be very strong. And if, and that's just got a very, it's got a fundamentally different trajectory than a business, which needs to be very big in order to have spectacular economics. And I think the mistake in the last couple of years in our market has been a lot of businesses that could be good businesses at prices if they could be enormous businesses with unbelievable economics. And so they've been mis-sized in terms of their cost base as a result, because they've been, they've been over capitalized, therefore mis-sized in terms of their cost base. And, you know, then we're in sort of a world of pain as investors and founders suffer as a result. Employees don't make the money they could have made if they sort of taken different decisions. So I think if we categorize those two right from the start accurately, then that helps a lot in terms of not being over specific in terms of outcome planning. But you sort of say, I know that this is the sort of business, which if it's doing well, You know, I won't need to put endless amounts of money in. And, um, if it doesn't become that big, at least compound very, very pro…

AI assessment note: “helps a lot in terms of not being over specific in terms of outcome planning.”

Q Uh, no, this is true. Um, tell me that, like, you know, we, we mentioned kind of the advice you've given me over time. We think about, you know, this new generation of investors who are seeing this crash for the first time. How do you advise them? How do you talk to them in seeing this crash for the first time, and how do you solve their insecurity?

A Um, if you probe carefully enough, most people were feeling insecure before the crash, but obviously it's come to the fore. But I, I enjoy mentoring, so, um, You know, I had these live conversations I have not only with you, I don't want to sound sort of promiscuous as a mentor, but, um, I do enjoy it. And sort of what I've been trying to communicate is you're not alone and that there's a big difference between being uncertain, which is completely natural. And in fact, it's built into the experience of being a VC. Or an early stage entrepreneur. Like there's a difference between being uncertain and insecure or anxious, and you can embrace your uncertainty and actually that, if you face up to it, can reduce the level of anxiety. So that's the first point. The second point I think is that you need a framework. You need, everyone needs a framework. You need, but you need a framework to figure out which way is up, which companies am I going to spend time with and why? And again, if you look at, if you create a framework that makes sense to you, everything else flows from that and you no longer have to look at every single decision by itself and sort of be a first principles thinker every single time. Now you'll still find that there are some situations that don't easily fit into the framework. And it's not a bad thing. It just means it's forcing you to acknowledge you might be abou…

AI assessment note: “what I've been trying to communicate is you're not alone and that there's a big difference”

Q of time allocation in venture, which is the head says, spend your time with your winners, helping hire a head of sales can move the needle for the company in your portfolio. Um, and then the heart says, actually, you know, it's really hard sometimes, and you can't just abandon companies. How do you think about time concentration across the portfolio, and do you have to concentrate time into winners?

A So you need to develop a good enough relationship that when companies mature, it's okay for them to spend less time with you, and okay for them to pull you in when it's, when they, when they need you. So I think the natural, people talk about rounds as sort of the natural demarcators of when an early investor may start to spend less time with a company. In my experience, it's actually not about the rounds, although it's related, it's more about the maturity of the team. So if you have a pretty, if you're a CEO and there's a co-founder and you don't really have a team, the relationship with the early investor is super important. But the more competent people you have around you, the more you inherently bring decision-making into the group. And You start to distinguish between stuff that happens inside the business and sort of working on the business and the investor perspective is working on the business. But in those early days, the two kind of really get mixed up. I spend less time with winners because they don't need me because they have good time, good, good, good, good teams. But when they come to me, the problem is usually a problem that I'm best suited to deal with and we can really go into it. So that's sort of my experience. And where you want to spend time, because these are your winners, and you want to feel like you're making a difference. Like, that's not very, that…

AI assessment note: “I spend less time with winners because they don't need me”

Q So tell me, Chalfin Ventures, how did that come from Apex?

A Yeah, so look, the first thing was becoming an angel, and you know, at Apex, you know, the culture was You know, focused on the business rather than the entrepreneur and as an angel investing day one, even very small dollars as I did after I left, you know, it's a sort of Damascene conversion. It was one of these sort of fulcrum moments where I sort of went from focusing on the business to focusing on the entrepreneur and the business opportunity sort of together. And, um, that was a very important moment. Um, And, you know, when I thought about the lessons from Apex, I decided I wanted to go and be a partner in a smaller firm where I can have significant influence on the firm more. So I thought I joined a firm called Advent Venture Partners, and it was hard to sort of move, um, Different people in and out of the firm to create the best possible team. And so I left, did more angel investing, sort of a more scale. And this is kind of an interesting period because without necessarily really hustling hard, I was finding very, very good opportunities. Like I was the first person to Commit to Illumio, which turned into a very good, good business and investment. And, you know, I'm led some seed rounds. Personally, I was sort of Realized that I didn't need to be at someone else's platform and instead formed, uh, Mosaic ventures with a couple of people who I knew, knew well, and it was…

AI assessment note: “when I thought about the lessons from Apex, I decided I wanted to go”

Q Sadly, I don't. I mostly sit in Fulham these days. But, um, I, I do want to move to chat off and ventures and one kind of layer deeper. And when we chatted before, you said to me, chat off and ventures is the solution to a problem. Um, what did you mean by this?

A There's two different things about it. One is that I think, um, I think Frank Rotman from QED captured it about solar VCs that sort of, we deliver quite a lot of bang for buck. We should deliver a lot of value compared to the dollars we invest. So I think it's a product that entrepreneurs want, and they know that by having someone like Chalf & Ventures, a firm like Chalf & Ventures involved, We're not going to try and dominate the cap table for the next three rounds. We're sort of giving them maximum advice and help and support now, and then hopefully set them up for success. So that's the sort of product I think entrepreneurs would like and enough entrepreneurs. And then in terms of what it means financially, it means that I'm not trying to own 20% of every company. I'm not trying to dominate each round. Most entrepreneurs have a specific sort of set of goals for a given round, especially early stage, like what are the milestones they want to reach? Why are those the right milestones? How do we get there? And they ought to craft the syndicate around those goals. What's a syndicate that will support them in reaching those goals most effectively and efficiently? And I may say, look, I'd love to be your only investor. And this is why you might pick me to do that. But there may be a better solution, which is a split round. Well, you may decide that you just want me as a follower. …

AI assessment note: “We're not going to try and dominate the cap table for the next three rounds.”

Q How do you say that to an entrepreneur? It's fucking hard.

A I'm going through this now. You don't say I don't trust you anymore. You say this hasn't happened, and that's a problem. It's just, it's just facts, and you, you say it with, with empathy. You say this, I understand this is hard, and then you sort of make it They're, it's like, it's a decision maybe that they need to take with their team about how to reallocate responsibilities or may give them the support they need to perform better. But you sort of, you know, you sort of give them a window of time to sort of resolve, resolve matters. And the answer is you, you've got to give, give people that dignity. Right? So, you find a way to do that.

AI assessment note: “You don't say I don't trust you anymore. You say this hasn't happened”

Q want to dig in on something in particular, which a lot of, like, our mutual friends said, I mean, specifically Richard, Trey and Charlie, but it's plenty, when a lot of others pass, you dig deeper, and so I just want to understand, really, your mindset around what Does it take for you to turn over another card when others don't want to and will go, no, on first glance?

A So, sort of, diligence-wise? Yeah. So, to me the question is, sort of, when something's not obvious, can I imagine how it could become very, very interesting and possibly dominant? So very different and possibly dominant. And, um, you know, that is a, that's always worth, to me, that's always worth, worth a look. So I probably wouldn't take another look if it looks like it's the 10th business making Um, you know, Salesforce data more freely available to salespeople. I mean, or, or, or whatever it may be that's a sort of, where there's a low barrier to compete. But if I think that a business is genuinely has a different view of the world, ideally both in terms of its technology choices and the business outcome that's possible for customers, that's worth a look.

AI assessment note: “can I imagine how it could become very, very interesting and possibly dominant?”

Q How do you think about outcome scenario planning? The big lesson I have from speaking to some of the best is you can never predict the size of your winners, in which case, surely outcome scenario planning leads you to the wrong decision.

A Very acute question. Um, I think that's true. However, I think that there are two different kinds of Good businesses that broadly that we could, we could invest in and support. One is a business that you just don't know how big it will be, but the economics are going to be very strong. And if, and that's just got a very, it's got a fundamentally different trajectory than a business, which needs to be very big in order to have spectacular economics. And I think the mistake in the last couple of years in our market has been a lot of businesses that could be good businesses at prices if they could be enormous businesses with unbelievable economics. And so they've been mis-sized in terms of their cost base as a result, because they've been, they've been over capitalized, therefore mis-sized in terms of their cost base. And, you know, then we're in sort of a world of pain as investors and founders suffer as a result. Employees don't make the money they could have made if they sort of taken different decisions. So I think if we categorize those two right from the start accurately, then that helps a lot in terms of not being over specific in terms of outcome planning. But you sort of say, I know that this is the sort of business, which if it's doing well, You know, I won't need to put endless amounts of money in. And, um, if it doesn't become that big, at least compound very, very pro…

AI assessment note: “helps a lot in terms of not being over specific in terms of outcome planning”

Q and then, and then do a quick fire, and it's FOMO. FOMO dictates so much of this industry. I'm riddled with FOMO. I mean, it's incredible how many misses I have for my short career. Really, I'm talented in this respect. Um, my question to you is, when we chatted before, you told me you do not have FOMO. Mike, how do you avoid it, and help me out here?

A Look, Channel from Ventures is a solo VC. It's just me. And I don't want to, um, have a lot of noise in the system. I don't want to be sort of chasing every possible investment because then I can't provide the service that I think is at the heart of my business to the entrepreneurs that I work with. So it's a sort of business choice. It's a business model choice. And if I didn't feel I could find differentiated, potentially large businesses that other people don't necessarily see either at all, or see as attractive when I invest, then, you know, without seeing every possible investment, then, you know, I shouldn't be in the business. But I do feel like that. And so it's a sort of combination of a business model choice without which being a solo VC to think is just not, not possible, but also the sort of being content with my strategy and how I operate. If I wasn't content with it, which obviously is partly a question of not sort of aesthetics, but producing results for LPs. Then, um, maybe I'd suffer from FOMO sort of more often, but when I look back on my career, what I found interesting and maybe my partnerships supported weekly or didn't support or invested in with my own money has been on balance, pretty interesting. And so I'm sort of reasonably confident that what I see will produce stellar results. And so I'm sort of at peace with that choice.

AI assessment note: “it's a sort of combination of a business model choice”

Q of like, as you said, the trade-offs you make there, you choose to do a board seat role often, um, which is a question now that a lot ask whether they do or don't. I've, I've sat on boards before. Might we sat on boards together? Um, I don't think boards add much value, and I know that's a sweeping statement. How would you respond to do boards add value?

A Well, there's, do they add value, and do they add the right value at the right time? So my view is that at seed stage, a board is of limited value. The most value is weekly, bi-weekly spending time with, with teams, helping them solve problems quickly so that they're not waiting for the board in order to say, by the way, I've got this problem. And the cadence of the board is often a sort of determines the cadence of reflection by the team. And so at seed stage, I think a board is negative. Even if it's a helpful board, the most valuable thing happens frequently, frequent cadence outside the board. So, um, and then when a board becomes sort of more useful, partly perhaps cause there are more investors involved, but mainly because the company's plan is clearer. Um, You know, I think too many boards are talking shops, but even good boards I think are inefficient. So, you know, with the board, you want to clarify any factual questions up front. Then, you know, so information should come out early, factual questions clarified, and then sort of agenda reprioritize according to what feedback is on what the big issues appear to be. Then you want to focus the discussion on those issues. It shouldn't be a reporting sort of forum. So I think that's one of the reasons why boards aren't very helpful is that they're misconceived as reporting for us. And you should really split apart facts an…

AI assessment note: “So my view is that at seed stage, a board is of limited value.”

Q Yeah, yeah, it's dot to dot. Um, uh, tell me, what's the biggest weakness of venture partnerships today?

A I'll give you two answers. There's the entrepreneur's experience of them, and then there's how they operate internally. So the entrepreneur's experience of them, it's the process. You meet someone, you explain your business, you then meet two people, you explain your business, then you might meet the partnership, you explain your business again. You've repeated yourself three times at this point. Like that's, that's not a good customer experience. So that's sort of, um, that's sort of one issue. Um, I understand why it operates like that, but I don't think that's a great experience for the entrepreneur. Um, and you know, in the world of loom and video, surely we can do better. Um, and then, you know, I think the sort of The venture partnerships solve for stability because it's such a long-term business. And there are these sort of carry handcuffs that sort of, um, you know, vesting that encourage people to try and stick around. And I think that as a result, dissent is very, like, it's quite a big deal to have actual proper dissent. Um, and I'm not sure that, you know, there are lots of different ways of dealing with that, and, you know, a lot of firms change their, for example, their voting processes and approval processes for investments quite frequently because, and they do that because the firms are evolving, but also no one's really got a good answer, properly a good answer…

AI assessment note: “I'll give you two answers. There's the entrepreneur's experience of them, and then there's how they operate internally.”

Q Uh, selling on the way up, what did you mean by this?

A Um, It's two different things. Um, and actually a long time ago there was an ABC, a Fred Wilson blog about this, about selling Twitter on the way up. Um, but we, we, we build a portfolio and if you can take money that looks like it's going to make another three X and put it into a 10 X opportunity that's earlier. That recycling is, is actively good. Now you might get it wrong. It might turn out that you backed, you know, Twitter and it was a terrible mistake to have sold early, but, um, you know, you're, you're backing your judgment about where in the portfolio will generate the most alpha, you know, today. So that's, you know, if you're not open to that because you're wedded to not selling because something is a, is, is a current winner. Then you're sort of not really looking at how to optimize returns in your, in your portfolio as a whole, as opposed to forgiven atom. And, you know, there are, you know, there, we have different LPs and there are LPs that want money return sometimes. Um, and you know, if you are looking at holding something fully, when there's a chance to get out, if you don't have, if it may be another three or four or five years before you can sell, then you need to look at not just what you think that company might make over the next year, but over the next five years, and determine whether it's fundamentally diluted to your performance, to Keep going or wh…

AI assessment note: “if you can take money that looks like it's going to make another three X”

Q Have there been one to two professional things that have changed the way you are as an investor? Often it can be the most painful or challenging, the catalysts.

A Yeah. So I think, I think, um, the.com crash that being faced with is what you have invested in actually a good business. Like that was very, very tricky. That was a very, very important question. Um, And as part of that, I remember turning down, in fact, not one, but two entrepreneurs. Um, so there's this company that was being, these two companies that were competing, they decided the best comp, the best ideas to combine. And it was two entrepreneurs, um, who were good and would be complimentary. And for the combination to happen, all it was going to take was for Apex to say, yes, we would put From a very large fund from a 1.8 billion euro fund that we put a million euros in. And these two entrepreneurs were Mark Schuster from upfront now, and a guy called Matthew Negrin, who I respected a lot. Um, and we said, no, and that was my recommendation was not to put A dollar in. And it wasn't, it was a mistake in the sense that Mark built a business. And it was probably not a mistake in the sense that where we did concentrate capital ended up as bigger, more valuable businesses. That's a very hard discussion with entrepreneurs who were very good. So that was a sort of painful moment.

AI assessment note: “the.com crash that being faced with is what you have invested in”

Q Okay, so what does that look like on a capital concentration per company basis? I remember having Brian Singerman on the show, and he said the great line of capital concentration limits, the enemy of great returns. What does that look like?

A Well, within the sort of day one to series A kind of bracket, um, you know, day one, it might be a Sort of one to three million dollar first investment and a series A could be up to eight from my funds. And, um, the, so that's the first thing. The second thing is from a follow on perspective, um, how quickly can you learn whether to really concentrate on On one business. So I think you wouldn't want to get over, you wouldn't want to get over, I don't know, 10% of the fund, 10, 11% of the fund with the first check, my view. But if you can pick two businesses which you want to become 15 to 20% of the fund, then that's, that's sort of a very positive outcome.

AI assessment note: “you wouldn't want to get over, I don't know, 10% of the fund”

Q for you to do, and for those that actually can't see and would see on TikTok, Mike has the most brilliant bookshelf behind him, um, which just shows how wise he is, but we're gonna start today with Mike's intro, and so tell me, Mike, how did you make your way into the world of venture, and then how did you come to found Shelf and Ventures, obviously, most recently?

A I grew up sort of quite nomadically. We moved around a lot, and I was very interested in sort of fairness, and in sort of how the world ought to be, because wherever I went, I was a fish out of water, and nothing seemed to be how it should be. Um, so I did the obvious path to get into venture, which is I started studying civil rights history. And, um, got a fellowship to the US to pursue more, more history. And, um, when I arrived, um, went to meet the guy I thought I'd study with, who said, you know, I hate this career. I can't recommend it. I read your submission. You could spend your whole life doing that. I cannot recommend it. Good luck. I'm going on sabbatical. So off I went and started doing two things, uh, playing with the web. A little bit very early, but mainly sort of going and hanging around at the business school and ending up at BCG, which I didn't enjoy. Um, and I left much to everyone's surprise at BCG to join a venture capital firm called Apex Partners, which was then a venture firm in 1996. So, um, you know, I was sort of a believer in bottom up change and that the web could enable it. And Apex was an unusual place, um, at the time, partly because there were only three firms in London that did VC. Um, but it was a very sort of strong analytical culture. Um, from the beginning, I had to sort of do all my own legals, do all my own numbers, um, write my own recom…

AI assessment note: “left much to everyone's surprise at BCG to join a venture capital firm called Apex Partners”

Q You said there about embracing uncertainty. I do want to ask, I had Keith Raboy on the show recently, and he said his acid test for whether he's still a good VC is whether at least half of his friends laugh at all of his deals. Would you agree with that?

A Um, Well, it depends what your strategy is. I mean, there are sort of, there are businesses that aim to take share in an existing market. Often it's just a more efficient service or whatever it may be. There are businesses that aim to, um, create a new market and sort of, if you're the create a new market sort of end of, of, of things, then quite often it will appear to be completely strange. But I learned early in my career, um, that any, any business opportunity where I or my partners thought was a very good service that they would definitely use, that was almost certainly addressing way too small a market opportunity, right? So really what Keith is, has discovered is that his friends don't represent a big enough market opportunity. It's probably true.

AI assessment note: “So really what Keith is, has discovered is that his friends don't represent a big”

Q there are some questions I, I would love to ask on the back of that. I feel like a vulture journalist now, but it's like, you mentioned like Prince to pauper and like being in the heyday of heydays. Was ego management a problem for you? You were young and you were doing really, really well. Was ego management challenging and how have you learned to control ego over time?

A It was definitely a problem. Um, you know, there were very tiny differences between me and other people who were on the way up in the organization. And I'm not sure I always wore that. Those, you know, I think I'm, those people felt the differences more than they, more than, more than was appropriate. And I probably also did. So that created tension. Um, You know, I was, I was dealing with more volume than anyone in the building had ever experienced, you know, in the dot-com like this, the pace of company creation was pretty intense. And, um, that was, uh, you know, I was under a fair amount of pressure. Um, I had two small kids. My marriage wasn't great. Like I was definitely not sort of optimally placed to Um, sort of have perspective on life at that time. And I'm, it was definitely, it was definitely a problem. And what made the difference was actually one of the most experienced people in the business, actually an operator who became a very, very good investor, a telecom investor called John Montmodigal. He's called me into his office and said, I just want to talk to you because I think you're very good, but if you continue as you are, that will be less important than Sort of whether we want you to stay here.

AI assessment note: “It was definitely a problem.”

Q of like, as you said, the trade-offs you make there, you choose to do a board seat role often, um, which is a question now that a lot ask whether they do or don't. I've, I've sat on boards before. Might we sat on boards together? Um, I don't think boards add much value, and I know that's a sweeping statement. How would you respond to do boards add value?

A Well, there's, do they add value, and do they add the right value at the right time? So my view is that at seed stage, a board is of limited value. The most value is weekly, bi-weekly spending time with, with teams, helping them solve problems quickly so that they're not waiting for the board in order to say, by the way, I've got this problem. And the cadence of the board is often a sort of determines the cadence of reflection by the team. And so at seed stage, I think a board is negative. Even if it's a helpful board, the most valuable thing happens frequently, frequent cadence outside the board. So, um, and then when a board becomes sort of more useful, partly perhaps cause there are more investors involved, but mainly because the company's plan is clearer. Um, You know, I think too many boards are talking shops, but even good boards I think are inefficient. So, you know, with the board, you want to clarify any factual questions up front. Then, you know, so information should come out early, factual questions clarified, and then sort of agenda reprioritize according to what feedback is on what the big issues appear to be. Then you want to focus the discussion on those issues. It shouldn't be a reporting sort of forum. So I think that's one of the reasons why boards aren't very helpful is that they're misconceived as reporting for us. And you should really split apart facts an…

AI assessment note: “at seed stage, a board is of limited value.”

Q How do you deal with the really shit times, Mike?

A If you've done your best, there's really nothing else Nothing else you can do. And if you treated people well and with kindness in difficult times, that matters a lot. Um, you know, the biggest, the biggest conflicts I think come when you're trying to hold too many different Things in your, you know, in mind that are really not, not compatible with each other. And the quicker you admit that you've made a mistake, whether it was an investment decision or how you can be communicated with an entrepreneur or when you prioritize work over family or vice versa. Um, you know, you just got to be very, very honest with yourself, and I think that removes a lot of tension and weight from difficult times.

AI assessment note: “you just got to be very, very honest with yourself, and I think that removes”

Q I often speak to GPs, and I'm like, this company is a fucking winner. Why are you shipping it to tier one multi-stage firm? And they go, Harry, when I tell my LPs that X did this company of ours, I look great. Well, I don't give a fuck. I would like to have more ownership in that company and actually double down. But there is a misalignment there, though.

A Yeah. I mean, I'm in a different position because, you know, I don't have a growth pool of capital by design. So for me, the question for the company is what, what suits them best? Does a round with Shelton Ventures piling in, Help them. What are the risks from their perspective? And sort of let's sort of, rather than just sort of what's my incentive, it's like, what's best for the company is always the first question. And it may be, I'm having one discussion at the moment with a portfolio company where it may be actually the best thing is for me to price around and for the best possible co-lead to join and for us to crystallize that round. And that may be better than sort of a multi-stage fund investing Kind of too early, which we've seen quite a lot of, but that sort of seems to be the alternative.

AI assessment note: “I don't have a growth pool of capital by design. So for me, the question”