The Exchanges

Q Well, I'm so excited, so I want to kick off, though, with a little bit about you, and it's a very wonderful world being venture, but how did you make your way into this world and really come to be a GP at True today?

A Yeah, no, great question, Harry. I find that most people enter the venture world in a very serendipitous manner, and I think the same is true with me. So I began my career really early. I was part of a group called the Mayfield Fellows, which is a kind of fellowship at Stanford, where they take, you know, 10 or 12 engineering students, and they put them into various startups. And that was back in 97, 98. And because of that, I ended up working at a firm called Mayfield way, way back, around 99 to oh-two, which was really the boom and the bust of venture capital. So I saw a lot during that time frame. And during that time frame, I ended up meeting Phil Black, Who ended up founding True Ventures. We didn't end up working at that time together, but we got to know each other. I ended up going into industry for a long period of time. And then when Phil started True Ventures, I was coming off running product at a company called Geodesic, and it was based in India. And so I was flying back and forth quite a bit. I was thinking about my next thing and Phil and John, John Callahan, his co-founder said, why don't you just come hang out at True? And it wasn't a here, let's Come work together. True had just started. It was about a couple years in. It was around 2008 time frame, and it was more like, hey, come here, hang out. Let's see how it goes. One thing led to another. We really clicke…

AI assessment note: “within two years, I was a partner, and 11 years later, I'm here.”

Q I've never had that as an answer, and it's one of my favorite questions, so no, I think there's a 20 VC award for that first time hearing it. I do want to finish, though, Puneet, the most recent publicly announced investment for you, and why did you get so excited?

A Yeah, the most recently announced investment was a company called Upsy, which was actually based in Minnesota. It was founded by an individual named Clarence Bethea, by the way, who you should have on the show. He's terrific, an amazing leader. He has an amazing story. Story of his own right that was very rough in his early childhood and how he grew up and persevered, and he built this company, which is all in the warranty space, and the warranty space doesn't sound so sexy, but it is a monstrous space, so if you've ever gone into a Best Buy or bought a TV or bought an iPhone or whatever it may be, you get this big receipt that has a warranty attached to it, and it's voodoo, you don't even know what it means, and it's way overpriced, so for example, Best Buy charges, gets two percent of its revenue from the warranties it sells against its electronics, but it's 60% of its profit. So this company came in and actually has partnered with an insurance company and offers these warranties direct to consumer at literally 75 to 80% lower prices and offers customer service at the highest level and offers a really interesting view into all your receipts. And so they're really upending the seventy billion dollar old state industry with a consumer facing product that is brilliant and beautiful. So it's an exciting company to be involved with.

AI assessment note: “the most recently announced investment was a company called Upsy”

Q I totally agree with you in terms of pushing the envelope there. On the flip side, I have heard you also say that in some cases, you like to minimize the risk. So if that's how you kind of maximize the risk in terms of the price, how do you think about risk minimization, and where's that maybe important?

A Yeah, you have to minimize risk as well. So the way we minimize risk is on two vectors. One is on the actual dollar amount. When we first write our first checks, we're writing sub one percent of the fund into an investment, which again, reduces all that loss aversion piece that I was talking about earlier. It frees up all their creativity for both the founder and us. So on a dollar amount, that's where we minimize risk. And the other thing is on the founder quality. So most of the founders that we invest in today are referred to by our existing founder network, which is vibrant and highly connected. But more importantly, you know, we really look at that founder, look at their backgrounds, look at who they are, try to really get to know them. And that's where we minimize risk because Both on the founder and the dollar amount. So we maximize risk on one vector, minimize on the other, and that's how the business is essentially run.

AI assessment note: “the way we minimize risk is on two vectors.”

Q I totally agree with you in terms of pushing the envelope there. On the flip side, I have heard you also say that in some cases, you like to minimize the risk. So if that's how you kind of maximize the risk in terms of the price, how do you think about risk minimization, and where's that maybe important?

A Yeah, you have to minimize risk as well. So the way we minimize risk is on two vectors. One is on the actual dollar amount. When we first write our first checks, we're writing sub one percent of the fund into an investment, which again, reduces all that loss aversion piece that I was talking about earlier. It frees up all their creativity for both the founder and us. So on a dollar amount, that's where we minimize risk. And the other thing is on the founder quality. So most of the founders that we invest in today are referred to by our existing founder network, which is vibrant and highly connected. But more importantly, you know, we really look at that founder, look at their backgrounds, look at who they are, try to really get to know them. And that's where we minimize risk because Both on the founder and the dollar amount. So we maximize risk on one vector, minimize on the other, and that's how the business is essentially run.

AI assessment note: “the way we minimize risk is on two vectors. One is on the actual dollar amount.”

Q Do you take a board seat with every check?

A Not with every check, not all the time. We do have a big team though, so we have about 13 partners who can actually take board seats. Now that includes, there's a set of us who are full-time Partners. We have some venture partners. We have other folks who are more specialists, but we don't take it every single time. Some early checks we write. Sometimes we take it at the A round. So it's a bit of a mix, but we also have a broad team that can help. And then we have a community that helps a ton too. So there's a lot of leverage points for us because any founder who hooks into the true network, there's, you know, 140 active companies, 270 plus founder CEOs just today, and it's hyperconnected. So a lot of the help that we would provide gets offloaded to the community as well.

AI assessment note: “Not with every check, not all the time.”

Q Well, I'm so excited, so I want to kick off, though, with a little bit about you, and it's a very wonderful world being venture, but how did you make your way into this world and really come to be a GP at True today?

A Yeah, no, great question, Harry. I find that most people enter the venture world in a very serendipitous manner, and I think the same is true with me. So I began my career really early. I was part of a group called the Mayfield Fellows, which is a kind of fellowship at Stanford, where they take, you know, 10 or 12 engineering students, and they put them into various startups. And that was back in 97, 98. And because of that, I ended up working at a firm called Mayfield way, way back, around 99 to oh-two, which was really the boom and the bust of venture capital. So I saw a lot during that time frame. And during that time frame, I ended up meeting Phil Black, Who ended up founding True Ventures. We didn't end up working at that time together, but we got to know each other. I ended up going into industry for a long period of time. And then when Phil started True Ventures, I was coming off running product at a company called Geodesic, and it was based in India. And so I was flying back and forth quite a bit. I was thinking about my next thing and Phil and John, John Callahan, his co-founder said, why don't you just come hang out at True? And it wasn't a here, let's Come work together. True had just started. It was about a couple years in. It was around 2008 time frame, and it was more like, hey, come here, hang out. Let's see how it goes. One thing led to another. We really clicke…

AI assessment note: “within two years, I was a partner, and 11 years later, I'm here.”

Q Can I ask, does the ever-expanding seed round that we're continuously seeing today, does that change your thinking on kind of the right insertion point for you?

A So when True started back in oh six, it's interesting, we were half of the seed market, if you think about it. We were, we started with a hundred sixty-five million dollar fund, and I think Mike Maples was around, first round was around, you know, some of the other funds were getting started. Now, obviously, that's exploded into a much bigger scale, but we've always actually said the same thing. Now you have super seed and Sub super seed and mango seed. We've always called it seed. I mean, for us, it's sort of 500 K to three ish million is where we tend to play. I would say we often do now see companies that have some money in them now before that wasn't always the case. So sometimes we're the institutional seed round after that. And we are seeing some cases also where we might lead a seed two round. So they've raised a couple of million bucks, but they haven't gotten to the escape velocity they were expecting and they need some more capital. And there are some cases too, I would say a third scenario is the early A round. So the early A round, that five million dollar check, we've dabbled with that also on occasion too, because that's a big hole in the market too. You either have kind of the early seed stuff, or you have now an eight to 10 A round, whereas the old A round used to be more four to five million. So there's a hole there as well. So we've kind of, I would say, broad…

AI assessment note: “So we've kind of, I would say, broadened our spectrum a bit”

Q Phil and Rich said to me that I had to ask you about, and it was the element of kind of geography, because you invest in some incredible companies in pretty out there geographies, kind of outside of the valley, so to speak. So I'd love to hear, what's your secret sauce in sourcing here, and how do you think about that geodiversity that's actually quite rare in the valley?

A Yeah, we're big believers in it. So we've invested in Montana, Minnesota, Wisconsin, Michigan, Oregon, Africa, Europe. It wasn't like we intended to To do that right out of the gate, a lot of what we did initially in the early days was around the valley, and I think there's still a lot of promise here. Great companies are being built everywhere, and we source them because our network has grown. I mean, I think it's from a few places. One is we funded 250 to 300 companies over the life of our time here as a venture firm, and those companies have thousands of employees, and we're hyper-connected in a lot of ways, and we've done a lot of work connecting them, so we get a lot of referrals that way from our existing network. You know, as a team, we have deep operational experience, have worked for decades in the industry, so those networks help us. And there's a lot of small seed funds that we've gotten to know extremely well all across the country, and they have also referred to Steels, and we love working with them as well. The other thing is, we've put a shingle up on top of True and said, we're fine with investing in any company anywhere. And a lot of VC firms still haven't done that. They're still very provincial about that whole aspect. I think they're going to miss out because some great companies are being built everywhere. Trey as an example, right? Duo is another example. …

AI assessment note: “we get a lot of referrals that way from our existing network”

Q I've never asked this question before, but you laid it so nicely for me. What's the craziest thing you've seen? No, no names mentioned, but what's the craziest thing you've seen?

A Yeah, I have seen some crazy stuff. I'm trying to figure out how to actually say it without not saying it in a funny way. I feel like I've proved some really bad behavior, uh, inside of companies from a founder or CEO perspective, just on a personal level with employees. And some of that stuff has been very crazy. I've seen some really personal stuff separately. For example, there was a company and I've been a little bit open about this, but there was a company that we put five million dollars into the company on the day of wiring. The CEO called me and said that he was diagnosed with colon cancer. And that he didn't have a long time to live. And the first thing he said to me was, how do I give you the money back? And because it was literally the day of wiring, he says, you invested largely because of me. And so just send me the wire instructions and we're just going to figure out what we have to do with the company. And so, you know, you take that all in. That was pretty shocking at that moment. There's no real lessons for how you handle yourself in that moment. But we, at that moment, instinctively said, no, you keep the money. Let's go forward and try to build this business. This is what it's about, how to work through these hard times and work as a team to go figure it out. And so you see the gamut from crazy bad behavior to intensely personal issues. By the way, that compa…

AI assessment note: “the CEO called me and said that he was diagnosed with colon cancer”

Q Clearly, I need to check it out, so that's added to the list. What makes Richard Trey so special? You've worked with him for a number of years now. What makes Rich so good?

A Rich is, I shouldn't say this publicly, but I'm going to, he's one of my favorite people to work with. I think That Rich, someone described this to me, Rich is sneaky good in a funny way. So he's not like out there beating his chest all the time, but he's got so much authenticity and he really understands his business at a depth that is quite remarkable, both at a product level and a unit economics business level. And he's got a calmness about him. He's a leader. People want to work with him. He's a listener and he's got that patience and capability to kind of see it through over the long haul. And he's just a hell of a lot of fun. He's just a great person to sit down with and chat with and hear about his own life. He's persevered through a lot. I mean, you know, as you know, he actually had to sell shoes given the team just ends meet to kind of get the business off the ground. So he's got a great perspective. Never gets too high on himself, which I really like.

AI assessment note: “he really understands his business at a depth that is quite remarkable”

Q so much Alignment in terms of your passions and mine, and it was something that you said in particular that really struck me. You said the next great firms will separate themselves based on empathy. Now, that is incredibly concisely and clearly put compared to my way of saying it, but I'd love to hear, why do you believe that EQ is so cool to the business of venture today?

A Yeah, no, great question here. I really do. I do think it's what's going to separate the best firms in the next decades to come. I think IQ, if you want to call it, just Being smart, understanding industries. I do believe that's table stakes in a lot of ways. There's a lot of smart people around. A lot of people are very smart at digging into companies, but I do believe the human connection is what's most important. Venture capital to me is fundamentally a human business. I mean, I'll give you an example. Like, you know, I get questions all the time when I'm on various boards and things come up all the time. I want to sell a company. I'm not getting along with my co-founder. I've missed a quarter by a mile. I can't work with this person inside the company, even to very fundamental Core human issues like, you know, I have cancer. I mean, these are real issues that come up, and I think all those questions, while they sound, most of them sound like business issues, they're actually fundamentally human issues. There's emotion behind all of it, and so if you can understand and unpack the emotions that a founder has, I think you can be extremely successful in this business.

AI assessment note: “all those questions, while they sound... like business issues, they're actually fundamentally human issues.”

Q So I totally agree with you in terms of the work of the collective Active team is, is the most important thing. As you said there though, you don't do attribution. I was at a dinner the other night and someone was actively saying that I was naive not to do attribution. What are the benefits of not doing attribution?

A Well, so I'll answer it in a couple of ways. So if you do do attribution, it's fine. The industry has been around 4050 years. It's very much a star culture. It's very much about the Midas list. It's very much about, you know, what deals have I done? You see it on everybody's website. I think what it does is it does inherently create a culture sometimes where it People are saying, this is your deal, this is my deal, and you end up sort of doing weird trades, like, okay, I'll support your deal if you support my deal. That doesn't really further the business in the correct way. So I think if you have a culture of no attribution, that pressure, that blanket, that pressure blanket on top of, like, what my performance has to be just dissipates, and people make the right decisions for the company at the right time. Not the right decision for themselves, but the right decisions for the company. Is it the right time to continue to raise money? Does the CEO and the CEO Actually makes sense to scale the company going forward, and you don't sit back and make decisions based on your own personal need. It's super important, and it's incredibly, incredibly hard in this business. You have to work at it. I don't know a lot of firms that actually do it or care to do it, but again, I think it's very much tied to empathy and what I talked about before, and if you can create that kind of culture, a…

AI assessment note: “if you have a culture of no attribution, that pressure... just dissipates”

Q Phil and Rich said to me that I had to ask you about, and it was the element of kind of geography, because you invest in some incredible companies in pretty out there geographies, kind of outside of the valley, so to speak. So I'd love to hear, what's your secret sauce in sourcing here, and how do you think about that geodiversity that's actually quite rare in the valley?

A Yeah, we're big believers in it. So we've invested in Montana, Minnesota, Wisconsin, Michigan, Oregon, Africa, Europe. It wasn't like we intended to To do that right out of the gate, a lot of what we did initially in the early days was around the valley, and I think there's still a lot of promise here. Great companies are being built everywhere, and we source them because our network has grown. I mean, I think it's from a few places. One is we funded 250 to 300 companies over the life of our time here as a venture firm, and those companies have thousands of employees, and we're hyper-connected in a lot of ways, and we've done a lot of work connecting them, so we get a lot of referrals that way from our existing network. You know, as a team, we have deep operational experience, have worked for decades in the industry, so those networks help us. And there's a lot of small seed funds that we've gotten to know extremely well all across the country, and they have also referred to Steels, and we love working with them as well. The other thing is, we've put a shingle up on top of True and said, we're fine with investing in any company anywhere. And a lot of VC firms still haven't done that. They're still very provincial about that whole aspect. I think they're going to miss out because some great companies are being built everywhere. Trey as an example, right? Duo is another example. …

AI assessment note: “we get a lot of referrals that way from our existing network”

Q What motto was saying do you most frequently revert back to, Puneet?

A Oh, you know, what popped into my head was, uh, my grandfather said this to me when I was a Kid years ago. So my grandfather was based in India. So I used to go visit him in India all the time. I know this sounds corny, but he did say this to me a long time ago. And he said, only a person who risks is free. And I didn't really know what that meant for a long time, but I've come to know what that means. And to me, it means that if you kind of live by other people's rules or are too conservative or just too worried about what other people think, you're never truly free. You don't have that just freedom to go out there and take chances and do the things you need to do. And so I've always tried to live by that. That you got to push the ball forward, not really worry about what everybody thinks at all times. I don't think I'm the best at it. I think I see other people who are amazing at it, but that has always stuck with me.

AI assessment note: “only a person who risks is free”

Q so much Alignment in terms of your passions and mine, and it was something that you said in particular that really struck me. You said the next great firms will separate themselves based on empathy. Now, that is incredibly concisely and clearly put compared to my way of saying it, but I'd love to hear, why do you believe that EQ is so cool to the business of venture today?

A Yeah, no, great question here. I really do. I do think it's what's going to separate the best firms in the next decades to come. I think IQ, if you want to call it, just Being smart, understanding industries. I do believe that's table stakes in a lot of ways. There's a lot of smart people around. A lot of people are very smart at digging into companies, but I do believe the human connection is what's most important. Venture capital to me is fundamentally a human business. I mean, I'll give you an example. Like, you know, I get questions all the time when I'm on various boards and things come up all the time. I want to sell a company. I'm not getting along with my co-founder. I've missed a quarter by a mile. I can't work with this person inside the company, even to very fundamental Core human issues like, you know, I have cancer. I mean, these are real issues that come up, and I think all those questions, while they sound, most of them sound like business issues, they're actually fundamentally human issues. There's emotion behind all of it, and so if you can understand and unpack the emotions that a founder has, I think you can be extremely successful in this business.

AI assessment note: “while they sound, most of them sound like business issues, they're actually fundamentally human issues”

Q now it's the eight to 10 rounding, that perfect point at four to five. So that's exactly where we like to place it with you there very much. In terms of the investment decision making, we spoke about how mindset shift with spanning rounds. I'm really interested in the decision making at True. What does the investment decision making process look like for you at True with the 13 partners?

A Yeah, so we have an interesting model. So we don't have a consensus driven approach. We actually encourage dissension and we want dissension. We don't have attribution. Everything's sort of, yes, there's a point person who may be on the deal, of course, but everything is team-based. We have based the firm around something that Phil Black created a long time ago, and we call it Mickey, Mickey Mouse, because it's three concentric circles that look like a mouse in the funny ways. But what happens is we think about the person and the team and the founder. Obviously, that's critical. That's in one circle. Then we think about the market. And for us, the market is interesting. If the market is here today, it's probably not an investment for us. We're looking for people who are creating new markets, markets that essentially don't exist, and so that's a big factor for us, but we have to see the vision. Can that market be very big? And it may not be right, but is there that vision, that story, and is there a wedge or an entry point in, and then does the deal make sense for us where we're kind of in our range of dollars and ownership, and if those three circles align and a partner is really in love and feels like this is the, I would almost say here, the corollary to the Mickey Mouse drawing is you put a big heart around it, then that means that Someone can pound the table and say, this i…

AI assessment note: “we don't have a consensus driven approach. We actually encourage dissension”

Q there's some questions I just have to ask. So these are based ones where I'm too intrigued not to ask. So we spoke about boards earlier. You know, I know Rich obviously very well. He said the most wonderful things about you. So how have you seen yourself evolve and improve as a board member? And then what advice would you give me having just gained my first board seat?

A Yeah, I think when you first get in the business, you're so eager to just keep doing stuff for the founder, get in there, get involved. But part of the trick, I think, but at least I've learned is, and I alluded to this earlier, is learning how to actually not talk. It's one of the most important skills you can have as a board member to actually just listen and absorb and let the founder go through their process. And maybe help afterwards or on the side, but don't be too eager. Don't monopolize a board meeting. One of the pet peeves I have as well as, and this happens all the time in the industry, is you sort of force a founder to meet with you every week or every two weeks and just say, hey, let's have breakfast every two weeks. And if you unpack that, I think the investor is doing that more for themselves and for the founder. The founder doesn't necessarily always have to meet with someone every two weeks. Earn their trust and have them want to reach out to you. I think that's where you earn your stripes in this business. So Part of it, I think that's one part of it. The other part is, I think, a calmness inside of a boardroom, a rationality and a calmness. There's oftentimes, again, I find panic in either direction, either over-exuberance about where the business is going or over-exuberance on the downside of how bad the business is doing. A company missing a quarter doesn't…

AI assessment note: “learning how to actually not talk. It's one of the most important skills”

Q I mean, amazing to hear, and I'm thrilled to hear that on that company. I do have to ask, some people have different feelings on this. Do you think board members can be friends with founders, or do you think there's a line of professionalism that has to be drawn?

A No, I do think they can. I know there's colleagues of mine who vehemently disagree with me on that, but I do think you can be friends. I mean, if you unpack what friendship means, it means respect. It means love for another individual. It also means honesty and transparency, and I think those are all the qualities that you need to have as a board member. Yes, I have a fiduciary duty to all shareholders, as do all board members, and that's very clear up front, but that's where the honesty and transparency comes into play, and I've become very close With the people I work with. And I think it's one of the joys of the business. I love it. And so that's me. Other folks vehemently disagree, as you pointed out, but I think you have to choose your own path and the way you do business as a board member.

AI assessment note: “No, I do think they can... but I do think you can be friends.”

Q Clearly, I need to check it out, so that's added to the list. What makes Richard Trey so special? You've worked with him for a number of years now. What makes Rich so good?

A Rich is, I shouldn't say this publicly, but I'm going to, he's one of my favorite people to work with. I think That Rich, someone described this to me, Rich is sneaky good in a funny way. So he's not like out there beating his chest all the time, but he's got so much authenticity and he really understands his business at a depth that is quite remarkable, both at a product level and a unit economics business level. And he's got a calmness about him. He's a leader. People want to work with him. He's a listener and he's got that patience and capability to kind of see it through over the long haul. And he's just a hell of a lot of fun. He's just a great person to sit down with and chat with and hear about his own life. He's persevered through a lot. I mean, you know, as you know, he actually had to sell shoes given the team just ends meet to kind of get the business off the ground. So he's got a great perspective. Never gets too high on himself, which I really like.

AI assessment note: “he's got so much authenticity and he really understands his business at a depth”

Q Can I ask just for founders listening, maybe who are sitting in board meetings with their investors so they can identify really which emotion is which, what are maybe some examples that would exemplify maybe one each fear and then safety?

A Yeah, no, great questions. I mean, I think the fear aspect comes when A board member comes in, I would say, and makes it about themselves. So one of the biggest skills I've learned as a board member is how not to talk, actually. Um, I think it's one of the most acquired skills you can have inside of a boardroom. It's just that listening gene and just letting a founder speak and talk about all the various issues. And they don't have to be perfect, right? Like, founder doesn't feel like they have to be perfect. They can talk, they're given rope and space to make mistakes. And I think if you as a board member say, okay, that's okay, let's work through how we can constructively make something better versus saying, Hey, that's horrible. You missed the quarter. I can't believe you're doing this. Pull the cord quickly, fire quickly, all those things. I mean, I think that's the difference between fear and safety. And I think the other thing I would say too, is I think structurally as a firm, True has made it so that we can bring safety into the boardroom. I think firms can structure it so that you can do that. For example, we invest a very small portion of our fund to begin with. It's, you know, two million bucks, for example, maybe that's one half or one percent of the fund. I mean, and by the way, I give Phil and John a ton of credit for the structure that they created around True. B…

AI assessment note: “versus saying, Hey, that's horrible. You missed the quarter... that's the difference between fear and safety.”

Q This is really unfair of me to ask. What's the highlight of the true journey so far? There have been many, but what's been the highlight that stands out?

A That's a good question. There's been a lot. To me, it's the relationships. That's the first thing that popped into my mind. Our partnership is going to sound corny too, but it just has a Care about each other at a deep level. We like being around each other. We know each other, not just as professionals, but personally. I never really thought you could do that. I worked in a lot of different places. I had good relationships with various folks, but I used to always have a separation between work and personal life, and I still do to some extent. Obviously, I have my family, etc., but this is really blended for me, and this is something I will never, ever forget, and I think it's very, very unique, and that's, again, something that I hope we can maintain forever.

AI assessment note: “To me, it's the relationships. That's the first thing that popped into my mind.”

Q Can I ask, does the ever-expanding seed round that we're continuously seeing today, does that change your thinking on kind of the right insertion point for you?

A So when True started back in oh six, it's interesting, we were half of the seed market, if you think about it. We were, we started with a hundred sixty-five million dollar fund, and I think Mike Maples was around, first round was around, you know, some of the other funds were getting started. Now, obviously, that's exploded into a much bigger scale, but we've always actually said the same thing. Now you have super seed and Sub super seed and mango seed. We've always called it seed. I mean, for us, it's sort of 500 K to three ish million is where we tend to play. I would say we often do now see companies that have some money in them now before that wasn't always the case. So sometimes we're the institutional seed round after that. And we are seeing some cases also where we might lead a seed two round. So they've raised a couple of million bucks, but they haven't gotten to the escape velocity they were expecting and they need some more capital. And there are some cases too, I would say a third scenario is the early A round. So the early A round, that five million dollar check, we've dabbled with that also on occasion too, because that's a big hole in the market too. You either have kind of the early seed stuff, or you have now an eight to 10 A round, whereas the old A round used to be more four to five million. So there's a hole there as well. So we've kind of, I would say, broad…

AI assessment note: “we've kind of, I would say, broadened our spectrum a bit”

Q now it's the eight to 10 rounding, that perfect point at four to five. So that's exactly where we like to place it with you there very much. In terms of the investment decision making, we spoke about how mindset shift with spanning rounds. I'm really interested in the decision making at True. What does the investment decision making process look like for you at True with the 13 partners?

A Yeah, so we have an interesting model. So we don't have a consensus driven approach. We actually encourage dissension and we want dissension. We don't have attribution. Everything's sort of, yes, there's a point person who may be on the deal, of course, but everything is team-based. We have based the firm around something that Phil Black created a long time ago, and we call it Mickey, Mickey Mouse, because it's three concentric circles that look like a mouse in the funny ways. But what happens is we think about the person and the team and the founder. Obviously, that's critical. That's in one circle. Then we think about the market. And for us, the market is interesting. If the market is here today, it's probably not an investment for us. We're looking for people who are creating new markets, markets that essentially don't exist, and so that's a big factor for us, but we have to see the vision. Can that market be very big? And it may not be right, but is there that vision, that story, and is there a wedge or an entry point in, and then does the deal make sense for us where we're kind of in our range of dollars and ownership, and if those three circles align and a partner is really in love and feels like this is the, I would almost say here, the corollary to the Mickey Mouse drawing is you put a big heart around it, then that means that Someone can pound the table and say, this i…

AI assessment note: “we don't have a consensus driven approach. We actually encourage dissension”

Q to unpack it more, but I do have to touch on that element of loss aversion there. How does that mean, then, you think about loss ratios? And I don't mean to denigrate some LPs, but it surprises me how many LPs still really care about loss ratio, even in this game of kind of upside maximization that we seem to play. So how do you think about loss ratios?

A No, I mean, I think you have to build it into your business. We play super early at true, right? We play at the seed level. We're the first one to three million in a company. You know, we are very open about the fact that 40 to 50% of the companies we invest in will probably lose or go to zero. It's just the nature of the game because we invest super early, but you have to build it into the model. That's part of what we do. I would classify investors in two camps these days. It's the people who invest before you know what's about to happen, before all the traction is there, and the people who invest After the traction is there and are sort of trying to ride the wave and hope that it gets as big as it can possibly be. When you're investing before all the traction is there or all the information is there, there's inherent risk, but you have to embrace that risk. True. We talk about it all the time. We say we maximize risk on product market timing, which means that you have to have, you have to build failure into the model. And if you don't, we would fail. Like it just wouldn't work. Failure is a huge part of the venture capital business. In fact, If you're not pushing the envelope, and you're not failing, you're probably not doing it right. It's just a part of how the business works.

AI assessment note: “we are very open about the fact that 40 to 50% of the companies”

Q Can I ask just for founders listening, maybe who are sitting in board meetings with their investors so they can identify really which emotion is which, what are maybe some examples that would exemplify maybe one each fear and then safety?

A Yeah, no, great questions. I mean, I think the fear aspect comes when A board member comes in, I would say, and makes it about themselves. So one of the biggest skills I've learned as a board member is how not to talk, actually. Um, I think it's one of the most acquired skills you can have inside of a boardroom. It's just that listening gene and just letting a founder speak and talk about all the various issues. And they don't have to be perfect, right? Like, founder doesn't feel like they have to be perfect. They can talk, they're given rope and space to make mistakes. And I think if you as a board member say, okay, that's okay, let's work through how we can constructively make something better versus saying, Hey, that's horrible. You missed the quarter. I can't believe you're doing this. Pull the cord quickly, fire quickly, all those things. I mean, I think that's the difference between fear and safety. And I think the other thing I would say too, is I think structurally as a firm, True has made it so that we can bring safety into the boardroom. I think firms can structure it so that you can do that. For example, we invest a very small portion of our fund to begin with. It's, you know, two million bucks, for example, maybe that's one half or one percent of the fund. I mean, and by the way, I give Phil and John a ton of credit for the structure that they created around True. B…

AI assessment note: “I think that's the difference between fear and safety.”

Q I totally agree in terms of the magic. Do you ever find that founders have a problem with the unanimous decision making because they know that maybe not everyone was on the side? I never thought about this until a founder said it the other day. Did all the partners vote yes?

A Yeah, no, I mean, I haven't gotten any pushback on that. We're very open about how our decision-making occurs, but the one thing we always say is, yeah, we like dissension, but they're not necessarily hard no's. They're actually just more questions, and they're the same questions that the founder's asking. Like, no one knows at the really early stage if this market's going to move left or move right or if the product's going to get adopted in a certain way or not, and so it's those same exact questions, and it's the same questions we've been asking the founder throughout the entire process. So it's not that big of a deal. And plus, when we make an investment, we are a hundred percent behind. It's everybody, all hands on deck. So we may disagree or dissent, but then it's all about commitment. And you know, one of the point too, Harry, I'll make too, is for us, it's not about the end point as much. The exits are great. And that's where all the rah-rah and everybody gets excited about it. For us, we really measure ourselves and look at ourselves on the process. And when you think about the process of your decision-making or the process of how you get to a certain point, Of going forward with a company, that's what really drives and, and that's what we measure ourselves on more than anything.

AI assessment note: “I haven't gotten any pushback on that. We're very open about how our decision-making occurs”

Q internal investment decision-making, you've said before, and I've always believed this too, is that you can always kind of reason yourself out of any deal. Can I ask, over the last several years, what have been your big lessons and solutions in preventing yourself from going through this kind of internal flip-flopping of convincing yourself and then convincing yourself against it? What's the solution that you've found works quite well?

A Yeah. You know, I don't think there's any exact solution. I think you just have to keep testing yourself and pushing yourself and you have to have partners who push yourself too. I do agree with you. I think one of the challenges that we have in the venture industry is we don't take enough risk. It's becoming a little more risk averse because just people are inherently moving more later stage, which means you in fact, just look at more spreadsheets and numbers and invest based on that. And so I think you have to continually push yourself and not be afraid to lose. Think about what the possibilities are. What would happen if it actually did work? Have faith in the founder that you and them together, especially the founder though, that they can figure it out and navigate these markets and know that there's going to be lots of change as you go. As you get longer in the tooth in the business, one of the dangers is, is yes, maybe you've had some success is that you keep looking for perfection. And so, you know, yes, I've, I've been lucky and the firm has been lucky to have success, but you know, we got to be very careful not to just look for the perfect deal. And that's why we create these constructs of, Dissension and putting smaller checks in so that we just take chances based on the constructs that we've built inside the firm. That makes sense.

AI assessment note: “we create these constructs of, Dissension and putting smaller checks in”

Q internal investment decision-making, you've said before, and I've always believed this too, is that you can always kind of reason yourself out of any deal. Can I ask, over the last several years, what have been your big lessons and solutions in preventing yourself from going through this kind of internal flip-flopping of convincing yourself and then convincing yourself against it? What's the solution that you've found works quite well?

A Yeah. You know, I don't think there's any exact solution. I think you just have to keep testing yourself and pushing yourself and you have to have partners who push yourself too. I do agree with you. I think one of the challenges that we have in the venture industry is we don't take enough risk. It's becoming a little more risk averse because just people are inherently moving more later stage, which means you in fact, just look at more spreadsheets and numbers and invest based on that. And so I think you have to continually push yourself and not be afraid to lose. Think about what the possibilities are. What would happen if it actually did work? Have faith in the founder that you and them together, especially the founder though, that they can figure it out and navigate these markets and know that there's going to be lots of change as you go. As you get longer in the tooth in the business, one of the dangers is, is yes, maybe you've had some success is that you keep looking for perfection. And so, you know, yes, I've, I've been lucky and the firm has been lucky to have success, but you know, we got to be very careful not to just look for the perfect deal. And that's why we create these constructs of, Dissension and putting smaller checks in so that we just take chances based on the constructs that we've built inside the firm. That makes sense.

AI assessment note: “we create these constructs of, Dissension and putting smaller checks in”