The Exchanges

Q I am so excited for this. This is going to be such a fun discussion today. Now we're going to dive right in because I got teed up by a comment from Rick first, Who said that, uh, we need a Jerry Maguire moment in venture. I love Jerry Maguire, but I was intrigued. What did you mean by this Rick?

A So Jerry Maguire is one of my all time favorite movies. Like part of me really wishes I was a sport agent. Um, yeah. And for those who don't know what this movie is about, Jerry is this kind of soulless sports agent working in this big agency that has come. And he has kind of a come to Jesus moment, but he realizes that they're working with too many clients. They're trying to scale too much. You know, that they've lost the kind of, like, hands-on connection with their clients, and that they need to go, like, back to the core business, focus on the clients over making money. He writes this big manifesto, Catcher on the Rye style, and then he ends up getting fired for it. But all ends well, that ends well, you know, he ends up developing a close relationship, helps his client through a bunch of these struggles, and, you know, hilarity ensues all along the way. And, you know, in many ways, I think this is what venture used to look like. It was a really hands-on connection between a board member and the founder, Uh, and then you guys talked a little bit on your last round table about this factory model. I think that's really torn that all out of whack, where it's become about how much we can be an asset management business, how much we can scale the capital that we have, and that's really taking VCs away from the founders, um, and really focused on some things that I think are some…

AI assessment note: “in many ways, I think this is what venture used to look like.”

Q Right. Japs. I want to do a quick fire round with you. So I pelt questions at you and you answer them in a short supply. Okay. Sound good. Ok, so what is the most important trend in venture the world or the ecosystem is not paying attention to, Rick?

A I think the reality is the broken incentives that venture firms have of all these zombie VCs that are Series A, Series B, Series C at multistage funds, a lot of those venture investors may not be there three to five years from now. If you are building a company, if you're trying to construct your board, knowing who will and will not be there, Uh, as your company is going through scaling, going public, that is a major risk that no one's talking about and something that we are really concerned about as we look at downstream funding for companies, uh, and figure out, okay, how can we partner with folks like Jason, who we know for better or worse, like Jason's going to be running his fund for, you know, here at the end of time, because his name's on the door.

AI assessment note: “that is a major risk that no one's talking about”

Q Right. Japs. I want to do a quick fire round with you. So I pelt questions at you and you answer them in a short supply. Okay. Sound good. Ok, so what is the most important trend in venture the world or the ecosystem is not paying attention to, Rick?

A I think the reality is the broken incentives that venture firms have of all these zombie VCs that are Series A, Series B, Series C at multistage funds, a lot of those venture investors may not be there three to five years from now. If you are building a company, if you're trying to construct your board, knowing who will and will not be there, Uh, as your company is going through scaling, going public, that is a major risk that no one's talking about and something that we are really concerned about as we look at downstream funding for companies, uh, and figure out, okay, how can we partner with folks like Jason, who we know for better or worse, like Jason's going to be running his fund for, you know, here at the end of time, because his name's on the door.

AI assessment note: “broken incentives that venture firms have of all these zombie VCs”

Q How do you know that? Because like bluntly, you know, your monday.coms, your pipe drives, your sales, like sales loft, if you saw the pre-seed or seed, like, no offense, Jason, I don't think it would have like, oh, this could change my family's life with the grand vision of sales loft. I don't know. Do you know what I mean? It's not that obvious.

A So, so here's my mental model around it, and it's probably a broken one, but it's the only one I got. One, does this have the chance to be such a A few big outcome that like, it's going to completely like return our fund five, 10 times that like you believe in your heart of hearts, that it's an uber size outcome with deck of core potential that you see that so early that you cannot miss it. And that's a meeting that I need to take to, you know, we have a process that we call hunting. Like we have our top 10, 15 ideas on our big board that like, I am laser focused on finding companies related to those and screening for the quality of those companies and our team screening for the quality of those. So if it's an idea that I feel like I need to flip the card, like, you know, Rogers talked about this for trade desk. He was like, I needed to flip the card on that company because it was a thesis that I had thought about so much. And I just like, couldn't live with myself if I didn't flip that card for me, like flipping that card changes my life. Or third, is it one of these founders that you believe that has the chance to be like truly once in a generation that is that exceptional, you know, in a very objective way, not like a good founder, but someone who has the chance to be Absolutely that insanely good. And at least for me, like, yeah, we miss a ton of great companies, a ton of g…

AI assessment note: “here's my mental model around it, and it's probably a broken one”

Q is valued over ten billion, but the idea of like, oh, you don't have to see them all. Even in the U S like there's very, very, very few that are over ten billion dollars. You kind of do need to have coverage play now. Because the enormity of exit is much more realistic. And I think about that a lot more now. How do you guys think about that?

A There are plenty, 10 X funds that haven't ever been in a deck accord. And like, I think Roger probably has a couple of mucker has a couple, you know, um, Tim Connors has some monster funds that like, you know, certainly some big drivers in there. And then you look at funds like emergence in us that I've had, you know, massive, massive funds. And certainly they have some deck accords in there. So I think You're right that that first one of this will change my life. It is really, really, really hard to figure out what is going to be a massive company at the seed stage that, you know, plenty of people have haircut things and surprised the upside. At least for us, we look for the ideas that we think are going to be really transformative industry. And I am not going to guess what's going to happen to long-term outcome that hopefully they have flight path to a ten billion dollar company. Like there's definitely TAM in all these industries to be able to do that. But Companies can screw up a thousand times now or along that way that cuts that path short. So I think like the, the scary thing about venture is when you really cut yourself off that like, if you're a European seed stage VC and the only way you can win is if you have Spotify, that is a really, really tough position to be in. If that's the only way you can three to five extra fund, you know, chances are, is that you're not go…

AI assessment note: “There are plenty, 10 X funds that haven't ever been in a deck accord.”

Q How do you know that? Because like bluntly, you know, your monday.coms, your pipe drives, your sales, like sales loft, if you saw the pre-seed or seed, like, no offense, Jason, I don't think it would have like, oh, this could change my family's life with the grand vision of sales loft. I don't know. Do you know what I mean? It's not that obvious.

A So, so here's my mental model around it, and it's probably a broken one, but it's the only one I got. One, does this have the chance to be such a A few big outcome that like, it's going to completely like return our fund five, 10 times that like you believe in your heart of hearts, that it's an uber size outcome with deck of core potential that you see that so early that you cannot miss it. And that's a meeting that I need to take to, you know, we have a process that we call hunting. Like we have our top 10, 15 ideas on our big board that like, I am laser focused on finding companies related to those and screening for the quality of those companies and our team screening for the quality of those. So if it's an idea that I feel like I need to flip the card, like, you know, Rogers talked about this for trade desk. He was like, I needed to flip the card on that company because it was a thesis that I had thought about so much. And I just like, couldn't live with myself if I didn't flip that card for me, like flipping that card changes my life. Or third, is it one of these founders that you believe that has the chance to be like truly once in a generation that is that exceptional, you know, in a very objective way, not like a good founder, but someone who has the chance to be Absolutely that insanely good. And at least for me, like, yeah, we miss a ton of great companies, a ton of g…

AI assessment note: “here's my mental model around it, and it's probably a broken one”

Q is valued over ten billion, but the idea of like, oh, you don't have to see them all. Even in the U S like there's very, very, very few that are over ten billion dollars. You kind of do need to have coverage play now. Because the enormity of exit is much more realistic. And I think about that a lot more now. How do you guys think about that?

A There are plenty, 10 X funds that haven't ever been in a deck accord. And like, I think Roger probably has a couple of mucker has a couple, you know, um, Tim Connors has some monster funds that like, you know, certainly some big drivers in there. And then you look at funds like emergence in us that I've had, you know, massive, massive funds. And certainly they have some deck accords in there. So I think You're right that that first one of this will change my life. It is really, really, really hard to figure out what is going to be a massive company at the seed stage that, you know, plenty of people have haircut things and surprised the upside. At least for us, we look for the ideas that we think are going to be really transformative industry. And I am not going to guess what's going to happen to long-term outcome that hopefully they have flight path to a ten billion dollar company. Like there's definitely TAM in all these industries to be able to do that. But Companies can screw up a thousand times now or along that way that cuts that path short. So I think like the, the scary thing about venture is when you really cut yourself off that like, if you're a European seed stage VC and the only way you can win is if you have Spotify, that is a really, really tough position to be in. If that's the only way you can three to five extra fund, you know, chances are, is that you're not go…

AI assessment note: “There are plenty, 10 X funds that haven't ever been in a deck accord.”

Q What's the biggest investing mistake that you've made and how did it change your mindset?

A Honestly, I'm incredibly thesis driven, and I've missed a lot of amazing companies because of that. I told the story around investing in the guys from Vetteri, and then, like, they started a public company in our office, and we did invest. Um, you know, that company's called Archer Aviation, and, like, that's, that's incredibly depressing. I'm very, very happy for those folks, but I do think it's made me, like, very much think more about that third, you know, aspect of how folks can change your life and being more open for founders that There aren't in your thesis that you have a real deep connection with that. Like I should have just written those guys a check. You know, like that, that was insane to me.

AI assessment note: “I'm incredibly thesis driven, and I've missed a lot of amazing companies because of that.”

Q last year. I have a couple in the 1,000,000,002 billion range, and now they're looking at them like, Wow. That's a long way out. First question is a lot of VCs are sitting on books that are just incredibly highly priced with many companies like this. If you were advising an LP today on how much they should discount the value of their books, what, what would you tell them?

A It comes down to the company level. Uh, I've definitely heard some secondary offers on some big, big companies that I know that are going to turn Some of our peers, uh, from seven X funds to one X funds. That would be really, really scary. Um, at least for us, like, we've been very, very forthright. We share a ton of information with our LPs. We have a very small LP base of endowments and foundations that we're, we're, we're tight with. You know, we're not in as much of that situation of having a bunch of two, three billion dollar companies that, that were driving the fund that we gotta, you know, really freak out about. But I think this is gonna wash out a ton of venture firms. I think a lot of folks Who weren't honest with their LPs, who did a ton of SPVs and these things on the way up, you know, on trying to kind of grab every buck that they had and then didn't take liquidity on something that was a three to five billion dollar outcome across like, and it was the one company working in their 50 company portfolio. That's a really, really tough situation now that you're under six hundred million dollars of preference and that company is not really worth anything. And your LPs are going to be really pissed with you if you screwed up on an SPV and didn't deliver fund returns to them. So I think that's a tough situation.

AI assessment note: “It comes down to the company level. Uh, I've definitely heard some secondary offers”

Q last year. I have a couple in the 1,000,000,002 billion range, and now they're looking at them like, Wow. That's a long way out. First question is a lot of VCs are sitting on books that are just incredibly highly priced with many companies like this. If you were advising an LP today on how much they should discount the value of their books, what, what would you tell them?

A It comes down to the company level. Uh, I've definitely heard some secondary offers on some big, big companies that I know that are going to turn Some of our peers, uh, from seven X funds to one X funds. That would be really, really scary. Um, at least for us, like, we've been very, very forthright. We share a ton of information with our LPs. We have a very small LP base of endowments and foundations that we're, we're, we're tight with. You know, we're not in as much of that situation of having a bunch of two, three billion dollar companies that, that were driving the fund that we gotta, you know, really freak out about. But I think this is gonna wash out a ton of venture firms. I think a lot of folks Who weren't honest with their LPs, who did a ton of SPVs and these things on the way up, you know, on trying to kind of grab every buck that they had and then didn't take liquidity on something that was a three to five billion dollar outcome across like, and it was the one company working in their 50 company portfolio. That's a really, really tough situation now that you're under six hundred million dollars of preference and that company is not really worth anything. And your LPs are going to be really pissed with you if you screwed up on an SPV and didn't deliver fund returns to them. So I think that's a tough situation.

AI assessment note: “It comes down to the company level. Uh, I've definitely heard some secondary offers”