Shalek: Sector-focused funds often get blinded by their own expertise
Nick Shalek · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · Jul 26, 2021 · at 29:35
Nick Shalek is a General Partner at Ribbit Capital, a sector-focused fintech fund. He outlines why deep sector expertise can be a hidden disadvantage.
0:00 / 0:15exact quote · 15.5s
720p mp4 · rendered on demand · StarZero watermark
“There's a lot of things actually about being a sector-focused fund that are a disadvantage that people think are an advantage, like expertise that we talked about earlier, because, you know, you can become way too full of your own ideas, and you miss that the best companies are, you know, often have some very core, simple insight.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Nick Shalek
Ribbit Capital requires deal conviction but bans individual partner attribution
“I would say we have a process that's intentionally conviction-driven, meaning somebody on the team needs to pound the table, but we try not to attach that Investment decision to a person because I think that often leads to people thinking about investments in …”
Ribbit Capital wired Robinhood $500 million in emergency liquidity in one day
“We were able to figure out terms and get the liquidity to wire them half a billion dollars that day.”
Shalek: Crypto is one of the best risk-adjusted bets in the world
“Myself have been kind of hooked on crypto ever since. And convinced that, you know, it's one of the best risk-adjusted bets you can make anywhere in the world.”
Shalek: Sector-Focused International Funds Can Succeed in Venture Capital
“Look, the thing that Mickey wanted to do, which was start a sector-focused fund that would invest internationally, it went against everything that I'd learned as an LP about what worked in venture. You know, I told Mickey sector-focused funds don't work, and t…”
Shalek: Core VC metric is whether top founders choose your firm
“A friend of mine has a theory that any decision or any investment can be whittled down to like One single most important question. And for me in venture capital, that's like, will great entrepreneurs consider working with us? You know, there are lots of good p…”
Shalek: Type two errors are much more painful than type one errors in tech investing
“In most cases in tech investing, it's great to have conviction about things to invest in or to do, but you gotta be really weary of conviction around things not to invest in. Like type two errors are a lot more painful than type one errors.”