The Ledger
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Fishner-Wolfson: Valuation price only matters in VC when off by 5x
“I think this is an interesting question because my answer is oftentimes price doesn't matter unless you're off by five X, in which case then price is the only thing that matters.”
Fishner-Wolfson: Rigid target ownership blinds VCs to massive opportunities
“And so focusing strictly on ownership percentage really, I think, blinds people to opportunities that may be much larger, and they just can't get over the hump from a process perspective to make those investments.”
Fishner-Wolfson: Strict VC ownership targets blind investors to bigger absolute returns
“Focusing strictly on ownership percentage really, I think, blinds people to opportunities that may be much larger, and they just can't get over the hump from a process perspective to make those investments.”
Fishner-Wolfson: Applying 90% margin multiples to 40% margin companies causes losses
“You can't put the same revenue multiple on a 90% gross margin business with super high operating leverage as you would, you know, a company with 40% gross margins and less operating level. Like if you do that, you'll just never make any money. And eventually t…”
Fishner-Wolfson: Secondary liquidity leads founders to reject early acquisition offers
“And they will then, and I've watched entrepreneurs do this consistently, turn down acquisition offers that would put huge amounts of money in their bank account. And that's really ultimately To the benefit of the venture investors, because they really want to …”
Fishner-Wolfson: SPAC proliferation will lower deal quality and cause market bust
“So I think that's going to create an incredible amount of competition amongst the SPACs to get deals done. And then the quality of those deals will inevitably trend downward, which will then make SPACs, you know, look bad and they will then go away for a perio…”
Fishner-Wolfson: Rigid VC ownership targets blind investors to massive opportunities
“Focusing strictly on ownership percentage really, I think, blinds people to opportunities that may be much larger, and they just can't get over the hump from a process perspective to make those investments.”
Fishner-Wolfson: The final valuation double drives the vast majority of venture returns
“And I think one of the other pieces that I really think is important is that it's the last double on the investment that matters, right? The first double, it's good, but really when you look at the absolute returns on investing, specifically in venture investi…”
Fishner-Wolfson: Investors must evaluate startup quality independently of valuation
“Like valuation matters. Right. And you don't want to let things like valuation sort of influence your decision on whether or not you want to be in the company, because that will lead you to investing That may not meet your bar because it's a quote unquote grea…”
Fishner-Wolfson: Great founders expand their addressable market by entering adjacent markets
“At the end of the day, you can't be bigger than your market, but you might be able to expand Expand your market by redefining it, or you may be able to move into adjacent markets, and therefore, the ultimate opportunity is much bigger, right?”
Fishner-Wolfson: Entry price only matters in VC if overpriced by 5x
“Price doesn't matter unless you're off by five X, in which case then price is the only thing that matters.”
Fishner-Wolfson: Maximizing VC returns strictly favors investing in one winning company
“At the end of the day, the way to make the best returns is to invest in one company that does incredibly well. Everything else is basically pulling you down. That's clearly the correct answer if you're Only focused on returns.”
Fishner-Wolfson: Unreformed equity options will force engineers to hire lawyers
“I think if that continues to happen across the industry, we're going to break the social contract between, you know, companies and employees and end up with a situation where, you know, every engineer is hiring a lawyer to negotiate their employment agreement …”
Fishner-Wolfson: Top-quartile VC funds will continue outperforming other asset classes
“So, you know, you could still see compression across everything, but I think on a relative basis, you know, the top quartile of venture will continue to perform or outperform, you know, the other asset classes.”
Fishner-Wolfson: Investors must focus on decision-making process over short-term outcomes
“And I think the lesson from poker that I think very much applies to investing is to focus on process and not outcomes, right? Outcomes matter over a long period of time, but there's a lot of noise. And the better you can focus on making the process, you know, …”
Founders Fund put $40M into SpaceX from a $200M fund
“And I think even Founders Fund, you know, I mean, back, back in Founders Fund too, I mean, SpaceX was a, basically a forty million dollar position out of a two hundred million dollar fund, and it was a rocket company.”
Fishner-Wolfson: 137 Ventures targets roughly 12 core portfolio positions
“I mean, we run our portfolio to be sort of a dozen core positions for this exact reason, right? You don't want to dilute all of your good returns with a bunch of other noise.”
Fishner-Wolfson: VC ability to grow ownership stakes depends heavily on relationships
“I really think your ability to grow your position over time is heavily driven by relationships. And so if you have very strong relationships with the company, you can maintain and grow ownership over time. And if you don't, you can't.”
Fishner-Wolfson: Follow-on investment decisions should be dictated by cost of capital
“If you still believe that you can hit your cost of capital at those higher numbers, then you absolutely want to be writing those checks. If you don't think that you can hit your cost of capital at those higher numbers, then you probably want to be adding new p…”
Fishner-Wolfson: Unprecedented 2021 tech revenue multiples will not persist long-term
“Are they going to be true in 20 years that everything's going to trade this high? That seems relatively unlikely.”
Fishner-Wolfson: Founders change behavior once liquidity reaches complete financial independence
“I worry about people getting so much liquidity that they sort of never have to work again. And that number can obviously somewhat change depending upon who you are and your family and where you live and a bunch of other factors, but there's always something th…”
Fishner-Wolfson: 137 Ventures has backed SpaceX since 2008
“SpaceX probably wins this for me. I mean, it will probably be the investment that defines my career. We've been invested since 2008 back before there ever been a successful rocket launch. And we've just continued to build that position over time. And, you know…”
Fishner-Wolfson: 99.99% of public market stock trades are secondary transactions
“In the venture space, when people think of investing, they generally think about, you know, a primary investing round where you're investing in the company, and yet they seem to forget that in the public markets, 99.99% of shares traded are all secondary trans…”
Fishner-Wolfson brought in the anchor LP for Founders Fund's first fund
“I ended up You know, bringing in one of the largest investors who ended up anchoring the first institutional phone.”
Peter Thiel invested $500,000 for a 10% ownership stake in Facebook
“Peter ended up investing half a million dollars for like, 10% of the company.”
Fishner-Wolfson: Regulatory limits prevent traditional VCs from doing secondary investing
“There's constraints on venture firms, you know, doing too much secondary investing because then they have to register as an investment advisor. And there's a bunch of regulatory overhead that comes from that, that people are trying to avoid.”
Fishner-Wolfson: Emerging managers are married to LPs for 10 to 20 years
“Venture as a venture business is an incredibly long-term business and that your LPs, you're effectively married to them, right? These funds are often 10, 12, 15 year funds. You know, you end up raising multiple funds, and so it's just very important to do busi…”