venture capital

“Venture capital works very differently than the public stock markets, for example, where it's not here we just sort of decide, okay, let's invest in this company. A lot of it is, frankly, the entrepreneurs drive the process and decide who do they want to work …”

“When, ah, when you go pitch to VCs, the first thing they tell you is like, on slide number one, you're supposed to have some word, somewhere, it's where, you're supposed to have the words, billions of dollars, somewhere on slide number one, otherwise the VCs d…”

“70% of all venture capital goes into enterprise companies, which, you know, more than half of which are infrastructure.”

“I think the basic mistake that entrepreneurs make when they're pitching VCs is they kind of pitch that they're likely to succeed as opposed to pitching that there's a small chance they'll be mega successful.”

“As a VC, you can't really evaluate Somebody's idea. If it's a good idea in 30 minutes, an hour or whatever. And that instead you kind of look for things like, does this person have a plausible background to have earned a secret?”

“I think that 90% of it, and maybe we're fooling ourselves even with that, maybe it's 99% of it is people.”

“Venture capital has not been affected at all by this approach, you know, big data approach.”

“And don't just think about the Brand of the VC. Because once the check clears, that doesn't really matter that much. What matters is who's in the boardroom for the next 10 years.”

“I always kind of had a rule of thumb, like every time a VC joined my board, I'd add a CEO.”

“The way big companies operate, they kind of ignore our VC world. Like we think we're, you know, we get all this, we think we know we're important in the center of the world. And in fact, most people don't really care. And the big companies really don't care. A…”

“I mean funding science. Rather than funding, funding the commercialization of technology and finding commercially valuable new innovative applications of technology.”

“You know, we only have Three to five years to demonstrate that we've done something smart when we've made a startup investment.”

“Well, what I'm saying is that because getting public is so difficult and so rare for venture-backed tech companies that, practically speaking, we should be thinking about that what we're doing is funding distributed research and development for big companies.”

“Private tech companies failing is not a sign of venture capital not working, it's just a sign of venture capital.”

“For the people inside their company, they're the VC. They're the source of funding and political capital that everybody needs to sustain what they do.”

“Venture capital, I think, continues to be so regional. I mean, it's a terrible thing. It just doesn't sort of unify across you know, across Europe. And so scalability is limited, therefore, you know to a big reason because of that.”

“It's about the best performing funds in the history of venture capital, about half the companies lost all the money.”

“There are a lot of them out there in the same parts of the world, and sometimes when you see it, and there's so many of them there, you're already probably too late in that industry.”

“The reality is that the return to venture capital over the last 10 years overall has been nearly zero.”

“The first thing you have to do is, it has to be ok to fail. You've got to make it easy to start a company, easy to close a company. It's got to be easy to declare bankruptcy, it's got to be culturally acceptable to try something and fail, and that be ostracize…”

“The day job is so much dealing with people that you'd have to have the AI bot that can, like, sit down and do founder therapy. Yeah, I mean, like, my guess would be we're still a ways off.”

“It's pretty intimidating to be around your VCs. You've thrown your whole life into this. They haven't, and so it's bigger risk for you personally than it is for them”

“Now, the underbanked space, lesser space, has been traditionally dominated by nonprofits and ignored by VCs.”

“Venture capital has a very, very high latency loop. You make a decision today, you figure out if you're right or wrong in 10 years.”

“I would argue that the set of principles that people use around investing has to be much more internal-focused than external-focused because you don't, on a short-term time horizon, have the external outputs in terms of the stimuli.”

“We experienced this in venture capital. It's like, we basically get two kinds of press coverage. One is what a bunch of geniuses we were for backing the successful company. What a bunch of morons we were from backing the failing company. And I keep pointing ou…”

“Venture capital works very much like that in that you hear people complain a lot, well, I don't know any VCs, so I can't get my company funded. Well, if you're going to be an entrepreneur and build a company, you know, Scrape and get customers and figure out h…”

“There are VCs who are like, well, I'm gonna focus all my energy on the winners. Well, the winners don't even need your help.”

“There's kind of two big cardinal sins in this business. One is you miss one of those companies. You don't invest in them. The other is that you invest in it, but you don't own enough of it so that when it gets to be Facebook, it still doesn't meaningfully chan…”

“So basically what that means is the way this business works, the difference between success or failure in this business means you've got 10 or 20% left of your investments that need to basically generate, you know, 90% of your returns, and so”

“And that was kind of most of actually the first 30, 40 years of venture capital from kind of early 19 seventies to mid 2000, I think was characterized by that. You know, capital was scarce. The VCs had it and therefore You went to the BC to get the money.”

“Before the kind of mid-nineteen seventies, you know, institutional asset managers like Yale actually were prohibited from being able to invest in assets like venture capital that were considered too risky, and, you know, kind of, there were a lot of changes th…”

“To be successful in this business over the long term, you probably need to return two and a half to three times the money that the LPs give you over that 10 year period”

“Venture's probably almost 18, 20% of his assets. And then if you layer on other private assets, he probably has, you know, kind of 40 plus percent, maybe even 50% of his assets in the private markets.”

“The basic way to think about a venture portfolio is you know, about half, 40 to 50% of what we do, we're gonna get wrong. And there's this very euphemistic word that we have in this business, which I know you and I've talked about, called you have an impaired …”

“There's, you know, there's no normative you know, kind of reason why you shouldn't do that, but that's probably not the kind of alignment of interest that you would have if you took venture capital. The venture capitals would probably be disappointed with that…”

“The most common form of it is what's called broad-based weighted average anti-dilution, and the simple way to think about that, as I said, you can Google the actual math of it is, it's a partial adjustment.”

“You will not see any VC. We have not funded. No one will fund an anti-spam solution for Twitter or Facebook.”

“We've raised about thirty million in total venture capital over a couple of rounds of funding.”

“The way I view kind of what we do, like in venture capital, what we do is we basically are, we're basically the throwback. So the startups that we fund are being funded. We fund startups that fit that old model. Like we're trying to find the next generation of…”

“Had somebody actually said, oh, I'm going to found a currency in 2007, 2008. Almost every VC would have looked at them like they had four eyes.”

“There's actually stories about VCs who were able to catch some really fantastic companies in China that were targeting more like second, third, fourth tier cities. By literally just talking to waiters and waitresses and asking them, those who were working in B…”

“And the reason it's the easiest part is because VCs are literally in business to meet with startups and to give them money. Like everybody else you're ever going to deal with is not actually in that business.”

“Getting the introduction to the VC Is a little bit of a test of entrepreneurship because a big part of being a successful entrepreneur is being able to kind of network your way to the right person.”

“If you can come from sort of outer space and network your way all the way to venture capital, that's also, that's more impressive than if you have a Stanford MBA or something like that.”

“For VCs like us, like it actually, the fact that you got admitted MIT is itself a credential. Yeah. Even if you never went right. Even if you never actually completed the thing.”

“I would probably warn people away from that idea that, that it's the same bundle. Although, you know, like Today is probably the right time to come at that idea. I think from a venture capital standpoint, that is a very long shot.”

“And of course, the answer was because I had no idea that there was such a thing as venture capital.”

“One of the things that's almost impossible to do from a venture capital standpoint is cure rare disease, because it costs a billion dollars to bring a drug to market, and then they don't all work, so, you know, multiply that. And there just aren't that many, i…”

“And then number two, venture capital just ends. It's just over. Like firms like ours just like don't exist.”

“There's a whole wave, I think over eight billion dollars of venture capital's gone into the next gen small modular nuclear.”

“In venture capital, the top firms often remain the top firms for a very, very long time. And the reason is the best entrepreneurs will only take money from the best venture capital firms.”

“Venture capital is a little bit unique you know, from our point of view in that it's the only asset class where the top managers tend to persist for decades.”

“Venture capital is so underwhelming in that it, you know, it's a great product for investors for LPs, but it's a kind of very mediocre product for entrepreneurs because like we, you know, you get almost nothing. You get like some money and then a smart person …”

“Like, that's art. Like, that, that's not science, that's art. Like, we would like it to be science, but, like, it's art. And by the way, how do we know that it's, how do we know that it's art and not science? Every great venture capitalist in the last 70 years…”

“We met with one firm, Ben, you might remember one of the partners said venture capital is like being at the at the sushi boat restaurant. A thousand startups come through and you just like meet with them. And then every once in a while you kind of reach down a…”

“Basically, for as long as he had been in the field, I think you know, going back, you know, going back now decades, you know, he said, basically venture has always been over, over, Overfunded as an asset class. There's really never been a time in which vendor …”

“The great thing about venture capital is picking is a small part of the game. It's who gets to pick is as important.”

“We actually were the first ones to market a firm in venture capital and, you know, market wet markets did like an amazing job of, you know, creating a brand for a firm that, You know, popped up out of nowhere. And that had never happened before”

“After the dotcom crash in 2000, there had been an angel and venture boom in the late nineties. And then after the dotcom crash in 2000, like almost all angel investing went away. And a large amount of VC went away. And you know, it was like a full on depressio…”

“AI, like, I think it might eventually definitely be kind of better at us than picking”

“It was a difficult year to raise venture capital. In fact, I think there were only two new funds raised that year. There was SARS and Khosla.”

“When we started the firm, the history of venture capital, like if you had done like a the back test on it, what you find is there were never, ever more than 15 companies in a year that would ever make it to a hundred million dollars in revenue.”

“I never understood the argument that there's too much venture capital in. That's crazy. It can never be too much.”

“When, you know, when the AIs are doing everything else, like that may be one of the last remaining fields that, that people are still doing.”

“The generalist model doesn't work anymore because each of those things now is actually a very deep domain in and of itself, right, with like very specific domain knowledge. And then the specific problem that a generalist has is that a generalist can sense heat…”

“In venture capital, the same firms that were the top firms in, like, 1978 were the top firm in 2009. And the reason for that was the top tier firm got first pick on every deal.”

“When we started the firm we had shared economics like every firm does, but we didn't have shared control, and that gave us a giant advantage over every other VC that had shared control, Because if you share control, you can't scale, because if you share contro…”

“At Uber, like the VCs there wanted money and Travis didn't want to sell or IPO. So that's why they did it in part.”

“So that's why a small amount of capital, when 20 people compete for it, strengthens the whole ecosystem. But a small amount of aid, when 20 people compete for it, weakens the entire ecosystem.”

“There's this kind of thing in venture capital that a lot of venture capital will say, well, spend all your time with your winners. Like we don't believe in that at all. Now, like if you look at a spreadsheet, that's the exact right thing, right? Like because t…”

“And I think that that's the future of venture capital. Like when we think about. Who's really an interesting competitor. It's the pure crypto firm, the pure games firm, the pure AI firm, more than the generalist firm that's trying to cover all of that with the…”

“This actually reminds me of one of the first things Mark Andreessen ever said to me when we were talking about Substack. He said, you're gonna do to media what the venture capital industry did to software companies or to tech.”

“Now, you know, someone can have an entire career investing in databases alone, right? And so as the market grows, clearly you have to specialize.”

“Venture capital uses like the same. Model that you'd use for like a dentist office or something, like a partnership where everybody's equal, right? Like that makes sense for a small service organization, but you can never scale that.”

“I also do still very much believe in the barbell that there will be, you know, these big, you know, sort of massive funds that continue to win and invest in compound value. And also these you know Smaller, focused, concentrated, expert, the boutiques who absol…”

“Being blinkered to how VCs view companies is, is actually quite dangerous because you're so dependent on follow on capital.”

“Nothing's worse than passing on a deal and then having the company become a great success. Like, it's just, it puts you... You could be furious about that for 30 years in our business.”

“Like it shouldn't just be owned by a small fraction of VCs. In fact, we should make sure that there's ways to distribute it.”

“Usually the VCs would want to talk to the press, and some of them had been clients, at the IPO time. So they wanted to basically have no risk. But then when the company goes public, it's like, hey, I did that, right?”

“We don't have products. We have people and ideas. That's it.”

“I mean, yeah, I like, it's a great, if you can get away with having nobody know who you are and still, you know, be on top of the industry, it's great. But like, if somebody actually does, you know, does it the other way, it's, it causes a permanent change, wh…”

“It felt like, to me, when I was at the out, on the outcast side, it felt like, to me, the top five firms never changed. Like, never, ever changed, right?”

“One of them said that we should just do, like, we'd never raise it from the LPs, so we should just raise the money from VCs and give the VCs who invested half the carry.”

“Every great VC, like, if you, this is the stories that, you know, the VCs tell each other. Every great VC basically has this history of, like, my God, I had, it was in my office. The thing was in my office, and I said no, and if I had just said yes”

“Investing is hard enough without like introducing other criteria other than is this thing gonna be a giant company and make a lot of money.”

“So like, I think it's dangerous to in VC kind of wait for the outputs because they're so far up you know, to kind of wait and see, okay, does somebody have a great portfolio after 10 years or 15 years before kind of deciding what to do with them? It's just suc…”

“When we talk to government, you know, they're looking for partners to absorb that risk. And frankly, when we talk to, you know, some of the commercial companies as well, they're really excited about venture's role in absorbing some amount of risk so that they …”

“Where the entrepreneurs are advantaged by their lack of attachment to history and tradition and the old way of doing things. Where the iconoclast is the in your business, the iconoclast and the young guy. Not only celebrate, they're the you know, they're the t…”

“Whereas I think other VCs think of the product much more as the money. And so if the product is the money, then the international strategy is, ok, we'll find a team of investors in, say, The UK. And we'll help them raise money. And then we'll take a percentage…”

“Our asset class is five to six trillion dollars of value, and the dynamics around companies staying private longer, They're not going to reverse.”

“If you look at Cambridge data, the average venture return over the last 10 years is one to two x net. You will do better in private equity. You'll definitely do better in the public markets. You don't need to lock up your money for 10 years.”

“The top decile outcomes, I think, used to be ten billion and now they're like forty billion.”

“Venture-like returns are possible in late stage, but your best company should be five, 10% plus of your fund. That way you can actually return the fund on a single company. Fund returning math in late stage didn't exist before. It now does.”

“Like, we've looked at the data of 3000 venture capital firms in the U.S. Only 20 have achieved consistent three X net returns over the last two decades.”