The Wisdom Wall

“That's the thing that's crazy about venture. It's like, you have a whole community of people who've been lucky who think they're really smart and the evaluation horizons are so long. There's like no feedback.”

“So, like I said, those funds will continue to do well, but some of the venture funds that we've seen grow quite large end up doing much better for their partners than they do for their investors.”

“It used to be 20%. Now we're hearing about a lot of 15% discount saves, and it's like, holy smokes, you're putting the riskiest dollars that are ever going to go into that company in for a very modest return. Now you're on the cap table, and you can put more money in later, so maybe you're buying it as an option, but…”

“He said that all of the risk premia have been arbitraged away, except for one. He said, horizon. People just need cash sooner. And by being a long-term liquidity provider, you know, if we can be, he, I think his phrase is BLT investor, if we can be a beyond the long-term investor, then we can capture some risk premia,…”

“So Sequoia goes out and raises four billion dollars, and then, you know, Billy Bob Joe's venture firm thinks they can raise four billion dollars, and by the way, there's a lot of money coming to the asset class that, that they can. So, you know, this kind of value capture, I think, has fundamentally changed, you know,…”

“once you take venture capital, the venture capitalist business model is your business model. You've got to get liquid at a number that makes sense for them.”

“when you have a high valuation, it starts to limit your options. And I think we're starting to see companies that were highly valued, that had a moment where they could have been acquired or gone public if they were, you know, less richly valued, but that moment's passed, and now either the company is kind of…”

“maybe the risk premia all arises from the horizon premium, which is just like being able to take a longer term bet than the next guy.”

“Venture works really well when capital is expensive and time is cheap. When time gets dear and capital gets cheap, watch out.”

“In venture, what we're doing is we're already buying long dated way out of the money options. And by investing in the seed stage, a lot of these guys, whether they admit it or not, are basically buying option portfolios”

“Where historically a lot of people, because I think somebody told them at some point LPs love it when you say, you know, your value add, but the reality of it is the best late stage investors have always been good stock pickers.”

“Everything eventually has to exit, and either you're going public or you're selling to somebody who's got an inflated or deflated public currency, the amount of beta as a result is huge.”

“The thing that has always attracted me to the seed stage has been that there's no beta in going from zero to one. That's all alpha.”

“everybody's got an angel-less track record today, but I'm talking like formal investor training. So I love introducing people like, I mentioned, you know, Ross Fabini, who spent, you know, years with Canaan Ventures, or Sunil Nagaraj, who launched Ubiquity after a ten-year career at Bessemer, because I think having…”

“the way most people do diligence is they run up and down Sand Hill Road, and they say, hey, Mike Moritz, who's good? Hey, John Doerr, who's good today? And you're just getting this warmed over conventional wisdom with sometimes a healthy, you know, dose of politics on the side.”

“there's a whole riff I can go on about how that completely is a misspecified measure of, of risk, even in public stuff, but especially in private stuff, not only with stale prices, but like, when I think about the startups that I invest in, not only do we have, like, Product market fit risk, technology risk, execution…”

“When venture's working really well, time is really cheap and capital is really expensive. He says what happens in bubbles is that time becomes really scarce and expensive. People don't have any time. And as a result, their capital becomes cheap.”

“The risks are so high as to be almost infinite, so you can't risk-adjust it. You can maybe time-adjust it, slash duration-adjust it, but that's nothing.”

“So, if you look at the ownership for a firm that owns on average 10% at exit, they've got to return 15, one five billion dollars. They've got to create fifteen billion dollars in enterprise value to get a billion and a half in returns, right?”

“I've always had this hypothesis that fund three is like the optimal fund. It's where, you know, hunger and experience intersect.”

“We shouldn't pick and choose among our managers. Once we decide to hire them, the bar is so high that we should hit them hard. We shouldn't take these, like, little, you know, hesitation marks, right? Like, I know a lot of people are like, oh, I'll throw a million dollars in that and see how it goes. That's, you're not…”

“I think in the main, most venture capitalists today are price takers, not price makers.”

“So if your whole micro-cap public market has gone, where are you going to go for emerging growth companies? So it makes perfect sense for Fidelity and T. Rowe and all these guys to come in.”

“rather than the venture capitalist being the hub in the middle of this kind of hub and spoke network, could you push, you know, he called it the Napster of venture, right? Could you push the interactions out to the frontier where entrepreneurs are interacting with each other and the venture capitalist is removed as the…”

“one thing that's interesting is I actually just saw some data that I think said that seed valuations were up year over year. And anecdotally, that's what I'm hearing as well. And I think that's actually just a data composition issue because the marginal ideas aren't getting funded anymore, which in the marginal ideas…”

“The material sciences guys, you know, none of their companies will ever sell for more than two hundred million dollars, but when you can own 35% of the company for 750 K, and you got a twenty-five million dollar fund, the arithmetic works in your favor.”

“don't sub-optimize exits, but when you see an opportunity maybe to sell into around, if you're an early holder and can sell part of your position, put that moolah in the coolah.”

“pessimists sound smart, but optimists make all the money.”

“one thing that we heard constantly from entrepreneurs in those days is it turns out that the Capital's not the scarce resource. It's the time and the engagement. And so surmounting that engagement hurdle, I think, is one thing that's really challenging, and I think that those efforts collapse under their own almost…”

“Paradoxically, I think the thing that's the biggest change in my career is it's gotten both cheaper and more expensive paradoxically to get a startup from inception to exit. Cheaper in the early days because the cost of inputs has gotten so much lower with AWS and you can rent all your infrastructure and all that…”

“The number of firms that have failed in generational transition outnumbers by orders of magnitude the numbers of firms that have had successful generational transitions.”

“They're so afraid of being wrong and alone and taking that career risk that they migrate from being alone and having conviction to being with the crowd. But when you migrate towards the crowd side, you take the right and alone box out of play. And that's where fortune and glory reside. And if you can be right and…”

“You're always testing a joint hypothesis. Is this manager an outstanding manager with a sustainable competitive advantage is hypothesis one. The second is, am I sufficiently aware and educated that I can ascertain that?”

“He said, you know, it's, it's the most amazing job. It's like the closest you'll ever come to managing your own multi-billion dollar fortune. You have incredible flexibility, uh, low liquidity needs, Long, if not infinite time horizon, few tax headaches, a single client, et cetera, et cetera.”