Mar 9, 2025 · 27m · tbpn
"There's a lot of stuck founders out there" - Jeremy Giffon breaks down the current state of VC.
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Investor Jeremy Giffon discusses the systemic liquidity crisis in venture capital and outlines his strategy for restructuring overcapitalized startups burdened by toxic liquidation preferences. He also shares candid perspectives on founder burnout, leadership handoffs, the economic realities of AI, and the evolution of venture capital into diversified asset management.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The hosts as informed peer 3.7 Guest teaching 3.0 Guest disagreement 1.4 The hosts pushing back 1.3
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 3:29 Giffon rejects AI capital-raising premise
Giffon immediately rejects Jordy's suggestion that founders pivot to AI to raise more venture rounds, arguing instead that AI enables lean bootstrapping.
Hardest push from the hosts ▶ 22:46 Host pushes back on generalized VC asset manager classificationThe host refuses the simple generalization that all scaling VCs become identical asset managers, drawing distinctions between proprietary trading desks, index models, and General Catalyst buying hospitals.
Biggest teaching moment ▶ 14:48 Giffon educates on venture capital cost structuresGiffon breaks down how venture capital only offers high-cost primary growth capital, explaining why portfolio zero-loss assumptions distort incentives for ordinary cash-flowing businesses.
The host holds their own ▶ 11:59 Jordy breaks down PE fund economics versus VC rollupsJordy demonstrates sharp financial expertise by comparing traditional private equity 2/20 fund economics against the equity advantages of venture-backed rollup vehicles.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing Jeremy Giffon and Salvaging Venture Roadkill | 3 | 3 | 1 | 1 | Hosts open with friendly banter about Giffon's unique strategy before prompting him to explain his fund. Giffon lays out his thesis on venture-backed companies buried under preference stacks and the industry's need for DPI over paper IRR. | |
| AI Leverage and the Renaissance of the Bootstrapper | 4 | 4 | 2 | 1 | Jordy asks if trapped founders are pitching AI to raise more venture capital. Giffon politely reframes, explaining that founders are actually using AI to cut burn and bootstrap rather than taking on more dilutive capital, educating the hosts on cap table incentive dynamics. | |
| Redefining the People Business and Liberating Founders | 3 | 3 | 2 | 2 | Jordy challenges Giffon on whether he is in the people business or value business. Giffon redefines the premise, explaining that freeing trapped founders who have hit a growth ceiling is fundamentally serving people. | |
| Sourcing Replacement CEOs and Untapped Executive Talent | 5 | 2 | 2 | 2 | Jordy demonstrates solid industry understanding by analyzing fund structures, comparing private equity 2/20 economics with venture-funded rollups. Giffon adds the point about private equity hurdles versus venture's lack of hurdles. | |
| Venture Dislocation and Founder Financial Education | 4 | 4 | 1 | 1 | Host inquires whether Giffon's strategy relies on post-bubble dislocation. Giffon educates on venture's 10x expansion and why Silicon Valley lacks diversified cost-of-capital debt/equity products, joking founders need a crash course. | |
| Venturification of Middle America and Physical Sectors | 3 | 3 | 1 | 1 | Jordy asks about expanding into physical and manufacturing assets. Giffon broadens the perspective to discuss venture firms buying up med spas and vet clinics across Middle America. | |
| VC Firms Going Public and Evolving into Asset Managers | 6 | 3 | 2 | 3 | Discussion centers on VC firms evolving into public asset managers. The host pushes back on the monolithic asset manager view, distinguishing between Andreessen's broad index approach and General Catalyst's PE-style asset takeovers. | |
| The Fragility of Fast-Growing AI Startups | 3 | 4 | 2 | 1 | Jordy brings up a chat debate on whether to short fast-growing AI wrapper companies. Giffon explains his thesis on the fragility of fast growth due to near-zero switching costs and inevitable consolidation. | |
| Scaling Giffon & Co and Hiring an Investment Principal | 2 | 1 | 0 | 0 | Jordy closes by asking about hiring plans. Giffon announces on the podcast that he is hiring an investment principal to help manage overwhelming deal flow alongside AI agents. |
Statements from this episode (24)
Giffon: My business picks up the roadkill of the venture industry
“My business is picking up the roadkill of the venture industry. The startups, the founders that have triumphantly built Heroic and wonderful businesses and have gained 1,000,010 of millions of revenue and built incredible teams and have a wonderful product and…”
Giffon: Venture portfolios face a severe lack of DPI in the middle
“There's a lot of these, a lot of businesses, a lot of great businesses out there, and a lot of, like, stock founders, and there's more and more of them, and increasingly a lot more VCs who realize that, like, you know there is a severe lack of DPI, especially …”
Giffon: Capital allocators realize they can only eat DPI, not IRR
“Gross IRR is, is all well and good, but eventually, you know, you can only eat the DPI and that's kind of, that's what the, you know, that's what the capital allocators are starting to demand.”
Giffon: Every company should consider capping headcount and scaling with AI
“I think like every organization should be thinking hard about whether or not they ought to cap headcount and just, you know, keep headcount at or below where it is and increase kind of headcount, so to speak through AI.”
Giffon: We are about to see a renaissance of bootstrapped startups
“And I think, you know, I think we're about to see kind of the renaissance, the bootstrapper.”
Giffon: AI will enable 100% annual growth with far less capital
“I think we're about to see like an era of incredibly like capital efficient businesses that by the way, like are not giving up growth at all. Like you can still grow a hundred percent a year.”
Giffon: An investor's cost of capital dictates what they demand from startups
“The cost of capital of the people that own you makes a really big difference for like what they expect and what they demand of your business.”
Giffon: Returning capital is often the best outcome for venture-backed startups
“I think like oftentimes the best outcome is just returning capital, which used to kind of be a norm in venture.”
Giffon: Founders with $20M revenue and $100M raised are quietly trapped
“A thing that happens far too much that, that no one talks about is all these founders who are stuck. You know, if you have twenty million of revenue, A hundred employees and you've raised a hundred million bucks. You can't just quit. If you're the founder, eve…”
Giffon: Scaling from $20M to $100M revenue requires different leadership than starting up
“A lot of times the person who takes a business from 20 of revenue to a hundred of revenue can be a very, you're looking for a very different type of person, someone who's going to start it from zero and grow it into a huge business.”
Giffon: Senior execs at larger firms are untapped talent for running startups
“There's a lot of C-suite and senior executives at a business that's two or three times bigger than maybe the business you're looking at. And those are people who are like highly capable, has at least some entrepreneurial spirit, but maybe they're not, you know…”
Giffon: Venture Capital Lacks Hurdle Rates Present in Private Equity
“There, there's a hurdle in private equity, and there's no hurdle in venture capital, which makes the whole thing even sweeter.”
Giffon: Liquidation preferences trap founders who build heroic $30M revenue businesses
“Look, if you build a business to thirty million bucks for revenue, that's like a heroic feat. It's extremely hard to do. And then you somehow end up with eight percent of it under a two hundred million dollar press stack. That kind of sucks. And I don't think …”
Giffon: VC dollars deployed grew 10x over past decade
“Venture is 10 X in terms of dollars deployed in the last 10 years.”
Giffon: The largest venture firms are functioning PE shops
“Just as the biggest firms are turning into PE shops, the biggest venture firms are functioning PE shops.”
Giffon: Silicon Valley only offers one product: primary growth capital
“There's basically one product in Silicon Valley and it's like primary growth capital. And you know, once these markets become bigger and more liquid, more efficient, there needs to be a different kind of different just as there is in wall street or like on the…”
Giffon: Power-law VC models create excessively high cost of capital
“If your model is to have a lot of zeros in your portfolio, your cost of capital I either like minimum return that you need is just really high, which like creates all these knock on effects.”
Giffon: The 'venturification' of Middle America is buying up local businesses
“I mean, right now you're seeing The venturification of middle America and like, as all these venture co's start to buy up, you know, vets and med spas and all these things like venture capital. I'm in like, I'm in the rural Midwest right now. And like, you're …”
Giffon: Making money online in high school predicts a successful founder
“If you made money online in high school, I honestly can't think of an exception to have someone who's done that and has not ended up being like, Quite a successful founder in one way or another.”
Giffon: Pure alpha-focused investment firms cannot scale into giant institutions
“Your business can only really get so big if you're actually in the business of like true alpha outperformance, you can't, you know, build the JP Morgan or Goldman Sachs or something.”
Giffon: Sequoia Heritage is roughly the size of Sequoia Capital
“I mean, Sequoia heritage, you know, Sequoia heritage is, is significantly or maybe not significantly, but it's like roughly the size of Sequoia.”
Giffon: Scaled VC firms inevitably turn into fee-seeking asset managers
“At some sense, at some scale, you just become an asset manager and really what you're looking for are you know, different fee paying products basically.”
Giffon: Users will consolidate AI model subscriptions to one within three years
“I know like I pay for, you know, whatever, six different models, like that's probably not gonna be true in three years, right? Like there's probably gonna be one that I'll end up paying for too. There's certainly no reason to pay for six right now.”
Giffon: Rapidly Cropping Up Startup Categories Rarely Form the Permanent Equilibrium
“I can't think of an example where like a whole class of businesses have cropped up, grown immensely quickly, and then kind of just been the new equilibrium. You know, that, that's certainly not what happened in the dot com. There's some exceptions, but in gene…”