A product executive colleague at Google once joked he was basically an email router; that most of the problems they solved were largely about sending or forwarding a message with a small amount of value added. Certainly my life as an investor has me doing a bunch of this as well. I’m actually quite particular about how, when, and why I’ll make (or decline) an introduction request (as the middle man) but that’s a separate post. Here I’m creating a URL I can send to people when they ask me for best way to make an introduction. Blog as archives!
Your lemons tend to ripen before your cherries. That was the advice an experienced seed investor gave me when we founded our own shop Homebrew. It’s a colorful (and delicious) way of describing what’s commonly known as the performance ‘J curve.’ Sometimes you get lucky and have outsized exits early in your fund’s life – these are helpful for brand momentum and recycling – we had one in Homebrew Fund 1 with Cruise (I guess also IRR positive even though it’s really cash on cash that matters). But for the most part, your realized losses occur before your realized gains.
I’m a personal LP in a wide variety of venture funds. Often because it gives me exposure to areas we don’t invest in directly, or as a way to support and learn from friends. Below I’ve take a screenshot of roughly the last ~18 months in my AngelList VC account. You can decide whether ‘using AL’ is a positive or negative selection bias – it usually means just smaller, younger firms so definitely likely more performance variance and lengthly periods to meaningful outcomes. Most of these funds I’m probably making $10,000 – $50,000 investments in (just to provide a scale of what 1x needs to look like versus the numbers below) and I think they represent about 25% of my total LP commitments by number of funds, not by dollars.
As you see there are a ton of very small disbursements! These are mostly the proceeds from seed/Series A failures – what ‘cents on the dollar’ looks like in practice! Every once in while they’re probably interest payments from notes/dividends or escrow payments, which is less relevant.
There are three of any meaningful size (given my cost basis) and none ‘returned the fund’ by themselves – like I said, those cherries are still ripening. Two of them [$4,490 and $16,986] fall into the ‘quick outcome’ bucket – you’ll need to ask those fund managers whether they wished the founders played on instead of taking the acquisitions 🙂
The largest [$20,120] is a partial secondary transaction, and one I especially appreciated. Basically the involved GP solicited my advice about whether or not they should sell a small portion of a portfolio unicorn in a growth round where there was excess demand. Selling this portion would get them to 1.0 DPI (in combination with some earlier distributions) in their first fund and into the carry, as well as create liquidity during a period where other managers are bone dry. It was my strong recommendation to do so, for a handful of reasons:
The still have a large amount of TVPI in this company and would benefit from its continued growth while derisking the downside a bit. It’s responsible given the fund size.
We were at a peak in the market and the company (like most) could perform really well and still have to re-earn that valuation.
Their LPs would remember that they were a good portfolio manager and understood not just how to get money *into* startups but out of startups as well. It would make the next fundraise for the firm that much easier.
It feels great as a GP to get into the carry!
Now the company has continued to do well but I don’t think this person regrets what they did and regardless I stand by the advice!!!
Venture capital is an easy model to understand and a challenging model to excel at – especially with emerging managers where there’s amazing upside but also more risk. That’s one reason why we believe our fund of funds Screendoor is so well positioned to succeed for LPs, even those who also do direct investment alongside us or into other segments of the VC ecosystem.
David Zhou recently featured Lisa on his Superclusters Podcast, and it’s a great listen for anyone in the business of Being a VC or Backing VCs.
Having been fortunate enough to hire Lisa to run Screendoor, I’m of course biased in this endorsement. But it’s not just me – as David leads with when referring to the backchannel research he did on Lisa for the interview: “the number of raving fans you have in the LP ecosystem is phenomenal!”
Two other sections of the pod I’d direct your attention to which I think make Screendoor especially unique (and compelling) in our backing and support of new VC firms
Our service model: Once we become your LP, not only do you get time from the Screendoor team (comprised of three senior investment professionals who have lived in the venture LP world for years), but also our GP Advisors [experienced VCs who have all built their own firms – representing Homebrew (us!), Forerunner, Kindred, Precursor, First Round, and ++++
Our investors become your investors over time: The LPs who back Screendoor represent a select group of endowments, foundations, institutions, family offices and other capital allocators committed to the venture segment. As opposed to keeping this group distant and opaque from you, we look to build relationships early and often, so as your firm matures, they can invest directly in you when there’s mutual fit. This abundance mindset gives them the opportunity to tap into the returns of Screendoor while proactively getting to know the best emerging managers and having an inside track to allocations based on the trust they’ve built with you.
If you’re a VC raising a new fund, or an investor interested in participating in Screendoor, we’d love to hear from you.
Thank you Susan. I owe a lot to you. Many people do. I’m thinking mostly about your wonderful family right now, but I did want to share two of my favorite memories. If someone were to ask about my time with you at Google, I’d tell these stories.
The first came at the beginning when you pulled me into your AdSense product org. You might remember that I’d always wanted to do marketing at Google but started out on the business side of the house for a year or so (much to the initial bruising of ego and equity). After having proven myself, the opportunity arose to transfer into Product Marketing and I was just about to do it when you interceded. I knew who you were of course but this might have been our first 1:1.
“Join product,” you said. And I thanked you for the offer but let you know that I was pretty excited about marketing. You leaned in a bit and said,
“Hunter, there are three ways things happen at Google. What Larry, Sergey and Eric want. What I want. And what You want. The first two want you to become a PM.”
Momentarily paused by this Godfather-style offer I couldn’t refuse, you then relaxed and said a bit more collaboratively, “Look, I spoke with Jonathan [Rosenberg] and come do product, and if you don’t like it, transfer into product marketing then. But Product is really where you want to be at a place like Google.”
And you were right. For the next three years you served as my manager, then skip-level manager as we grew.
The second memory was more of a coda. It was towards the end of 2006 after a very tough year working on Google Video. It wasn’t just that we were failing, it was that we were failing because of Google’s politics, personalities, and blind spots. On top of that my promotion packet was denied, leaving me, in my mind, significantly under-leveled. My manager let me know that everyone was still very high on me but I needed a ‘win’ before getting advanced. And shared that in lieu of the title change you’d approved a bonus.
I immediately booked a 1:1 slot with you and said “I don’t want your money, I want your time. Tell me where I can do better. Give me feedback. This company is throwing off cash but your time is more valuable to me.” You said you understood and a few months later supported my transfer to YouTube where I spent the rest of my Google career. You always believed in YouTube, years before you joined us as CEO (I was already gone). Thank you for your advocacy and help, even when many on Google’s executive team wavered. For another six years you gave me exactly what I’d hoped for – your time.
Today we know your time was even more precious than any of us could have imagined.
Back in my day, we had web pages and URLs. And you had to look for stuff.
“Who needs to know about this?”: Communication as you Scale [Molly Graham/GlueClub] – People forget all the time that your company values can stay the same as you grow but the activities and practices required to achieve them successfully often have to evolve. Some things you leave behind, others your pull forward in a modified fashion. Here Molly makes the claim that ~50 people is a major transition point for most startups and that COMMUNICATION is the most important/quickest to break at this inflection.
What follows is a fantastic guide to how to think about communications; what you need to implement; and evaluating success. Seriously, read it.
Are We Doomed? Here’s How to Think About It [Rivka Galchen/The New Yorker] – Takes you inside a class at the University of Chicago where each lecture focuses on a perceived existential risk to humanity (AI, Climate Catastrophe, Nuclear Destruction), with a scientific approach. I was also surprised to find that the term ‘existential risk’ as an academic concept only dates back to a 2002 paper by philosopher Nick Bostrom (although obviously theorizing about doom scenarios is, well, timeless).
The Last $250k [Charles Hudson/PrecursorVentures] – A notable pre-seed investor, Charles is remarking on the clarity of action which comes when you’re down to your last $250k of capital and wonders why we don’t/how we can operate with that focus while there’s more money in the bank (so as to not have to get to your last $250k).
“For the type of companies I work with, that $250K usually translates to 4-6 months of life, barring a fundraise or other capital infusion,” Charles writes, then noting that it’s not about effort – most everyone is already working very hard. But rather:
The most important things to work on become incredibly clear
The data needed to validate the company’s hypothesis becomes much clearer
There are things that the company was doing that they stop doing because those things don’t really matter given the gravity of the situation
Why we changed prices 3 times in 1 year [Matt Hodges/Equals]– Oh I love the art and science of pricing. It’s just a truism that most startups begin pricing incorrectly – either choosing a structure that ends up not being properly connected to the desired motion of their business (per seat vs usage based vs tiered, etc) and almost certainly higher or lower than where they’ll end up. The way I think about it is pre-PMF your pricing should be rational but not a barrier to adoption, and post PMF you should be pushing pricing up to find where your true limits on value exist.
Equals is a SaaS reporting and analysis startup that walks you through their pretty wide ranging journey to figure out how they should charge. Spoiler alert, simple was best and they turned off self-service.
Investing in the Age of Generative AI [Kevin Shang/East Wind]– Everything anyone writes about AI investing is simultaneously out of date and prescient. Although I guess you can also be out of date and incorrect, but if that’s the case I would be sharing with you here. Here Kevin believes “Regardless of how venture firms choose to ‘play’ this cycle, this almost feels like an existential moment for the venture industry.” And translates that into strategies based on firm size/focus.
Manage the What, Not the How [Molly Graham/Glue Club] – Molly always has great management essays, riffing off her own experience at learnings at places like Facebook and CZI. This one focuses on finding that right level of direction but not micro management.
It’s tempting to manage how employees work. But in 90% of cases, what really matters is: Did you hit the goal?
To run a successful company, particularly one past a certain size, controlling the “how” is simply not an option. You have to learn to be extraordinary at aliging around the “what” and at coaching people as they go.
How to Build and Run Your Exec Team [Harry Glaser/Modelbit] – We’ve known Harry for a while, and have the pleasure of working with him as investors in Modelbit, so I enjoy his posts, both in a vacuum and as context for the way he’s building this startup. This one is a pretty practical take on how you evolve the exec team and cadence of management during the first phase of hypergrowth. As he writes,
The transition to a real structure with “teams of teams” and executives is fraught for two reasons: First, as the company is going through a transition where employees no longer automatically know everything and everyone, the founders are not going through that same transition. They don’t realize the employees are losing track of all the new people, don’t know the priorities any more, and are feeling disconnected from the mission. This makes the founders slow to add structure and process as they scale up.
Skilled immigration is a national security priority [Noah Smith and Minn Kim/Noahpinion] – It always amazes me that growing skilled immigration to the US isn’t a bipartisan priority. Would certainly be one of my objectives if I served in government. Noah Smith is pretty consistent on making the case for smart immigration policies and here he (and Minn) tackle the ‘competition with China’ angle.
Maintaining a lead in industries like AI, semiconductors, and advanced manufacturing – all things that are essential for national defense as well as big contributors to national wealth – will require the U.S. to have more than its share of the world’s human capital.
This is why calls to “just train Americans” instead of recruiting skilled immigrants ring so hollow. Of course the U.S. needs to train its own skilled workers, and it should constantly be striving to improve its education system and to direct students toward the fields where they’re needed most. But at the end of the day the U.S. represents only 4.2% of the world’s population, while China represents 17.4%. China has a much bigger talent pool than America because it’s simply a much bigger country. If the U.S. wants to match China’s gigantic pool of human resources, it must supplement domestic talent by recruiting from abroad. Mathematically there’s simply no other option.
The Oral History of Gremlins [Alan Siegel/The Ringer] – Besides being an amazing nostalgic read about a fun movie from my childhood, this oral history has a few moments that reminds you how fragile the creative process is, and what great leadership/insight looks like. Excellent products – whether they are films, software, cars – are full of collaboration, but not consensus or compromises. Spielberg is amazing.
For example, on casting the male lead
Galligan: They had to take the tape and they had to FedEx it to Spielberg. Apparently when Spielberg saw me put my head on her shoulder, he turned to Joe and he said, “Stop the tape. Just turn it off.” And they were like, “What?” Joe and Mike thought he wanted to discuss something. And he got up, started walking out. And they said, “What?”
Dante: Steven turned to me and said, “We’ve got to cast him. He’s already in love with her.”
And a particularly weird speech that everyone was trying to get Director Joe Dante to cut
Dante: They said, “Well, we’ll get Steven to make you cut it out.” So they went to Steven and said, “Make him cut it out.” And Steven said, “It’s his movie. I don’t even get it. I don’t know what it is he likes about it, but it’s his movie. Leave it in there.” So it stayed in the movie.
Robert Putnam Knows Why You’re Lonely [Lulu Garcia-Navarro/New York Times] – Putnam, who wrote the brilliant Bowling Alone to describe the increased lack of IRL community in the US, is back with an update. While I recalled his general thesis, this interview reminded me about the importance of Bridging community alongside Bonding community. In his words,
Ties that link you to people like yourself are called bonding social capital. So, my ties to other elderly, male, white, Jewish professors — that’s my bonding social capital. And bridging social capital is your ties to people unlike yourself. So my ties to people of a different generation or a different gender or a different religion or a different politic or whatever, that’s my bridging social capital. I’m not saying “bridging good, bonding bad,” because if you get sick, the people who bring you chicken soup are likely to reflect your bonding social capital. But I am saying that in a diverse society like ours, we need a lot of bridging social capital. And some forms of bonding social capital are really awful. The K.K.K. is pure social capital — bonding social capital can be very useful, but it can also be extremely dangerous. So far, so good, except that bridging social capital is harder to build than bonding social capital. That’s the challenge, as I see it, of America today.
Inside Danny McBride’s Lowcountry Comedy Commune [Sam Schube/GQ] – Incredibly talented dude, operating within his comfort zone, with people he cares about, and enjoying his life. Left Los Angeles and set up a production studio back in South Carolina. This is one of the recipes for happiness.
in 2017, he and a handful of his closest collaborators, who also happen to be some of his closest friends, decided to move to South Carolina, where they had filmed plenty of TV and then returned together as serial vacationers. The plan was simple, but grand in ambition: to airlift the whole McBride creative brain trust, 8 or 10 whole families, to a pleasant and occasionally hard-partying city far from the spotlight.
Rhoades [zoologist and chemist] had watched a nearby forest be decimated by an invasion of caterpillars. But then something suddenly changed; the caterpillars began to die. Why? The answer, Rhoades discovered, was that the trees were communicating with one another. Trees that the caterpillars hadn’t yet reached were ready: They’d changed the composition of their leaves, turning them into weapons that would poison, and eventually kill, the caterpillars.
Scientists were beginning to understand that trees communicate through their roots, but this was different. The trees, too far apart to be connected by a root system, were signaling to one another through the air. Plants are tremendous at chemical synthesis, Rhoades knew. And certain plant chemicals drift through the air. Everyone already understood that ripening fruit produces airborne ethylene, for example, which prompts nearby fruit to ripen too. It wasn’t unreasonable to imagine that plant chemicals containing other information—say, that the forest was under attack—might also drift through the air.
The Secrets of Alicia Keys and Swizz Beatz’s Museum-Ready Art Collection [Nate Freeman/Vanity Fair] – Excellence is so sexy. Watching this amazing couple win together while impacting culture and economy is just BRAVO. They started collecting, nurturing, evangelizing black artists early in their careers and have established themselves as serious players.
The Deans also were collecting Black artists, especially Black figurative artists, at a time when the art market has started to correct for decades of neglect. Dean was particularly struck by the contrast he saw between visits to the homes of old-guard collectors and his peers. It further fueled their collecting. (The couple put many of their largest-scale works on view at their homes—including a $20 million mansion in La Jolla, California, that is said to have inspired Tony Stark’s house in Iron Man 3—and have never sold a work since the inception of the collection.)
The Only App That Always Wins The Battle For Your Attention [Ben Cohen/WSJ] – As the father of a daughter who prizes her Duolingo trajectory, our household lives this article. “Streak” mechanics are often cheap implementations of game mechanics, or even worse, build bad habits into bad apps, but when applied to learning a language, it’s hard to argue they’re empty calories.
Traits I look for in founders [Nakul Mandan/Audacious Ventures] – We enjoy coinvesting with Nakul and the Audacious Ventures team. Recently added his blog’s RSS feed to my reader [OPEN STANDARDS FOREVER] and highlighting one of his posts (but go back and read more).
Maybe I should be more worried about Artificial General Intelligence but these days it’s the probability of Artificial General Bullshit that leaves me wondering about AI-powered everything. Given that the enshittification of the web is largely driven by economic incentives, why do we believe AI will be any different? I mean it’s largely the same people, same companies doing the building anyway.
Back in 2016 when agentic consumer tech was just starting to pique interests I wrote “What Happens When Bots Learn to Lie?” Was the post about electronic disinformation? Wrong. About the massive security and hacking threats ahead from machine-generated deceptions? Ha, I wish I was that smart. Nope, rather my intellectual horsepower focused on the implications of hyper sophisticated ‘sales people,’ powered by AI and optimized for transaction. Eight years later, with the GPTs and LLMs advancing faster than a cheetah on prey, I’m even more sure this is coming. It’s our future – at least for a period of time and for some people/industries.
Ok what do I mean? The best commerce platforms will be constantly grooming you, priming you, shaping you to buy. The combination of short-term and long-term value that leads to the optimal financial outcome for the business. Imagine a helpful shopping bot sitting on StockX or Gucci with as much information as possible about your demographics, purchase history, and so on. All that information exists today and is used to tailor mostly asynchronous (email marketing) or low fidelity (recommended for you) personalization. But when it can be turned into conversational real-time sales, we unlock the best salesperson who ever existed! Before you know it, instead of one item, you have three in your basket, assured that it’s a fierce look, and paired with a BNPL offer.
What’s an undermatched consumer to do? We can’t shut off the fact we’re human and subject to all sorts of cognitive biases [BEST URL ON THE WEB]. But we can train our own bots on them [“Answer as if I’m a 50 year old dad who reads Influence by Cialdini every day”]!!!! HunterBot is there to call bullshit on the shopping bot. “I told you I wanted $50 shoes and now you’re showing me $1000 ones. Please restrict your recommendations to my desired price range.”
From there it’s each of our bots competing to jailbreak the other into a hallucination or non-standard response that’s disadvantaged to the entity it’s representing. HunterBot gives in an believe the $1000 shoes are better because it gets told it was Hunter’s grandmother’s dying wish he wear Chunky Monkeys. StockX bot whispers that I’m better off waiting a week until a sale starts that it ‘knows’ about but isn’t supposed to share publicly yet.
You might be worried about “SHALL WE PLAY A GAME;” I’m already tired thinking about “SHALL I ADD THIS TO YOUR CART.”
“Excited for [Startup] to continue its mission at [Acquirer]”
It was an acquihire and I lost money
“They never gave up and I’ll miss working with them (hopefully will do so again). Congrats to [Startup] on their exit!”
It was a journey but we at least got our money back. Founder, please remember me when you start the next company.
“Proud to have been along since the earliest days. Thanks [founder] for letting me be a small part of your journey!”
The big VCs in the deal made way more money than I did, but at least I got a little bit into the seed round.
“You did it!” [with picture from 10 years ago of VC with young founder, holding term sheet, thumbs up]
I made a lot of money here but didn’t do much work for the company after the first funding
“You did it!” [with picture from 10 years ago of VC with young founder, holding term sheet, thumbs up -AND- picture of me at the IPO or acquisition closing dinner]
I made a lot of money here and did actual work for the company after the first funding
“Thrilled to have represented [VC firm] in our work with [company]. Huge outcome!”
A partner we fired actually did the deal, and no one serviced it well until it was clear it was going to be a homerun. Then we all fought over it and rewrote history in a ‘congrats’ blogpost that never mentioned the original GP.
[no tweet]
I’m fully post economic after this acquisition, why the fuck would I be on social media any longer?
When the growth slows, and, You and your Co-founder [Harry Glaser/Cofounder, Modelbit] – More good repeat founder wisdom from Harry. In the former he has practical advice for how to handle speedbumps post-hypergrowth period. The latter is a good articulation of true cofounders. Sometimes when we meet a startup the ‘cofounders’ are really more like a founding team – there’s clearly one lead individual and one or more team members. But the ones which feel like true partnerships are pretty close to Harry’s guidance. The first two he notes are actually the most difficult!
The Rick Steves guide to life[Natalie B. Compton/Washington Post] – It turns out that travel entrepreneur Rick Steves is also a really decent human being, perhaps even exceptional! We spend a lot of time these days – on social media, via journalism, in our lives – pointing out the villains. I’m finding the identification and celebration of role models to be more enjoyable.
