YouSaid · the spoken record

Brett McGurk

lines on the record: 68
first: 2025-12-08
most recent: 2025-12-08
sittings or episodes: 1
sources: podcast

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“Which I've always admired, that is a total equal partnership. You're in the partnership or you're not, and that's it, there's not a lot of junior people, there's not a lot of staff, a real craftsman-like kind of thing.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can you introduce them to capital market folks early on? Can you introduce them to crossover investors early on? Can you get potential MA heads at the major tech companies? Our best outcomes as an aside have always been an oligopolistic industry structure where there's three or four players who are going to irrationally compete to own the asset because they want it and they don't want their competitor to get it leads to the best outcomes for us, even better than IPOs. Knowing those Corp devheads of those different companies, being able to play them off each other in a good ethical way is really important. The fifth is firm building. People thinking about how do we build the brand? Some people might do that by kinetic networking. Some people might do that by hosting dinners with thematic ideas around certain founders or technology areas. Some people are talking on campuses. Some people are going on brilliant podcasts like yours. Whatever it is to build the brand of the firm is another way that people get comp. Over time, the org has gotten flatter and flatter. You have one end of the venture ecosystem that is institutional hierarchical, almost like a Goldman Partnership, lots of gradations. You have others, benchmarks.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“We are relatively small, 40 plus people, 10 on the investment team. Everybody is a partner. We're comping everybody on a few things. One is capital formation, a small group of people do that here. That's the lifebud of every firm. The second is, can you source and win deals? The right to win is the most important thing. It gets easier as our reputation has got better. It gets easier when you back amazing founders who you can call on your behalf to come in and help you win other founders and compounds. Adding value to the companies, can you help them with syndicate formation, competitive intelligence, customer introductions, beta design partners, hiring and recruiting, building out a board, governance?”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“A company, and our goal is to be the founding investor in those companies. That is what has changed this go earlier, benefit from this ecosystem where there's an abundance of later stage capital. There, in many ways, indexing across the venture landscape. But it benefits you if you can be in early.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Really is try to be the first institutional investor in. The difference in this ecosystem between those minnows and the megas, we like the megas. We want them to be in the cap table. We always say we're contrarian. We just want people to agree with us later. We want these funds to come in later at a lower cost of capital and higher valuation where we've assumed some risk. We've killed those risks, product people, finance, technology, market. And therefore created value and a later investor should come in and demand a lower quantum of return. That is the way that we think about it. That has really not changed. It also serves us well because then you have a product that you're generating that other investors want to invest in. The other thing we're doing is hiring a young bench of investors who I'm 47 years old. My youngest partner is 24. Her name is Lan Jang. She's a killer. Amazing network of young bright, brilliant math Olympiad winners in high school that have gone on to computer science at Stanford and MIT went to work at OpenAI at 19 years old and then a 22 years old are leaving and starting.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“That landscape has changed. You have competitors who have decided to be large, and therefore they have big balance sheets that they could attract founders at all stages. How have you thought about changes in Lux's model over time?”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Harder return capital. There are exceptions, and that's what everybody is trying to do find the outlier exceptions where they can still use capital as a moat, generate deckabillions of enterprise value based on billions of revenue, but few and far between companies that can do it.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“There will be outliers where you can still underwrite these companies and they can be DECA billion dollar outcomes. But that historically adventure was not the case. You were looking for one, two, three billion dollar outcomes and ideally you were funding them at sub $100 million and you can have any individual portfolio company giving you 10x in under five years. If you think about venture portfolio construction, there's two ways to cut this. One company will return the entire fund one time for a billion five fund. We need to own 20% of a company for it to return a billion five. It has to be $7.5 billion outcome. There's a long tail of those, but it's hard. Another way to look at it is that the next five or ten companies in your portfolio are going to return the entire fund another turn. And then the long tail of everything, including all of your losers, would return it a third time and you'd end up with a 3x cash on cash. The other way to think about it is about a 30-year company's might be 10x. A third might break even, and a third are basically total losers, and you end up with a 3x cash on cash. More capital intensive on average.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Landscape were venture historically was high return, high risk from the LP perspective. How does that change when companies go from that early stage founding to something like a multi-billion dollar business that's still private?”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Plus AUM and be a diversified player like that. Different fund strategies, different thematic funds, different geographies, there will probably be demand for the players like the dials and the new burgers and Petershill and Goldman and people that are doing GP stakes. That's the incentive difference. Build for AUM and franchise value or manage for returns and being the most desirable for founders.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are a lot of people that are just trying to asset gather the smart employees at those funds know that they will likely never see a dollar of carry. The larger the fund you raise, the harder it is to return inventure. To get a three to five X cash on cash return, we've got to return four and a half to $6 billion of gross proceeds. If you're owning 10% to 20% of your companies on average, you've got to have between $40 and $100 billion of aggregate market value. There aren't that many companies that end up like that. We have companies today that are approaching trillion dollars. If you're a realist about this, fund size increasing is the enemy of returns. The incentives for the founders who want to have great investors that can be early stage investors that can scale with them over time, that's harder to do when you have a much bigger fund. The other guys that are going after these larger funds are recognizing the market wants to see these multi-asset diversified alt managers. And if you can reach $100 billion.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“Historically, if you take rule of thumb of asset management size as the enemy of performance, firms get big, they live off their management fees, not their incentive fees. I'm curious as these changing dynamics of what you see the needs of venture-backed companies are as they grow and scale and stay private. How does that change the different incentives of a GP and LP and a founder?”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“We went from this belief of hyper efficient software, and the virtue of that was that you didn't need a lot of money and you could figure out if your product was working and users would adopt it. The reality is some of the most successful software businesses have actually raised billions and billions of dollars. Snowflake and Datadog and Datadricks, quite capital intensive businesses, they've also created a moat around them. It isn't always bad when something is capital inefficient if you create a moat and can get dominant market share. We do everything at Luxram about a third in biotech and robotic surgery and med devices and another third in aerospace and defense and industrial. The other third on core technology, which is everything from non-invasive brain machine interfaces to everything we do in the AIML compute infrastructure stack and semiconductors and edge inference chips. The defense space takes a lot of capital. Anderol has raised several billion dollars now. There are a few companies that are competing with him. There's a long tail of wannabe next-gen defense tech companies.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“You take those two theses together, so the shift into a form of venture real assets and the bifurcation of the minnows and the megos, what does it take to fund the generation of companies that have real assets that can't massively scale through the internet?”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm accepting a premise that you're going to have this long tail. The fund sizes are increasing, the total AUM is approaching 80 to $100 billion under management. They will take a page from the playbook of Apollo, Blackstone, Carlisle, TPG, KKR, all of whom, when public during the 2009 to 2014 period. And I believe that at least General Atlantic General Catalyst Andreessen, maybe inside maybe lights be go public, they are making global acquisitions. They're buying up other asset managers. They're going into wealth management. A whole slew of decisions that are creating this bifurcation venture between the small guys who are under-reserved and likely to go out of business and the big guys that are doing later stage deals, becoming more like the fidelities of venture capital.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“But you have a lot of people that have been tourists in venture. They benefited from an environment with low rates and an abundant amount of follow-on capital. That follow-on capital was six, seven, eight years ago. Softbank and Tiger. At first, those were coveted firms because they would turn you into unicorn. And now they're almost taboo and in many cases adverse selection of founders saying, why would you take money from those folks? The long tail of funds that are subscale I have predicted that you would see a 50% involuntary exit or extinction rate, that they would go out of business. And why? Because they're under reserved. They've overinvested. They have too many portfolio companies. Those companies are going to have to come back to the well and raise money, and they're not going to be able to find investors. There's going to be a lot of down rounds, broken fund raises, broken syndicates, and those guys are going to go out of business. And I was sharing that with a large LP, and that large LP looked at me and laughed and said, Josh, that's ridiculous. It's not going to be 50%. It's going to be 90%.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“State of play at a macro level is you're coming off of a 10 year boom cycle that largely was SaaS enterprise software driven and you're seeing a big shift into real assets, physical assets, which doesn't mean real assets in the classical allocator sense, but real assets in the form of semiconductors, energy, compute, silicon, steel, data centers, all of that, seeing a huge wave to the point that it is reaching an apex of absurdity. Defense and aerospace as well, those are areas where hard material is going into the ground and infrastructure behind all that stuff. Within the fun level stuff and the allocators, you have this bifurcation that I call the minnows and the megas. What I mean by that are a very long tail of subscale funds, funds that are basically call it $500 million or under. Normally that was the average size for venture funds.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source
“The long tail of funds that are subscale, I have predicted that you would see a 50% involuntary exit or extinction rate. They're under reserved. They've overinvested. They have too many portfolio companies. Those companies are going to have to come back to the well and raise money, and they're not going to be able to find investors. There's going to be a lot of down rounds, broken fund raises, broken syndicates, and those guys are going to go out of business. And that large LP looked at me and laughed and said, Josh, that's ridiculous. It's not going to be 50%. It's going to be 90%.”
2025-12-08 · Capital Allocators · Josh Wolfe & Brett McGurk – Venture, Geopolitics, and the Next Frontier (EP.476) · IDENTIFIED FROM THE TRANSCRIPT · source