YouSaid · the spoken record

Dan Scheinman

lines on the record: 32
first: 2018-05-21
most recent: 2018-05-21
sittings or episodes: 1
sources: podcast

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“Harry, the privilege has been all mine. Thank you for taking the time to talk to me, and I really appreciate your time and energy.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Where they are most vulnerable today. And he's in fact been able to show attacks in progress to some of his POC customers at the current moment. So very exciting, psychognito, pay attention. They're going to do really well. And I loved his presentation. In fact, so much so that I keep looking at it every few days because it was so well thought out and he understood my job here is product market fit. My job is to raise an A round. And these are the metrics I'm going to get to in order to prove product market fit and in order to raise an A round. And I was like, God bless this guy understands and he understands how this works. And he's thinking backwards, which is the exact right way to think.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so my most recent one is a company called Psycognita, run by a guy who used to be in the Israeli 8200 elite unit. There was a number of things that grabbed me. First, it was the single best angel presentation I had seen since Zoom. And I had spent a lot of time saying, market for security is overinvested. I'm not going to do another security deal. Blah, blah, blah, blah, blah, blah, blah. What's the first thing I do in 2018? Another security deal. And here was a guy who had found some oxygen in a space that was neither networked nor endpoint. He had found a space that was kind of interesting and that was very customer focused. And basically what he had done is used his knowledge from being an elite hacker to turn around and say, since I know where everything is vulnerable, why don't I start showing people a map of if I was a hacker, how would I hack into their systems? And from that core idea, he's ended up building a very unique and interesting set of technology that will allow companies to understand.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“So I am a real believer that companies, diverse organizations are better. And I think for a long time, this idea of pattern recognition has acted to exclude groups from being inside large funds. And I would like to see large funds become more diverse. I'd like to see them become more gender diverse. And I think it would be good for them. And I think it might also enhance their core thesis and it provide them more breadth and depth in the market. So that would be my biggest thing.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“My biggest advice is to really understand your thesis. I'm surrounded. I mean, we could throw a rock around my house and we'd hit other angel investors. And what I'm struck by most is that beyond, I like finding good deals and making money, I see that there's a lack of focus in terms of what they're doing. Let me just say that if you walked into the great VCs, Andreessen, Sequoia, Greylock, those guys have a clear thesis on what they're doing, and they know exactly what they're doing. And I think to be a successful angel investor, you have to understand that clear thesis. And that clear thesis has to tell me what kind of deals you won't do, as well as what kind of deals you will do. And you have to be prepared to defend that thesis. And I think if you don't have that, then you're really in spray and prey land and then you're taking a lot of risk and you basically you've got to bungle into one that's good. Otherwise, you're going to end up getting burned and losing money.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, mercifully, I haven't had an Uber-sized miss yet. I've had some medium-sized misses, and I will tell you the biggest ones I've had are where in the middle of the deal, the price starts escalating seemingly without any regard for anything. And what I take that as a sign that the founder doesn't really care about the investors, really because, okay, we started out at a $5 million valuation. Now we're at a $15 million valuation, heading towards 20 and not that much has changed other than he's sensing there's a lot of interest. So sometimes I've shied away in that fact pattern with the escalating price and there have been a couple times where I was wrong because ultimately the company built a $200 million exit and I was not able to participate.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, I believe that older entrepreneurs have the same or more fire sometimes in the younger entrepreneurs are as technically adept or more than younger entrepreneurs. They drive value because of their experience. They're actually more efficient, both in spend and in thinking than sometimes the younger entrepreneurs.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, I'm going to give you a quick story, and maybe a couple quick stories. But when I was young, I was actually a very fairly good basketball player. And I went to an elite camp, and I was put in the elite division. And at the end, the coach told me something. He said, in order for you to come back here next year and be good, you need to do two things. One is grow six inches. Unfortunately, that only happened around my waist. And two, I need you to, you have to be able to use your left hand because there's no great player who only uses their right hand. So I spent the next year only using my left hand. And what I was, instead of becoming an okay right-handed basketball player, I became a very mediocre left-handed basketball player. And what I came to realize is it's not about focusing on your weakness, that it's a waste of time and you never get good. It's about always accentuating your strength, deal with your weakness, but don't try and eliminate your weakness. You can't.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Michael Lewis, Money Ball. It is one of the great business books, business fables of all time. It's really about the rise of analytics. And it takes an industry, an old industry, baseball, which I love sports. And it basically says, looking at them through your eyes only yields a certain set of data. You have to look at the data as well. And you need both in order to assess players. And I believe that that is absolutely true. And I don't think it's analytics only as we've talked about it, but I do believe that there has to be both and you have to look at things with open eyes and all the data.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So, this is an area where I am all over the map, and I'm going to tell you right away this is the toughest thing we deal with. I do believe that the Angel investors, you want to have a coalition of folks who can carry you in the event there's a stumble because, you know, not everybody is Zoom where they just boom, boom, boom, boom, boom. It all works. Fabulous, right? A lot of times there are stumbles and you do want your angel team to be financially strong enough that that will get you through that first wobble if there is one. But beyond that, I have to go back and look and say, okay.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Kind of deals can make up for missing Uber or whatever, Zoom or Arista or whatever you want to say. No amount of things can make up for missing something that's gray. So I have mixed feelings on there's a certain price which I think is too high because what I worry about is not that doesn't work out numbers wise, but I worry that it detracts or deters a round people from actually investing because they are more price disciplined. And on the other hand, I also think, but if it's a winner, it doesn't matter. And so you're better off being in it than not. And so I'm a little bit bipolar on it. Clearly, you know, we go through roller coasters and we clearly in seed we're in a price rising moment right now. And I've had deals that have gone up significantly and had to really look at myself and say, am I really, do I really want to do this? And in the end, I have. But I realized we're taking on increased risk by starting at a higher price.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so when I was at Cisco, I took over Corp Dev in 2000. And let me just say that after a bubble burst, you have a lot less to do. And I had a brilliant analyst working for me. And I said, can we go back over our portfolio of deals and figure out what makes us successful and what doesn't? And I sent him off, and the results were just stunning. And there are two things that came out. One, in the best deals, price didn't matter because your returns were so incredible that negotiating over price just didn't matter. And secondarily, what we talked about earlier, which was that really the people and the people, whether they stayed or left, whether we liked them or we didn't like them two years out, those determined whether or not you were successful. But the corollary was if you're a serial investor or a serial acquirer, if you do lots of bad price deals in aggregate, it will hurt your return. But the biggest sin is missing that 10% deal that's the huge winner, right? Because no amount of mediocre.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so first of all, we were in the convertible note mania for a long time, and I am not a huge fan of the convertible note because I've been in situations where what happens when the note doesn't convert and something starts to happen and things get beyond where the note was designed. My preference as a price round, if possible, and so I tend to like the safe because it mimics a price round and it's generally simple and clear and the investor rights and obligations are generally simple and clear. My ideal preference is to do a price round. My second preference is to do effectively a safe. My dislike is of the convertible debt. I think it's ultimately it's a lose-lose for both sides when things don't go so well.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, my LP is my wife who went to business school. I tell her at product love, detailed analytics, but the truth of what I tell myself is, nope, it's 70% EQ. Do I love the founder? So to my LP, no, it's all science. But truth is, it's 70% of it is really the EQ because this is all about the people. At the end of the day, I can tell you I've heard VC say this, but then they go back. And what they really say is, I have no real consistent way to measure grit, to measure the people. I don't know. So I'm going to go back into and spend 90% of my time in the science of product market fit, blah, blah, blah, blah, blah, blah, blah, all the measurable stuff. But the reality is I personally believe, and I actually, quite frankly, I know from my days at Cisco running M&A, that it's the EQ that drives success. It's way, way, way more factor of what drives success is the people. But yet one of the problems in the industry is we spend a huge amount of time looking at the science, if that makes sense.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“What you're building, I believe in you. And I did write him a check, and I said, Here it is. I'm in. And he said, you want to see the presentation? And then I was so taken by my rhetoric. I'm like, Eric, no, I don't even need to see the presentation. I love you. And he looked at me and he said, hey, for both of our sakes, can I show you the presentation? And I said, okay, maybe that's a good idea. So we looked at the presentation. I said, we're doing video conferencing again. Interesting. But it was my strong belief in him first as opposed to worrying about, okay, the product, blah, blah, blah, blah, blah. And what's this? What's that? What's your strategy, blah, blah, blah, when you have a great person? I believe they're going to get to great places. And it didn't really matter the dynamics of the market. This guy was going to build something better than whatever else was out there. And that has proven to be true all along.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so one other concept I want to throw out here, which is there's a lot of debate in the VC world of is this art or is this science? And ultimately believe it's a lot of art and a little bit of science. And the art is you have to be able to look at that entrepreneur and say, do they have grit? Do they have drive? Do they have what it takes to build a great company? Can they hire what people work for them? And, of course, the science does the product work. Is it in the right market? Blah, blah, blah, blah, blah. Literally, Eric was and is one of the greatest human beings I've known. And when I met with him, which was he and I left Cisco effectively the same day. And we met in a coffee shop in Palo Alto and I asked him about the next thing. And Eric said to me, he said he had about, I think it was about 3,000 people who work for him. And within a week of leaving, he had 2,000 resumes in his inbox of people who wanted to work for him. And so at that moment, to be honest, I didn't even care what he was doing. I said, I'm going to write you a check. I'm in because you're the kind of leader that it almost doesn't matter.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Let me provide dives to each of you. I just need one of you, right? But the reality is that it doesn't happen as frequently because you have people who are working now with people they've worked with before and their roles and hierarchy is a little bit more established and people therefore I would say I spend probably 20% of my time or less on founder drama and that provides a huge productivity uplift to me and to the companies.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Why there may be market sentiment isn't. So, first of all, I think if you look at most VC funds and you gave truth serum to most A-stage VCs and said, okay, tell me, what's the number one destroyer value in your portfolio? Found your drama would have to be way up there. When you look, where does founder drama occur? It occurs in young teams who really didn't”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“They were wrong. I had enough data at that point to know that that was wrong and that in fact there was life and oxygen in that space. And quite frankly, even the Arista guys who have had 20 years experience in networking were told, hey, you're building a box. There's no interest in the networking space anymore. That's nuts, right? And today we're 18, 19 billion dollar market cap company. And so I look for the places where you may have less competition and where for whatever reason it's not in the theme of the moment. It's not the popular party to be at.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“When you're going out to do the raise outsized returns. So, Harry, I am a contrarian. I'm an actual contrarian. And the problem with contrarians is everyone brands themselves a contrarian and then says, I'm a contrarian just like that guy, right? I am a real contrarian. What that means to me is I try and find areas where the market is saying no, right? Or the market is saying we don't buy it. And for me early on, what I found was in the seed round, it was much harder for people over 35 to raise seed funds. Maybe it's less true now, but there are still groups or things that are harder to raise. And if you can stay focused on those things, you know, I used to get taken out every once in a while for the patronizing lunch where someone would say, for example, Zoom, people said, oh, you're competing against free with Google and Microsoft. And Cisco's already won this thing. It's never going to work. This shows you're not a real VC. And then I would make them pay for lunch. At least I got lunch out of it, right? But I knew.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“I believe that the reality is that you want as much runway as possible in order to have as much leverage when you get into that A round. So let's just say what's the worst situation for an entrepreneur? The worst situation is at one time I was at Cisco and I got a call. The guy said, look, we're going to disrupt Cisco and we're going to put you guys out of business. And I said, awesome. Maybe I should go take a look at whatever this is. And then he said, by the way, can you call me back by Thursday because I'm running out of money? So you don't want to be in that situation of, yes, I found the cure for cancer, but I'm out of cash and I needed an investment in a high valuation by Thursday. So I think you need enough money so that you can achieve your milestones and achieve the mythical product market fit and still have enough money in the bank that the VC goes, ooh, I better invest now rather than saying, ooh, I'll wait this out and I'll get a better price if I wait a little bit. So I don't know whether it's 18 months or 36 months. I don't think there's a magic number. What I believe is you still want to have gunpowder.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. So, Harry, I am not technical. So if a company calls me and says, we need to really look at the architecture, I realize we're both in trouble, right? So I spend most of my time on the business side and on strategy. And what that generally means is working through issues with customers, working through issues with people and hiring, working through issues around funding strategy. So that's really where I'm strong and I'm going to spend a lot of time. Occasionally, we'll get involved in should we let a partner invest, not invest, how do we deal with big co-relationship we have now? But really, the core of it is helping the founder navigate through the myriad of choices. And I sometimes like to describe myself as the chief focus officer because I try and keep early stage companies really focused on one or two core things and not wander. Because wandering waste resources, waste time, waste energy, and if we can stay focused, we can be clear about what we're trying to do and clear about what it's going to take to get an ARAD.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So I have lots of love for these big multi-stage VCs. The question at the end of the day is going to be how really committed are they to you at the early stage, right? And what you want is you want to team around you that's going to help you realize your dream to grow into a larger company. And are those people going to take your calls? Are they going to deal with the stuff that you have to deal with at early stage? And are they willing to commit the time and energy to that? And then the second problem, which you have to figure out is when they commit to seed, what is their commitment around A and what does it mean if they don't do A? Does that put you in a box? And does it mean you have to do A with them, right? And so I would make sure that founders really explore what does all this mean. The brand of these funds is fantastic. Their networks are fantastic. And the question will be, is do you really get to access those networks? And are they going to be there for the A? What does it mean? And I think that those are the questions I would ask.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“I saw a kid in a room with stacks of paper and I asked the VC, what's he doing? And he said, funny story. He is calling all of our seed investments. And he's asking them, one, do you still exist? Two, have you raised money? Three, was it from us? Because what happened was a lot of these VCs in the earlier mania didn't spend any time with their seed investments because it consumed a lot of time. And obviously it's a long way before it turns into a Series A. And I think there's a chance that that may happen again. And as you know, these markets shift and twist and turn. And so I think there could be a chance that these guys, again, intercede but aren't all that committed when they see how much work there is, where the hit rate is. So I have some degree of I need to focus more. And second is I want to make sure that they're still committed in the long term before saying, oops, I got to go somewhere else.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, this is a great question. And let me just say right at the outset, I believe Sequoia are the best investors in the world, right? And what they have done over a long period of time with multiple generations of management is incredible. So when you see them saying, okay, we're going to attack Angel, that should scare you, or it should scare me. And it does, right? Because I think this is interesting. But the reality is that to me further, you have to be really clear in my case, okay, what am I looking at? What am I not looking at? And what types of things are they going to look at? And what are they not going to look at? And is there enough oxygen in spaces maybe that may not fall into their seed radar that you can still find really interesting things, right? And so for me, it increases the focus on trying to find the seams where for whatever reason, their network won't touch, right? Or won't get through their vetting system. So you have to be increasingly a contrarian in order to try and be successful in a world where sequoia and others are going to be aggressive. Now, let me tell you one other quick story. Five years ago, I was in a VC fund.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“It's no longer that lucrative on that side. And then the second thing has been that a lot of those companies are slowing down the tech and talent deals because what they found was they were angering their existing employee base. And some of the existing employees felt, hey, why is this guy who hasn't done anything getting now this massive retention? And here I am working on the core product and I'm getting just salary and stock options. This doesn't make sense. And so what I have seen has been that both they have gotten.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, here's a couple things that have gone on. So let's say five or six years ago, you had healthy competition to buy tech and talent, particularly with Facebook, Google, even Yahoo at that time when Marissa came there. They were all trying to grow their engineering teams by buying early stage company. Over time, they have become both more sophisticated and more jaded about the process. And they became more sophisticated in the sense that they said, hey, do we really need to pay the existing investors? What we really care about is the talent, even if the headline price is 40 million, 30 million of it may be going in retention bonuses. And therefore, we don't really care what happens to the early investors. And so what I've seen has been that in reality, some of those transactions look a lot more like return of capital or maybe one and a half X kind of returns.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Where companies up and down, up and down, up and down, where people may want to say, okay, it's time to reduce the risk. But there for me, I feel like I want to stand with the management team and stand and say, hey, I support you up and down. And I'm going to hang in there and see if we can get this right. And I'm generally using my own capital at this point. So if I am using my own capital at this point, generally. And so I want and I have the ability to say, I'm with the entrepreneur and I'm going to hang with you good and bad.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. So, this is where I'm a little more old school. So, I do believe there's a time and a place for a secondary. But I also tell a story, and I don't know which VC this came from. It's reputedly, I've heard the story told about three different BCs, but apparently there was a VC who flew to see one of his portfolio company. And he asked the portfolio company, how do you think I got here? And the guy said, you took a jet. And he said, yes. How did you pay for that jet? And he said, I paid for this jet because I never, ever sold the company too soon. So I tend to believe that a lot of returns are there late. If you can hold on for that last bit of return, it's where you see a tremendous amount of return. So I have for a variety of reasons not participated in secondaries so far. And I believe that there will be exits, that great companies eventually will exit, that we will see a return to some larger M&A in markets where it becomes so critical for some of these companies that have holes that have to acquire. So I think on the high end, you're going to be fine, right? Now, there are times at the low end.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Returns in order to be able to keep doing this, and since I love doing this, I want to keep doing it, I'm focused on fighting those few companies that can provide really disruptive returns in order to be able to keep funding the business.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“Harry, this is something that is core to my belief, and I can't tell you whether I'm right or I'm wrong. It's just this is how I feel. And what I've come to believe is that a couple phenomena going on. First, we've had enormous company creation. There have been more companies created in the last 10 years than probably the entire technology business before that. So you're seeing enormous amount of creation. And the reality is that for a long time, the exits have been declining. And they've been declining at late stage because for whatever reason, IPOs are down. Large M&A is down. And it's also the truth that the reality is a lot of the large companies are no longer really thrilled with tech and talent acquisitions. And those acquisitions are turning into less and less friendly for early investors. And we can go into why for a variety of reasons. So when I look at doing this, I'm doing this really as a business and I'm trying to figure out how I can do this in a way that's sustainable. And in the end, the math is very simple. You have to have big exits in order to provide the kind of”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source
“So, Harry, I've been around this world for a long time. I grew up in California, Northern California, and returned to Silicon Valley in the late 80s. I really fell in love with this notion, this sort of romantic and incredibly difficult motion of company building. I was fortunate enough that I landed at a company that did a lot of massive company building and buying in the 90s and beyond. So I was at Cisco early, about 20 months after the public offering, and stayed until it hit around $40 billion in revenue. And I learned a lot about big companies and a lot good and a lot so good about big companies. And I really said, I want to get back when I left Cisco. I want to get back into the core of what Silicon Valley is, which is creating something from nothing. And the best way to do that was to find ways that I could help my friends realize the dreams that they had and capital was a good way to do that.”
2018-05-21 · The Twenty Minute VC · 20VC: Why The Days of Spray and Pray at Seed Are Over, How To Compete In A World of Sequoia Seed Funds & Why Price Doesn't Matter with Dan Scheinman, Angel Investor @ Zoom & Arista Networks · IDENTIFIED FROM THE TRANSCRIPT · source