YouSaid · the spoken record

Mike Chalfen

lines on the record: 62
first: 2022-07-08
most recent: 2022-07-08
sittings or episodes: 1
sources: podcast

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“Hopefully, some of them were interesting and useful to you. But when we meet, there's a lot to talk about. A beneficiary. I learned from you too. It's two ways. I think that's the best Lucky to have the mantles I have. I think honestly, the hardest announced investment and why did you say yes and get so excited sure the company is called Ockley and Oly creating on the face of it just an ingredients marketplace where”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think there's enough mentorship. It's partly because as information flow has accelerated and grown exponentially as we see with your business, younger and younger people have incredible access to experience, precarious experience. There's a lot to read and absorb. I mean, young people today are so much better in the industry than when I was the equivalent age in the industry when I was starting. I mean, really, it's no contest. You know, when I started, we had an information department, the basement at Apex. They had a fantastic woman, Jackie Meat, who would help find a bit of information about market if we needed it. And contents pages of reports are available on CD-ROMs. We faxed to her and we would decide if we wanted a chapter on the whole thing. I mean, there's so much information that is available. And yet, I think that people going through the industry still need to talk and to bounce things off other people. I think that there's a people need mentors, I think. You know so much. You've done almost 4,000, I think, of these shows.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“You've done your best, there's really nothing else you can do if you treated people well and with kindness in difficult times, that matters a lot. The biggest conflicts, I think, come when you're trying to hold too many different things in mind that are really not compatible with each other. And the quicker you admit that you've made a mistake, whether it's an investment decision or how you communicated with an entrepreneur or when you prioritize work over family or vice versa, you just got to be very, very honest with yourself and think that removes a lot of tension and weight from difficult times.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“I largely agree, but it's not every fund can lean in and do more than pro rata. Not every company has the capacity to bring in the investor they really want and allow us to invest more than Pro Rata. So it's a sort of useful artifact in the market. And there's, I think, a difference between what we can do and what we do do. What you've just said is theoretically true, but not very practical.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“To your performance, to keep going, or whether you should sell some of that stock. So, my point is not that I want to sell. It's that you've got to sort of as a manager, these are decisions. And arguably, businesses where you are not prepared to invest, logically, if not emotionally, you're a seller. So you just need to be open to examining these points in time as if they're decisions rather than around us happening. I'm just going to sit back. Sometimes that's the right decision, but you need to be open to weighing it up. You're asking for quickfire and I gave you a speech.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Two different things. And actually, a long time ago, there was an AVC of Fred Wilson blog about this about selling Twitter on the way up. We build a portfolio. And if you can take money that looks like it's going to make another 3x and put it into a 10x opportunity that's earlier, that recycling is actively good. Now, you might get it wrong. It might turn out that you backed Twitter and it was a terrible mistake to have sold early, but you're backing your judgment about where in the portfolio will generate the most alpha today. So if you're not open to that because you're wedded to not selling because something is the current winner, then you're sort of not really looking at how to optimize returns in your portfolio as a whole as opposed to forgiven atom. And we have different LPs and there are LPs that want money returns sometimes. And if you are looking at holding something fully, when there's a chance to get out, if it may be another three or four or five years before you can sell, then you need to look at not just what you think that company might make over the next year, but over the next five years and determine whether it's fundamentally”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“If seed is an intrinsic part of their business and they're prepared to get up early occasionally rather than have every joint meeting start on West Coast time, I think it's completely fine. Well, this is a remote first world. As long as this investment is important to them, then go for it. I would be very happy to co-invest with a good USVC on most investments I made.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Give you two answers there's entrepreneurs experience of them, and then there's how they operate internally. So the entrepreneur's experience of them, it's the process. You meet someone, you explain your business, you then meet two people, you explain your business, then you might meet the partnership, you explain your business again, you've repeated yourself three times at this point. That's not a good customer experience. That's sort of one issue. I understand why it operates like that, but I don't think that's a great experience for the entrepreneur. And, you know, in the world of Loom and video, surely we can do better. And then I think the sort of venture partnership solve for stability because it's such a long-term business and there are these sort of carry handcuffs that sort of investing that encourage people to try and stick around. And I think that as a result, dissent is very, it's quite a big deal to have proper dissent. And I'm not sure that there are lots of different ways of dealing with that and a lot of firms change their, for example, their voting processes and approval processes for investments quite frequently because, and they do that because the firms are evolving, but also no one's really got a good answer for that. Actually, they don't have”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I like sort of fish out of water books, novels I'm talking about, where people go through conflict and they have to adapt and they learn about themselves or they don't adapt and you see what results. Some very different examples. There's Days Without M by Sebastian Barry I Love. Don't Let's Go to the Dogs Tonight by Alexandra Fuller, completely extraordinary memoir. I'm like Werner Herzog movies. I mean, it's all the same. There's a wide range, but that's kind of the theme.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's then up to the entrepreneur to disagree with Alfred if that is the correct path. But I think an intellectually honest discussion is sort of saying don't understand why you said that this is the most important point, Alfred, or that this is why I disagree, and then you can go at it.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Depends. So there are founders that are very good at saying here are the two or three big problems right now, and this is why these are the big problems, even if numbers four, five, or six may look important to you. And there are some founders that really aren't very good at that. I think setting the board agenda with the founder is kind of important. What we should discuss is direct result of the problems that they are encountering, although they can see coming over the hill. And I think most first-time founders are not that good at anticipating something that will be a problem in three to six months. I think that's probably where you and I can be the most helpful in ask asking them to think that through. So that's probably where I would ask the most questions compared to the material I'm being supplied with.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“That's not a good way for the company to get value from me. The company should basically determine when they want to talk to you. And actually, I'm going backwards now, the conversation. By the way, with boards, what drives me mad is everyone's accruing the right to be on the boards round by round. One or two board members get added. statute of limitation after three years you no longer have the right to be on the board boom and then if the team wants to invite you back that's great and it doesn't and if you're an early investor they may not exclude you from the next board they may determine that actually the series a investors just not very helpful so they want to lose that person and keep the seed investor i mean it should be up to the company”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you need to develop a good enough relationship when companies mature. It's okay for them to spend less time with you and okay for them to pull you in when they need you. So I think the natural, people talk about rounds as sort of the natural demarcators of when an early investor may start to spend less time with a company. In my experience, it's actually not about the rounds, although it's related. It's more about the maturity of the team. So if you're a CEO and there's a co-founder and you don't really have a team, the relationship with the early invest is super important. But the more competent people you have around you, the more you inherently bring decision making into the group and you start to distinguish between stuff that happens inside the business and sort of working on the business. And the investor perspective is working on the business. In those early days, the two kind of really get mixed up. So I spend less time with winners because they don't need me because they have good teams. But when they come to me with a problem, it's usually a problem that I'm best suited to deal with and we can really go into it. And where you want to spend time, because these are your winners and you want to feel like you're making a difference.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Not distinguishing between opinions weekly held or strongly held, and not distinguishing between advice that they are in a good position to give or not in a good position to give. We should all, it's not just young investors, we all sort of slightly miscategorize that some of the time. I think being very clear when you've got a question and you've got an opinion and you've got advice. Those are just three different epistemological kind of categories.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“It shouldn't be reporting forums. I think that's one of the reasons why boards aren't very helpful is that they're misconceived as reporting forums. And you should really split apart facts and reporting from the strategic issues arising. That's where you should focus your time. And then a lot of boards, there are people who are sitting around the table very quietly, and sometimes they're firm or they could be very helpful on a given issue. And I think that we don't always look around the table as a tribe. We don't always look around the table VCs to sort of determine who around the table is the best person to help. with this one problem, either because they know it or because they have a portfolio company who's particularly strong in this area or who have the problem and overcame it. I think there's a lot of sub-optimal sort of resource offers that result.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, do they add value and do they add the right value at the right time? So, my view is that at seed stage, a board is of limited value. The most value is weekly, bi-weekly, spending time with teams, helping them solve problems quickly so that they're not waiting for the board in order to say, by the way, I've got this problem. And the cadence of the board is often a sort of determines the cadence of reflection by the team. And so at seed stage, I think the board is negative. Even if it's a helpful board, the most valuable thing happens, frequent cadence outside the board. And then when a board becomes more useful partly perhaps because there are more investors involved, but mainly because a company's plan is clearer. I think too many boards are talking shops, but even good boards, I think, are inefficient. So with a board, you want to clarify any factual questions up front. So information should come out early, factual questions clarified, and then sort of agenda reprioritized according to what feedback is on what the big issues appear to be. Then you want to focus the discussion on those issues.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Think you've got to be competitive on the field you're choosing to play on. I'm not uncompetitive and I'm definitely not uncurious, but I'm happy with the trade-offs I've made.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Balance pretty interesting and some sort of reasonably confident that what I see will produce stellar results. So I'm sort of at peace with that choice.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, child financials is a solo VC. It's just me, and I don't want to have a lot of noise in the system. I don't want to be chasing every possible investment because then I can't provide the service that I think is at the heart of my business to the entrepreneurs that I work with. So it's a sort of business choice. It's a business model choice. If I didn't feel I could find differentiated, potentially large businesses that other people don't necessarily see either at all or see as attractive when I invest without seeing every possible investment, then I shouldn't be in the business. So I do feel like that. It's a sort of combination of a business model choice without which being a solo VC thing is just not possible, but also the sort of being content with my strategy and how I operate. If I wasn't content with it, then maybe I'd suffer from emoj more often. But when I look back on my career, what I found interesting and maybe my partnership supported weekly or didn't support or invested in with my own money has been”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“In enterprise in particular, a lot of larger businesses actually want services. Like there's a reason workday and SAP have big services lines. Customers want the provider, the vendor, to really hold their hands and make sure that value is delivered. And that stickiness is an underlying reason why it might be hard to automate something even if you wish to, even if you could, very hard to get away from that sort of client need.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Think businesses that start as services and the objective is to build out, use the service process to build out software to automate, I found that very hard to do. And so I've invested in businesses like that a couple of times in my career and just got that transition completely wrong.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“You can imagine that once that's proven, really not very many times that sales cycles and rollouts will happen relatively fast. So you can sort of imagine what good you can in economics will look like for that business. I'm giving you a deliberately specific example that's sort of relatively obscure, but even with a type of business which the broad market doesn't sort of associate with good unit economics, you can imagine what good unit economics looks like for most businesses. And you can assess whether the conditions required for those unit economics to obtain. whether those are really likely to emerge does that make sense you're not looking for proof of unit economics but you've got to imagine all the levers clicking into place so that good unit economics emerge over time”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. Good unit economics basically means you can ultimately at some point choose to control your idestity. What it means is that there's some size, whether it's 10 or 50 or 100 or whatever million dollars of revenue, at which point the company could choose not to rely on capital to grow. That's the heart of it. So my view is poor unit economics mean you're always relying on the next investor and ultimately the greater fool. Now most businesses, to your point, most businesses don't know if they have good unit economics at very early stages, but you can sort of imagine what good unit economics would look like for a given business. So if you have an enterprise software business, applied AI for a given process in the semiconductor industry, if it's addressing an acute pain for fabs, and if there are very few competitors to that business, even though it's got long sales cycles and after sales, you need to prove that the technology delivers value to customers.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Then maybe it would have been a great decision to capitalize them well. But unfortunately, I think, as you said, foie grade them.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Which, if it's doing well, I won't need to put endless amounts of money in. And if it doesn't become that big, it at least compound very, very profitably. So an example is a winner for me from 11, 12 years ago called The Foundry, which was making $35 or 40% margins when it was really not very big. And it didn't grow that fast, but it produced 40% margin, 35, 40% margins for 10 years, growing at 30, 40% a year, requiring no capital. That's the sort of very interesting model. That's not a great investment necessarily for a huge fund, but for most funds, that's actually interesting model. Ideally, they're growing faster than that, the businesses, but that's sort of a different point. And then there are businesses which are real moonshots. The trick there is not getting sucked into imagining that they're sort of huge and ready to scale when they're not. And that's a way that the whole market, in my opinion, the last two years has sort of overfunded businesses as if they're ready to scale. And if only that money had been held back for a year or two.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Very acute question. I think that's true. However, I think that there are two different kinds of good businesses that broadly that we could invest in. One is a business that you just don't know how big it will be, but the economics are going to be very strong. And that's sort of fundamentally different trajectory than a business which needs to be very big in order to have spectacular economics. The mistake in the last couple of years in our market has been a lot of businesses that could be good businesses at prices if they could be enormous businesses with unbelievable economics. So they've been missed in terms of their cost base as a result because they've been overcapitalized, therefore missized in terms of their cost base, and then we're in sort of a world of pain as investors and founders suffer as a result, employees don't make the money they could have made if they sort of taken different decisions. So I think if we categorize those two right from the start accurately, that helps a lot in terms of not being over specific in terms of outcome planning, but you sort of say, I know that this is the sort of business.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of diligence wise. So to me, the question is sort of when something's not obvious, can I imagine how it could become very, very interesting and possibly dominant? So very different and possibly dominant. To me, that's always worth a look. I probably wouldn't take another look if it looks like it's the 10th business making Salesforce data all freely available to salespeople. I mean, or whatever it may be, where there's a low barrier to compete. But if I think that a business genuinely has a different view of the world, ideally both in terms of its technology choices and the business outcome that's possible for customers, that's worth a look.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“It's very, very hard because it's such a social business and there are referrals and people take blind references and should I work with this person? And I think there's a lot of smiling and nodding. And it's just part of syndicates coming together quickly, part of rounds happening quickly, sequentially for comfort companies. It may be that in the next year or two, we'll are a bit more upfront because we kind of have to be.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it made me more upfront. Having gone through that, there's a big difference between someone building a business and someone building a business you think you should put money in. And the most important thing was being very upfront about it. And it was a very clear decision process. And it was very hard. And it wasn't even because I didn't think they were going to build a good business. It was just a business which fell below others where we wanted to concentrate capital at a time of scarcity.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think the dot com crash being faced with is what you have invested in actually a good business. That was very, very tricky. And as part of that, I remember turning down, in fact, not one but two entrepreneurs. These two companies that were competing, they decided the best idea was to combine. And it was two entrepreneurs who were good and would be complementary. And for the combination to happen, all it was going to take was for Apex to say, yes, we would put from a very large fund from a 1.8 billion euro fund that we put a million euros in. these two entrepreneurs were Mark Schuster from upfront now and a guy called Mattin Negrin who I respected a lot. We said no and that was my recommendation was not to put a dollar in and it was a mistake in the sense that Mark built a business and it was probably not a mistake in the sense that where we did concentrate capital ended up as bigger, more valuable businesses. That's a very hard discussion with entrepreneurs who were very good. So that was a sort of painful moment.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Been a long time coming just from a stage perspective, so it didn't feel unnatural. It was nevertheless pretty hard. We had the conversation, I think I was doing jury service, and I was perhaps uncharacteristically quiet that week. But I had a coach who kind of really helped me figure out that it was just a fit problem. There was something wrong with me. It's just there was a fit problem what I was and what Apex was becoming, had become two very different things. So it was okay from an ego perspective, but it wasn't easy.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you've put yourself in a position where you're the best person to what you are doing in various ways that we could talk about if you wish. 20 minute EC is exactly what you should be doing, both as a media platform and as a fund. And whether I felt I was better than people or they felt they were better than me, which I'm sure happened a lot, definitely a couple of people who were normally one or two years behind me at Apex said over drinks, you know, I still understand what you invest in. What's that? What's this? It's kind of crazy. So there's definitely two ways to treat. The question is not, am I better than you? The question is, given what I think I'm very good at, is this place the right place for me? And actually a lot of the last few years at Apex on Apex scaled and I ended up, I think it's the last remaining venture-focused partner in what was becoming a growth and buyout and then a buyout shop. I was sort of isolated and I shouldn't have been there and it was right that I didn't get to stay and that I left. And the beauty of what you and I do is that we're doing exactly what we should be.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“No, in terms of behavior with colleagues, and it wasn't senior colleagues, it was sort of peers. You didn't say, look, this is a terrible threat. He's just saying, just calm down, just calm down. And it was very well taken”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“It was definitely a problem. There were very tiny differences between me and other people who were on the way up in the organization. Those people felt their differences more than was appropriate, and I probably also did. So that created tension. I was dealing with more volume than anyone in the building had ever experienced. And the dot-com, the pace of company creation was pretty intense. And, you know, I was under a fair amount of pressure. I had two small kids. My marriage wasn't great. I was definitely not sort of optimally placed to have perspective on life at that time. It was definitely a problem. And what made a difference was actually one of the most experienced people in the business, actually an operator who became a very, very good investor, telecom investor called John McModigos. He's called me into his office and said, I just want to talk to you because I think you're very good. But if you continue as you are, that will be less important than whether we want you to stay here.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Rather than just sort of analyzing the situation and telling them the answer, which is rarely the most effective path to communicating well.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, quite a few things changed me, not just being a parent, but a lot of things fed into it. I think even more important than parenthood actually was just significant things going wrong in my life. So in a short ish period of time, unfortunately, my father died very suddenly, quite young. There's the sort of dot-com bust and sort of I had been the glory, you know, not the glorious internet kid, but, you know, like the king of Apex internet, and that was all wonderful. And then it all kind of turned out I was a prince and it turned out I was the pauper. I got divorced and then dumped like Apex fired me. And it was not personal, it's just to a stage. You go through a period of time like that and you don't do things from a position of feeling like you're better than other people. Like life's a great leveler. What worries me in the venture business to a degree is people for whom nothing's ever really gone wrong and life's been pretty easy. So I think going through those things that I describe was incredibly impactful and sort of my ability to start with the people in the room feeling understanding what they're feeling like.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“You don't say, I don't trust you anymore. You say this hasn't happened, and that's a problem. It's just facts. And you say it with empathy. You say, I understand this is hard. And then you sort of make it there. It's a decision maybe that they need to take with their team about how to reallocate responsibilities or give them the support they need to perform better. But you sort of give them a window of time to resolve matters. And the answer is you've got to give people their dignity. So find a way to do that.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“No, for sure How I work generally with early stage entrepreneurs is we're in touch pretty frequently. We have typically a weekly or bi weekly call and it's a standing call. And most of those calls are devoted to what is a problem that we're trying to address rather than updating me. So it's like 30 seconds, 60 seconds on quick update. Here's a problem we're trying to deal with. Both ways there's openness. As a result, just that cadence, the entrepreneurs are not constantly in sales mode. They're sharing and we're hopefully resolving problems together. So when a problem comes up, which is put a performance problem by the founding team amongst the founding team, you sort of first of all need to start by saying this is a hard one. You acknowledge it's hard. You sort of say, look, here's some things I've learned. This is how I've learned it. Do we agree just on that? So say, look, this is now, it's a shared problem. It's a problem for the company. What's the best way to resolve it? And you rightly sort of present it as a shared problem. And you need to sort of get well planned for the company.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, so it's very rare that the answer is this is never going to be 10x, but it's about probability weighting. So I'm very unlikely not to contribute. I'm much more likely to put in an amount that suggests what I think the return opportunity is. The reality is that the fund sort of small solo VC, I'm not Oren, I'm not expected to lead the next round or hope to lead the next round typically. So by sort of removing that possibility from my funds by virtue of size, you know, they're sort of sub 100 million dollar. I'm under less pressure to invest a lot in the next round typically.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“You've got to believe the new money is 10x money. And if it's not, then you need to understand whether in the portfolio you've got whether a sort of more growth return of 3 or 4x or whatever the number is has a place in the portfolio.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so it's nine or ten investments in a fund, core investments. So within the sort of day one to series A kind of bracket, day one, it might be a one to three million dollar first investment and a series A could be up to eight from my funds. So that's the first thing. The second thing is from a follow-on perspective, how quickly can you learn whether to really concentrate on one business? So I think you wouldn't want to get over, I don't know, 10% of the fund, 10%, 11% of the fund with a first check. But if you can pick two businesses which you want to become 15 to 20% of the fund, then that's sort of a very positive outcome.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the web is such an incredibly efficient discovery mechanism for needs that you can usually find some kind of indicator as to whether there's an unmet need that exists even if it's not called the market yet, not coalesced into a kind of clear market. So I've got one company in stealth where its service hasn't been announced. It's sort of you've got to really hunt it down to find it. And then you need to describe how you would use the service as a customer before they decide whether they can help you and want to engage with you on a sort of private one-to-one basis while they sort of build and perfect their product and their onboarding and make sure they're adding value. And that business gets about 25 inbounds every day of businesses. That's an unmet need. There are ways of triangulating these unmet needs. I think if you're talking to yourself and you're persuading yourself that there's an unmet need, I would sort of catch that. Does that make sense?”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's all of those things less stage. It's also, however, how much capital is required to learn. That matters a lot. And it's also how many investments require a completely new market to emerge. You've got to have some investments where that's a question. You actually don't know if the market will emerge. You may have a hypothesis to why and why now. And then some markets where you're attacking a large market which has for some reason vulnerable or weak or lazy incumbents or incumbents with incredibly high margins which are beautiful to attack with tech businesses.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I agree with what Oren said on the show that LPs don't need diversification, but they get it naturally in their portfolio. So it's really a question of what's the right construction for the fund. I was talked a little bit earlier about having no real regrets about sort of what I'd invested in in 2021. And what I was saying was that there was the right mix of end markets, go-to-market vectors. There's freemium, there's small business SaaS, there's marketplaces, there's enterprise sales, there's a sort of range of go-to-markets. important to me is that you sort of have a reasonably sort of anti-fragile portfolio construction, not by virtue of having 30 or 20 or whatever number of investments, but by virtue of having different kinds of risks that you're taking with your investments.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and actually, when you say five, it's interesting. So, there's been this fashion of inviting lots of angels. And you really want to know exactly what each person's going to bring, whether it's a fund or an angel. You've got to sort of ask them, what will you do for me? As long as you know that, then it's great to have someone on the cap table, but I think I suspect not every cap table is created like the team that you just described.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“I may say, look, I'd love to be your only investor, and this is why you might pick me to do that. But there may be a better solution, which is a split round. Well, you may decide that you just want me as a follower. Like, let's just talk about what your goals are and what the best round is as a result and how does shelf adventures fit into that becomes a derivative rather than the goal of the question. They know you're problem solving together from the beginning, which is how it should be. So quite frequently in the last year or two, I've issued term sheets to companies saying I can underwrite the round or I want to invest at least X, which is typically half. So they've got a choice. And actually what's come back is probably half and half where entrepreneurs wanted me to take a whole round and half the time they wished for me to share a round with a very different kind of investor. That's what I meant by that statement.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“There's two different things. One is that I think Frank Rootman from QED captured it about solar VCs that we deliver quite a lot of Ang for buck. We should deliver a lot of value compared to the dollars we invest. I think it's a product that entrepreneurs want and they know that by having someone like Chalf Adventures, a firm like Chalfentures involved, we're not going to try and dominate the cap table for the next three rounds. We're sort of giving them maximum advice and help and support now and then hopefully setting them up for success. So that's the sort of product, I think entrepreneurs would like. And then in terms of what it means financially, it means that I'm not trying to own 20% of every company. I'm not trying to dominate each round. Most entrepreneurs have a specific sort of set of goals for a given round, especially early stage. What are the milestones they want to reach? Why are those the right milestones? How do we get there? And they ought to craft a syndicate around those goals. What's a syndicate that will support them in reaching those goals most effectively and efficiently?”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“It depends what your strategy is. There are businesses that aim to take share in an existing market, often it's a more efficient service or whatever it may be. There are businesses that aim to create a new market. Sort of if you're either create a new market, sort of end of things, then quite often it will appear to be completely strange. But I learned early in my career, any business opportunity where I or my partners thought it was a very good servicer, they would definitely use. That was almost certainly addressing way too small a market opportunity. So really what key things has discovered is that his friends don't represent a big enough market opportunity. Probably true.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“It just means it's forcing you to acknowledge you might be about to make a decision which goes against sort of what you set out as how you do things. And that may take a different level of conviction to break your own rule.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source
“If you probe carefully enough, most people were feeling insecure before the crash, but obviously it's come to the fore. Look, I enjoy mentoring. I had these alive conversations I have. Sort of what I've been trying to communicate is you're not alone and there's a big difference between being uncertain, which is completely natural and in fact it's built into the experience of being a VC. There's a difference between being uncertain and insecure or anxious. And you can embrace your uncertainty and actually that if you face up to it can reduce the level of anxiety. So that's the first point. The second point, I think, is that you need a framework. Everyone needs a framework. But you need a framework to figure out which way is up, which companies am I going to spend time with and why. And again, if you create a framework that makes sense to you, everything else flows from that and you no longer have to look at every single decision by itself and sort of be a first principles thinker every single time. Now you'll still find that there are some situations that don't easily fit into the framework. And it's not a bad thing.”
2022-07-08 · The Twenty Minute VC · 20VC: How to Build Anti-Fragile Venture Portfolios Today | Why Diversification is Overrated in Portfolio Construction | How to Think Through Sizing Investments, Market Sizing and Pricing in Today's Environment with Mike Chalfen @ Chalfen Ventures · IDENTIFIED FROM THE TRANSCRIPT · source