YouSaid · the spoken record

Mike Chalfen

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2022-07-08
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2022-07-08
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  1. “I don't think that the proportion of mistakes was out of white with a normal proportion of mistakes for me. So I still feel that there were some very, very good businesses that I backed. They cover still a range of different go-to-market motions, end markets that they sell to. And I don't think that any of them are selling to other businesses that are going to be significantly hit by current downturn, any more than the rest of the market. I feel it's a sort of relatively robust crop that I happen to have picked relatively quickly. And then the other way of looking at it, by the way, is am I doing them with disservice by investing a little faster? And the answer is no, again, not really. I feel I'm sort of devoting the right time to the companies and to the entrepreneurs that I promised my time and service to.”

    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

  2. “A wider market if there's a sort of bubble growing, but you know you're building real value. So that was a huge lesson. To answer Stefan's question on deployment, there are two different ways of deploying capital. There's first investment and follow-ons. So in first investments, I've definitely moved faster in 2021 than before sort of reverted to the mean, which for me is three or four investments in it a year. But what I think I'm investing in hasn't changed.”

    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

  3. “I think my reflection on the sort of early busts, good companies are still good companies, but it might just take longer and maybe more dilution for them to sort of come out the other side. I don't believe in sort of the fast payday. I've sort of mentally just don't count on timing. You can't time a winner. Secondly, and this is very fundamental, actually. So I had two great mentors at Apex, Barbara Manfrey and Peter Englander. And Peter was my direct manager. And in 2001, when we were sort of catching our breath and wondering what to do next and which portfolio companies to save, he said the first question is, would you put a single dollar into each of these companies at a zero valuation? And what he was asking was, is this a fundamentally good business? Or were you just playing the market? Were you just playing the dot-com boom? And that has always stayed with me. And that definitely has affected how I invest and how I think of which business to invest that may not be fashionable, may not benefit from some of the sort of momentum in the...”

    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

  4. “Today, but there is definitely a sort of risk asset specific decline that we're getting today. And then what's, I think, harder to call competitive 2000 is it looks like the significant economic headwinds beyond tech valuations, which obviously it's all interlinked with some of the causes of the depression of retreat into tech valuations. But between war and inflation of supply chain instability, and there's a lot to take, and it looks like there's going to be economic headwinds for a couple of years. In 2000, it was really a sort of our corner of the market was suffering, but the wider world didn't suffer in quite the same way.”

    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

  5. “So, as bad as it seems, there's obviously in the eye of the beholder, but I do think that it's a pretty serious correction. I think it feels worse in a way than 2000 did. The reflexivity in the market is just much faster. Stuff happens faster, and that's because of information flow and the web, root cause. So it's hard to know whether it's worse or just things happen faster. So I think that's the first observation. If you sort of divide up a correction into financial and fundamental economics, obviously the two are related, but yes, errors come out of the valuations of risk assets, including tech. In 2000, it was just tech and telecom that really had the error taken out of them. But the web businesses were very mature then. The cost of capital went way up and they didn't have stuff like eBit. And we now know today that the best web businesses can generate enormous profits. So the losses then were a little higher, I think, for most of these essentially public startups, which is what they were, than some of the 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

  6. “It's a very reflective role. You're sort of sitting back a lot of the time, deciding when to act and when not to act. I think it's quite hard to sort of combine being very, very good at that, very, very good at supporting companies and being a sort of operator with a plan who can lead large numbers of people or even a handful of people in one direction. So I think it's sort of a bit of a mix of characteristics. I think they don't always fit well with each other.”

    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

  7. “The first thing was becoming an angel, and they packs the culture was focused on the business rather than the entrepreneur. And as an angel investing day one, even very small dollars, as I did after I left. And it was one of these sort of fulcrum moments where I sort of went from focusing on the business to focusing on the entrepreneur and the business opportunity sort of together. That was a very important moment. When I thought about the lessons from APAX, I decided I wanted to go and be a partner at a smaller”

    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

  8. “Yeah, I mean, I'm in a different position because I don't have a growth pool of capital by design. For me, the question for the company is what suits them best? Does a round with shelf and ventures piling in help them? What are the risks from their perspective rather than just sort of what's my incentive? It's like, what's best for the company is always the first question. And it may be I'm having one discussion at the moment with a portfolio company where it may be actually the best thing is for me to price around and for the best possible co-lead to join and for us to crystallize that round. That may be better than sort of a multi-stage fund investing too early, which we've seen quite a lot of.”

    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

  9. “You're a mid level person, if you were a mid level person at Apex, you would do the right thing in order to look good, further your career rather than optimize returns. Sometimes the two coalesced and overlap. Sometimes they didn't. For example, there were winners that I invested in in 2000 or 1999. And as this sort of upswing in the market happened a few years later, and I remember very distinctly suggesting that we reinvest in one of those businesses, I don't know. eighty or ninety million euros was the valuation, I think. The answer was, no, we're past that. We've left that one behind. We've moved on. And that ended up as a one and a half billion euro outcome. The APAX missed on because it sold. I sort of didn't fight my corner, even though I had conviction. I just sort of went with it as an example of managing my career rather than sticking to my guns.”

    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

  10. “Career rather than managing the money I was investing and everyone else in the building below sort of the very top level was similar. That was something again I only realized much, much later. It was an unusual experience, really set me up well, both good and bad.”

    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

  11. “When I arrived, I went to meet the guy I thought I'd study with who said, I hate this career, I can't recommend it. I read your submission. You could spend your whole life doing that and I cannot recommend it. Good luck. I'm going on sabbatical. So off I went, ending up at BCG, which I didn't enjoy. And I left much to everyone's surprise at BCG to join a venture capital firm called Apex Partners, which was then a venture firm in 1996. And Apex is an unusual place at the time, partly because there were only three firms in London that did VC. From the beginning, I had to sort of do all my own legals, do all my own numbers, write my own recommendations. And so it's very good training, in fact, for what I did later and do today. And although the funds got very big, you sort of learned the value of every dollar counted. We didn't sort of walk away and just lose money casually, even though the funds were pretty big. I think I was a 31st in youngest partner, but it peaked at 41 partners. I learned quite a lot about big partnerships. And lastly, when I look back, I was managing my”

    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

  12. “Like, this is such a joy to do. I've wanted to do this one for about seven or eight years, but thank you so much for joining me today first. Thank you so much for having me. And I'm sorry that I didn't join when you first asked me. I'm a slow learner, but I eventually made it. Listen, it was only my mother that actually listened back then. So I think it was a strategic wise move for you to do. And for those that actually can't see on TikTok, Mike has the most brilliant bookshelf behind him, which just shows how wise he is. But we're going to start today with Mike's intro. And so tell me, Mike, how did you make your way into the world of Vanchure? And then how did you come to found Chalfan Vancha's obviously most recently? Sure. I grew up quite nomadically. We moved around a lot and I was very interested in sort of fairness and in sort of how the world ought to be because wherever I went, I was a fish out of water and nothing seemed to be how it should be. So I did the obvious pass to get intervention, which is I started studying civil rights history and got a fellowship to the US to pursue more history.”

    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