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Nick Chirls

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2024-09-06
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2024-09-06
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  1. “If you're doing really true early stage investing, I hate like, for example, like, okay, we see an idea. It's a pretty good idea. Our assumption now, it's a pretty good, well understood idea. Like the market will understand this. Our assumption now is there are at least 10 to 15 competitors to that company. Maybe we know a few. It makes me really uncomfortable to invest in a company where there's 20 others that are doing the same thing that I don't even know about. I don't even know who they are, where they are. how good the teams are what i love investing in is companies i wouldn't describe it as contrarian it's not like the market is like we hate this thing actually the market is we just don't care this doesn't seem like an interesting big opportunity like we just don't care my bet is that for some subset of those companies in the next three to five years people will care the venture market will care the market will care at least that's the only”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “I'd much rather do momentum investing or consensus investing in the winners at series A, series B. If I'm trying to pick the winner in a very crowded competitive category, I'd like to see some data across how the teams operate, across how the companies.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “I think that's true for the average seed fund or pre-seed fund for sure. We're not, I don't think, doing this to be average. If I've learned one thing over the last 12 years or 13 years investing is that the only way that I personally have ever made money, and I think this is probably true for most of early stage investing, is to invest in something that no one cares about yet. That's it. And the things that no one cares about yet are not 25 post. They're five or ten. That does not go away. I'll give you some examples. Like the way this works, right, is that I think the way that this basically works is like there's a new category that's defined by a company. Some VCs were in that company. The big firms then say, holy shit, we missed that company. We need to go fund lots of similar companies like that. They put out a siren call. And then all the little firms run around town.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “For something meaningful, standing for something meaningful, by the way, means that as many people are not going to like that thing as they are going to like that thing. That's actually what's standing for something means. And there's a few. Founders funds, maybe Sequoia stands for excellence. I don't know if that's differentiating enough, but like I think that's the only way to actually take some margin and actually have a competitive advantage at large scale. Small scale, we can talk about this endlessly, but like for the right small scale firms, those firms will continue to produce very, very, very good returns for a very long time.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Yeah, so if you extend the analogy to the big banks, large banking institutions are mostly commodity products that are very low margin. I'd argue the same is true for the large venture firms. I'd actually maybe make one exception. I think the one exception for me would probably be Founders Fund. What I've come to believe in ventures that the only thing that is actually differentiating is actually standing for something meaningful. Sector, stage, I mean, notation was a precede firm. We were the first in New York. We had an advantage in New York because we were early and the only pre-seed firm from 2015 to 2018. I think pre-seed as a concept is it's no longer unique. It got eroded away, got arbitrage away. I think for the most part, stage sector geo focuses, these things get arbitraged away. They are not sustainable positions in Venture, in my view. The only sustainable position is actually”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Totally agree. Whatever. That's a funny thing, right? Because it's like it's hard to actually ask. You could ask for people's tax returns, like sort of like understand roughly what they make and how much they're worth and then sort of back out from that. That may be a valid diligence.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I can, so like, we don't talk about this often, but the notation returns have been extremely good. First couple funds in particular made a lot of money. And so I do have that luxury. I have the luxury of taking that and actually investing it back into a firm. I would argue that over time, even wealthy folks that have made a lot of money in this business or venture don't put any money into their firms.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “You have a long track record of producing returns for your investors. I think you have arguments to charge a certain rate. Like, I mean, you can take Renaissance. That's probably a very good example. I think famously they charge like 70% carry and produced, by the way, like net to LPs like 60% or whatever, some insane rate of return. The reality is most venture firms don't make money.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “That's a really good question. I think a lot about how many VCs would be doing this if they had to actually pay back the management fees if they didn't make any money. Like how many VCs would be confident enough?”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Matter. The ventor, Honzi, you raise a fund, you take 2% management fees for 10 years guaranteed. It does not matter how well that fund does. And you've taken 20% of that fund and put it in your pocket. That seems absurd to me. It's obviously the main driver of incentives throughout the venture industry. You don't have to make a single dollar and you take 20% out of the capital raised and you put it in the pockets of mostly employees that work there. The other thing I would actually say is I've never understood why venture doesn't have a hurdle that exists in most other private asset classes. You can do reasonably well and not even do as well as the Nasdaq and the S&P and you're still making money.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “So, like, I have this view that every particularly private asset class has its own version of a Ponzi scheme. The hedge fund Ponzi scheme. The hedge fund Ponzi scheme is you take a lot of money, you take insane amount of risk, you double that money one year, you take your 20% of the bonus in cash. The next year it goes to zero and you don't have to give that money back. That's the hedge fund Ponzi scheme. And we saw this, by the way. I saw this at Lehman Brothers back in the day. Traders, you're gambling with someone else's money. So you're incentivized to take as much risk as humanly possible with the bank's money. You take a ton of risk. You get a $20 million bonus that year. Great. You lose all the money next year. You get fired. You go across the street to another bank and do it again. I think hedge funds are sort of a similar proposition. The private equity scam is like we probably all know this is like you can invest in a company. It doesn't actually matter how well that company does. You can take a lot of money out of that company. And if it goes bankrupt, it doesn't.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “AUMs, as you know, and so we now internally at Asylum, we call them the Big Bangs, not all that different than Lehman and Goldman and the others back in the day. My mission now is to provide an alternative to founders, to the big banks, and ultimately over the next five, ten, 15 years, be it gigantic thorn in the side to the big banks. That's my new mission. It's very personal.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “$55 million fund. We write 500K to $2 million checks. My mission is personal. I started my first job at a college was at Lehman Brothers in 2007. It went bankrupt. I joked that the only good day at Lehman Brothers was the day it went bankrupt. I found startups in New York shortly afterwards around the financial crisis. And it was everything that Wall Street wasn't. It was creative and it wasn't all about the money. There were these young kids building all these creative new things on the internet. It was kind. It was nerdy. Everything that Wall Street wasn't. I fell in love with it. Fast forward to 2021. I felt like basically all the same people from Lehman showed up. Highly transactional, all about the money. There was no real art or creativity. Very private equity like finding the company, dressing it up a little bit, handing it off to the next guy. And I was about as unhappy as I was in 2021 as I was working at Lehman Brothers in 2007. The big firms have gotten huge. They have gigantic”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “We're launching asylum this week. I decided to do a completely insane thing and start an entirely new venture firm about 10 years into notation. I ultimately felt like notation was built for a moment in time. It was the first precede firm in New York and one of the first precede firms in the US. And ultimately, I did not feel like it properly represented who I am and where I think the next 10 years or 15 years of Venture go. You know this, Harry, a venture firm is a very personal expression of a GP or set of GPs and there's a new mission.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Thank you, Harry. It's a pleasure. We were just talking about this beforehand, but I think the last time we did the show together was almost 10 years ago.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Your junior partner, like a VP at Goldman, they are compensated and promoted based on money velocity, not money returns. What's an ideal company for that model? It's a company that requires insane amounts of capital. Like the foundation models are like a big, big VC firm's dream. They literally require billions and billions of dollars to go pie effectively NVIDIA GDUs. What is the business model for large venture banks? Yeah. It raises much money as possible. Get that money out the door as soon as possible. Raises much money again and rinse and repeat.”

    2024-09-06 · The Twenty Minute VC · 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures · IDENTIFIED FROM THE TRANSCRIPT · source