YouSaid · the spoken record

Roger Ehrenberg

lines on the record: 71
first: 2024-02-19
most recent: 2024-02-19
sittings or episodes: 1
sources: podcast

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“10 years is a good time horizon. So in 10 years, I'll be $68. There'll be 36 and 33. I would aspire for them to be day-to-day running pieces of our family business with me really serving more in a chairperson's capacity, but with them being the principal operators. We talk about venture, and that's where we spend most of our time, but there's lots of other things I do too. Like I've got this pretty significant real estate business and I have this deep interest in affordable workforce housing and investing in Detroit. I've got investments in food and beverage. I'm like very invested in the rejuvenation of Detroit. That's something I'm very, very passionate about. And it's not just in Detroit kind of the Great Lakes states and believing that that is a great place to do business and ultimately with the intersection of climate change.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“There is something to the general view that VCs think a lot of themselves and probably attribute more skill to themselves than they actually have. I think unless a VC is proactively and consciously humble and aware of the limitations they can have on the outcome of a company, then they're probably value destructive.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the best founders aren't dependent. I think the best founders benefit from really good VCs to act as a sounding board, especially in those earliest days and to give them honestly empathy and psychological support because that is often the hardest thing to get when you're struggling at the beginning and trying to get to product market fit. Again, like the very best companies that we've been involved with, the founders were all amazing. They all were highly self-motivated and independent. Like they didn't want to lean on us as a crutch and didn't. But I would say to a person, they all benefited from us as strong, stable, safe partners to process hard feelings and hard business problems in those early days.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Different. Take risk. Don't play it safe. Have a deeply held thesis and just put it out there. Be shocking. Don't be a sheep. Don't follow the playbook.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say I am weakest today on C and strongest on when. C because my energy is much more focused on my current company's tremendous energy on having them be their best. I am not out going to conferences and doing all the things that I did in my younger days because I'm just fucking tired. But that's what my kids for. They are going to scaffold the sea.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, certainly with the different head of the FTC, I mean, the pendulum has swung all the way in the other direction. I think you could argue that antitrust was extremely weak for a generation, and now it swung all the way in the other direction. I would expect it to come back the other way, yes.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“The ability to withstand short term pain for long term gain is a superpower. So being able to manage your own internal stress and to let a thesis play out, even if it's unpopular and unconventional, can lead to amazing compound returns. You just need a long enough time horizon.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“No, because of something we talked about earlier, which is with this tremendous influx of institutional capital and with pro-teams, producing the NFL, I would guess, becoming PE investable, return expectations are going to come down and prices are going to go up.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“We disagreed or had a fight. And I knew I fucking knew I was right. Network. That's just the wrong frame. You can have a disagreement. You can argue and fight. Firstly, you should always fight fair. Words matter and not being very conscious of saying hurtful things because you're hurt and you want to lash out. Sometimes it's important to just take a breath and pause and not say that thing that you want to say because you're so red hot. Just don't say it. Take a deep breath because I guarantee you that next moment will be better than had you said that thing. And it's always better to have hard conversations later after things have cooled down. If things get really hot, the best thing to do in that moment is just to say let's stop. Let's pick this up when we're both calmer. And again, I'm saying these things. It's very, very hard to do. This is like level 10 ninja shit, but I'm also speaking to you as somebody that's been with this person for 37 years and we've been working on this for a very long time. And we still fuck it up, believe me.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Picking your battles. And what I mean by that, Harry, is as long as we've been together and as well as we know each other, there are ways in which we still bug the shit out of each other. That's just natural. We're humans. There's stuff that used to irritate me that I would call out and she would get angry and vice versa earlier in our relationship. And I think what has happened over time is a bunch of those things, stupid things, but annoying things. A bunch of stuff is hardwired that's very, very hard to change. And unless it's really important, biblically important in terms of the way it makes you feel about your partner, just fucking let it go. Just let it go. So that'd be one. And there's one other enormous one and maybe even the biggest one, which is it's not about winning. I used to feel that if”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, no, I don't feel that way at all. I mean, again, my wife and I were together for a decade before we ever had kids. We had kids when we were ready, both in our personal relationships and our relationship with ourselves. We embraced it and invested in it and engaged in it as the priority in our lives. So even with all of my business activities and achievements, I never didn't optimize for family.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I've been present no matter how high powered a job I had. I coach their teams. I never missed a birthday. I was at every school performance. I optimized for my family. Thankfully, I was able to do that given my career choices. Karen, clinical psychologist, has her own practice could shape her schedule to be a full-time parent active in the kids' schools, active in their activities, coach their baseball team, was commissioner of the baseball league. We have done everything to align our actions and interests with what we want from our children. We have kept them grounded because we ourselves are grounded and it's not just we're jetting off doing this and that and they're sitting back with a babysitter and 10 grand on the counter. Oh, go have a good weekend. So it's a very long answer to a very short question, Harry. It's a very nuanced question. And again, it's an ongoing conversation or family, even as our boys are adults.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“That is probably the question I get asked the most by people who have known me and know our family. I'll first say it's hard as hell, really hard, especially raising them in a place like New York City where they went to school with kids whose parents might have different values than ours and needing to remain true to ours and for kids to respect that. So our kids are young men 26 and 23, it's still constant vigilance. This is an ongoing conversation. So thankfully, I think Karen and I, just because of who we are and how we live life, there was not a disconnect between what we say and what we do. We walk the talk. We work hard. We care about other people. We believe in investing in your community. We believe in humility and grieffulness. This has been pounded into our kids' heads from day one and they've lived with it. It hasn't been words.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the way that I approach the world, obviously it's like we have nice things. I mean, the place that we raised, the Boyd's in New York, we have this house I'm calling you from today, New Jersey, a little house in Ann Arbor. Okay. Well, there's people with a lot less money than us that have those things married to the same woman, never been happier, knock on wood, something I do know is at this age and stage is all about health getting to this age and just friends and family and stuff like that. Honestly, Harry, I feel like the same person as when I met Karen at a bar in Ann Arn Arbor in 1987. I don't feel that different. Yeah, there's the feeling of waking up in the morning and not worrying about money, right? Like not worrying if somebody gets sick or if God forbid one of my kids needed something or whatever. It's like, we don't worry about that. So that whole thing is off the table. But in terms of like my drive and motivation and excitement.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not money. I've never worked harder. I'll know it when I feel it. I'll give you an example. I've now invested in multiple sports teams. And that's exciting. But that's simply because I have money and people value me around the table. That's not it. What's it is going to be one of my venture investments that I ceded or preceded becoming a widely successful company? It's going to be the same thing that I did 13, 14 years ago at IA or eight years ago with TTD. It's going to be something like that in the future. It could be that. It could be some of my economic development work that I'm doing in Detroit. It could be something there. Like, I don't know what it is. There'll be a fourth and there'll be a fifth. I'm in this for a long time, my friend.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“And I built a great business, great people, super profitable, low risk profits. And then my boss at the time we ran the equity division, he got this special pool to give to 20 people and he gave it to me. It was the special equity program on top of what was then my largest bonus. Just tell you, order of magnitude. So like the $320,000 of 29 or whatever, this was $6 million plus this other thing, this special thing that only $20.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I understand. I think it made me feel different. In the way that I talked about the TTDIPO giving us this measure of confidence and validation, that bonus gave me something similar. And that was the first time I had felt something quite like that. It felt durable. It felt like it validated my skill as a Wall Street transactor, as a partner to customers. And I was really valued. And that did change something inside of me. I'm good. I can do this. That was the first inflection point. Second inflection point was, and that was at city, at Deutsche five years later, when I was on the equity management committee, I had rebuilt the equity-derived structuring and marketing business thereafter. They blew out all the BT people in the wake of that acquisition.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“So, as I think I had told you once before, for me, the most the time when I realized, wow, I can make a lot of money is when I was 20, 28 on Wall Street 29, got a $320,000 bonus in my $95,000 base. So I made $415,000. And that $320,000 bonus check Harry was like the most exciting amount of money I've ever received. And it was just such a vast difference from what I ever thought I could make.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“For both investors and founders? Yes. Do you still need to hustle like hell and work as hard, if not harder than everybody else to leverage that little advantage you have over net new manager? Yes. Apps a fucking lutely. It's both.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's as successful as he's been. He fights like hell. And this comes back to the conversation that we had before we even started recording about wealth, motivation. What do you need to make you happy? Doug, he's richer than Croesus. My sense of him is he wakes up every morning, puts his feet on the ground, and he's like, let's fucking go. I'm not as rich as Doug Leone, but I'm in a pretty good place. When I put my feet on the ground, I wake up in the morning and I say, let's fucking go. Do either of us need to do this from an economic standpoint? Of course we don't. Do we need it for ego invalidation? That's not really it. At least I can't speak for Doug. That's not really for me why I do it. I do it because I just fucking love to work and I love working with founders and I love building stuff. To answer your question, is it easier if you've actually done a bunch of really good stuff and you have a ton of respect and awareness in the market?”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“The answer is yes. It's yes to both because venture in the best of circumstances is hard as hell. And I am sure your pal Daglione would say the exact same thing”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“But we didn't do it. How would we feel then? Let me tell you the downside regret versus the upside opportunity cost, we made the right trade. It's not even a question.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we could have held on to TTD and returned another five to 10x of the fund. Aren't we stupid, just processing these things very honestly and then learning from what happened was one of our superpowers, which didn't mean that we always made the best decisions. It certainly meant that we tried to make the best decisions and that we had deep logic for our decisions. But that's separate from did of work out because life is not in your control. I come back to the clubhouse example of, well, even though you believe, even though it's crazy, what I'm seeing here in valuation is divorced from objective reality, just sell something so I take that schmuck factor off the table if the thing goes to shit. That kind of drove a lot of the thinking around TTD. There was the franchise making aspect. And then there was the, if we don't do it and things go south and we could have made the whole fucking franchise.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, firstly, acknowledging that it's a super hard job and that we're all human and subject to frailty and bias all over the place. And I think one of the amazing things about my partners is that we were able to talk about all this stuff very openly. So having a strong partnership and that deep respect and intellectual rigor and honesty helps to deal with that. And I think if you're a solo GP, then you really need mentors that can kind of help serve in that function because we process this stuff a ton. So I think we are always very grounded, Harry. But when it comes to the psychology of missing something great, we could have invested in Platin like our anti-portfolio. Or we had the opportunity to take liquidity off the table when a company was high flying and then it crashed. Well, how do you deal with that? And then there's the issue of.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“You could say it that way. I would say it a little bit differently. I think about it more as have you made the franchise? Now, Sequoia made the franchise 40 years ago for them to set up this evergreen structure makes all sense in the world. I want to be precise. When you say like rich investors, it's not so much that when TTD went public, we were then rich. What it meant is we had actually done our job and returned significant capital to our LPs. They all had a thesis that we were great stock pickers, a great partnership, and had keen insight into which sectors would ultimately be”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, geez. Remember, we met Jeff Green before I had even set up the fund. We met in the fall of 2009 and I incorporated IA in December of 2009. Brad was a consultant for me. He hadn't even started. And Ben Siskovic was there who had worked with me on my Angel portfolio. And yeah, I think we all felt very passionately about Jeff. He hadn't yet onboarded his co-favor Dave Pickles, the CTO. We literally committed on the basis of a PowerPoint. We worked on that deal with Fatter Collective. So Eric Paley and I both sat on the board. And so we literally co-led the seed round together. And then IA bridged them three times before raising their Series A.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that we ended up returning five to six X net on that one trade. It was a $250 million fund. So $5.2 million turned into net $250 to $300 million, DPI net.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I feel like we had a ton of respect in the market even before the IPOs. By then, we were just starting to deploy Fund three, right? Fund two had WIS and DigitalOcean, Fund one had Data Dog. And we had a bunch of other stuff in there that was really great stuff. So I think that we had the respect in the industry, both by peers and RLPs. But I'm sorry, there is nothing like taking a company public where we owned 17% on the day of IPO.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not a requestful person, Harry. That's just not, that's not the way I'm wired. You can always look back at 2020 hindsight and overfit a curve and say, well, this would have been the optimal thing to do. But that's not real life. Real life is we discussed in great detail what our strategy should be. We discussed the balance between what happens if the market goes to shit. And we had this franchise-making position. Well, how would we feel then? What about our brand? You know, we're going to be in this thing for the long run. So I think we behaved incredibly rationally. If it had been not IPO one, but IPO two three four, we would have behaved differently and we would have generated greater returns. By the same token, you could say the same thing for wise. And we've done very well on that. So it's kind of like, you know, dude, as long as you're thoughtful and as long as you go through the process of analyzing the context and the”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Data dog, WIS, a DOCN, those we've been much more measured in systematically distributing, not doing public secondaries for cash, but actually just distributing shares over time.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“On TTD, it's probably two and a half million. It went IPO at a 700 million. It was valued at 700 million on the day I went public. So we ended up doing two public secondaries within the first six months. And then we distributed shares over the next 18 months. That was one where because it was our first, we got out quick. So you think, well, what could have been? Early seed stage funds, $50 million fund, first big win, return five, six net on that one position. We'll chalk that up as a win, but a lot of money left on the table, obviously. Now, personally, you know, we distributed shares. I held shares for a very long time. So I personally am those LPs who didn't sell immediately made way more than that because the stock just rocketed. But as a firm, what I told you is what happened. Then when you think of our other...”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“That is one of the hardest questions that Brad Jesse and I have dealt with. And we talk to tons of friends and mentors about this to try and develop our own philosophy. And I would say our behavior shifted post trade desk. Trade desk was idiosyncratic in that that was our first Grand Slam, right? Like that was the franchise making investment. Our first IPO in 2016 enabled us to return many, many, many, many, many multiples of our first fund. But because of that, we got out of that position much faster than we would have otherwise because it was such a franchise making deal. So if you look at our average distribution”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Cycling, we got bailed out with the simple acquisition in fund one and in fund two, we addressed a proactively through the sale.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a very fair point, Harry. Yeah, I think the really the only way to get that with cycling now is through sector, is similar to what we did in Wise, like the BBVA simple thing. You're right. That was like 117 million M&A. Yeah, we don't see very many of those these days. And honestly, I just chalk that up to dumb luck, like the timing ended up working out for us there. No, and we were holding our breath. Recycling for a very early stage fund is a struggle, a real struggle just because of how earlier investing, how long it is before some of those companies have these opportunities where I want to invest in that, but where am I going to get the capital from? It's like you've deployed, you need to reserve for your fees, well, where do I get the money from? Which is why a lot of firms try and solve the problem with SPVs, we never would do that. So we forced ourselves into finding solutions for”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Generate recycling capital. Fun two is $105 million, which obviously is done extremely well. That was great. We had a similar result from a very different situation in Fund 1 when we sold Simple to BBVA because that generated the liquidity that we then invested in the Trade Desk Series B.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“We had such an enormous position in the company. We wanted to distribute something from fund to and to generate some recycling dollars. And it was what we considered to be a fair price at the time. And it was part of this process. And why's it this brilliantly, actually? They made money like they generated actual money way in advance of going public. So they held these annual employee tenders where we basically cleaned up the cap tape. We brought in the super sophisticated great pre-IPO investors to then buy out some early investors and to give employees a measure of liquidity. And so it just basically continued to concentrate the cap table and shrink the number of holders, which makes life easier. We sold into one of those for the reasons I said. We ended up being able to return half a fund to.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Would have prompted you to say, huh, I really believe in that, but maybe I should take 20% of the position off the table. Something. And you know who's done that really well is USB. Fred very selectively, and they've obviously a big IPO winners, and they've had some IPO winners where they've sold some in advance.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Much harder for the reason that clearly in this particular bubble, in the same way when we were in 99, 98, 99, you had companies that had these stratospheric valuations that made no sense on any objective basis. Clearly with 2020 hindsight, it would have been great to sell something, sell some part of a position, sell 10 or 20% of a position. It's hard. It's very, very, very hard to do that, but I think the mindset needs to be almost the same as the public company readiness framework because it forces you to be objective. Is this company a public market candidate? If you had taken a deep breath, looked at an offer, said, huh, from an IPO readiness perspective, where is this company? The objective answer to that question is, no fucking where, light years away, then maybe that.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“We at IA would work with our companies to plan probably two years before a planned IPO in terms of undergoing an IPO readiness process and being in a position to be opportunistic when both the company was done with our preparation and literally republic markets ready from an infrastructure, a legal compliance, and a org structure and board structure perspective. And that takes time. So literally it's like a two-year lead time. Then, yes, once you're ready and let's say it takes nine to 12 months to get that done, then it's okay. Let's find the best time and then do it. But I find that framework of when a company is on that trajectory to be an IPO two to three years forward to undertake this IPO readiness, so you can be opportunistic based upon the market environment. That's one. The private side, the secondary side, that is much.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think we need to distinguish between IPO liquidity versus secondary market liquidity because those are two very different things.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“midstage farms that started and unfortunate time just as their companies were hitting their stride, the IPO market shut. The M&A market became increasingly challenging with Lina Khan and the FTC getting much, much more aggressive. But they've got really great portfolios, but they haven't had a lot of DPI. That's where I would focus my energy is on those funds that are new-ish, meaning past decade, have some great stuff, but started a little late to miss the IPO wave of the 2016 to 2020 era.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a very interesting challenge because, on the one hand, the very best firms and funds will do it, right? Because, well, there may not be liquidity today. They've got great portfolios. They've had tons of DPI in the past. And they're like, I don't give a shit if we don't distribute anything for five years. And neither do RLPs because they've already made so much money. They're off the table. Then you've got a bunch of met managers who don't have that much interest in the portfolios, haven't delivered DPI. And they're just kind of fucked, right? And I think there is a whole swath of the industry. It's like a slow motion train wreck. They are not going to be able to raise new funds. They're going to struggle. But the firms have so many funds behind them and so many assets that they are eventually going to wither. But they're not my target either, Harry. So, you know, what I'm looking for are honestly the most promising early.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“To get blood from a stone. And then you've got continuation fund managers that are deeply aware of the phenomenon I just mentioned. And they're like, oh yeah, public markets have recovered. Public markets are near highs, but private markets are still really low. Now's the time for me to get in and take advantage of that desperation on the liquidity front. And that's what makes the magic right now.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“That is a very manager specific question. I can't give you a blanket of answer, Harry. And honestly, I'm kind of out of the game, so I'm not really speaking to these firms. You're much more in it than I am. I would posit from what I know when I am an LP in a lot of funds that they have been very slow to adjust down. And it's been happening. Everything is always with a lag adventure. Right. It's slow to adjust to down markets. Down markets is being observed in the public arena and very slow to reflect up markets. It's just everything is like this. Public markets are like this and private markets are like this, which is why, honestly, I think this whole continuation fund discussion is so interesting and topical because you've got these two very different utility functions because there has been so little liquidity for so long some managers are desperate because they're under tremendous heat from their”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“For the portfolio that is both fair from the existing manager perspective and represents an attractive investment opportunity for the net new continuation fund investment.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“While you're operating that portfolio that's already been deployed, you're now managing a static pool, right? So there's no net new asset coming into that pool. It's continuation fund, investor works with manager to hire a firm to value portfolio. So there was a third party that's valuing the portfolio. Buyer and seller need to agree on a price around that third party valuation if price is agreed to, remember, existing manager, not existing manager, is still managing these assets. They have LPs. Their GP. So for them, they want to get the highest price possible. For their LTs to be happy and for their crystallized GP interest to be worth as much as possible. Obviously, continuation fund manager wants that value to be as low as possible. So their basis in that portfolio is low. It's that dynamic that creates, if you can find a market clearing price.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“You're not the price out. You're not the price setter and the price giver. Remember, so you have net new investor looking at a portfolio. They're the price, not the existing manager”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of these firms are saying yes. I think it's a viable strategy for a decent swath of the banking industry. It certainly caters best to the later just because you can price those assets easier.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“No, they can happen with smaller names. You probably still need a continuation fund as small as 50 or 100. You probably could get it done. But then it's, you need some smaller firms that have really good private portfolios in order to generate that kind of investment because you're obviously not going to sell the whole portfolio. You're going to sell. I'm talking about this in the context of going concerns, right? These are active firms that are investing new funds and they're operating as the normal funds, but it's addressing the exact question you ask, which is what about the liquidity? And if you're three, four funds deep and you've got some stuff in one and two that's a liquid but really, really good, profitable and growing quickly, but it's pre-IPO or their IPO scale, but there's no IPO market, would you be willing to take a discount in order to generate some liquidity for your LP?”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“That's what NEA's done. And I see this as being actually a very pragmatic technique, especially for managers that have stacked funds where there are some real gems in there that you've got some ANSI LPs that are like, man, I need money to fund other parts of our mission, whatever it is. And net new investors can come in and provide that liquidity. I think that's a really great strategy.”
2024-02-19 · The Twenty Minute VC · 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital · IDENTIFIED FROM THE TRANSCRIPT · source