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Semil Shah

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2022-11-21
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2022-11-21
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  1. “We haven't been a part of publicly announced ones recently. I think, oh, in part security, which is a team that left signal sciences that was doing a new way of collaboration across security teams. And we like this idea of collaboration. But again, it was a bet on the people, right? And so they may take it in a different direction. But we just thought they had a mastery of product. They weren't trying to raise too much money. They were the entrepreneurs we like to work with, which is they use us for very specific advice and then they sort of move accordingly and they reference really well. So we're really excited about that category overall and just working with the impart team”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Then there was in Fun one we had an acquisition to Datadog. And then this is one of my favorites. We own chairs in WeWork, but not at the $40 billion price. But I created the poker chips through Martino to show how random the business can be.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Martina, and so I made these poker chips for shares that we get in companies through acquisition. So this one, this company where I passed on the seed round in a friend, that was going to be a huge mistake, but we ended up getting, can you see that?”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “You know what's funny though is like athletes on the field I end up, and I'm sure you do too, we end up thinking more about that than Hashi Corp.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “And nothing. Of course, this was during my fun four vintage, which was littered with mistakes. So there were mistakes of commission that I mentioned, and this was a mistake of omission.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “The biggest miss was open sea. I had known Nick Tomano for a long time, like Knuckle and Anand. I helped him raise some of his fund and introduce him to tons of LPs because I thought Nick was doing fabulous job. He's opposite of a tourist in crypto because we were so helpful he would send all the deals he was doing to us and he sent us OpenSea three times. Now I don't know if OpenSea will end up who knows what it'll be, right? But for a period of time, I had spent time with Devin. I had looked at the numbers. I didn't understand. I just thought it was about gaming. We didn't talk about NFTs earlier. And it was just sitting right in front of me. Like, why is this working? I think the last round I looked at was like a 28 post extension. And because I didn't understand it, I just let it go rather than just looking at what was working.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Somewhere between 30 and 40 something. No one cares because the base is super small and you get lucky. And then as the fund size gets bigger, the multiples will go down, right? Unless you hit something. I think it's like going back to the jet fuel comment. That was a jet fuel to get off the runway. But in a way, the people I talked to today, they don't really care about that today. It's like, what are you going to do?”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “That fund had Instacart, DoorDash, HashiCorp, and it still has $2 billion companies that are still growing in there. So it's crazy”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Will we distributed the shares right at lockup? That's when the market crashed. But I also felt we weren't trying to juice our numbers at that point. I think it was like the 25K turn into something like 30, 35 million bucks.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “It was a $3 million fund. Well, I don't know the exact numbers, but it was pretty asymmetric. Probably the other one is HashiCorp, where we invested in the first round and it was just a huge win.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “to release David completely shot up, and so a lot of equity token holders were able to every month sell those tokens because we had such a huge position. We would sell the max every month for months to go. Now the price of that has gone down. I mean, the return would have been absolutely insane, but it was still been probably the most accretive thing.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “It's in Filecoin I don't know what the exact multiple is because it fluctuated a lot, but I can give you some of the, I honestly don't know the multiple because there were like so many sales, but essentially met the founder when they were in YC. Remember meeting him asking for a couple meetings. He was obviously brilliant. I didn't understand everything he was doing. I had some friends come investing. So we invested 50K at the 8 million cap or something. Then he didn't raise for a while. And then USV and I think Blueyard invested, I think $3 million total in a small seed round. And then in 2017, I think there was the ICO. So they had raised, it's public. All this is public, like 150 plus million in the IPO. And then they went on a journey to build their product. As part of that, we got tokens as part of being equity investors. So all the equity investors got tokens. And then basically in the first year of the pandemic, when they were about to.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “I think the first four fundraises were really hard because it just were continuous. I think in those first four, I only took like six months off. And I was too naive to know the Angela syndicates weren't up. There wasn't this rush of people and it was the only real option I really had. That's probably been the toughest part where finally in Fun Five got over that hurdle.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “And then this is more of a close friend for many years. But I think Scott Belsky, if I were an early stage, Yeah, that would be my topic.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “I think if you and I were in the bar and we would say, oh, you have a three-x funel, what is it now? I'd probably say it's one and a half X one. I don't think that's out of bounds”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “But I mean, I'm not trying to give a political answer. It's just like I don't know what it is. Is it 25%? Is it 50%? Is it 80%?”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “I spent a lot of time talking to a variety of LPs and GPs about this. There is no consensus on this. I think I would just bucket it, which is get seed and early where you don't really know yet, even if you have a great Series B that you've seeded, where it is, you do have to pick some methodology and stick with a number and go. But I don't think I could say this is the right number or not. That being said, let's say you're a growth fund Meritek where your entry, they're a great fund, everything they're investing in has product market fit, their larger checks, they probably need to comp everything they have against public comps to go company by company. And so I think it just really depends what your portfolio mix is like.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “We're doing that right now. I would say doing that literally in Q3 for the Q3 report, Harry, where we have, as virtue of our LPA, we obviously have to have a professional third-party audit. So we're doing that audit with the firm and remarking the portfolio now. If we had talked two weeks later, I probably could give you like a firmer answer.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “The thing that worries me the most is the portfolio of risks that are around us in addition to like the lower money supply. I saw Scott Menard, who's the Guggenheim CIO, said that this is the lowest M2 since the depression. So there's less cash around and much more risk around. And so it feels like we're just in the early innings of this administration of pain or the game hasn't even really started. So it feels like it will be quite prolonged.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Oh man. You know what else? I shared an article with a lot of people recently that is available on the internet. So it's an article, but it's about one of the famous game creators on The New Yorker from Nintendo. And it talks about how he grew up in the woods in Japan and saw all these amazing natural things in the wild, and that ended up becoming the landscape in which he painted on for his video games. And I thought that was really interesting because so much of people playing on computers like us or working online, we forget about that.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “That's an example of not respecting the money. Just to put a finer point on it, the sin that certain GPs have made or certain founders have made that I think will cost them now in this new environment. If you didn't respect where the money came from and treat it like some sort of light partnership, it's going to be really hard to advance. And that's why I think it's sort of Darwinian, which is the new environment now calls for not only capital efficiency, product-led growth, hustle integrity, grit, all of that. I think it also calls for this as well.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “I would say the overwhelming majority, but we talk about that in the diligence investment process. And then we actively try to get them on a cadence like early part of the month, first of the month thing, because then that triggers a conversation for the month, right? And some people, frankly, it's impossible to get them to do it. Again, it's okay. It's not like required, but then it's hard for us to advocate for you if we're not in the know.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “I think it's kind of Darwinian, honestly. If you can't respect the dollars that you've taken and you can't give those people a transparent, brief view into what you're doing and allow them to guide you in a polite way, then you're probably not set out for the journey. And I think we've had a lot of people who on both funds and as founders of companies or hopeful founders of companies do that, take the money without really thinking about how do I respect the investment that someone made in me. And that manifests in a lot of different ways. Reporting is one way.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “I mean that should happen more. I think a lot of traditional VCs are loath to do that for reputational reasons. I would just say from the founder's side, their cost of time right now is probably pretty great. So like we may start to see that. And then what are the original sins that the founders committed here is I think that a lot of them didn't have their own discipline about creating the checkpoint and milestones for themselves. They didn't get into a habit of bringing certain investors along for the journey or keeping them updated. But we have a few entrepreneurs over the years who really want to get better at their updates and metrics and really tune that every month. And we have some where they just don't think it's important and don't think it's important to bring us along for the ride. And then they don't realize it's really hard to socialize it with other people if we're not part of the story. So I think that is a sin that will come home to roost for a lot of founders.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “One thing I think we should talk about before we wrap up, too, is like when I mentioned we all committed sins, right? Okay, we talked about the sins and LPs committed. What are the sins VC committed? I think the biggest one, in addition to like fun size escalation for fee grab and AUM, is this lowering the threshold for having each financing be an actual true checkpoint for an entrepreneur. A lot of people just deployed capital, like a speculative real estate and it's just stranded in these companies now. I'm sure you've seen this too. There's probably multiple multiple companies with like over $50 million of cash with no product market fit. This is wild.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Get paid I'd probably do it the way you alluded to earlier, which is if I were an LP not living in the Bay Area, New York, I'd probably go spend a month in each location, get an apartment for Airbnb for an entire month, hang out with lots of people after hours, name check lots of people, and place money with the people that the network told me were the most interesting. Now that's for early. And then I would probably recruit somebody who has BC deal experience to help go do directs on top of it and to stay close to the winning graduating companies. And then I would probably try to get into using my network five to ten franchises where I feel you want to be part of their ecosystems.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “But remember, if you're an LP and thinking about this bucketed approach, most LPs don't live in the Bay Area or they're not in the market. They're not talking to founders. They're not talking to VCs all the time. And they just have to map it out. Most of them have to present a strategy or a map of how they cover what they want to cover. So it kind of makes sense why they do that. It doesn't make sense to you and I because we know all the people.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Yeah, maybe the canonical example of this is the sector focus run is like, hey, I want to play this sector because I think it's going to work out that way. I think in some cases it makes sense for early stage because you're filtering more at early. But I tend to believe, and again, this could be not true in the future. But I feel like if you look at the big important companies and outcomes, when they go public, they have three or four venture capital.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “I agree, and it's easier to say that today than the year or two ago. I think what I've heard from LPs is some of them picked a few to go stay on the train, and a number of them last year dropped off. A number of endowments foundations fund of funds who were longtime investors in like top-tier funds that had gone really big have for a variety of reasons just said, hey, we're great. Thank you for all the returns. Thank you for the partnership. It's time to move earlier for us. I'm not saying that LPs should have abandoned all those, but I think they probably stand on too many trains than they should have.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “I think that everyone in the ecosystem has committed since. We can talk about what those mean sins are. I think on the LLP side, this sin was going along with fund size escalation and allowing and enabling those firms to allocate within those funds. So I believe in having separate vehicles for separate activities because that's the best governor. And so I think when you have the blind pool of capital going all over the place, it really puts a burden on the management of that firm to allocate it properly. And I think it's really hard to do. So I think that's the biggest sin that LPs have committed.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “Look at Cross Link. I mean, no one really talks about crosslink. I don't even know if you've had an investor from CrossLink on 20 Minute VC, but they ended up owning over 20% of China through like a pretty modest deal because no one was looking at it.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “I'm only calling that out to just illustrate that we can pontificate about who will have fundraising success or pain with, I think, some good precision. I think it's impossible to know who can catch a tiger by the tail.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “Oh, I have no idea. But it's just such a unique company that people are talking about. I'm not close to it. I'm just saying it's an interesting company. And what if you're the Series B investor in that company in a no-name billion dollar fund that could totally change the trajectory of your franchise?”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “I guess the reason maybe I would have a slightly different perspective, Harry, is that I think so much of this can pin on one deals. You probably had Duvos on, and he will famously talk about getting off the Excel train in the pre-Facebook fund. They were going through a lot of hard times, or Peter Fendis came in interviews about this. So I think it just takes one deal to completely change the trajectory of some of these funds. And so I always keep that in mind. It's too hard to predict what's going to happen. We can predict in a fundraising sense what will happen, but in the deals and what's going to work. Like I think about a round that's happening now, this company Replit, right? Very unique, exciting company. A lot of people are talking about it. I don't think a lot of people have thought about the seed or Andrea did the A was like a $4 million paycheck, whatever you want to call it. It only was started four or five years ago in terms of the, sorry, the investment going in. Some of this can change over time.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “On the fun side, people who can pair the magic of meeting entrepreneurs early and getting the ownership early with the firepower of putting enough wood behind the arrows at work. It's probably these funds that are in the billion to four billion range, so to speak, where they'll have a lot of firepower if they have that magic. I also think you'll see a lot of hundred to $200 million seed funds start to fill that seed series A gap in a more pronounced way. There'll obviously be winners in that. Like if you think about an initialized in the last decade, there's probably one starting now that'll have a rise like that now. Thrive started in the last decade. So I think there are opportunities for these folks to go make deals and put it on the line.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “I think what you're saying, Harry is it's true. There's lots of capital that's hungry to go into venture. And I think the question is, how do those people decide where to put it or how do you as a GP go grab it? I think historically the case has been that the endowments and foundations who have been in venture capital for the longest period of time are your stickiest partners. That being said for you, for me, for a lot of those people, they haven't even lived through a recession. You have to be well over forty, fifty years old to have actually lived through a recession as an adult. All the dips that we've had have been pretty narrow in terms of their duration.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “So, when you go out for your third vintage, assuming your funds are a similar size, you're going to be more in demand because these LPs now are now downshifting to the”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “That hasn't been my experience. I think most people have barbelled. And so the people who get caught are the people in the middle. Now, that was what I would say a year ago. I think right now, most LPs I've talked to feel like the bigger funds that they're in, they're more worried about those positions because of the market contraction. Whereas I think for you, for example, you're on fund two now, right?”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “It's either stuck in a portfolio company that doesn't have product market fit or it's stuck in a fund that will deploy it, but the fund size may be so large that it's impossible to get over the hurdle.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “Is coming because I think one most GPs don't understand how different LP business models work to begin with. But right now the liquidity profiles of these endowment foundations, family offices, et cetera, could be wildly idiosyncratic. Certain endowments and foundations could have gotten really liquid in 1920, twenty one. A number of them haven't gotten liquid and they don't know where their portfolios sit. So I think it's going to end up becoming two kind of opposing forces clashing. You'll see a lot of institutional capital constrict out of conservatism and the lack of visibility into what they own that's already on the ground because they haven't been able to see it. But then on the same side, you'll also see a realization that a lot of their capital in these larger funds will be stranded capital, that they may not see a return on.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “No, these two we let go of really for behavioral reasons. Everyone else has been super great, but I think everybody in our position should expect Chern moving forward for a variety of reasons. So churn is coming.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “One person asked for a phone call asks before we were raising the next fund for all these terms. I remember I was driving along the Embarcadero and I was like, hey, sounds like you really want all this stuff now. I'm happy to talk about it when we raised on five. And he was, we won't even be in it unless we get all this stuff now. I was like, okay. And then I just thought about it. And then I talked to the colleagues. And they were like, yeah, he doesn't change his mind. He just went rogue and he wants all these things. And I just thought, yeah, I just don't work like that. But I just feel these things are gifts because then you end up cherishing and valuing more of the LPs who treat you well. And I guess the point I'm trying to make, Harry, is that once people get the funds and go in, you just think that everyone's going to support you and people can have very different motives or ways of revealing information or asking for things. A mistake I think that I made was not being open-minded to that. So it was more of a surprise.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “Luckily, that happened because it was in January. They host or no meeting in January, and I had just started that campaign in January. So I felt like I got this omen early. Whereas like I was probably in my head thinking, oh yeah, I'll meet her on this trip. And so it went 180 real quickly. Okay, this will be difficult. So I felt it was kind of a gift in terms of the timing. The bigger mistake is thinking naively that all LPs will, once they've committed to you, want to see you succeed and want to just be along for the ride if you stay true to what you said you're going to do. It's interesting because I've had the fire is the wrong word. I don't think of it that way. But I've blocked two LPs from investing in future funds. And I think both of the behavior in what they did and how they did it, I just felt, hey, I don't work like that.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “literally across a street at a meeting, and I was like, hey, I know you're across the street. It would be great to get together while you're here. In five minutes, she wrote back, sorry, really busy, send for my iPad. That was sort of a warning of you could have really good track record, an amazing introduction. You've already met this person. They've already done small funds. And this person literally doesn't give a shit.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  45. “Yes, I think there are two, and one was a minor little warning, and one was a major shift in my own psychology. So the minor one is I remember that not to out this person, but I would say a major leader of a major successful fund who spent a lot of time with me, who's been on your show, who introduced me, they only have 24 LPs. And they're all endowments and foundations and introduced me personally to the head of this one huge university. And I thought, holy cow, this is for the Fun Four that was supposed to be about $30 million, end up being like 22. I thought, oh my God, I've never gotten an introduction like this. I've already had three funds. They do smaller funds. I had met this person before. I knew that this GP's annual meeting is every year in Q1 at the Rosewood. So I have all this stuff on my calendar because I know when these meetings happen. And I sent her an email.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  46. “This was actually the one question I was thinking about in the shower this morning where I was like, okay, I know Harry will ask this question.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  47. “I follow a lot of honesty with USV does of trying to learn. I think they're the best pound for pound fund in the world, both operationally in every way. And I think Fred has been on the record of just saying they just do a standard 2 and 20 on every fund. So I'm really seeing the need to deviate from that.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  48. “It really depends on who that person is and what the timeline is. Let's say a really well-respected endowment foundation came to you, Harry, in 2018, and said we want to put you in business with a $200 million fund, and we'll do 75 of it, and we'll introduce it to everyone we know. If they take part of your carry as a GP, not the management company where the fee income goes through, right? And you could say, well, normally I was going to have 20 points a carry, but now maybe I'll have 16. But to get the $200 million fund, that name and all the network, you could say, yeah, for one fund. Okay. Now, the problems could be the other $125 million that come with the 75 may also warrant that same thing. And so you'd have to operationally tell them, hey, we're just doing this for our anchor, right? And some other people may say, well, I don't like that or whatever. I think the problem comes in is when that's in perpetuity. To get off the ground, you may have to spend some, the jet fuel is more expensive.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  49. “I haven't done that ever, and not a lot of people have suggested that. So it's not probably something I would advise people to do, only because it could set a weird precedent over time. That being said, I think to get off the ground, sometimes people have to make deals. And so what I would just say is think about it in the sense of how do you survive and thrive? So the first point is how do you survive and get off the ground? You probably need to do what it takes to get the plane off the runway. I wouldn't sit here and say do it this way, do it that way. It's just like, okay, if you don't take off and leave the runway, then we don't have anything to talk about. Once you're in the air and can stabilize, I would move away from preferential terms. Basically, if you're trying to offer preferential terms to get the jet off the runway and get some thrust, that's fine. But just don't have it be successive in future funds. Gate it to that one fund.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source

  50. “I wouldn't say I'm great at this, so grain of salt. I think like at a certain point in your career and as an adult, you have to just be willing to walk away and accept a no in different formats. One way we do it is we kind of just say, hey, Julie Smith LP, hey, if we don't hear from you past this day, we're just going to assume that this is not a fit for you. That's okay. But it's not waiting around the phone for someone to call. It's more we're going to move in this direction. Most LPs have plenty of time to decide. You don't wait for a response. You just sort of move forward on your own timeline.”

    2022-11-21 · The Twenty Minute VC · 20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager · IDENTIFIED FROM THE TRANSCRIPT · source