YouSaid · the spoken record

Zach Weinberg

lines on the record: 37
first: 2020-11-06
most recent: 2020-11-06
sittings or episodes: 1
sources: podcast

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“Right, like why now is big idea, clever business model, and highly technical founder. So we just wrote a fairly big check into their seed actually about a week ago.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“The most recent one we did, I think, is a company called David Energy, which is here in New York. And what got me excited, it's a software company in the energy space. And really the trick here, and there's an amazing why now, but essentially all of the high cost infrastructure of a commercial building, and it's true of residential as well, but think lighting, HVAC, boiler, whatever the systems at pull in a lot of energy. Historically, if you wanted to manage your energy utilization, you got a person in the building who would walk over to all these items, all these pieces of infrastructure and turn them on, turn them off, very manual process, and couldn't be reactive to energy prices at that point in time. You have to remember energy prices, obviously very, not just day-to-day, but within a single day. It's a real-time market. And what David Energy was working on is how do we actually take control of those systems using computers, but also take control of them in a way where we use our understanding of energy prices in the market to actually change our utilization. And they have a very clever way that they're going about doing this, which is actually becoming the energy retailer themselves. So a kind of a vertical integration play. And it just touches on all the”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would say, like, some of the best investors, I mean, actually almost all the best investors I know will tell you, I don't know what I don't know. And here's the thing. They're able to quantify their confidence level. Maybe the person I know who's the best at this is probably like Roger Ehrenberg at IA Ventures. And he's a rational logical thinker, but he's going to say, I don't know the answer to this. And I'm not confident in my answer. And I think that's the key. It's not stretching to lots of fields. You have to do that as an investor, but you also have to know, I know this to be true for sure, and this one I'm not so sure about.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the guy is a giant doofist, and I would continue to hold my belief that he's a giant doofist. And I'll be very specific about why. I think Keith Rupert is probably a phenomenal technical investor, software company investor. It seems to me to be an amazing operator in the world that he comes from. He's clearly an accomplished guy, and he knows what he's talking about in that world. He has absolutely no idea what he's talking about in healthcare. And some of the things that he is saying are not just incorrect, but potentially harmful and dangerous to people who don't know the details. And that's the part that bothers me. It's not just having extra confidence and saying things as if you had all the details even when you don't. It's that what comes out of your mouth actually can have a negative effect on people's health and lives. And that's the part that really annoys me. But again, it's about overconfidence in a field that you don't know well. That would be my major critique.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I obviously get asked this question a lot. And Nat and I are very, very different people, and anyone who knows both of us will say that. But I would liken it to one specific thing, which is at the end of the day, I think each of us understands that the other person is just trying to do the right thing. And we may disagree on the tactics or even what the right thing is, but we know that that's the goal. And if he makes a mistake or I make a mistake or we do something that doesn't turn out in the right way, I know that there were no bad intentions, if you will. And it's just like a fundamental trust thing. And just, I think part of that is just having work together since we were 19. We started having nothing and now we've built a few good businesses. And so having that trust is probably the biggest thing.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“We had, this is going to be a little different answer, we had a hedge fund called Kazdin Capital and Eli Kazden, the guy that runs it in his group, who was one of the most useful and helpful investors we have ever had. They are a healthcare-focused fund that really mostly does biotech, although is now doing more health IT, but tons of introductions would show up to our customer conferences, would listen, would make useful ideas, and just followed through. So many people you talk to, they say, oh, I'll do this, this, and this, and then you have to hound them over email. And Eli and his group just never needed to do it. And actually, a lot of times they came.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the tech scene is actually in pretty good shape. I'm somewhat of a big fan. So there's nothing I would say like this must change. I mean, I would hope over time, more people kind of recognize that spending their time working on social media in particular to me is just such a disastrous waste of very smart people's time and attention. And I'm hoping that at least as the employees realize this, that they go on and work on more important things. That to me is maybe the biggest thing. We talk about tech mission oriented and all the great things and how tech is going to change the world. And then you've got like four thousand people who work at Facebook. That bothers me a little bit. But again, this is America. You can make that choice.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I mostly focus on reading actually a lot in kind of like the scientific world, if you will. I'm just kind of fascinated with science and what's going on. So it's not blog writers per se, but there are newsletters and things that I follow to try and track what's going on in drug development and drug discovery and things like that. No one individual, but definitely focused on a particular category for that kind of stuff.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I don't really read a ton of books. I'm like pulling up a blank here. I'm much more like a long form article type of person. But there's a new book called Calling Bullshit, which I think is kind of phenomenal. And it's all about how do you understand when data and statistics are lying to you? And I think it came out just earlier this year. I have it sitting on my desk here. It's great.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“My belief in general is that most VCs are actually very good. 90% of our investments are co-investments with venture leads. I mean, I'm actually a huge fan. I think the venture community is one of the best places to be if you're raising money. But there are always bad apples, right? So it's just protecting against those. I also think there's a time and a place for an early stage VC to step off and to say, look, I've got you to your B or your A and now I need to go back and focus on what I do, which is early stage stuff, and off you go. Let's get somebody who's better at this stage of the business on your board because the skills that you need as a seed stage board member, let's say, are probably very different. I mean, they are very different than Series B or later. We would just say, make sure you're doing the right thing for the stage of the company”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I would say being an early stage board member is a very different job than being a late stage slash public company board member. Later stage, there's like actual serious requirements, if you will, that are material. I think early on, really what you're trying to do is find ways to help the founder in any way without distracting them. So maybe little things show up to the board meeting having read the deck. I would be nice. Don't be on your phone during the meeting if you can. And if you have to excuse yourself and explain why. I mean, just like little stuff that basically means I'm paying attention and I understand what's going on here.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“We have target check sizes based on the valuation. Basically, we have a model that shows, all right, if you're going to invest at a company between five and a $15 million valuation, here's generally the type of check we'd like to write. Here's generally the type of check we'd like to write for a Series A company, but we're flexible. I mean, I know my role here. My role isn't to provide primary capital to this business. And so we don't have ownership requirements or anything like that. But I will be transparent and we'll tell the founders like, here's the check side we'd like to write. And if it's lower than this, probably isn't going to move the needle. And I just want to be honest about like my time. So it's up to you if you want us to write it. We'll go for it. But let me just tell you what that means. And it's just a transparency thing. That's what we've gone with. And maybe I'll change my opinion over time. But for now, I would say it's a target, not a rule.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Investment is so there's just a slightly different incentive structure for your major investors than your minor ones. And that's one of the advantages of being one of the smaller members of the Cap Table is you can kind of say to founders, like, let me just give you the best advice I can because I'm not 100% tied to this outcome. And that's the truth. And then honestly, over time, you build a reputation for just being honest and sticking to your word. And I hope for the founders I've worked with that that's true. I don't share information they tell me not to. I don't talk to people about them behind their backs, things like that. I mean, just some of the very basics that frankly some people fail at. That's it.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, you hit on a few things. Usually, what I'll say is, and I'd say this publicly too I'm on your team, like I see absolutely no benefit from marking up some investment or using it to raise a future. We're not raising funds. We don't have any LPs. We're just investing our own money. So we're aligned. All we care about is the final outcome, which means I'm going to do give you advice based on what I think is the right thing to do and then it's your choice. So you don't have to worry about me having some like weird incentive structure out there. That's kind of the first thing. Second is, look, I've been in your shoes. Let me give you a few examples of when I had to have this conversation with my co-founder and our investors and make decisions about fundraising size. And here's how we thought about it. And then last, what I tell them always is like my career isn't on this business. And so if we get it wrong, we get it wrong. I'm not going to be upset. And I'm just going to tell you the truth, or at least what I think is the truth, I should say. Mostly it's just saying you're going to get brutal honesty from me. I have no other incentives to tell you otherwise. And then it's up to you to make the final decision. And it's not that I would say like a classic VC is materially different, but they are on your board. They are publicly responsible for this.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the conversation usually with them is what I would call like a private one-on-one of take your sales hat off for a second, take your hype person hat off because as a founder, you know, you're selling every single day, whether it's to recruits or customers or whatnot. And let's just do like a reasonable bottoms up, what is actually going to get done with this money? And do we really think, do we have high confidence that if we take it, that we're going to hit the milestones we need to hit to get to the next milestone and to not have to enter the death spiral of down rounds and we just do the work? And if there's clear high confidence and a founder is willing to take that risk, then off they go. I would say it just comes down to that person's bottoms up belief in the business and to each their own. I don't think there's like a hard and fast rule.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Funny because as I put my founder hat on, if I were starting something today, I would say, well, this is great. Talk about an opportunity to take advantage of somebody overpaying early on and giving you additional capital to work with and taking some risk off, I would be ecstatic about that. As an investor, obviously your concern is, well, you guys are basically taking from your future investments and borrowing from the future and paying it out now. And my guess, and I have it modeled this, but my guess.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So to be clear, we won't sell. It's just sometimes we may not buy the parada, but we're basically never selling in a secondary. Sometimes we're buying actually from other people who are doing it. For the founder, I encourage them to take enough money off the table that they're comfortable taking a big swing at a bigger outcome. And for some people, just to put some numbers against it, some people, that's a million dollars. Because remember, you're going to pay taxes on this stuff. For some people, as they get bigger, that's a few million dollars. And for others, maybe it's like inching closer to 10. And these are giant numbers for the vast majority of people in America. So we want them to be comfortable and then focused. And we just have a conversation about what is that number? What does it mean to you? And usually it's like less than 5% of their total stake would be a nice benchmark because you want them to feel like there's material upside left and that's why they're going to put in the effort. I actually think this is fairly consistent. I haven't seen a lot of controversy in almost any of the companies we've invested in about this. I think the VC world and even the angel world kind of agrees on this mostly.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“But if you are trying to deploy a ton of money, if you're one of these billion dollar plus AUM funds, then the math changes for you. So it just depends on what you're trying to accomplish, I guess.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Still figuring this one out. I wish I had a better sense of the right way to do it. For now, what we're generally saying is if the Series A is getting done and it's getting done at a price that we feel like is reasonable for the business, which most of them are, by the way, that's 80-90%. Then 100% of the time we're going to participate at least as a pro rata. As it gets to a B or a C where the check size on the Pro Rata gets really big, we'll usually dip out just because it becomes too much concentrated risk in any one company. I mean, you can have pro radio checks if a company is doing well that are five ten times bigger than your initial investment and just too much concentrated risk. But if it's an A, we'll very likely do it. And then we're going to figure the rest out. I'm not 100% sure the right way to do it is these companies get bigger. Do we take parts of it? Do we sell off a piece of it? I'm not sure. I'm more and more convinced that it kind of doesn't matter. And actually by far the most important thing is did you get into the right company in the first place? It's the initial check that drives almost all of the value. And we've done some very basic modeling that I think shows that that's probably”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“For creating new dollars because the value prop here is so big. And then you do a little bit of math. You want those opportunities to be in the billions because it's unlikely you're going to see a significant percentage of those dollars and a little bit of guesswork and most of it ends up being in the founder articulate this really well. I don't want to have to teach the founder about their market size. I want him or her to teach me. And if they can do a credible job of explaining why they think it's bigger than I think, great. That would be awesome. Mine's just like a little bit of a best guess.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I wish I had a magic wand on the market size stuff. I mean, there are people who do this so much better than I do. I would say stick me in Excel and I'm on the bottom end of the spectrum of knowing how to build a model. I'm a little more of napkin math for me, but we like to look at what are the existing dollars that are being spent already. It's a lot easier to go after a market where people are already budgeting for that type of expense, whether it's a business that's already budgeting for it and you're just shifting it from where they spend it today to what you're going to do. And that's a lot easier of a business to build than creating new budgets and kind of pulling money out of thin air. And that does come into play when we think about market size. We prefer where possible known budgets. But if you only invest that way, you will miss a few very, very giant opportunities. I mean, if you looked at just to use the classic example, I guess, of Uber and you said, all right, well, let me like add up all the taxi dollars here, you wouldn't have seen something big, but they expanded it. And so I think you just have to take a view towards, is this taking a set of existing dollars and shifting them over? Or is there a real possibility?”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't. I think the cycle times on these companies are so long. We used to say seven years, but I think it's actually much closer to ten, if not longer. I mean, some of the best companies we've invested in back in the 2011, 2012 timeframe are still illiquid, right? So we're coming up on nine years now. And these are great businesses. And maybe there's another two, three years for liquidity. So that's a 10 to 12 year cycle. You could have two business cycles in that whole timeframe. So I think if you try and time it, you're just going to get it wrong. So we'll invest in a boom. We'll invest in a bus. We're not going to look at it. We're going to look a lot more about does this business make sense? Are the technical trends there? Are the market trends there, not based on like pricing and the hotness of the economy, but based on what we think customers belong? And that's it.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's really hard. I mean, I think the seed and A pricing is kind of a very different beast than Series B in later. And for one fairly simple reason, which is on the B and later, you've got numbers and a history that you”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Founders. So it can be both. It's just, I think the second time folks have a little bit of a shortcut. And usually what that means is the valuation on those businesses are just a little higher. Yeah.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“As with anything, it's all like shades of risk, right? I don't think there's any hard and fast rule if this, then that is always true. That's never the case. I have found that second-time founders who had a good but small first outcome are by far and away the best people to invest in. And the reason for that is they've showed that they can get something stood up and have some sort of success with their first business. So they clearly took something from zero through to position or an IPL or something along those lines that, you know, maybe it's a smaller number. And they've got this like chip on their shoulder to say this was good, but I made all these mistakes. Let me go back and redo this, but take all of my lessons learned and apply them here. And I think that gives them an edge. It gives them an edge in making fewer mistakes. They're usually better at recruiting. They're usually better at attracting talent. They have a slightly bigger risk profile because they did make a little bit of money in the first one. So I think there's a type of second time founder that is just highly fundable. And we would back them anytime. But it's definitely not the only way to do it. I mean, plenty of giant companies, most of giant companies were started by first.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't need to ask anybody for anything anymore, I guess. And there's a freedom to that. I don't have to rely on somebody else saying, oh, I like this person. Let me help him. And I guess that's a little liberating. And you'll notice I didn't necessarily have as much public opinions, let's call it, prior to the exit. And okay, that's really what it is. As for the democracy thing, I mean, yeah, look, this is the part of the puzzle that I believe this is why companies do need or should, I shouldn't say do, but should have a stance on because pieces of the democracy crumble eventually that will make its way to your business. And whether you like it or not, the government and the folks in charge of the SEC, of the DOJ and our attorney general broadly, they have real impact on your businesses day to day if they are doing things that benefit them rather than the American people. And that would be my argument, right? There are things that eventually have an effect on the business and you need to take a stand on them before they have that effect. I don't want to get into like all the nitty gritty political issues I have. You could just read the news. But that's kind of the way I would frame it.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“He's 100% right. I mean, that's the truth of the matter, right? Is at the end of the day, this is Brian Armstrong's company, and it's his decision. And if he wants to say for us, the human issues in the outside world are not relevant for us to have a belief on, then he can do it. That's up to him. And Jeff is completely right. It is not a democracy, and it's really up to the CEO. And then ultimately, the board who controls who the CEO is. And obviously, he's quite good at his job, and he's gotten this far. So, yeah, you joined the company that you believe you want to work for. And that's kind of the beauty of America, right? It's like we can disagree on this. And ultimately people and employees can vote with their own feet. They can choose to work in one place or another based on what that CEO has set out as the culture. And it doesn't all have to be one way. I would do it slightly differently, but he is in his absolutely right to be able to do it the way he wants to. And I wouldn't say otherwise.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“The distinction I would make when you are running a business and when you're an employee at one of these businesses, there are things you can do and say and support in a public forum. And I want to stress, in a public forum, that I believe it's the right thing to do, right? So a company can come up and say, we stand for a higher minimum wage or there's a company can stand up and say, look, we believe in freedom of the press and attacking the press is not a reasonable thing to be doing and not good for our country. And you can say those things in an endless list of these, right? That you can say publicly. And I think you can support the employees who want to talk about that publicly. You can say, yes, we support you if you want to go to meetings, if you want to speak at conferences, go forth. But don't bring it into the day-to-day work. And that's the distinction I want to make is you can say, I believe these things are important and also say to an employee base, however, don't bring it into the day-to-day office. Don't bully people. And if you do bully people, and if you do push people based on their beliefs, we're going to fire you. And I think that's it. You have to say, look, there are consequences for bringing this stuff day to day, but I don't think you have to pretend like the world doesn't exist around you. And that's the thing I think is his post missed, is the world can still exist.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Execution oriented. And that was what I was trying to convey is like you can set rules. You can have guardrails. Here are the behaviors that are allowed. Here are the behaviors that are not allowed. And I don't think you have to pick.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I came out and I don't know, maybe had a little bit of boredom and motivation to kind of rewrite what I thought he should have written, which I guess is a little pretentious on my part, but okay, fine, so be it. But I'll try and describe it in words. To me, I think it's a little naive to think that a company can just say we stand for absolutely nothing but our business. And maybe that was true 50, 60 years ago, but I just don't believe that that's true today. And my problem with the Coinbase piece was not Brian or anything like that. I think he's probably an amazing founder, but he's basically saying, look, whatever else is happening in the world, that's not our problem. And I understand the interest and the need to focus on like top tier execution and you don't want to be distracted with public events and even more in particular actually to say I want to protect employees from bullying and whatnot. And that's critical. And I guess what I'm saying and where I disagreed was that I think you can do both. I think people are saying this is A or B either you have beliefs or you don't. That's the only option. And I think you can have core beliefs. I think the company can have a belief system, things that they believe are important even beyond the business and still have a culture that's high throughput.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I actually would say the money has made me happier. Maybe I'm not supposed to say it, but it's true. But it's not because, oh, I get to go around like spending it on cars and houses and stuff like that. It's just the flexibility to choose where you want to spend your time. To me, that's what the value is. If my son is sick and I need to stay home with him for a day, I can do it. If a friend of mine is starting a company and it's super high risk and I just want to like help them get a crack at it, I can do it. And I think those are the kind of things that I value in terms of having personal wealth, if you will. It's not, I guess, the stuff that you would typically see on like TV or Instagram or whatnot. That's kind of like fake wealth in my opinion. So all about time. Yeah.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“That we knew there would be a backstop, wouldn't be a giant backstop, but there'd be something there, and that allowed us to take a risk early on that I'm guessing many people, most people frankly, just don't have that opportunity. So it's part risk taking and part circumstance.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, at the end of the day, I always thought of this stuff as opportunity cost. So what's the opportunity cost of spending my time working on a startup every single day of my life, including weekends versus the other path? I would say in the beginning, especially when you're in college and you're a little younger, it seems, okay, fine, I'll just take this risk and what's the worst that happens. I can go back to the old world. And I honestly never gave it much thought. It was probably incorrectly so. I just said, all right, this looks like an interesting path. Let's try it out. What do I have to lose? Now, frankly, because we've sold this second company and we're in better shape financially from a personal perspective, I would say our risk tolerance had actually continued to rise. But everyone's different. Everyone's circumstances are different. Do they have family money or not? It's always one big, interesting thing. I know people don't like to talk about it, but the reality is if you've got family wealth, and we're not talking about having to have tens of millions of dollars here, you could just be upper middle class wealth, let's call it. It makes it a lot easier to make a leap and to do a startup because in the back of your head, you're going, all right, well, I've got a little bit of a backstop here. And I think both Nat and I lucked out and came from”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Just as a percentage of overall, there are other people I've talked to. I'll mention Leaf Excel because everybody knows him and he's kind of a remarkable guy. But at some point I had dinner with him a few months ago, probably before COVID. And I asked him the same question. And I'm going to paraphrase, so don't quote me perfectly. But he said somewhere north of 100%, which I thought was just such an amazing, funny comment. And I think he was completely serious about it too. So some people have a little bit more risk appetite than others. And I think we're like in the middle. That's how I'd frame it.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, after we sold the first business, I would say we tried to come up with a number. I think it ended up being around 20%, where it's like, okay, if I lose this, it's not going to be fun, but I'm not going to worry too much. Like I'll be okay. And we felt like 20% of the dollars that we had made was probably a reasonable number. And that's what we started with. We had a target and kind of worked our way up to it. Wasn't more complicated than a little bit of finger in the wind and pick a number that felt comfortable to lose. And then this time around, I would say we're getting a little bit more aggressive. And I think part of that is I think the quality of the companies that we're seeing and the quality of the founders that we're working with has gone up since we first started. And so I actually am extremely bullish on startup investing at the early stages. If you have good access, obviously, and then you can pick reasonably well. This time around, we're looking closer to like 30 or 40 percent over time. There are constraints, right? Check sizes are capped and round sizes are capped and things like that. And so if we're not going to force it in any way, we'll take what we can. But that's kind of how we thought about the targets.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“We had some money that we had made from the deal, and people start pinging you and asking for advice and investment. And so we started to do it fairly ad hoc, no strategy, no structure, just someone we had known and made an intro. And that was it. And after we sold Flatiron in 2018, we started to take it a little bit more seriously and put some structure and took some of the lessons learned and applied it. So I would say this time around where there's writing larger checks and maybe more volume, we're trying to take what we learned from the first round and apply it here. So that's it. Sometimes I guess like you're in the world and people start chatting with you and that's when the opportunities come up.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I don't think it's that different of a story from a lot of other people, maybe with one little twist. So on the startup front, I met my co-founder in college, which I think is pretty common. And we met in a writing class, which is kind of ironic because we both went to business school as undergrads to avoid doing any writing. But here we are. We met in a writing class. He had been into entrepreneurship and had built websites. Remember, this is like 2004. And then one of the things that happened was he had gotten in touch with Josh Koppelman, who you mentioned. And through that connection, Josh got us an internship at one of the early first round portfolio companies. And Max just kind of opened our eyes to what the possibilities were in terms of startups. And in particular, enterprise software, if you will. So that's what's got us into startups. And then we started invite media, which is our first company in school in 2007. And once we were in it, you're hooked. And so at that point, I was like, okay, we're going to do this type of thing for the rest of our lives. And then Angel investing and investing broadly came fairly organically. It was basically after we sold the first business in 2010.”
2020-11-06 · The Twenty Minute VC · 20VC: Zach Weinberg on Whether A Company is a Democracy, The Importance of Ownership, The Rise of Pre-Emptive Rounds, Multi-Stage Funds Entering Seed and How he Approaches Both Risk and Personal Capital Allocation · IDENTIFIED FROM THE TRANSCRIPT · source