The Full Ratchet: Venture Capital Demystified

Lo Toney of Plexo Capital joins Nick to discuss Common Traits Shared by Top GPs, Why Underrepresented Fund Managers Will Produce Superior Returns, and SPACs vs. Direct Listings vs. IPOs. In this episode, we cover:

  • Walk us through your background and path to VC?
  • Why are Product Management skills similar to the skills required for VC?
  • What's the thesis at Plexo Capital?
  • Do you think a thesis on investing in underrepresented founders will produce superior returns?
  • What do you say to pundits that claim you've restricted your options and will have far fewer managers to choose from... which will adversely impact returns?
  • On a percentage basis... will there be more outsided outcomes from diverse founders (or managers) vs. those that are not diverse?
  • How are you innovating on the LP side?
  • We talked about some of the challenges of raising funds... are there ways that you work with and help emerging managers raising a first-time fund?
  • Not just about performance... especially early on.  What are the common success traits you see in GPs?
  • What's your position on investing in the management company or even the GP itself?
  • Where do you see the market for secondaries evolving?
  • I'd like to talk about the exit market a bit...
  • What are your thoughts on companies listing direct?
  • How about the explosion of SPACs -- net positive or negative for venture?
  • Any unintended consequences that founders (or investors) need to watch out for?
  • Zoom is now worth more than Uber, Airbnb, and Stripe combined... Are the three companies undervalued or is Zoom overvalued... or is the pricing about right?
  • Amazing to see companies like Paypal and Square have surpassed Goldman in market cap
  • "3 Data Points"...
  • You’re approached by a first-time fund manager.  The fund manager did not work for a large, brand-name venture firm before and she has never had an institutional investor.  She has been actively investing for 3+ years.  She plans to raise $20M to invest in 30 seed-stage companies w/ no reserves.  The catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
  • What 3 questions do you ask? 
Direct download: TFR249.mp3
Category:general -- posted at: 6:00am EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Elizabeth Yin
  • Michael Cardamone
  • Gigi Levy-Weiss
  • Niki Pezeshki

Each investor describes the most unusual situation or pitch that they've encountered as an investor.

Direct download: IS158_v2.mp3
Category:general -- posted at: 6:00am EDT

Lanham Napier of BuildGroup joins Nick to discuss Scaling Rackspace, The Evolving Responsibilities of a Venture-Backed CEO, and Confronting Big Tech Monopolies. In this episode, we cover:

  • You took on capital from Seqouia, Norwest and others while at Rackspace.  What was the biggest challenge to taking on venture capital?
  • How were you able to move from the early product-market-fit days to true scale... what were the defining decisions/actions that helped you expand exponentially?
  • As a company leaves the product-market-fit stage and reaches scale, what is the job of the CEO or how does the job of the CEO change as the company scales?
  • You've talked about investing "long-term capital"... what do you mean by that?
  • How have you created a fee-light model, where management fees are eliminated?
  • How do you guide CEOs that have been conditioned to think in 12-18 months cycles, when the long-game is much more critical?
  • You've hired and developed a lot of folks over the years.  What advice do you have for young CEOs with regards to selection and/or development of people?
  • Leadership -- great ones emerge in hard times.  What are some of the most important lessons you've learned about leadership?
  • We're in an environment where the largest tech companies have monopolized a lot of the upside in the market.  Of course recently many of the CEOs appeared in front the house judiciary committee.  Where do you stand on the position of large tech companies and how that impacts emerging startups?
  • Do you think China is a threat to the U.S.'s position as world power and tech leader?
  • What would suggest we do about it?
Direct download: 248_v3.mp3
Category:general -- posted at: 1:04pm EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Henrique Dubugras
  • Ryan Gembala
  • Grace Isford
  • Scott Kupor

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.


Trae Vassallo of Defy Partners joins Nick to discuss Leaving Kleiner Perkins to Start Defy Partners, The State of Venture in the Bay Area, and Maintaining a Beginner's Mind. In this episode, we cover:

  • Can you talk about your transition from Kleiner Perkins?
  • How tough was that decision to make?
  • What was it like to work with John Doerr?
  • What’s the thesis at Defy Partners?
  • When you began Defy you chose not to look at San Francisco. Can you talk about why that is?
    • How do you think this plays out? What will tech and venture in the Bay Area look like a few years from now, when COVID is behind us?
    • Any stats on flight of talent form Bay area to other cities/regions?
  • What changes have you observed in venture/tech that this crisis has either caused or accelerated?
  • You’ve been a founder and can relate w/ the folks you’re working with. How do you try and keep that beginner’s mindset as you gain more experience and get further away from your founder journey?
  • What are some the biggest mistakes you see founders making when pitching investors?
  • What tips can you give founders around building relationships as well as pitching in a completely virtual environment?
  • You experienced a severe personal experience… near death situation a few years ago. How has that changed you as a person and as an investor?
  • 3 data points…
    • Let’s say you’re approached to invest in a consumer hardtech startup.
    • The startup is doing $1.5M ARR
    • It’s growing at 15% MoM
    • And LTV:CAC is 4:1
    • Catch is, you can only ask 3 questions for 3 specific data points, in order to make your decision. What three questions do you ask?

On this special segment of The Full Ratchet, the following Investors are featured:

  • Jason Whitney
  • Shawn Carolan
  • David Horowitz
  • Jaclyn Hester

Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.


Nikhil Basu Trivedi of joins Nick to discuss Agglomerators vs. Specialists, the Rise of the Solo-Capitalist, and the Importance of Founder-Investor Fit+. In this episode, we cover:

  • Why did you decide to leave Shasta?
  • What's the plan moving forward?
  • The Rise of Solo Capitalists
    • You wrote a great piece on the rise of this behavior, ‘The Rise of the Solo Capitalists’. What do you think has caused the rise in single GP funds?
    • What are the main benefits to both investor and entrepreneur with this model?
    • What are the limitations and/or downsides of this model?
    • You wrote that an LP said that this model ‘may be the biggest threat traditional venture capital firms have seen in a long time’. Why?
  • Founder-Investor Fit
    • What do you think are the most important things for founders to consider when choosing an investor?
    • There are many firms that don't care about the "fit" per se... they just want to get money into the best deals.  And it can be tough for a founder to turn down the best offer or the biggest name investor.  Do you think that lack of fit can lead to the demise of the company?
    • Do you think that founder-investor relationships/dynamics will change significantly over the next decade?  Why or why not?
  • Agglomerators vs. Specialists
    • Can you break down the types of focus amongst VCs? Agglomerators vs. Specialists?
    • What do you think has caused the rise of the agglomerators?
    • From a returns (TVPI) standpoint, do you think one model is superior to the other?
    • A large, institutional LP said to me this week that he doesn't believe in sector-focused fund models and returns suggest that they underperform.  He only invests in generalists with stage focus.  Have you found that the specialists have underperformed the generalists?
    • What do you think about the future of these models?  Where will the most crowded section be, five years from now?
    • What are your thoughts on rolling funds?
Direct download: FR246.mp3
Category:general -- posted at: 6:00am EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Oren Klaff
  • Tamara Steffens
  • Leo Polovets
  • Byron Deeter


Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

Direct download: IS155.mp3
Category:general -- posted at: 11:00am EDT

Ben Casnocha of Village Global joins Nick to discuss Backing from Bezos, Zuckerberg, and Gates; Lessons from Reid Hoffman; and Building a Network-centric Venture Firm. In this episode, we cover:

- How have things changed for the firm since the pandemic broke?
- You've raised from some very big names in tech -- Zuckerberg, Hoffman, Gates, Bezos, Greene, Blakely and many more.  How exactly did the formation of Village and fundraise from these notable tech leaders come together?
- Village has a unique approach to sourcing...  Tell us about the scout network?
- Decision making process, architecture when doing deals at this pace and volume?
- Many firms talk about their founder networks and Slack Groups.  But often if you ask founders, the density and connectivity of those networks are lacking.  What is it about your broad founder community that succeeds where others don't?
- Worked with Reid Hoffman for two years... what were some of the key lessons from that experience w/ Reid?
- YC is in full swing right now... many investors I've chatted with this week are a bit dizzy with the number of companies they're meeting with.  Do you invest in companies coming out of YC?
- What do you think the future holds for accelerators like YC?
- How do you determine when to make an exception on a deal?  We all have rules, check-size, valuation range, etc... how  do you know when to go off-thesis?
- What are your thoughts on the future of Valley-based investing vs. investing outside the Valley?
- Thoughts on all these large, multi-stage firms investing at seed and pre-seed?
- Capital Supply and concentration is at new levels in the Bay Area... especially for seed investors.  While it's reasonable that more great companies will be built with the tools and opportunities available, this all won't end well.  I've seen pricing spike and aggressive tactics changing from investors to get access to deal.  What are you observing and how do you think it plays out?

Direct download: FR245.mp3
Category:general -- posted at: 6:00am EDT

On this special segment of The Full Ratchet, the following Investors are featured:


-Beezer Clarkson
-Alex Osterwalder
-Patrick Gallagher
-Steve Blank


Each investor discusses a portfolio company that did not survive and why it was that they failed.

Direct download: IS154.mp3
Category:general -- posted at: 2:00pm EDT

- You recently published research on the expansion of 175 US companies into Europe. I’d like to discuss a number of points from the piece, but first off… what prompted you to do this research and write the piece?
- Part of the report is about timing… ie. when is the right time is for a b2b SaaS company to make the leap and expand into Europe.  Talk us through your findings and conclusion w/ regard to timing.
- In preparation to make that jump, you recently talked about the challenges for “globalizing” a company and that it really starts at the CEO’s desk… what do you mean by that?
- As an investor, how do you prepare a CEO to shift mindset from US-centric to a more global one?
- When a company makes the leap to Europe, what are some of the most common pitfalls/mistakes they make?
- How do the challenges of growing a b2b software company across Europe differ from that of growing it in the United States?
- Is there a particular playbook that you follow when bridging the gap between the US and European markets, if so can you share the broad strokes of what that entails?
- Do you think it’s more difficult for companies to start in the United States and grow into Europe or start in Europe and grow into the States? Why?
- As part of the report, you talk about the difference between sales led expansion versus product and engineering led expansion, what are the primary differences?
- How has COVID affected which expansion strategy to choose, if at all?
- How to build a fully functioning sales force remote from the ground up
- What, if any, tailwinds have emerged for the growth of the European tech ecosystem?

Direct download: FR244.mp3
Category:general -- posted at: 11:00am EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Leah Solivan
  • Kane Hsieh
  • Richard Kerby
  • James Currier

Each investor describes the most unusual situation or pitch that they've encountered as an investor.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 153_Investor_Stories_153__Strange__Unusual_Solivan_Hsieh_Kerby_Currier.mp3
Category:general -- posted at: 9:00am EDT

Jonathan Hsu of Tribe Capital joins Nick to discuss how to Acquire Data, Build Abstractions and Do Research. In this episode, we cover:

  • Walk us through your background and path to VC
  • What’s the thesis at Tribe Capital?
  • How do you define PMF?
  • Could you explain what the 8 Ball diligence framework is?
  • When is a deal too early -- how much data (or over what time continuum do you need data) in order for the model to assess appropriately?
  • Just for evaluation or also sourcing?
  • Can you apply this tool to a range of business types (ie. SaaS vs. Maretkplaces vs. User-Growth, etc.)?
  • How to avoid false positives? Data looks great for early phase -- early market… How do you know that it isn’t luck and the company didn’t stumble onto something with early signals of PMF but they don’t have the insight or flexibility to evolve the business through growth and scale phases?
  • What aspect of early stage investing don’t you use data for?
  • Why is this not appropriate to measure with data?
  • Loss ratio goes down -- do you think it increases potential outcome size?
  • On the evaluating side of things, it seems like Tribe has a big emphasis on using data to understand early product market fit. What is your definition of product market fit?
  • Does Tribe conduct portfolio support in a similar way?
  • What happens when data and intuition clash?
  • Do you always lean one way or another? Examples of either?
  • How do you account for exogenous factors?
  • Ever been a scenario w/ a company misrepresenting data (fake data)?
  • How long did it take to build this out -- what is the current team structure of investors, developers, and data scientists?
  • Where do you and the team at Tribe need to improve most?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: FR_243_FINAL_v2.mp3
Category:general -- posted at: 12:00pm EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Courtney Reum
  • Mark Suster
  • Sarah Tavel
  • Jason Calacanis

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 152_Investor_Stories_152__Lessons_Learned_Reum_Suster_Tavel_Calacanis.mp3
Category:general -- posted at: 9:00am EDT

Check Warner of Ada Ventures joins Nick to discuss Structural Disadvantages in Venture, Investing in the "Overlooked," and Open-Sourcing the VC Fund Raise and Investment Playbook. In this episode, we cover:

  • Background / Path to Venture
  • The thesis at Ada Ventures
  • Is it tough getting the up-rounds from Tier 1 VCs when the profile of the founders doesn't look like the standard, obvious profile that's been funded for the past couple of decades?
  • You look for founders and markets that have been mis-priced… what are the three that you believe to be underpriced?
  • Novel scout program -- how many scouts and who are they?
  • How did you recruit them and how are they incentivized?
  • Talk about your recent fundraise…
    • How did you determine how much to raise?
    • Walk us through the timeline of the fundraise.
    • What resonated most w/ LPs?
    • What was the biggest surprise?
    • How did you create urgency and get LPs to move from a maybe to a yes?
    • What will you do differently next time?
  • You and I have discussed your seed investing framework -- how you make decisions on investments. Can you give us the broad strokes?
  • You have an incredibly transparent approach… from your fundraising to your sourcing to your evaluation. Are there any concerns about revealing too much about your strategy?
  • You publicized your investment process and shared some of your funnel data. Have you noticed any differences or changes (relationships with founders, LPs, brand, PR) from when you shared the inner workings?
  • Many issues w/ racial and gender diversity in the news… what message would you like to share re. Diversity?
  • "3 Data Points"
    • Let's say you are approached to invest in a consumer user-growth company with 30k DAUs, and has a 10% WoW growth rate for the last 4 months.
    • Catch is you can only ask for 3 data points to make your decision.
    • What 3 questions do you ask for?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 242_v2.mp3
Category:general -- posted at: 8:36am EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Ramy Adeeb
  • Somesh Dash
  • Jeremy Neilson
  • Minnie Ingersoll

Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 151_Investor_Stories_151__Whats_Next_Adeeb_Dash_Neilson_Ingersoll.mp3
Category:general -- posted at: 9:00am EDT

Niki Pezeshki of Felicis Ventures joins Nick to discuss Finding Markets with Long-Term Tailwinds; Macro Impacts on Venture; and Robust vs. Fragile Data. In this episode, we cover:

  • Background and path to venture.
  • Thesis at Felicis and your focus there?
  • How has the pandemic affected your approach to investment?
  • You’ve mentioned that you look for market tailwinds, especially tailwinds that will be lasting. Right now, we’re seeing a number of shifts that will have lasting effects -- which are you watching most closely?
  • Why do you think the public markets have, largely, stayed high during a very large health and economic crisis?
  • Can you give us an overview on your three-part investing framework for making investment decisions?
  • Where do you look for these large shifts, creating opportunity -- aside from Mary Meeker's report?
  • How do you make sure you are current on-trend instead of getting anchored on data that's old or fragile?
  • What are you looking for in the business model that indicates to you that it is not only the correct approach but can lead to transformational changes in the industry?
  • In which types of businesses do you like to see product-focused founders versus marketing-focused founders, is there a heuristic or systematic way that you think about this?
  • You mentioned that business is a formula and that it’s clear early on whether it’s going to work or not -- can you give us an example of the formula?
  • What's your approach to coaching and advising founders? 
  • There's this fine line between being overbearing w/ advice and not providing enough insight in an area that could derail a company.  How do you strike the balance?
  • What keeps you up at night... the ones you invested in that you shouldn't have or the ones you didn't invest in that you wished you had?
  • 3 Data points: Let's say that you have a consumer SaaS company that is doing 300K in ARR, growing 20%  MoM and that’s all you currently know about the company.
    • Which 3 data points do you ask for and why?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • M.G. Siegler
  • Grace Isford
  • John Vrionis
  • Ash Rust

Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 150_Investor_Stories_150__Why_I_Passed_Siegler_Isford_Vrionis_Rust.mp3
Category:general -- posted at: 9:00am EDT

Henrique Dubugras of Brex joins Nick to discuss the Blazing Fast Path to $B+; Binary Outcomes; The Fintech Revolution; and A New Approach to Employee Comp. In this episode, we cover:

  • Background -- path that led to Brex?
  • Origin story for Brex Tag-line / One sentence overview
  • What's so different about Brex?
  • Why is more than just a credit card?
  • How has the pandemic affected the business thus far?
  • What do you offer that no one else does?
  • Who do you consider to be competition?
  • What is the moat here - why can't another well funded startup replicate your offering?
  • A criticism I've heard is that, when businesses need credit most, when bank balance/working capital is low, is when Brex cuts off access to credit. What's your response?
  • How would you describe your leadership philosophy?
  • Are you recruiting/hiring? Is the approach different while 100% remote?
  • What's the compensation structure at Brex?
  • One of the fastest companies to multi-billion+ valuation -- more pressure w/ all that capital?
  • With the raise and expectations some suggest that the outcome is binary -- is it?
  • What advice do you have for early-stage, pre-A, founders trying to build a venture scale business?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Ryan Gembala
  • Scott Dorsey
  • Elizabeth Yin
  • Jeff Fluhr

Each investor discusses a portfolio company that did not survive and why it was that they failed.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 149_Investor_Stories_149__Post_Mortems_Gembala_Dorsey_Yin_Fluhr.mp3
Category:general -- posted at: 9:00am EDT

Gigi Levy-Weiss of NFX joins Nick on a special Crisis Coverage installment to discuss What's Next in Gaming; The True Essence of Product-Market-Fit; & Investing with an Emphasis on Retention and Engagement. In this episode, we cover:

  • Background and path to venture.
  • The thesis and your focus at NFX?
  • Did you invest in Houseparty when it was Meerkat?
  • You've written about your thoughts on PMF...  How do you assess whether a company has real product market fit?
  • What advice would you have for those still trying to find it?
  • With this focus on product and retention...  What's your response to investors that say distribution is more important than product?
  • Why do you think VC interest has been declining in the gaming space?
  • What has been the history/evolution in the gaming sector?
  • What's next for gaming -- Is there a step beyond the platform?
  • Are there any niches or segments within gaming or esports where you see the most potential?
  • 3 Data points:
    • Let's say a gaming startup comes to you... they have 50k DAUs, K value of 1, 20 % MoM growth... 
    • What 3 data points do you ask for and why?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Scott Kupor
  • Melody Koh
  • Tom Tunguz
  • Jim Douglass

Each investor describes the most unusual situation or pitch that they've encountered as an investor.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 148_Investor_Stories_148__Strange__Unusual_Kupor_Koh_Tunguz_Douglass.mp3
Category:general -- posted at: 12:00pm EDT

Jaclyn Hester of Foundry Group joins Nick on a special Crisis Coverage installment to discuss GP and LP Alignment, Challenges for Emerging Fund Managers, and How the Explosion in Seed Fund Volume Plays Out. In this episode, we cover:

  • Tell us about your background and path to VC.
  • For those who don't know, talk about the approach at Foundry with both the LP and GP model.
  • Foundry traditionally had no apprenticeship model and no junior investors... were you the first?
  • Pandemic... Are you making investments currently and what are you hearing from other LPs?
  • What's your advice for GPs re. building relationships and momentum w/ LPs during these uncertain times?
  • What's the biggest mistake emerging managers make when fundraising?
  • What do new fund managers underestimate when starting a venture firm?
  • Does it matter how specific a thesis is? Do you need to see a unique, focused and compelling edge or are you just as receptive to a generalist w/ a strong network and track record?
  • What question tends to trip up GPs?
  • What are some of the most important things GPs should ask LPs when raising?
  • What do you think are the most important things GPs and LPs need to be aligned on for a successful relationship?
  • How does the explosion in volume of seed funds affect you approach to selection?
  • How do you think this plays out -- most funds fail? Returns more evenly distributed? Power law no longer applies (or is less pronounced)?
  • Fast forward 5 years and let's assume there's been a fundamental shift in early stage Venture. What do you think is the most likely, largest change that's occurred?
  • What advice do you have for young people that aspire to be a VC someday?
  • Not going to ask for favorite GPs but, I will ask, if you could break quarantine to grab a cocktail w/ one GP -- who do you choose? ; )
  • 3 Data Points...
    • You’re approached by an emerging VC firm raising fund II. The fund manager did not work for a large, brand-name venture firm before and she has never had an institutional investor. Net TVPI is 1.4, and Net IRR is 35% and it's a 2018 vintage.
    • The catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 questions do you ask?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Nick Rishwain and Hannah Konitshek of The LegalTechLive Podcast interview Nick to discuss Advice for Founders -- Reaching out to VCs, Pitching over Zoom, and Closing Capital Amidst a Pandemic. In this episode we cover:

  • How have valuations been impacted from the pandemic?
  • How long will lower valuations persist?
  • Are VCs actively doing deals right now?
  • What's the most common mistake that founders make when approaching you for funding?
  • How much information would you prefer a founder share with you upfront (deck, financials, incorporation, docs, etc.)?
  • How often have you met a founder early, been added to their monthly update list and then come back to make an investment?
  • Should founders become more clinical when selecting investors?
  • How do you convince founders on New Stack as an investor?
  • There is one area that New Stack is really hands-on -- what is it?
  • What are some things a founder can do to get funded while  he's only got a well thought out idea and business plan?
  • Many founders don't know if their business is venture scale.  How do you determine if a business is venture-backable or not?
  • How does a sector that hasn't had huge exits at large multiples (like LegalTech) impact the way you assess startups in that sector?
  • How do you evaluate high recurring revenue vs. low recurring revenue?
  • Do you have any suggestions for a founder that is pitching now that it is completely remote?
  • Overall advice you're giving your portfolio companies right now?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Alex Osterwalder
  • Beezer Clarkson
  • Michael Cardamone
  • Leo Polovets

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Shawn Carolan of Menlo Ventures joins Nick on a special Crisis Coverage installment to discuss the Four Fundamentals of Investing; the Future of Micro Mobility; and Hunting Consumer Unicorns. In this episode, we cover:

  • Tell us about your background and path to venture.
  • What's the thesis at Menlo Ventures?
  • Can you explain the "Four Fundamentals" framework for investing and give us a brief description of each?
  • What are you looking for in terms of unit economics?
  • You like to invest in technologies that change everyday life for the better.  Do you have a sense for the needed technologies and then find founders in those areas, or do you identify compelling entrepreneurs that then guide you to emerging technologies that will shape the future?
  • Have you been in the situation where you identified the right consumer trend and technology required to deliver but you picked the wrong startup?
  • Is there a priority of importance amongst the four?
  • Which do you think investors most often get wrong? 
  • Let's talk about consumer a bit...Many VCs think that consumers and consumer behaviors evolve quickly in unpredictable ways.  And b/c of that many VCs avoid consumer.  What's your response?
  • We’ve seen an explosion in Cloud and SaaS recently, and some question whether there’s room for another big consumer company, what is your response to this and which areas do you see the biggest opportunities in?
  • Before the pandemic, the future of scooter companies was murky with challenging unit economics and fleet maintenance... while governments were, in some cases, were imposing regulations and putting a halt to deployment.  What does the future hold for the scooter companies?
  • How do you view these situations, like scooters, where there’s low differentiation and a number of players trying to scale and grab share quickly?
  • Any other micro-mobility trends that you’re watching closely, aside from scooters?
  • Changing gears away from micro mobility and into AI for a bit, why do you think we haven't seen many unicorns in consumer AI?
  • Where (sectors, categories) do you think the initial consumer AI unicorns will come from?
  • Let's say that you have a micro mobility company that is currently operating in 3 cities within one region, grossing $500K monthly and growing 30% month to month.
    • Which 3 data points do you ask for and why?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Patrick Gallagher
  • Sarah Tavel
  • Byron Deeter
  • Jim Kim

Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 146_Investor_Stories_146__Whats_Next_Gallagher_Tavel_Deeter_Kim.mp3
Category:general -- posted at: 12:00pm EDT

Tamara Steffens of M12 joins Nick on a special Crisis Coverage installment to discuss Why Corporate VC Gets a Bad Wrap; Microsoft's Fresh Approach to CVC; and Key Insights to Acquire Mass Users. In this episode, we cover:

  • Background and path to venture.
  • Overview of the thesis at M12.
  • Investments since COVID? Changes in strategy, markets of interest.
  • CVC has the reputation of being very slow, not leading deals, imposing restrictive terms, and thinking only about broader success of their parent company— what's different about M12?
  • What's your approach to sourcing?
  • You are known as a user acquisition expert in the valley... having generated millions of app downloads for Path, Color and Acompli. One of your main suggestions is to "Dismantle the silos" ... what do you mean by that?
  • You've cited the top three things you need to make your app part of the zeitgeist -- can you walk us through each and why they're critical?
  • Talk about the 'Leaky Bucket' of new user acquisition and how to avoid it?
  • What's a good level of user retention (%) after 6 weeks?
  • What are the biggest differences in approach when acquiring consumers vs. enterprise customers?
  • What are the main KPIs/OKRs you track when optimizing a sales funnel / team?
  • I'd like to talk a bit more about the startups you work with...What are the key factors you're looking for in investments?
  • How do you work with your portfolio companies?
  • Why should every startup be thinking about culture as they build their companies?
  • How are founders today different from founders 20 years ago?
  • What tips do you have for founders pitching investors remotely?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Brian Hollins of BLCK VC joins Nick on a special Crisis Coverage installment to discuss Breaking into VC; Excelling at Goldman Sachs; and the Origin of BLCK VC. In this episode, we cover:

  • Background and path to venture?
  • What was the most surprising thing about venture that you only realized after working in it for awhile?
  • So you've got this great job in venture...  Why'd you decide to go back to HBS?
  • Tell us about the origin story of BLCK VC?
  • What are some of the specific activities and programs that BLCK VC is running?
  • On June 4th, BLCK VC held an event, “We Won’t Wait”, for people in venture to take action. What were the primary goals and outcomes of the event?
  • I want to talk a bit about your experience at Goldman... did you have an opportunity to invest in black and/or underrepresented founders?
  • What, if anything, did Goldman do to support black investors and founders?
  • It's so hard breaking into this industry and orders-of-magnitude harder when you're black --  how have diversity issues and racial profiling affected your professional journey?
  • Can you give us your take on the current social unrest and what path you want to see going forward?
  • Do you think we'll see the systemic changes required this time or do you think progress will be limited?
  • Who are some investors, founders or people in the space you see paving the way and driving change?
  • What can white VCs do, specifically, to contribute to more better balance and stronger representation for black founders and investors?  What organizations do you care about?
  • What are sites or resources that our audience can visit to get more involved?
  • Aspen Fellowship... At New Stack we're rolling out a fellowship program to train young, college students in VC... you're back on a college campus... what are some ways that we can get our job description in front of more black, latin and underrepresented minority students?
    • Are there any national organizations or communities for college-aged, black students that are interested in tech?
  • 3 Data Points...
    • Let's say you are approached to invest in an enterprise SaaS business. The startup has $10M ARR, Growing 10% MoM and LTV:CAC is 4:1. Catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 questions do you ask?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Minnie Ingersoll
  • Adeyemi Ajao
  • Richard Kerby
  • David Horowitz

Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 145_Investor_Stories_145__Why_I_Passed_Ingersoll_Ajao_Kerby_Horowitz.mp3
Category:general -- posted at: 12:00pm EDT

Kane Hsieh of Root Ventures joins Nick on a special Crisis Coverage installment to discuss Investment Decision in < 3 weeks; the Challenges and Opportunities with 3D Printing; and the Future for Industrial Automation. In this episode, we cover:

  • Backstory/Path to Venture
  • Tell us about the the thesis at Root and your focus areas.
  • Any unique outcomes or behaviors you are observing as a result of the pandemic?
  • What's your investment position on 3D printing... bullish or bearish?
  • I used to work in the industrial automation area... developed two different products there and saw limitless opportunities but also many challenges.  From your standpoint, what have been the biggest challenges to progress in industrial automation?
  • What excites you most about industrial automation going forward?
  • How will jobs in the industrial space, or any space for that matter, change with the immersion of automation and robotics? Is this a net job eliminator?
  • Startups w/ hardware as a part of their solution (whether off the shelf or developed internally) are often are more capital intensive than their pure software counterparts.  How do you balance progress and capital efficiency for  these businesses?
  • Do you think the expectations of progress/traction, at different stages, is different for hardware as a service vs. software as a service?
  • One piece of advice for founders of industrial automation startups... what would it be?
  • What are some of the deep tech or capital intensive investment areas that you're avoiding?
  • Heard a rumor that you're starting podcast?
  • I came across a side project, "Transformer Poetry,” a book of famous poetry reimagined by OpenAI’s GPT-2 language model. I don't even know what to ask here but would love to hear what the inspiration for it was.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


James Currier of NFX joins Nick on a special Crisis Coverage installment to discuss Network Effects; 9 Days Until a Funding Decision; Software as the Foundation for the Modern VC firm; and the Future of Social Media. In this episode, we cover:

  • Background and path to venture
  • Thesis: Overview of the thesis and your specific focus at the firm
  • Pandemic: Unique outcomes or behaviors you are observing as a result of the pandemic?
  • Overview of Software: You're a huge inspiration to me...  I love that you're bringing innovation to venture -- building software and tools that help founders and allow them to access more investors. For those in the audience that don't know, can you give a brief over of the major software and tolls that you've built.
  • FAST Program: You launched the FAST Seed Financing Program ($1M, $1.5M or $2M for 15% of their company) which ran April 16-May 22.... were you allowed startups to apply for funding and you committed to responding in 9 days. Why'd you launch the program?
  • What did you learn that was surprising?
  • Will you do it again and, if so, what will you change?
  • All this software focus could run the risk of investing in startups that look great on paper but could underestimate or not fully assess the founding team's mindset.  How do you consider the qualitative?
  • Creators vs. Opportunists: How do you insure that the founder's you are backing on true creators with the right motivation instead of just opportunists with great skill addressing large markets?
  • Unusual vs. Conventional thinking: You have said that exceptional outcomes are the result of unusual thinking and that conventional thinking is the death of many companies -- explain what you mean by these types of thinking?
  • 1st time vs. 2nd time founders: What's the biggest challenge to working with second time founders?
  • Social: One of your key observations was that social media is becoming less social and more media. What are some of the consequences of this shift?
  • It seems that social media is moving away from broadcasting towards intimacy and sharing. Does the pandemic accelerate any trends/behavior/psychology within in social?
  • Do you think business models and advertising as a primary revenue stream with have to change w/ it?
  • 3 Data Points...
    • Let's say you are approached to invest in a consumer social business that has a network effect. Their user base is 20k DAUs and is growing 30% MoM and they have not yet monetized. Catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 questions do you ask? 

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Leah Solivan
  • Oren Klaff
  • Jason Whitney
  • Darren Bechtel

Each investor discusses a portfolio company that did not survive and why it was that they failed.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 144_Investor_Stories_144__Post_Mortems_Solivan_Klaff_Whitney_Bechtel.mp3
Category:general -- posted at: 12:00pm EDT

Ramy Adeeb of 1984 Ventures joins Nick on a special Crisis Coverage installment to discuss Why Facebook Should be Broken Up; SV Hype vs Returns; Amara's Law; and VC's Track Record Predicting Trends. In this episode, we cover:

  • Backstory/Path to Venture
  • Tell us more about what was it like working with Vinod. Is there anything he taught you in specific that was most influential? And how about Pierre?
  • How has the crisis impacted the way you invest as well as your thesis?
  • Have you seen an adjustment, a correction or a slow down amongst the Series B, C and growth stage investors? Any predictions on how long this period will last? 
  • What are some tips for founders when pitching to VC's over zoom? 
  • Quick highlights of your thesis (stage, sectors, geos, check sizes, etc.)
  • You've said that one should "Avoid the hype - whatever is en vogue you should run away from" why should the hot trends be avoided?
  • What's Amara's Law and how does that inform your thesis?
  • Any stats or data on VCs ability to predict the future?
  • Let's say someone describes one of your investments as feeling more like a product and not a company... how do you respond?
  • You've mentioned your focus on passing quickly... What are your tips and tricks to get to a quick pass?
  • You've said that Facebook is a monopoly and should be broken up... why?
  • In your estimation, what's the most significant adverse effect from WeWork and The Vision Fund that no one's talking about?
  • Tech is often credited for creating significant value but some also argue that it destroys jobs and widens the wealth gap. What's your take on this and how, someone like Bernie Sanders, in office could affect venture?
  • When it comes to the economy and the effect of tech on the economy, we've seen unemployment fall to an all-time low while the # of people 'not working' is at an all time high... Are we measuring the right economic indicators when it comes to unemployment and also inflation?
  • I also came across something you tweeted about Tech Pessimism. You quoted: "We too often focus on the drawbacks of a new tech while taking its benefits for granted." Meanwhile "To be Alive in the tech obsessed 2020 is to be among the luckiest people who have ever lived.” Can you give us some examples of Tech Pessimism and your take on it? Do you think there's a resolution?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


David Rabie of Tovala joins Nick on a special Crisis Coverage installment to discuss Finding PMF, Raising Series B, & Navigating a Startup Amidst the Pandemic. In this episode, we cover:

  • I was just checking and we had you on the show back in March of 2016... that was over 4 years ago, pre-launch, during your Kickstarter campaign.  So crazy how much time has passed.  Can you refresh us on the origin story of Tovala...
  • We've invested in the pre-seed, seed, Series A and now Series B round... and we're fortunate to have a front row seat while  you and the team built an amazing company but bring the audience up-to-speed on the last few years... what have been the key milestones/inflection points?
  • Your revenue was strong, hovering near mid seven figures ARR, until Q3 2019 when it took off at a growth rate like I've never seen... accelerating past $10M ARR and continue a rapid growth rate, even during the crisis.  What changed that caused the ramp?
  • How do you define PMF and when did you know you reached it?
  • What tech companies do you compare yourself to and how do you measure up?
  • North Star Metrics?  LTV, Payback, Yearly Spend, Retention?
    Overall, how has the crisis affected your business?
  • What are the major levers/measures you've taken to reduce cost?
  • Talk to us about raising the B round -- and How it was trying to raise as the pandemic hit?
  • Let's talk about what's next for Tovala...  On the oven side of the business... currently consumers have to purchase your smart steam oven -- a countertop device similar to a toaster oven.  What does the future look like on the hardware side and is the Tovala countertop steam oven always going to be necessary to enjoy Tovala food?
  • And the food itself... what are some options available to expand meal kits available beyond just Tovala's kitchen? Any other strategic partnerships or growth channels that are high priority opportunities for you after closing the B round?
  • Greek chicken and vegetable pita... Any plans for breakfast or lunch?
  • From my family members... When are you going to have a pizza or a hamburger?
  • How would you describe your leadership style and the culture you've established at Tovala?
  • What advice would you have for founders building a D2C tech company?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Grace Isford
  • Somesh Dash
  • Steve Blank
  • Mark Suster

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 143_Investor_Stories_143__Strange__Unusual_Isford_Dash_Blank_Suster.mp3
Category:general -- posted at: 12:00pm EDT

Taranvir Johal & Salman Elmi of Tavolo and Top Figure join Nick to discuss Racism in Venture -- A White, Male VC Threatens Black & Brown Founders. In this episode, we cover:

  • Quick personal backstory and origin story for Tavolo -- Taranvir.
  • Quick personal backstory and origin story for Top Figure -- Salman.
  • So, there was an incident last week in Minneapolis where venture capitalist, Tom Austin (who has since been fired by F2 Group), confronted you in your building's exercise room.  You guys captured a video of the incident and it begins with w/ Mr. Austin pointing his mobile phone camera back and forth at the three members of your team -- as he confronted you. Walk us through what happened before and after the video recording.
  • Very, very reminiscent of the Amy Cooper video from NYC's Central Park -- shocking similarities between your situation and the Cooper situation.  It's nothing short of tragic.  What were you feeling as this was happening to you?
  • What has it been like growing up in a society that is not structured to promote your success?
  • Tell us about your experience as black and brown founders in the startup world?
  • How does what happened change the way you go about business in the future?
  • Thoughts on the murder of George Floyd and impact on the black community?
  • What are some of the changes you’d like to see most from a systemic point of view?
  • What do you think are some actionable steps investors and founders can take to respond to what’s been going on?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Jim Douglass of Fulcrum Equity Partners joins Nick on a special Crisis Coverage installment to discuss Pandemic Effects on B2B SaaS and Healthcare -- Total $ Invested, Multiples, and the Exit Environment. In this episode, we cover:

  • Background/path to venture.
  • The thesis at Fulcrum.
  • Investments since COVID -- Anything additional you need to see or changes to process to get to investment?
    B2B SaaS -- impacts to existing contracts and funnel opportunities thus far?
  • Recently, we had Byron Deeter at Bessemer on the show talking about why this is the seminal moment for Cloud and b2b SaaS companies, do you share that excitement with Byron or where do you stand?
  • Previous downturns have had a deeper and longer term effect on growth stage (volume and dollars) then the earliest stages -  what are your predictions for the near term and mid term on growth stage investing?
  • How do you and your partners think that investment multiples will be affected?
  • What about the exit environment...What have you been seeing in the current exit environment and how do you think it will be impacted over the next 12 months or so?
  • I believe the entire team at Fulcrum has experience as an operator -- How does this impact the way you work w/ portfolio companies?
  • Substantive changes to operating plans?
  • Healthcare Services framework and approach to investing?
  • What actions are you seeing CEOs take and/or what are you encouraging they take in order to maintain operating culture in this distributed work environment?
  • "3 data points"
    • Independent of the COVID situation, let’s say that you are approached by a B2B SaaS company that is currently doing $5M ARR, has a 5:1 LTV/CAC Ratio and MoM growth is trending at 10%
    • Catch is you can only ask for 3 data points to make your decision.
    • What 3 questions and data points do you ask for (can not ask for P&L, Operating Plan, Cohorts, etc... need to be specific data points)?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • John Vrionis
  • Elizabeth Yin
  • Bobby Franklin
  • Jeremy Neilson

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 142_Investor_Stories_142__Lessons_Learned_Vrionis_Yin_Franklin_Neilson.mp3
Category:general -- posted at: 12:00pm EDT

Melody Koh of Nextview Ventures joins Nick on a special Crisis Coverage installment to discuss Super-Technologies; The Everyday Economy; The Overlooked Working Class; and Fear of Missing Out vs. Fear of Looking Dumb. In this episode, we cover:

  • Background and path to venture
  • Thesis and Focus at NextView
  • Hands-on approach (only 2-3 investments/yr)?
  • You wrote that when it comes to investing in the COVID era -- FOMO (Fear Of Missing Out) is replaced by FOLD (Fear Of Looking Dumb). What are you seeing from other investors?
  • How will this effect 'Seed' as a Stage of investing?
  • How has the crisis effected your approach?
  • Conviction without face to face?
  • Recently heard about NextView’s new virtual Accelerator... congrats on the launch. Can you give us a quick overview of the program?
  • Do you have any predictions on the long-term effects of this crisis on the ‘Everyday Economy’?
  • I saw your tweet about companies shifting the real estate burden to employees as everyone works from home... do you think companies should subsidize this?
  • Super-Technologies...  railroads, electricity, automobiles, and now internet connectivity.  Ideas about what may be some of the next infrastructure type super-technology?
  • Why do you think the working class has been overlooked as an opportunity for innovation?
  • You cite labor as an opportunity ready for innovation. Why is now the time for innovation here?
  • You point out a really interesting observation -- that this demographic is more likely to use smartphones as their daily driver and that they tend to skew towards older devices. What does that mean for new tech products?
  • Are there examples of tech companies that have successfully built a company designed for this category of workers?
  • What are the key success factors or key criteria for success, when launching technologies for the working class?
  • Which working class industries do you think are in the best position for change?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Jeff Fluhr of Craft Ventures joins Nick on a special Crisis Coverage installment to discuss Launching StubHub During the Dotcom Crash; Why Market Need Trumps Market Timing; Choosing B2B vs. B2C; and Why Founders Shouldn't Let VCs Decide Their Fate In this episode, we cover:

  • Background and path to venture
  • Thesis and focus at Craft
  • So, you incorporated Stubhub in March 2000... just weeks before the dotcom bubble burst. Was there any hesitation or second thoughts as the tech world was collapsing around you?
    • LESSON 1: IT’S ABOUT THE MARKET NEED, NOT THE MARKET TIMING
      • You talk about the difference between market need and market timing. Can you explain what you mean by this point?
      • How did you validate the market need, beyond just the experience of you and others you knew?
    • LESSON 2: BE FLEXIBLE IN YOUR STRATEGY
      • Often founders face this question of choosing B2B vs. B2C... can you talk us through the early days and StubHub and the how the strategy evolved?
      • Do you think if you initially focused on the B2C segment when the crash just happened, results would’ve been different?
      • What metrics were you optimizing for in the early days. While there were some successful marketplaces, like eBay, the playbook and range of metrics, I'm sure, were much less known and developed in the early 2000s vs. the resources we have to leverage today.
    • LESSON 3: VCs DON’T DECIDE YOUR FATE
      • Tell us about the Series A Raise -- did it go smoothly?
      • When did you shift the model and begin engaging more B2B channels? Was that post-Series A, B?  What guidance do you have for founders re. focusing on one and when to expand?
      • What was it, do you think, that kept all the VCs from investing?
    • LESSON 4 : DEPRESSION-ERA VALUES CAN BUILD A STRONG CULTURE
      • What were the three values that were core to your DNA and culture -- that helped you survive and ultimately thrive?
      • Has this shaped the way you evaluate companies, pre COVID and during?
    • LESSON 5 : MANY THINGS ACTUALLY GET EASIER
      • In what ways is it easier to build during a recession?
  • If you were building another company right now, what’s one major thing you'd do differently?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following investors are featured:

  • Ryan Gembala
  • Jenny Rooke
  • Jeff Clavier
  • Courtney Reum

Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 141_Investor_Stories_141__Whats_Next_Gembala_Rooke_Clavier_Reum.mp3
Category:general -- posted at: 12:00pm EDT

Sarah Tavel of Benchmark joins Nick on a special Crisis Coverage installment to discuss Consumer Marketplace Investing; Why Aggregate GMV is a Red Herring; and Minimum Viable Happiness as the Key to Market Leadership. In this episode, we cover:

  • Background and path to venture?
  • Quick overview of the thesis and your focus at Benchmark
  • What are your thoughts on platform VC?
  • What tactics or approaches do you use in the process of “scaling your founder”?
  • You sit on the board of some companies, such as HipCamp, that have been greatly affected by the pandemic -- What are some of the creative responses you've seen from portfolio companies?
  • Is there anything fundamental to Marketplace businesses that you think will shift as a result of the crisis and changes in consumer behavior?
  • In the food delivery space, we recently witnessed DoorDash unseating the larger incumbent: GrubHub, with the greatest market share. DoorDash started after PostMates and years after Grubhub... how'd they do it?
  • Do you currently see or do you predict more situations where a startup capturing more supply will lead to displacement of a large tech company as mkt share leader?... if so, in what markets?
  • Recently, you published a series of newsletters talking about the hierarchy of marketplaces... first off, what are the three phases that you've outlined here?
  • Why is a push to aggregate GMV across many markets, less important than dominance in one market?
  • What is Minimum Viable Liquidity?
  • How do you define/measure happiness?
  • At what levels do you know you've reached MVL or MVH?
  • Level 2 of your Marketplace framework... Can you talk about what it means for a marketplace to “tip” and how do marketplace based businesses achieve this?
  • Is there something specific that happens w/ the metrics of a businesses that show that the marketplace is tipping?
  • Do different stages of fundraising map to these phases?
  • The third phase you refer to is the 'Outrun' phase... walk us through the main focus areas in this phase.
  • Homogeneity of the buy-side as a negative... can you expand on this?
  • How does your evaluation of a marketplace based business differ whether it’s a b2b company or a b2c company, if at all?
  • Let's say you are approached to invest in a Consumer Marketplace company with $10M in GMV, a 25% take rate, and 20% MoM growth for the last 6 months.
    • Catch is you can only ask for 3 data points to make your decision.
    • What 3 questions do you ask for?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Beezer Clarkson of Sapphire Ventures joins Nick on a special Crisis Coverage installment to discuss Platform LP; Allocations in a Down-Market; COVID Strategy Drift; and Emerging Manager Selection. In this episode, we cover:

  • Background and path to Sapphire?
  • Overview of the thesis at Sapphire?
  • You have relationships with many different funds and fund managers, how have you been managing the current situation from the LP side?
  • Down years tend to be very good times to invest, what portion of institutional LPs do you think will view the current situation as an opportunity to deploy versus those that tighten up?
  • Strategy drift of a venture firm can be concerning. COVID has impacted some strategies more adversely than others -- what have you seen as far as shifts in theses and deployment strategies among firms and what's your opinion on GPs changing course due to COVID/SIP?
  • Changing gears a little bit, but I want to talk about OpenLP. What is OpenLP and why'd you launch it?
  • There was a good article recently published by Kauffman Fellows talking about the relationship between LPs and micro-vcs and emerging fund managers. It mentions that most institutional LPs won’t invest in emerging managers until they see them produce cash-on-cash returns, but at that point, they’re no longer an emerging manager. What do you need to see from emerging fund managers to consider investing in their subsequent funds?
  • As far as skills are concerned, which skills do you often see emerging fund managers have aside from having access to great deals, making good investment decisions and providing value to founders?
  • Have there been any novel ways that you've seen smaller firms differentiate themselves that you can mention? Any other areas where you'd like to see more focus?
  • Let's say you're looking at an emerging fund manager's existing LP-base -- what, if any, are the red flags or things that might give you pause?
  • I know you place significant emphasis on the human aspect of working with people, how do you assess whether or not a fund manager has the people skills that you require when deciding whether or not to invest into their venture fund?
  • How can a fund manager determine whether an LP has real interest vs. just being a tire kicker?
  • You are approached to invest in a Emerging VC Firm. Their last fund is currently at 35% IRR 1.3 TVPI and is 2018 vintage.
    • Catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 question do you ask? Granted this is not how investing works! ; )
  • Any advice for fund managers that are early in the career, planning a fundraise within the next 12 months?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Alex Osterwalder
  • Scott Kupor
  • Cheryl Cheng

Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 140_Investor_Stories_140__Why_I_Passed_Osterwalder_Kupor_Cheng.mp3
Category:general -- posted at: 12:00pm EDT

Byron Deeter of Bessemer joins Nick on a special Crisis Coverage installment to discuss Why This is the Seminal Moment for Cloud and Lessons from 19 Unicorn Investments. In this episode, we cover:

  • Background and path to venture
  • Stage and focus area at Bessemer?
  • You’ve said that many of the lessons learned from the 08 crisis are applicable today -- what are the top 2 or 3 lessons that founders can directly apply to their business during the current crisis?
  • From a startup standpoint, how is this crisis different from the last?
  • What are your thoughts on the dynamics of the PPP and the role the government is playing amid the crisis?
  • We’ve seen significant volatility in the public markets, but Cloud has remained pretty resilient... what have been your macros observations on SaaS and Cloud businesses over the past couple of months?
  • Why is now “the iPhone moment” for Cloud? 
  • We’ve seen a number of business models gain increasing momentum, such as freemium, low friction and developer centric to name a few -- what have you observed w/respect to evolving business models and which do you think will become more pervasive in the coming years?
  • You’ve talked in the past about the importance of channel scalability for SaaS and cloud companies, define channel scalability for us and what some red flags that may reveal a lack of this?
  • A lot of analysis that goes into these businesses and every situation is different, so I don't want to over simplify... but have you found some general characteristics that separate the winners from the losers?
  • Trust is such an important part of a relationship between founders and investors, what's your approach to building relationships, and do you have a specific example/story?
  • We saw substantial growth in the number of unicorns from the 2000’s to the 2010’s, what do you expect to see this decade?
  • How do you feel about the trend of companies to stay private longer?
  • From the 10 Laws of Cloud Computing... which are the ones most often absent from opportunities you're reviewing?
    • Law 1: In the cloud economy, scale wins
    • Law 2: Growth at optimal cost
    • Law 3: Invest behind the cloud sales and marketing learning curve
    • Law 4: Product as a competitive advantage
    • Law 5: Master the 5 C’s of cloud finance
    • Law 6: Discover your secret KPIs
    • Law 7: Customer success is company success
    • Law 8: Impact through engagement or insights
    • Law 9: Tone starts at the top
    • Law 10: Map your fuel stops
  • In the last State of the Cloud report, you mentioned 5 predictions about the future of Cloud, can you highlight a few you're most excited about? 

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Michael Cardamone
  • Jim Kim
  • Jason Calacanis

Each investor discusses a portfolio company that did not survive and why it was that they failed.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 139_Investor_Stories_139__Post_Mortems_Cardamone_Kim_Calacanis.mp3
Category:general -- posted at: 12:00pm EDT

Leah Solivan of Fuel Capital joins Nick on a special Crisis Coverage installment to discuss Building TaskRabbit in a Recession; COVID Effects on the Independent/Gig Economy; and Key Factors for Early-Stage Marketplace Success. In this episode, we cover:

  • Background -- path to venture?
  • How is the current climate affecting your investing?
  • Differing viewpoints on how much runway to plan for w/ a new capital raise... are you suggesting founders raise for more than 18-months or does the standard runway guidance hold?
  • This crisis has had a pretty profound impact on the sharing economy/the gig economy/the independent economy. As someone with experience working in this space, what are your observations?
  • Key lessons learned from building TaskRabbit in 2008/2009 during a recession?
  • What will be the big opportunities post-covid, given the changes to consumer behavior?
  • What are the main 3-5 things your looking for in a consumer marketplace business at the seed stage?
  • Are there GMV levels that you're looking for?
  • How about take rate?
  • Best advice on investing in marketplace businesses that you've come across and incorporated into your approach?
  • I've seen a number of consumer marketplace business that start w/ an auction-style format where vendors bid for consumer business, like thumbtack... then they flip to more of an affiliate/referral model where the consumer enters the specs for their job, those leads are sent to vendors and the vendors reach out individually w/ proposals. Why have we seen this shift?
  • Does the transaction interface/format between vendors and customers influence your interest as an investor?
  • You've said that you think investor's should stand in a founder's corner, not their kitchen. What do you mean by that?
  • How involved do you get w/ founders, and how has that changed as the portfolio continues to grow?
  • Advice for founders that are approaching an exit process w/ strategics?
  • I know you pride yourself on your efficiency... do you have any efficiency hacks or tips for investors young in their career?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Grace Isford of Canvas Ventures joins Nick on a special Crisis Coverage installment to discuss How Companies Can Maintain Growth Post-COVID. In this episode, we cover:

  • You're an extroverted, people-person... how you holding up w/ the quarantine?
  • Quick overview of your background and path to VC?
  • Your focus (and thesis) at Canvas?
  • You developed a 30 page GTM Playbook based on interviews w/ 10+ CROs/VPs of Sales across major B2B companies. First of all, is this publicly available and also what were some takeaways that really stood out?
  • There's a segment of VCs that believe that one must be an operator to be a good VC... what's your stance?
  • Examples of successful non-operators?
  • You completed a comprehensive analysis of the portfolios of over 200 venture firms, looked at 100 successful GPs, and winning, U.S.-based investments w/ a valuation greater than $500M... what were your key takeaways?
  • A bit about signaling... Many in the industry and those observing determine the value of a startup based on whether a brand name venture firm is in the deal... "If Sequoia is in the deal, startup must be great"... what are your thoughts on this common perception?
  • What does your weekly routine look like and how have you prioritized the various demands of the job?
  • What have you found to be most challenging in your career as a VC?
  • What advice do you have for young folks trying to make an impact as an investor or board observer?
  • You wrote a great piece that analyzed three areas where VCs could invest to address the societal challenges of COVID-19.
  • Can you walk us through each of these and why the opportunity here is greater?
  • What do you think the future holds for venture & entrepreneurship in a post-COVID world?
  • The old playbook for winning deals is gone... Any idea on how one might win a deal virtually?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Minnie Ingersoll
  • Scott Dorsey
  • M.G. Siegler

Each investor describes the most unusual situation or pitch that they've encountered as an investor.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 138_Investor_Stories_138__Strange__Unusual_Ingersoll_Dorsey_Siegler.mp3
Category:general -- posted at: 12:00pm EDT

Ash Fontana of Zetta Venture Partners joins Nick on a special Crisis Coverage installment to discuss The AI Investing Playbook; Why "Dev Tools" for Data Scientists is the Next Great Opportunity; When Fund Returns Don't Fit the Power Law; and Ash's Favorite Investment Heuristic from Naval Ravikant. In this episode, we cover:

  • Zetta III was announced recently, a $180M fund for founders building AI-first companies.
  • You went from $60M -> $125M -> $180M... how was the fundraise different this time around?
  • Quickly can you give us your definition of an AI-first company?
  • What will you be doing differently with the new fund and how does the pandemic affect your approach?
  • Tom Tunguz just mentioned that in the data they're analyzing they are seeing a drop in spend on Machine Learning Infrastructure.  How much of a concern is this to you and your portfolio companies?
  • With the launch of the new fund, you outline focus areas both Applications as well as infrastructure and tools...Is the application-layer ready to leverage AI in a significant way or is there still a lot headway that needs to be made at the infrastructure level first?
  • Carlota Perez has written about technology cycles and how new technologies typically go through this installment phase, w/ rapid development and heavy investment, followed by crash and subsequent recovery leading to the deployment phase...  in your estimation where are we in the tech life cycle of AI and is it really ready (or will it be ready over the next 3-7 years) for mass deployment?
  • How effective are the AI models today when much of the input data, generally speaking, is flawed?
  • Talk about the next 3-5 years for Data Science... we've seen significant advances in developer tools and systems for software but I still feel like we're at very early stages in evolution, efficiency and scalability of data science tools/fundamentals.
  • Does your fund returns follow the power law?
  • Part of the advantage to AI-first startups is the supreme data moat that they can build, preventing others from gaining traction w/ competitive solutions. While this is an advantage for the startups that get a head start (and their investors) is there an adverse impact on other startups that are founded later and don't have the extensive data sets?
  • Many of the startups you invest in are "deep-tech" and will not monetize and grow ARR the same way many familiar SaaS or transactional businesses will.  What are the major gating factors to raise each of a Seed Round, a Series A and a Series B, in these longer cycle tech-first approaches?
  • You've create a Playbook on how to build an AI-first company.  It's evergreen with plans to update regularly as you work w/ companies...  I wonder if you might give us the basics... What do AI-First companies have in their DNA and when building a company, what's the sequence and major building blocks required at the early stages?
  • Last time you were on the show you mentioned you learned a lot of great heuristics and mental models from Naval Ravikant. Can you give us a couple of these that have been really valuable in helping you quickly frame startup investment potential?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Tomasz Tunguz of Redpoint Ventures joins Nick on a special Crisis Coverage installment to discuss SaaS Strategies, Sector Data, and the $ Ceiling for Deals over Zoom. In this episode, we cover:

  • September of 2015 was the last time we had you on the program...  bring us up-to-speed on major milestones and changes since then?
  • Has your thesis changed at all?
  • Aside from the effects of the pandemic now, what has been the biggest change in SaaS investing since then?
  • Lots of varying advice from so-called experts... some suggesting to deep cuts across the board, extend runway out for a few years... others saying now is the time to lean-in, expand and take advantage of opportunities that are created by the crisis.  You put together a pretty simple two by two decision-matrix for startups.  Can you talk through this and how you're providing different counsel to startups in different positions?
  • If you're vetting a startup for a Series A that has benefited from the crisis, how do you disentangle or segregate temporary or non-sustainable revenue sources from the steady-state?
  • Have you adjusted your vetting criteria or expectations around metrics due to the crisis?
  • What's something you look for and analyze that is less common?
  • What's your take on situations where there is an agreed MRR but the contract is structured such that the bulk of the contract value is paid upfront.  On one hand is a great boost to working capital but how do you look at that from an MRR standpoint?
  • Any tactical advice for founders/sales teams w/ regards to structuring new customer contracts in this environment?
  • Is there a maximum $ contract size that you think can be closed over the phone?
  • To determine the sectors impacted most by COVID-19, you looked at Roger Lee's data on Layoffs.  We've discussed a lot of the impacted sectors anecdotally here on the show... according to the data, what has been impacted most?
  • Are there some sectors where we'll see a lagging effect... due to factors like sales cycles maybe we don't see the effects yet but will over the coming quarter or two?
  • You've discussed sectors and categories that this crisis might accelerate... aside from the obvious like teleconference, telehealth, grocery delivery, video streaming, etc... what are some non-obvious areas that may get a big boost?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Aydin Senkut
  • Steve Glickman
  • Ash Rust

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

 

Direct download: 137_Investor_Stories_137__Lessons_Learned_Senkut_Glickman_Rust.mp3
Category:general -- posted at: 12:00pm EDT

Richard Kerby of Equal Ventures joins Nick on a special Crisis Coverage installment to discuss the Tactical Advice for Raising VC Fund 1, Why Not to "Raise the Bar," and a Framework for Startups Adjusting to COVID-19. In this episode, we cover:

  • Walk us through your background and path to Venrock
  • Why'd you leave to launch Equal?
  • You, Rick and the team just launched a $56 million Fund 1 at Equal Ventures in February...congrats on the final close! Tell us a bit about your thesis and how you differentiate?
  • You invest in retail, insurance, supply chain and the care economy. From afar those seem unrelated - how'd you arrive at those four categories... is there a common thread?
  • What is the best tactical advice you'd give to someone raising a fund?
  • What's the biggest mistake you made during the raise process that prospective fund managers should do their best to avoid making?
  • So you're early in the fund cycle w/ multiple years of initial check deployment in front of you... has the deployment strategy changed at all given the current environment?
  • Many investors are talking about and tweeting about "raising the bar” for investments... due to the pandemic and recession. Are you "raising the bar" at Equal?
  • Many famous investors opine on the importance of market size when making investments. What's your position on market size and how does one estimate an accurate market size in categories that have not yet been created?
  • You recently published your framework for COVID-19 Scenario Planning on Medium. Walk us through this framework and how it's applied.
  • What impacts has the virus had on your incubation arm at Equal?
  • Do you see this being a permanent change in incubators once this passes?
  • Diversity in venture is terrible... what is Stealth Mode and how are you trying to improve diversity?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Elizabeth Yin of Hustle Fund joins Nick on a special Crisis Coverage installment to discuss Investing after 1 Zoom Meeting, 2nd & 3rd Order Effects of the Virus, and Why "Market Pull" is Critical. In this episode, we cover:

  • Tell us a bit about your background and path to venture
  • Why'd you leave 500 and start Hustle Fund?
  • What is the thesis at Hustle Fund?
  • From a macro standpoint, how do you think the pandemic effects the venture landscape?
  • What were some trends you were following, prior to the virus, that have accelerated in this environment?
  • What are some that have regressed?
  • What are some non-obvious sectors or business types that you're bullish on?
  • Due to maybe second and third order effects of the virus, what are some sectors you are bearish on?
  • You’ve said that you can make a decision after one Zoom conversation in 48 hours. Without much time to conduct diligence on the company and its founders, how are you able to get conviction so quickly?
  • Many of us are trying to figure out how to invest w/o meeting founders in-person... what are some of the key things you’re listening that help you make a quick decision w/o having met the founder?
  • NFX's launched a new application process where startups can apply for funding, give up 15% equity and receive a funding decision in 9 days? What are your thoughts?
  • You've stated that long term success for you is in changing the way that early stage VCs invest and think about investing. What's wrong w/ early stage investing and how do you see it changing over the next decade?
  • I appreciate your contrarian belief that the best startups will be founded outside the Bay Area. Why do you think this is the case?
  • Are there specific areas/geos you're focused on?
  • I want to talk about this concept of "market pull"... Can you define “market pull” for the listeners and how you assess whether a startup has it or not?
  • What advice do you have for investors/fund managers as we proceed amidst a very uncertain future?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Adeyemi Ajao
  • Oren Klaff
  • Leo Polovets

Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 136_Investor_Stories_136__Whats_Next_Ajao_Klaff_Polovets.mp3
Category:general -- posted at: 12:00pm EDT

Patrick Gallagher of Tuesday Capital joins Nick on a special Crisis Coverage installment to discuss VC Firm Survival, How Seed Investing Scales, & A Glimpse at the Road Ahead. In this episode, we cover:

  • Walk us through your path to venture
  • How did things first come together for Crunchfund w/ you and Michael Arrington?
  • Why did Michael leave and why did you rebrand Crunchfund to Tuesday?
  • Gives us the highlights of your thesis?
  • How do current events effect your approach going forward?
  • Anything you'll avoid/be much more cautious investing in?... or anything you're leaning into?
  • Some have said that many seed venture firms will not survive the current crisis.  I think there may be more than 1000 seed firms currently...  Do you think the volume of seed players reconciles as a result of this correction?
  • What is your reserve strategy?  How much and how do you make decision as to how you deploy reserves into current portcos?
  • Why the partnership with Frog and what does that mean for your portcos?
  • Aside from design, branding, storytelling... what is an area that is significantly under-utilized as an area of value that VCs can provide to starutps?
  • I believe you're in Airbnb and Uber... was it difficult to invest in their later rounds while you had a young seed-focused fund?
  • Do you believe seed funds can scale?
  • Why do you think there are so many people that want to do this job?  The numbers aren't good... it takes a long time to establish yourself, most funds fail and even the successful ones take a long time to make money.
  • Before we wrap things up, what would you say to a young individual that wants to make a career in venture capital?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Darren Bechtel of Brick & Mortar Ventures joins Nick on a special Crisis Coverage installment to discuss The Built World in Crisis. In this episode, we cover:

  • Background and path to venture?
  • South Park... must be a story behind the name there?
  • Overview of the thesis at Brick & Mortar?
  • Just have to say... I suspect that the impacts of this crisis on the built world will be more profound that we can possibly imagine... and I won't pretend to know what those might be. Can you talk a bit about what you're seeing and what that could mean for the future?
  • Circling back to your path to venture... How did your family react to your pursuit of a career in VC in lieu of the family business?
  • Walk us through your first angel investment -- was it opportunistic or were you looking for startup investments actively?
  • How'd that one turn out?
  • Prior to founding the firm, were there any existing firms in the space that you looked to for inspiration?
  • Talk about your first fundraise... you had access to a lot more capital than you closed. Why didn't you raise more?
  • What was the biggest mistake you made when launching your first fund?
  • Now that you're nearly 5 years into Brick and Mortar, is Built/ Construction tech where you expected it to be and are you as bullish on it now as you were then?
  • Do you think a major infrastructure bill gets passed? Trump has been talking about this for years and it seems like, with the current stimulus, now is his opportunity?
  • I have to imagine this will be a big tailwind for some of your portcos (and prospectives)?
  • Safety has been an area of interest that you've spoken about in the past. How does that apply in the context of your investment focus and does that change w/ the current crisis?
  • What advice would you give to a founder in the built technology space and how might that advice differ from the standard advice given to SaaS or consumer tech companies?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 215_215._Crisis_Coverage_w__Darren_Bechtel_-_The_Built_World_in_Crisis.mp3
Category:general -- posted at: 5:00pm EDT

Welcome back to TFR for the first Investor Stories Cram Session. In these special releases, we have aggregated the Investor Stories from previous episodes. In this installment, the following investors are featured:

  • Jonathan Struhl
  • John Greathouse
  • Joanne Wilson
  • Semil Shah
  • Bryce Roberts
  • Troy Henikoff
  • Jason Heltzer
  • Christopher Mirabile
  • David Brown
  • Brad Feld

Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Somesh Dash of IVP joins Nick on a special Crisis Coverage installment to discuss Late Stage Impacts and Prioritizing Mental Health. In this episode, we cover:

  • Quick background and what led you to venture/IVP?
  • Overview of the firm and your focus?
  • Covid impact on later stages
  • The 2008 crisis... '08 was still strong for C round funding, steep dropoff in 2009, stayed pretty low in 2010, returning to fairly strong levels in 2011... thoughts on timing, severity and duration of impact on later stage funding?
  • Directional impact on average valuations at late stage?
  • Thoughts on exits?
  • What do you think happens in the secondary market?
  • What do you think happens with the well-funded, late stage companies in markets that are highly dependent on social interaction, mobility, travel, etc.?
  • Reasonable to complete deep diligence in a completely remote environment?!
  • You've been w/ IVP since '05... best recollections of changes in strategy made at IVP in '08/'09?
  • Suggestions on how early-stage VCs should adapt the playbook?
  • Best moves startups made to survive and/or thrive at that time?
  • Biggest mistakes you've seen CEOs make?
  • Investment in Lyra's Series C....
  • Mental health now more than ever... expectations for industry amidst WFH/social distancing?
  • Tips for delivering hard news? -- furloughs, layoffs.. especially remotely
  • Suggestions for leaders to help their people through this?
  • How to keep team morale high?
  • How are you adapting communication or work habits at IVP to better keep engagement of your people, your portcos and your LPs?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Semil Shah of Haystack joins Nick on a special Crisis Coverage installment to discuss VC Fund Management in a Pandemic World. In this episode, we cover:

  • Last time we had you on was Nov. 2017... quick update on you and Haystack since then?
  • LP interaction - are capital call defaults a serious issue to consider in this environment?
  • How do you think investment dollar volume adjusts in 2020 vs. '19?
  • I know you've had a lot of calls w/ friends and mentors lately... what are you hearing from the veteran investors right now?
  • What feedback or insights have surprised you?
  • What actions have you taken since the crisis hit to adjust your own strategy?
  • How do you see the value of face-to-face interaction playing out in the VC-Founder interaction during pitches moving forward?
  • How are you prioritizing reserves when triaging?
  • In the case of a fund running low on dry powder right now, what are your thoughts on reopening a fund?
  • In what cases should an early stage company change their business model to address the changing environment?
  • What are your thoughts on GTM, or changes in GTM, in this environment?
  • I saw that you guys are Crowdsourcing a list of startups who have changed their business model to help fight covid-19.  What have been the most interesting so far?
  • Over/under on duration?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Samir Kaji of First Republic joins Nick on a special Crisis Coverage installment to discuss Relief $ for Startups via CARES Act, EIDL, PPP; & How an Extended Downturn Affects Emerging VC Funds. In this episode, we cover:

  • Startups...
    • The CARES Act became law on 3/27, but many are having trouble making sense of it and how it applies...
    • Let's start out w/ the two types of loans that are available to small businesses...
    • First off, can you explain the difference between the Economic Injury Disaster Loan Program (EIDL) and the Paycheck Protection Program (PPP)?
    • EIDL - No forgiveness potential and and requires personal guarantee?
    • PPP - Forgiveness potential and no personal guarantee?
    • Affiliation...  Dan Primack was writing about how the 500 employee rule and how much of Private Equity portfolio companies will be excluded b/c of how the language is written.  Can you explain the "affiliation issue?"
    • How can this be enforced/checked... so many obscure LLCs used for investment in companies... hard to verify.
    • April 3rd - Is this the date that PPP applications are available?
    • What advice do you have for startups right now, to be prepared and get to the front of the queue?
    • How will seed stage be impacted?
    • Some of the best companies (Uber, AirBnB) first took institutional capital after the 2008 crisis; is now the time to be aggressively investing?
  • VCs...
    • How are the existing funds w/ committed capital adjusting?
    • Will we see a lot of attrition / VC firms shutting down?
    • What are the impacts on firms that are actively raising?
    • Advice for those planning to raise a fund in the next year?
    • What do VCs and LPs need to hammer out before moving forward in this environment? (projections/protocol for capital calls, projections for investments, communication plans, etc.)
  • LPs...
    • What are you hearing from institutional LPs?
    • How about the family offices?
    • Is it still in a crisis/panic mode or have some allocators put together a solid investment plan going forward?
    • If you had to estimate, what % of capital commitments will default and/or be adjusted down?
    • Final thoughts and advice for startups and investors?


To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


David Horowitz of Touchdown Ventures joins Nick on a special Crisis Coverage installment to discuss How Corporate VC Will Respond. In this episode, we cover:

  • What is your current view of the venture market given the current crisis?
  • Corporates have a history of pulling back in economic downturns, what will happen now?
  • This is your 3rd economic downturn, What is different about this economic period vs. prior recessions?
  • Are there advantages to new corporate funds vs. existing corporate funds?
  • Committed capital vs. not committed
  • You told me you believe corporations are more important in this environment than startups why?
  • What advice do you have for start-up companies on dealing with corporations?
  • Fair that those discussions or partnerships slow down?
    What is your prediction when things return to normalcy?


To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Chris Douvos of Ahoy Capital joins Nick on a special Crisis Coverage installment to discuss the LP Lessons from '01 and '08, The Denominator Effect, Capital Calls & Fundraising in a Down Market. In this episode, we cover:

  • What is the denominator problem/effect?
  • Why does it matter?
  • How do LPs react when they face the denominator problem?
  • How quickly do LPs tend to rebalance their investment portfolio?
  • What's the implication to VCs?
  • How should VCs react when their investors face the denominator problem?
  • LPs lose access to future funds if sell position as secondary?
  • When VCs make capital calls at times like these, what's the ripple effect down the line for these LPs?
  • What were some of the typical LP reactions you've seen from the dot com bubble and the 2008 crisis, that you expect to see again?
  • Can you talk more about the thought process of LPs during a crisis like this? Are they rushing to liquidate? Are they putting that money somewhere else?
  • VC capital calls - guidance?
  • What's the impact on VCs that are fundraising?
  • What type of VCs have had success raising in a down market? 
  • What are some best practices/principles for managing LP relationships in a time like this?(Chris was in PE, as Co-head of PE Investing at the Investment Fund for Foundations in 2008 crisis)
  • What was the biggest lesson you've learned from previous crises in 2001 and 2008?
  • VC's metrics are dependent on the market, like PME. What's the impact of the current situation on the VCs performance metrics?
  • Is there some downward pressure for VCs to lower the Net Asset Value (i.e. the valuation of portfolio companies) to reflect the current market situation?
  • Can you explain the disconnect between VCs that want to actively invest (because of lower valuations) and the LPs who are rushing to liquidate?
  • What does this mean for later-stage startups that were thinking of IPO-ing in the near future?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Steve Blank joins Nick on this special "Crisis Coverage" installment to discuss The Playbook for Startup Survival. In this episode, we cover:

  • What industries will be most affected by social isolation?
  • How do you see this playing out over the next 3 - 6 months?
  • How does this pandemic and the impact on the economy compare to the past 3 market crashes? Similarities/differences?
  • Having lived through 3 crashes, what's the biggest mistake CEOs make?
  • So lets say I’m a startup founder -- What are the major questions I should be asking before putting a new strategy together?
  • Let's talk about burn and runway -- can you break down the key elements and how much runway one should plan for?
  • What are the first cost cutting measures that should be taken?
  • Should startups consider a change in business model, go-to-market or even target customer -- why or why not?
  • Do you have any guiding principles when it comes to communication -- whether it be to employees, customers or investors?
  • What happened to startup fundraising at different stages (seed, A, B, C) in the last crisis of 2008?
  • You've stated that the health of the venture business may depend on what hedge funds, investment banks, private equity firms, sovereign wealth funds and large secondary market groups do. What are the possible and likely scenarios in your estimation?
  • What advice do you have for those companies that have limited runway (3 months or less)?
  • How about advice for pre-funded startups that are just getting off the ground?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Mark Suster of Upfront Ventures joins Nick on a Pre-Crisis chat to discuss Building a VC Franchise; The Shift to Bite-Sized Video Content; Last-Mile Attribution; & the Impact of Corona Virus Over The Next 6-12 Months. In this episode, we cover:

  • Last time we had you on the show was December 2016. Any notable updates or changes at Upfront since then?
  • Just chatting w/ Minnie Ingersoll and she was saying how great the Upfront Summit was and how I need to attend next year... what were the highlights for you this year?
  • Content companies are beginning to optimize for quick 1-5 minute gaps everyone has in their day, on their commute, between meetings, etc. where really short form content can be consumed beginning to end.  You had a chat w/ Meg Whitman, CEO of Quibi at the Summit... and I'm going to read a quote from your blog post about that interview "her analogy of content like “The Da Vinci Code” which had 464 pages and 105 bite-sized, fully realized chapters. In essence, you’re not intimidated by the size of each episode so you dig in and might just read 8 chapters in a sitting before realizing you read 35 pages. And so it is with video."  Clearly Quibi is trying to capitalize on this short form video content w/ A-List celebrities and over $1.75B in venture funding...  Mark, do you believe this is significant emerging trend or is it overhyped and overfunded?
  • Quibi successfully sold out of $150m in first-year ad inventory even before they launched, which says a lot about the current marketing landscape. Channels like Google and Facebook are becoming saturated, and marketers are desperate to find that new channel that will give them an advantage... thoughts here on the macro digital marketing landscape?
  • Seen any great companies doing last-mile attribution? - Whether it be the corona virus, the election and/or a potential market correction... what do you think the next 6-12 months will hold and what effect will that have on early stage startups, funds and IPOs.
  • What's the biggest mistake LPs or the VCs that are guiding them, make when co-investing?
  • Who haven't you gotten yet as a featured guest at the Summit that you'd like to get in the future?
  • Since we last spoke, you’ve inserted an “Inclusion Clause” into your term sheets at the firm. Why'd you do it? 
  • Talk a bit about investing...  You wrote a blog post about key lessons since the first VC check you ever wrote.  Can you highlight the most critical things you've learned. - Assessing the intangibles are so important when evaluating an early stage founder ie. grit, personality, drive etc. Are there specifics methods you apply to assess for these intangibles?
  • Are there any traits or characteristics that you think are being over-indexed on by some investors?
  • Jason Calacanis was on recently and mentioned that you work harder for your startups than anyone else... what is your playbook for helping startups and what determines your level of involvement?
  • In early 2019, you wrote a post about why seed investing has declined. You ended the post saying "Seed investing is here to stay (although the firms may change — with some seed funds becoming A investors).” What are the biggest shifts you see happening in early stage VC?
  • It looks as though you took a 4 month "forced hiatus" from the blog.  What was the motivation for the break?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • John Vrionis
  • David Horowitz
  • Cyan Banister

Each investor discusses a portfolio company that did not survive and why it was that they failed.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 134_Investor_Stories_134__Post_Mortems_Vrionis_Horowitz_Banister.mp3
Category:general -- posted at: 5:00am EDT

Ryan Gembala of Pathbreaker Ventures joins Nick to discuss Breaking Convention, Hitting The Fundraise Wall & Why Deep-tech Is Not More Capital Intensive Than Software. In this episode, we cover:

  • Backstory/Path to Venture
  • Talk about your time at Facebook and working in M&A.
  • What's the thesis at Pathbreaker?
  • How do you define pre-seed?
  • Most of your dealflow inbound or outbound?
  • Quote from the website: "We don't believe all great companies, nor all phenomenal investments, look the same early on. So we are flexible, realistic, and patient - solving for supporting the founders best-suited for tackling the most meaningful problems." I'm curious, what are the must-haves that cut across all investments that you do?  
  • You've said to me that hardware isn't more capital intensive than software. As a hardware investor myself, that was refreshing to hear but I'm sure there are many founders and investors that would strongly disagree. Why is not more capital intensive?
  • Do you think the time horizon to exit is longer?
  • We've all been in this situation where founders hit a wall — they're running out of money, having a hard time telling your story, investors aren't pulling the trigger to invest, there are team challenges, maybe trouble converting from pilots to licenses... Give us examples of how you dig in and help when it gets tough.
  • We've seen some recent failures or, at least, setbacks in the automation/robotics space. High profile companies like Zume pizza and CafeX have had significant challenges... what's your take on where these companies went wrong?
  • What's your POV on robotics investing and the types of opportunities that are going to be successful?
  • Just speaking to Kane Hsieh at Root about the effect of automation, robotics on jobs... what's your stance on the impact of these technologies on employment?
  • You've had a number of Series A's just here in the past couple of weeks... seems like every time we connect you are dealing w/ a number of up-rounds at A and B. Clearly something is working so congrats on the early success. Talk to me a bit about how hard it is to raise a Series A?
  • Different types of companies have to achieve different milestones/benchmarks to raise and A but have you seen any common traction levels or standards to successfully close an A round?
  • For founders that are considering M&A and maybe some options are emerging for exit... what advice would you have?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Jeremy Neilson
  • Jason Whitney
  • Jenny Rooke

Each investor describes the most unusual situation or pitch that they've encountered as an investor.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 133_Investor_Stories_133__Strange__Unusual_Neilson_Whitney_Rooke.mp3
Category:general -- posted at: 5:00am EDT

Alex Osterwalder of Strategyzer joins Nick to discuss The Ultimate Testing Framework. In this episode, we cover:

  • Take me back and talk through the origin of the business model canvas?
  • Just to refresh listeners can you provide a high-level overview of the business model canvas and how it's used?
  • Let's chat about your new book, Testing Business Ideas, co-authored with David J. Bland... Why'd you right the book?
  • Who is the target audience?
  • If I'm the reader, what outcome can I achieve after reading this book and applying it's principles?
  • What are the four phases outlined in the book?
  • Walk us through the objective and key elements of the testing phase.
  • A significant focus is the elimination of risks?  How does one systematically reduce or remove risks from their business?
  • We recently had Leo Polovets on the program and discussed the challenge of balancing testing with executing.  I think it can be difficult to know when something is working well enough that you should stop testing and move forward quickly in that direction.  What's your guidance here?
  • How does one avoid getting too caught up in rigid frameworks and checking boxes vs. finding that key insight that warrants 90+% of their attention?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 206_206._The_Ultimate_Testing_Framework_Alex_Osterwalder.mp3
Category:general -- posted at: 6:00am EDT

On this special segment of The Full Ratchet, the following Investors are featured:

  • Scott Dorsey
  • Jeff Clavier
  • John Fein

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 132_Investor_Stories_132__Lessons_Learned_Dorsey_Clavier_Fein.mp3
Category:general -- posted at: 5:00am EDT

Jason Calacanis joins Nick to discuss Unicorn vs Pegasus, The Softbank Effect, & Impacts of a Recession on VC. In this episode, we cover:

  • Last time we had you on the show was July 2017. What big things have happened over the past (almost) three years with yourself and Launch?
  • Last time you talked a bit about the "Goldilocks zone"... sort of that post-seed, pre-A round. Is that still the stage getting most focus from you?
  • I read an article where you suggested that SoftBank is changing the way Silicon Valley thinks about going public.
  • What are the biggest positive effects you've seen from the Vision Fund?
  • What about negatives and adverse effects?
  • The volume of startups seems to be ever increasing... Any advice for founders on how to stand out?
  • Lots of people talking about an upcoming recession in 2020. If a recession were to hit, what happens to venture? How do you think it could potentially impact startups as well as investors or VCs?
  • How does your investment strategy change in a recession?
  • Anything founders should should do to prepare for a correction?
  • As part of the fallout from WeWork... I've been hearing a lot of VCs talk about a shift from growth at all costs to a focus on profitability. Are these empty words or are you seeing a material change amongst VCs?
  • Want to get your input on investment and selection...
  • First off, in the book, if memory serves, you suggest angels should focus exclusively on SF-based startups and founders should relocate to SF. We recently committed to a Launch Accelerator company that is not in SF, they're in Chicago. Have your thoughts changed on location?
  • What is a unique requirement or heuristic you use that you don't think other investors consider?
  • What are your biggest red flags or dealbreakers?
  • What are some acceptable risks or issues vs. what's not acceptable?
  • I notice you talking about Pegasus startups (vs. Unicorns). What the heck is a Pegasus?
  • What tips do you have for founders to reach the Unicorn as well as Pegasus status?
  • You also talk about the “Dark Pegasus” can you give us some insight into what that entails and how to avoid these startups as an investor?

 

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.


Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Scott Kupor
  • Michael Cardamone
  • M.G. Siegler

Each investor discusses sectors, drivers and/or trends that may have a significant impact in the future and are potentially positioned for outsized-returns.

 

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 131_Investor_Stories_131__Whats_Next_Kupor_Cardamone_Siegler.mp3
Category:general -- posted at: 6:00am EDT

Minnie Ingersoll of TenOneTen Ventures joins Nick to discuss Embracing Failure, Capitalizing on Crisis & Building Resilience. In this episode, we cover:

  • Backstory/path to Venture
  • You co-founded Shift, which you scaled to $100M. What was the most unexpected/surprising aspect of leading and scaling a venture-backed startup?
  • Where did you spend most of your time (and mindshare) at A vs. B vs. C/D?
  • What was it like building a venture-backed startup as a woman?
  • Tell us a bit about the thesis at TenOneTen.
  • I was recently speaking with M.G. Siegler about the societal impacts of tech... all of which are not positive.  I know you're a mother, so this probably takes on new meaning for you... but how to you consider social and societal responsibility in your role as a tech investor?
  • You've experienced early struggles in your life that have informed your approach as an investor and founder.  Can you talk about what you've been through, the impact and the perspective you've gained from it?
  • Is failure acceptable?  As an investor failure makes me really uneasy and I've not had to deal with this yet with a portfolio company but I'm sure it's just a matter of time.  What's your stance on failure and how to speak with founders about it?
  • You've spoken about the importance of founder resilience... Is it something you select for in investments or something you work on with existing portco founders... trying to help them build resilience?
  • How are the challenges for women similar different as a founder vs. investor?
  • Favorite Podcast guest?
  • Best/favorite low profile investor in LA?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.


Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Jim Kim
  • Courtney Reum
  • Aydin Senkut

Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

 

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.


Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 130_Investor_Stories_130__Why_I_Passed_Kim_Reum_Senkut.mp3
Category:general -- posted at: 12:00pm EDT

Leo Polovets of Susa Ventures joins Nick to discuss Raising Fund III, A Framework to De-risk Your Startup, & When to Explore vs. Exploit. In this episode, we cover:

  • Give us an update on your investments at Susa since we last chatted?
  • How has the thesis at Susa evolved over the past couple of years?
  • Do each of the GPs at Susa have specialty areas of focus?
  • This year Susa closed on 2 new funds - Susa III a $90M early stage fund, along with your first opportunity fund to which investors committed $50M. What was the elevator pitch to LPs and what worked well in the first two funds that resonated with LPs, leading to the successful raise?
  • What would you have done differently in Fund I and Fund II if you could go back?
  • What it takes to raise a Series A... often founders will have a singular focus on the vanity metrics -- they assume if they hit $2M in ARR they'll attract the A round at an attractive multiple from Tier 1 investors. But, we've seen this play out and it's not all that's required. Why is a singular focus on ARR a poor approach to raising money?
  • Leo, you have an original framework here focused on de-risking the the major risks centers facing a startup. What are the high-level principles?
  • The 9 risk centers that you've identified include Product Market Fit, Product Quality, Team, Recruiting, Sales, Market, Funding, Short-term Competition, and Long-term Competition -- can you pick one of these areas and walk us through an example?
  • What are the common mistakes founding teams make with regard to these risks?
  • Talk a bit about the balance between testing and execution? 
  • How should founders balance figuring out the best path forward with running fast in the direction they think is best?
  • Increasingly our founders have been sending us dealflow, operating as scouts, making angel investments in early stage companies. Where do you stand on this -- distraction that should be avoided or net benefit to those involved?
  • In what ways have you changed most as an investor since the early days?
  • One piece of advice for founders -- what is it?

 

To listen more, please visit http://fullratchet.net/podcast-episodes/  for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Adeyemi Ajao
  • Ash Rust
  • SC Moatti

Each investor discusses a portfolio company that did not survive and why it was that they failed.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 129_Investor_Stories_129__Post_Mortems_Ajao_Rust_Moatti.mp3
Category:general -- posted at: 12:00pm EDT

Welcome back to TFR for another Cram Session. In these special releases, we have aggregated the takeaways and tips from previous episodes. In this installment, we will be recapping the following episodes:

 

 

To listen more, please visit http://fullratchet.net/podcast-episodes/  for all of our other episodes.

 

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 202_202._Cram_Session_Episodes_138-143_Nick_Moran.mp3
Category:general -- posted at: 12:00pm EDT

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