The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

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

  • Darren Bechtel
  • Melody Koh
  • Somesh Dash
  • Jeff Fluhr

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

Direct download: IS160.mp3
Category:general -- posted at: 1:36pm EDT

Ty Findley of Ironspring joins Nick to discuss Industrial Innovation, Where Blitzscaling Doesn't Work, Why Sector Focus Wins, and Beginning with the End in Mind. In this episode, we cover:

  • Walk us through your background and path to VC?
  • Why the decision to leave Pritzker and become an MP at Ironspring?
  • What's the thesis at Ironspring?
  • Lots' of new firms and new funds being launched…  How is Ironspring different?
  • You're a "sector-focused" fund… why do you think specialized funds will outperform their generalist counterparts?
  • We work in an asset class that often promotes bliztscaling, exponential growth and often spending ahead of progress… how do you rationalize the expectations of startups in our industry with the much slower pace that many legacy and heavy industrial industries… that your startups are serving… are going to move at?
  • Glacial pace has benefits… long-term durability of cash flows, customer retention, pricing power… the moat
  • Do you think product-led growth can work in these sectors?
  • Talk about the difference between "occupations" vs. "activities" and why this is especially relevant in industrials amidst the pandemic?
  • How do you think your style as an investor differs most from others (ie. discussion of decision making process/thinking in bets… focus on the decision not the outcome)
  • How would you describe your system for investment decision making?
  • 4-part framework of the “Day in the life of a VC fund manager”?
  • Must-haves for an investment?
  • Aligned with your recent collaboration on the article, "Evaluating the Successful Industrial Technology Exits", you've talked about startups in industrial tech "beginning with the end in mind"… why is this important?
  • Rumor has it you're starting a podcast -- lots of new podcasts these days, why will your's standout and what's the objective?
Direct download: TFR250.mp3
Category:general -- posted at: 6:00am EDT

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

  • Minnie Ingersoll
  • Jim Douglass
  • M.G. Siegler
  • James Currier

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

Direct download: IS159.mp3
Category:general -- posted at: 6:00am EDT

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.