Exploring Venture Capital Dynamics

Fred Destin: On the Craft of Venture (Part 1) | Episode 50

Estimated read time: 1:20

Summary

In the first part of this two-part series, Fred Destin, founder of Stride VC, dives into the complex world of venture capital. Through an engaging conversation with host Arish Sha, the episode unravels the nuances of VC-founder relationships, the challenges of board dynamics, and the craft of venture itself. Destin highlights the systemic issues within traditional VC practices, such as lack of trust with boards, and the art of making strategic decisions in uncertain conditions. The discussion also ventures into how venture capital is returning to its roots after a decade of deviation, emphasizing the need for genuine partnerships and skillful navigation through the ever-evolving landscape of entrepreneurship and investment.

Highlights

Fred Destin discusses his surprise at the level of discontent founders have with VC relationships. 🚀
The importance of trust and empathy in VC-founder relationships is emphasized. ❤️
Destin shares insights on how VCs can truly add value beyond just monetary investment. 💡
Venture capital is compared to a craft, focusing on unique skill sets and adaptability. 🔨
The episode tackles board dynamics, underlining the impact they have on startup growth. 🧐

Key Takeaways

Venture capital isn't just about investment; it's an art of building genuine partnerships. 🤝
Navigating board dynamics is crucial for startup success, and many founders find their board interactions unsatisfactory. 🛠️
VCs should strive to provide actionable, relevant advice, rather than generic counsel. 📈
The state of venture is evolving; now, more than ever, a unique value proposition is essential for standing out. 🌟
Craftsmanship in venture includes mastering decision-making under uncertainty and delivering strategic insights. 🧠

Overview

Fred Destin, founder of Stride VC, joins Arish Sha on the Nothing Ventured podcast for an insightful conversation about the intricacies of venture capital. In this episode, Destin offers his perspective on the systemic challenges within the VC ecosystem, particularly focusing on the strained relationships between founders and their boards. He points out the high levels of distrust that many founders experience, suggesting that a shift towards more supportive and understanding VC relationships is crucial.

The episode delves into the importance of empathy and genuine partnership in the venture capital world. Destin emphasizes that venture capital is not merely about financial backing but about building lasting relationships that can weather the uncertainties of building successful startups. He also talks about the role of board members, arguing that they should be more than just accountability figures; instead, they should act as partners who provide constructive support and strategic guidance.

Furthermore, Destin reframes venture capital as a craft—much like any artisanal pursuit—requiring a blend of skill, intuition, and adaptability. He highlights the necessity for venture capitalists to refine their skills continuously and engage deeply with the founder's journey. This approach, he suggests, will help navigate the evolving landscape of the venture capital industry, bringing it back to its foundational roots of genuinely supporting entrepreneurs.

Chapters

00:00 - 00:30: Introduction and Episode Overview The chapter serves as the introduction to a special two-part podcast episode hosted by Arish Sha, featuring guest Fred Destan. Fred is the founder of Stride VC, a seed fund based in London that is currently investing from its second fund. Stride VC operates under the tagline 'Denters welcome.' Before founding Stride VC, Fred was a general partner at both Axel and Accomplice, where he was the lead investor on seven projects.
00:30 - 02:00: Fred Destin's Background and Introduction to Venture Capital Fred Destin's Background in Venture Capital explores his involvement with highly successful companies, such as deals that exceeded one billion dollars including with companies like Amazon. The chapter delves into a recurring theme of dissatisfaction among Founders towards venture capitalists (VCs) and examines how widespread this sentiment is despite the operator-VC potential advantages. It questions the empathy levels VCs have towards Founders and discusses the benefits of minimalist boards, suggesting ways VCs can adapt and move forward.
02:00 - 03:00: Venture Capitalist- Founder Relationship The chapter discusses the critical relationship between venture capitalists (VCs) and founders, emphasizing the importance of how VCs position themselves with the founders they collaborate with. It highlights the notion of venture capital being an 'artisanal occupation', requiring adaptability, especially in decision-making amidst uncertainty. The chapter delves into the dual reality of living in a world driven by both skill and luck. Additionally, it touches on the elements that lead to successful returns, such as the initial selection (the pick) and the entry price, concluding with a mention of the Cambrian explosion.
03:00 - 05:00: Trust and Transparency in Board Relationships The chapter discusses the importance of trust and transparency in board relationships, particularly within the venture capital ecosystem. It emphasizes the value of adopting a generalist approach without being generic, promoting the significance of maintaining a beginner's mindset. This mindset encourages individuals to delve deeper into information beyond surface level and to avoid lazy thinking, which can lead to misconceptions and errors in judgment. The episode is a part of the 'Nothing Ventured' podcast hosted by Arisha, where stories central to the venture capital industry are explored.
05:00 - 08:00: Roles and Responsibilities of Board Members This chapter discusses the significant role that board members play in guiding startups through various growth stages, from pre-seed to Series C and beyond, focusing on maximizing company value and successful fundraising. It emphasizes the impact of experienced board members on companies achieving exits and raising significant funds, often exceeding half a billion dollars. The chapter also encourages listener engagement through comments and guest suggestions on social media.
08:00 - 12:00: Challenges and Misconceptions in Board Dynamics This chapter features an interview with Fred, who has been working in the field for 25 years. The interview aims to cover in-depth and nuanced aspects of board dynamics and being an inventor. The discussion is expected to expand over a couple of episodes due to its complexity and the depth of Fred's experience.
12:00 - 18:00: Craft of Venture Capital and Decision Making The chapter titled 'Craft of Venture Capital and Decision Making' delves into the themes surrounding venture investing, particularly focusing on exceptional businesses and founders. It highlights the central idea of how venture capitalists (VCs) can provide support to founders. The discussion begins with the speaker expressing a continuous commitment to exploring how VCs can effectively engage and show up for the founders.
18:00 - 22:00: Role of Luck and Skill in Venture Success The chapter explores the dynamic between venture founders and venture capitalists (VCs), highlighting the surprising level of discontent that many founders feel towards their VCs. Despite this, there are still numerous cases where founders report having a beneficial and productive relationship with their investors and board members.
22:00 - 25:00: The Investment Game and the Craft of Supporting Founders The chapter explores the complex dynamics between founders and their boards, highlighting a common sentiment among founders of distrust towards their boards in sensitive matters. Founders often avoid discussing delicate topics because they fear those issues may be used against them, reacted to poorly, or lead to discussions that spiral out of control. An anecdote is shared about a conversation regarding exits with a founder who had recently experienced a successful exit, illustrating the nuanced relationship between founders and their boards.
25:00 - 33:00: Emerging Managers and the Changing Venture Landscape The chapter discusses the importance of early exit planning in the venture landscape. It highlights that exit planning should ideally begin three to four years prior to an actual exit and suggests making it a regular topic of discussion in board meetings. The conversation aims to make stakeholders understand market dynamics, identify potential acquirers, and establish communication strategies with these entities.
33:00 - 40:00: Funding Challenges and Market Adjustments The chapter 'Funding Challenges and Market Adjustments' delves into the dynamics of decision-making within corporate boards, particularly regarding exit strategies and market adaptations. It highlights the conflicting perspectives that often arise when discussing the right time to sell or hold onto investments. The narrative underscores the complexity of board-level decisions, suggesting that these challenges stem from both board member experience and the volatile nature of market conditions. The chapter seems to suggest that while market adjustments pose a significant challenge, the experience and perception of board members play a crucial role in determining strategic directions.
40:00 - 43:00: Tax Incentives and Early-Stage Funding in the UK The chapter discusses the challenges of poor communication in board meetings. It highlights that instead of focusing on the actual topic, participants often come with their personal desired outcomes. Additionally, the chapter touches on the "existential dread" experienced by boards when confronting uncertainties in early-stage funding and tax incentives.
43:00 - 44:00: Conclusion and Preview of Part 2 This chapter emphasizes the fundamental importance of trust within relationships, especially in the context of organizational boards. The discussion highlights how trust is foundational for openness and truthfulness, which are critical for addressing complex topics. It critiques the tendency of board members to offer advice that may not be relevant, pointing to the need for more pertinent guidance. The chapter sets the stage for a deeper exploration of these themes in the upcoming part 2, suggesting a continuation of the discussion on trust and its implications on business dynamics.

Fred Destin: On the Craft of Venture (Part 1) | Episode 50 Transcription

00:00 - 00:30 hello and welcome to a special two-part episode of nothing ventured with me arish sha today in the studio with me I have Fred destan Fred for those that need an introduction is the founder of stride VC a seed fund operating out of London and currently investing out of its second fund their tagline is denters welcome prior to stride Fred was a general partner at Axel and accomplice he was a leader investor on seven
00:30 - 01:00 companies that have exited for over a billion dollars in value including delu zuper ppac now Amazon health and many others in these episodes we talk about how Founders have a level of discontent with VCS and how surprising that has been is operator as a VC a magic label how many VCS have empathy for the founder journey and why minimalist boards uh and how VCS can move the
01:00 - 01:30 needle for the founders they work with is so important navigating the need to be seen as a VC Venture as an artisanal occupation the fact the Venture is not complicated but that you do need to be adaptable and how you make decisions in a state of uncertainty we talked about as a VC you are living in a world of both skill and luck how Returns come from the pick and the entry price we talk about the Cambrian explosion
01:30 - 02:00 adventure and where we are now and how you can be a generalist but you can't be generic we end up in the second episode talking about VCS as human beings how you can Embrace The Beginner's mindset and how you should look beyond the information that's being presented to you and how to avoid the Trap of lazy thinking let's get into it this is nothing ventured with me Arisha the podcast where I talk to the people behind the stories that make the Venture Capital ecosystem go around I've been
02:00 - 02:30 working with startups from precc to series C for the last decade and companies I've worked with have gone on to realize value and exit or raise funds in excess of half a billion dollars I really hope you enjoy the episode and if you have a guess that you'd love to see me have on or you have a comment on any of the episodes that I've recorded so far do reach out to me on LinkedIn or Twitter I'd love to hear from you let's get straight into it
02:30 - 03:00 Fred really wonderful to have you in the studio with me thank you so much for joining my pleasure um so you know this is going to be slightly different to the majority of PODS uh that that we do and I think it's probably going to expand over a couple of episodes um because I think we're going to get quite deep into uh maybe some of the more meta details of what it means to be inventure so you've been working in the field for 25 years now that's a lot of knowledge to distill in a relatively quick chat
03:00 - 03:30 um so let's explore some of the themes on life Venture investing in exceptional businesses and more importantly exceptional Founders so you know we talked uh around a number of themes and one of those that came through very much and and and seems kind of core to what how you think about um Venture is how VCS can show up for Founders so how do you think about that I mean the first statement to make is that I am am continuously and
03:30 - 04:00 consistently consistently surprised that when founders have a chance to be honest so in a private setting in a Founder centc group um the level of discontent with their relationship with their VC is it's just unbelievable and it's so systematic now this is not everybody there are a bunch of Founders who say they have they enjoy great relationship with their investors and have very productive boards but
04:00 - 04:30 maybe 90% of the time the answer is the exact opposite so the kind of comments that come up would be I do not trust my board with any topic that I consider to be truly sensitive or I'm wary of bringing certain topics to the board because I know they will either leverage it against me react poorly or I will not be able to control where the conversation so one example recently we were talking about exits and I was sitting next to an exited founder who had a pretty massive massive outcome and
04:30 - 05:00 we were talking about when to start exit planning now exit planning is one of the Strategic topics that you ideally start thinking about three four years before you actually get exited and I was naively sort of saying well you know if you made it a board topic and this was a regular topic of conversation you can understand the chess game that's being played in your Market who the like your aquires are how to build diplomatic lines of communication to that population group and he laughed uh
05:00 - 05:30 understandably and said you don't understand the moment I mentioned the word exit at the board I'm going to have half of my board things I want to sell too early and the other half of my board things we should sell right now and you know there's no way that we trust the board with with that just just quickly on that on that point then is that a function of an experienced board or is that a function of I guess you know the Avenger to some extent is you know
05:30 - 06:00 always looking for obviously the large outcome what is it that that you think causes that that moment of kind of existential dread amongst the board right well so what you're faced with here is a poor conversation in other words the quality of the conversation is terrible it seems that everybody's coming with their desire outcome and you're not really talking about the topic um I think more generally through founders
06:00 - 06:30 I don't think trust their boards in terms of bringing up complex topics if you don't have trust in a relationship you really don't have much of anything at all and um it's quite um it's quite foundational to the relationship to be able to speak in trust and truth and I think it you know what I observe the kind of behaviors I observe are advice given freely which half the time is not truly relevant to the business so it may be good advice in
06:30 - 07:00 theory it's not like people are saying stupid [ __ ] but it's not really applicable to where the company's at given its people that resources you know so it's it's nice in theory but not applicable so you will see founder roll their eyes at that um very often you have advice that's just ungrounded so literally somebody has been to another board and heard about a new technology and comes and ask what we're doing about that thing uh so some of it is just irrelevant some of it is present it too
07:00 - 07:30 strongly you know it's very difficult to present generalized advice so people come with their own baggage and their own history just present one version of the this is what we did this is what you should do correct by the way which is one place where people always say oh operators make for better VCS I would temper that and say operators may make for better VCS but it is not a given and one of the things you see with operators is they come with a lot of crystallized knowledge from where they used to work in can they try and apply it in a
07:30 - 08:00 startup and they can't you know kind reframe how they think about stuff and there's a there there's two points there right so one is operator as VC there's also operator as board member right so I find that when I think about and we'll talk about the craft of investing but when I think about Venture I'm hinded by the fact as a as an operating kind of CFO I get deep into the numbers right and as a VC you got to look Beyond Today right into the future
08:00 - 08:30 so so that potentially as an investor might hold me back on the board it's a different matter because I have experience I've understood kind of how boards operate Etc right so but and bringing the experience of an operator is helpful potentially to the founder because there may be things that I've seen either at a strategic or even at an operational level that that that change things so is is is that that dichotomy is it is it there the being a VC is actually multiple roles it's not just one right yeah correct so look first of all the state of the nation is that the
08:30 - 09:00 VC founder relationship is broken yeah then you can start to unpack what you actually expect from a board member and what I would also say is people live in tropes and the tropes are we live in a sort of mtic world where simplified ideas seem to be the truth so one of the tropes is every VC should be an operator right that's a Trope um I would argue Founders are uniquely placed to be uh to become great board members because they
09:00 - 09:30 buil from zero to one they started things from scratch they had to make decisions under conditions of uncertainty operators not so obvious for example because if you're a metal manager at a large US tech company you know in what way does that make you uniquely positioned to be a board member at a high growth startup and comp building companies from scratch you've never done it you may maybe given a set of instruction by HQ which you then deployed across a team that you manag so this you know people use these labels as
09:30 - 10:00 if they were magical you know you will magically be better at the job of being B memory if you're an operator there's also it's a question of first of all what are the roles right so if we break it down a good board first of all if you go to a board as a VC and you meet and you're working with a Founder what if you reframe the whole thing and said I will be your partner in building this company now there are limits to the Partnership if the company underperforms and I account back you the partnership
10:00 - 10:30 may end but I will go in as your partner and let's discuss what a partnership looks like what do you need what do I need how do we operate how do we interact you know what are my blind spots what are your blind spots right I bet you nobody does that which is first setting the stage for the relationship and understanding each other you just go into your first board and you start talking about the business and kind of hoping for the best if you put five people in that position what do you think is going to happen right it's kind of difficult to create alignment secondly so what's the role of the board
10:30 - 11:00 member well you're an accountability partner right there is a portion of governance Etc which is like hey every two month or whatever we're going to sit down and there is accountability it's great to have an accountability partner right so as long as the accountability partner is not an [ __ ] it's a great place to be because you know you have some somebody holding you accountable to what you said you would do it's really useful a lot of experienced Founders actually say I love having a board because it holds me account okay cool now beyond that next thing is do you
11:00 - 11:30 have my back you know are you there in the inevitably difficult conditions that are going to show up um and one of the ways I think about it is did the founder leave the room more energized and they came in if you can be in a place where even if people are facing hard difficulties but you know because you've unpacked the situation or you talked about how to solve it or you just pumped them up to go like all right let's get back in there did they live with more energy than they can the vast majority
11:30 - 12:00 if almost all the founders I speak to it's the opposite it's not all of them I don't want to oversimplify but a large majority it's the opposite they find the board to be a chore they don't look forward to it trains energy they kind of the the tend going in and then they kind of survive it right so it's no surprise that a bunch of Founders would just want benign boards you let me take people that are easy to deal with and kind of push pushovers and I'll just have my own
12:00 - 12:30 little strategic group on the outside of the boat because the boat is not the for that I'm I'm doing it because it needs to be done not because I I think it adds value but and again because you know in what you've just described it's very much the founder as the champion and of course in 90 90% of the cases that probably is correct but is there also an element of Founders not understanding what a great board looks like well so before we go there there let's just finish off with with the
12:30 - 13:00 roles because so you have this accountability partner I'm going to you know do you have my back and tough situations which goes back to empathy you know how many people have empathy for the founder Journey how quickly do you lose it and then it's like what else can you do as a board member because it's also not um not everybody needs to be the same so I personally like complex strategic decisions so my jam is I want to help us collectively think better are about complex strategic
13:00 - 13:30 problems somebody might be a transaction Hound right and somebody who's very experien in transactions so they may not be product Centric or design Centric or engineering Centric but you know what they might know a lot about fundraising m&a you know etc etc and so they might bring that lens to the table and actually have value purely as that um so having a very astute investor who knows their place in the
13:30 - 14:00 world they know where to interact and where not to interact who's a first principle thinker can be extremely useful because this is somebody who's going to think risk return allocation of capital return on Capital invested they're going to come with a certain lens on the world which is like how do we use the money we were given intelligently it's really useful why somebody else might come with a very product Centric or design Centric uh sentiment and say hey why don't we bring the voice of the customer more into the room and then I over time you can cover
14:00 - 14:30 all these things because you know you're able to interact intelligently around the whole race holes of topics which you know makes you this sort of 360 board member that can kind of look at the whole territory and be be helpful now but where do we live we live in a place where like VC is a [ __ ] and you should only the only thing that matters is their intros and the money that's it but I mean okay that's also a lie because V are going to be on your board for seven years and when you come to key decisions you're going to have to make some of
14:30 - 15:00 them with your financing Partners right re uh raising New Capital selling the company going bus acquiring I mean it's got a pretty big event strategic hires senior hires all of this sort of stuff yeah so so this whole idea of like yeah you know you just run interest it's like it doesn't work that way you're in a contract with a set of financing Partners anyway they may be a minority but they have certain rights so we're sort of trying to evacuate the fact that there's no relationship at the core and I'm like can we like build a
15:00 - 15:30 relationship and then everything else will become easier I mean like B exactly as you say it's often a case of like four you know four board members whatever the number is Rock up to a room they have not necessarily had the conversation about okay this is where I can add more value this is where my skill set lies Etc and everyone is also I guess to some extent trying to you know force their Mark upon either the founder or the company they you know there is a lot of ego involved often in these sort of um uh environments right
15:30 - 16:00 uh but actually you kind of need you almost need you know a pre-board offsite where you just explore where each of you can add value and how you're going to show up for the founder uh and the business ultimately you know it's not just the founder is the business um and where you can where you can support them through hopefully not many but clearly there will be difficulties that that that arise right and and in in today's environment I would say having an incredibly strong and focus and and and
16:00 - 16:30 aware board is more important than ever right because it's hard to navigate the current market uh for sure I like to think of um minimalist board uh which is you know a lot of venture capitalists will actually arguably spend too much time with their companies but not on things that move the needle right so for me it's like I the way I think about it is what are two
16:30 - 17:00 things that I can do for this business at any point in time that will be somehow some form of contribution so recently I was with Callum at Kashmir intelligence and you know we spent five five hours on a Monday afternoon just having a very free flow flowing conversation about strategy and we filled the Whiteboard from five years out to three years out to a year out and it was just exploration because I
17:00 - 17:30 thought as a company that's kind of refining its model I thought it was a good time to go just very creative and very broad okay so that was my contribution for this particular quarter to moving the needle I think Kum is thankful and I also just enjoyed the whole process frankly but we're like okay so we have got a a clear idea of our positioning we've made some useful distinctions we understand we're a deep learning company with a Federated learning environment platform you know in in comple control processes in industrial
17:30 - 18:00 environment and we came out with this this language and this position okay well that was a contribution right um instead you find that people go at the board meeting feeling I have to be adding value which is by the way that's their need it is not what's required in the room necessarily or that they want to be heard or that they want to show they're smart or that they want to show have Network so they come with like something inside of them that they want to bring to the table you should do this oh came across this and actually you
18:00 - 18:30 should consider doing XYZ yeah yeah so I've been I was recently at buenna in Berlin and it is such a well-run company that over the course of three hours I expressed support two or three times basically saying that's amazing that's incredible and by the end of the board I kind of had nothing to say now we've done a lot of strategy work with them in the past Etc but and I just sat there and I'm like and I felt the need in me to say something and I'm like okay
18:30 - 19:00 no no no I just said you know what the first board in 10 years where I have nothing to say and what a what a relief because there was nothing to say there was nothing required of me but so as a board member you really have to watch what you're bringing into the zone so very often people want to be recognized you know there is a need to be seen we all we human beings we all have the need to be seen and so you want to be seen to be smart or you want to be seen to be adding value or you want to fix something for the founder which they
19:00 - 19:30 should really fix themselves and so all that stuff you bring into the zone and it just pollutes the environment especially if you're patronizing and you know if you're committing one of the cardinal sins of just basically being an [ __ ] being patronizing talking at people providing grounded advice I mean if you're committing one of the cardinal sins of being a shitty bold member that's easy but even then you know you just want to watch like this thing is not about you it is about the company making the right decisions at a specific point in time
19:30 - 20:00 and just understanding what game is being played here rather than being stuck in your own mind is important so so that's I mean that's interesting because often it is not the founder that is choosing who that board member is right like that board member is representing the fund or or you know or financier that has come into into the business and so the founder doesn't necessarily have control over that so H
20:00 - 20:30 how how can a Founder better equip themselves as well as the other board members and the board members around the table how can they set that narrative how how what is the best way to approach that because those egos are going to show up like yeah it's a good question so let's talk about selection first um so the very big brands in Market will have you believe that brand is everything right because that serves
20:30 - 21:00 their game it's the how you perpetuate success and by the way the big brands are there for reason so if you look at an index Etc they incredibly what manage firms but leave that aside for a second so they're selling you on the brand yeah and then some of them will do a bait and switch so I'll throw a lead partner in there who's a general partner and then I'll actually say this person should be on the board which may or may not be the right person but you know they will do that they will do that thing um board member is one of these people people that you cannot fire so this is a
21:00 - 21:30 classic sorry this is a classic non-reversible decision you want to think about it carefully they will make your life hell for years if they're [ __ ] I mean The Compound Effect of being on a bad board with the knowing board members on the morale of Founders is not to be underestimated so the first step is like what can I actually Sho and I always say to my Founders it's like do do you have the perception that this person deeply
21:30 - 22:00 understands your business do they give a [ __ ] about it do they give a [ __ ] about your success are they are you able to have deep conversations about what you're building is the quality of the challenge you're getting back high quality you know it's like how sophisticated are they at understanding what I'm doing and for me it's like let's start with that you know if they're smart articulate and deeply understand your company which I know doesn't necessar show up every day but I mean okay now we're in a good spot
22:00 - 22:30 because at least the quality of the conversation we can have is pretty high now if you you know if you're set up with the wrong board and you have um you know egos who are superficial and like to come and hear themselves Stu you're kind of [ __ ] and then you should probably run your board is the most benign environment that you can and actually check box check box sort of just we do that sometimes by the way we have the board it's like once a quarter and it's like it's the weather report right did it rain did it Shine last quarter and we go through that it's very
22:30 - 23:00 well organized but a lot of Founders equally think that that is what the board is there for or inexperienced Founders I should say right I mean see what's interesting is how much we talk about the [ __ ] board and how much of an oversized topic that is versus what what it should really do I think for me in early stage startups is like okay the accountability piece is important but let's not overstate it so it's basically we design our boards we basically like
23:00 - 23:30 try to get rid of board packs systematically slides so we encourage Founders to write a memo it's a lot easier Google Docs they can write ideally is the same M memo internally as for the board exactly so whatever they're going to share with the company and where the strategy is at is what they can share with us so it's the same tone it's the same content it's the same shang um the preparation is limited and then we try and do kpi sheets and ideally these are you know there's some form of analytics and again they're the
23:30 - 24:00 same internally as for the board and they're the same over time when Alex chestman and I designed the kpis for zupa these stayed for six years I don't think we changed anything because we really spent the time to actually do them properly what is the right all start to be chasing what are the right yeah we ran this company on Two on Two excels you know one was everything had to do with um sites and metrics and acquisition Etc and the other one was financials we ran this company on two excels that's all we ever had to look at and you we knew the definition of the
24:00 - 24:30 terms that we there was no discussion required I'm amazed at the number of boards where we sit down we're like what's the definition of bookings again you know and you're like [ __ ] we've gone over this 12 times you know what's committed AR versus era and why's the discrepancy that big and and you sort of keep cycling through the same crap so you take the accountability piece you keep it because it's important and the founder shows up and he says green lights orange lights red lights whatever format you want because that's important
24:30 - 25:00 and then you stop there and you go all right I have two topics I want to discuss one is um I need to think about my organization design because we opened in the UK when I launch in the US my VPS are all over the shop and I don't know how to [ __ ] bu this thing and I'm struggling Okay cool so let's do that and um go to market I want to go midm market and I want to talk to you about whether that's right or whether we should stick to large Enterprise I'm taking an example okay these are two interesting topics you then come with a
25:00 - 25:30 little bit of research and Frameworks Etc so you're actually having a conversation that's rich you let people know aead of time so they can think about it and then we're having a good conversation with the people around the table Yeah the worst boards are the boards at sharp cold like just no context haven't haven't kind of I mean you can't have a deep strategic discussion if you know you get the slides the night before and everybody's like so what's the topic it's not going to work right so you let people know a month or two month ahead of time it's like we're going to talk about our mid
25:30 - 26:00 Market strategy um here's some articles we found Etc just to help people refresh you know first round review like best content in the world so here's a framework to think about this [ __ ] and we'll send you a little short paper you know again like these strategic papers Al Amazon for me are that's the game changer because I mean I don't do anything without writing it down you know the it helps the process of think yeah writing and summarizing is the way I crystallize the things that matter so
26:00 - 26:30 do that you know and that you're doing that for yourself you're not doing it for the board right and so going back now to the like the founder VC relationship right because the board is just a part of that right um and you and I talked about just going for a walk with a Founder like a lot of VCS that I've worked with are very good at that outof board interaction with the found right they're there they'll WhatsApp there's you know but not not in
26:30 - 27:00 the sense of like hammering what are you doing what's going on but actually just checking in and trying to understand where where things are at right but equally I think a lot of Founders would be hesitant to really share the intimate details of like you know the pain they may be going through the the anxiety the suffering whatever it is right like we've all been you know this year has been a disastrous year for many many businesses right like I I mean my business is probably 50% down on where
27:00 - 27:30 it was last year and it's now coming back up again whatever but it's very difficult for Founders to potentially talk about that to essentially their investors right because any signal of weakness may be may be uh perceived as you know blood in the water there's something that needs to be done here right so H how can how can VC's I guess you know you talked about empathy how can how can they show up with that empathy and and walk their Founders through those sort of those
27:30 - 28:00 sort of problems yeah so if you're talking about Founders being able to share the founder Journey at a personal level um I think that's a subtle question um if for me if you're able to come to the board table and say the company's struggling in this department that department that department like will shoe a deliverer used to come in shorts after his workouts and you go he'd sit down and go like everything's
28:00 - 28:30 [ __ ] and then he' put the list of things that were like oh you know whatever driver orders too many a manual and it just he would just come out with the [ __ ] and it was incredibly relaxing right because everybody's like well okay it's on the table well now we're working right now we're talking about the real things and he would just come out with it like okay here's the stuff that's broken um that I found extremely refreshing and I you know if you can show up that way as a Founder that's actually sign of strength and authority and then you know nobody disrespected
28:30 - 29:00 will ever around that kind of stuff now um again with many boards in the real world you want to trade carefully because people freak out in the face of uncertainty right now if you're talking about the personal Journey I'm struggling uh I might be heading towards burnout Etc yeah you may have have a board that invites that in and knows how to deal
29:00 - 29:30 you may not and I think in the vast majority of cases you probably won't so that is probably a discussion you can have either one-on-one in the sanctity of a really safe relationship with one of your investors yeah yeah but the ideally you go talk to a coach about it and you know I don't know that I would trust too many boards to deal with that particularly well and part of it is not evilness it's that the role of the
29:30 - 30:00 board is to decide who runs the company and so if somebody's really struggling you know at some point you're like well okay but there's something we need to do now again if the quality of your relationship is great you might sit down with a found say how bad is it and you know if they can't function because they're deep in anxiety you've got a problem then the found might raise their hand and go like I'm fine struggling and then let's work together on figuring that out it may be temporary maybe something that can be locked um maybe
30:00 - 30:30 situational or something that's happened at home or whatever right so if you have again that quality of trust you can I think otherwise it's a I'm going to talk to maybe my co-founder about this my coach and then I would say on that point it like it is the responsibility of the founder in terms of their responsibility to the company to figure out whether they can hold a line right um I have zero ISS with people coming to me about that and I think actually very often
30:30 - 31:00 we'll have that conversation which is how bad is it can you still function what needs to be done how do we support you but you know at some point my responsibility primarily is to the company and that will come into to play but I'll be transparent about it which is I've got your back I'm here for you let's be patient I'm not I'm not going to come behind and and say right we got a problem we need to replace so you will be the first let's talk about this together because because what I'll do probably is bring a little bit of a little bit of perspective to what's
31:00 - 31:30 going on you know it may be that hey you're not the first person to go through this you're just going to have to you know kind of manage your intensity a little bit and maybe ship you on holiday and maybe hire someone to support you or something or it may be that you have something more profound you know you've hit a zone of trauma or somebody's FL on in anxiety which happens or they're or they're or they're not the right they they AR integ the melting yeah ex they've reached theing
31:30 - 32:00 of what they're able to do at they can go from Z to one but maybe not one to many or whatever right so all of these things are possible I would also say you know this is where founder identity being meshed so tightly with the company yeah can be a real danger because I mean people die trying to build startups because they run themselves too hard I I write about it a lot like I always say you are not your business right I think there is there is there is something both both intrinsically you know natural
32:00 - 32:30 about feeling that kind of close symbiosis with your business but there is there is also something incredibly unhealthy because if you tie your self-worth and your value to that business we all know 90% whatever the right metric is a lot of startups fail if you are so in mesed in your own personality with that business then any failure is going to impact you quite heavily right yeah failure and success yeah so it's interesting because people
32:30 - 33:00 have been building so Founders that I know build their businesses for many years sell successfully and then suddenly turn around and go wait who am I yeah right yeah what's my purpose again yeah when we did the IP of zla someone behind Alex who like hits the buzzer and then it's 10 9871 and then stock starts trading you're at DLC on top of the stairs it's a bit disincarnate but whatever and then we go to the traditional room next door we
33:00 - 33:30 sign the Registries we have glass champagne and literally everybody started looking at each other going what now all right let's get back to work so everybody walked back to their respective offices and that was it so was like 15 minutes right and so I think as a Founder as you fully invest your identity into your company and then suddenly you sell it and then you kind of go what the [ __ ] it's an interesting moment of interrogation the kind of who am I most people go right back in um
33:30 - 34:00 they they either go go again or they yeah you know but who starts to think about actually what the learning is from that is an interesting question yeah it's almost like is it events or is it is it the journey like which which is the bit that actually is what are you what what are you chasing are you chasing the journey or you chasing the outcome well most of us live four years into the future when this then that yeah you know and you can live your entire life life like that until you die actually never really being in the you
34:00 - 34:30 never get it yeah because there is no end game yeah yeah um we're going to SW switch tack a little bit right because I think you know I think the board Dynamics and the composition and all of that is super interesting but I also wanted to talk to you about you know you talk about the craft of venture right um and Venture as an artisanal occupation so what do you what is it that you mean by that what are your thoughts on where Venture is is going well and
34:30 - 35:00 where it's equally not I mean we lost sight of what Venture is I think to some extent right the last 6 10 years seem to have been a lot of aberration and you know it feels like we're returning or you know getting back to almost what Venture I guess started off as in the 60s right in the US and so on um but and I guess you know those are two separate topics almost so what you know what how does one build uh the craft of venture but then
35:00 - 35:30 also what should Venture actually be and these are two um big and somewhat separate topics um so when I say I think of Venture as a craft it is because when you look at the breadth of roles that we have to embody across the life cycle of an investment um a there's a lot in it and B there's a lot of those skills that you can acquire refine so if we go back to
35:30 - 36:00 the board member to link the two topics for a second so the craft of a board member would be how do I ask the right questions what what what does a high quality question look like how do I establish trust in difficult in conditions of Crisis um what does true active listening look like um am I able to detect the emotional state of the people I'm talking to which is very important a lot of the cues are nonverbal do I have the Strategic tools to think
36:00 - 36:30 about what a company needs to do so whether are you using seven Powers I mean there's a whole host of Frameworks so part of the development of your craft would be to learn a few of these strategic Frameworks and actually be able to apply them uh ogsm objective goal standards and measures is the one I use which I turned into the 531 I mean once I mastered the methodology I can deploy it over and over and over again because it's very generic so you can break down between sourcing investing in decision making diligence transaction
36:30 - 37:00 execution being a great board member Etc and then running a firm there's a whole set of tasks there and the reason why I think of them as a craft is because the ingredients are always the same but the answer is are always different so it's not like you're not running some kind of recipe book you're not running code you're going to deal with the same type of issues but different humans different Market timing different availability of
37:00 - 37:30 capital so so it's like Venture is not theoretically complicated but you have to be highly highly adaptable so the analog to working wood would be when you work a piece of wood you get to understand the knots that you're working with and the way the wood has grown so here it's sowhat similar it's there's an aspect that's quite organic so on the one hand you can learn methods and I think the more you learn the more you treat the craft with respect the better you're going to be let me pause on that for a
37:30 - 38:00 minute most VCS that I have seen are love the lifestyle love the features of the job oh it's interesting it's married I get to travel people pitch me you know it's very intellectually stimulating and they have some story which I respect which is my story as well around I help I love to help Founders build company but then they're kind of stuck there a little bit which is they have a relatively high level value view of
38:00 - 38:30 markets they don't go super deep into understanding how the companies operate they don't go particularly deep in their relationship with the founders because sometimes it's uncomfortable for example when do when are you comfortable firing a friend because you can get quite friendly with founds and you may still need to remove them from their job hopefully never but it happens it happens so you're in a place of discomfort in on the relationship side so anyway they stay at a relatively high level and that's how you get the cliche of the VC who you know lands into the board
38:30 - 39:00 drops a bunch of irrelevant advice and leaves because they didn't treat the whole thing as a craft so the craft for example in terms of decision making is do you understand that you're making decisions in conditions of uncertainty right so you're living in a world of probabilities and outcomes and your world you're living in a world of skill and luck right when you live in a world of skill and loock what you're not trying to predict
39:00 - 39:30 success because you can't predict success what you're doing is you're identifying whether a certain risk return tradeoff belongs in your portfolio right so again people have a superficial knowledge of the power LW and they can talk about the power law but it's like okay but do you understand the nature of the risk you're taking and how sophisticated can you be about that and so that's one example and we can go we can sort of Deep dive into decision making is one of the aspects but that's part of the craft right part of the
39:30 - 40:00 craft would be how do I run effective meetings with Founders without any form of leading questions and how do I place them in areas of that are a bit difficult a bit uncomfortable but without feeling like a pounding them with aggression right which is how a lot of V go cool so that's a craft you know um how do I most VCS go into meetings and
40:00 - 40:30 ask the person in front of them for their metrics which you can read on a [ __ ] spreadsheet and that's how they spend most of their meetings it's like okay what is the thing that you're trying to eek out of a person in front of you to determine whether he's an exceptional founder so we also want to back exceptional Founders what do they actually look like right so that's part of the craft you know what is the psychological makeup of somebody who's likely to be an exceptional found because Founders are friendly sell really well are connected are pretty
40:30 - 41:00 smart you know they take a lot of boxes it's like okay well so how do you uncover the exception there's two things that come out of that right um so the first point and it's great that you said it like I think you know working in a world of both skill and luck right like I think far too many people both Founders and investors underestimate the level of or or the the role that luck plays right in in um in outcomes right and that may
41:00 - 41:30 be due to Market timing it may may be due to you know just the right email came through at the right time or or whatever it is right um but clearly there also needs to be some skill because otherwise you know you wouldn't have high performing firms the second part that I think is super interesting right so if if if I think about the way most people think about the way Venture works they look at it through the lens of it's an investment game but actually from
41:30 - 42:00 everything you've just said the investment game is not a small part of it but it but actually the you know the deploying the capital is just the start it's everything that follows that is actually the craft ADV Venture as well so it's not just how do you pick but it's also then how do you support yeah it's always a it's an interesting question the how much is in the pick and how much is in the follow on um I think personally so the the vast
42:00 - 42:30 majority of your Returns come from the pick and your entry Price Right for obvious reason so in the pick is also what the transaction looks like I think that's where the vast majority of returns comes from if you do systematically good and disciplined work across your portfolio of companies you can probably shift the risk on that portfolio by by a little bit so you're you're kind of bending the curve a little bit on your
42:30 - 43:00 portfolio as a whole it's somewhat difficult to determine whether if you did nothing at all differ or if you did great work what the difference is on occasion you're going to have a massive amount of difference rarely and if you're good at your stuff so when I recruited I went out to recruit Scott null and see what integral ad science because our original founder got cancer the person we groomed to become CEO felt
43:00 - 43:30 it was too risky and left last minute I had a sales turned out to have a drinking problem it was like it was like a meltdown and you know I went out and interviewed 14 people and I flew back and forth to New York a whole bunch of times and then we the first person I met Scott um like couldn't quite get there on first meeting and then we kept interviewing all these other high powerered New York Executives and I remember going back to Scott and going there is something about this guy because it's very understated there's
43:30 - 44:00 something about this guy that I think will serve us well and then quote unquote having to sell it to my co investors because it didn't fit the classic super charismatic thing and you know that was a four and a half billion dollar company so had I not been there like how much of an impact did I personally have on the outcome I think it's something to be said for that um so so did it become a 4 and a half billion it became A4 and a half billion company from a from a near rack yeah because
44:00 - 44:30 when this thing happened literally our entire team was in meltdown and we put we took the four VPS they were all in their 20s and we said you're going to run this company because we lost all of Senior Management like at once it was insane so it was like getting them to Rally together and I remember going to see them in New York and we had this like Crisis meeting like all right guys it's they all guys unfortunately but it's you there is nobody else you got to go run the show and I'm like I'll go find a CEO so you know this whole
44:30 - 45:00 process you kind of go like well we we did do something meaningful for the company in that moment so on occasion you'll do it and then because it's a powerload game the question is well how valuable was that you know with pil Pac we had a few decisions so David Franco from founder Collective and myself really pushed TJ and Elliott to go free away from a paid service which I think was transformation into business and then there was a second one where we decided to to build the pharmacy operating system so ppac was a consumer
45:00 - 45:30 facing Pharmacy business and then we decided to build the industrial break of the pharmacy operating system that piece of software which took was about $25 million to build ended up according to Amazon being you know half of the billion that they paid was for that for that yeah so that came out of discussions with Elliot around hey what if we could go raise enough money to fully liberate you from any Legacy on the pharmacy back side and you know
45:30 - 46:00 that's another moment when you say well that's an inflection point in the life of the company because that strategic decision can make a difference so on occasion you'll pull one of those and most of the time you don't do anything that meaningful and you can kind of question whether it was even worth all the effort and love you put in right but the thing is you don't know ahead of time and one of those was born out of need right one you had a a meltdown as you say in the team and the other and the other one was a strategic like bet essentially it wasn't you you you
46:00 - 46:30 didn't like Amazon wasn't waiting for you to build this as an example but once it was built Amazon was was was was there paid a premium for that for sure but so you know you're always looking back and then you're linking the dots you're building your narratives but the point about that is well if you do consistently good work occasionally something will be transformational to your portfolio and and you just don't know what that is which is why you know you get into that issue of like well how much work do I
46:30 - 47:00 want to how much time do I want to spend with my Founders he do they want me to another question but you know where do I spend my time which is why a lot of vs get lazy because nothing feels like it has immediate impact yeah it's a 10y year game 15 you're throwing you're throwing water in the ocean you know it's kind of what it feels like yeah I I mean and I think this is It's one of these things that I think a lot of a lot of Founders don't necessarily appreciate either right because in front of them they can see the business they can see where they're going from and they assume that from a VC perspective you put in
47:00 - 47:30 the money and you walk away and when the outcome happens it happens whatever right but from a VC perspective you know you'll have whatever a dozen 20 companies in the portfolio it may take 10 years to see even one of those return something right and it may not even be the sort of size of return that you want right so um so it's a it's a long game it's a really uncertain game right like so as a VC and again I guess this comes back to craft of VC you have to be you talked about operating in
47:30 - 48:00 uncertainty I mean VC is Perpetual uncertainty to some extent right I mean there is a question in my mind always around you know you talked about whether the big firms whether it's the brand that that you know creates a self fulfilling prophecy I I always wonder right if if Andre horowits backs X company and X company is successful would X company have been successful had Andre not backed it right and is it and is it it the momentum that Andre brings that has essentially
48:00 - 48:30 allowed it to grow and scale and and potentially exit and I think there is that sort of constant question as to you know is it the tail wagging the dog or is it the other way around right like where does the value how does a value a crew and like very clearly like if if a business is not if a business doesn't have the fundamentals then it'll never break through right but occasionally it needs that additional push that comes from uh you know comes from a really great brand
48:30 - 49:00 yeah I don't think there's an answer to that um look I think great brands in Venture are at the top mostly for a reason uh which is they tend to operate incredibly well they will they are at risk of arrogance and so how well they manage their own arrogance there is a question because otherwise that's maybe the beginning of their own demise and maybe that's how much time they spend on Twitter versus versus anything else I don't know maybe um now I think look I
49:00 - 49:30 think if we're humble for a minute great companies will perform no matter what yeah and this is again the story you're being told is the VC's made the business I don't buy that um and you just have so much variety of companies with varieties of capital sources that have done great that I think you got to all right let's let's just go in the back seat for a minute and go back in place where we belong that that these were founder built I think the reverse though is
49:30 - 50:00 painful boards may damage businesses uh in there's an old saying in Silicon Valley a good board does not a good company make but a bad one will destroy you every time um bad boards are painful and you know they're worth fighting hard to avoid so it feels like you have like some re like some real trauma uh over kind of boards I mean I'll give you one anecdote first of all ask any
50:00 - 50:30 experienced founder well get a 100 Founders in the room and see how many horror stories come up because this is not a perception on my part this is also I have run in the past this informal surveys and the horror stories are um everywhere but then worse than that it's not so much the horror it's the mediocrity of it you know this kind of Soul sapping mediocrity grayness of the whole sh um I'll give you one example there was
50:30 - 51:00 one company we used to have 7h hour long board meetings wow and in one of them we just hired a new head of sales and one of the investors insisted the guy literally just come on board and he was with one of our large clients somewhere in the building and because the company had missed its numbers he insisted that they bring the guy in so they interrupted his meeting with one of the Marquee clients brought him in and when the guy came in my co- investor
51:00 - 51:30 said you're not allowed to sit down you're going to stand so we made him stand by the next to the deck and started asking questions such as do you think these numbers are okay yeah which yeah right yeah it like as a CFO when someone says is that number correct I'm like Define correct like so so it was addressing down of a newly appointed exact as a show of power assertion of
51:30 - 52:00 power and you know I remember the CEO and I had to run after this new head of sales buy him a beer and convince him not to leave like don't worry he's not that bad it's just for show you see um but you know this the kind of [ __ ] I have 30 stories like that yeah um and and for me they don't bother me that much but my found empathy my founder Injustice flag goes up you know and like
52:00 - 52:30 the [ __ ] you know so I will I will get somewhat agitated yeah I'm I think I think anyone with with any sort of sense of decency probably would we we're gonna just shift slight tack on this um just as we wrap up kind of this episode because we we got a ton of stuff we want to go through um in in the next uh session as well but let's touch on the state of not the state of venture now but you know you and I I think we know quite a lot of emerging managers VC
52:30 - 53:00 landscape has has shifted quite dramatically um you know recently we talked about it uh you know recent news is Harry steings who of course was one of the partners at Stride uh in fund one has gone out and raised um second fund of 400 million at uh 20 VC um but there's been like this seismic I mean like you know Harry is almost the the the outlier in that sense right like a lot of the stories I certainly hear from emerging managers at the moment is
53:00 - 53:30 fundraising is really hard um getting LPS to commit and stay committed is really hard uh but also just the nature of venture has changed somewhat in the last couple of years as compared to say the last six years may have actually reverted to what it what it was a decade ago or whatever but so where do you see the landscape at the moment and and how do you how do you see you know I think I saw metric yesterday something like there was 62
53:30 - 54:00 62% fewer funds or fewer fewer funds deploying uh this year versus last year or something in the US like you know there's there there's clearly there's been a a clear change I mean it's kind of a modled up question but I guess you've spit into to where's the VC landscape sitting right now and what does that mean for emerging managers maybe yeah so let's deal with the data point first um there was a Cambrian explosion in the number of funds so it's interesting because we look at last year's data two years ago data and we
54:00 - 54:30 say Oh look The Market's crashing but if you look back 7 years ago people were saying there are way too many funds getting started and they're undifferentiated and there were like 4,000 seed funds in the US so some insane number all backing exceptional Founders yeah right and you know in future of work and future of learning or something Market places and so so everybody's got the same investment thesis and it's all selfsame and you know I've got some angle because I'm in Philadelphia and I went to that or something so look way too many funds and now we're looking at last year's data
54:30 - 55:00 and saying oh my God the Market's crash so if you can look through the most insane cycle we've lived through since 2000 I think probably you'll see that the Venture industry is an expanding asset class second thing is let a thousand flowers bloom I think there's everybody's always preaching for their own Chapel whatever their strategy is so I'm a bouque craft person right you want to work with me because I'm actually a good board member that's where you come to me if I was a deep Tech index investor and I had a
55:00 - 55:30 very clear set of investment thesis around Tech bio or computational genomics or whatever it is and I was able to find companies incredibly early and I would check super fast and my value out would be I find you I write a check quickly and I Syndicate and I did nothing else for you that's also a great investment strategy I'm like more power to you if I'm a Harry and I've built the most insane Network in the world and I can po that n network and those learnings into you know a network asset
55:30 - 56:00 that I can deliver on for Founders I like more power to you that also works because it's differentiated because he got a massive media outlet and he's got one of the world's best networks yeah I mean his entire network probably out class is most tier one VC firms for sure so okay so he's got something the question is what do you have why do you exist and why do you need to be here and you know a lot of what here that passes for investment strategy is some kind of
56:00 - 56:30 regurgitation of recent Tech Trends applied to a specific sector that people find interesting and that's that right and so you go one level deeper and you realize there's not that much thinking so LPS are going to hear aund of these pitches you know AI sensors like what whatever version of that and we're doing Financial inclusion and health and mental health and the third topic right
56:30 - 57:00 sorry but there's 150 similar pictures in Market if we get Sam cash he went after industrial environments you know it's very narrow it's very clear it's a good single GP positioning he's raising fine um because he has a reason to exist and he organized a little conference around it that's got a good number of people going so like more power to you or if you look at nucleus uh Max nucleus that's a pure um uh synthetic biology
57:00 - 57:30 fund and you know with a good group of advisors ET and they're super veral in that so I know exactly what risk I'm buying is an LP so this is not a time to be generic right the the generalist VC like the the era of the generalist VC is I didn't say that yeah okay generic generic yeah generalist is a strategy that you can still sustain if you got the tools to do it um but if you are if you are just doing the same as ABC I SS a generalist yeah but good luck
57:30 - 58:00 taking them off their position um you know General catalyst is a fascinating firm that continues to innovate so I think there's a lot of innovation data blah blah blah but you know none of this is one science fits all and I love the diversity that we've got then as an emerging manager if you can't raise then that's reality and then the question is do you want to go hit your head against the wall for two years or do you want to
58:00 - 58:30 readjust and you can blame the lp Market all you want there is money out there it's not easy to get but you know I would argue or question whether how well we would have done without eif for example versus with the yeah because how many managers are in business because of existence existence of private funds and what would have happened if this wasn't
58:30 - 59:00 there at all yeah have would have been harder to build this sure would you have had better teams potentially uh more differentiated teams Etc I don't know I a question is the capital bringing the talent or is the talent driving the capital right right so it's like you know you want to there's a point where okay I'm seeding the ecosystem that's one thing but now I am the ecosystem eif is such a juger you got to go like well okay but what kind of ecosystem is that you know how good
59:00 - 59:30 is it yeah so that's a European investment fund and then you have obviously the British Business Bank here in the UK which you know cornerstones up to 25 million I think in in in emerging funds and yeah it means that and nothing is easy right but that access to that initial cap capital and that that Cornerstone potentially is there it just means that more more people can get involved the question then I guess that arises is what do those returns look like but that you're only going to see in 10 years right and and that's going to be the
59:30 - 60:00 yeah I mean it's you know if between uh e tax i e tax relief is too much of a oh yeah for sure right it's kind of created a whole class of companies that are probably shouldn't be there we we had so we had people don't know what they're doing yeah we had Josh Bell from dawn capital and I asked him explicitly and he you know he said of the 70 odd Investments or whatever you know he said he Di any of them would have had Eis uh have raised under the e or seis in the
60:00 - 60:30 past and and I think because I see this a lot right I think F like there is this weird dichotomy where Founders raise on the seis and Eis schemes which you know are wonderful from the perspective of very early Sage PC Capital but because they can raise a seis Oris they assume that they are therefore on track to raise from Venture but actually seis and a tends to inflate valuations a little bit right so entry points for VCS then
60:30 - 61:00 don't make sense necessarily and B there they are different classes right of capital right so Eis and seis yes of course there is an element of looking for outsid returns but for a lot of investors investing under those schemes it really is about the tax break right like so so correct and and so and I think this is the thing in the UK we've therefore had this just like massive blossoming of of companies being built which is great but it's always this caution that building a company raising
61:00 - 61:30 on seis does not mean that you are suited for or should take or should consider taking Venture yeah I mean if you want look at this differently when you go to San Francisco and you come with the stupidest idea in the world people are going to go that's great yeah [ __ ] go for it yeah when you look at e CIS investment groups what do they sell to their members we're really good about making sure the legals
61:30 - 62:00 are tight we're really good about due diligence or some [ __ ] so there is selling downside protection on a tax advantage investor exactly that's the mindset I'm like why do you think's going to happen right so the problem is it's not risk Capital yeah it's it's a it's a tax Harbor yeah for people who like you know they kind of want to dabble or something so the whole setup is kind of wrong right so where's the UK Angel list and you know the reason why we run Angel un conference with Petro at
62:00 - 62:30 fire drop and stride every year I came because 2022 I think yeah we're trying to get you know 80 100 angels together so that Community Fosters you know this and so that we get better together at actually backing risk businesses from the beginning and not holding them back and allowing them to run fast and allowing them to fail and go like [ __ ] yeah it's built and not worrying about whether you get a 50% or a 30% tax break as a result correct yeah so I think that feels like a a a good place to kind of
62:30 - 63:00 pause um for for now because we've got a whole another episode where we're going to get into some pretty personal I guess level sort of uh discourse on on on where you are at and sort of philosoph the the philosophy of how you've gotten to where you are um for the time being Fred thank you so much for joining me uh here in studio um it's it's it's been incredible I I I feel like we could talk about a lot of
63:00 - 63:30 this stuff for a lot more but um you know let's uh let's now park that in and talk about the future a bit amazing thank you so much