Aleph's Michael Eisenberg on Why Generalists Over Specialists

Thank you for having me, Harry. I’ve been an avid listener of your podcast almost since inception and also know what a great guy you are because in our last correspondence, you mentioned to me how you’ve been taking care of your mom, the ad revenue is good to help her. So thank you for having me. You’re a special guy.

So I don’t have the typical career path, I would call it. I graduated in 1993 with a degree in political science, kind of barely getting my way through college because I was editing the college newspaper at the same time. And I moved to Israel and got married right after I graduated. And so within eight weeks, you know, got a new job, which was in political consulting and got married and moved to Israel from New York where I grew up. Started my career in political consulting for a year and a half, and I like to say I repented from that experience because no one told me that actually politicians come and go from office and the people we’re working for would stop paying us.

And I found myself summarily fired but not knowing it because the firm was in Boston and I was in Israel and it wasn’t this kind of Internet era. An email barely worked in my apartment in Jerusalem at the time. I found myself unemployed and couldn’t figure out what to do, I couldn’t get a job. That’s the truth. And I was unemployed for months, and my previous employer still to this day owes me a fair amount of money. So I ended up starting something, and it was the early days of tech and venture capital in Israel.

And I persuaded a firm that people you already don’t even know who they are anymore named Montgomery Securities. Okay. Open a paragraph. This is important about the history of venture capital. In the nineties, there were the four horsemen investment banks, Hammerson, Quist, Alex Brown, Robertson, Stephens, and Montgomery Securities. Montgomery Securities was run by a guy named Tom Weisel at the time later to be of Tom’s Weisel Partners. And I somehow persuaded them through endless calling to hire me, whatever that meant as the representative in Israel.

And with that contract, I traded it with a guy named Shlomo Kalish who became a partner and a mentor who had a technology consulting in Israel to set up a merchant bank of sorts where we kinda raised private capital. It was early days of venture capital in Israel. Raised private capital for startups and took companies public alongside of Montgomery. And we were fortunate that it was kinda the early days of the bubble. This is early ninety five till sometime in ’97, and we did pretty well pretty quick.

And back to the first online photo sharing company and a bunch of others. And my basic advantage was in the not so wealthy college I was in, we were a beta site for at the time it was called desktop publishing. So I knew what this thing called the Internet was in nineteen ninety three, ninety four when I graduated. And in Israel, almost nobody knew. So I got to back some of Israel’s earliest Internet companies. Did that for a few years, then went to the buy side, so to speak, went to a venture fund called Israel Seed Partners.

My partner there, John Medved, who went out to start our crowd, likes to tell the story that he turned me down for a job when I was unemployed and then asked me to come be his partner. Right? Some truth to that. Then, you know, Bill Gurley and Alex Balkansky and Bruce came calling, you know, to join Benchmark Israel, which I did. Did that for a while. And my agreement when Benchmark, as Peter Fenton has so famously said, decided to get out of the imperial era of venture capital and focus locally.

The partners at Benchmark were super supportive and went out on my own, so to speak, found a partner, Eden Shochat, a wonderful partner, and set up Aleph in 2013. And with the amazing support of my partners at Benchmark, all of whom invested and were really supportive along the way. We launched Aleph, and, you know, here we are three funds later.

inspired to move to Israel as a 19 year old. I was doing a gap year in Israel that turned into two years. And I was in this place of study called Haratzion in Jerusalem, and I had this interaction with a rabbi who was thought of as a spiritual leader. And he said to me, don’t ask me spiritual questions. The most important thing you can do in life is enable the employment or employ 10,000 people who can earn an honest and decent living. And that was like a challenge to me.

And he said, you need to come to Israel to do that. The economy wasn’t so good in Israel at the time. And I just got inspired to try to help build an economy and create good jobs. I didn’t know if I’d be good at it in any way, but it was like a mission. You know, like you talked about in our last correspondence with your mom, wanted to put the benefits and business to good use and to helping other people. And that was what I was inspired to do, Israel felt like a great place to do it.

So I basically decided at the moment that I’d move here when I finished college and found a wife who’d be willing to do it with me. And we came and landed and wasn’t that easy at first. It’s still always strange to be an immigrant, by the way, even twenty seven years later, a lot of things you still don’t understand. But it’s been an unbelievable place to raise a family, and it’s a vibrant society and an innovative society and creative and and an inspired society on a values basis.

I’m old enough and long enough in this business to remember when Josh Kaufman christened the city or named the city of 0.5.com. I think it was in Indiana at the halfway point of The United States in what was perhaps the greatest marketing stunt of the early Internet days. And I just respected Josh compliment ever since. And we had breakfast together actually right before COVID after a tweet of Keith Rabois. And I wouldn’t say I’ve gotten more conservative. I think I’m more nuanced. It’s made me more aggressive on the investing side because these things come in boom and bust cycles, but innovation is constant.

So I knew a lot of people in 2000, 2001 who took their foot off the gas from an investment perspective, and they let the psychology of the Nasdaq impact the psychology of early stage investing. But it turns out that the best time to invest is when it busts. And so you need to maintain a constant investment pace no matter what the external circumstances are around the bust in early stage venture capital. So that actually made me more aggressive. The conservative or shall I say more uncertain view is I think a lot of people think they got winners in their portfolio and then the bust comes.

And a lot of people kinda especially investors who haven’t seen downturns, don’t understand what happens in downturns and how that impacts reserves. We generally need to have more capital available than you think. How that impacts the psychology of founders. How difficult it gets to recruit people into early stage tech. How many investors around the table, even current investors in the company behave differently than you’d expect because there’s partnership pressures that you don’t see at the board table, but they’re experienced when they go back to the Sunday or Monday partner meeting.

And that has a huge impact on your boards, your CEOs, and it’s totally unpredictable. So there’s a lot of unknown and uncertainty and bust. And I hear a lot of people talking today who haven’t seen downturns. We can pull the model forward. You know, it’s doing 10 to 15,000,000 in ARR now. And so in four years, it’ll do 25 or 40,000,000 or a 100,000,000 in ARR, and it’ll be worth 35 times revenue. Except the world just doesn’t work that way. It just

So there’s a few elements you need to kind of unpack here. One is, although my partner, Eden, would disagree, and I think other people might, reserves is an art and not a science. That’s the first thing. It’s impossible to know what kind of comes in and out of favor, what people wanna invest, etcetera. So I think it’s more art than science. The second part of this is it informs our investment strategy in general at Aleph, which is a lot along the lines of Benchmark, which is we like to work with partners.

And that means we are a single stage, basically, seed and a fund. We’re not doing the big, big fund with the multistage thing, where I think you have a lot more risks around reserves and around signaling risk when times go get bad. And so we end up with a larger and broader partner network that we always play nice in the sandbox with because in bad times, you need them there too. And in good times, and specifically, if you’re kind of piling money into companies at early stage and not leaving room for other people, When times go bad, they’re not there to help you either.

And when times go bad, you actually need that help. And so that’s informed strategy as well from the fund. And then I think the third element, which is perhaps very nuanced, is busts are psychologically impactful far more than they’re financially impactful. It takes people a long time to realize you’re in a bust and an even longer time to come out the other side. And that’s true of founders. It’s true of most investors. And so you can gain a lot of advantage in a bust if you’ve got capital on hand.

Capital becomes scarce, and we should have a conversation whether this time is different. But capital becomes scarcer, but mindset becomes scarcer yet. And so how you think about, you know, when COVID started and there was a short bus, so to speak, on March 4, I sent a letter to our CEOs saying, I’ve seen this before. I don’t know what it looks like exactly because no two are the same, but history tends to prefer the prepared of mind, and it prefers those people who keep something in reserve to kind of plow in when everybody else is scared.

So I encourage people to be opportunistic about it. And I think that’s another thing about reserves. It enables you to be opportunistic in spots. We have a company in the travel space that was slaughtered by COVID. We got a pile of money reserved for it. We plowed in. We think this is gonna come back. And when everyone else was not there, we are. And I think that’s enabled us to be nimble. A company called Book Away, keeping your eye out for it. It’ll be interesting.

No. Bill Gurley is fond of saying play the game on the field. I think he got that maybe from Bezos. And there’s definitely some truth to that. You can’t be at a capital disadvantage to competitors raising money. But to my mind, this comes back to a more fundamental question, which is how large is your competitive moat what you’re doing? That’s number one. And so if you have low competitive moat, you can’t lose the capital game.

If you have a high competitive moat, what’s commonly misreferred to in my view as network effects or an increasing competitive boundary, you may be able actually or even advantaged by taking less capital over time because it enables you to be more nimble and not need to kinda modulate your growth to catch up with the valuation expectations and capital return expectations. And I think the next element of is it really depends on the character and personality of the founder. The first thing I did when this pandemic hit, I was call a couple of founders and say, you ought to get profitable.

Maybe be able to raise money, maybe not. But even if raise money, you know, I think the personality of the company should maybe be slower growth because you got real competitive advantage and fits your personality better. And no two founders are created equal. And I think that’s a really important point. When you overstuff founders who are better at lean with capital, they explode. And conversely, if you’ve got guys who can press on the gas and play the game on the field when everyone’s got capital, you ought to load them up.

And I think it’s important to be really specific about that.

Maybe. I have a view of the world that says that there is a lot of uncertainty out there. And those people try too hard to predict the future end up failing. And so here are some things we can point to that are different. One, technology has become more a part of the mainstream economy. So no one invested in insurance before and called it a tech investment, but Lemonade has proven that insurance is really technology at the end of the day. And same thing is true of these neobanks potentially.

Maybe I’m little less convinced about that. But there’s a pile of categories in the economy that are going digital that were atoms. And so they become opportunities for venture capital. And because of that, more of the global TAM has opened up to what we now call venture capital. Nobody thought of doing an insurance business venture capital even fifteen years ago. Right? So more money therefore has flowed in and become accessible to technology investment. The second thing is, and I think, and Howard Marks touched on this in your podcast, zero interest rates just screws with the model.

Blows up every DCF model, that’s first of But more than that, if you’re seeking return and you look at the last ten years of the economy, which by the way, people do, which is a silly idea, but most people do it, you look and say technology has been the place of returns. So let me pour more dollars in there. So every asset manager looks back, plows more money in going forward to catch the same return, of course, reducing returns over time. And then the third thing is, and I’ve been talking about this a lot in our LP meeting presentation on it, technology has had two facets that have changed the dynamic.

One is the winner takes most aspect of it, which has been proven out, means that there are outsized returns at venture level at later stages. And so therefore, it’s brought in all sorts of sources of capital that weren’t around that didn’t exist before for this market. But the second thing is technology has become a long duration asset, which it never it was before. So we used to think of bonds as long duration assets, refrigerators as long duration assets, houses. But now people look at Amazon and go, woah.

Thirty years plus some boom and busts in the middle and go, that’s a long duration asset. I can predict this twenty five years in the future. Microsoft, which even went down in the bomber era, has come back with a vengeance. So this is a long duration asset. I can park a ton of dough here forever and take it of bonds. And so maybe it’s different. But at the end of the day, I think we have boom and bust cycles in every business. And you know, if you read Ray Dalio, you know what he thinks of the world.

And I tend to think things go up and down. And because human psychology is same thing. I’ll spot for a commercial one saying, which is I’ve read a couple of books in Hebrew, one come out in English. I’ve read four books actually. But two of them or three of them are on the intersection of the bible and economics. And one of them is on the book of Genesis. And some rabbi reads the book, and he gets on a panel with the book launch night. Says, I’ll tell what I learned about the bible and economics.

I’ll tell about innovation in Andrew Carnegie and Abraham and this, that, the other. And he says, here’s what I’ve learned. In thousands of years of history, the one constant is people don’t change. And I think that’s really true. People are people. And we have our own psychologies that kinda change this.

Well, I often describe this is hedge fund managers deal with risk, venture capitalists deal with uncertainty. And so risk has a band, and you essentially buy insurance or hedge against risks because you don’t want catastrophic outcomes. In uncertainty, you actually don’t mind the catastrophic outcomes. You could lose all your money. What you’re looking for is asymmetrical upside. You live in the uncertainty. Bruce Dunlevie once said, venture business something like this. If this happens and this happens and this happens and then this happens and this then you got a big outcome.

The odds of each of those things happening is, five percent. So it’s a really miniscule possibility that outcome, but it’s certainly high impact. And by the way, think of COVID the same way. The reason that a model’s broke is most people looked at COVID as a risk problem, and I think it’s an uncertainty problem. And you can behave differently in uncertainty than you do In risk, you wanna centralize to make sure people don’t go off the reservation. And in uncertainty, you actually wanna diffuse responsibility. In risk, you kinda wanna bring things in to make sure you don’t have a cash out for the outcome.

In uncertainty, you wanna make more bets because more things become possible. We accelerated digitization 10 x in COVID, and it’s the same thing. Walt Disney did the same thing. I often joke that COVID’s like Walt Disney. He had a lot of characters. None of them hit until Snow White did, and when she finally hit, it was a huge outcome. And the venture business is like that. Whereas the hedge fund business, it’s asymmetric, but it’s within a band. You try to get asymmetry, it’s within a band.

It’s arbitrage within a band. And that’s just a different mindset.

The word diversity is so loaded these days. I’m not even sure what it means anymore. I don’t think of our portfolio as diversity. I know there’s all these portfolio theories. In the venture business, I think about it as shots on goal, which is a portfolio should have somewhere between fifteen and twenty five, call it shots on goal. I don’t care what businesses they’re in because, again, it comes back to people. People are inherently different. You want 15 to 25 brave souls trying to do something most people think is not possible or looks foolish or has asymmetric upside.

And so by having 15 to 25 entrepreneurs in there going after maybe different markets, maybe related markets, maybe correlated markets, I don’t know. I don’t think the outcomes are correlated in any way. And so it’s just a shots on goal question, and then you wanna have concentrated ownership in them because some significant number of them will fail. I know it doesn’t look like that right now where everyone’s raising money for everything. Eventually, it does shake out. You know, the venture math tends to work over time.

There’s a small number of funds that deliver outsized returns or small number of investors at firms that deliver outsized returns. And it’s, I think, ultimately gonna work out that way. And so maybe a diversion for a second. Diversity suggests that this is portfolio management business. It’s not in my view. This is a business about great individual entrepreneurs who are change makers, who are difference makers, who you gotta pick, and you can’t always get it right. And so kind of traditional notions of portfolio diversification, so I think diversity comes from, or poorly applied in venture, where you’re actually looking for a lot of outliers, and that doesn’t actually create diversification.

It creates concentration risk around a certain type of people, but you believe that in that group of people, there are special human beings, special souls, special heroes, or giant change makers.

I think the key is that innovation is constant, whereas markets are fluctuating. And so you need to kind of invest consistently in the venture business almost in roughly the same amount of companies every year to be able to get your shot on different innovations. And as years go on and technology stacks build or unpack, you run into different opportunities. If you put all your money in four years ago, two years ago, you probably won’t run into DeFi. But, you know, you need to kind of invest over time to be able to catch the next great technology innovation.

And the next guy who came out of university or in Israel, the military, who’s got a new view on the world. And what you’re really looking for in temporal diversification, in my view, is the new technology stack that comes in, plus a new view on the world influenced by whatever is has changed around you. And I think a lot of this business comes down to connecting very broad diverse dots that form a picture that meets an entrepreneur who has a different or related picture or something you can relate to about the world.

I think diffusion as a strategy or distribution to the edges is a strategy I’ve been investing behind for the last five or six years is happening in every industry on the planet, whether it’s DeFi, I think old age homes, for example, or a thing of the past, edge networking, all those kind of things. You start to see patterns emerge in this way.

I think Brian is right if you have a large fund like he does. We are deep believers in the small fund theory. I was talking yesterday with one of the partners in emergence and with one of our LPs who said, you know, there’s like a handful of people left who are like generalists, but keep the small fund size. You’re looking for multiples. So think you have less of a risk even with the kind of limits if you’re a smaller fund because the returns can still be way outsized on the fund size.

But if you’re buying size fund, you wanna be able to deploy as much capital as possible to those winners. You’re dealing with a different kind of churn profile than we are. And if you need a multiple on a billion and $0.5 fund, you need to own 30% of Opendoor. You need to own percent of whatever Keith’s working on now and Brian. So that’s the way I think about the problem. And like I said, we play nice in the sandbox with everybody, and we find that that’s good when the bus comes to.

personal level, I want to be a company builder alongside the entrepreneur and not an investor. That’s the way I want to live. And so what Benchmark taught me over time was if you want to be a company builder, you need to stay small. And the reason you need to stay small and focused is your most precious commodity is not your money, it’s your time. You need to be there shoulder to shoulder with the entrepreneur. They’re the heroes. You’re the supporting cast while doing this. And so if you got kind of a huge multi stage fund, you end up becoming over time an investor.

And I never fool myself. I’m not building the company. But I still think that being able to spend real time with these founders is super important. That’s at the really high level, and it’s a personal choice question. I mean, you you can find exceptions, you know, guys like Keith who accept companies even though there are these giant funds right now. I think it’s more true of this you know, there’s a handful left of people who are kinda smaller, just early stage focused generalists that are kinda small craft players in the business.

I’m a generalist mostly because I don’t know much about anything. I don’t understand technology terribly well. I have a pretty uncertain view of markets as a general proposition. And I think the one thing I semi understand is people and have been fortunate enough to be surrounded by wonderful people in my life, from my wife to my partners and parents and everybody. That’s what I optimize for. And I think in the investment business, in this generalist versus specialist, when we think we’re specialists, we think we know a lot about something.

If you think you know a lot about something, you have really expert questions, so to speak, to ask a lot of the founders. But my guess is if you were that knowledgeable and specialized about something, you probably should do it yourself or think you could do it yourself and not necessarily have enough open mind that maybe this founder knows a lot more than I know or knows something entirely different. It was a different frame of reference for how he thinks about the problem. And I like to say, I’m encumbered by any management experience and any specific knowledge about much of anything.

And that leaves me an open mind to be able to listen to the founders who I think have insights. And I don’t care about my insights. I care about theirs.

Well, Lemonade, by way, is the prime example of this because I introduced Daniel and Shay, the two founders of Lemonade. I know Daniel for thirty years and Shay for a while since he started Fiverr. And I introduced him, and Daniel came to pitch me before he met Shay and said, I’m gonna do this thing called p to p insurance. And he described this kind of amazing world where we can remove conflicts from the insurance business. And so he got together with Shay. They said, okay. Abracadabra, there’s gonna be a company.

Shay’s got a great name for it called Lemonade, and we’re gonna disrupt the insurance business. And I said, we’re in. Two amazing founders, big TAM, etcetera. We anchored around $13,000,000 seed round. We put six and a half in the term sheet. You need it because of regulatory capital in the insurance business, you need a lot of dough. And we called around and I called a bunch of fintech investors in particular, and this is, I can’t remember how many years ago. Was five and a six years ago.

And they all said, who’s the insurance guy at the company? I said, well, there’s this guy named Ty who was like an adviser to the company. Know? Who knows insurance? I guess nobody. That one gives him a virgin look at it. And most fintech guys who really knew insurance thought it was a coin flip, by the way, so did I, whether we’d get our license in New York. And thought if you didn’t know insurance, you couldn’t do this. And being as dumb as I am and looking at this and knowing nothing about insurance turned out to be a hell of an advantage.

You’ve now got a 7 or $8,000,000,000 public company. And we were the first check-in. Sequoia, God bless them, came in. And the guy who joined Sequoia, he still knows less than I do probably about insurance, but what an investment, man. He loved the guys. I don’t know that much either still.

My benchmark partner Peter Fenton used to be firmly of the view, it doesn’t matter what price you get in at, it matters what price you get out at. And I hear that for what it’s worth. So I’ve come with a different heuristic to it, which is if the founder wants my money based on price, I’m not doing the deal. And so that may sound obnoxious, but I actually think it’s become a view of how the founder thinks about the world. Eventually, if this works out, everyone gets paid and we make a big impact.

You want founders who optimize for the help and network that they can get from their investors rather than who are optimizing on the price. And so Daniel and Shay could have gotten a much higher price probably than they got from me. I said to them, what’s the right and fair price you think? And I’m gonna tell you yes or no. And they said it, and I hit it. Was it high? I don’t know. It doesn’t matter. We weren’t optimizing for price. They could have gotten a higher price.

That’s how I think

Really good question. So you mentioned Bruce. The guy is the biggest gentleman in mensch in this business by a long shot and has unbelievable wisdom. And one of the things he he taught me earlier in my career, he used the basketball analogy where he said, you know, if you’re constantly pushing up against the center, so he’s pushing back at you and it’s hard to push him out. If sometimes you take a step back and let him fall on his own weight, that’s a better approach. And one of the things you learn from that is you have to let people come to their own conclusions over time.

And a big difference between my early board membership and my later board membership is do you push back hard all the time, or is this kind of a slow evolve where you enable people to come to what are their own conclusions that are maybe influenced by yours? He often says it’s an influence business. And he’s the smartest board member I’ve probably worked with. And so I think there’s a view of venture capitalists in many cases that they don’t work that hard around the board table. I’ve always had the belief that one, if you wanna work with the best entrepreneurs, you need to work hard.

And you need to kinda stay in the game and be as knowledgeable or more so than anybody else around the table. I don’t know if I’m doggy, but I think a big job of the board member is to have a network that’s not necessarily available to the entrepreneur who’s just starting out or growing his business and focused in his areas. And that network and network view enables you to see maybe more forest and less trees point things out. I try not to do the well, I saw that this company do this here because that’s really annoying to founders, but also to bring the value of repeat iterations of the game to this specific entrepreneur.

And you can do that if you’ve been at this a while. And one of the things that I realized early on was the value of network. And so the kind of dog in this is just go meet everybody and give them respect and respect them and try to do things for them because you never know when your entrepreneur is gonna wanna avail themselves of that network. And the last thing I’ll add, I’ve always been a tireless optimist. I know no other way to kinda say that.

I’m optimistic about everything. Even today, where we’re sitting after what happened yesterday in the capital, I’m an optimist. And I think America will be resilient or I hope it will certainly. But sometimes that optimism can be blinding. Josh says he became more conservative. I haven’t become more conservative. What I have become is more realistic. Like, money’s not in the bank until it’s in the bank. And so I will chase down signatures, getting on a board member sooner rather than later and fast and just get it done and get it done.

And I think I let as a younger board member, I let things play out, and now I wanna chase them down and get them done and behind me fast. I wish I’d known that earlier. Can

I have a bad memory. It’s really true. I have a bad memory. I had an early failure in my career. I had a success in the first online photo sharing company. Thought I knew a lot about digital imaging. I invested in another company. It was like the first of the photo book space. Boy, did we mess up the business model, and boy, was I partly responsible for that. And we kind of got way out over our skis, and then the market crash came and, you know, the bubble burst, and we were Buffett says when Ty went out, we were definitely naked.

You know, you need an iron stomach in this business. That’s kind of first of all. And then you kind of develop what I would call heuristics and pattern matching around people. And I think most of these failures are around people, pick bad. And then you didn’t see the warning signs. You didn’t surround them with executives. You didn’t bring outside board members. Although I’m fond of saying the companies only go out of business for one reason, they run out of money. You tend to run out of money for reasons.

I tend not to dwell on the failures. I just kinda move on and move past really, really quick. I credit my parents for teaching me that for what it’s worth.

No. I I have zero FOMO. We have this discussion in the partnership all the time. I have no FOMO. Bruce once told me, I think it’s true, you need to make sure you manage your time, Moe, because you never know when the next Google walks into the lobby or gets on a Zoom or whatever it is today, the equivalent. And I think that’s true. This is a low market share business at the end of the day, and you only get some number of the winners. The key is to get some of the winners.

And so if you miss some, god bless the venture capitalists who did it. Send them a congratulatory note and say, mailman, I hope we can invest together again. I really I don’t have FOMO. I try to teach my children not to have FOMO. The our motto at Aleph is different is better than better. Everything we do should be different, not better. Everything our company should do should be different and not better. And so I obsess, my partners will tell you I obsess about missing deals up until the point that we missed them.

And then they’re gone, and they’re not coming back. The one exception I’ll tell you is a deal. I mean, there are many exceptions. The one exception is a deal that I passed on two and a half years ago. I had no FOMO, I let it go. But a real interaction with them. We spent a lot of time explaining what I didn’t like about it, but they had to prove a certain thesis. Guy calls me up about two and half, three months ago and says, hey, Michael.

Remember what you said about this certain feature? He said, you were dead wrong, and I can prove it to you. Can I come in? And I really appreciated that, actually. And he walked in the door and said, it’s working. You didn’t think it would. I understood you, but it’s working. So now you come be my partner. And you sit there and you go, man, I could have had this at a third of the price two years ago. Do I do it now? And then I just looked at it and said, who cares?

Let’s go do it. We did

You should be in awe of my wife. That’s the first thing. That is true. I should add, it’s one wife and quite an amazing one at that. So I’ll say a couple of things. One is, I think many people tend to be transactional and more so in this business now than it was when I started, by the way. It was much more of and a clubby and a crafty business. And I think relationships matter a lot. And relationships matter in the venture business and personal life and everywhere else because if you have a trusting relationship with people, you know, they make your life easier.

They invest with you. They want to come on boards with you. They want to pick up slack when you drop it, and you need some personal time, and you can share burdens and share triumphs and share everything else. And that relationships truly matter. That’s kinda point one, and it’s true in personal life and and business life as well. And long term relationships matter even more than that. And because it’s long term, you need to think about how you raise your children and your relationship with your spouse or significant other in long term terms as well.

And there are ups and downs and, you know, nothing’s ever a better roses and have ups and downs and struggles along the way. But if you’re in it together for a common purpose, then it works better. And I think our children have been fortunate to have an amazing mom who does a better job than I do. Of that, for what it’s worth, I think I’ve been a better parent of older children than I was of younger one. I think my children would agree to that if you ask them.

And now it’s public, so you can ask them. Why do you think that is? I don’t know. I viewed it as a failure of mine. I was never really good at getting on the floor and playing with kids and doing that. The thing I would add is I’ve actually never ever thought about work life balance. I don’t believe in it. I think it’s a failure of modern culture to seek work life balance. And it’s become the bonton. I gotta find balance. And the truth is, in life, nothing is ever in balance.

Relationships aren’t in balance. The markets aren’t in balance. Nothing in life is in balance ever. And if you’re always seeking it, you’ll never find it. And so I’ve always described myself as trying to do the best at parenting and spending time with family because that matters most and trying to be the best venture investor I can be, and trying to be the best at my faith that I can be and trying to be the best contributor not for profits that I can be. And it’s just an aspiration to try to get better at these things and knowing that you fail at most of the time.

I failed a lot of these things over and over and over again. But I never think they’re imbalanced. Balance is a flawed pursuit in my view. Can I

It depends what it is. I I don’t think you can live in a situation where your family life or your kids are out of balance for too long. Or not out of balance, don’t need enough attention. For what it’s worth, like, people have to say, gotta give your kids tons of attention. No. You need to develop independent kids. They need to become independent adults by themselves. That’s what they need to be. So coddling is a terrible idea. And we’ve got bizarre things in helicopter parents and coddling parents going on in the world right now.

And so, you know, you need to invest in your kids. Can I can I better be? But I tend to become pretty total when things require taking care of. And so you can find me diving into my books for hours when I’m on deadline buried in my basement. Or, you know, yesterday or day and a half ago, my wife’s grandmother unfortunately passed away. They got canceled. We’re done. And, you know, you jump in. And everything in life is out of balance and things are uncertain, and we need to embrace that.

And I think this suits for I need my balance back in my life is just and I don’t pursue it.

As you probably read, I’m a person of faith, and I’m fond of saying that God lives in uncertainty. And I have another deep belief. It’s already written in Ecclesiastes of places, but it’s everywhere. It’s it’s obvious. The world is getting better. People will say that the past was better. Just offer them to trade places. They wanna go back to a place where there weren’t vaccines or there wasn’t the Internet, the food wasn’t readily available. It’s ridiculous. And so the future is definitely getting better, but it’s very uncertain.

As a person of faith, I just assume uncertainty and that I’m not in control. If And you’re not in control, you can let go of a bunch of things. One of my earliest memories is of a family member of mine. We’re in a plane, and we’re going through turbulence, and she grabs my arm. Was like digging her nails into my arm. Probably there’s not a flying plane. Nothing we can do about that at this point. It’s like, it is what it is. And it’s kind of a lesson.

There are things that are just out of our control. And by the way, there are more things that are out of our control than we actually know. But we have this false sense, particularly in modern society of control. We need our control back. I don’t think that way. By the way, think it’s a good mindset for venture because we don’t fully understand the outcomes. And, you know, sometimes you gotta trust the entrepreneur even if you think he’s wrong because it’s really uncertain out there. And that’s a wonderful thing.

It’s a mysterium tremendum to use the Latin phrase that we can kind of, you know, behold. How amazing? How amazing is the world? How amazing are different people that you and I can talk like this? We don’t really know each other that well. And I can discover you and, you know, the amazing work you’ve done with your mom and find out you have a deep soul and just an amazing guy living in London who started a venture business by starting a podcast. God, that’s amazing. Did you ever believe that ten years ago?

the future is uncertain? Yeah. The future is uncertain and better for you. And so you just kinda dove into it, and you dove into it totally. Look how amazing it’s to become for you.

Okay. So what’s the favorite book and why? Oh, that’s easy for me. The bible or the Torah as we call it in Hebrew. It is the richest piece of literature and life wisdom. By the way, you know, everyone talks about monthly active users and daily active users. The Bible has the most active users in the history of humanity. And it’s had the most written about it in the history of humanity, and it’s just incredibly rich. And I think there’s timeless wisdom there that’s as applicable today as it was ever.

What’s your writing process?

Most of my books are around textual analysis and then modernization of ancient concepts that appear in the bible into modern economics and technology. And so it’s not science fiction. It’s actually textual analysis, and then trying to develop modern economic and technological theories based on timeless wisdom. You know, it’s coming out in English in the summer, I hope. And so that’s what I do. I just do textual analysis and then try to apply my daily life, which is economics and venture capital and technology to ancient texts.

you

Well, there there’s been a lot of those. Most of them have been founders that blow up in one way or another. The line between founders that do amazing things and ones that blow up is really thin. And I just admire them for the process. Kevin Compton told me twenty five years ago, he’s ex client of Perkins partner, always respect the founders even when they fail because they do yeoman’s job, and I believe that. And then other ones where it became haughty. Thought I I knew something about digital imaging.

I did another deal. I was wrong. And so I try to reduce what I know in order to leave my mind open to do just absolutely new things. I’ve become obsessed because of Josh Hannah. He’s made me obsessed about DeFi because it fits kinda my distributed everything thing. So I’ve he’s down a rabbit hole. He got me down a rabbit hole. I’m obsessing about that now. So hopefully, I can be dumb enough about it to to be able to understand the words. Tell me, what would you most like to change about the world of venture capital today?

I don’t spend any time thinking about that. I don’t think about this as an industry. This is a craft business with a small number of practitioners who actually do it well. Read Michael Maboussian’s research on the difference between PE and venture capital. The one thing I would like is I’d like to become it’s become more transactional. I’d I’d like to be more relationship driven. I love that. I love the people, you know, and I miss that a bit. It’s become too transactional. I hate this Zoom thing, by the way.

This is the worst. I like to shake people’s hands, see them. I remember the coach used to give the big hugs. I miss that.

knew you’d ask this question. The last seven investments I’ve made are all in stealth. So literally and I like stealth for what it’s worth. I don’t see why people rush to announce investments. So the last one we announced is actually Melio, which has now gone through four rounds of funding, three this year. And Matan Barr and I had been meeting for years about once every month or two. We’re a few blocks down from each other on Rothschild Boulevard in Tel Aviv. And he kept talking about payments and this, that, the other.

And I said to him, okay. What are you gonna do different? What could we brand? And back and forth and back and forth. And one day, he just walks in my office and says, got it. We’re gonna brand ACH checks and payments. And we’re gonna create a consumer user experience for small businesses. And I said, done. Because Matane is amazing. And I know a little bit about small business from Wix and HoneyBook, another amazing company. And we jumped in and the investor rejoined and things been off to the races.

And this team of Matane and Elon and Xieve are amazingly complementary to each other, amazingly ambitious, and they had a unique insight about small business payments that nobody else had. And this has been a hell of a ride. I mean, Philippe at Cotu and, you know, Julian at Excel and Philippe at Excel and just amazing people. And Adam at Bessemer, obviously.

Thanks, Harry. I hope I won’t have to wait another two thousand six hundred and ninety seven episodes in order to see you again. That’d be unfortunate.