Is Now Really the Best Time to Be Investing? WTF is Happening at Growth Stage Investing?…

Of course. I’m glad to be here. I actually do remember that. We were at the, I think, Mattermark was hosting a party at SaaStr, and this would have been probably 2015 or something. So way back when, but coming full circle, I want you to know that you were the only podcast I did from 2015 to 2022, the beginning of twenty twenty two.

Yeah. I kinda found it accidentally, which you hear people today talk about they’re so purposeful about what they wanna do, and they wanna go after venture and get into tech, and they’re very specific about the firms they want to work with. I didn’t even know what venture was until I was 23, 24. I actually it sounds silly, I did investment banking out of undergrad, ended up at a small boutique investment bank doing software advisory. And I worked alongside the Vista Equities of the world and the TA Associates, the JMIs, and actually got some exposure to folks like Battery, Excel, Bessemer, Redpoint.

I actually raised my hand and said I wanted to go over to one of those places. Most of them said no or who are you? But I actually had a handful of interviews, one of which was Redpoint, one of which was Battery. Battery gave me an offer Redpoint did not. I went over to Battery. I was there for six years and the Redpoint folks kind of stayed on top of me. They wanted to correct the error of their ways and not making me an offer when I was associate.

And so I went over to Redpoint, I guess it was December 2019 and joined at the beginning of twenty twenty, and I’ve been here ever since.

Literally, like, Redpoint turned me down, and then all that happened in between them hiring me back as an equal partner and turning me down was my experience at Battery. I I think Battery in general, one, they’re awesome people. Two, they’re very prudent about returning money to their limited partners and consistently delivering great returns. And they do that across a bunch of different strategies. So they’ll be they’ll do early stage venture, late stage venture. They’ll do growth equity. They’ll do growth buyout type opportunities, they’ll do lower mid market buyouts where they add on acquisitions to it and leverage with debt and all of that.

And so I think honestly, Battery does best and what I internalized most was just how to evaluate investment opportunities in general. Right. It seems sort of pedantic in some ways and that that should be the job in its entirety. But because they looked at so many different things, it was very much a mash up of a bunch of different styles of investing with everyone aiming just to be a good investor and deliver great returns to the limited partners. And so internalizing those different styles and understanding there’s a bunch of different ways to make money under a single umbrella, I think, was something that I really appreciate today in looking at different investment opportunities.

It’s up there for the best time that I’ve seen in my career. I think there was probably that stretch in 2014, 1516 that not a lot of people knew that software was going to be a big thing. And so that was certainly a great time to be investing as well, particularly when you saw the multiple appreciation that occurred over the next whatever six years. But right now it is in that there’s been a recalibration of price from entrepreneurs, what they’re ultimately looking for from potential board members, investors on their cap table, that money isn’t just money, that there are some other things that come along with that.

I’ve never been more bullish about the different trends that are going on in the overall tech landscape right now, be that software, digital transformation or fintech or some of the stuff going on in health care. We’re even seeing some pop up of different consumer type companies, which it’s been a little while since we’ve seen companies like Be Real or whatnot. And so I’m really enthusiastic about the opportunity set and price is a little bit more rational than what it has been. I don’t know best ever, but it’s certainly a fantastic time to invest right now, particularly when compared to the last two or so years.

As a pre seed investor in Be Real, I now feel like Jason

Kallikanis with Uber in this moment.

I started hearing about it six months ago, and it’s one of those things. I’m mostly B2B software, but occasionally, you hear about something and you’re like, I really wish I wasn’t so focused on what I do because this sounds great, and it seems like they just executed absolutely phenomenally.

it’s a funnel. Right? It kind of goes to how public markets end up flowing through to private markets in general. Obviously, we’ve seen it in the public markets. In the private markets, late stage privates right now, we’re not seeing a ton of re pricing, but we are seeing when they’re making investments, it’s typically converts into the IPO at some discount or something like that. We’re seeing some like structured terms associated with it. Then there’s this big gap where there aren’t a ton of deals getting done right now.

That’s the Series C, Series D, maybe a little Series B. And so what you are seeing is there’s a dearth of opportunities that even exist right now because those companies have raised so much capital and have such blast money post around valuations that you’re not seeing them go out there and fundraise right now. Instead, they’re kind of waiting to grow through or wait for the market to normalize in some way. And so what does that mean? Well, you’re seeing a bunch of people say we would have invested $200,000,000 at a $2,000,000,000 valuation.

Now we’re going to invest $20,000,000 into 10 companies. And so take that same 20,000,000 and invest it across the board. So that’s squeezing the earlier stage groups more and more. And I assume, as you’re seeing, it’s pushing down into the seed pre seed part of the house because ultimately there are a finite number of these opportunities. I think at the earlier stages, people can really talk themselves into the difference of four post versus six posts versus 12 posts really isn’t going to matter. Just put this money to work.

And if it works, we’ll be able to put in far more capital later on. While it might be 100% difference in price between 4,000,008 million posts, you’re not seeing the level of financial rigor and analysis that you probably would at the later stage, which to your point probably leads to some inflation that’s actually occurring at the earlier stages.

Yeah. You know, right now is particularly weird, and I think it’s most weird for those series b folks where, to your point, see, series a, it’s mostly business as usual. Maybe it’s a little higher at the earlier stages. Maybe it’s a little lower at the series a stages. But in those two buckets, I think it’s game on and ultimately people are investing. Series B is kind of the weird one. Series C, maybe to a lesser extent, where there aren’t a ton of data points out there in the market for what these businesses are worth.

And so there aren’t a lot of comps. There aren’t a lot of people that are actively making the market for these potential investment opportunities. While I think that if you go out right now to raise or if went out two months ago to raise, you might ultimately get a far higher price than you would two months from now. Ultimately, the market was kind of reeling in such a way that there’s people that are doing a bunch of different things. Some people are saying they’re actively investing, but they’re not.

You know, they’re kind of wasting your time. Some people are actively investing, but they’re actively investing at 50% below what you think you’re worth. And then there are some people that are saying, hey, the market was this a month ago. In my mind, it’s still this today. And so I think what happened over the last couple months is you were just seeing while the market could have been higher from a price standpoint, you were seeing a lot of founders kind of get jerked around with regard to valuation, with regard to whether or not people were actually actively investing.

And so my only advice and potentially holding off, and I agree with you, if you don’t have the luxury to go raise, having capital is a prerequisite for success at all. And so I would go raise if you need it. If you’re afforded a little bit more of a time horizon to wait, I’ve encouraged most the founders that I work with maybe wait till after Labor Day, maybe wait to sometime a little bit later in the fall. I think we’re starting to get to back to the point that one’s willing to make investments.

Everyone is within some zone of what valuations are worth. And so I think that leads to just a much more efficient fundraising process and ability not to say, hey, this person’s at 500 post and this person’s at 200 post. How do we even make a decision? But instead, actually pick the partner that you want to work with. And usually these people are going be within some bound that hopefully you’re able to get everyone to kind of march in line and pick the person you think is actually gonna be most helpful to you as a founder.

I think it’s a function of stage. And so to some extent, if at the later stages, you have to be very beholden to what public markets ultimately are going to be willing to pay. And we saw a dislocation that existed at the later stage versus the public markets that occurred over the course of the last couple of years. And it certainly has existed in a meaningful way in the last six months where we’re still seeing businesses get done at 200 times, 300 times ARR when the public markets were saying, like, at best, you could trade at 20 times forward revenue or something.

At the later stages, you need to be careful there because ultimately, that’s where liquidity is going to come from. And some of these high flyers at the earlier stages, I think if you have businesses that are working and it’s a low enough absolute valuation and you need to think through what your blended cost is going to be and what your portfolio concentration makes sense. But I actually think it is a great time to be doubling down into the winners or just providing them more runway.

Because ultimately, if you get into a business at 50 post and you really think it’s going to be an important company, it’s going to be a great investment whether or not you put in more at 55 or 70 post as well. So I would be doing that with some pragmatism associated with fund construct and absolute valuation, blended cost, all that stuff.

I’ve seen some folks do it really well. I think Sequoia has always done a good job of this. I think Founders Fund has done a good job of this. The people that do it well don’t view the initial investment as a call option on later investment opportunities. They instead view it as, hey, we’ve made this investment and we’re going to treat it like it’s a full investment, like we’re on the board, whether or not we are. We’re going give it the full support of our partnership, all the portfolio services we may have, all of that stuff.

And then if the opportunity arises that it’s really working, then we’re gonna lean in and provide them more capital. The ones that don’t do it well are the ones that really view this as out of the money call options. And if the opportunity presents itself, we’re gonna try to get sharp elbowed and box out other groups. And I’ve yet to see that really work. It might work for one round, but then you really piss off the founder and the round construct and all that. And then they go out of their way to make it not work at later stages.

There are some groups that do this really well, and then I think there are a lot of groups that are a little sloppy with it.

Yeah. You have to hold a really high bar there. At the end of the day, our only constrained resource oftentimes is time. If you’re gonna be treating this small investment like it’s a big one, then you could be really upside down in terms of if that business doesn’t work, how much you invested just from a time cycle standpoint into that company.

The laziness occurred because venture has been a pretty cottage asset class for the last thirty years, and it’s been institutionalized more in the last five than it had in the previous twenty five. And so what you saw were a bunch of people that were SaaS investors, or maybe they were early to fintech, or maybe they got lucky with one consumer company that hit it big. And they confused the fooled by randomness of being at the right place in the right time with them actually being good investors.

And I think we saw a whole vintage of people that that sort of fit this bill. They came of age in 2005 through 2015 and founders came to them and founders pitched them in a meaningful way. And founders begged them for capital to support their business and their ideas. And there wasn’t this tension that existed between buying and selling that I think is healthy in the ecosystem in general, where entrepreneurs are looking for both capital, but then also looking to pick who they want to work with.

And investors are also looking for who they want to invest in, what ideas they believe in, but also earning the right to invest in those opportunities. And so there is this tension that I think is healthy in the ecosystem. For a very long time, it was 100% on the side of the investors where the power existed. The last two years, I think it moved all the way to the entrepreneurs. Now we’re back to a little bit of an equilibrium. But you’ve seen a lot of people retire in the last five years.

A lot of very famous investors retire. I don’t blame them at all because the game on the field has definitely changed and it’s far more competitive than it was in their day. And you’re chasing around people trying to earn the opportunity to invest. And when you came of age, when people showed up at your door and gave you a month to respond, I think it’s probably pretty jarring to be chasing around founders or sending DMs or begging for intros. And so I think there was a group that got very rich, very fat, and very happy and ultimately decided it made more sense to take a step back than to try to adjust to the game on the field.

Yeah. I mean, I think it’s all. I think the venture capital world that we live in today is more akin. We were in the generation of broadcast television, right, where there were only a handful of channels. The TV you were making was what was most broadly appealing to as many people as possible. And so you made Happy Days and I Love Lucy and all that stuff. Then we moved to the cable news era where there was some level of personalization. There might have been ESPN or Fox News or CNBC or MSNBC or MTV.

There was some level of personalization, but it wasn’t super personalized to each individual. And now in this era of streaming wars or TikTok or whatever you want to call it, everything’s hyper personalized to every individual entrepreneur. And so if you want an early stage fintech only fund to support you, QED is out there, Ribbet’s out there. If you want the preeminent brand that exists with the biggest access to capital and all of that, that firms out there. You want the firm that’s going to leave you alone and give you as much capital as they possibly can, that firms out there.

And so I think all of these different forces, like if you’re looking for any one thing out of a potential investor, there’s going to be a firm or a person that services that. What does that mean for us? Well, I think it means that each individual at Redpoint has to stand for something and be known in some way, shape or form for what it is that they do to help rise above the noise. And then I think we need the sum of the parts of Redpoint to be greater than any of the individual coming together so that the brand actually stands for something.

And when people think about it, Redpoint actually means something to them beyond any individual. The accumulation of the individuals, the accumulation of the brand, the accumulation of the companies we’ve been involved with actually stands for something because that’s the only way we can cut through the noise of all the specialization that exists out there. It’s not going to work every single time for every single entrepreneur. We don’t need any one individual thing to necessarily carry the day, but we do need the sum of our parts to be greater than who we’re competing with.

That’s where we really focus is to make sure we have a suite of services or a suite of personalities or a suite of domain expertise that makes us rise above the noise and makes us win that individual hand to hand fight. And we’re not always going to beat you or Lockheed or Buckley. We’re not always gonna beat Sequoia or Founders Fund or Andreessen, but we need to win our fair share of the great opportunities that exist out there. And so that’s what I wake up every day kinda thinking about.

I think it’s idealistic to try to do both at once. Inevitably, you’re going to be pulled in one direction or the other. And you can look at where people kind of pick one quick test of where people pick an orientation of individuals versus the firm is like, where do blogs reside? Right? Do blogs reside on someone’s own sub stack or someone’s own domain? Or do they reside on the firm’s website or the firm’s medium or the firm’s sub stack? And there’s definitely gray areas that exist between the two.

But ultimately, I think there are some firms that have done a really good job of elevating the brand of individuals along with the brand of the firm. I think Andreessen has done a great job of this. Now, Andreessen crypto, don’t think of as the same way of an Andreessen Enterprise. You don’t think Chris Dixon or Martin Casado or David George in the same way that you do Mark Andreesen or Ben Horowitz or Geoff Jordan. Maybe that’s an exception to them. The way I think about it is how much accumulating benefit exists between the before the at sign and the after the at sign on the email address.

And I just wanna make sure that both of them mean something and that both of them mean more every day than it did before. And so Logan@Redpoint.com, I wanna make sure that Logan means something more than it did the day before and that redpoint.com does as well. Where the pendulum exists on that spectrum, I think it’s gonna change for every individual, for every firm, and all of that. But I think we’re at least striving to have elements of both that are important for us. We mentioned,

I was having a conversation with an LP yesterday about this interestingly. It’s a function of stage initially. What is a Series A worth in today’s environment versus what it was six months ago or nine months ago? And you could argue based on performance, it should be written up potentially. Right? If the company’s 15 x in the last eighteen months, then you could say, hey, should we write this up altogether? At the later stages, I do think there’s a handful of these businesses that if you’re holding at the last round price, you’re probably being a little superficial in your analysis of like what that business would be worth today in the public markets.

It is an important part of the flywheel, though, of how you go about this and not just with discretion, broad based kind of writing everything down across the portfolio 15% or if you’re going to do that being very, very transparent and upfront with your limited partners about how you’re doing this. Now, some people are going to be very incentivized to say, Hey, can you please keep your marks where they are? A fund to fund, for example, because that helps us go raise our money, and we don’t really need you subjectively and artificially writing down your marks just based on your own analysis today.

We would prefer you not do that. Some other people might be overexposed to venture because these marks are at a high level right now and their public books come down and their private books still sitting high. And so they’re saying, hey, can you take this down or take a little bit of pressure out of this system because we still want to be re upping with managers and we can’t if our target was 12% venture and now we’re 18% venture or whatever it is. And so it is some level of delusion if you actually believe that all of these companies are worth what they were worth six months ago.

And you’re saying that with a straight face to your limited partners. And I think you’re losing trust, right? A 100%. I don’t think you can be a prudent manager and look every person in the eye and say, hey, this is worth exactly what we thought it was worth six months ago. That just doesn’t make sense to me. The construct by which you write down these investments or how to think about the holding value of these investments and how you go about communicating how you’re adjusting these things.

I think just doing broad based write downs of late stage companies, I think ultimately there’s probably some nuance in there. I will tell you in talking to this LP yesterday, they said they saw Q2 was the big reckoning for people taking it down. But even then, there were still a handful of people that didn’t. And so they’re expecting it to kind of flow through to the end of the year. But even still, I mean, is that actually an accurate reflection of what the market’s worth? It’s hard to say.

These are very illiquid private valuations. Until these things are in the public markets or until they trade hands, it’s really hard to put the price to any of this stuff. And so just having a disciplined structure of how you’re doing it, I think, is more important than taking down the marks themselves.

I being one of them. Did you?

No. I didn’t. I only no. I’m How did you do that, Harry? I’m sorry. You’re really showing your age here. No. Listen. Anyone that invested last year lost some level of price sensitivity. I for sure changed the underwriting framework by which we were evaluating companies, not in terms of what we thought they could be. Our simple underwriting framework for growth at Redpoint is three to five X with 10 X plus upside. And we really want to be investing in things that we think can be important, long standing public businesses.

By that definition, we kept the framework the exact same as we always had. Now, when you’re underwriting to a three to five x with 10 x plus upside and things are trading at thirty, forty, 50 times in the public markets, inevitably, there’s going to be some level of price sensitivity that adjusts right to the new state of the public markets in that regard, for sure. Like we didn’t have the same price sensitivity that we had had a year or two years before, mostly because the public markets had changed what things were worth.

I think the good news, or at least what allows me to sleep at night, is while I wish that I invested at today’s prices last year, there isn’t a single investment that I wish I had back. That keeps me optimistic that maybe the 10x plus upside case that we underwrote too, if things go right, maybe now that’s five x, six x, seven x on some of these investments. But they still have that outsized tail opportunity that they should be great, important companies for us if we picked correctly.

Inevitably, there’s going to be price pressure and returns are going to compress. But pretty proud of the portfolio composition that was built out last year for us even if some level of price sensitivity was lost.

Yeah. It can be dangerous. At the end of the day, there’s only a single outcome. Annie Duke’s in her book, Thinking and Bets calls it resulting when you end up looking back based on the result and having that inform the decision. In terms of the probability weighting, I think that there is no certainty by which I can make decisions. Don’t know for other people, but ultimately I sort of view that there’s a spectrum of potential outcomes that can exist in some world in the future. Ultimately, there is only going to be one of those outcomes that ends up being the actual one.

But at the end of the day, you have to take in all these disparate inputs and think through what the likely outcome can potentially be. And sometimes you’re wrong in it far out seeds the outcome that you actually thought was most likely. And so therefore, were you wrong in your probability weighting? Or was it a outsized outcome that actually ended up occurring that existed on the very far end of the distribution scale? I tend to think about just making the best risk adjusted return that you potentially can, sort of like playing blackjack and you can see the dealer’s hands on the other side.

And while you can split tens when the dealer’s showing a six potentially, and that could work out for you, or you could end up holding and staying where you are, and that could work out for you. Sometimes you make the right decision based on the information you have with the wrong outcomes. Sometimes you make the wrong decision and get the right outcome. One of the best investments in my career was an investment in a company called Braze, and they were called Appway at the time. I remember really haggling with them.

It was like eighteen months of haggling with them on and off over price about whether or not we would pay 90, 100, 110, 120. Today, it’s a $5,000,000,000 public company, right? Did any of those things matter? No, they didn’t. Like none of those things would have determined whether or not they were a good investment or not. At the time, was convinced that the most likely outcome was that it was going be a 300 or $400,000,000 acquisition by Salesforce or Adobe or someone like that. And so I felt like I had to be really disciplined on the entry price because it just seemed like such a long tail opportunity that I was going to be a public company.

Now clearly I was wrong there. How did that inform me going forward? Well, it’s definitely informed my if you wanna be in the company within the margin, just find a way to get into it and don’t get too hung up on the 10,000,000 here, 10,000,000 there. But I can’t say that that was the only outcome that I thought could occur, that it was inevitably destined to be a 4 or $5,000,000,000 company. I sort of think the world has enough randomness in it that I find comfort in trying to come up with the likelihood that something’s gonna happen even if it’s false precision.

Multiple on dollars. I mean, obviously, it’s easier to own ten, fifteen, 20% plus of a business and have those returns end up generating the three to five x with 10 x plus upside. But we’ve been fortunate enough to be involved in companies like Stripe and Twilio and Snowflake and a bunch of others that have been just really far hit home runs. And so when those ultimately happen, they can far exceed the ability of owning 12% of any individual company. So we really focus on outcomes more than the percentages at our stage.

I know our early stage team spends more time thinking about ownership.

I think at the growth stage, have at times gotten hung up around the individual machinations of the market at that moment in time, rather than looking far off in the future and just saying yes or no. Do we think this will happen? And yes or no, will this be the company to do it? While we were fortunate enough to be an investor in Snowflake at Redpoint, I remember back at Battery looking at the opportunity and just thinking the customer calls at the time were kind of raw about the business and how well the cloud was actually working.

Amazon and Redshift seemed like such a formidable competitor. Who ever wanted to compete with Amazon on their home turf, which was AWS and what we thought was Redshift and EC2 at the time? Like, why would you make that investment? That seems like something that you’re jumping into shark filled waters. What I learned from that is, one, if you look far enough in the future, do you think something is inevitably going to happen? And in this case, the cost of compute and the need for performance was just so apparent that Redshift wasn’t going to be able to meet that need that there was going to be someone else that ended up coming in and doing it.

If we had looked at the founding team and the infrastructure they built, I think we would have looked past the individual customer feedback, a data point here, a data point there that said, hey, this is still not quite ready for prime time and instead focused further downfield and said, we think in the long term, this is all going to work out and made the decision to invest. And so that’s informed a handful of investments for me.

If something just feels like an inevitability and you might be a little early on the tech or on the market, we’re talking months or maybe years, not decades, then it’s worth just getting on board if you think the company is going to be the one to execute on it. That’s really informed a handful of investments I’ve made. If you feel like it’s inevitable, get on board because the details can be figured out along the ride.

Yes. It’s typically been some window of opportunity was missed to execute on the business that I felt like the company could have been. I guess it’s one specific instance where this occurred. It felt like it could have been a really, really, really big opportunity, but because of some execution decisions along the way, it didn’t ultimately prove out.

I have yet to have that specific conversation with a founder. In the case that I’m thinking about, there was a board member who ended up leading the charge on that conversation. Ultimately, I think the opportunity passed by anyway, so it was kind of neither here nor there. In this specific situation, inevitably, if I’m afforded the luxury of doing this for a long time, I’m sure that’s a conversation I’m going to have to have. And that’s kind of where it comes down to trust and building relationships with the founders that you work with.

I found that people that at least I like working with are very pragmatic and understanding of themselves that if I’m seeing it, there’s probably a path to them also seeing it as well. I never want to be the one that’s in there replacing the CEO if they also don’t agree that there might be an opportunity for a better person to step in. I just don’t view that as something that’s a core part of the job. I think founders are sort of the lifeblood of what we get to do.

Replacing founders, I just don’t view as an ethical thing that I want to be a part of. But if there are ways of soft diplomacy of convincing founders that maybe that’s the right path through enough data points and conversation. So that’s the tact I hope I’ll be able to take.

Yeah. My role as a board member necessarily to hire and fire the CEO exclusively. I think that that’s certainly an element and can be a part of the job. But if ever you’re going to the votes that are, hey, do you have the power to get something done with regard to removing the CEO? Something else is broken down along the way in the journey and the relationship you built with the founder and the rest of the board. Brad has done this a lot longer than I have.

I’m sure he’s been in a lot more of these situations in which this has been totally necessary on behalf of either existing investors. I view my role as earning the right to be a trusted confidant to the CEO and the executive team. I very much view all those words as important, earning the right to be a confidant. If part of that ultimately involves helping the individual to see that there might be a better path for the business going forward, for their employees, investors, with someone else at the helm, then I hope to be able to use that soft diplomacy to get it done.

I’m sure there’ll be a date in which I will need to use my board power to vote against a CEO. I’m thankful that it hasn’t happened yet, and I certainly don’t hope to find myself in that situation anytime soon.

fun I have regularly on a board right now is with Crossbeam, mostly because I just really like the people around the table. Bob Moore, the CEO, is fantastic. Matt Turk is a very good friend. Andy McLaughlin from uncork led the seed. And then we have a fun group from Andreessen Horowitz as well involved. So I think as a group, we just have a lot of fun together. The best single board member I’ve worked with, Neeraj Agrawal was my mentor at Battery. He was fantastic. Two that I’ve really appreciated getting to know are Rob Ward from Meritech, just is very similar to Neeraj in style.

He has a ton of gravitas, is able to handle the soft diplomacy with CEOs in a very tactful and smart way. The one that I’ve internalized the most from and that I just have infinite amounts of respect for is Eric Visria from Benchmark. Eric and I worked together on the Amplitude board, and now we have a new company, AcuityMD together. Eric is just A plus plus as a board member.

I think he has the right level of empathy and passion, and he knows the inside out details of the companies he works with. He knows the right altitude to talk to the different entrepreneurs. And you just know he genuinely cares. So he’s willing to spend as much time as you want as an entrepreneur with you on all the problems that you have. He’s willing to roll up his sleeves and be helpful. But he’s also not only going to be a pushover and not only going to be your friend, he’s going to push back when he thinks you’re wrong.

And he’s going to help you learn from all the things that he’s seen in his career as an operator or his career as an investor. I think just his ability to synthesize all that stuff down and speak to people at the right level with the right tone is just unlike anything I’ve really seen before. I’ve learned a ton from him and wish I could spend as much time as possible kind of learning from the style that he takes to operating with these companies.

I absolutely love Team of Rivals about Abraham Lincoln and how he assembled his cabinet. I think there’s a lot of applicability to really successful CEOs I’ve worked with and their ability to have a bunch of different conflicting personalities, styles, opinions, and ultimately synthesize down what is the most insightful decision for, in Lincoln’s case, the presidency and the CEOs I’ve worked with the business. And so I I learned a lot from that book.

I think there’s some value to be had in the crypto ecosystem. I don’t think it’s to the tune of $25,000,000,000 or whatever was put out last year from the venture ecosystem. I think there’s a handful of use cases. I don’t know what number that exactly adds up to speculation and gambling seems to be a decent enough use case. Throw in NFTs, and I think there’s some value there. And then some of this cross currency border exchange related stuff, I think there’s some utility there. I don’t think that’s nearly commiserate with the amount of money that’s gone into the ecosystem.

And so I think we’re gonna see a lot of zeros pop out of the vintages of these crypto funds that we’ve seen recently. Why do B2B marketers suck? Because if you cared about marketing and you were really good, you would go into consumer because the budgets are much bigger and you get an opportunity to be much more creative and come up with things like Super Bowl advertising and all that. So if you were really good about marketing in general, you would pick consumer. If you really care about B2B, you’d probably go into sales or product because oftentimes that has much more budget or influence within these organizations.

And so what you’re left with with B2B marketing is typically people that fell into it from some way, shape or form. And then there’s three different buckets, typically a B2B marketers. There’s sometimes brand marketing or PR. There’s product marketing, and then there’s demand gen. And ultimately, not all of those things are going to be exactly what you need as a company. And so not only are you getting picked over for all the quality people, but then it’s also often down selected to specific skill sets that aren’t totally transferable.

And so you end up just having to pick one of three, but you can’t get all three. And so it just ends up being a very limited pool of people that go into it that are talented.

I think it’s one of those things that you just need to in house. Ultimately, every industry is gonna be bespoke in terms of your ability to get out there, get reach, get message and paying a PR firm to go about doing it. One, they’re going to have a whole bunch of clients that they’re horse trading on who goes where. And two, over time, it’s going to benefit you much more to build these long standing relationships with the reporters that are on your beat and give you an opportunity to tell your story yourself early on.

And you know what? It probably is going to mean that people don’t really care initially when you’re telling your story, but at least you’re going about figuring out one who the people are that care about your industry to what message even kind of resonates. And it gives you a much quicker, iterative feedback loop where I see oftentimes early stage founders think about the PR side of things and they just dump it over the line and give it to the PR agency. The PR agency goes out, runs around, does a bunch of stuff they don’t really have visibility into.

Then they come back and say, Oh, sorry, it didn’t really work out. And there’s no iterative cycle or relationship development that’s been built at all in that funnel. Even if it doesn’t work, you’re much better in housing it than throwing it over to someone else and having them give probably not their best performance

It needs to be a core competency of what you’re gonna do. And ultimately, it’s kinda taking a shortcut because you don’t think it matters. But if you’re gonna build an important company, it is gonna matter. And so you should only really do stuff that you think are going to be needle movers for you. And I just think PR can be one of them. Tell me, what’s the hardest element of your role with Redpoint? It’s just managing the market that we’re in today and trying to figure out where the best investment opportunities exist and what valuations ultimately are going to be worth in the end state and making sure we’re picking correct between the difference between the A businesses and the A plus companies.

That requires a level of discipline. It requires a level of ability to win. Requires a level of patience in making sure that we’re holding the bar really high and willing to say no to stuff. And so that in this market right now where things have have ground fairly to a halt at at least the stages we play in in Series B and C, it just requires a lot of patience and a lot of willingness to not have FOMO, not feel like we’re missing out on opportunities.

And instead, we’re gonna wait for the great ones to come across our desk.

If I were to say pure crossover fund, I’ve really admired what the folks at Cotu have done in terms of building their brand and awareness at the late stage growth market. I think that they’ve done a lot of amazing stuff. I think in pure growth, I just have infinite amounts of respect for Sequoia’s growth fund, the folks over at Meritec, and the guys over at Iconic. All those groups do a really good job picking, and I wanna beat all of them every single day, and I wish them very poorly.

But I have a lot of respect for what they’re doing and a lot of friends at those places. I know when we’re going head to head in an opportunity, you can’t go wrong if a founder picks to work with them, and they all do a very good job of picking to be in great companies. And so respect for the game on the field we play against all those firms.

I think the crossover firms that are most in trouble are the ones that got into the market hot and heavy over the last two years and didn’t necessarily have the history of delivering out sized returns over a long period of time at their existing shop. And so I think that there’s a few that you can think of that people spun out and maybe started new funds or went really, really big over the course of the last two years and brought in a whole bunch of new LPs.

And I think anyone that either doesn’t have their existing track record of the last whatever ten years attached to the name of their existing firm or anyone that scaled well beyond what they had in the prior five years in the last two years. I think anyone that fits that bill is probably going to have a little bit of a reckoning here right now. I’m surprised, honestly, we haven’t seen more firms move to the family office model.

I think it’s kind of a function of how much money exists in the ecosystem right now from all the different pension plans, but all the different foreign sovereign wealth entities out there that you haven’t seen some of these people have to close-up shop and say, hey, we’re just gonna manage our own money going forward. But I keep waiting for that to happen. I think it’s bound to happen at some point here. Who’s the most underrated angel you think? The one that I just have infinite amounts of respect for is Zach Weinberg and Nat Turner and what they do over at Operators.

It’s their own money. They’re very long oriented, and they have such a pragmatism by which they approach investing and the types of people that they want to work with. Whenever I talk to them about a potential opportunity, it’s not just a something about a big market size or something about someone else investing. It’s usually something very specific about the individual entrepreneur and something very specific about their insight. Zach had a great insight that I’ve kind of internalized is that the best founders can tell a very high level story about their business, but also can drill down very deep into all the nitty gritty specifics about their opportunity, about their company, all of that.

And I think that type of insight, I just get out of him all the time. And it really amazes me that he’s able to take some very specific insights and bring them to a part of the market that I just view as such a black box and such an art. And to know that there are people like that, like him out there that really have these set of core principles that they operate with that lead to the investments, I just think is really impressive for me to see.

I haven’t yet. Now we’ve been in a eight year bull run since I’ve been investing. I was on a board of a company that had to do a full recap. I thought about this. I give the founder a lot of credit because actually after the recap, he was able to turn it into a really successful outcome for all the people that participated in the recap. The thesis that was wrong at the point of the original investment was ultimately it was a little too beholden to trends associated with Google, Facebook, Amazon, some of these big players.

And you dance with elephants and there’s a real risk that you get stepped on. I wonder at the point of investment if that was actually one of the real internalized probabilities that could happen or if that was something that snuck up on the investment team over time. What I’ll always tell our team internally is I really don’t care if something goes wrong in an individual investment, but it can’t be something that we didn’t have written out in the investment memo before.

We have to know the entirety of the potential risks to the extent we can on the way in and do all the work so that we understand that so that we’re at least not surprised by things when they ultimately do hit bumps along the way. Logan, hit me. Final

AcuityMD was the most recent investment that I said yes to. The seed series A was done by Eric Vishria from Benchmark. I did what was called the Series A was more like a Series B. What got me most excited about it was it was in this underserved market that had an opportunity that the founders recognized to bring tech and specifically CRM and targeting. So they operate within the medical device space. And so what they’re building is something akin to ZoomInfo plus Salesforce for med devices. And these founders had that unique insight that this actually maybe wasn’t a big enough market as a standalone of any one of those two.

But combined together, if you could bring these two things to market, then it actually could be a really big, interesting opportunity. So they had that insight. And then the founders are just so tireless and thoughtful in their approach of building product and recruiting and building this company. The CEO, Mike, was a swimmer. And you can just kind of tell, I think swimmers in general are kind of crazy to begin with that they put their head down for hours a day and don’t talk to anyone and just put one arm in front of the other while you kick.

There’s a level of discipline that that requires. And I use that as an example of just how disciplined and thoughtful he is in the tireless nature by which he works. And so it was a big market, a great founding team. And honestly, I think that there’s not going to be a ton of venture backed competition going into this space. And so I think they have the right to win and the right to earn a lot of these customers trust and ultimately turn this into a really big vertical market, a la Viva, a la Service Titan, a la Procore and a bunch of those other successful ones that we’ve seen in the public markets.

So a really exciting opportunity that, yeah, we’re really fortunate to work with.

Awesome. Thank you for having me. We’ll do it again in another six years or so.