# Mark Suster on The Biggest Fundraising Lessons for VCs

Why the Correction in Venture is Still to Come, Why Private Equity Will Replace IPOs and M&A as the Exit Path & The Woke Left and a Trump Administration; What Happens?

20VC · May 1, 2024 · 59 min · 11,725 words
Speakers: Mark Suster, Harry Stebbings
Source: https://www.996.fm/episodes/20vc--ep-b142c871/

## Cold open

**Mark Suster** [0:00]:

1998, '99, 2000 are nothing compared to the overvaluations of 2021. So we're two years into a correction. I think it's gonna take another five. Of the 1,200, 60% were marked by four firms, SoftBank, Tiger, Coachu, and Insight. People invest the most amount of money when the market is just about to hit the peak. When markets fall, that's when everyone sells. And they sell because you start looking and I'm taking losses. I can't absorb these losses.

**Harry Stebbings** [0:30]:

Welcome back. This is 20 with

## Intro

**Harry Stebbings** [0:32]:

me, Harry Stebbings, and I'm so excited for the show's stay. So I first met this guest seven years ago when we did our first show. It was such a special one to do then, and so this was even more cool to do in person in the studio in London last week. So joining me in the hot seat is Mark Suster, General Partner at Upfront Ventures, one of LA's leading early stage venture firms. And before leading Upfront, Mark was a serial entrepreneur, having founded two software companies, selling both with the last selling to salesforce.com. And fun fact, I really learned a lot of what I know in venture through Mark's blog. It's really one of the best, both sides of the table, so do check that out. But before we dive in, let's face it.

## Sponsor read

**Harry Stebbings** [1:08]:

Your employees probably hate your procurement process. It's hard to follow. It's cobbled together across systems, and it's a waste of valuable time and resources. And as a result, you probably are facing difficulties getting full visibility, managing compliance, and controlling spend. It's time for a better way. Meet Zip, the first modern intake to pay solution that can handle procurement and all of its complexities from intake and sourcing to contracting purchase orders and payments. By providing a single front door for employee purchases, Zip seamlessly orchestrates the procurement process across systems and teams, meaning you can procure faster with the least amount of risk and get the best spend ROI for your business. With over 4,400,000,000 in savings for our customers, Zip is the go to solution procurement for enterprise and industry disruptors like Snowflake, Discover, Lyft, and Reddit. Finally, a solution employees love to use where buying things for work just works. Get started today at zip h q dot com slash twenty v c. And speaking of game changer with Zip, we have to talk about Cooley, the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world with sixty plus years working with VCs. They help VCs form and manage funds, make investments, and handle the myriad issues that arise through a fund's lifetime. We use them at twenty VC and have loved working with their teams in The US, London, and Asia over the last few years. So to learn more about the number one most active law firm representing VC backed companies going public, head over to cooley.com and also cooleygo.com, Cooley's award winning free legal resource for entrepreneurs. And finally, travel and expense are never associated with cost savings, but now you can reduce costs up to 30% and actually reward your employees. How? Well, the van rewards your employees with personal travel credit every time they save their company money when booking business travel under company policy. Does that sound too good to be true? Well, the van is so confident you'll move to their game changing all in one travel corporate card an expense super app, that they'll give you $250 in personal travel credit just for taking a quick demo. Check them out now at navan.com/20vc. You have now arrived at your destination.

## Conversation

**Harry Stebbings** [3:29]:

Mark, this is so you know, I first interviewed, like, seven or eight years ago. Think it was on, like, a Skype call. I was probably about, know, 21 or whatever it was. But thank you so much for joining me in person today. I'm thrilled to do it. Thank you for offering. I did I have gray hair back then? No. You looked actually about twenty years younger. Adventure's really taken it out of you, dude. Yes. It's a grueling industry. But it's so lovely to do this in person. Before we dive in, is there anything that you wanna start with?

**Mark Suster** [3:54]:

Yeah. I would, if it's okay with you. Today is actually Passover, and Passover is a holy day for Jewish people, so you might ask why I'm here. This is maybe the first year I haven't been home with my family having a seder. I actually came to London to pick up my son who did a study abroad. But for any non Jewish listener, I just want to acknowledge what Passover is. It was the struggle of the Jews to flee from slavery from the Egyptian people, and it's a story from the Bible about the goal of the Jews to return to their homeland. And the homeland of the Jewish people, many people don't know, was actually Israel. And so we originated from Judea and Samaria, which is modern day Israel. And we, over time, were enslaved and oppressed throughout thousands of years. We were founded about four thousand years ago. And the idea of Passover is that eventually you will return to your ancestral land. So we say every pass over next year in Jerusalem, and we've been saying this for thousands of years. And so I just want to acknowledge that there's still a 130 people being held hostage in Gaza. The 130 people for a lot of people who want peace, but the starting point is to acknowledge that there's a 130 people taken hostage held by terrorists, of which it's estimated 20 to 40 of them are already dead and not released. So at least on this Passover, I wanna acknowledge the people who don't have the freedom that I have today.

**Harry Stebbings** [5:22]:

I mean, first, thank you so much for doing it today. And I didn't actually know that in terms of the historical context of Passover, so I really appreciate you sharing that. It's a tough one to also pivot from to venture, I have to admit. But you know what? I've done so many of these shows. I can just do it seamlessly anyway. For those that don't know, Marc, how did you make your way into venture just first setting the scene?

**Mark Suster** [5:42]:

Yeah. So I first got into venture in 2007. And in 2007, I had started two software companies. My second company, sold to salesforce.com. Actually, love Salesforce. It's a great company. But after you've been an entrepreneur for ten years, at least for me, the idea of working at a larger company and not running the company was not something I wanted to do. I contacted my VC firm and I said, I think I might start a third company. And they said, have you ever thought about being a GP? Have you ever thought about being an investor? And, of course, I had thought about it. I think a lot of people kind of think about would I make a good investor. The problem is in 2007, people didn't really want operators. A lot of VCs were not operators. And so I said to my then mentor, my still mentor, Yves Sisteron, who's the founder of Upfront, I said, I'll do it as long as I'm a GP, as long as I'm actually writing checks and being an investor. So in 2007, I started.

**Harry Stebbings** [6:39]:

If we just start on that, I actually sat down with one of the leading founders of one of the best firms the other day, he said, we get operator investors wrong. Founders who turn investors are brilliant. Yeah. Operators are generally not. Okay. They've run divisions at large companies. It does not mean you understand the zero to one, the granular, and it's such a different element between founder turned investor and operator turned investor, and we should delineate between the two. Have you found that as a difference, and how do you think about that?

**Mark Suster** [7:07]:

I do think one thing that was unique about being a founder two times is I think I uniquely understood the journey, just how hard it is. You know, we were talking just before we started about the kicks and the shins that you really take as a founder, even of a venture fund. I remember raising capital, my mom assuming I was gonna IPO sometime soon. I'm thinking I have six months cash left in the bank. My employee is coming to me and asking if they should take out a loan to buy a house, and I'm thinking, god, no. Like, why would you do that? I have no idea if we're gonna be in business in seven months. And you've gotta suppress all of that. You gotta turn up at the office every day with enthusiasm enthusiasm and and and telling people all the positive things that are gonna happen. You sort of learn what that psychological thing is for founders, so that's something I try to bring to the table. How do you do that today,

**Harry Stebbings** [7:56]:

Marc? Like, there's always hard times, and you will continuously get punched in the face. Yeah. How do you continuously show up to the team and be like, no. No. It's great. It's all good, and go home to your your family and say, no. No. It's good. It's sometimes not good.

**Mark Suster** [8:08]:

It is true. It's sometimes not good. I think in order to be an effective entrepreneur and in order to be an effective venture investor, you have to be able to compartmentalize. You've gotta be able to put problems into a box and say, I know I'm gonna have to deal with that problem. I'm gonna deal with it at some point in time. But if that encompasses everything I do, then nobody else can operate. What I learned was that there's a lot of people who can't deal with that. They can't I I'd say the majority of people can't deal with the stresses. So, like, in our worst days at my first startup company, which was based in London, a lot of the people who came from bigger companies quit because they wanted to go back to bigger companies. It proved too stressful. Can

**Harry Stebbings** [8:47]:

I ask you? Yeah. What was your worst days?

**Mark Suster** [8:50]:

Look. The things that people don't tell you about venture, losing money is hard for anybody, and nobody wants to lose money, and taking write offs is really painful. But there's worse than that. There's worse than that because we sort of, as an industry, we lionize founders and we say they're amazing and VCs are, of course, terrible and evil. But there's the same proportion of good and bad people who are entrepreneurs, who are investors, who are big company people, operators, whatever. Like, the human population is a human population. So if you're gonna fund a 120 or a 150 people, you're gonna find some entrepreneurs that are not good. You know, I found myself in a situation of people that I had backed for years that suddenly turned bad. They threaten you. They threaten lawsuits. You've gotta deal with the legal side of it. I know many GPs dealing with this now, and they call me, and they can't talk about publicly.

**Harry Stebbings** [9:43]:

Do you think we will see many more frauds come out from the last

**Mark Suster** [9:46]:

You're already seeing it. You know? We're reading about it, like, almost monthly in the press. Yes. You're gonna see a lot more of it.

**Harry Stebbings** [9:52]:

Do you think they will be exposed, Seed?

**Mark Suster** [9:53]:

It's one step worse than that, which is I know of a company in which the founder embezzled money, literally stole millions of dollars. In order to not end up in a big legal battle, their VCs ended up settling. They got all the stock back, but none of the money back. What he did was illegal. It's the same as going down to a a bank and stealing millions of dollars. Like, if you could imagine someone like that not being prosecuted. So they got back all the stock. He got to keep the cash, and they signed legal agreements that they're never able to talk about it. And that stuff happens. He will go on to raise money from other people.

**Harry Stebbings** [10:31]:

So when these hard moments happen, what do you do today? With all the years of experience that you have, how do you manage that conflict in your own mind today?

**Mark Suster** [10:40]:

Well, I view the job of a CEO and the job of a managing partner at a venture fund, so I run our venture fund, is really to shield people from that. That's literally part of your job as a leader is to shield other people from the stresses and pressures that you face. Talk about, you know, fundraising. Like, fundraising is not easy for VCs. Like, maybe it's easy if you're Sequoia or Andreessen Horowitz, but for all the rest of us, fundraising's hard. I know through thirty years of doing startups and venture that persistence pays off, and your ability to work through problems pays off. So if I look at venture capital going and raising money, I used to tell people about fundraising, which is lemons ripen early. And what do I mean by that? So if you go ask 30 people for money, five or 10 of them are gonna tell you no quickly because nos come quickly, and the yeses take months. So the problem is psychologically, you get in your head, oh my god, everybody's telling me no, and you could easily give up, and people do give up. And my mindset is, I know our returns are good. I know our team's good. I know the opportunity in the market's good. I'm just gonna keep moving ahead, and I know we'll get to the finish line. But it's my job to not let everyone on my team feel that way, so I have to suppress it.

**Harry Stebbings** [11:55]:

Okay. So I love so much of your writing, by way. We haven't talked about this. Mean, one of my favorites is Lines Not Dots, but I do just wanna finish touch on the lemons ripen early. I find a lot wanna keep optionality. Well, let Marc, really interesting. Let's let's stay in touch over the next few months. And then when you come back and say Yale and you name your great institution, they go, oh, we'd love to be in. Yeah. And so actually, do lemons really ripen early with LPs actually being scared to get off the fence?

**Mark Suster** [12:20]:

Yeah. I think they do. There's no doubt about it that and we know that entrepreneurs get this behavior too from VCs where they say, you know, we really like you. We just wanna see a little bit more traction. And I tell all founders that we wanna see a little more traction is the same thing as saying no.

**Harry Stebbings** [12:37]:

Wait. I think it's saying, actually, we don't believe in you enough right now. Because if we did, you'd just get over the data stuff. We've all done preci. We've all done low data testing.

**Mark Suster** [12:43]:

So it just means no. If they actually tell you no, they're worried you're not gonna come back to them, so they don't actually tell you no. They grin fuck you. They smile at you, and they say, as soon as you have more traction, please come back and see me. Of course, LPs do that too. Right? It's human behavior. But I would say two things. One is some actually do tell you no, and they tell you no in the nicest way. They'll say I'll give you an example. The equivalent of we need more traction is, hey. We have a full stable of managers right now. We're gonna do mostly re ups. It's one in and one out. So in order to take you, I would have to drop somebody else. That just means no. Right? Like, you have to learn the signs that mean no. Or they tell you we're, you know, looking to be 17% in venture, and right now, we're 21 in venture, so we have to scale back. That just means no.

**Harry Stebbings** [13:34]:

I find that more agreeable, though. I'm like, I get that. That sense. The ones where I get very angry as a GP is when they do 60 references, 10 meetings with you and your team, and then come back and say, actually, we're still developing our emerging manager program, and we don't feel ready for it. Yeah. And you should have known that before you did work. That's appalling. In terms of the lines, not dots, do you still agree with that? Like, you fundraise can yeah. Like, we all do kinda continuously. I'm shocked by how few LPs do invest without existing relationships. How do you think about that lines, not dots, and whether it really holds true

**Mark Suster** [14:07]:

So the analogy just for anyone who hasn't seen it is on an x axis is time, and then a y axis is performance. And I always said to entrepreneurs, when I meet you, you're a dot. You might be high on the y axis, you might be low on the y axis, but however you performed, you performed and I formed an opinion of you. If I meet you a second time, a third time, a fourth time, it starts to form a pattern and that's the line. And sometimes a pattern is up into the right. I can't believe you launched your product, You hired great people. Your revenue is going great. And then your cofounder quits or sues you or you got bad press or Google announces they're gonna crush you and then it's down. But over time, you start to see a trend of who you're dealing with and the resilience they have. I think the same is true for LPs making commitments to VCs. Like, you have colleagues that left or you took a write off, and what did you make of that? What did you learn of that? How did you respond? How resilient are you? What did you do when everyone was writing huge checks at enormous prices in 2021? Were you doing the same thing, or were you selling? Were you taking money off the table? So they get to see a pattern over time. Some of my best LP relationships said no to two funds before they finally came in. I just viewed it the same way. I'm like, you just haven't yet seen enough of me to make a decision, but because I'm persistent, I keep going back. I always tell this story about Morgan Stanley. So Morgan Stanley, I had gone to see Jamie Sparron six times, and six times he politely said not yet. And this is a true story as I was camping with my family in Los Angeles in tents. And in case you don't know, I mean, another thing about Jews is Jews don't camp. Like, we don't do DIY and we don't camp. So this was, like, a big deal for me, and I'm in the middle of a tent with my family. And I get a message from Jamie who says, can you be in West Concha, yeah, West Conshohocken on Monday? I left my family in a tent. I got in my car. I raced to the airport, and I caught a red eye to Philadelphia to go see him. And it was the seventh visit. I had no idea if I was gonna get him, but I already told you I'm persistent. We were raising a $195,000,000 fund, and I was stuck at a 110, and I hadn't got a breakthrough. And the reason we were stuck is I had just become managing partner, and people said, your first fund is managing partner. I don't know how that's gonna go. So I showed up for this seventh meeting, and two weeks later, he called, and he said, And I couldn't believe it. He said, you didn't even ask me the most important question. And I said, what is the most important question? He said, how much? And I said, I'll take anything. $22,500,000. From that $22,500,000 commit, the whole fund came together, and all the people who knew Jamie were willing to commit. And then my next fund, that took me thirteen months to raise. Okay? 2,011, 2,012. My next fund took five months to raise because all the people who passed on that fund came into the next fund. That 2,012 fund for us, I think, is gonna be a a phenomenal success. It should return north of five x capital, cash on cash. I'm just thrilled that Morgan Stanley is getting paid back.

**Harry Stebbings** [17:10]:

If we think about lessons from the fundraisings, how do you advise founders on when to do a first close? I get so many founders that say, like, 30%, 60%. How do you advise them and lessons them?

**Mark Suster** [17:19]:

So I have unconventional views on most things. They always I mean, the industry people you meet will tell you you wanna be one and done because it's a sign of strength, right, to show that you could close all your money at once. I always tell people raise the minimum amount you can to get closed. So let's say you're raising a $100,000,000. K? If you can close on '20, if someone's willing to write that check and close on '20, close. And then you need to create a narrative on why you closed on '20. The nice thing about closing on 20 let's say you're on fund two. If for whatever reason the rest of the money doesn't come, you're still in business. And all you need to do is get through the next two to three years when you're raising your next fund. Now you've got three more years experience. When you have the 20, you'll start deploying checks. Now you have three, four, five deals for future people to evaluate. Usually, in a fund, you have up to one year to raise the additional amount of money. So I always say to people, no matter what, just be in business. So my current fundraising, and I can't really talk about fundraising, but let's imagine I was fundraising. You go out to raise $300,000,000, let's say. If you can get 200 in the bag and just put it away and be done even though you're not writing check, why wouldn't you? But you've gotta explain to people why are you committing before other people because no one wants to commit first. People always wanna be the last check-in.

**Harry Stebbings** [18:34]:

What's a good narrative for closing on, say, 20 of a 100? Because that's not even a minimum viable fund size.

**Mark Suster** [18:39]:

I think it is. You can do a $20,000,000 fund. Sure.

**Harry Stebbings** [18:42]:

But if you were raising a 100 and, say, doing a we lead

**Mark Suster** [18:45]:

series

**Harry Stebbings** [18:45]:

The

**Mark Suster** [18:45]:

problem with closing only 20 out of a 100 is it looks failure. So the first advice I give to people is put the smallest number on the front of your pitch deck that you're possibly raising. So if you want a 100, you're raising 50 to 60 and then end up oversubscribed. If you close 20 of 50, that's still failure, but that's not as bad as 20 on a 100. And you just gotta have a positive errors. When you close to 20, you say to people, I think we will get to 50. I think we will get to 60. And you have to believe that. Right?

**Harry Stebbings** [19:13]:

Sure.

**Mark Suster** [19:14]:

But but you might not get there. If they really negotiate hard, give them something. Like, I don't know. Can you give them a little extra economic incentive for being the first 20 to commit?

**Harry Stebbings** [19:25]:

Would you do that?

**Mark Suster** [19:26]:

I haven't done it. Yeah. But would I do it? Of course, I would. If I had to, sure. So what would that be? That would be extra carry? That would be Maybe you get a discount on your fees. Maybe you have a slight discount on carry. Maybe there's some other incentive you can give to someone to committing the first 20,000,000.

**Harry Stebbings** [19:42]:

We know funder funds. I'm not singling them out, but they are the ones who normally have a problem with this. Mark, you said 50. Doing a 100 is a different fund size. There's a challenge where if you say too small of number, and then it turns out being double, you've got a problem. How do you think about that, and is that not really the case?

**Mark Suster** [19:57]:

Would my strategy fundamentally change if I had a $50,000,000 fund or a $100,000,000 fund? Of course, it wouldn't. What it means is I probably will instead of having 25 investments, I'll probably have 35, 36 investments. Instead of writing $1,200,000 checks, I might write $1,500,000 checks. Instead of investing over a two year horizon or a two and a half year horizon, maybe I'll invest over a three and a half year horizon. But it's not the same as going from 50 to 500. 50 to 500 fundamentally changes your strategy. 50 to a 100, you're still playing in the same ballpark.

**Harry Stebbings** [20:31]:

Should you go after the institutions or the big names first, or should you go after your friends and your family, get the local corralled around you? Which one's the better one?

**Mark Suster** [20:41]:

First of all, money's money. You could have Harvard, Yale, Princeton, Stanford, but their money doesn't come with anything additional. Right? So money's money. Then the hard job is yours. Like, you have to deploy it. You have to get founders to wanna work with you, and then you have to make returns. Right? So it helps a little bit to have the brand than to raise other LP money, but money is money. Do I think people should go for institutional money? Yes. Why? Institutional money is way more likely to be in fund two and fund three and fund four, whereas friends and family money is not as likely to repeat. Just like with CEOs who I might say, look, if you can't raise institutional money, raise friends and family money, it's the backup, probably not your leading plan. Same is true for funds. Like, the funds, if you can raise from institutional investors, you should. And the thing is there are institutional investors that wanna write $3,000,000 checks. So if you're raising a $50,000,000 fund, like, that's a good size for them.

**Harry Stebbings** [21:40]:

Are LP sheep around brand names? Do you notice that big brand names, your Harvard's, your MIT's as well, do convert people who could be on the sidelines?

**Mark Suster** [21:48]:

All investors are sheep. End of story. Like, I don't wanna pick on LPs. Like, LPs are no different than VCs. They're no different than retail investors. I took my first investment course in 1997, and one of the things I learned from my professor at University of Chicago is that people invest the most amount of money when the market is just about to hit the peak. Why? Because if you've been seeing three solid years of every time you write a check next quarter and the quarter after and the quarter after it's worth more, then at some point, the whole market comes in and wants to write checks, so you sell. And, of course, psychologically, that's the opposite of what you should be doing. Like, when markets see a run up, you should be selling. When markets are falling, you should be buying. Now I'll give you a real world example. Two thousand and eight, fourth quarter of two thousand and eight, I had sold my company. I had a bit of cash. I said to my wife, I think the stock market's a little bit beat up post Lehman Brothers. I'm gonna put money into the market. And I said to her, please don't log in to Charles Schwab. Because by definition, the checks that I write are gonna be worth less two weeks later, two weeks later, two weeks later. It's really hard to do. And so I put a little bit of money and I dollar averaged down between about November 2008 till about March 2009. And for anyone who doesn't know, March of o nine was like the nadir of the global financial crisis. I'm logging on every day saying, what have I done? Psychologically, it was really stressful And

**Harry Stebbings** [23:12]:

you keep doing it if you're dollar averaging down.

**Mark Suster** [23:14]:

And that's what I did. And I kept writing checks, and I kept taking losses. And I said to her, fundamentally, I believe in these companies. I bet she got goosebumps. But listen. I'll tell you the names. I bought Verizon. I bought Altria. I bought DuPont. So I bought some safe names. I bought Microsoft. I bought Google. I bought Amazon. I bought Morgan Stanley. I bought Goldman Sachs. Like, I bought Citigroup. And then all of a sudden, people are saying Citigroup's gonna go bankrupt. I'm like, what have I done? Right? And then the market, of course, had a huge rebound starting in April, and it it was unabated until 2021. But I sold as soon as I made a profit. I just like, I couldn't handle the stresses of it. But let me tell you now in my professional career, Harry. I in 2018, we had seen this booming market. Right? I started selling. So we sold in 2018, nineteen, twenty, and twenty one, and I've been public about this. We sold $1,200,000,000 worth of positions. In 2021, when everyone was writing crazy checks, I sold $600,000,000 that year. Why? Public stock markets in November 2021, software was trading at 24.6 times NTM, next twelve month revenue, 24.6. If you look at the ten year average, the ten year average public market, 9.6. The twenty year average, 6.2. So I call that football field. One side of the pitch is, like, the low watermark, 6.2. The other side, the high pitch, high watermark is 9.6. And we're trading at 24 in the public markets. In the private market, it was 50 times NTM to a 100 times NTM. It just made no sense. Right? So we became a seller. Part of that was, you know, some companies just exited, but part of it was a conscious effort to do secondaries. Okay? So I learned psychologically, people are buying. I'm selling. Now in 2023, everyone was shitting themselves because they had so many losses from 2021. We did not. We did not just because we dialed back our pace of investments. I don't wanna say, like, I'm perfectly smart and I time the market perfectly, but we just had a sense valuations had gotten crazy. So in '23, I started buying secondaries at discounts. We deployed almost $50,000,000 into secondaries in '23 at deep discounts at a time where other people were, like, scared about the market, and I'm like, I'm an investor. Do

**Harry Stebbings** [25:28]:

you sell all of

**Mark Suster** [25:28]:

your

**Harry Stebbings** [25:29]:

positions? Do you sell part of your position? I know it's dependent.

**Mark Suster** [25:31]:

How do you advise? In a run up, I'll usually sell 33 to 40% maximum maximum. At a time or just

**Harry Stebbings** [25:38]:

generally?

**Mark Suster** [25:38]:

Generally. Because I'm a venture capitalist. I believe in long positions. So if I have a company that went from, in one case, 0 to 600,000,000 in net revenue, Like, it's hard to get to scale, so you don't wanna have your gems sold when you get to 600,000,000 net revenue. But at the same point in time, it was about three x overvalued for the public market comps. So I took a 150,000,000 off the table. I kept 200 long. I had some LPs say, why would you do that? And I'm like, I don't know. If I was a public investor, would imagine I would do that. Why wouldn't a private investor do that? 70% of my LPs were gracious and appreciative and thoughtful and kind, but a couple were very vocal, and it was hard.

**Harry Stebbings** [26:17]:

One thing that I really worry about today, Marc, is that you mentioned kind of liquidity and, you know, getting cash back. IPO markets are not open, and the spigot is turned off, and Lena Khan is crushing m and a. Yeah. I'm like, shit. Venture doesn't work when we don't have the other end of the spectrum open.

**Mark Suster** [26:33]:

It's funny you say this. When I first got into technology, there was one goal of every founder. There was one goal of every VC, IPO. The problem with IPO, even if you can IPO, there's no liquidity. So it's like a dirty secret. Like, you take a company public, it's worth a billion dollars. You hold a 180,000,000 of that billion dollars, but there's no float. There's no one trading the stock until you become enormous. So you're sitting on a $180,000,000. Congratulations. You can't get out. So that market is shut. But even if it was open, it's not nirvana. Right? That's one channel. The second channel is strategic acquisition. So we all aspire to exit to Google and Facebook and Amazon and whatever Microsoft. But that market, as you've already noted, is largely shut. So where where are returns gonna come from? They're gonna come from private equity. So private equity firms are gonna step in and buy assets from venture capital funds. They will either buy a company or they will buy secondary. So secondary is the fastest growing part of the market right now. But here's the thing. They're gonna pay rational prices because there are professional investors who have to make money. They have to make a return. If you're selling at rational prices, how can you pay irrational entry prices? So I've always said, like, entry price matters. You have to have discipline. Right? So our median valuation on entries between 11 to 12 pre at a time where people are paying 25, $30.40 pre, It got crazy. Like, in 2021, people were paying $6,070.80 pre for pre revenue companies.

**Harry Stebbings** [28:06]:

Oh, sorry, Marc. They still are. Yeah. In Europe, we had three twenties on a 100 in a week. Really? Yeah. For nothing. No revenue, no product, no nothing. So

**Mark Suster** [28:14]:

in 2021 and 2022, there were 1,200 companies valued for the first time ever at a billion dollars or more in the private markets. 1,200. Okay? But let's give you some historical context. Where did the term unicorn come from? I assume you know.

**Harry Stebbings** [28:28]:

I didn't

**Mark Suster** [28:29]:

see. Yeah. So she wrote an article in 2013. If you look at 2012, guess how many unicorns there were? One. That's why she called it a unicorn. In 2013, there were three. By 2015, there had been, like, 25 or 30. By 2018, these are net new per year. There were something like 50 or 60. And then fast forward to 2021, it was more than 700. It was, like, 749 in that one year. Okay? So why the explosion? They were valued at a billion dollars. They weren't worth a billion dollars. How many public market companies do you think are worth a billion dollars in The US?

**Harry Stebbings** [29:09]:

I would have no idea.

**Mark Suster** [29:10]:

So if I take all of software and all Internet companies, there are 343. That's it. That's the whole universe. That includes Facebook, Google, that includes Amazon, all of them, 343. And yet there's 15 or 1,600 in the private markets? How could that be?

**Harry Stebbings** [29:28]:

So how many if you were to make an assessment, how many do you think are legitimate unicorns?

**Mark Suster** [29:33]:

Of the 1,200 in twenty one and twenty two that were funded, my guess is a thousand of them will never achieve an exit value of a billion dollars or more. Of the 1,200, 60% were marked by four firms, SoftBank, Tiger, Coachu, and Insight. And I'm not saying they're not smart investors. They are. But there was this euphoria of people just paying prices. But the average SoftBank deal and SoftBank, the whole team is gone now. Right? Like, I don't know if anyone's left, like, all their investors. And I'm not saying they're bad people either. Like, I mean, he made money on ARM. He's, you know, he's certainly a smart guy, but they wrote a typical $300,000,000 check into a company at a $4,000,000,000 valuation. Of course, I'm making these up, but that's roughly about where they were. Founder took 20 to 50,000,000 off the table, and they know they're never gonna be worth $4,000,000,000. So that it's a zombie company. So then the employees eventually are gonna figure that out, and they're gonna leave. So it becomes even more of a zombie company. There's no even cleaning it up. And so they've just walked away from those investments. So how many seed funds are there that are held at seven x, nine x, 12 x, TVPI, zero DPI on the basis of these irrational fake markups?

**Harry Stebbings** [30:45]:

Okay. So the question for you is, are they bad for our ecosystem? As you said, they will help a load of seed managers managers raise new funds. They will give confidence to LPs, rightly or wrongly. Are they good or bad?

**Mark Suster** [30:56]:

I don't ever ascribe good or bad. Like, markets will be markets, and there's not good actors in bad markets. There's markets. If you look at the over capitalization, capitalization, for example, of the telecommunication industry in the nineteen nineties in The US, a lot of people lost money. There were a few winners, but a lot of people lost money. But out of that, out of the ashes rose industry because all that money fueled laying down broadband fiber to the home. So there's gonna be some good. There's gonna be some bad. But here's the thing you should know. 1998, if you look at venture capital, it took two years for the top quartile to go from one x to 3.3 x. K. Two years. Think about what that means. I have to deploy my whole fund, and my whole fund has to be marked up 3.3 x in two years. The only thing that could deliver that kind of returns for an early stage fund is momentum. It's, like, not based on fundamentals. You can barely even finish your code in two years. And it fell from 3.3 down to 1.4, but it took five years to be marked down from 3.3 to 1.4. And this is top quartile. This is not the whole industry. And by the time TVPI turned to DPI at the end, it was 1.7. It never there was no dead cat balance. It was flat. So five years. Nineteen ninety eight, ninety nine, two thousand are nothing compared to the overvaluations of 2021. So we're two years into a correction. I think it's gonna take another five.

**Harry Stebbings** [32:23]:

Are managers accurately reflecting their books today, do you think? I'm an LP in lots of funds. I'm sure you are too. The numbers still look pretty high.

**Mark Suster** [32:30]:

Sequoia, Axcel, people like that who don't ever have to think about fundraising, they immediately take markdowns. Yep. So we had zero SoftBank deals. We had zero Tiger deals. We had one COA two deal, one Insight deal. I'm not saying good or bad of any of those deals, but, like, we didn't have irrational markups in our portfolio. So you either are a fund that never asked to think about fundraising, you just take the markdown, or you're a fund that never subscribed to all the hype in the first place, you don't have as far to fall. But for a lot of people, I think they're not taking the markdowns they need to take. I mean, look at what is it called? Laceworks or whatever. It was valued at 8,500,000,000 and it's reported in the press getting sold for 300,000,000. That's just one of 1,200 companies that's gonna go through that or at least 1,000. Think about funds who said, I'm only gonna hold it at 6,000,000,000 instead of 8,500,000,000. I'm only gonna hold it at 5,000,000,000 instead of

**Harry Stebbings** [33:23]:

8,500,000,000. Okay. But, Marc, have we actually learned anything? I am seeing the most astoundingly ridiculous pricing deal activity on AI companies' customer support tools for AI.

**Mark Suster** [33:35]:

The answer is no. We don't learn anything. We're doomed to repeat history. So let's also go to the data.

**Harry Stebbings** [33:41]:

But will we even have a correction? Because it seems like here, venture was about to, and then it's like, boom, AI.

**Mark Suster** [33:46]:

Of course. Of course, you will have a correction. So let's look at AI. If you take generative AI companies at the seed stage, I mean, you know, any seed deal is overvalued. Any any startup is overvalued because you're talking about a company that has no customers, no revenue, no nothing. But if you wanna do generative AI in 2023, 2024, you're paying 44% premium to do a generative AI deal. Remember, entry price matters, exit price matters. At the b round, it's like 200% premium to an enterprise software company. So let me say this to you, Harry, and this is the hard thing about investing. To make money as any investor, you have to believe something that other people don't believe, and you have to be right. So if you're betting on generative AI for the first time in twenty three, twenty four, twenty five, good luck making returns. Because even if you get into reasonable companies, and chances are you won't. But even if you get into reasonable companies, you're paying a premium because the market has already moved there. The arbitrage is gone. If you were in crypto in 2013, 2015, 2017, you made a lot of money. Right? You pushed all your chips in 2021, god help your returns. So this is the weird thing. You go to see LPs. LPs wanna talk about the trend of the day because they're hearing about generative AI in the press. They're hearing about it from every VC. Right now, Upfront is not doing a lot of generative AI. What are we doing? I'm doing things that LPs are not hearing from other people. I may turn out to be right. I may turn out to be wrong, but let me give you some examples if it's okay. We're putting way more dollars into space right now. Why? If you look at 2005, 2005 was a seminal moment in our industry. That's when AWS was launched. By 2009, the cost of launching a startup went from $5,000,000 for infrastructure, for Sun Servers, for Unix, for Oracle databases, for web hosting. It went from $5,000,000 down to 500,000. So you had a Cambrian explosion of startups starting around 2009. It wasn't like VC suddenly woke up one day and said, you know what? Instead of giving $5,000,000 to founders, let's give $1,000,000. And let's create a category, and we'll call it a seed fund. All of it was driven by Amazon, all driven by AWS. And it changed the way our whole industry works because you could launch things for 500,000. The same thing is happening in space today. Falcon nine, the SpaceX rockets, which are now re landable, so you don't need new materials, you just need to refurbish it, has decreased the cost per kilogram to launch into space by more than 90%. So what's happening? You have an increased cadence of things going into space, and you have an increase in startups trying to take advantage of that. So there's been more than a 100 spinouts now from Space More than a 100. They've raised more than $10,000,000,000, and the vast majority of them are in Los Angeles. So that's why we're super active there. We both believe in the market, and we have a bit of a home field advantage. Do you know what think everyone, though, sees

**Harry Stebbings** [36:36]:

that? Like, given the cadence of spinouts from SpaceX and the amount of funding that's gone in, it's not really a contrarian thesis, is it?

**Mark Suster** [36:43]:

I should say, of all the companies that are spinning out of SpaceX, something like 30% of them are going into space. There's people going into energy. There's people going into clean tech, other types of infrastructure. But what it's doing is it's leading to a moment in Los Angeles where there's a lot of hard tech founders working on things that wouldn't have been funded five or ten years ago. Of course, there are other there's great VCs focused on it. You have founders Fund focused on it. You have Lux focused on it. You have Andreessen Horowitz focused on it. But the overwhelming majority of the industry is not focused on it.

**Harry Stebbings** [37:16]:

Do you not worry that we have a generation of formerly software investors now moving into hard tech infrastructure energy. These are fundamentally different games. I do not play this game because I don't get it. Like, I don't do biotech. I think I'm gonna see a huge amount of people like we did in o five with clean tech lose a lot of money because they don't get it.

**Mark Suster** [37:33]:

Of course, you have to have skills. So as I look at my practice, we don't have generalist investors. We have specialist investors. I actually don't believe that much in a concentrated fund around one theme. We are what I've started calling multi thematic fund. We have themes, but we have five or six themes. And so we have partners who just stay in their swim lane of their themes. So I have a team just looking at space and national defense. I have a separate team just looking at health care. When we started doing health care investments in, like, 2014, 2015, 2016, most people in venture capital were saying, don't invest in health care. It's a regulated industry. It's hard to make money. Some of our best returns are now coming from that sector. We try to stay focused on what we know.

**Harry Stebbings** [38:16]:

Do you also worry about exit environments for those companies? They are not traditional there's not, like, 20 space companies in the public markets like there is consumer enterprise.

**Mark Suster** [38:25]:

Well, first of all, if I define space as rocket launching, yes, there not a lot of exits. But what is actually happening in space? The vast majority of what's happening in space is satellites and its communications, so it's either earth observation or media or telecoms. New use cases are emerging, and they will emerge like extracting minerals or zero gravity manufacturing. There are new use cases that will be created. But do I worry about exit environment? I worry about exit environment for all of venture. You're a software company. If you become big, who's gonna buy you? Like, who's gonna buy all these $13,000,000,000 companies?

**Harry Stebbings** [39:01]:

Mark, what happens to the m and a environments? Like, you know, we have the CMA in London that blocked Figma. London blocked Figma.

**Mark Suster** [39:07]:

The biggest buyers will struggle to buy the biggest companies. That's why I think a lot of those may end up well, either you get big enough to IPO, and there will be plenty of those, or you end up getting bought out by private equity who ultimately probably combine you with other businesses until you're big enough for an IPO. But it's probably easier to get exits at the $250,000,000 to a billion dollar level because the universe of buyers is much greater. Back to this idea of capital efficiency, back to this idea of entry price mattering.

**Harry Stebbings** [39:36]:

Do you think founders have realized that message, though?

**Mark Suster** [39:38]:

I think it matters what teams are you backing. There will always be founders who are going to be the biggest players in the industry. And those companies, if they're successful, will drive great returns. So Anderol, amazing company. Like, god bless everyone who backed that company. It's really important for national defense for for The United States and for the Western world. And they have really big ambitions, and I think it's gonna be a public company one day.

**Harry Stebbings** [40:05]:

Do you with the thesis of, like, founders fund who kind of go, instead of trying to be in the category around it, regardless of stage, just be in the company, which is why they're, like, plowing into OpenAI, which is why they plow into AngiRel. Just be in the number one at whatever price, or are you like, there's ancillaries around the edges?

**Mark Suster** [40:23]:

I don't know is the answer. I know it's not my strategy. I know that I don't have the skills to do it, but look at their history. Like, they've been incredibly successful with that strategy. It's kinda hard to bet against Founders Fund. Their returns have been phenomenal. Their team's been phenomenal.

**Harry Stebbings** [40:39]:

Do you outcome scenario plan when you invest?

**Mark Suster** [40:41]:

Not really, but we do generally think about what we think the exit environment's like, and we care a lot about valuation and discipline. Because for us, I can't plan that Founders Fund world. I'm not Brian Zingerman or Peter Thiel or, you know, any of these guys who have been able to plow $152,100,000,000 dollars into a single company and be right consistently. So it matters to us.

**Harry Stebbings** [41:03]:

You said eleven twelve for entry price. And I love your honesty around price discipline because everyone normally says, well, it just matters that you're in the best companies. Question on eleven twelve. Anyone who comes out of a great company now raises five on 25 from Andreess. How do you do 11 or 12? And does that mean that you're getting different numbers?

**Mark Suster** [41:19]:

I your question actually is is there selection bias? Are you picking companies that are not gonna be as good? I don't agree with the premise. I don't believe that everyone raises five on 25 from Andreessen. I think Andreessen's great for some people, not good for other people. Our median investment pre money is 11 or 12, but we pay 20. We pay 25. It depends on the founder. It depends on how much progress they've made. It depends on what we see as opportunity and how competitive it is. Do I think that there's selection bias? No. There are great people who leave companies. You have to make an earlier bet. I might have been able to wait six months, nine months, twelve months to make a bet. We have to know the founder before they create the company.

**Harry Stebbings** [42:00]:

How often when you break the rules, are you right or are you wrong?

**Mark Suster** [42:04]:

I don't think I can really put a number on that. I think post hoc, we rationalize everything. We just wanna back the most talented founders working in the industries that we're focused on. We wanna stay disciplined. Since 2009, if you take every one of our funds, they've been median between 3.2 to $3,500,000 first check-in, and they've been median between 18 to 21% ownership. That's what we do. That's our strategy, and we're disciplined about that strategy. We haven't diverted from that. How

**Harry Stebbings** [42:35]:

do you think about reserves?

**Mark Suster** [42:36]:

We invest 40% of our fund, usually 42% of our fund, and we reserve 58%.

**Harry Stebbings** [42:43]:

In the next subsequent round or in the subsequent two, three rounds? How do you think about that distribution?

**Mark Suster** [42:47]:

The 58% is reserved for all subsequent rounds.

**Harry Stebbings** [42:50]:

Okay.

**Mark Suster** [42:50]:

And and, you know, the job of every VC is, like, let's create three buckets after we write the check. Bucket one, the companies that just clearly aren't gonna work, and then you try to minimize the amount of capital you put into those. Bucket two are the ones that are clearly working, and you really wanna back up the truck as much as you can. But bucket three also matters. These are companies that you really believe have a prospect of building something big, and the market just hasn't accepted that yet, and getting them over the hurdle matters.

**Harry Stebbings** [43:17]:

Or bucket three is also, I don't know. It's kind of just a bit in the messy middle. It's slower. It's harder. Whatever. But my question to you is, like, I don't think the rocket ships are sustainable value generators, and I think we overestimate our ability to pick our winners early, especially between seed and a. With that in mind, I question the effectiveness of reserves, especially if you get ownership like you do.

**Mark Suster** [43:39]:

I'll just disagree. First of all, I disagree with the premise about the third bucket, which you kind of say, oh, those companies, I don't know how you characterize it, but aren't likely to work. Some of our best returns have come from companies nobody else wanted to fund, but they were doing something fundamental. It just took longer. On average, of our companies that take longer and that we had reserves for, on average, it took six years to raise a growth round. But those companies, by definition, are more capital efficient because they didn't have access to it. I have six deals that fit this category that returned $1,400,000,000 of returns in companies that other people didn't wanna fund.

**Harry Stebbings** [44:18]:

We're agreeing. I'm saying that I don't like putting money into the rocket ships because they've got huge, huge trash can value. I don't think that's sustainable value

**Mark Suster** [44:26]:

generation. Yeah. I got it. So, look, we have three things we look at for your next round. Do I still believe in the market? Sometimes you write a check, and a year and a half later, you're like, I was wrong about that market. Right? The second thing is, do I still believe in the team? So sometimes you're like, god. I got the right market, but I got the wrong founder, and you can tell the founder is not gonna get to the next level or the founding team. Sometimes you have the right market, the right team, but you don't believe in the valuation. And we have been disciplined about that. Like, one of our best performing companies, they went from 15,000,000 valuation to $90,000,000 valuation to $500,000,000 valuation, and it's gonna be worth billions. I'm very confident of that. But when it hit 500, it didn't have the traction to support it at the time, and we just didn't write a check.

**Harry Stebbings** [45:14]:

There comes a time when it's not effective use of reserves. Dollar averaging in at that price.

**Mark Suster** [45:18]:

At that There's an opportunity to cost a few dollars. It didn't make sense for us given the traction of the business, but I still really believe in the team market, and it's just the price I didn't.

**Harry Stebbings** [45:27]:

People always say with this business, founders, founders, founders, founders first. When you mentioned that kind of the three criteria for reinvesting, for investing, how do you think about market product people?

**Mark Suster** [45:37]:

Look, you can have great people, like amazing people, but if they're focused on the wrong market, the returns aren't gonna be there. So it's a combination of the right people in the right market, and I know that's kind of a hedge, but it really is that. We're kinda 70% founder driven because I think great founders, if they're pointing at the wrong opportunity, will start to pivot towards a better opportunity. So we're probably 70% founder driven.

**Harry Stebbings** [46:02]:

When you've got it wrong on founders, what have you not seen that you wish you had seen?

**Mark Suster** [46:06]:

Well, if you get it wrong on founders, it can be someone who wants to take a quick exit, and they wanna make a little bit of money, and none of the investors are really gonna achieve what we wanted to achieve. It's the short termism that you know, we're really trying to bet on people who wanna do this for twelve to fifteen years. Like, that's extraordinary for someone to wanna do it for that long. So that's something that we get wrong sometimes.

**Harry Stebbings** [46:30]:

Marc, what's been your biggest investing mistake? I think we learn a lot from mistakes.

**Mark Suster** [46:33]:

Early on in my career, it's exactly what you said. When I had winners, I wanted to pile money into winners. And it worked for me for the first two times I did it, and so I just thought that's the thing you do. And then I had one big company that was incredibly fast growing. It's the fastest growing company I had ever seen. And so I piled money into it, and it ended up being a zero. We we had an offer to sell the company for $350,000,000. Founder didn't wanna sell. Market changed, and it eventually sold for zero. Yeah. It was hard. How did you change as a result of that? So we started getting more disciplined about reserves, and I started doing better planning and realizing that what drove me to make the mistake in the first place was ego. I was driven by, like, I'm not gonna have a new investor come in and own more than I own because I've done all the hard work for the last three or four years, or this is my winner. Okay, I know I have $6,000,000 into this, but why wouldn't I have $15,000,000 into this? I think, really, ego got in the way, and I made that mistake really early in my career. And then I started advising the rest of my partners. I'm like, don't let ego get in the way. Like, we can love the founder. We can love the market and just not love the valuation.

**Harry Stebbings** [47:42]:

I think it's quite dangerous for younger investors deploying capital if they've never raised money. It's so easy to come into venture and be like, oh, amazing founder. 5,000,000. 5,000,000. 5,000,000. Me and you know it. It's fucking hard to raise money. If you don't have the perspective of how difficult it is, I think it changes how you think about deployment.

**Mark Suster** [47:57]:

Not just raising money is hard. Driving returns is hard. Right? It's easy to write checks. Writing checks is the easy part. Making returns is the hard part. And so I always tell people, like, when you're new in venture, if you look at seven deals and you have great networks and you look at seven deals, you're gonna find three that look good, and you're gonna wanna write those three checks. If you look at 70 deals, you're still gonna find probably three, maybe four that you really like to do. If you look at 700 deals, okay, it's not gonna be a three or four, you might wanna do seven to 10 deals, but the chances that those first three are gonna be the deals that you do is almost zero. It really is a numbers game. You really need to see lots of deals, and over time, you start to realize this is something special. So I tell people, just be patient when you first join venture. Don't deploy capital too quickly.

**Harry Stebbings** [48:44]:

Do you think richer investors make better investors? They're not scared of downside. They don't kind of worry so incessantly. It's like, ah, you know what? I believe they have that upside maximization mindset.

**Mark Suster** [48:54]:

I don't know. But I think, like, deeply analytical people who are self confident enough to believe something that other people don't believe, when everybody tells you you're wrong and you're still making the investment, that's what matters. You know? And believe me, I've done for the last twelve or thirteen years, I've been doing hardware investments. You know, we did an investment in Ring. We were the seed investor in Ring. Everybody on Shark Tank passed on it. We wrote a check. I wrote a check into Nana, the baby camera company. It produces hardware. To this day, people still tell me, like, why would you invest in a hardware company? But Apple's a hardware company. SpaceX is a hardware company. Tesla's a hardware company. Hardware plus software is incredibly valuable, so the hardware actually provides you with a differentiated return if you also have a services business. For me, it's hardware plus software. And believe me, a lot of people don't agree with that.

**Harry Stebbings** [49:45]:

Does that not just show you how hard venture is? If you think about Ring, it's like a billion exit. You have 15% on the exit. You're, like, a 120,000,000 back. On a 300,000,000 fund, it's like 40% of the fund.

**Mark Suster** [49:55]:

I wish he didn't sell. I understand why he sold. I think it was right for him, and maybe it was right for the market. But, I mean, Amazon sells billions of rings now, billions of dollars worth of rings. Like, I look at what could this have been.

**Harry Stebbings** [50:11]:

Yeah. On our door. Yeah.

**Mark Suster** [50:13]:

Yeah. Yeah. They're everywhere. Now Jamie would argue, and he's probably not wrong, that Amazon wanted to own this market anyway, and Google really wanted to be in this market anyway, and it was gonna get too competitive.

**Harry Stebbings** [50:24]:

Is there anything that you're not asked that you wish you were asked before we do a quick fire mark?

**Mark Suster** [50:29]:

That I'm not asked.

**Harry Stebbings** [50:31]:

Are you worried about Trump?

**Mark Suster** [50:32]:

Yes. I am, is the honest truth. I fundamentally don't believe that he cares about democracy, and so that worries me. And I know that a lot of people that I'm friends with don't share that view.

**Harry Stebbings** [50:44]:

But would you prefer Biden in this state?

**Mark Suster** [50:46]:

Look. I'm like everybody else. I'd prefer third. You know? I'd prefer somebody else, But these are the choices that we have, and it's it's not a great choice. You know what worries me? Of course, the extreme right worries me. It always has. But the extreme left worries me too. And they've become so radicalized, and they've really become radicalized against my people. They become radicalized against Jews. If I could say it to you this way, there's, I don't know, about 2,000,000,000 Christian people in the world. There's about 1,300,000,000 Muslims in the world. There's a little over a billion Chinese people in the world. There's a little over a 1.3, 1.4 Indian people in the world. Right? Like, this is the world's populations. There are 15,000,000 Jewish people in the world. 15,000,000. That's point 15% of world population. We have historically, for thousands of years, been amongst the most persecuted people there are. We were forced out of North Africa. We were forced out of Iran and Iraq. We were forced out of these places. We returned to our ancestral homeland. Land that we acquired, we acquired by purchasing it. We purchased it in the late eighteen hundreds up until 1947. It was all purchased. Zionism was a movement to aggregate money and convince people to return to their ancestral homeland. It was not a state. There was it was a British mandate. It was occupied by the Ottoman Empire for hundreds of years and then by the Brits. The Brits took the land, and they said in 1917, the Balfour Declaration said we're gonna give a land to the Jews. The Jews are gonna have an ancestral homeland. And there were roughly the same size population of Muslims as there were Jews at the time, and they were granted a homeland. And to see the far left now villainize the most oppressed people in history that we somehow are the oppressors is beyond absurd, but it happened in The UK. Jeremy Corbyn allowed antisemitism to rise in the far left in The UK, and it's happening in The US, and we need to put a stop to it.

**Harry Stebbings** [52:47]:

Can ask when you look at the rise of antisemitism, we mentioned, you know, what we're seeing in Colombia right now. Do you think that's always been there, deep seated antisemitism within these people who we haven't seen before, or is it just suddenly there? Antisemitism has

**Mark Suster** [52:59]:

existed for thousands of years. Right? It's But it's

**Harry Stebbings** [53:02]:

not the topic du jour of middle class white people

**Mark Suster** [53:05]:

who just want something testify. A historical context. Let's look at Russia. So Russia, there was something called pogroms, which are the Russians who have been killing Jews for hundreds of years. In 1917, you had the Bolshevik revolution, and they said out with the leadership who's the autocracy, like the common man, the common people are gonna take control of the company socialist movement. Right? The Jews were incredibly supportive of that. Why were they supportive of that? Because they've been oppressed for a hundred years. They're like, wait. We all gotta be equal. And you know what the Bolsheviks did? They turned around and said, yes. We're all equal except for the Jews. Right? So the Jews don't have a seat at the table, so they started to oppress the Jews. The Russians have been some of the most oppressive people killing Jews for hundreds of years. So do I think it's new? Like, I would tell you that antisemitism

**Harry Stebbings** [53:52]:

So you believe with these, like, white middle class students who are suddenly anti Semites have suddenly have always been anti Semites. I'm almost just I think it's topic du jour. I'm gonna join that brigade for today.

**Mark Suster** [54:05]:

For you to be willing to deny that more than 1,200 people were killed on October 7, For you to say that people weren't really raped, that babies weren't really killed, for you to believe that Jewish people who I mean, something like 20% of the population of Israel is Muslim today. They have elected officials in the Israeli government on Israeli courts in senior positions, and for you to call something like that genocide is beyond absurd. And is it a perfect democracy? Of course not. And do I believe in every one of their policies? Of course not. But it's a democracy. It's a democracy that welcomes minorities, that welcomes women in leadership roles. And now suddenly for the far left to try and villainize that, it's like a crazy ideology.

**Harry Stebbings** [54:55]:

Because what do you do if you're a university? We've seen universities struggle to manage it in any effective way.

**Mark Suster** [55:00]:

Well, thank goodness. You have activists, especially the donor base and the parent base that are starting to revolt against Harvard, against Penn, soon against Columbia, and they're forcing change. And I hope that forced change continues where education should be a place where all ideas can be explored, but where no single group is targeted. Like, the way that Jews are being targeted now at Columbia, can you imagine any other oppressed group, black people or Latino people or Chinese people or LGBT people being marginalized the way Jews are right now? It's beyond absurd.

**Harry Stebbings** [55:38]:

Right, my friend. I know you've gotta run. I wanna say a huge thank you for joining me. It's been so lovely to do this in person, and I hope that we don't have to wait as many years to do the next one.

**Mark Suster** [55:46]:

It's been lovely to see you. I really appreciate you hosting.

**Harry Stebbings** [55:51]:

I mean, chats with Marc are always the best, and it was so lovely to be able to do that in person. If you wanna watch the full conversation in person in the studio, you can check it out on YouTube by searching for 20 VC. That's two zero VC. But before we leave you today,

## Sponsor read

**Harry Stebbings** [56:03]:

let's face it. Your employees probably hate your procurement process. It's hard to follow. It's cobbled together across systems, and it's a waste of valuable time and resources. And as a result, you probably are facing difficulties getting full visibility, managing compliance, and controlling spend. It's time for a better way. Meet Zip, the first modern intake to pay solution that can handle procurement and all of its complexities from intake and sourcing to contracting purchase orders and payments. By providing a single front door for employee purchases, Zip seamlessly orchestrates the procurement process across systems and teams, meaning you can procure faster with the least amount of risk and get the best spend ROI for your business. With over 4,400,000,000 in savings for our customers, Zip is the go to solution procurement for enterprise and industry disruptors like Snowflake, Discover, Lyft, and Reddit. Finally, a solution employees love to use where buying things for work just works. Get started today at ziphq.com/20vc. And speaking of game changer with Zip, we have to talk about Cooley, the global law firm built around startups and venture capital. Since forming the first venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world with sixty plus years working with VCs. They help VCs form and manage funds, make investments, and handle the myriad issues that arise through a fund's lifetime. We use them at 20 VC and have loved working with their teams in The US, London, and Asia over the last few years. So to learn more about the number one most active law firm representing VC backed companies going public, head over to cooley.com and also cooleygo.com, Cooley's award winning free legal resource for entrepreneurs. And finally, travel and expense are never associated with cost savings, but now you can reduce costs up to 30% and actually reward your employees. How? Well, Navan rewards your employees with personal travel credit every time they save their company money when booking business travel under company policy. Does that sound too good to be true? Well, the van is so confident you'll move to that game changing all in one travel corporate card and expense super app that they'll give you $250 in personal travel credit just for taking a quick demo. Check them out now at navan.com/20vc. As always, I so appreciate all your support, stay tuned for an incredible episode this coming Friday with Ramp's Eric Glimon and the one and only Keith Raboy joining us for a very special duo episode.