Investing Lessons from Fred Wilson and Why Small Funds Outperform Large Funds

Absolutely my pleasure. And as I was just saying to you, I haven’t really done much press since I started Shine. And when you reached out, I thought this would be a great opportunity to share some of my current thinking. So thank you again for doing it.

Honestly, it was an accident. If you would have asked me about venture capital when I was in college, I literally wouldn’t have known what it was or barely knew what it was. And I’m dating myself here, but that is the truth. As my old boss, Diller, liked to say, I just put one dumb foot in front of the other. My family background has a lot to do with where I am today. My father is an immigrant from the Former Soviet Union who came to America when he was 35.

He didn’t speak a word of English, and he didn’t have a penny in his pocket. All he had was his intelligence, his education, and his determination. My mother, on the other hand, was the child of immigrants and grew up in Brooklyn. They didn’t have much, but she got a good education and she was embraced by a warm, loving family and community. She moved to Israel after college and met my dad on a trip back to New York, where in her words, she got stuck. My mom, interestingly enough, is an OG software engineer.

She learned to code before she moved to Israel, figuring it would be more useful than her Hebrew teaching degree. Ultimately, she too started her own consulting business. So my entrepreneurial inclinations definitely come from my folks. I went to Penn as an undergrad where I studied finance at Wharton and English literature in the college. After Penn though, I sought to join an investment bank. I ended up at Bear Stearns because it was the most entrepreneurial bank I could find. I was lucky enough to be recruited to IAC in 2001.

I joined the strategic planning team, who interestingly enough, we were just talking about, was then being run by Dara Khros Roshahi, who’s now the current CEO of Uber, who hired me into IAC, as well as a guy named Jeremy Liew, who you may also know who led consumer investing at Lightspeed for a while.

Yeah, so there were basically six of us that were responsible for strategy and M and A at the company at that time, including Dara and Jeremy. As the market started to heat up ahead of the ’eight crisis, we could no longer find attractively priced assets to buy. So Barry pushed us to go earlier and flex our entrepreneurial muscles. It was in this capacity where I was intimately involved with incubating and acquiring a handful of early stage businesses. Through this experience, I really fell in love with the early stage of business building and decided that is where I wanted to spend my time moving forward.

So I ultimately decided to leave IAC, and I joined an upstart venture capital firm out of Boston called Spark Capital. As I was joining Spark, Bijan Sabet at Spark led Twitter’s Series B, and that investment catapulted us into the upper echelon of VC firms. Ultimately, though, the entrepreneurial bug, and that bug bit me, and I decided to start something on my own. After spending some time investing as an angel and advising startups, I ultimately decided that an early stage firm based in New York City is really what I wanted to do.

Honestly, what I learned at Spark, most importantly, is that I love early stage investing. I think it’s really important to have perspective in life. I needed some time to separate myself. Both when I left IAC, I took six months, and when I left Spark, I took eighteen. One of the core things I learned beyond that is really around the difference in structures of venture capital firms. When I came up in venture, many firms were built as partnerships, and this was often a function of previously successful entrepreneurs and investors banding together to create a structure that provided for maximal individual freedom while leveraging their collective expertise to build venture capital portfolios.

And while the partnership structure has many advantages from an investment point of view, there are a lot of trade offs around investment and personnel decisions when governance becomes more broadly divided. Whereas investment firms, on the other hand, tend to have more clear leadership structures, even if there are a number of senior investors, all of whom share ratably in the proceeds of their work. And while both can certainly work, and there are notable exceptions here like Union Square Ventures, for instance, which works very well as a partnership structure.

The more durable firms in my experience often have very clear leadership and governance structures. And something that I learned at Spark is that I would do better in a structure like that.

By the way, I don’t think anybody would employ me either at this point. So this is both out of desire and out of necessity.

Yeah, I live my life by a very simple moniker in this regard, which is strong opinions, weakly held. I feel this way to my core. Having strong opinions is both a blessing and a curse. It can be one’s greatest strength and their greatest weakness. But I think it’s really, really important to have strong opinions. People who don’t take strong points of view tend to be quite boring and uninteresting. And I have no interest in being boring. And I don’t look for people that are boring. I’m drawn to people that are interesting.

And almost definitionally, to be interesting, you have to have a point of view. So my approach to the world, strong points of view, not being scared to share them and to articulate them and to present a compelling case for them. But I am deeply compelled by data, and I am very open to be proven wrong. In fact, I like it. And when I was at IAC, Barry used to call our Monday meetings, our office of the chairman meetings, the dynamic debate. And we would sometimes sit in there for eight hours yelling at each other and screaming at each other to get to the right answer.

And I am much more fundamentally interested in getting to the right answer than I am in being right. That is how I balance these things. I put out opinions that I feel strongly about, but I actually encourage people to challenge me. I ask them to challenge me and I push them to find data that challenges my assumptions. And if I think I’m right and I don’t have the data to back it up or to refute it, we together as a team will go out to do just that work.

The moniker of Strong Opinions Weekly held is crucial to me. And I think if you’re not willing to test your assumptions, you end up as an absolutist or you end up very susceptible to groupthink. I think both of those things are poison for decision making. As venture capitalists, the most important thing we do day in, day out is making decisions. We do that on a macro basis and on a ton of little micro bases. So everything I do is all about trying to make better decisions, and believing your own bullshit is not a way to do that.

I have a handful of mentors who challenge me on it. Interestingly enough, they can be extremely different. Some of them will tell me one thing, and another will tell me the exact opposite. And in many ways, that’s interesting. The other day, I was talking to one of my foremost mentors, Wilson from Union Square Ventures, and he literally was screaming at me on the phone. I honestly loved it, and it’s totally Fred. He knows with me, he can just kind of let it loose and say what he feels.

And I was sort of recounting to him something that another one of my mentors had shared. And he was like, No, that is total bullshit. Absolutely not. Don’t listen to that. You have to take risks. That’s what venture is all about, etcetera, etcetera, etcetera. And I value that tremendously. So to the point, I always want people to call bullshit on me. If they’re right, I will take it in stride.

To be clear, investment firms can grow and continue to perform quite well against their stated return objectives and increase their assets under management. I’m not making a damning comment on the entirety of the investment management business, and I think we can talk about that at another date. What I was really referring to, specifically the business of early stage investing, which you and I both practice. When I started Shine, Fred and Joanne Wilson were my first investors. And when Fred told me they were going to invest in the fund, he gave me a sliding scale of how much capital he wanted to put into the fund.

The larger the fund, the less money he was willing to invest. Simple as that. And his lesson to me was very straightforward. Larger early stage funds always lead to lesser returns. And it’s not simply because it is harder to return larger pools of capital. What he was teaching me is that the reason larger pool of capitals end up performing poorly or less well than smaller pools of capital in early stage investing is because of the lack of constraints. It’s actually the same thing we warn our companies against.

And why the last few years of irrational exuberance are going to be so devastating for many previously high flying companies and a number of venture funds. Keeping early stage funds relatively small imposes constraints, and those constraints force you as an early stage investor to make considered choices about how many deals you’re going to do, which deals you’re going to do, how much you’re going to be putting in. You simply don’t have the luxury of YOLO ing it, and that alone often makes the difference between a good fund and a great fund.

In terms of number of portfolio companies?

So fund size, we manage about $435,000,000 or so. Our first fund was $125,000,000 early stage fund. Our second fund is a $200,000,000 early stage fund, and we have $100,000,000 opportunities vehicle that we can invest cross fund to lean into the companies in our broader portfolio that perform.

We did about 25 deals in fund one, generally the right number for us given that we do both seed and Series A investing. Granted in fund one, we did do some experimentation with some smaller checks, especially around crypto as we were legging into some Web3 investing. But for the most part, we like to lead or co lead rounds, and we’re typically writing for a seed 1,500,000 to $3,000,000 to lead around, for an A, 6 to $8,000,000 to lead around. And if we really push it, we could probably go up to 10.

Honestly, no is the answer. Not for our strategy. It could be enough for other strategies, more seed oriented strategies. It could be enough for a more concentrated portfolio if people want to run a much more concentrated book. I like our concentration where it is, having been doing this now for sixteen years. I believe in having enough ways to win in the fund. And ultimately 125 was a bit small for our first fund. I’ll tell you a story about that. The reason, again, not to harp on USB, but the reason we capped our first fund at $1.25 is that was the size of USB’s first fund.

And we shared one LP who was like, why don’t we just cap it at $1.25? It worked for Fred. Why wouldn’t it work for you? And in general in life, that’s a pretty good tact to take. What happened was we capped it at 125. I had the unfortunate reality of raising fund one. Got hit by COVID like four months into our first fundraise. Really just wanted to constrain the problem, create scarcity value around the fund, and use that as a way to attract capital. In hindsight, it’s funny, when we did our final close on the fund, I actually went to our LPAC and asked them about making the fund a little bit larger and going to $1.50.

They gave me permission, and something didn’t sit right with me about it. I had given them my word that I was raising 125 and that was the cap. I just didn’t like the idea of my first decision, my first move as a GP, to be going back to my LPAC and to ask to blow through my cap. So I basically just said, You know what? Forget it. I’m going to keep it at 125. If it ends up being too little, we’ll figure it out. So part of the reason I raised an Opportunities Fund pretty early in the life of our fund is to make sure that we had enough dry powder for fund one companies that performed.

And that gave me the comfort to slightly over invest fund one. So our reserve ratio in fund one is a little less than I would have liked it. We’re probably 60 fivethirty five on first money in. But I think structure of using opportunity funds for the companies that do best allows us to overinvest a little bit upfront, reserve a little bit less in the core fund, and then use the opportunities opportunities fund when we have companies that are really knocking it out of the park.

Yeah. It’s a really interesting point, and it harkens back to your question around the lessons I learned from Spark. Reserves is extremely tricky. It’s a very, very tricky business. It’s especially tricky in a partnership model. What happens in venture partnerships is you have investors at different stages in their careers optimizing for different things, and their own personal desires and positioning within the firm and biases and what they’re trying to signal will enter into the discussion. You often see that leading to suboptimal reserve decisions and suboptimal follow on investment decisions.

I took a totally different tack to doing reserves at Shine, which is we don’t actually reserve per company when we do a deal at all. I actually reserve a bucket for the entire fund. My old partner, Todd Degris, used to refer to it as, They’re not reserves, they’re deserbs, always stuck in my head. So I tried to structure it and Shine where they actually were deserbs. So when we make an initial investment, we actually don’t attach formal reserves to the company. We do some math in the background, and I work on that with my CFO.

But we actually have a bucket of reserves that we apply to companies as they perform. And that allows us to be a little more rigorous about who gets reserves because it very much is a haves and have nots game. It forces us to only put capital in companies that really deserve it and not throw good money after bad. So I really have structured our firm and our decision making and our processes to avoid throwing good money after bad. And you’re gonna ask me now, how do you navigate that with entrepreneurs?

Like, it’s so difficult, right, when they come to you for capital and you don’t have the money to support them. And what I will tell you is Yeah, go ahead.

Anybody that says they do pro rata always, I think, is lying. I don’t believe that to be the case. I’ve been in venture long enough to know that that’s total bullshit. To be clear on pro rata, we always do pro rata if the company deserves it or if the situation warrants it. There are times when a round is getting done. In a vacuum, if you asked me, does this company deserve pro rata on a standalone basis for what they’ve achieved today vis a vis what you underwrote at the beginning?

I might say, no, I don’t think they do. But if there’s a round coming together, and somebody in the market is willing to pay forward and give the entrepreneur credit that they will actually achieve what we all from the beginning set out to achieve together. And us doing our pro rata is essential to getting that round done, to the right signaling, etcetera, etcetera. I’m never going to hurt a company by not doing pro rata. I will never do that. The only time I won’t do pro rata is if I don’t need to or I know it’s the best thing for the company.

So in hot markets, for instance, it turns out that over the last few years, you don’t have to do your pro rata. You never had to do pro rata. Every new investor under the sun will gladly take your pro rata if you give it to them so they could put more capital to work and own more of the company. And by the way, even into the downturn that we’re facing right now, most of the big funds have so much capital that they don’t give a shit if you do pro rata or not.

They’ll take it regardless. So you don’t have to if a company is able to go raise money from the outside, you can do your pro rata. You don’t need to do your pro rata. That signal around doing pro rata is just simply not what it used to be, number one. And number two is, if there’s a round, like if there’s a company that’s not doing well and they want you to do pro rata, the reality is, especially in the current environment, if they’re actually able to get a VC step up to do the round and we need to put a little bit of money in to signal properly and to make that happen, of course we’re gonna do that.

But the reality is that most companies that are having trouble on a, of course we’ll do pro rata no matter what basis, convincing their existing investors that no matter what, you know, we’ll write a check, it doesn’t matter. The reality is that those companies are gonna have a hard time getting funded if folks like us don’t feel excited to do our pro rata based on what they’ve been able to deliver thus far. This is a conversation I’m having with a couple of companies right now. And it’s one of the hardest thing for new VCs to do.

But I mark my words, it is such a valuable thing that you are doing for entrepreneurs, and it’s something that we’re gonna have to do over the next couple of years time and time again. The best thing you could do for an entrepreneur who is working on a project, who is working on a business that you know is not going to work is to tell them in the nicest, kindest, most genuine and sensitive way for the following reasons: You don’t believe this is going to be successful.

If there’s someone else out there who’s willing to fund it, Godspeed. And if we need to do some amount of pro rata to make that happen, we’re not going to kill your company. But you should take a really hard look in the mirror. You should take a really hard look at what you’re doing. You should think about it for a while, then we should have an honest and open discussion around whether this business can work, especially in this environment. And if it can’t, either you need to hard pivot into something that’s gonna work and get your investors behind you in doing that, or you should shut down the business and return the capital.

And by the way, the investors that are in your cap table today are infinitely more likely to back you again watching you make that mature decision as an entrepreneur rather than watching you piss that money down the drain over the next two years and actually, in many ways, waste two years of your life with a very high opportunity cost that you could put against something way more valuable.

Unless what they’re asking us is to step up and lead around, which I do not feel compelled to do under any circumstance other than when I feel compelled to do it. It’s kind of a null set. When we’re in go go markets, capital’s cheap and everything’s getting funded, we could choose to do our pro rata. We don’t have to do our pro rata. It kind of doesn’t matter. We’ve talked about that already, and you’ve seen it. In the last couple of years, whether we did our pro rata or not made no difference to the incoming investor.

We’re now about to enter a period whereby it’ll be a function of whether they can get anybody to write a check. Like, if a company is able to get a quality VC to write a check, then in some ways that in and of itself makes that company better than it was before. Because not that capital is a mode or a barrier or anything else, but having more capital to give you more time to achieve your objectives means that we’re getting leverage capital and the likelihood of success is going up.

So if we have to write a pro rata check, if today new investors are actually looking for us to write more pro rata checks as a signal, which by the way, to be clear, I’m still not so sure they’re gonna care about, and that signal really matters. And round sizes are coming down and valuations are coming down. In a sense, having more capital derisks the company, then it actually is kind of an easier pro rata decision because putting another $500,000 or $1,000,000 into something that’s getting funded by a good firm at a rational price and gives them more opportunity to win, all of a sudden it’s not a bad pro rata decision.

That situation where a company is getting funded and you really don’t want to do your pro rata, it doesn’t really happen very often. It did happen recently with us, but our pro rata was so small anyways that it didn’t even matter. It was like our pro rata was going to end up being a few $100,000. And I said to the entrepreneur, obviously that’s not going to move the needle for the round. If it did, obviously we would do it. It’s not going to matter. But all else being equal, we’re fine with our $4,000,000 position in the company or whatever it is.

And we’re here to help however we can, but our pro rata doesn’t move the needle for anybody, so let’s not bother with it.

There’s different ways to play the venture capital business, and we’ve certainly seen that evolve over the last bunch of years. And you have folks like Ron Conway that have been playing that model and getting into the best startups is is the only thing that matters. I sit somewhere in between. I think both things are true. The only thing that matters is getting into enough of the biggest winners. And the other thing that matters in venture capital is making sure that you own enough of those winners when they’re really big.

That’s my strategy because I run a classic venture capital fund. We’re not investing in 100 companies. We’re investing in 25 per fund. So for us, the only way to play the it doesn’t matter, you just need to get into all of the businesses, Doesn’t matter how much you own. The winners will take care of everything else. That only works if you invest in a ton of companies and you are convinced that you can get into the winners. So you have to be elite, so to speak.

You have to be one of those seed firms that sees every deal, that doesn’t want board seats, doesn’t care about ownership, isn’t going deep, is playing more of an index role, is comfortable with that role, and believes and knows that they can see everything and get into everything because their check size relative to their brand, value, reputation, etcetera, it works for them. Now there are a few people that can make that work. There are a few people have made that work. There isn’t one way to do venture.

That is not how I do venture. Not because it’s not a good way to do venture. I’m just not interested in it. I don’t get energy from being an index fund. I am a stock picker. I like picking stocks. I like betting on individual companies. I like taking risk. I like having conviction, and I like being right when I’m right. It’s almost hard. If you’re an index fund, you may get right on a few things, but how much luck versus how much skill at that? The skill is making sure you see every great deal and you have a chance to get in.

It’s not the skill of picking winners. It’s a different skill. I like the challenge of picking winners. So I’ve structured a venture capital firm where we make many fewer investments. We do 10 to 12 deals a year, a deal a month, call it. Some years are slower. Right now we’ll be slower. Sometimes are a bit quicker. Last year was too quick. But ultimately, we do a deal a month, let’s say. We’re focused on picking. So in a venture capital fund structure like mine, where we focus on picking, two things matter.

You have to pick the right companies, but you can’t just index your way into all the good companies. And if you pick the right companies, given that you do few deals, etcetera, and you really want to drive out performance, you have to own enough of those companies for it to matter for the fun. To be clear, when I started in the business, everybody was trying to own 20 or 25% of a company. The only firm that was incredibly successful, and I hate to go back to them, but they are in many ways the North Star for me, the only firm that was incredibly successful at being in the top quintile of venture capital performers without needing 20% ownership was USB.

And Fred regularly and the team at USB regularly, and they did it with us and they did it with others, would split deals. Fred split Coinbase with Mickey Moko. He split Mark Pinkus’ Zynga with Brad at Foundry. I’ve seen him do it time and time again. Fred and I just split a deal that we’re incubating in the web three space where Fred kept taking his amount of capital and ownership down. We were debating it and we were going back and forth, and Fred was like, We can own less.

It’s okay. Fred ultimately was targeting closer to 10% than 20. And his view was somewhere in the middle, which is you don’t have to be super, super greedy. If your fund size is constrained, again, back to constraints, if you’re not raising more than a couple $100,000,000 or even $2.50 at the max, and you own 10% of a company, especially given the level of outcomes that we’ve seen, it’s okay to own 10 or 12% of a business. You don’t need to own 20. And it turns out by bringing in other extremely talented investors and doing real syndicate building, it can really matter during the tough times.

And I know over the past few years, it didn’t matter. But mark my words, syndicate building, who’s around your cap table, how they work together, all those things are gonna matter now more than ever. So our approach has been, it’s all about who you pick, but ownership does matter. But again, pigs get fat and hogs get slaughtered. So we’re always looking to be pigs. Like we are trying to get double digit ownership where we can, and we will do a little bit less here and there.

Like we will sometimes build our way into positions. We’ll buy five or 6% and then buy a little more in the next round from the seed to the a, but we’ve gotten comfortable targeting 10 and we think it works for our model.

Yes and no, like everything else. There are exceptions, like some of the best in the business continue to be collaborative. But yes, I’ve had that issue where they wouldn’t even budge a little bit to make room. And even though we’re so helpful and additive to the company, both before the investment, after the investment, etcetera, I do agree. I do agree that there has been just a lot of shortsightedness in the business. And I think these are the kinds of cycles where those sorts of behaviors end up being laid bare, and it comes back to bite people in the ass.

I do, and I think that’ll happen in some instances. But I also think in markets like this, building strong durable syndicates matters. If some VCs wanna play that game and take on all the risk and shoulder all the burden, then god bless them. I will fight against that, and I will position against that. I’m in a slightly different bucket than you, in that I’m not trying to tuck into that VC’s deal. I’m trying to beat them to the punch.

I’m trying to convince the entrepreneur that I’m the better investor for them, I’m that gonna care more about their company, that I’m actually gonna roll up my sleeves and be there for them, and I’m not just one of I don’t know how many investments that they don’t care about as much. And by the way, the interesting thing about that is the firms that tend to be that greedy and that aggressive are also the ones that’ll drop you like a bad habit, that pay less attention to you, that are much, much bigger, and where you are much less relevant to them.

To me, I like when firms sort of take that approach because it’s such a stark contrast to what we do. It’s kind of an intelligence test for the entrepreneur. And if it’s not an intelligence test, it’s a test of like, what are you looking for? One of the things I realized over the many years I’ve been doing this now, not every deal is right for me, and I’m not right for every deal. I prefer not to write a check into the deal. These processes are very self selected.

When an entrepreneur decides they want to take a venture firm or a mega firm that’s going to box everybody out, that’s going to be super greedy, but by the same token, you are 0.005% of their capital base, it tells you what that entrepreneur is prioritizing, and they’re probably not a good fit for Shine, and I’m probably not a great fit for them. So onwards, there’s always another deal to do, Harry, and I spend most of my time looking forward. I only look back to learn lessons, but I’m not the kind of person that dwells in the past.

I try not to learn lessons from my successes. I’ve actually found learning lessons from successes is extremely dangerous because of the risk of confirmation bias. We will convince ourselves of whatever we want to convince ourselves is the proximal cause of the success because it was successful. So I honestly believe you can only really learn from your failures. I don’t believe you can learn from your successes. What I’ve learned from my failures time and time again, both in terms of my misses, my mistakes, it always tends to be very entrepreneur driven, like where I misjudge the entrepreneur in some way.

That has been a consistent lesson for me in investing, it’s why Shine is such an entrepreneur, such a founder, such a people focused firm, and why I don’t sweat it when an entrepreneur makes a decision, to your point, either doesn’t allow us in or they pick a different firm with a different ethos. It just means it’s meant to be. This is a people business. These are long relationships, especially when you’re writing lead or co lead checks and taking a meaningful role around the table, whether you’re on the board or not.

My biggest lesson is really to lean into and learn and understand people and figure out if you have the right chemistry to be partners over time. My biggest venture win to date has obviously been Plaid. And as I said, I honestly try not to take too many lessons from that investment. But what I appreciate most about Plaid as an investment, it required two things: one, a belief in a new category called fintech. When I did Plaid in 2012, fintech was not really a thing yet. Having that courage of conviction around the new category was one of the things required to make that investment, and many people did not believe in FinTech at that point.

And the other was a bet on two great young entrepreneurs. What it continually I don’t know if it’s a lesson, but it continually reminds me to go with my gut and my instincts and not follow the crowd, and to always bet on people.

At the end of the day, the more an investment matters to an investor, the better investor they will be for you. So long as, this is the key caveat, they are not in a structure that they can’t control. Firms are great, but partners matter. And at bigger firms especially, you’re not just taking money from a firm, you’re taking money from an individual. Is that individual gonna even be at the firm for a decade? Are they doing their own positioning at the firm? You don’t necessarily even know what you’re getting when you take it from somebody at one of these very large institutions.

These are businesses with hundreds of people working there. The odds that all of those same people are gonna be there in five years are zero. You wanna take money from people where it really means something to them, where they are deeply invested in your success. When you take money from a very big firm, definitionally, at the early stage, definitionally, they can only be so invested in your success because it is a tiny amount of overall capital for the firm. And more so, you have that added complexity that you don’t know.

You’re not actually getting the firm’s money. You’re getting money from someone who’s advocating for you on behalf of that firm who may or may not be there in the future. So you’re taking two risks. You’re taking the risk that you’re a pimple on the ass of that firm, and you’re taking the risk that the guy that really cares about you or the gal that really cares about you ain’t even gonna be there when the shit hits the fan. So if you wanna take that risk, godspeed.

Early stage is a very boutique and bespoke business. While I believe entrepreneurs drive all of the real value creation, great early stage investors can be an unbelievable strategic sounding board. They can guide you in certain ways when they have years or even decades of experience. They can help you avoid pitfalls or mistakes. Unbelievable connections. They can open any door. They help you close recruits. They help you open business development doors. There’s things that they will do that really matter. And when it matters to them, you will matter to them.

To me, these things kind of sell themselves. I want people that want me around the table. I want to work with people that want the Shine team around the table. I want to work with people that I am aligned with and that we are aligned with. And if that alignment isn’t there, then onwards. There’s always another deal to do.

My favorite book has to be Portnoy’s Complaint by Philip Roth, because it is the most notorious talked about novel in the American Jewish tradition, but it also happens to be probably its funniest and smartest.

Like, what are the tips? Interestingly enough, it is about simplicity, focus, and integrity. Believe it or not, it’s similar to building a company. The thing people get wrong when they make burgers, and this is especially true in your home country of The UK where I tried one of those Gordon Ramsey burgers the other day and it was dreadful, is they try to do too much. They’re throwing in the truffles and the this and the that, and best things in life are the simplest, the most focused, all of the pieces coming together in a beautiful whole, the integrity.

So my burger is a classic American cheeseburger modeled after what you would get in an In N Out burger or something like that, just a little more elevated. But really simple, simple, simple. And the key to making a great burger is to get all those little ingredients and all those things exactly right, but do not overcomplicate it. Keep it completely simple. Focus.

just that I could do it. I took a longer path to becoming an entrepreneur. I didn’t start Shine till I was 42. I was on a an extremely traditional path. I was a bear for a couple years, almost. I worked for Barry for six years. I spent eight years at Spark, and then I started Shine. And I took some time in between Spark and Shine. Guess if I had to do it all over again, I would have done it a bit sooner. And my advice to anybody with the entrepreneurial inclination out there is that if you have it, go for it.

But as they say, the best time to plant a tree was twenty years ago, and the next best time is today. So here we are.

I think we should have fewer investors and some less capital in the system. I think we’ve pumped too much capital into the system, and it’s created a lot of bad habits. And I think it’s going to dampen returns, frankly. What are the worst habits it’s

Overfunding of businesses that are too early, lack of constraints on those businesses, founders getting over their skis, being undisciplined, doing too many things, not keeping their eyes on the prize. The best companies are built with focus and discipline. When there’s too much capital in the system, you lose those things. I think we need to return to a more rational funding market.

I think there will be a lot of folks that go away in this cycle. I watched it in the last go around. Spark and USB and all these firms didn’t exist before the last cycle, and they really made their names coming out of the o eight crisis and on the other end of that cycle. I think we’ll have a similar reckoning in the venture world over the next few years. By the way, and I think some of the late stage and the crossover guys are kind of pulling back from that business.

So I do think the amount of capital that has been poured into startups will shrink. I don’t think it’s going back to levels we used to see. Things they grow and they reach a new plateau and they come down a bit and they grow up. So I think capital will continue to come into the technology business because it’s obviously a great place to deploy and a great place to create value. But I do think we will have some rationalizing of capital, and I think we’ll have a lot of tourists leave the system.

And I think we will separate winners from losers through this cycle, and I think that’ll be healthy for the ecosystem.

Relentlessness, integrity, and generosity.

to build a top 10 early stage venture capital firm, and I want to be on that list for every seed or Series A company that’s in our wheelhouse. I want them to be thinking of us and coming to us and at least give us a shot.

Absolutely my pleasure. Really appreciated spending the time.