20VC Newsletter - 22nd Sept 2024
20VC Newsletter - 22nd Sept 2024
Here are the transcripts and top takeaways from 20VC episodes released this last week!
Monday’s episode with Shardul Shah, Partner @ Index Ventures:
Download the full transcript:
My 7 key takeaways:
Why Growth Investing is the Same as Early Stage Investing
Whether early or at growth, it is all about the team.
The right team will find adjacent market opportunities over time.
This applies even when you’re paying high prices for late-stage companies.
The Sin of Omission and Three Core Lessons
The three biggest lessons on missing $BN+ companies:
Don’t be cute on price
Don’t overthink it
Don’t underestimate exceptional founders.
The sins of omission are much greater than the sins of commission.
Why Every VC Meeting Should be 30 Mins Not One Hour
You probably already know the answer in the first 15 minutes.
Now all my meetings are 30 minutes by default.
It is a huge time saver.
TAM is a Trap
The biggest public companies today all underestimated their TAM.
Their market caps today are bigger than what they thought the TAM would be.
The best founders find & expand market opportunities.
Why the Best Founders are Not the Best Fundraisers
Olivier and Alexis were not great fundraisers when we invested in Datadog’s Series A.
They evolved into tremendous fundraisers over time.
The best founders do not need to start off as great fundraisers.
Upside Requirements for Growth Stage Investing
We noticed our first growth fund had a power law.
Now we look for 5x plus upside.
There is no such thing as a safe 2x.
Why Wiz Was Right Not To Sell
They have insane growth & productivity across multiple segments & geographies.
They have an incredible team with Dali joining as COO.
Wednesday’s episode with Akshay Kothari, Co-Founder @ Notion:
Download the full transcript:
My 6 key takeaways:
We Raised $50M Purely to Make New Talent Feel Safe to Join
The people we wanted to hire wanted signal that the company’s stable.
Raising $50M from Index and Coatue was a stamp of approval.
We didn’t have immediate cash needs but it helped us recruit.
Three Ways to Increase Your Valuation Multiple
Three things:
Faster growth rate.
Better cash flow margin.
Operate in an industry that can maintain a high terminal growth rate.
Build Your Board Like Your Exec Team
There’s five seats to fill:
CEO Whisperer: Advisor to CEO, preferably a fmr CEO.
Audit chair: Partner to CFO
GTM: Has expertise in sales/marketing.
Governance & compensation: Partner to Head of People.
Investor with macro perspective
It’s a great one-on-one system to your exec team.
How the Best CFOs Use Test Budgets
They look at each part of the business through an unit economic lens.
Have test budgets but only double down when your team can prove the unit economics for that channel.
You shouldn’t worry about the rule of 40 in that period.
The Long Term Mindset of Sequoia
We reported to Mike Vernal & Pat Grady when we missed our number one quarter.
They said we shouldn’t be worrying about this quarter but whether we can scale it to 100M+ users.
They believe in the long-term mission.
Thoughts on Founder Mode
It is really good for founders who are right a lot.
If not, god bless that company.
Friday’s episode with Phil Carter:
Download the full transcript:
My 6 key takeaways:
What Makes the Best PMs
They need to be strong generalists.
They have deep intellectual curiosity.
They have a desire to move fast & take smart risks.
How to do growth assignments in interviews?
Pick an assignment that truly shouldn’t take more than an hour.
Pick a hypothetical scenario or a company everyone’s heard of (Uber, Airbnb)
Focus on prompts that test their first principle thinking.
The Biggest Growth Wins Come After a Loss
You’re learning something new about the customer after a failed A/B test.
You can run a second A/B test on the basis of that learning.
Those unlock new opportunities in the most unexpected way.
Why CACs Always Go Up
As you expand you’ll tap out your highest intent early adopters.
It will be harder to convert eyeballs into subscribers.
Your cost per install, sign up activation rate, trial conversion rate will become harder to maintain..
The Dire State of Retention in Consumer Apps
The average consumer subscription app is losing over 50% subscribers in the first year.
There’s no real concept of net revenue retention unlike B2B SaaS.
They only have one sub tier so they can’t really upsell.
Is Consumer Subscription an Investable Asset Class
It is not the most attractive asset category for a VC.
There are few $BN business outcomes
BUT Founders can still create a sustainable business with the right product & growth strategy.
Let us know what your big takeaways from this week’s shows were in the comments below!
Thank you for reading, and don’t miss the great guests we have next week:
Dmitry Gurski, Co-Founder @ Flo
Eric Vishria, General Partner @ Benchmark
Jeetu Mahtani, EVP Customer Success @ Hubspot
Thank you for reading 20VC.
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