20VC Newsletter - July 28th 2024
Here are the transcripts and top takeaways from 20VC episodes released this last week!
Monday’s episode with Kevin Hartz, Co-Founder & GP @ A*:
Download the full transcript:
My 7 key takeaways:
Venture Is More Sharp Elbowed Than Ever Before
We’ve had multiple trillion dollar businesses in the last couple of decades.
The stakes are very high so we have a period of less cooperation.
There needs to be a very specific reason why funds would work together.
Too Much Money is Distorting What Would be Good Companies
Companies are reaching the same milestones with a $1M vs $5M seed.
We’re in a period with so much capital & so little checks and balances.
Even the best founders will lose discipline in this environment.
Most people do not understand Airbnb
It’s a distributed storage for people.
A distributed storage system is far more efficient & cost effective than on-prem EMC drives
Airbnb has built a perfectly distributed mass hotel network throughout the world.
How Founders Fund Sold Spotify to Buy Airbnb
They sold Spotify at $8BN & rolled it all into Airbnb at $2.5BN.
You need clear power law winners in each fund.
The idea of going all in is very important.
The Importance of Not Selling and Holding Companies for Life
Most companies will go to zero, but your power law winners will be so massive they’ll dwarf everything else.
I’m not in the practice of selling.
I’m in the practice of finding & building companies & sitting on these for life.
The $80BN Exploding Term Sheet Mistake
So Keith Rabois, Jawed Karim, and I gave Airbnb an exploding term sheet.
Paul Graham said no bueno and teed off on us.
We still got a cut in the round but it was something I never forgot.
Biggest Lesson from Pierre Lamond
He has extremely high expectations of everyone & companies he’s invested in.
When he invested in Xoom he asked me to force rank my direct reports.
He crossed out the last name and told me to fire that person.
Wednesday’s episode of ‘This Week in SaaS’ with Jason Lemkin:
Download the full transcript:
My 6 key takeaways:
Is Crowdstrike F****d?
No one is going to churn. They’re growing 33% at $4BN in revenue.
They rely on selling 30 products. Upsell is going to be brutal.
It's going to be a rough NRR year. The GRR is going to stay high, as is the logo retention.
Why $23BN for Wiz is not Expensive
They have gone from $0-$500M in just 4 years.
Growing 120% YoY.
Crowdstrike in the public markets was traded at almost 30x.
This Wiz deal was not expensive.
We Have a Liquidity Crisis in Venture
There has been 3 years of no liquidity.
Brian Halligan was right, the Figma deal was the end of big M&A.
We need to solve the liquidity crisis.
You Need $500M to Go Public
To go public you need $500M revenue & 30% YoY growth.
It is possible to IPO at $200M, but you need to be growing at 50-60%.
There just aren’t enough of those candidates.
Why 2025 is the Year of AI Parity
2025 will be the year of AI Parity.
Every SaaS vendor in each vertical will have the same features, the same messaging.
2025 will be the year of commoditisation of features and SaaS parity.
The Question Every LP Should Ask Every GP
Your job in venture is not to modulate your pace, it’s to up the game.
There is a company like Wiz every year. Don’t miss them.
Every LP should ask every GP ‘Why weren’t you in Wiz?’
Friday’s episode with Nilan Peiris, Chief Product Officer @ Wise:
Download the full transcript:
My 7 key takeaways:
How To Win in Content: On & Off Topic
There are 2 kinds of content:
On Topic: Content which solves your target customer’s queries.
Off Topic: Catering to wider demographics, not directly related to your product.
Aim to dominate ‘on topic’ content in your vertical & build brand visibility with ‘off topic’ content.
How To Beat a Competitor With 8x Your Budget
We can’t compete on SEM (search engine marketing).
Instead we focus on word of mouth & shape Wise around this approach.
Build a product that is so superior that people will talk about it.
The Secret to Word of Mouth Growth
You have to be an order of magnitude better than the alternative.
Customers must get an experience that previously didn’t exist.
People didn't know they could move money instantly.
Wise are moving £60BN instantly around the world.
The Simple Screen That 3x Wise Recommendations
We started showing how much people saved when using Wise.
The big needle-mover was when we added a comparison chart.
The visual aid built understanding & trust.
We saw 3-4x increase in recommendations from this screen.
What is Great Product Marketing
Great product marketing closes the gap between perceived & actual value of a product.
Success is measured by how much this gap is reduced.
When customers see increased value, they are more likely to recommend the product.
How the Best Performance Marketers Make Bets
The best performance markers are gamblers.
You bet on CAC in hope of a positive return over time.
You build a portfolio of channels. Track investments.
Double down on what works and cut what does not.
Overspending without guaranteed returns can quickly spiral.
How Wise Became Profitable With 1 Change
Inefficiency builds up in marketing all the time.
By halving marketing spend, we saw only a 1% revenue decrease. Our marketing spend had become inefficient.
That’s how Wise became profitable in 6-9 months.
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:
Delian Asparouhov, Partner @ Founders Fund
Ethan Mollick, Associate Professor @ The Wharton School
Alexis Ohanian, Co-Founder @ Reddit & Founder @ Seven Seven Six
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