The Twenty Minute VC

Brad Gerstner: How I Pick Companies; Lessons from Warren Buffet; Chamath vs Gurley | E935

Brad Gerstner is the Founder and CEO of Altimeter, a life-cycle technology investment firm that manages public and private portfolios. Brad has personally participated in more than 100 IPOs as a sponsor, anchor, and investor. Brad’s notable deals include Snowflake, Mongo, Bytedance, Gusto, Unity, Okta, dbt, Modern Treasury, EPIC Games, Hotel Tonight and Zillow. Prior to founding Altimeter, Brad was a 3-time co-founder where he sold all three businesses (to IAC, Google and Marchex), a founding principal at General Catalyst; a securities lawyer, a former Deputy Secretary of State of Indiana, and a pilot. ------------------------------------- Timestamps: 0:00 Intro 1:02 Brad’s Backstory 5:35 How did your childhood impact your parenting? 6:28 How did you found Altimeter? 10:00 What is the power law? 12:04 The Three Supercycles 15:31 How do you pick companies? 21:01 How do you communicate with founders? 23:55 Price Sensitivity on Reserves 26:04 Value reshuffling 28:59 How does rate of change with interest rates affect your decisions? 32:40 Gurley vs. Chamath 34:50 When’s the right time to take cash off the table? 38:22 Marking Down Books 40:36 Misalignment Between Fees & Alignment 43:29 The Structural Problem with LPs 46:13 Portfolio Concentration 52:30 Altimeter’s Cultural Northstar 54:08 Advice to Young Investors 58:18 Does hustle get in the way of loyalty and discipline? 1:00:17 Biggest Hiring Mistakes 1:02:45 How is Altimeter structured? 1:04:21 Biggest Challenge in Firm Building 1:05:48 What is your relationship to money today? 1:10:23 How do you think about ego management? 1:14:07 How has relationship with friends and family changed? 1:18:36 Brad's Favourite Book 1:19:14 How do you evaluate the next few years for SPACs? 1:20:05 Best investment advice and warning 1:21:03 What is so special about Burning Man? 1:22:41 Brad's Biggest Insecurity 1:24:40 Where do you see Altimeter in 10 years time? ------------------------------------- In Today’s Episode with Brad Gerstner We Discuss: 1.) From Humble Beginnings in Indiana to 100 IPOs: When did Brad realize his original love of finance and entrepreneurship? What one single question does Brad ask all potential new recruits to determine if they have hustle? What does Brad know now that he wishes he had known at the beginning of his career? 2.) The Power Law and Supercycles: What is a power law? Why is it the single most important thing in investing? How do the best investors in the world build a framework around supercycles? How does Brad approach market sizing? How does Brad think about market creation when aligning that to his thesis of investing in power laws? How does Brad determine if a large opportunity is a “super-cyle” or a short, time-stamped fad that is unsustainable? How does Brad assess the importance of market timing? 3.) Building Anti-Fragile Portfolios: Portfolio Construction: Why does Brad disagree that the answer to risk mitigation is portfolio diversification? How many companies is enough companies for a diverse portfolio? Price Sensitivity: How does Brad reflect on his own relationship to price? How does this process and mindset change on re-investments? What is needed for Brad to re-invest? Time to Exit: How does Brad analyze when is the right time to exit a position? What are the single biggest mistakes people make when it comes to timing their exit? 4.) The Venture Landscape: Today, What is Happening? Why does Brad believe what has happened over the last 24 months is a great disservice to founders? What are the biggest examples of a complete lack of investor discipline? How should we think about private company valuations in today’s market? Is today’s pricing actually just the new normal? How has the public market pricing impacted the deployment of growth stage checks? How will this play out in the next 12 months? Why does Brad believe there is “not blood on the streets yet”? How does the speed of interest rate change impact our ecosystem so dramatically? ------------------------------------- Subscribe to the Podcast: https://www.thetwentyminutevc.com/brad-gerstner/ Follow Harry Stebbings on Twitter: https://twitter.com/HarryStebbings Follow Brad Gerstner on Twitter: https://twitter.com/altcap ------------------------------------- #altimetercapital #bradgerstner #harrystebbings #20VC #venturecapital #venturecapitalist #warrenbuffet #billgurly #chamathpalihapitiya

Harry StebbingshostBrad Gerstnerguest

Oct 10, 20221h 26mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

Brad Gerstner on Power Laws, Purposeful Wealth, and Essentialist Investing

Brad Gerstner traces his journey from a financially struggling Indiana childhood to founding Altimeter, explaining how early hardship shaped his risk appetite, ethics, and approach to fatherhood and money. He outlines his investing philosophy around power laws and “super cycles,” arguing for concentrated, thesis-driven bets instead of index-like diversification or FOMO-driven deal making. Gerstner emphasizes discipline on valuation, reserves, and liquidity, especially in the context of changing interest rates, inflated private marks, and recent market excesses. Beyond investing, he stresses essentialism, ego control, and intentional living—using wealth to enable impact, maintain grounded relationships, and raise non‑entitled children.

IDEAS WORTH REMEMBERING

5 ideas

Invest around super cycles, not just current TAM snapshots.

Gerster focuses on massive structural shifts (internet, mobile, cloud/data/AI) and then backs the likely category leaders within those, rather than over-fixating on today’s market size or narrow subsectors.

Concentration beats over-diversification if you have real edge.

He argues that owning many names produces index-like returns; instead, Altimeter puts substantial capital behind a few highest‑conviction ideas (e.g., Snowflake), re-underwriting them at each stage.

Price of entry and interest rates materially shape outcomes.

Gerster ties valuations to the cost of capital, using sober exit multiples (pre‑COVID averages minus a discount) rather than extrapolating from bubble-era prices, and will pass on pro rata when later-round pricing no longer supports venture returns.

Have a clear, quantitative discipline for liquidity and marks.

Altimeter distributes when they no longer see 3–5x over 3–5 years, even in beloved names, and Gerstner advises LPs to haircut recent high-valuation privates heavily to avoid denial about true portfolio value.

Essentialism—doing fewer things better—applies to firms and careers.

He resists product proliferation, headcount bloat, and fad vehicles (e.g., unnecessary SPACs, structured funds), keeping Altimeter small, flat, and focused on a narrow band of high-impact work and relationships.

WORDS WORTH SAVING

5 quotes

Diversification is a great way to preserve wealth, but a terrible way to create it.

— Brad Gerstner (channeling Buffett’s philosophy)

The truth of the matter is most of the people you know, Harry, they're not great. They don't have alpha.

— Brad Gerstner

I don't carry the bags for anybody. We do our own work, and we're gonna force ourselves through that screen around valuation.

— Brad Gerstner

This can't be the end of our story. We didn't work this hard to have this be the life that our kids are going to live.

— Brad Gerstner

We are all just passing through. This life is really, really short, and people tend to meander their way through life because they don't think about mortality.

— Brad Gerstner

Brad Gerstner’s upbringing, early influences, and path into investingPower laws, super cycles, and concentrated venture portfolio constructionValuation discipline, interest rates, and the recent tech market resetReserves management, liquidity decisions, and marking down private portfoliosFirm-building philosophy: essentialism, flat teams, and avoiding product/people sprawlPersonal relationship with money, parenting, and maintaining perspectiveEgo management, burnout prevention, and living a purpose-driven life

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