The Twenty Minute VC

Jason Lemkin: Cold Email Tips; Why Only 15% of Founders Listen to their VCs | 20VC #954

Jason Lemkin is one of the OGs of SaaS of the last decade. As the Founder of SaaStr, he has inspired more SaaS founders than one can imagine building “The World’s Largest Community for Business Software.” Jason also invests out of the $100M SaaStr Fund and in the past Jason has led rounds into TalkDesk, Pipedrive, Algolia, Gorgias, Salesloft, and many more incredible companies. Prior to founding SaaStr, Jason was the Co-Founder of Echosign, an early e-signature business, funded by Emergence Capital and that was acquired by Adobe for $100M. ------------------------------------------ Timestamps: 0:00 Intro 0:50 Why Jason Only Invests in SaaStr Fans 1:51 Cold Email Tips 4:30 The Algolia Story 10:48 Do you worry about adverse selection? 12:36 Betting On What You Know 16:20 How to Retain Plasticity as a VC 18:46 Advice for Operators Turned VCs 21:02 How to Compete When Your Competitors’ Products are Free 22:36 FOUNDER ADVICE: How to Present the Competitive Landscape 24:50 Investing in Commoditization Products 27:00 VC-isms: The Biggest Mistakes VCs Make 28:39 Have you ever had a portfolio company get smoked by the competition? 30:29 Pre-PMF: Is speed still everything? 32:17 Zombie SaaS Companies 35:30 Algolia’s Market Size 38:09 What causes hypergrowth companies to plateau? 41:09 Why Only 15% of Founders Listen to their VCs 47:15 How Jason Convince his Partners to Invest in Algolia 51:50 Are we about to see the greatest LP churn ever? 55:58 “If your numbers aren’t great, you are the product.” 58:22 Harry and Jason’s Biggest Mistakes from the Bull Market 59:57 How important is it to meet founders in person? 1:03:38 Are you worried about being replaced? 1:06:26 Brands Matter in VC 1:08:27 Has Jason lost a step? 1:10:21 What does Jason think Harry could do better with 20VC? 1:12:52 What did you think the best case scenario was for Algolia? 1:13:30 Most Underrated Investor in Algolia 1:14:17 Single Hardest Moment in the Algolia Journey 1:14:40 Algolia in 10 Years ------------------------------------------ In Today’s Episode with Jason Lemkin On Algolia We Discuss: 1.) Meeting the Unicorn: Algolia: How did Jason first come to meet Nicolas (Founder) and Algolia? What specific elements of cold emails make the best attract Jason’s attention? What do they have in them? What are the most common mistakes people make with cold emails? What is the single biggest mistake Jason made when making the deal with Algolia? How did Jason lead their seed round when their round was “oversubscribed”? 2.) Competition and TAM: The Reasons To Say No: Competing with Free: How did Jason analyze the competitive landscape Algolia was facing? How did he gain comfort that they could compete and win against free and open-source? TAM Analysis: The TAM at the time for Algolia was $2M. How did Jason analyze the TAM at the time? How did he get comfortable with such a small TAM? What are the single biggest mistakes investors make when analyzing competition today? What are the biggest mistakes founders make when presenting the competitive landscape? What are the single biggest mistakes investors make when analyzing TAM today? What are the biggest mistakes founders make when presenting the TAM and how it breaks down? 3.) Investing Lessons Transition from CEO to VC: Jason has previously said one of his biggest lessons is “bet on what you know when you go from CEO to VC”? What did he mean by this? How can one keep this operator knowledge and mentality when one is a VC for a long time? What are the biggest pieces of advice that Jason would give to operators becoming investors? What are the biggest mistakes that Jason made in his first 3 investments as a VC? How did he change? 4.) Mastering the World of Venture Today: Why does Jason believe that he has become a worse investor with the rise of “remote investing”? Why does Jason believe he is a worse investor without having a partner in SaaStr Fund? Why does Jason believe that even the best founders do not want hard feedback anymore? Should we as VCs still give it to them? What has Jason learned here? Will we see great LP churn and many LPs leaving the asset class? What will happen to the existing incumbents with massive AUM and reduced performance? ------------------------------------------ Subscribe to the Podcast: https://www.thetwentyminutevc.com/jason-lemkin-2/ Follow Harry Stebbings on Twitter: https://twitter.com/HarryStebbings Follow Jason Lemkin on Twitter: https://twitter.com/jasonlk Follow 20VC on Instagram: https://www.instagram.com/20vc_reels Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok ------------------------------------------ #JasonLemkin #SaaStr #HarryStebbings #20vc #venturecapital #angelinvesting #algolia

Harry StebbingshostJason Lemkinguest

Nov 29, 20221h 16mWatch on YouTube ↗

WHAT IT’S REALLY ABOUT

Jason Lemkin Reveals Cold Email Secrets, Founder Mistakes, VC Truths

Jason Lemkin and Harry Stebbings dissect how the very best cold emails and ‘inbound super-fans’ drive Jason’s entire investment strategy, using Algolia as a case study. Jason explains why he only backs founders who already love SaaStr, and why a detailed, data-rich cold email can be enough for him to want to invest before a meeting. They explore core venture topics: ownership and valuation mistakes, founder quality, competition, TAM, zombie companies, LP behavior, and how operators should transition into VC by betting on problems they know intimately. The conversation also dives into decay in investor edge, the role of brand and content (SaaStr, 20VC, TikTok), and the tension between giving brutal board feedback and preserving founder relationships.

IDEAS WORTH REMEMBERING

5 ideas

A+ cold emails can win top investors—make them detailed and data-rich.

Jason only invests off inbound from SaaStr super-fans and wants emails that clearly state MRR, growth rate, NRR, top customers, team, and why you’ll win—so strong he’d want to invest before meeting. Different investors prefer different formats, but all great ones value thoughtful, high-signal cold outreach.

Invest in problems you’ve personally suffered from; your edge decays fast.

Jason’s biggest winners (Algolia, Talkdesk, Front, Salesloft, Gorgias, Pipedrive, Greenhouse) map directly to his worst operator headaches—search, contact center, CRM, outbound, recruiting. He argues ex-operators have a 1–2 year window where their pain is freshest and gives them non-bullshittable insight into founders and products.

Aim for meaningful ownership; sub‑10% stakes rarely justify the effort.

Jason now optimizes for at least 10% and wants one 20%+ position per “batch” as a solo GP, realizing his early valuation sensitivity (e.g., taking 500k at 12 pre instead of 1M at 15 in Algolia) was driven by fear of losing money and materially reduced his upside.

Founders must be clearly better than you in their domain, or pass.

As an operator-turned-VC, Jason’s rule is to only back CEOs who are at least slightly better than he was on the same problem; if they aren’t, competition and complexity will outpace them in 2–3 years. His worst investments share one trait: founders who weren’t truly stronger than him on the problem.

Respect competition deeply and avoid ‘throwaway’ two-by-two slides.

The best founders know their competitors cold and often publish honest, data-backed comparisons (e.g., “Algolia vs Elasticsearch”) that admit where they lose and why certain use cases fit each product. Weak, hand-wavy competitive slides and “we’re alone in the top-right” narratives are red flags.

WORDS WORTH SAVING

5 quotes

“I only invest from inbound SaaStr super fans. Every deal I’ve tried to go out and get, I’ve failed.”

— Jason Lemkin

“I like a cold email that’s so good I already want to invest before the meeting.”

— Jason Lemkin

“You have to invest in CEOs that were better than you. If they’re not better than you, you shouldn’t invest.”

— Jason Lemkin

“Hyper growth in the early days can decay, but it proves you have a large TAM. That’s all I need to know for TAM.”

— Jason Lemkin

“I would say only maybe 15% of founders really can take the feedback… and 60% will hate you for it.”

— Jason Lemkin

How Jason sources and evaluates cold inbound deals (Algolia, Pipedrive, others)What makes a great cold email and differing investor preferencesOwnership, valuation sensitivity, and learning to ‘lose money’ in ventureOperator-to-VC transition: investing in problems you deeply understandCompetition, commoditization, and presenting competitive landscapes effectivelyCauses of hypergrowth plateaus: management timing, iteration speed, TAM expansionVC–founder dynamics: hard feedback, board roles, partnerships, and LP pressuresBrand, content, and platform shifts (SaaStr, 20VC, Quora, TikTok) in ventureZombie startups, overfunding, and the future of LP and manager selection

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