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

1. 0:00 – 0:50

   Intro

   1. HSHarry Stebbings0:00

      Jason, I am so excited for this. I can't believe it. You know it was seven years since we first chatted, so thank you so much for joining me again today.

   2. JLJason Lemkin0:07

      Wow. Well, Harry, it's just be- it, it has genuinely been a delight to watch 20VC just grow and grow over the years. And, uh, you know, it's, if, if it's been seven years, it's a good reminder that overnight success stories take a long time.

   3. HSHarry Stebbings0:20

      Oh my god.

   4. JLJason Lemkin0:21

      (laughs)

   5. HSHarry Stebbings0:21

      I mean, (laughs) Jason, I feel so fucking old. I wear a hat because my hair is thinning, my friend.

   6. JLJason Lemkin0:26

      I have been wondering about the hat on the TikToks. I've been wondering where that hat comes from, but, um, yeah.

   7. HSHarry Stebbings0:31

      Do, do you, do you know why? Fun fact, we get 28% higher engagement because of the hat. There we go.

   8. JLJason Lemkin0:37

      I see. I see. I see.

   9. HSHarry Stebbings0:38

      Now listen, we're, we're gonna do the Algolia story here.

   10. JLJason Lemkin0:40

       Okay.

   11. HSHarry Stebbings0:40

       So I wanna do a little bit of context setting.

   12. JLJason Lemkin0:43

       Sure.

   13. HSHarry Stebbings0:43

       Where did you first meet the team? How did you meet them? How did that meeting go? Can you paint that picture for me?

   14. JLJason Lemkin0:49

       Well,

2. 0:50 – 1:51

   Why Jason Only Invests in SaaStr Fans

   1. JLJason Lemkin0:50

      first of all, one thing that's pretty... It may be true of you to some extent because in some ways we invest similarly in some ways. Um, but I only invest, um, from inbound SaaStr super fans. Uh, every deal I've tried to go out and get, I've failed. I do nothing outbound. Every warm referral doesn't work out. Nothing works out except the high velocity inbound email. Um, "My round's oversubscribed. Would you like to meet?" Or, "I just wanna meet with you." And some of, well, some of those emails, they're soony baloney, but the really good ones break through. And every single investment I've done has been a high velocity inbound, including if we, if we're gonna talk about Algolia today, we'll talk about that, my second venture investment. Um, just, it's not that I don't think hunting is a good strategy, it's just not good for me.

   2. HSHarry Stebbings1:38

      You mentioned about the ones that break through.

   3. JLJason Lemkin1:40

      Yeah.

   4. HSHarry Stebbings1:40

      What is it about those that break through that break through? Is it the traction? Is it the team? Are there elements and commonalities which stand out which make them higher signal for you?

   5. JLJason Lemkin1:50

      What

3. 1:51 – 4:30

   Cold Email Tips

   1. JLJason Lemkin1:51

      I learned is that the, look, there are exceptions. It's funny. The, um, we did this digital event during COVID with the founders of Monday.com, and they asked-

   2. HSHarry Stebbings1:58

      Yeah.

   3. JLJason Lemkin1:58

      ... why I didn't respond to their inbound email. And I, I'm like, "Oh my god, how did I miss the one from the Monday founders?" And, and obviously the b- and I went back and their inbound email was terrible. It was very interesting. It was a horrible two lin- they had a different name before Monday. They were, like, Harry and Jason's we- wedding rentals. I'm making it up, but it was a terrible name they, they bought Monday... They bought a great URL, right? And the email was like, you know, "We love SaaStr. We're gonna be in town for SaaStr Annual. Can you meet next week?" Those are the worst ones because I got 10,000 people coming to SaaStr Annual. So thi- it's not that this is the best strategy, but what I found with the best investments I've done, Algolia, we'll talk about Talkdesk, Sales Loft, Greenhouse, um, Gorgias, um, Pipedrive, my first investment. Like, the best founders are great communicators one way or the other, right? And so if you can write an incredible cold email, like an incredible inbound email, um, you, you can, you can judge a human being and a company just from that email if it's A plus, right? But you'll lose the Mondays. (laughs) Like, that was my, that was my big wake up moment of the limitations, which I always knew, of this strategy-

   4. HSHarry Stebbings2:58

      My question-

   5. JLJason Lemkin2:59

      ... was this digital event. Yeah.

   6. HSHarry Stebbings3:00

      My question is, is there a format for the incredible inbound email? Like-

   7. JLJason Lemkin3:05

      Yeah.

   8. HSHarry Stebbings3:06

      ... I, I, yeah. What is it?

   9. JLJason Lemkin3:06

      Well, you know, it's funny. Dur- we did this other event during peak COVID called The New New Adventure, and I actually flipped it around and I asked David Sacks, Keith Rabois, Aileen Lean, and Satya Patel all, all, the best how they handle it. And it was interesting that all of them plus add me, like, as a distant fifth or whatever, we all gave radically different answers. So I love an incredibly detailed email. "Harry, it's Jason Lemkin from this company. We're at 18K MRR. We're going 29.6% a month. Our NRR is 142%. Our top customers are GE, Facebook, Twitter, whatever. Here's our team. Here's where we come from. Here's our story. Here's why we're gonna win. Here's what we're doing that matters." Like, I like a, a cold email that's so good that I already wanna invest before the meeting. That's how I do. Like, every, including Algolia we're gonna talk about, I already wanted to invest before I met. All of my initial unicorns, I all wanted to invest before I met. David Sacks was like, um, "I just want two lines. What do you do?" Um, and Keith Rabois was like, "Send me a very lengthy deck." I, I, I, that's good too, but like... And so it was just interesting to hear the different perspectives. But all of these top investors all loved getting the best cold inbound, right? The c- because every, every, every, every, every top investment's an outlier. Everyone's an exception, right? So be thoughtful about the rules you hear, right? Because they may only partly apply to you.

   10. HSHarry Stebbings4:24

       I, I, I totally agree with you. Um, I, I think you're right. Can I ask, when, when

4. 4:30 – 10:48

   The Algolia Story

   1. HSHarry Stebbings4:30

      you apply that to Algolia-

   2. JLJason Lemkin4:31

      Yeah.

   3. HSHarry Stebbings4:31

      ... how did, how did that come together then and how did that first meeting take place from the cold email?

   4. JLJason Lemkin4:37

      Uh, I was lucky. I, I, this, um... First of all, thi- this whole series you're doing is interesting 'cause you go back in time, right? So you have to be thoughtful, uh, about what works today. I mean, we're going back to 2014, my second investment, right? The first one was Pipedrive. They sold for 1.5 billion cash to Vista, uh, last year. Um, Algolia today is worth 3 billion, probably would, would be IPOing if it wasn't for the, the markets. But look, it was just the, the founders were SaaStr super fans in the early days. And, um, they had come out of Y Combinator. Um, the round was full. They sent me an email a week after demo day. I was lucky, I met them. Um, and I was just in love with the problem, which we'll talk about. I was in love... Algolia does search as a service. It's an API to automate search. And when I was a founder, this was one of my top five headaches was that our search servers built on Lucene would go down every day. Like, I wanted to bang my head on the desk.

   5. HSHarry Stebbings5:30

      (laughs)

   6. JLJason Lemkin5:30

      And so when you get some founders that can describe a problem you're passionate about and they have incredible numbers in the early days, you know, you wanna meet in, you wanna meet in 60 seconds, right?

   7. HSHarry Stebbings5:42

      Yep.

   8. JLJason Lemkin5:42

      Um, but the key was staying in your lane. The key, again, was an inbound deal that picked me. I didn't pick them. Um, uh, I actually missed the deal because for a year I had a full-time email reader....I need to get this again. And my email reader said, "I don't know too much about this company, but I think you should meet them. You missed this email." And I'm like, "Oh, you're right, I missed the email." And so we met the next day, right before they were back to go back to France, um, and then, you know, within five minutes, 10 minutes, of course, I knew what I thought was true was accurate, and I said, "Well, I'll just buy as much of the round as you'll let me."

   9. HSHarry Stebbings6:14

      Okay, so if the round was full, sorry, I didn't know that. If the round was full, how were you able to invest? How much did you invest, and what was the price?

   10. JLJason Lemkin6:21

       Look, I think, I was the largest investor in this, in this pre- well, I guess what we call pre-seed round, but I think it was all angels, right, and, and micro-funds, so you just re-jiggered it, right? You call it, it's the thing that's frustrating when we invest in a YC company sometimes because I'm, I'm a, as, I'm a, as a ex-founder, I'm passionate about YC but it's also such a game, right? And just everyone finds out, "Oh, sorry, your allocation has been reduced (laughs) 50%." Probably what happened, I, I, I, it was, it was a new, it was a new experience for me, but all of a sudden there was the room to do, to do half the round.

   11. HSHarry Stebbings6:50

       So, how, so how much did you put in, and what was the price?

   12. JLJason Lemkin6:52

       Well, that's interesting learning. And again, this is a long time ago, right? So I did only 500K in the first round and I bought up in the next. I did three-and-a-half million in the A. Um, so I did 500K in the seed at 12 pre, so it was low ownership, relatively speaking, at the time, and there were a bunch of reasons for that. But in a classic YC thing, we, I got a deal. L- it was like, you could either do 500K at 12 or a million at 15. And I didn't know, it was my second investment and I was, I was very valuation sensitive. In fact, this deal at the, when I was working at a traditional venture fund, it was seen as very expensive at the time, given that they were like a 10K MRR. And, um, so I chose half the amount at 12 instead of double the amount at 15. And that makes sense if you're optimized around small exits, right? Actually there is a logic to that, right? But n- now you look back and we laugh today, right? In 22 it's like, wh- you could've had, you could've almost doubled your ownership for a modestly higher valuation. Like, what a numnuts. Um, but I was so focused, not only was I learning in my second inve- venture investment, but I was so worried about losing money, right? And I, tha- that's a mistake you gotta, you gotta lear- y- y- like, you don't wanna go too far, you don't wanna start off in venture and burn all the money in the first six months, but you gotta realize how to lose money. And for me it took me years, years to learn how to lose money, years h- to learn that, and I, I didn't even lose any money for five or six years, um, but I had to learn how to get my, g- wrap my head around it.

   13. HSHarry Stebbings8:17

       How did you learn how to lose money, Jason?

   14. JLJason Lemkin8:20

       Look, I'm not the smartest investor out there, or the highest velocity. Honestly, I had to get up almost 10X on my initial investments to realize that losing a 1X doesn't matter. I had to get there. I was terrifi- as a founder I was terrified of losing my VC's money. Like, I sweated it every day. I raised, oh my god, I raised $8 million in venture capital. I thought the world would end if I lost them a dollar. Di- didn't matter, right, to, to, especially to m- I was in Emergence too, that's a, like a 12X fund. They didn't care if they lost $4 million on that fund, but I, I worried every day, an- and I, I did the same thing. But then once you're up literally, you know, hundreds and hundreds of millions, at least on paper, if you're a seed investor you fi- I was slow. I finally got the perspective, I'm like, "Listen, I gotta, like, take a little bit more risk." And, and a lot of the, the, the great GPs that were investors in me then, the Byron Deters and others were like, "You gotta take a little more risk, Jason. Like, it just doesn't (laughs) matter." But I was slow, I just had to feel it and I just, um, I didn't want to, I didn't want to lose much money until it really did not matter.

   15. HSHarry Stebbings9:19

       So the interesting question is, 500K at 12.

   16. JLJason Lemkin9:22

       Yeah.

   17. HSHarry Stebbings9:22

       Would you have done that deal today? I know how you invest today. Would you have done that deal and taken that ownership today?

   18. JLJason Lemkin9:28

       No. Well, there's so many lessons when you start learning. I, I think you and I might have talked about this when you started investing more aggressively. No. I, well, first of all I would've done the million at 15 in a heartbeat, right? And that would've been my bare minimum of investment, right? 'Cause then I would've owned 8% or something of the company. And, uh, no, I would've passed on it, and of course it would've been an error, right? But, um, I'm sitting here at this stage of my investment career and, and really anything under 10%, um, I, it's hard to take seriously. It's just hard to take seriously. I will do it if I fall in love with the founder, I will do it if it's a friend, I will do it if there are other reasons, right? Um, frankly, I will do it to help build a more inclusive portfolio. Um, uh, the majority of the companies I've invested in have a woman CEO, and, and right or wrong I, I, one of the ways I've done that, which is probably not the best way, was to mix and match ownership stakes a little bit. But yet, if it's not at least 10%, and I wanna have i- each, in each batch of investments I wanna have at least one a- as a solo GP that I own 20% or more of. Like, I want that because honestly it's the only way you can make enough money. You, you wanna own 20... If you, if, if you're a seed investor and you're a solo GP and you own 20% of something worth a couple billion dollars, that's, I think, what the game of venture's about. And I think if you don't play it to win you shouldn't have, you shouldn't play the game unless

5. 10:48 – 12:36

   Do you worry about adverse selection?

   1. JLJason Lemkin10:48

      you need a salary.

   2. HSHarry Stebbings10:49

      Do you thi- do you not worry about adverse selection? The ones where you can get the 10% plus are the ones where you probably shouldn't.

   3. JLJason Lemkin10:54

      No, I don't worry about it anymore. Because what I've learned is that, um, like the Algolia one. Listen, Algolia was not the hottest company at YC Batch, but it was, it was probably in, whatever the top, the hotter group, but it was not the top one, right? Whatever it was. But the best founders always have multiple options, even today. Even in, even in a growth round today they, the best, the, the incredible ones have multiple options. And if you're lucky enough that they pick you, and you play the adverse selection game, you're, you're playing weird psychodrama in your head. Like, you, you, but you have to believe there's a reason you pick you. The worst, the worst line you get, this is why I don't invest in any founders that don't love Saster, because I, I get some Sony baloney line, like I, I, I talked to this great founder about a three or four weeks ago, "I really want to invest in this company." She wa- everything was great about these metrics, right? I mean, you'd love it if you saw it. A- and she was like, um, "Well, I'm still learning about Saster." I'm like, "Ugh. I know this isn't gonna work out." (laughs) Then we have some sort of weird adverse selection thing where I'm probably either being used as a stalking horse or it's too early in the discovery, and you know what? That deal didn't work out.... it, it didn't work out, right? And- and- and I- I ran that experiment one more time this year after nine years of investing to- to- to challenge yourself, and I won't run that experiment again. Like, I will only invest in folks that come through the funnel and pick me, and I'll do it somewhat poorly. But, um, if you, if you can find a way that just even once a year one of the truly best founders picks you and you p- and you, and you're smart enough to recognize that, like, that's all it takes, i- if your fund size isn't huge, to win in venture. Like, you need a real unicorn a year with large ownership, and the math is magical. But if you don't do that, you're running something for feats.

6. 12:36 – 16:20

   Betting On What You Know

   1. JLJason Lemkin12:36

   2. HSHarry Stebbings12:36

      One of the main reasons I think f- I- I've seen founders pick their venture investor-

   3. JLJason Lemkin12:40

      Yeah.

   4. HSHarry Stebbings12:41

      ... is the alignment of realization of problem. You feel the problem of search-

   5. JLJason Lemkin12:47

      Yeah.

   6. HSHarry Stebbings12:47

      ... and they see that in you. They feel your passion. And you've said before about betting on what you know when you go from CEO to VC.

   7. JLJason Lemkin12:55

      Yeah.

   8. HSHarry Stebbings12:56

      Wh- what did you mean by this, Jason?

   9. JLJason Lemkin12:58

      Yeah, it's the same advice I give to lots of op- operators. Um, look, I came out of a, you know, I c- I came out of a second-generation SaaS company now called AdobeSign, and I had, you know, we, we hit a million a month when we sold to Adobe, 12 million a year, growing 100%. And I just... But, but we had a tiny team, and I had so many headaches. And my biggest headaches were, um, you know, we talked about our search servers going down. We used f- we used a, a cool in-browser thing that didn't scale. Then we switched to Lucene, which is basically Elastic today, but it was an early deployment and we didn't have the right engineers to make Lucene scale. So, so search was core to our product, and when you'd search in the contract with Harry Stebbings, like, it would crash the, the, the, the product. And so it just drove me nuts as someone who was very product-focused. So I had this problem. Our contact center never really worked, so I invested in Talkdex as my third investment worth 10 billion. I invested in Front, which is worth 1.7 billion. I invested in Gorgias, which is number one contact center in Shopify worth almost a billion. I invested in MaestroQA, which will be worth a billion in the not-too-distant future. So I knew this contact center was one of my headaches, getting my contact center, search, contact center. I could never get Salesforce to work for me, so my first investment was Pipedrive for an elegant CRM. Um, and then our whole outbound cadence was broken, so the Outreach-Salesloft mix. I invested in Salesloft, which exited for two-and-a-half billion, uh, last year to Vista as well. These were all, like, my top headaches. But interestingly, the things that worked well, like payroll, like I remember I was, you know, I met Josh Reaves really early. He was such a good CEO, right, really early. He didn't ask me to invest, but I remember I met him early, but I didn't get the problem because it wasn't a problem I had as founders. My payroll (laughs) always worked just fine. This wasn't even in my 100, top 100 problems. So I knew there were HR issues. I knew recruiting was hard, so I was involved with Greenhouse, which sold for 800 million very early, pre-revenue, right? 'Cause I got that. But I just didn't get payroll. I didn't get a whole bunch of other things that worked really well. I didn't even get parts of web design 'cause I had a great designer. Um, so it sounds silly, but when I talk to folks that come out of different, uh, success stories, um, I'm like, "Just don't, don't, don't do what a lot of VCs say, which is wait a year, slow it down, take it easy." Like, no, I'm like, "Invest in, like, five companies your first year that are your top problems where you have this special insight, and you'll know who the best founders are in that space too 'cause they can't bullshit you. They can't bullshit you 'cause you know," 'cause you just saw your search servers go down four times a week. So when this group of French co-founders come in and they can explain to you exactly why you had your problem and why their product is 10 times faster and get deployed in, d- be deployed in an hour, when we've been spending two years trying to get this to work and it doesn't work, and this is 10 times faster in one hour? I mean, you know, i- i- y- you, you, you, you know, you, you buy every share you can. So, but, but I will say today, you know, it's funny. Today that's, in some ways, that's decayed, right? I know a lot about community with SaaStr, as you do, right? And I remember you made a comment to me not too long ago that you should have invested in Riverside that we're on, right? Because you knew the space. So wh- so that was your mistake, right? But as investors, the, as folks that have gone from CEO to VC, you've got about two years before you'll understand the problem, right? You'll understand the problem, but not necessarily what's next generation, right? Like, my head of customer success, like, we used New Relic very early, and I begged my head of customer success to go there next. But I'm not sure I would have understood Datadog, right? It was one generation. I would've got the problem, but I wouldn't have been able to say Datadog would be huge, even though I knew New Relic would

7. 16:20 – 18:46

   How to Retain Plasticity as a VC

   1. JLJason Lemkin16:20

      be. So you got this two-year window.

   2. HSHarry Stebbings16:21

      Can I ask, how do you retain that plasticity? Like, when you look at yourself now, you know, you haven't been a SaaS CEO for many years.

   3. JLJason Lemkin16:26

      Yeah.

   4. HSHarry Stebbings16:26

      You've been a venture investor for many years.

   5. JLJason Lemkin16:28

      Yeah.

   6. HSHarry Stebbings16:29

      So you don't have the pain points and you don't know what is front and center for SaaS CEOs 'cause you're not living it. How do you think about retaining that awareness of pain?

   7. JLJason Lemkin16:38

      First of all, I think it is... I, let's be clear, my opinion, and I think, I see this around us, I actually think it is permanent decay for VCs.

   8. HSHarry Stebbings16:47

      (laughs)

   9. JLJason Lemkin16:47

      I don't think you can retain it. You can retain a curious mind, which I think is critical to this, right? A curious mind, which we can talk about me next, I have. But maybe there's a reason I've done six contact center investments in a row, because I- I- I can't think of something new. I just k- keep reliving my pain. I can't find six search investments, search APIs (laughs) , but I can find... Contact center keeps, keeps remaking itself, um, you know? It's the, it's the second- or third-largest category of software, so if you just wait, like I waited. Okay, well, Shopify is taking off. What's gonna be number one on Shopify? Well, that's Gorgias. Now they have 11,000 customers on Shopify. It's, you don't need, like, the, the biggest degree to relive your pain. We all can relive our pain again and again. But I think it's an existential issue, and I think anyone that says, "I, I, that it isn't," I think, is, uh, kinda full of it. You can either build a team under you that's close to the problem, right? Which is what I suspect David Sacks has done. I mean, off-the-charts brilliant, right? As a SaaS CEO. But I think his team keeps him fresh and alive, right? That's closer to it. But I think it's risky, and you, and you probably have to all converge on a more traditional venture playbook, and I struggle with that, right? The only thing that helps is, look, both you and I are doing something quirky, which is we are attempting to run operating businesses and communities at the same time as we're investing, right? So SaaStr Inc. will do 40 million this year. So there are a set of issues, a set of issues around sales compensation we're gonna talk about when we get off this year, commissions. Um, I- I really understand CMOs problems 'cause we have 200 CMOs that we work with, right? But it, but it's a narrow set of Riverside-esque investments that you get out of it, but it does keep me fresh. I understand the pain of having...... rebuilt the sales team, right, that closed 30-something million. Uh, I know the issues there. Th- I feel young in a sense in that, in that area. But, but parts of the tech stack, yeah, you get like, you age out of a lot of things in venture. You really do. And if you're not honest about it, I think you're, you just end up in a female king vehicle.

   10. HSHarry Stebbings18:39

       Why can't you just invest in another sea vent? (laughs) Um, but, uh, no, listen, I totally agree with you. Unbelievable. I didn't

8. 18:46 – 27:00

   Advice for Operators Turned VCs

   1. HSHarry Stebbings18:46

      know about the 40 million.

   2. JLJason Lemkin18:47

      Yeah.

   3. HSHarry Stebbings18:47

      I do wanna ask that, you know, you mentioned there about doing four or five in your first year, really taking advantage of knowing the pain.

   4. JLJason Lemkin18:52

      Yeah.

   5. HSHarry Stebbings18:52

      Is there any other bits of advice that you'd give to operators turned VCs in their first year of transition?

   6. JLJason Lemkin18:59

      Yeah. I would say d- one, don't listen to the advice to slow it down, right? I- a l- if you join a larger fund, their incentives are different than yours, right? You're new. The, the ball is set. They're just hoping, the, a large fund is hoping in the next two years, you find one, one notion, that's all they care about, and that you don't create a lot of drama or headaches, right? They're only looking for one. That's all they need out of adding you. So your incentives are... You want ten so that you can get a couple unicorns and get, and get your, um, and get your track record going. So, so invest in as many as you can, even if you have to, even if the ownership is suboptimal, even if you have to join a syndicate you wouldn't want to, even if you have to d- do a few as an angel, just, just do all the good ones. Um, and the second piece of advice is, and, um, I think actually this is a rule I've bent over time and regretted every single time I do. Um, they have to be better than you. So, this is the rule that only operators get and founders and VCs do... When I tell this to the most successful VCs, they don't get what I'm talking about, or s- the almost successful ones. You have to invest in CEOs that were better than you. If you know the problem, if I, if I know, if, if I'm, if I'm a podcaster and I know r- Riverside or whatever the other versions are, and I, and I... Oh, look, Riverside's great, we're on it today, and you meet the CEO who I don't know, and he's not better than you, Harry, you shouldn't invest. But if you meet the CEO of Riverside, and my God, you're, you just know that whether he's 5% or she's 5% better than you or 50% but they're better than you and you've already had a decent outcome as a founder, you can't lose in those ones.

   7. HSHarry Stebbings20:24

      Yeah.

   8. JLJason Lemkin20:24

      You can't lose in those. So for... You know, we're, we're jumping around a lot, but if we go back to Algolia, and, again, this was the first venture investment I did when, when it was unanimously no, and I still did it. But the founders were clearly better than me. The traction was better than I had, the understanding of the problem was better than I had as a founder, like adjusted for time, and they were better than me. They were better than me. And I've never... And, and, and where you can... The mistakes I've made is whether there's traction or the c- product's cool, but the founders aren't better than me, 'cause this stuff's so hard, it's so competitive, it's so agile, that if the founders aren't better than you, in two to three years, the, the product's decayed with, against the competition.

   9. HSHarry Stebbings20:59

      Okay. So the founders were better than you.

   10. JLJason Lemkin21:01

       Yeah.

   11. HSHarry Stebbings21:02

       W- we're gonna get on to the partnership warnings to it.

   12. JLJason Lemkin21:04

       Yeah.

   13. HSHarry Stebbings21:04

       The other element though, th- there's a couple of elements we're gonna dig into, but like competition is always one that VCs spend a lot of time on.

   14. JLJason Lemkin21:09

       Yes.

   15. HSHarry Stebbings21:10

       When we look at the competition, you were competing with Free.

   16. JLJason Lemkin21:13

       Yeah.

   17. HSHarry Stebbings21:13

       Tough competition. How did you answer the question of how Algolia would beat Free alternatives and get comfortable with that?

   18. JLJason Lemkin21:21

       Yeah, I actually think it'd be even h- you know, I think, I do think competing with open source is really complicated, right?

   19. HSHarry Stebbings21:26

       Yeah.

   20. JLJason Lemkin21:27

       I feel like I'm a tiny bit smarter about it today, although I haven't done as many commercial open source investments as I wish I had. Competing with Free is both t- tough and wonderful, because it, it cuts through the Sony baloney. Like if you, if your product, if you're competing with a world-class open source product and you are getting incr- relatively incredible traction in the early days, that means your product rocks for some use case. It's not gonna be the best for everything, right? It cannot be the best for everything. But there must be some segment, some sliver where you are literally 10X better than, or you would never get any traction, right? Everyone's gonna futz around with the Free version. So, there's probably no better signal than when you compete with a free open source platform and your product is exploding even in an early day, because it's, it's gotta be magical. It has to be magical on some axis. So actually, like, yeah, hard on the founders, but easier on the ve- VC. (laughs) You don't, you, you're, you can't buy that traction typically. You can't buy it with marketing dollars. You can't buy it with referral games. You can't get it like EchoSign and DocuSign did in the early days, 'cause there's nothing else, so you tolerate a horrible product. Um, it has to be magical from the beginning.

   21. HSHarry Stebbings22:37

       Can I ask, you know, so many founders present the, you know, two by two matrix with them in the top right-hand corner-

   22. JLJason Lemkin22:43

       Yeah.

   23. HSHarry Stebbings22:43

       ... alone, you know. Wh- when you think about the way that founders present compe- competition and competitive landscapes, what advice would you give them in terms of how to present competition the right way to potential investors?

   24. JLJason Lemkin22:56

       Yeah. I, I think, um... Well, I'll answer two things. First of all, most of those two by two matrices are throwaway slides. Don't have a throwaway slide. Don't ha- it's a wa- not only is it a waste of everyone's time, but it, it makes you, it makes you look less than great if you have a throwaway slide. If you, if you can't come up with... Let's step back for a minute. If you can't come up with a two by two matrix, do it a different way. Do it in text. Do it in f- a 10,000 line memo if you have to. Um, do it in a comic book, uh, roo- uh, graphic. But, but don't f- if you... The two by two doesn't work for you, and a two by two is a construct, right? If it doesn't work for you, don't do it that way, because there's nothing worse than when I see a competitive slide and I see the two by two and it just, I, I, the axes make no sense. I'm like, "Ugh." Okay, this, th- I don't wanna do this one. (laughs) Because, because here's the thing about competition. I can think back vividly on the handful of investments I've made that haven't worked out. I can remember how they've answered the competitive questions, and it's always been mediocre. Um, the best founders know their competition cold and they respect it. They respect it. Now, maybe in B2C it's different, I don't know. But in B2B, you, you know... For example, one of the things I loved about Algolia was before I even met them, they had this iconical piece of content marketing back when we barely knew what content marketing was. And it said, "Algolia versus Elasticsearch," which is free. And they explained quite honestly where Algolia won and where it didn't, where you should use each product. It was data-driven in terms of spec for search time and everything, and they said, "H- listen, for these use cases, do not use Algolia."... okay? This was not a- a- a- a- a VP of product marketing that doesn't even know what the product does. This was v- incr- and it worked, it got them tons of leads and c- 'cause people would type in Elastic competitor, or- or ... and then they would find Elk. So it worked. But that's what you want. You want founders that profoundly respect the competition and they know exactly today where they sit in the market, and they know in three or four years where that white space is going. And that's what you want out of a competition slide. Who cares? Everyone has s- between two and 2,000 competitors. I wanna know h- why you're breaking out and where it's gonna go, and then your jaw drops because 95% of founders fail that- fail that exercise.

   25. HSHarry Stebbings24:55

       Uh, for me, the thing that w- I always run away from is kind of commoditization products. And what I mean by that is products where it's just a race to the bottom. Now, you could see payment processing as part of that. I know many investors lost on Stripe and Adyen because they viewed the market as that.

   26. JLJason Lemkin25:08

       Yeah.

   27. HSHarry Stebbings25:09

       But how do you feel about commoditization products where it simply is a race to the bottom?

   28. JLJason Lemkin25:15

       Listen, I'm with you and, uh, you know, all things being equal, I'd rather have a product that hits small, medium, and large customers, right? S- and, and has a bit of a mid-market or enterprise element, that isn't very low-end or race to the bottom. But I also think that is an- a VC-ism, and- and you're gonna lose great deals due to VC-isms. All these VC-isms are- are truths. And, you know, when I started investing, they harked back to the dot bomb era when everyone knew things didn't work. Um, th- I don't know where we're harking back now to 2016, 2017. There was a famous tweet that David Sacks had, um, before he started investing in craft that all the good ideas in SaaS were done, after he sold Yammer because Y- this was ... I w- you know, we were of the same CO class and it seemed like for a couple years there, it was done. Like all the categories had been built out until maybe 2015. And so my point is this race to the bottom thing, like, is it true or is the fact that Stripe's API was so elegant and disruptive and that they could build so much functionality around it, that why would you use anything else? Uh, maybe- maybe we missed the whole point and that this is not a c- a Str- I do not believe Stripe is a commodity, right? Uh, whatsoever. And, um, if I were building a SaaS company today from scratch, and- and I sh- I wish I'd invested in Stripe 'cause this was also in my top 10 problems as a founder, was payment processing. I would use Str- I wouldn't even, I w- if- if anyone, if my engineering team wanted to use anything but Stripe, I would really challenge them. I'm like, it's proven, it works, everyone uses it. I- I'm in. I don't even care what the fees are that much. There might be ... they're like, they might say, "Hey, look, use something like Pilot that can handle billing and automation too." They might con- I might do that, right? But for the pure API piece, no. So I don't know that this- this- this race to the bottom thing i- i- like you'll, you- you- you- you might just miss some things. Uh, all these ... the- the tough thing is all these VC-isms are accurate

9. 27:00 – 28:39

   VC-isms: The Biggest Mistakes VCs Make

   1. JLJason Lemkin27:00

      and they'll all lead you to missed deals.

   2. HSHarry Stebbings27:02

      You said VC-ism there multiple times.

   3. JLJason Lemkin27:04

      Yeah.

   4. HSHarry Stebbings27:04

      What do you think the other mistakes that VCs make or you always laugh at when you hear them talk about competition?

   5. JLJason Lemkin27:10

      I think the one ... Look, I- I'll give you a version of it. The- the one that we all hate, of course, f- of ... the old, the old, old version of is why wouldn't Microsoft or Google or whomever do this, right? Then it became why wouldn't ... then it became why wouldn't Salesforce do this? Like, you know, I- I- I was involved, invested in SalesLoft pre-revenue, right? We sold for two and a half billion last year. Everyone thought this was a terrible category. SalesLoft and Outreach. Outreach is worth four billion. They all thought it was a terrible category because of course Salesforce is gonna do this. Of course, like automating sales communication with customers, like why would the number one C- CRM not do this? There's no way they're gonna let these guys get big enough before it's- it's just built into Salesforce, right? So why wouldn't they do it, right? Why- why could- why should Calendly even exist? Google should have built that, right?

   6. HSHarry Stebbings27:56

      That- that is so true. I mean, Calendly i-

   7. JLJason Lemkin27:58

      Why? Why? Why? I mean, listen, Tope had a couple incredible workflow insights in this product that- that- that were profound, but, you know, like so- so that's the ism, like the worst ism is why didn't somebody do it? And I think that you can ask that question in a thoughtful way, but it's a lazy question if you don't- if you don't ask it in a thoughtful way, right? I- I wanna know why ... it's not w- it's not r- ... tell me, r- why didn't Google build it? Just- just so ... I- I always use the Columbo type approach. Like, "I honestly don't know." Like, "Why? Why do you think Google has not built this into their calendaring function?" Ask the question. "Why hasn't- why doesn't Salesforce build SalesLoft or Outreach back in the day? It seems so core. Tell me why they haven't built it." Right? And the smart founders will actually

10. 28:39 – 30:29

    Have you ever had a portfolio company get smoked by the competition?

    1. JLJason Lemkin28:39

       tell you why they didn't build it.

    2. HSHarry Stebbings28:40

       C- can I ask, have you ever had a portfolio company been smoked by competition, and what did you learn from that?

    3. JLJason Lemkin28:46

       Yeah, I have. I th- I think I've had ... well, I- I've had a couple and then I've had one that wasn't, even though they were slow, which is interesting, which was my first one, Pipedrive. So we can contrast them. Yes. They're all smo- like, the- the f- the fact is what they say on ... this VC-ism is true, but- but really it's only the operators that say this, which is it really is the folks that can iterate more rapidly that win.

    4. HSHarry Stebbings29:11

       Mm-hmm.

    5. JLJason Lemkin29:11

       Um, you know, whatever you use. Let's say you use s- story points and let's say you put out four st- 40 really high quality story points a quarter, whatever, however you measure it, and- and- and your competition puts out 30. Okay? But think how that compounds over two years. It compounds and you find a way to double your team. So by the end of year one, you're doing 80 and they're doing 30, and then you're doing 160 and they're doing 30. But then think about the amazing things you- you pushed out, right? The Shopify integration and the mobile features and all of this. And they're- they're struggling to keep up with bugs and feature gaps. And the pretty good teams get it done, but they complain all the time about how hard it is, how hard it is to launch the integration, how hard it ... but they still do it. The great teams just, they ... your jaw drops what- what they ship each month in B2B. It's easier in B2C. In B2B, your jaw drops. And then the mediocre teams, like nothing happens and the- the product is frozen in time. And- and, uh, you know, Evernote, we know r- Evernote just got acquired, right? We just watched that after all these years, and Evernote was so ... i- i- maybe it was before you were using it. It was so disruptive when it came out. Everyone in the internet used Evernote, especially for clippings, like every smart person. It was the notion of its day. Not just 'cause they're similar, but because it was so cool. And, uh, probably 'cause the founder turned over and there were other turnovers, it was never able to re-innovate ever again. Like it lost a- d- i- i- innovation. But the best ones keep going. And Notion is, Notion's nothing like it was

11. 30:29 – 32:17

    Pre-PMF: Is speed still everything?

    1. JLJason Lemkin30:29

       when we started using it for our team.

    2. HSHarry Stebbings30:30

       Can I ask, pre-product market fit, is speed still everything? 'Cause there's the idea of crafting, testing, making sure-

    3. JLJason Lemkin30:37

       Yes.

    4. HSHarry Stebbings30:38

       ... you hone that customer message, and then when you get product market-

    5. JLJason Lemkin30:40

       It is.

    6. HSHarry Stebbings30:41

       ... fit, go.

    7. JLJason Lemkin30:42

       It is.

    8. HSHarry Stebbings30:42

       What you actually say ... okay.

    9. JLJason Lemkin30:43

       It is, because, um-... the faster you can iterate, the faster you get into market and the more tests you can run. I know Figma spent seven years crafting their product in, in closed beta. But I, first of all, I'm not sure that story's completely true. I bet if we got Dylan back together and we really picked at it, it wasn't... Like, I bet he actually got some version of it out early. And I bet before this version one came out, there were 25 versions. Now, I might be wrong, but I'll bet you there's 25 versions that went out. Um, 'cause you want those reps, you need those iterations. And however you do it, whether it's with friends, beta customers, users. Otherwise, when you launch, like, th- this was my stress point when I launched as a SaaS founder, we burnt half our money before we launched. And luckily, it wasn't all of it. It was different time, but, but what I knew... And I pushed the team really hard to launch too early. It was a mistake. We still launched too early, but I knew we would run out of iterations. I knew our, our initial launch was not gonna be the right product. No one had ever really done eSignatures at scale back then. DocuSign was a Windows printer driver. Like, we were doing something kind of innovative and I knew as cool as the product was that we were using, it was not gonna be monetizable the way it was. So, I wanted three or four iterations, and I knew I had about 24 months total of time to do it, right? So, I, I shoved our product out the door after six months, my team almost killed me. It was a mistake, but it gave me 18 months to get to two million in revenue and a sellable product, like a minimum sellable product. So, the better the team is, the more those iterations you get in. And it's just, it's- it's wonderful when you see it happen because they d- they just have this leg up.

    10. HSHarry Stebbings32:16

        Can I ask, Jason, you mentioned

12. 32:17 – 35:30

    Zombie SaaS Companies

    1. HSHarry Stebbings32:17

       there about burning half the money before the launch. We've seen a whole generation of SaaS companies raise, you know, 50 million plus with, uh, 30 to 500K in ARR, in that range. So, really pre-PMF still. What happens to them who've raised that much at 150 million plus? What happens?

    2. JLJason Lemkin32:37

       I don't know. L- I- I liter- for better or worse, I- I've invested in none of them, so I can't tell you empirically. As- as- I- I- I'm scrappy. Uh, I don't see any way any of them succeed. Um, I'm- I'm very concerned... I'll take it back. I might have done one investment vaguely similar. What I mean is, what- however you define this term zombie, I do worry about zombies. Zombies are the ones that took advantage of a valuation last year, whether they raised 50 or 100 or they raised 30, right? Um, now they have infinite runway. They have runway forever. And, um, and when you get an investor update is, you know, good, bad news is, "We're not growing, Harry. We're, our growth has dropped from 150% to 0%." The good news is, "We have 10 years of runway. So, we're gonna take the next couple years to kind of think..." Like, this lack, it creates, these zombies have a lack of urgency, I think. And I think the VCs have kinda given up. In the old days, the VCs would be all stressed and yell at them, bring in a new CEO, liquidate the company. I- I think VCs just wanna ignore their zombies for the, for the moment because they have bigger, they have bigger problems to solve than their zombies, right?

    3. HSHarry Stebbings33:40

       But also, but also for VCs, it's not a problem. There is no exa- existential crisis. It, well, you can tell your LPs, they're figuring it out, they have lots of runway.

    4. JLJason Lemkin33:50

       Yeah, you can hide it from your LPs, yeah.

    5. HSHarry Stebbings33:52

       You know, it's- it's not a crisis.

    6. JLJason Lemkin33:55

       Yeah.

    7. HSHarry Stebbings33:56

       Do you see what I mean?

    8. JLJason Lemkin33:57

       I think it is not a crisis. Um, I will say that personally, the handful of things I have that are vaguely like that, I wish I could get my money back and put them into another investment though.

    9. HSHarry Stebbings34:07

       Well, so what I'm seeing now though is-

    10. JLJason Lemkin34:09

        I want, I would like... It's not that I'm worried that- that- that, about it, but like, I'm like, gosh, like even if it's just a couple million bucks, what if I could have put that into a breakout seed company that could do a lot with $2 million, right? Instead of this zombie $2 million is just lost, zombie in the fire and across the- the wilderness, the Arctic for the next seven years.

    11. HSHarry Stebbings34:26

        But man, I'm seeing this, I've seen four in the last month-

    12. JLJason Lemkin34:29

        Yeah.

    13. HSHarry Stebbings34:29

        ... where the series B investors have come back and said, "Hey, Jason, it's not your fault, it's our fault, but it's not working. Give us the money back."

    14. JLJason Lemkin34:37

        Right.

    15. HSHarry Stebbings34:37

        "We'll give you a million in secondary. Go on your way and we support you."

    16. JLJason Lemkin34:41

        That's a good deal.

    17. HSHarry Stebbings34:43

        "Look, and we all win. We fucked up. It's not you."

    18. JLJason Lemkin34:45

        I haven't been part of one of those, but if that's common, then I think that's- that's like the- the Elon Musk's offer to the Twitter, "Take your, take your 90 days now and don't show up on Saturday." Like, if the founders won a million dollars rather than to not keep going, it's a great incentive alignment because that's a lot of money and the VCs get 30 million back. They get, they probably don't get one X though in that scenario, or the math wouldn't work. That's- that's the part I don't totally get. Um, but, uh, it's better than none X, right?

    19. HSHarry Stebbings35:10

        Totally. If you get 0.8X back, you know what, actually, you know, it's gonna be a zombie anyway, take the 0.8X back.

    20. JLJason Lemkin35:16

        Yeah.

    21. HSHarry Stebbings35:16

        But my favorite thing is all the founders are like, "Fuck you. No."

    22. JLJason Lemkin35:20

        Really?

    23. HSHarry Stebbings35:21

        I'm like, "Oh, I..." Yeah, I was like, "Oh, I would not do that. I would take it." It's not a good... (laughs) So, I totally agree with you there. Um, yes, um,

13. 35:30 – 38:09

    Algolia’s Market Size

    1. HSHarry Stebbings35:30

       (laughs) it's amazing how this goes off schedule. Um, I do wanna go back to, to Algolia though 'cause, like, market size is another one where there's-

    2. JLJason Lemkin35:37

       Yeah.

    3. HSHarry Stebbings35:37

       ... a lot of VCisms. Algolia's market size, I read your tweet about this, it was $2 million I think it was.

    4. JLJason Lemkin35:44

       Yeah, it was funny. It was, that was a learning. When the- the first one was Pipedrive, so you don't have to do a TAM analysis for CRM, it's the, it's, you know, a- at least back then it was the largest category of software, so you really don't have to do the world's smartest, uh, TAM analysis. It's like, okay, who's in the next generation of SMB CRM? Who seems to have the most traction? That's this one, Pipedrive. Okay. Like, that's the end of your TAM analysis. Algolia, I knew this, again, this was one of my top problems as a CEO, was getting search to work as an API. But, you know, you had t- you basically had two, three competitors at the time. You had, uh, versions of Elastic, which was a services business, so it's free. Um, you had a deprecated Google product no one was using. Okay? So, that doesn't really count. And then you had weird niche offerings from Amazon that weren't directly competitive, but the best I could tell was doing $2 million in revenue. So, all of these products together were doing two million. Um, you could, you could have looked at it differently, you could have looked at some things happening in e-commerce and called them search-related products that were bigger, um, which would've been a s- a more thoughtful way to do it. But literally, the TAM was two million and I was deeply challenged on this. I'm like, "Okay, listen, obviously, like, search is important part of the internet." Like, it's how we all got on the internet, right? Was, was hopping into Google or even Yahoo back in the day. It's- it's the onboarding, but for this B2B thing, like, I don't get it. And like, here was my dumb guy math, I'm like, "Okay, listen.... these guys are at 12K MRR by the time we're gonna do the deal, and they're growing consistently 25% a month. Now, on the one hand, that's, that may not be statistically significant. At, at, we can talk about it. But let's do a line. It is impossible for the TAM to be two million. (laughs) They will approach 100% market share way too rapidly if they are growing at 12 to 20% a month, even at a couple hundred K in ARR. It's not mathematically possible, and it sounds silly, but what I, what I have learned is that, you know, hyper growth in the early days can decay for a variety of reasons, right? But it does prove you have a large TAM. It always proves to me that if you grow quickly in the early days, you have a large TAM, even if it looks small. Your ............................ And all these categories get bigger, right? Um, you know, even eSignature is, not to talk too much about the old days, but like, that was a one million dollar TAM, right? And today it's a $6 billion business. But the technology remakes categories again and again and again. So you have to, you, you either have to be smarter than me and figure out how, like all these naval gazers are figuring out how Web4 is gonna remake categories, or this t- hyper growth in the early days, it's good enough for me.

14. 38:09 – 41:09

    What causes hypergrowth companies to plateau?

    1. JLJason Lemkin38:09

       That's all I need to know for TAM. Like that's-

    2. HSHarry Stebbings38:10

       I think-

    3. JLJason Lemkin38:11

       ... all I need to know.

    4. HSHarry Stebbings38:12

       You speak about kind of the hyper growth in the early days being a real signal. I think you've spoken before. I think it was about Pipedrive and kind of how they've plateaued at certain points in the journey.

    5. JLJason Lemkin38:19

       Yeah.

    6. HSHarry Stebbings38:20

       My question to you is like, what are the number one or two drivers why companies go from hyper growth to plateau? Why do they plateau?

    7. JLJason Lemkin38:27

       Well, I think they, uh, they all do. I mean, a few haven't, but every single c- company I've invested in, uh, every uni- true unicorn, 100 million more revenue or billion more cash exit, all of them have had a plateau year. Um, all, 100%. And others have tell other stories. But, um, it's always, it's always a combination of, well, uh, it's almost a- it's really always not rebooting the management team. That's the real answer. It's always sticking with the 1.0 management team too long or Algolia, if we're talking about Algolia, Nicholas was very clear on this. He waited until 40 million to build his first management team. That was way too long. And Nicholas's problem, and he's been very direct about that, and this is a wildly successful company doing hundreds of millions, the problem is when you wait too lo- here's another problem founders have. If you wait too long to build your management team, it's like, it's kinda like the product conversation we ............................ You don't give yourself another chance because if your first management team doesn't work out and you, and you recruit them at five million, okay, you got another chance. Like it's painful. But if you, a lot of founders these days, in the boom, actually they waited. They waited to hire a real VP of sales or especially a VP of marketing or VP of product and then you, sometimes you don't get that extra chance if, when you screw it up because you lose a year with every bad VP. You hire two bad VPs, you might lose a year and a half. And so timing the, your, your second management team, your, it, that's really the plateau. You know, the underlying issue is often not expanding your TAM enough, not expanding your surface area, not going enterprise enough, not building a second product. Like we see all these root causes, but the great management teams figure it out. The great management teams f- figure out when to go up market, when to add a second product, when do they, they figure that, that, what looks like the reasons, it's all really the management team.

    8. HSHarry Stebbings40:02

       Jason, do you have many of your winners that still have the founders as the CEOs? When I think through the winners that you have.

    9. JLJason Lemkin40:09

       All but one.

    10. HSHarry Stebbings40:10

        Most- All but one? So who-

    11. JLJason Lemkin40:11

        Yeah. All but Algolia that we're talking about. Nicholas did, did step down as they were approaching a hundred million and Bernadette took over and it's been fascinating learning for me 'cause it's only one.

    12. HSHarry Stebbings40:20

        Well, I mean, did Timo at Pipedrive? Was he CEO till the end?

    13. JLJason Lemkin40:22

        Oh, I forgot. Yeah. Pipedrive. Pipe- there are a lot of CEOs at Pipedrive. You're right.

    14. HSHarry Stebbings40:25

        Okay. And-

    15. JLJason Lemkin40:25

        Timo came back and he came ... That, that, I take that one out because it was my first investment and I made so many mistake- we could have a different podcast, all the mistakes you made on your first investment. In Pipedrive I made ... Every mistake you can make as a VC, I made all of them and I, I would not make them. I, I immediately course corrected on the number two Algolia. I, the, the, and they're all-

    16. HSHarry Stebbings40:42

        What is-

    17. JLJason Lemkin40:42

        They all could be summarized by a, being, as acting like a VC.

    18. HSHarry Stebbings40:47

        Talk to me about that. What do you mean by that?

    19. JLJason Lemkin40:49

        I acted like, uh, you know, they, I, I wasn't sure it was worth my time. I would tell them how to raise money. I would tell them this thing and that thing, and um, I, I dressed like a VC for a couple months. Uh, and it just didn't fit. The, the outfit didn't fit. Um, and um-

    20. HSHarry Stebbings41:07

        What, what's wrong with telling them how to raise

15. 41:09 – 47:15

    Why Only 15% of Founders Listen to their VCs

    1. HSHarry Stebbings41:09

       money? Surely we're here to help coach some fundraisers.

    2. JLJason Lemkin41:12

       I think as a VC, look, you gotta ... And look, it, it's, it's harder these days when things are stressful in the markets. You gotta give the best advice you can, timed the way you can, and once every two years you have to give some arse kicking advice, which I hate doing 'cause I'm usually the only one left these days that'll do it. Every two years you have to give some arse kicking advice. But then they gotta just run with it. It's their company, right? But there is this, when I grew up as a founder, VCs were still much more patriot- patriarchical and patronizing than they are today. They're still patronizing today, but boy it used to be worse. And I still, I still had a, that bit of the abused founder in me by being abused by my, by a couple generations of VCs where I, I acted a little bit like that and then I immediately saw what I did and I'm like, "I could never, never do this again." I'm just g- I'm here to ... A- and, and it helped, going to one of the conversations we had actually before we started, it helped that my second investment I wasn't on the board interestingly, right? Because then Talkdesk I was, my third. It allowed me to have a more aligned collaboration with the founders than I might have had if I were Excel, the largest investor. Right? That's a, an interesting learning. So I course corrected, but um-

    3. HSHarry Stebbings42:19

       I see. I, I would, I would disagree on the patronizing. Well maybe, I'm sure they're patronizing. But I find say I've had one which has not gone well recently.

    4. JLJason Lemkin42:26

       Yeah.

    5. HSHarry Stebbings42:27

       And I say to the other investors, "Why are we not doing more?" And they go, "Oh Harry, it's a bad look. It's a bad look to say that."

    6. JLJason Lemkin42:33

       They're right. We're, you and I are wrong and they are right.

    7. HSHarry Stebbings42:36

       Well, fuck off. I don't want to be part of a business where we just say, "Yeah, sure, we're happy to actually not oblige by our fiduciary responsibility and actually not do what's best for the company." I'm gonna say the hard truth Jason, and say you should be on TikTok's ............................

    8. JLJason Lemkin42:50

       I know Harry and I think, I think, I think ... I, I, I, I th-... time will tell whether we're right. Um, I- I- I- it's funny, I put this on Twitter yesterday, and, um, this tough conversation, right? And maybe the sixth investment I did is a company called Logjikal. Um, I love this company, it's e-discovery, but it'll take a long time to get... It'll get to a hundred million, it's worth hundreds of millions for real. But it's not, it's, it, it's on a thoughtful growth. It's never raised again. And, and Andy's like, "Yeah, you gave me that kick in the ass conversation in 2017, and I, I, I needed it, and I'll, and I'll, and I'm grateful." But he still remembered it as a hard kick in the ass in 2017. And I realized there's this line, and I would say the very best founders, the top... And not the very best. Uh, well, you're, hopefully you're invested in pretty good founders, right? So you're already in kind of this, this, this Ivy League segment. But I would say even of this Ivy League of venture-backed founders, I would say only maybe 15% really can take the feedback, and, uh, 25% will tolerate it, and then 60% will hate you for it. They hate you for it. And that's why all the other folks in the room say nothing, Harry. And I tried to say... Literally, I had a tough board meeting, uh, about a month and a half ago, and the founders asked me eight times, "Well, what do you think, Jason?" And I'm like, "I- I'm just not... I'm gonna pass. I'm gonna take a pass on this, (laughs) this, this discussion."

    9. HSHarry Stebbings44:08

       (laughs)

    10. JLJason Lemkin44:08

        I said, "You literally, you do not want to hear what I have to say. I gotta be honest. You don't, trust me, you don't wanna hear what I have to say." And they ke- they kept pushing me and pushing me and pushing me. And finally, I was clear. It's like, "I love what you guys are doing, but your burn rate's unsustainable. And if you don't make... You don't have to make a change this week, right? You have a lot of... But if you don't make a change in the next 30 days, it, you will fail. And here are the 10 reasons you'll fail." And they're upset with me to this day. And, um, the Andy's from Logjikal, I- I'm glad he wasn't. We bailed out the company when he spent too much money. And, uh, but I would say the majority of the time I've had to be the ass kicker, the relationship is damaged permanently. And not with the best ones, right? Not with the Algolias, like we're talking about, but, uh, with more than I would have expected, Harry. And is it worth it? I'm not sure. I'm not, I'm not sure it's worth it.

    11. HSHarry Stebbings44:52

        I, I just want your thoughts. So when you go to an enterprise customer and you fucked up or the product's SSO is not working or whatever, permissioning is not working, they're gonna kick your fucking ass. And if you are a child and can't take that, well, you're not gonna have very good enterprise division. You're gonna have great engineers, great employees who are gonna advise you on your leadership and how it could be improved. If you can't take that, you're not gonna be a very good leader. So stop being a child.

    12. JLJason Lemkin45:15

        Yeah.

    13. HSHarry Stebbings45:16

        Like, help me... Like, that's indicative that they just can't take feedback. And then, you know what? Fine, we'll point to anomalies like Steve Jobs and Elon Musk. But predominantly, especially in B2B, that's actually just a sign of a bad leader.

    14. JLJason Lemkin45:31

        Maybe. I, I, I... It's not... I also think that the, the, the, the board member-CEO relationship is a nuanced one. It's complicated what it means and how it works. And I would say most folks... Uh, my feedback's always honest. It's always from the heart. It's, there's never any malice. And, and, and if we lose the money, it's fine. Like, it, it really, it's, it's relatively trivial for me compared to the founder. But most, most folks take months to deliver tough feedback. The truth is, this is the VC approach in 20- you know, 2022, 20... And he's like, "Give the tough feedback, but hint at it, uh, get into it, tell them maybe this, and then, and then talk about the big tough layoff meeting in, in two months." It's, it's the... And I- that's, I'm not that. I'm like, "I, I just... Do you really want my..." And then, uh, I, I ask, "Do you really?" And then they, you know, you get it. But, um, I just don't have the, the, the patience to sugarcoat the, the honesty. It's not even... But, but it's tough. I don't know that that's right. I think that VCs, you know, they're, they have a, they have peculiar relationship with startups, and maybe it makes sense to sugarcoat your feedback over three months. Um, and in the end of the day, as a manager, and I don't know that VCs are managers, it's always better if your report comes to the conclusion themselves. It's always worse if you have to tell them the answer. Like, you, you don't want to do that. And so VCs are so weird. We have these board meetings every two months, and I, we don't have the daily meetings to kind of hope that in a month or two, your VP of sales realizes Jack and, and Jill aren't going to work out. Like, the problem is, it's, there's these, these punctuated moments in time. And if you don't speak up, you can try it out of, out of band. Don't get me wrong. You can pick up the phone. But sometimes three months later is pretty

16. 47:15 – 51:50

    How Jason Convince his Partners to Invest in Algolia

    1. JLJason Lemkin47:15

       late.

    2. HSHarry Stebbings47:16

       Yeah. I mean, you said-

    3. JLJason Lemkin47:16

       Right?

    4. HSHarry Stebbings47:16

       ... you said about speaking up there. You spoke up in your partnership when no one else wanted to do Algolia.

    5. JLJason Lemkin47:24

       Yeah.

    6. HSHarry Stebbings47:24

       Talk to me about the internal discussions there and how you got it over the line when you were the only one and it was your second investment.

    7. JLJason Lemkin47:31

       Yeah. Yeah, I don't... It's, there's a bun-... First of all, I don't mean that to be critical. I think it's, I think it's, it's, it's just a learning. There's lots of investments that won't be unan-... And what's interesting, my third investment was Talkdesk, which is worth 10 billion today. That one was so unanimous that, you know, th- it was a yes before he left the building, right? Um, so, but both, both will probably end up being equally successful, right? So number 2 was, was all no. Number 3 was all yes. Nothing else I did was unanimous, right? Maybe the lesson is, you know, one of the VCisms I hate is conviction, right? Because conviction can, can just- justify so much sloppy thinking, but it doesn't mean it's wrong, right? And I was 100% sure this investment was, was going to be successful in Algol. I had zero doubts. Um, I had lived the problem. My colleagues had not lived the problem at the time. They were right about the TAM. They were right about some other things. They were wrong about a few things we could chat about too. But, um, you know, it was, uh... I was willing, I wa- I was so sure this would be successful that I was willing to take whatever hits it took to, to push it through.

    8. HSHarry Stebbings48:32

       Do you think investment partnerships are the best decision-making bodies? You have one person like you in this case with the-

    9. JLJason Lemkin48:37

       Yes.

    10. HSHarry Stebbings48:37

        ... domain expertise, the relationship, the knowledge, and then the other partnership, which not specific to this, but just generally, they don't have the relationship. They often don't have the knowledge. They may be specialized somewhere else. And it's a very different level of-

    11. JLJason Lemkin48:51

        Yeah.

    12. HSHarry Stebbings48:52

        ... knowledge barriers. Are they the best structures to make the best decisions?

    13. JLJason Lemkin48:57

        Well, look, here's the thing about what I've learned, what I thought about this over the years. I think... Forget about VC. In most true part- think about real partnerships you know. How many partners are there typically?

    14. HSHarry Stebbings49:07

        ... two.

    15. JLJason Lemkin49:08

        That's the right number. So VCs are legal partnerships, but I think once they're beyond two, they become dysfunctional. Almost they have to be dysfunctional. You start to lo- or at a minimum, you're only there because of the fund size, because it- you lose all the benefits of a partner once you're past... Now, there are great three co-founder startups, right? But, um, even three, it's usually two plus one, right? So that's the problem, is this corruption. We confuse the term. And I think, look, if you're gonna deploy half a billion dollars, traditionally, you know, you'd need at least five GPs to do that. That's the way the ma- You know, there, there are- there's crazy exceptions the last couple years. But so you, you had to kinda do it for the kids, for the LPs, and then you had to find a way for this to work. But no, I don't think when you have more than two partners that it's particularly helpful for... But I do think two, I think I would've been a much better investor. We were talking about this before we started. I would've been a much better investor with a partner than as a solo GP. I'll say it with 100% certainty. 100% certain I would've been better. I'm gonna do fine. Don't get me wrong. No, no, I will do well. But I, I could have had a fund or two for the ages if I'd had a partner, and I just- I just- uh, just when I did not have a co-founder, as a founder, I was less successful. It's, it's the sa- it's the same thing. Although it might not be the question you're asking.

    16. HSHarry Stebbings50:26

        Why did you not then?

    17. JLJason Lemkin50:28

        Look, the weird thing about venture is you gotta pick one of two types of partners, right? You can either pick someone that's as established as you, in which case the timing has to be right.

    18. HSHarry Stebbings50:39

        Mm-hmm.

    19. JLJason Lemkin50:39

        Like, are they gonna leave? Are they gonna leave Sequoia to join 20VC? Well, it might seem exciting, but whoa, you know, how much are they vested into at Sequoia? I mean, you don't even wanna know the numbers, right? So, uh, there are, there are one or two people I thought about working with, but what they would leave behind was, uh, made- made no sense. I, I wasn't even comfortable with it at the time, right? Then there's the up-and-comer, and that's what you wanna do nine times out of 10 anyway, right? Is bet o- is bet on the up-and-comer. I, I, I did some experiments there, both of which were successful, like, like... But they end up on their own journey. And sometimes that journey is not synergistic with the way you're running your fund, right? And so, yeah, I consider it a failing that I did not, as an investor, find a co-founder. We can call them a partner, right? But I do consider it a failing not finding a- finding a, a co-founder because the best co-founders are mega-accretive. They're, they're mega-accretive.

    20. HSHarry Stebbings51:30

        Do you find, do you find it lonely?

    21. JLJason Lemkin51:32

        Investing?

    22. HSHarry Stebbings51:33

        Yeah.

    23. JLJason Lemkin51:33

        No, because just running SaaStr overall is, is so rewarding and enriching and complicated and nuanced. And I'm talking with so many great people that, that, that fills up every mental... Every energy I have is the, is the community side. So, so no.

17. 51:50 – 55:58

    Are we about to see the greatest LP churn ever?

    1. JLJason Lemkin51:50

       I just know I would be a better investor with, with a true co-founder.

    2. HSHarry Stebbings51:53

       You mentioned doing it for the kids, being the LPs.

    3. JLJason Lemkin51:56

       Yeah. Yeah.

    4. HSHarry Stebbings51:57

       Uh, Samil said on the show the other day from Haystack, "We're about to see the greatest LP churn ever, with all LP books overweight on venture, and the churn in this next wave will be phenomenal." Well, huge.

    5. JLJason Lemkin52:08

       Yeah.

    6. HSHarry Stebbings52:08

       Not phenomenal, but huge. Do you agree with him? And how do you expect LP markets to move in the next 12 months?

    7. JLJason Lemkin52:14

       No, I don't think... Uh, well, first of all, look, Samil is not only wildly successful, but he's a student of this stuff, right? I mean, he's literally... It's great. I've considered myself a student of SaaS. I consider Samil a student of how LPs are put together and funds are constructed. So he's right. I can just tell you from my vantage point, I don't think so. Um, I think, m- the, the LPs I have are pretty well-established institutions that have been inv- investing in venture for decades and decades. Um, I, I have one that experienced some stress during this period, right? But it's someone that's s- uh, relatively newer of my LP stack. Um, I have the exact same LPs across multiple funds, no change. Uh, some, some losses, right? Uh, but, but, but basically others just took up the slack. So, no new LPs. And I just think that folks that have been in this category for decades, um, uh, they may drop managers, if that's the point. Like, managers are gonna get dropped, don't get me wrong. Like, it's gonna be brutal, right? But they're not, they're not going to not remain committed to the asset class. Um, and, uh, I remember talking, like, uh, to Horsley Bridge when things went pretty far south, and they're like, "Well, we've done an exhaustive analysis again of everything since we've been doing venture," right? And they're like, "The- just this type of manager is still gonna outperform every other asset class." Now, there are fund of funds. You can argue they're biased, but, uh, I think th- this, this capital house. Look, the, the LP or elp- Uh, the fact that LPs made 80- top LPs made 80 to 90% IRR last year was insane. Like, that should have been a flag to every LP on the planet, uh, instead of doing victory laps and committing more to the asset class. But it's really the only way they're gonna beat NASDAQ on this side, some combination of P and VC. And, and otherwise, w- you, you're, you gotta do it. You got, you gotta deploy the capital. So, um, but boy, you know, this is what I learned before the, the boom. There, you know, we, we talk about the boom in venture. We're missing the- but we're missing the boom in all the managers, right? There's such a boom in managers, and so many are gonna get dropped. And really good funds used to... In the old days, people would drop Excel and they would drop everything but Sequoia. The, the, the... And then, and then you would think, "Oh my God, how... Like, I, I dropped out of Excel after the Facebook fund?" That was like a career-limiting move. But people are gonna drop out of everything. They're gonna drop out of Andreessen. And it's not because these aren't great funds, there's just stress in the market, right? But it doesn't mean that these- the best LPs are going anywhere.

    8. HSHarry Stebbings54:32

       I mean, with a $4.5 billion crypto fund, I'm not surprised they dropped out of Andreessen. But...

    9. JLJason Lemkin54:36

       Yeah, but they'll come, but they'll come back. They'll... Like, if you look at the overall numbers for Andreessen, I'm shocked at how wildly successful Andreessen has been across these funds as they've grown. Wildly successful. That their blended returns are like 3.5X net after all these years. Pretty darn, pretty darn good at that scale. Pretty dar-

    10. HSHarry Stebbings54:54

        Yeah.

    11. JLJason Lemkin54:54

        And 3.5X net beats everything, Harry. That's the thing. Like, we throw... The other thing is, the last couple of years, everyone was so brilliant, we would throw out 3X, 4X, 5X, 6X, 10. I'm gonna have a 10... Every, every new VC that never had a fund was their, their, their deck was, "I'm gonna raise an 8X fund." I'm like, "Do you even know what that means?" Right? There, there's a reason 3X net used to be rare until the boom. It's because that beats everything.3X net beats every other asset class, except exot- except l- l- timber in good years or diamonds in odd years. 3X net beats everything. And 3X net is, used to be rare and will be rare again. It will be rare in today's multiples again. 3X net will be rare.

    12. HSHarry Stebbings55:31

        It's like, it so pissed me off the way people said, "Oh, I can see, you know, a X can easily be a $5 to $10 billion company, but can it be a $50 billion company?" And you're like, "$5 to $10 billion, that's a, that's a big company. That is a huge success." That was a throwaway comment for something.

    13. JLJason Lemkin55:47

        Yeah. And what if you own 2% of it and you have a $200 million, $400 million fund? It won't ma- w- w- won't, not gonna build you a 10 X... Then you ask them, "Okay, how are you going to get a 10 X fund out of that?" Great, hooray, like how- how are you gonna get a 10 X

18. 55:58 – 58:22

    “If your numbers aren’t great, you are the product.”

    1. JLJason Lemkin55:58

       fund? I don't think most of these folks could even do the math.

    2. HSHarry Stebbings56:00

       I- I totally agree with you. Uh, you said to me before, if your numbers aren't great, you're the product. You said that before. What did you mean by that? 'Cause I thought that was very interesting.

    3. JLJason Lemkin56:11

       As a, as a, as a GP?

    4. HSHarry Stebbings56:12

       Yeah.

    5. JLJason Lemkin56:13

       I just remember, I told you this story before we met, like when I first started in venture, the first LP meeting I went to was a huge, a huge entity i- in New York, in Manhattan, on the 48th floor of whatever. And we, we came with like a, an 80 page spiral bound notebook of all the strategy and the thesis and- and all the best... And they just turned to the very end, the last page of the returns, studied it for about 90 seconds, looked up and said, "So, are you guys IT or biotech?"

    6. HSHarry Stebbings56:39

       (laughs)

    7. JLJason Lemkin56:39

       Like, he only cared about the la- the numbers (laughs) and which of the two buckets of- of this asset category for a slot, right? And so then I'm like, "Okay, I get it. We're- we're just a product. We're just a product." And, um, venture seemed human for a while because when I started doing this, um, doing, like we, we're solo GPs, but- but emerging managers was seen as crazy when I started investing in 2013, when SML was crazy. When I started investing, all the LPs I met with talked about homebrew, and they're like, "Well, we love homebrew, but the fund size is too small. We can't make any money in homebrew." We li- And so homebrew, I- I got to know Hunter and Satya early for different reasons, 'cause I wanted to emulate them a bit. But the LPs actually were negative on them, not because they didn't love these guys, but just, it- it didn't make s- wasn't worth their time for these small checks, just like it's not worth your time for a 50K check or 100K check.

    8. HSHarry Stebbings57:28

       Cool.

    9. JLJason Lemkin57:28

       And then the crazy numbers and the energy for LPs to do this exploded, right, for three or four years. And emerging managers blossomed, right, and everyone wanted to do this. And that may well end now, soon. The appetite to go hunt the next Saster or 20VC or homebrew or cowboy or whatever it is that... I wouldn't be shocked, I don't know if SML said this, I haven't listened yet but I will shortly 'cause I want to hear it. I wouldn't be shocked if that evaporates in the next 12 months. If the appetite for the n- the next one just is- is gone, if it just evaporates at the LP level. It's just like what we're seeing with everyone. Everyone, like, yeah, we- we have startups that aren't growing, but Monday's, you know, all, all... The top public companies are still growing like a weed 'cause that's where all the budget's going, right? And all the LP budget similarly may- may- may see a flight to- to trust, to trusted brands. And just the energy to write a $5 million check out of a $10 billion endowment (laughs) may-

    10. HSHarry Stebbings58:19

        (Laughs)

    11. JLJason Lemkin58:19

        ... those days may be gone (laughs)

19. 58:22 – 59:57

    Harry and Jason’s Biggest Mistakes from the Bull Market

    1. JLJason Lemkin58:22

       .

    2. HSHarry Stebbings58:22

       Tho- Those da- those days may be gone. Uh, can I ask you, you know, um, I always think the best discussions are when you're very honest.

    3. JLJason Lemkin58:29

       Yes.

    4. HSHarry Stebbings58:30

       My biggest fuck up in this fund cycle was- was a company called Airlift-

    5. JLJason Lemkin58:34

       Yeah.

    6. HSHarry Stebbings58:34

       ... in Pakistan. I thought I knew better. I analyzed the market to the end of the world, the opposite of FTX, I did more-

    7. JLJason Lemkin58:41

       Yes.

    8. HSHarry Stebbings58:41

       ... diligence than anyone could have done. And actually, I'd never been to Pakistan, I didn't know about the politics in Pakistan, I didn't know about the geo, you know, rain patterns that happen in Paki- And it went to nothing.

    9. JLJason Lemkin58:54

       Yeah.

    10. HSHarry Stebbings58:54

        And I lost all my money and it was a big lesson for me. What was the biggest fuck up in your fund?

    11. JLJason Lemkin59:00

        I, uh, listen, the story... I- I don't know the whole Airlift story, but I th- I, the- the- the, you sh- you didn't- you didn't go there.

    12. HSHarry Stebbings59:06

        No.

    13. JLJason Lemkin59:06

        Okay? And I'm not saying you needed to go literally. I think it would have been enough if- if you'd- if you'd met halfway. You could have met in Dubai or met in wherever or something with the team. But you cut a corner, and I cut corners during the boom too, right? And all the corners I cut, look, they're not, th- they're masked by a decent- decent fund returns overall, okay? They're, that's- that's the one benefit of venture, right? But I think about them every day, the corners I cut, and I regret them. Uh, it was, it was obvious I was cutting the corner, um, money was too easy to make, markups were too fast, and I'm not saying you cut a corner.

    14. HSHarry Stebbings59:40

        No, I didn't, I-

    15. JLJason Lemkin59:40

        But I will never cut a corner, I will never cut a corner again. And- and even though they were minor corners, I w- I won't, I just won't do it. And- and- and it will, and it- it will impact investment velocity, it will, uh, it- it makes it harder to invest over Zoom when you won't cut certain corners, right?

    16. HSHarry Stebbings59:56

        Yep.

    17. JLJason Lemkin59:56

        But that-

20. 59:57 – 1:03:38

    How important is it to meet founders in person?

    1. JLJason Lemkin59:57

       that's why I think my learning from your story, but I might have it wrong.

    2. HSHarry Stebbings1:00:00

       Eisenberg at Aleph, who's a very close friend and- and an investor in my funds told me, like, "How many of your founders have you met in person?"

    3. JLJason Lemkin1:00:07

       Yeah.

    4. HSHarry Stebbings1:00:07

       And he is very, very intent on this. How do you feel about the need to meet in person in this Zoom invested world?

    5. JLJason Lemkin1:00:16

       Ho- Honestly, Harry, like, I mean, I- I've, I have not figured this out since March 2020, um, I... What I was very good at with this inbound strategy was getting an inbound thing. I didn't care where the founder... I invested in Estonia, France, what, all these different countries. Um, but when the founders came here from the US, I was often the first one they'd meet, okay, off the plane. And even if they went back to Belgium, um, or wherever it was, I- I inherently got all that benefit of- of that socialization from that meeting. And that's gone forever. Like, the first meetings will never happen in person again, right? No- even if you're in San Francisco, you're all in San Fran... They'll never happen. And I'm a worse investor for it. I have not figured out the answer to your question. I will say I'm a worse investor for it, um, and I don't have all the answer. And what I, what I really don't like is that founders don't care. They don't care. Uh, they- they really don't care if they meet. Uh, investing has gotten so transactional that even if they want you on the cap table, they don't care. They just want to check the boxes and move on. And so I don't have the answer. I- I think some of this advice we get is old school, right? I mean, we have to be thoughtful. The world has changed. We will never go back. When I think of what San Francisco was like-... in, up until in, like, 2019. Like, it feels so far in the past now. It feels like they should make a movie about this, because this world was so different. And, and I still miss it. And I was a better investor in it. But we, we can't go back, and you can't meet every founder face-to-face at the seed level, right? And then I look at friends of ours like Christof Jansen from Point Nine, which has ended up developing epic fund after fund. And Christof, in the beginning, perfected investing all across the world over, over pre-Zoom, over, over GoTo Meeting or whatever. We can, we, we can ask him. So obviously, it can be done wildly successfully, but you have to countermand that risk in some fashion, right? And I think taking a high risk without really getting to know folks is risky. On the other hand, I, I do like folks that are like, "Well, VCs over-index on their ability to s- to, to, to sus up a founder in a face-to-face." Like, it's ma- like, walking around, like, doing a walk and talk, uh, in, in, in Chelsea or, or wherever. East London is so magical, but all of a sudden you're, you're such a great student of human nature because so many founders are great bullshit artists, right?

    6. HSHarry Stebbings1:02:29

       (laughs)

    7. JLJason Lemkin1:02:29

       Sam Bankman-Fried and friends. So, it's not that. (laughs)

    8. HSHarry Stebbings1:02:34

       I think so many VCs are as well, my friend. (laughs)

    9. JLJason Lemkin1:02:36

       What I do think the face-to-face does, for me, for me, is, um... And I think this is what we lost in COVID, is it builds trust. And maybe this is going back to the errors you and I have both made. It builds trust. It's not that I'm such a great judge of character. There's so many different cultures in the world, I don't understand exactly what culture is like in other countries. I do think they're not all... I think entrepreneurs all have kind of the same culture, but I, but I do th- I think that venture is so full of risk. It's so full of r- I remember being terrified my first check into Pipedrive would go into the wrong bank account, or this would happen. I, I was still terrified. And founders forget that VCs are taking bounded risk, right? It's not the whole fund. But they're taking s- they don't get to know you that quickly. It's so risky, and you wanna d- one is you wanna de-risk things for VCs. That increases the odds you get a term sheet. But for VCs, man, it's just when you, when you build a relationship, it's just old school sales. When you build a relationship, it goes better, doesn't it? It goes better in the tough times. There's more honesty, there's less baloney. And so when we skip that step, we just never have that relationship, and I, I don't like it. I, I, I don't like it.

    10. HSHarry Stebbings1:03:36

        I wanna ask one final question

21. 1:03:38 – 1:06:26

    Are you worried about being replaced?

    1. HSHarry Stebbings1:03:38

       before we do a quick fire, back on Algolia.

    2. JLJason Lemkin1:03:40

       Yeah.

    3. HSHarry Stebbings1:03:41

       But it's, um, I was watching a documentary on J.Lo yesterday (laughs) uh, on preparing for, um, uh, Super Bowl.

    4. JLJason Lemkin1:03:47

       Okay. I will watch it soon.

    5. HSHarry Stebbings1:03:47

       And she was talking about her conti- her continuous fear of being replaced, being the old guard.

    6. JLJason Lemkin1:03:53

       Yeah.

    7. HSHarry Stebbings1:03:54

       I mean this in total respect to you.

    8. JLJason Lemkin1:03:56

       Yeah.

    9. HSHarry Stebbings1:03:56

       You're V1, I'm V2.

    10. JLJason Lemkin1:03:59

        Yeah.

    11. HSHarry Stebbings1:03:59

        And what worries the shit out of me is your Sahil Blooms who come along and do Twitter threads-

    12. JLJason Lemkin1:04:06

        Yeah.

    13. HSHarry Stebbings1:04:06

        ... and f- (laughs) Jesus, he's got 750,000 followers on Twitter. He shits on both of us-

    14. JLJason Lemkin1:04:12

        Yeah.

    15. HSHarry Stebbings1:04:13

        ... in seconds. And I worry that I'm not the hot one anymore. And yeah, I-

    16. JLJason Lemkin1:04:19

        I think it's a good worry.

    17. HSHarry Stebbings1:04:21

        Yeah. Do you worry?

    18. JLJason Lemkin1:04:22

        I think that just like, just like VCs don't have enough time to really get to the level of trust you'd like to investments, founders don't really have enough time to truly understand the nuances of venture. And it makes sense that founders are attracted to the most well, the most loudest VCs, the biggest brands. Everyone's attracted to brands, Harry. And one way you can build a brand is your fund is a brand, right? Sequoia, Sequoia will always be a brand, right? Um, it will be, uh, uh, and for a million reasons. Like, the business model's insane too, right? But, um, building, uh, people mock s- I, I, I, I think subscale brand building in t- uh, on VC is a waste of time. Subscale brand building, right? But a top brand is always compelling, and founders, founders don't know. Fo- founders are attracted, we're all attracted to brands. And so I think the way we build brand has evolved, and you should be worried. And also, uh, you know, not to do too much insider baseball, we're also both products of different types of social media. And social media changes. And for example, like, as a blog, SaaStr's a huge, still a huge... Even though blogs are dead, SaaStr- SaaStr traffic's insane, right? It is, it is a canonical source of a lot of content. But half of, uh, my, probably my deal flow came from Quora in the early days. Quora is dead for B2B. In the early days of Quora, I would write something, and you know who would comment on it? Garry Tan and Keith Rabois and David Sacks. And Stewart, Stewart Butterfield and I were on Quora talking about how quickly Slack would grow, okay? You know, it's all, it's all dog pictures and, uh, and, and, and, and, and, and weird stuff on Quora. And I'm still there by myself getting a half a million views a, a month, but, um, but it changes, right? And so, uh-

    19. HSHarry Stebbings1:06:01

        Uh, yeah, yeah, but that's what I think is down to us, Jason. Yeah.

Episode duration: 1:16:11