Jason Lemkin & Rick Zullo: How "Mark to Market" Corrupted Venture Capital | E1052

ℹ️ EPISODE INFO

Released

August 23, 2023

Duration

1h 12m

Channel

The Twenty Minute VC

Watch on YouTube

▶ Open ↗

📝 EPISODE DESCRIPTION

Jason Lemkin is the Founder @ SaaStr one of the best-performing early-stage venture funds focused on SaaS. In the past, Jason has led investments in Algolia, Pipedrive, Salesloft, TalkDesk, and RevenueCat to name a few. Prior to SaaStr, Jason was an entrepreneur, selling EchoSign to Adobe for $100M where it is now a $250M ARR product. Rick Zullo is the Co-Founder and General Partner at Equal Ventures. Prior to co-founding Equal Ventures, Rick was an investor at Lightbank, Prior to Lightbank, Rick worked with investment firms Foundation Capital, Bowery Capital, and Lightview Capital. -------------------------------------------------- Timestamps: 0:00 Why VC Needs a "Jerry McGuire" Moment 2:21 Mega Funds 32:15 How "Mark to Market" Corrupted Venture Capital 39:42 The Pitch vs Substance 50:31 The Heuristic VCs Forgot 1:06:49 Quick-Fire Round ---------------------------- In Today’s Episode We Discuss:

1. Why Venture Capital Needs It’s Jerry Maguire Moment: Why does Rick believe that VC needs it’s “Jerry Maguire” moment? What needs to change? What needs to stay the same? Why does Jason believe we will see even more mega funds in 2024 and 2025?

1. Unicorns are So 2019: Why does Jason believe that “unicorn investing is mostly dead for bigger funds and none of them are looking for a $1BN outcome anymore?” Why does Rick believe that multi-stage fund investing at seed simply does not make sense? What does Rick believe many founders need to know when they take multi-stage money at seed? Of the over 1,000 unicorns created over the last few years, how many of them do Rick and Jason feel are actually unicorns today?

1. Efficiency and Growth: We Need it All: Why does Jason believe, as a founder you should be embarrassed if you ever had a RIF (reduction in force)? Last year many founders got a pass on growth as they were more efficient. Is that pass over? Do they need to get back to growth? What is the single biggest reason that companies do not scale from seed to Series A? What happens to the many companies with years of runway but no product-market-fit? Are we entering a new age of efficient company building or will we go back to high burn environments and excessive spending?

1. Entering the World of LPs: If Jason and Rick were to advise LPs today on how much to discount the value of their venture books, what advice would they give? How have markups completely corrupted the venture ecosystem? How does LPs being incentivized by paper-marks make the industry even more screwed? What are the single biggest misalignments between GP and LP? -------------------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on Twitter: https://twitter.com/HarryStebbings Follow Jason Lemkin on Twitter: https://twitter.com/jasonlk Follow Rick Zullo on Twitter: https://twitter.com/Rick_Zullo Follow 20VC on Instagram: https://www.instagram.com/20vc_reels Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com Subscribe to our Newsletter: https://www.thetwentyminutevc.com/contact ------------------------------------------------- #JasonLemkin #RickZullo #HarryStebbings #venturecapital

🎤 SPEAKERS

• Jason Lemkin

  guest

• Harry Stebbings

  host

• Rick Zullo

  guest

🧾 EPISODE SUMMARY

In this episode of The Twenty Minute VC, featuring Jason Lemkin and Harry Stebbings, Jason Lemkin & Rick Zullo: How "Mark to Market" Corrupted Venture Capital | E1052 explores how Mark-to-Market Incentives Broke Venture Discipline and Founder Behavior Jason Lemkin and Rick Zullo argue that mark-to-market accounting, mega-funds, and asset-management style incentives have structurally distorted venture capital. Markups on paper valuations pushed VCs to over-fund and over-price companies, prioritize IRR optics, and drift away from hands-on, Jerry Maguire–style company building.

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