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Larry Aschebrook, Founder & MP @GSquared: How We Lost Money on Uber and Made Millions on Lyft

Larry Aschebrook is the Founder and Managing Partner of G Squared in what is one of the wildest stories of venture capital. Larry started G Squared with nothing, dialling for dollars having personally invested in Twitter and Uber. In his first fund, Larry made sizable bets into SpaceX, Palantir, Alibaba and Twitter. Larry has also had mega losses along the way (discussed in the show) in Getir, 23andme and more. Today, Larry manages over $5BN and has invested in all the best from Wiz to Spotify to Revolut and Anthropic. ---------------------------------------------- In Today’s Episode We Discuss: 00:00 Intro 01:07 Bootstrapping a Venture Career 04:41 The Best Investment on a Multiple Basis 09:29 The Alibaba Move That Changed Everything 20:19 How a $150M Spotify Bet Made a Billion 30:33 Lyft Made Millions, Uber Lost $50M 41:53 “We Fcked Up”: The Billion-Dollar Vintage 47:19 What Larry Does with Overinflated Assets 50:51 The Gut Call That Dodged Theranos 59:13 Losing $70M on 23andMe 01:02:42 The Getir Deal That Nearly Broke Me 01:05:57 The Janitor of Venture Capital 01:19:07 Getting To Revolut in 2018 01:24:21 Why I’d Buy Anthropic at $61BN Today 01:27:15 Vampires vs Zombies: The Coming Startup Purge 01:34:06 Does Money Actually Make You Happy? 01:39:18 Quick-Fire Round ----------------------------------------------- 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 X: https://twitter.com/HarryStebbings Follow Larry Aschebrook on X: https://twitter.com/LarryVCg2 Follow 20VC on Instagram: https://www.instagram.com/20vchq 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 ----------------------------------------------- #20vc #harrystebbings #larryaschebrook #gsquared #founder #partner #vc #lyft #spotify #twitter #coursera

Larry AschebrookguestHarry Stebbingshost
Jun 16, 20251h 47mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 1:07

    Intro

    1. LA

      (upbeat music) I mean, we made ridiculous sums of money for LPs in that period. We were the s- largest shareholder of Coursera, $800 million back to LPs on Coursera. We made a ton of money on Lyft and we lost money on Uber.

    2. HS

      What?

    3. LA

      40% of my third fund went into Spotify. I went back to our LPs and said, "Listen. We fucked up. We need to pivot. We need another 300 million bucks because I need to protect this thing." The next three years were some of the worst of my life.

    4. HS

      Ready to go? Larry, dude, we walked around the park and I heard your incredible story. And to be fully transparent, I didn't know the incredible story before, which is why at the end I was like, "Dude, we have to do a show together." So thank you so much for doing this with me.

    5. LA

      Well, thank... That's, that's humbling, you know. It's, it's sometimes difficult to open up and tell the story. But, uh, I enjoyed our walk.

    6. HS

      Listen, it's the short shorts and the great lakes that make you feel comfortable to open up. I completely understand.

  2. 1:07 – 4:41

    Bootstrapping a Venture Career

    1. HS

      But I wanna start on the entry. Dialing for dollars is kind of how I was thinking about this. How did you start your way into venture and what was that entry point?

    2. LA

      Yeah. For me, it was, it wasn't really, "Hey, I wanna be a venture capitalist and manage, you know, billions of dollars." It... For me, it was, you know, I come from nothing. Um, I was a fundraiser for academic institutions for their endowments. I was good at that. And everybody I raised money from, most of people, not everyone, most people made it investing in private companies, it would be at PE funds or venture funds, or running their own operating businesses, it didn't matter what it was, from, you know, Windows to financial management to, to PE, they created real wealth for their families. And I was like, "They're not that much different than me. I work hard. I'm smart enough. Um, maybe I can do it." So I went back to business school late in life and our business today was my thesis, and I started buying... You know, the smartphone became something that was running our lives in 2010. And I just started saying, "This is super interesting. Why don't I buy shares?" And, oh, yeah, I follow Twitter. I like Twitter. Uh, you know? What about, um, early Uber? What about early Spotify? And I just started buying shares from my classmates-

    3. HS

      Okay.

    4. LA

      ... with my own money.

    5. HS

      That, that sounds great, but these companies are not public at the time.

    6. LA

      No.

    7. HS

      And so, so how does one do that then? How did you approach it?

    8. LA

      Well, I guess it's not knowing what you don't know is... And ignorance is bliss is kind of the same thing. I didn't realize that it was something you shouldn't or couldn't do. I just asked people. "How about w- You have shares. Can I buy some of your shares?" "Well, I never really thought about selling them 'cause I really can't sell them." "How would you buy them?" And still to this day, 15 years later, there's a form that I created at the Carey School of Business at Arizona State, one-page form that then we sent to the company to buy stock. And it still floats around. I got, I got it back from a broker not that long ago and it's, like, literally the form I created in 2010.

    9. HS

      (laughs)

    10. LA

      One page. And it's binding though. That's scary. It's binding (laughs) .

    11. HS

      So, so, so-

    12. LA

      Which has bitten me in the ass a few times.

    13. HS

      So we're at business school-

    14. LA

      Yeah.

    15. HS

      ... and we're like, "You know what? I see the mobile revolution. I'm buying Uber, I'm buying Twitter, I'm buying Spotify." What happens then? And also, how much are you buying at the time?

    16. LA

      Yeah. So small... You know, I, I, I wanted to make a change. I was working in college athletics. That was changing as it's become today. You know, this whole thing pa- players should get paid, and coaches' salaries, and pretty soon the inmates were running the asylum, so to speak. And I was like, "This isn't my passion. This is not where I came from. I, I wanna make a change." As a former athlete, like, "Hey, maybe I can use my brain, not my brawn." And I just, I cashed in my retirement, I went through a divorce, um, got remarried, had nothing. I had no money and I just had paid the tax on my retirement and started buying these shares. And I think-

    17. HS

      This is literally your last money?

    18. LA

      This... Yeah. Well, half of nothing's nothing. My wife came to our marriage with $50,000. Um, I'd went through a pretty tough financial situation. Um, rightfully so, my former wife kinda took what I had, um, uh, raising my three young kids at the time. And my wife and I today, we started a journey together. And she backed me with the 50 grand and my small amount of retirement, I just started buying Twitter shares and Alibaba stock from Jack Ma's family office. And, and then holy shit, it

  3. 4:41 – 9:29

    The Best Investment on a Multiple Basis

    1. LA

      worked.

    2. HS

      Can I ask, when you review those today, which was the single best investment on a multiple basis?

    3. LA

      Oh. The early ones. I mean, Twitter and Alibaba were pretty good. Um, those were, those were when I realized there's something here. Like, making a little bit of money in your whole life, working 10 years in a profession, thinking you've kinda made it coming from... I grew up in a orange trailer in Myton, Utah.

    4. HS

      (laughs)

    5. LA

      You know? (laughs) Having, like, 100 grand in your bank account one random Tuesday felt pretty good.

    6. HS

      (laughs)

    7. LA

      (laughs) And I said, "Th- this is something interesting." And, um, I remember the first... You know, I tried then, I was like... I got some advice. Um, "You should raise some third-party capital." And that's when I really understood the power of OPM, other people's money. And, um, I went around to all those alums who basically, I think, gave me some money because they were tired of me asking, that I worked at five different large academic institutions.

    8. HS

      And so just so I get it right-

    9. LA

      Yeah.

    10. HS

      ... what was the thesis?

    11. LA

      For me, it was very simple. For the... If there's fewer institutions to help companies go public, coming off the financial crisis, funds started deploying large sums of money, so then the byproduct would be companies would stay private longer.

    12. HS

      Mm-hmm.

    13. LA

      The average age from inception to IPO was, like, three years leading up to 2010. From 2010 to 2018 it got to, like, seven or eight years. Today, our average portfolio company's 15 years old. So there was, to me, something that was clear there, which was there's an opportunity to buy shares from these people who have no liquidity-... and they're, you should be able to make more of a return than... and also, companies wouldn't return my phone call, frankly.

    14. HS

      (laughs)

    15. LA

      'Cause I had like, no money, and, "Hey, Twitter," you know? "Hey, Dorsey. My name's Larry Ashbrook. I'm a," you know, "a retread athlete that wants to become a venture capitalist. Can I invest in Twitter?"

    16. HS

      (laughs) Sure.

    17. LA

      "And by the way, my fund size is, uh, I don't have a fund. I just have like, 200 grand to my name. I'd like to buy, you know, $10,000 worth of Twitter stock." That, that conversation obviously wouldn't go anywhere. So, um... yeah.

    18. HS

      And so, you have this moment in time when you're like, "Hey-

    19. LA

      (laughs)

    20. HS

      ... we're seeing this establishment of private markets. We're seeing a lot more capital flow in." And so you go out and fundraise for the first vehicle. How big was the vehicle?

    21. LA

      (laughs) Uh, three years, $35 million dollars deployed along the way.

    22. HS

      Wait, wait, pause. It was three years to fundraise?

    23. LA

      Yeah, three years. Uh, 2010 to 2013.

    24. HS

      Wow.

    25. LA

      34 million or 35 million, and deployed the money as I raised it.

    26. HS

      So you did multiple closes?

    27. LA

      Oh yeah, multiple. Man.

    28. HS

      What was the first close?

    29. LA

      Like, I don't even know how many, uh, couple million bucks? (laughs)

    30. HS

      What do you advise founders on closings? I know it sounds strange, but like, uh, you got different advice. Close as soon as possible, 50%-

  4. 9:29 – 20:19

    The Alibaba Move That Changed Everything

    1. HS

    2. LA

      Yeah.

    3. HS

      ... like that.

    4. LA

      Okay.

    5. HS

      It's just such an amazing story. And so when we look back at that, okay, so three years, 35 million-

    6. LA

      Yeah.

    7. HS

      ... awesome. What was the first big mover in that portfolio?

    8. LA

      Yeah.

    9. HS

      When was the real momentum?

    10. LA

      The v- real momentum happened in 2014, and that's when I really felt the power of what I was trying to do, when Alibaba goes public.

    11. HS

      Mm-hmm.

    12. LA

      Um...

    13. HS

      And you had that in the fund?

    14. LA

      I had, yes. I bought f-... bought shares from Jack Ma's family office. Um, and, and wow, what a, what a creator of shareholder value, Jack Ma.

    15. HS

      I'm sorry, dude, how do you get in touch with Jack Ma's family office to buy shares-

    16. LA

      Yeah. (laughs)

    17. HS

      ... from them? (laughs) Like-

    18. LA

      I mean, that's the story of my life. It's like, you know, it's, it's, it's a bit of, bit of luck. You, you meet i-... alum that I knew, knew somebody, that knew somebody and, you know, kinda introduced me to... Uh, gentleman's name was Barry Purcell, who was running, um, some of Jack Ma's money in Virginia of all places, I believe. And he said, "Hey, we have some shares to sell." I'm like, "Okay." Hired a group in India to do some DD (laughs) 'cause I had like two people-

    19. HS

      (laughs)

    20. LA

      ... (laughs) and wrote me an investment committee-

    21. HS

      Are you serious? (laughs)

    22. LA

      Oh yeah, my early investment committee memos in the early vintages were outsourced to, you know, a, a group of really smart, um, analysts in India that you could pay a fraction of what you could pay talent in the US. And I didn't have any money to invest in talent.

    23. HS

      And that today is what Sam Altman does with Deep Research. (laughs)

    24. LA

      (laughs)

    25. HS

      Okay, so we've got-

    26. LA

      So yeah, Alibaba was the, for me-

    27. HS

      And so e-

    28. LA

      ... was, there's a business here. It was grinding, grinding, grinding. That was the first one that was material for me, is 2014 Alibaba.

    29. HS

      And are you putting size into these? Like, you-

    30. LA

      Yeah, so from the beginning, again, when you, you don't know what you don't know. (laughs) So, I didn't like the idea... and my personality is kinda you go big or go home. And so, I don't, I didn't like the idea of trying to manage a lot of these positions, 'cause I didn't really know how. So my idea was, I wanna have, I wanted to put a little bit of money in, understand the businesses, and then pick a few and put all my money in. Today, we call it land and expand. We have all this bullshit that we say-

  5. 20:19 – 30:33

    How a $150M Spotify Bet Made a Billion

    1. HS

      get that. I, I wanna-

    2. LA

      Yeah.

    3. HS

      ... go back to the four names you mentioned, you mentions. How do-

    4. LA

      (laughs)

    5. HS

      ... you get Spotify? What's-

    6. LA

      Oh, my-

    7. HS

      ... the story there?

    8. LA

      (sighs) Uh, uh-

    9. HS

      I, I love Daniel. He's one of my oldest-

    10. LA

      Yeah.

    11. HS

      ... friends.

    12. LA

      I love him.

    13. HS

      Shaq- Shak as well. They all special.

    14. LA

      Mm-hmm.

    15. HS

      How'd you get a Spotify in 2014?

    16. LA

      Yeah, so, so one of the first employees I hired, um, young guy outta Berkeley, he's now my, uh, co-PM, Spencer MacLeod. You gotta meet this guy. He is, he's a, he's, he's a living caricature of what Silicon Valley is. He was working as an analyst with me. Um, uh, this is like 2014. Um, I think he's like 22 years old at the time. And, um, I was telling him this story about how my, my mind exploded when I was in college, and I could download Metallica on Napster. And he's like, "You know you've heard of Spotify, right?" And I'm like, "Yeah." He's like, "Well, maybe we should buy some shares in Spotify." And it literally, that's kinda how it started, and we started searching around. And we found a celebrity that was going through a, uh, unfortunate change-of-life scenario and a divorce, and he had like $4 million of stock. And we had a, you know, $300 million fund at this point. I'm like, "Yeah, let's buy it." Well, Spotify had this interesting process of, of, of how they approve shareholders. It was kinda onerous and difficult. And my mentality was, "Hey, well, they're not responding, so let's go see them." So literally-

    17. HS

      (laughs)

    18. LA

      ... Spencer and I flew without an appointment to Stockholm. Um, my wife came. Uh, we spent a week there in the terrible nor- m... Like November. Um, we had a new baby, and we were staying in a, in a Airbnb that we rented, um, which became a great investment for us later on. But anyway, we started going to get a meeting. And finally, this young lawyer, Peter Grandelius, I think took pity on us in the waiting room and took a meeting, and we pitched, I, I think, to... I look back on all the pitches I ever gave a company on how we could add value with a small fund and a lot of co-investment. You know, Spotify's what it's become, but they're like, "Yeah, we could use the help." Very humble, very nice people. They introduced us to a gentleman named Johan Berghquist, who's, who was at the end, I think, the treasurer, and then went on to Bolt, where we also became an investor in the EU ride-hailing business. And before we left the meeting, they were like, "Do you think you could buy $150 million worth of stock?" And I said, "Sure." And I didn't have the money because we were in the process of raising the v- the fund, and I think we had like close to $125 million. (laughs)

    19. HS

      No, uh, have you, have you done the diligence?

    20. LA

      (laughs)

    21. HS

      Have you done the diligence?

    22. LA

      Yeah, by this time we did s... We did due diligence. We'd written a memo, and you know-

    23. HS

      But there's diligence and there's diligence. There's diligence like for $20 million check-

    24. LA

      This is mosaic-

    25. HS

      ... and there's diligence.

    26. LA

      ... theory. So most of the early stuff had to be mosaic theory because companies... Until really Spotify. So the early wins are, you know, gathering data, trying through public sources, but it's not really available. You're trying to gather, um, uh, through contacts and putting as many feelers out, and then sending all this information to what became our own research team to develop a thesis around it. Um, and then the Trojan horse became the check to get the info. So in that land-and-expand strategy that we run, as it's developed often, that first check is, is kind of the Trojan horse, 'cause you wanna... You like it, you've done some mosaic theory work, you think it works, but you don't really know, you go in. So we go in, they give us, they give us a whole deep dive on the business, and it's amazing. It's like nothing I ever could imagine, right? It's nothing I've seen before.

    27. HS

      Wh- why so?

    28. LA

      (inhales) (sighs) Why so?

    29. HS

      What was it about it that was, made it so different?

    30. LA

      20... At that time, the penetration of the usership in, in S... in Sweden was like 25% of the population used it.

  6. 30:33 – 41:53

    Lyft Made Millions, Uber Lost $50M

    1. HS

      When you go through those names-

    2. LA

      Yeah.

    3. HS

      ... what about Uber? How does that come?

    4. LA

      Yeah, Uber comes...You know, we-- often in our thesis, we'll back two businesses trying to attack the same thing. Lyft and that fund became the value play. Um, we sold it, um, and it-

    5. HS

      Did you make money?

    6. LA

      We made a ton of money on Lyft, and we lost money on Uber.

    7. HS

      What?

    8. LA

      Yeah.

    9. HS

      Well, how does that work?

    10. LA

      I think, (sighs) uh, it, when Uber chose to go public, I think, um, it was a tough time. Um, today Uber's valued off of gross profit, which is, I think, a good, a good metric for them, um, and, and a massive business. And I don't think when it went public, it was rewarded properly. In our business model, we don't hold ev- rarely do we hold post-public. Oftentimes, we sell before they're public. And as it went public at the price it did, on a converted basis, um, we were underwater. We lost, uh, I think we made, uh, we, we, we lost like 20 cents on the dollar. In Lyft we made like a 3X.

    11. HS

      So, how much did you lose on Uber?

    12. LA

      I don't know, $50 million bucks, probably.

    13. HS

      And you made a 3X on Lyft?

    14. LA

      Yeah.

    15. HS

      (laughs)

    16. LA

      Yeah.

    17. HS

      Because you sold before the IPO.

    18. LA

      We sold most of it before the IPO, and, uh, you know, we won't talk about the names-

    19. HS

      Yeah.

    20. LA

      ... that buy, but you'd be surprised of the, uh, it's kind of, I think one of the issues with Silicon Valley, one of the benefits of being in Chicago is we isolate ourselves a bit from the herd mentality. And it's like sometimes it's like sheep. They just jump one on after another, and they buy more stock in things that you see that you should sell, and it just takes one brand name to jump onboard and 10 others jump onboard. And we just kept selling our Lyft stock to oth- to others, um, and, you know, I get why they did it. It was a value play compared to Uber, and it went on to work for them, but we made our multiple and went home and distributed the cash.

    21. HS

      Do you think it's very clear when rationality leaves the room?

    22. LA

      Yeah, that's something I've spent a lot of time in the last few years trying to figure out-

    23. HS

      Yeah.

    24. LA

      ... because 2021, all rationality left the room, 2020, 2021, and, and us, like everyone else, just kept deploying capital.

    25. HS

      But it left the room in public markets too. The multiples were off the charts.

    26. LA

      Yeah.

    27. HS

      The excess of profit.

    28. LA

      No, everybody left the room. I think, you know, you wanna-

    29. HS

      And they're told to play the game on the field, as Bill Gurley says.

    30. LA

      Yeah. You, you, yeah, I think, um, a few things about that period that, that is the rationality leaving the room, that you wanna protect yourself, I think guardrails are important. A good friend of mine, and I know you had him on this show, I'm a huge fan of what they've done, Mitchell Green, you know, I th- the best things in life are, are copied, um, in, in some ways. Um, you know, he has his Lead Edge 8, we have our G-Squared 8. Sorry Mitch, we kind of borrowed it from ya. (laughs)

  7. 41:53 – 47:19

    “We Fcked Up”: The Billion-Dollar Vintage

    1. HS

      What did they give public here?

    2. LA

      Holy shit. They're trading... We sold the stock at 36 bucks a share, and it's at $8.

    3. HS

      (exhales)

    4. LA

      $800 million back to LPs on Coursera. $800 million back to LPs on Coursera. So, so that's part of the strategy where you get the concentration, and the law of large numbers actually works, and it's easier to manage a fund in liquidity. But getting into 2020, the mistakes we made, so you had all these exits. Toast was our largest position in that fund. It's trading at 76 bucks a share. Mitchell Green and I did Toast together. Man, we were... It's like you're popping champagnes around the office. You're like, "This is... We're so smart."

    5. HS

      (laughs)

    6. LA

      "We're the fucking smartest people in the room."

    7. HS

      (laughs)

    8. LA

      You know? And then I'm on a ski lift in Montana, and I'm looking at, unfortunately, and I'll admit it out loud, Yahoo! Finance.

    9. HS

      (laughs) It was before perplexity. (laughs)

    10. LA

      (laughs) It was before polite- perplexity. And I'm like, "Wait a second, you got... Toast is 76 bucks a share? What the hell? Wait a second, how is it at $76 a share?" It's a great business, but 76 bucks a share? I mean, whoa, at the time. Now, Toast is an amazing company, right? Cha- revolutionized ind- uh, th- the restaurant space. And by the way, saved, saved tens of, of, of, I don't know, hundreds, tens, thousands, hundreds of thousands of jobs in the US because of the way they pivoted during COVID to help restaurateurs. An amazing business, great founders. Um, all that being said, it wasn't worth, as a public company, that price. So, to me, that was kind of the canary in the coal mine, and I started freaking out because we just deployed $900 million between, you know, beginning of COVID and (laughs) 2021. To your point, jumping on board with all these primaries and secondaries, "Oh, we're super smart. We can do some pr- primaries too."

    11. HS

      So, what was the realization when you saw Toast? To sell?

    12. LA

      So that, that Toast was, "I have a problem in this vintage. We've overpaid for all of it. All of it, we've overpaid." Go to the team, and a lot of them aren't with us anymore, because we had to, we, we, we really w- went through a, a kind of identity crisis and said, "Listen, I had went through a period where I wanted to believe that our firm was, you know, more than just the t- co-PMs and Spencer and myself, and that we could, we could do a traditional model." Because we don't do that. We deploy the capital between the two of us. We have, uh, a research team that support us. It's more like a hedge fund. It's quick decisions. But at that period of time, we're like, "Hey, we've made all this money. We're growing our business. LPs are coming aboard with big checks. They want to chase MOIK. They want to chase TVPI, right?" We have to have a thesis that's a bit longer. Seven years, not five. So, let's divide the capital up amongst a bunch of people. Let's build the traditional fund model because we're so smart. And you know what? We're still conservative, so we're gonna pay 12 times last 12 months to enterprise value on SaaS. Public markets are trading at 25. Pat yourself on the back, guys. We're super smart. Oh, the floor can't be lower than 10. That's a historic multiple. Wake up in 2025, the multiple is four. So, when that happened, when, when a really awesome business, which we made a ton of money, eh, eh, on, by s- selling it at the right time, and harvesting, and they-

    13. HS

      In Toast?

    14. LA

      In Toast.

    15. HS

      Mm-hmm.

    16. LA

      And they, they've went on to create a tremendous amount of shareholder value as a public company, don't get me wrong. But when it's trading at this crazy multiple, I went back to our LPs and said, "Listen, we made, we, we, we fucked up. We need to pivot, and we need to, we need another 300 million bucks because I need to protect this thing." And so we went in, and we did structured equity deal after structured equity deal. As that market's falling, and the house is on fire, we're running in the front door with cash, and we're going and doing minimum IRR deals. We're partnering with the super savvy investors and the Light Speeds and the Dragoneers and the DSTs of the world, and we're doing deals that nobody knows about, Third Point, Coatue, and we're putting all kinds of structure in, where these founders believed their own bullshit, and they said, "I'll take the high price to- top line, but I'll embed structure in the equity." And so that vintage, of all of our vintages, has 70% primary-

    17. HS

      Whoa.

    18. LA

      ... with s- and 40% of that has structure.

    19. HS

      For people that don't know, what does that mean?

    20. LA

      It means you embed IRR hurdles in multiples in the paper. So, regardless if you say the business is worth 8 billion on paper, the company has to generate you a 25% IRR or a two and a half X, whichever is greater. So, every day, the return is ticking, and you walk it out, f- now, five years, the entire pref stack is totally fucked because we... The last money in has this ratchet that's just eating up all the value, and that pivot and, and, and the willingness, I think our team, not just me, the willingness for, uh, for Spencer and I to get together and say, "What, what were we thinking? We have to try to save this thing." Our LPs trusted us with a billion, at that point, billion five,

  8. 47:19 – 50:51

    What Larry Does with Overinflated Assets

    1. LA

      yeah.

    2. HS

      But, but you're going, like, on the offensive with cash in the door when everyone's running out.

    3. LA

      Yeah.

    4. HS

      In terms of the actual saving, what are you doing with the overly inflated asset prices that you have?

    5. LA

      S- selling.

    6. HS

      You're selling at a loss?

    7. LA

      Cutting losses. Selling. Taking a different perspective on multiples and saying, "Okay, you know, you, you have to get the price to 10X," so you're going back in in assets you overpaid, and you're using the secondary market as the market's falling to lower cost basis. So, we did a lot of primaries, yes, because we, we didn't like the secondary multiple because it traded at a premium during that period. So, if you paid 25X in a public company to enterprise value the last 12 months of VRR in a SaaS company, privately, they traded at 50.

    8. HS

      And so you're like, "Shit, the secondary market is overly inflated."

    9. LA

      The secondary market doesn't work. My business model is broken.

    10. HS

      And so you go to primary.

    11. LA

      You go to primary. You go earlier. You do a bunch of small cap-

    12. HS

      Was that a mistake?

    13. LA

      Hindsight, the mistake I made was not having... besides thinking we're smarter than we are, um, is, structurally in our business, not having the levers to pull. 'Cause leading up to then, it was like whatever we did worked, and you could get in and out in five years and make a 2X net. You're a hero. You just keep raising money, and it keeps getting bigger, and your amount, your wealth generation keeps getting bigger. So, we're unstoppable. We're, you know, Tiger Woods in, in 2001.You start to create this persona that everything works. And, and pivoting, it was a lot of soul-searching. We had a, a, a large meeting in-

    14. HS

      Was it difficult for you as a leader?

    15. LA

      I was... Yes, it was difficult because I couldn't believe that I talked myself into it. I c- you know, I had a Silicon Valley, uh, uh, coach. (laughs) Here you've got a, me, a person that grew up in a trailer in Mighty, Utah, athlete, and I have to have a coach to tell me how great I am? I bought into the whole hook, line, and sinker bullshit of the entire problem, in my opinion, of Silicon Valley. And so did our firm.

    16. HS

      What is that problem?

    17. LA

      I think losing focus of what you're hired to do and paying more attention to, um, the lifestyle that comes along with being a money manager, and the circles that you roll in, and about the deals that you're doing and the money that you're managing, versus at the end of the day, the actual value you're creating for your people who have trusted you with their capital, and making a difference for your underlying companies. That's what's important. Not going to a dinner party and saying, "I just invested in Wiz or Anthropic or OpenAI or Airbnb." That's the culture, in my opinion, that, in Silicon Valley, and it's people deploying the capital that don't have the responsibility to sit in front of the LPs to explain the problems. It's a herd mentality that rushes in. And LPs follow, by the way. LPs follow, at the wrong time. It's very easy to raise money in a crazy market, like you and I both did, and many other managers did, when it's the wrong time. And it's very hard. Our 2022 vintage we raised, very difficult to raise.

    18. HS

      How big was that fund?

    19. LA

      Billion two.

    20. HS

      Billion two. Was that the first billion fund?

    21. LA

      No, 2020 was a billion four.

    22. HS

      (exhales) So, you went down in fund size?

    23. LA

      Well, the 2020 vintage is, we

  9. 50:51 – 59:13

    The Gut Call That Dodged Theranos

    1. LA

      topped that up. Remember, it was, I was saying, we went back and said, "Hey, we've made all these mistakes. We have to protect. We need more money." And it went from a billion two to a billion five.

    2. HS

      And the protection there was 'cause pay-to-play was coming in?

    3. LA

      It was because we saw that we had overpaid on the first, first tranche of capital. So, I wanted more to combat that with secondaries and also structure.

    4. HS

      So, you hadn't lost faith in the underlying assets?

    5. LA

      No. Some of them have went on to c- m- monumental failures, um, that have been well-written about. Um, but most are really fundamentally good underlying companies.

    6. HS

      So, when you review-

    7. LA

      Yeah.

    8. HS

      ... that period of 2020, what do you wish that you had done? Or if you could replay the tape-

    9. LA

      Yeah.

    10. HS

      ... go back to the first half or quarter or whatever you-

    11. LA

      Yeah.

    12. HS

      ... Americans like to call your timings in sports games-

    13. LA

      Innings, innings.

    14. HS

      Innings. Yeah, that's cricket, my friend.

    15. LA

      No, no, that's baseball.

    16. HS

      Oh, right, sorry. Uh-

    17. LA

      That's okay. Both, I guess.

    18. HS

      Both, there we go.

    19. LA

      Yeah.

    20. HS

      We're both, um, what would you have done now if you could replay that tape?

    21. LA

      Um, if I, yeah, if I could go and talk to my, myself then-

    22. HS

      Like, I would say-

    23. LA

      Yeah.

    24. HS

      ... sit on my hands. You did not need to be part-

    25. LA

      Yeah.

    26. HS

      ... of that ridiculous 700 million price round for a 10 millionaire SaaS company.

    27. LA

      Yeah. Yeah, I think that that's the, that's the easy answer is wait. Um, I think if I could do it all over again, I would keep the control tighter to Spencer and myself on deployment. Um, in that way, as we went forward, the only excuse we could have is that he and I made the decisions. And we could, w- we wouldn't have any excuses. It would be clear that we made the mistakes, versus, "Hey, we tried to do the Silicon Valley mentality and hand out the capital and build teams underneath." And, you know, it's, yeah, it's the G-Squared logos that we invested in, but the attribution actually goes to X, Y, and Z.

    28. HS

      You don't like attribution?

    29. LA

      No.

    30. HS

      Why don't you like-

  10. 59:13 – 1:02:42

    Losing $70M on 23andMe

    1. HS

      the ick.

    2. LA

      Yeah, you go through this phase as building a business where you feel like you have some allegiances to some of the people that helped you get there, right? So you have other investors-

    3. HS

      And you're too far in.

    4. LA

      ... and you're too far in to say no, and you know you shouldn't do it, and, and, you know, it's not what el... we're humans.

    5. HS

      Oh, yeah, now I'm like, "Fuck you." It's a 10-year relationship.

    6. LA

      Yeah, no, now you're like, "What..."

    7. HS

      Too far in is, is, uh...

    8. LA

      First mistake on, uh, uh, on you, second mistake on me, right?

    9. HS

      Yeah, yeah. That I totally agree with.

    10. LA

      And, and the, the one that's probably from a financial perspective the largest that hurt, um, there's two really, uh, is 23andMe and Getir. Yeah. 23andMe not selling, that was my mistake.

    11. HS

      What, when did you come in?

    12. LA

      First investment in 23andMe in I think 20 s- 2016, '17.

    13. HS

      Okay.

    14. LA

      Um, really bought into the business model on the consumer side. Um, loved it, really enjoyed interaction with Anne, really bought into what she was trying to build and she really embraced our model to be helpful. Um, and I, I, I was really, you know, taken aback by, by what she was doing and believed in it, and we built a large position in our 2018 vintage fund. I think it was the second-largest position in that fund. Um, like co-investment we had, maybe had 50 million in and, and LP capital maybe 30 or 40 million in, and it... and, uh, during the SPAC craze, you know, pair up with Sir Richard Branson. Like, what an iconic pair, right? You got Anne Wojcicki who's, who's a fantastic founder in my opinion, uh, to, to, to... not maybe a great public CEO but awesome founder and-... visionary of what she wanted to build, and, and the ability to go do it, amazing. Richard Branson on top of it, awesome. Let's go. Put gasoline on it. Trade's at 10, goes up, we can start selling at seven, which would have meant about a 2X. I think I sold the last share at 70 cents.

    15. HS

      (gasps)

    16. LA

      So, so that's chasing multiple. That's me chasing multiple. And that's a problem in our strategy. And you need guardrails in that to protect from Larry chasing multiple. Yeah.

    17. HS

      Which is what a layered approach to selling.

    18. LA

      Yes. Dollar cost average out, just like you dollar cost average in, and just start getting liquidity when you can privately-

    19. HS

      (sighs)

    20. LA

      ... and continuing it through when they list. Liquidity's hard.

    21. HS

      How big was your position?

    22. LA

      In total, probably 100 million bucks. (sighs)

    23. HS

      100 million bucks. And you said you could do a 2X?

    24. LA

      Yeah, and instead, lost $70 million. (exhales)

    25. HS

      The LP's cool about that?

    26. LA

      No, the pool of the capital is awesome.

    27. HS

      Yeah.

    28. LA

      Eh, it's just, you know-

    29. HS

      What was the number one position in that fund?

    30. LA

      Toast.

  11. 1:02:42 – 1:05:57

    The Getir Deal That Nearly Broke Me

    1. LA

      It was fun.

    2. HS

      What about Getir?

    3. LA

      Getir, Getir is, is one emotionally for me that's really hard. Um, when I think about that good process, you know, good outcome.

    4. HS

      You had good process?

    5. LA

      We had good process on the first money, Gorillas, the investment in Gorillas, we had good process. Um, we had made a lot of money in kind of the food revolution. We were in Instacart, we were in Postmates, we were in Meituan.

    6. HS

      And just to be clear, sorry-

    7. LA

      Yeah.

    8. HS

      ... 'cause people will hear these names. You made money in Postmates?

    9. LA

      Oh, we made a, uh, that's a Sp- that's a Founders Fund special, man. We did a lot of work with Founders Fund early, fantastic group of investors there. Um, I mean, I think Peter Thiel's got more money than God now, but, um, uh, yeah, they were the largest investor in, in Postmates. Sebastian Lehmann, awesome guy, spoke at our 2018 LP day. Um, yeah, we made a 3X on Postmates.

    10. HS

      In how long?

    11. LA

      18 months.

    12. HS

      Whoa.

    13. LA

      It was amazing. And Spencer MacLeod, who was my co-PM, he led that deal. And he was like, "This, you gotta meet this founder. He loves what we're doing. He wants to help all his employees. Let's do it." And I was like, "Yeah, the data looks good, man. Let's go."

    14. HS

      And you made money on Instacart?

    15. LA

      Yeah, we made a lot of money in Instacart. We sold Instacart privately during COVID.

    16. HS

      You're one of the guys who sold at like the 25?

    17. LA

      Oh, yeah. I was like, "Come on, Sequoia."

    18. HS

      And the price, because Sequoia bought?

    19. LA

      Yeah, but Sequoia'll make money in the long run on that. They also bought along the way. I mean, Sequoia's business model is fantastic. We do a lot of, uh, we have a lot of investments in common. Their partners are, uh, y- awesome. There's few evergreen structures I'd ever invest in, theirs is one.

    20. HS

      I agree with that.

    21. LA

      Yeah.

    22. HS

      So, why did you sell at 25 then? You just thought it was-

    23. LA

      Okay, funny story.

    24. HS

      Yeah.

    25. LA

      Um, (laughs) and, uh, personally, you know, you have experiences with companies, and very frustrating experience with Instacart during COVID, where, you know, it went from Whole Foods only pickers and grocery shoppers, which was an amazing service, right? To then having your Uber driver shop for your groceries. (laughs) And try to get a ripe avocado in COVID from your Uber driver.

    26. HS

      (laughs)

    27. LA

      It's not a great experience. (laughs) And I remember a point, I'm hunkered down at my farm, the world's falling apart, you know? Um, and, uh, it's just like, I can't get... The order just can't... It's just not right. And they don't take it back. You just keep getting stuff delivered. And I was like, "It's time. I just gotta get out." (laughs)

    28. HS

      I'm sorry, wait a minute.

    29. LA

      (laughs)

    30. HS

      So the fact that your Uber driver can't get you a fucking ripe avocado, you're like, "You know what? I'm out."

  12. 1:05:57 – 1:19:07

    The Janitor of Venture Capital

    1. LA

    2. HS

      Don't founders just see you as a bit of a tourist? No offense, though.

    3. LA

      Yeah.

    4. HS

      If it's like, if you want that short compression, you're not exactly a long holder, you're not a long believer in the company.

    5. LA

      No, we're pro- we're at, we're at point-in-time problem solver. We're like the s- we're like the st- the janitor that's cleaning up the mess. They have an employee that leaves, that they're out there in the market making noise, they don't want them to take their shares, we get the phone call. You've got a fund that wants to show their LPs that there's value in the extension they're giving them, we get the phone call to buy a little bit of their position. You don't buy 100% of somebody's position typically in a f- in a company unless they're on year 15 of their fund and have no extensions, because if it's a large position in their, in their, in, in their holdings, in their nav, and you buy it all, you kind of scratch your head like, "Well, why are they selling it to me?"

    6. HS

      Yeah, but dude, I've had this before. I've got a great company, and I want to buy some, and I-

    7. LA

      Yeah.

    8. HS

      ... chatted with you. And then ROFRs happen.

    9. LA

      Yeah.

    10. HS

      How do you get around a ROFR?

    11. LA

      (inhales) You know, that's relationships and, and companies buying into the... In our business model, the companies and your peers have to see value in what you can bring to the company. Because what we're after is large concentrated positions. We're not...... indexing secondaries, buying with no information, playing the arbitrage and pricing, and putting 200 secondary positions in a fund. That's not what we do. We're gonna have 10 companies make up 90% of our risk, and we're gonna become very large shareholders of those companies by doing our business model. And so, it requires your peers to say, "Okay, they do something unique. They are gonna provide value to us by consolidating the cap table. They're gonna help us with employee structured tenders, shareholder tenders. Uh, we have an employee or a former share- or a current shareholder that, that w- needs to leave, they're gonna buy it." And it's, it's really the barbell of the small microtransactions that nobody cares about-

    12. HS

      Mm.

    13. LA

      ... that w- some of our companies we've built through 50 transactions to get to $75 million. And some we've done four to get to 200. It's just a... And you, you have to sell that you're, going back to raising money as a new manager, be different. Be different. Because different-

    14. HS

      Oh, it's a pain in the ass to do 50 transactions to get to 75 million.

    15. LA

      It is. It is. The, the, the muscle memory of that-

    16. HS

      Yeah, I get that.

    17. LA

      ... is not replicable for others. (clears throat) In the back office, you have to have the investment to not just pay yourself and to hire big teams to run it. Requires the ability for you to know that the actual outcome is the benefit of the carry, not the management fee.

    18. HS

      No, I, I-

    19. LA

      Yeah.

    20. HS

      ... totally get you there.

    21. LA

      Yeah.

    22. HS

      Going back to Getir.

    23. LA

      Yeah. Mm. That one took years off my life. Um, good process. Look, I think-

    24. HS

      How did you come to it?

    25. LA

      So, we made those investments and made a lot of money for LPs. And, uh, uh, getting in- introduced to Getir by one of our, uh, excuse me, to Gorillas. We have an office in Zurich. Uh, we have a, a team about 10 in Europe. We've been here since 2017. Um, say, "Hey, you got to meet this company in Berlin," when I'm there visiting. We had a bunch of portfolio companies in Berlin at the time. Met the founders and the business was growing like a weed. And-

    26. HS

      This is when it was in Turkey only?

    27. LA

      No, this was Gorillas in Berlin.

    28. HS

      Oh, this was Gorillas in Berlin.

    29. LA

      So, we were acquired... Gorillas was acquired by Getir.

    30. HS

      Yeah. That wasn't a good deal it, was it?

Episode duration: 1:47:28

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