The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Lanham Napier of BuildGroup joins Nick to discuss Scaling Rackspace, The Evolving Responsibilities of a Venture-Backed CEO, and Confronting Big Tech Monopolies. In this episode, we cover: You took on capital from Seqouia, Norwest and others while at Rackspace. What was the biggest challenge to taking on venture capital? How were you able to move from the early product-market-fit days to true scale... what were the defining decisions/actions that helped you expand exponentially? As a company leaves the product-market-fit stage and reaches scale, what is the job of the CEO or how does the job of the CEO change as the company scales? You've talked about investing "long-term capital"... what do you mean by that? How have you created a fee-light model, where management fees are eliminated? How do you guide CEOs that have been conditioned to think in 12-18 months cycles, when the long-game is much more critical? You've hired and developed a lot of folks over the years. What advice do you have for young CEOs with regards to selection and/or development of people? Leadership -- great ones emerge in hard times. What are some of the most important lessons you've learned about leadership? We're in an environment where the largest tech companies have monopolized a lot of the upside in the market. Of course recently many of the CEOs appeared in front the house judiciary committee. Where do you stand on the position of large tech companies and how that impacts emerging startups? Do you think China is a threat to the U.S.'s position as world power and tech leader? What would suggest we do about it?

On this special segment of The Full Ratchet, the following Investors are featured: Henrique Dubugras Ryan Gembala Grace Isford Scott Kupor Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

Trae Vassallo of Defy Partners joins Nick to discuss Leaving Kleiner Perkins to Start Defy Partners, The State of Venture in the Bay Area, and Maintaining a Beginner's Mind. In this episode, we cover: Can you talk about your transition from Kleiner Perkins? How tough was that decision to make? What was it like to work with John Doerr? What's the thesis at Defy Partners? When you began Defy you chose not to look at San Francisco. Can you talk about why that is? How do you think this plays out? What will tech and venture in the Bay Area look like a few years from now, when COVID is behind us? Any stats on flight of talent form Bay area to other cities/regions? What changes have you observed in venture/tech that this crisis has either caused or accelerated? You've been a founder and can relate w/ the folks you're working with. How do you try and keep that beginner's mindset as you gain more experience and get further away from your founder journey? What are some the biggest mistakes you see founders making when pitching investors? What tips can you give founders around building relationships as well as pitching in a completely virtual environment? You experienced a severe personal experience… near death situation a few years ago. How has that changed you as a person and as an investor? 3 data points… Let's say you're approached to invest in a consumer hardtech startup. The startup is doing $1.5M ARR It's growing at 15% MoM And LTV:CAC is 4:1 Catch is, you can only ask 3 questions for 3 specific data points, in order to make your decision. What three questions do you ask?

On this special segment of The Full Ratchet, the following Investors are featured: Jason Whitney Shawn Carolan David Horowitz Jaclyn Hester Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.

Nikhil Basu Trivedi of joins Nick to discuss Agglomerators vs. Specialists, the Rise of the Solo-Capitalist, and the Importance of Founder-Investor Fit+. In this episode, we cover: Why did you decide to leave Shasta? What's the plan moving forward? The Rise of Solo Capitalists You wrote a great piece on the rise of this behavior, 'The Rise of the Solo Capitalists'. What do you think has caused the rise in single GP funds? What are the main benefits to both investor and entrepreneur with this model? What are the limitations and/or downsides of this model? You wrote that an LP said that this model 'may be the biggest threat traditional venture capital firms have seen in a long time'. Why? Founder-Investor Fit What do you think are the most important things for founders to consider when choosing an investor? There are many firms that don't care about the "fit" per se... they just want to get money into the best deals. And it can be tough for a founder to turn down the best offer or the biggest name investor. Do you think that lack of fit can lead to the demise of the company? Do you think that founder-investor relationships/dynamics will change significantly over the next decade? Why or why not? Agglomerators vs. Specialists Can you break down the types of focus amongst VCs? Agglomerators vs. Specialists? What do you think has caused the rise of the agglomerators? From a returns (TVPI) standpoint, do you think one model is superior to the other? A large, institutional LP said to me this week that he doesn't believe in sector-focused fund models and returns suggest that they underperform. He only invests in generalists with stage focus. Have you found that the specialists have underperformed the generalists? What do you think about the future of these models? Where will the most crowded section be, five years from now? What are your thoughts on rolling funds?

On this special segment of The Full Ratchet, the following Investors are featured: Oren Klaff Tamara Steffens Leo Polovets Byron Deeter Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

Ben Casnocha of Village Global joins Nick to discuss Backing from Bezos, Zuckerberg, and Gates; Lessons from Reid Hoffman; and Building a Network-centric Venture Firm. In this episode, we cover: - How have things changed for the firm since the pandemic broke? - You've raised from some very big names in tech -- Zuckerberg, Hoffman, Gates, Bezos, Greene, Blakely and many more. How exactly did the formation of Village and fundraise from these notable tech leaders come together? - Village has a unique approach to sourcing... Tell us about the scout network? - Decision making process, architecture when doing deals at this pace and volume? - Many firms talk about their founder networks and Slack Groups. But often if you ask founders, the density and connectivity of those networks are lacking. What is it about your broad founder community that succeeds where others don't? - Worked with Reid Hoffman for two years... what were some of the key lessons from that experience w/ Reid? - YC is in full swing right now... many investors I've chatted with this week are a bit dizzy with the number of companies they're meeting with. Do you invest in companies coming out of YC? - What do you think the future holds for accelerators like YC? - How do you determine when to make an exception on a deal? We all have rules, check-size, valuation range, etc... how do you know when to go off-thesis? - What are your thoughts on the future of Valley-based investing vs. investing outside the Valley? - Thoughts on all these large, multi-stage firms investing at seed and pre-seed? - Capital Supply and concentration is at new levels in the Bay Area... especially for seed investors. While it's reasonable that more great companies will be built with the tools and opportunities available, this all won't end well. I've seen pricing spike and aggressive tactics changing from investors to get access to deal. What are you observing and how do you think it plays out?

On this special segment of The Full Ratchet, the following Investors are featured: -Beezer Clarkson -Alex Osterwalder -Patrick Gallagher -Steve Blank Each investor discusses a portfolio company that did not survive and why it was that they failed.

- You recently published research on the expansion of 175 US companies into Europe. I'd like to discuss a number of points from the piece, but first off… what prompted you to do this research and write the piece? - Part of the report is about timing… ie. when is the right time is for a b2b SaaS company to make the leap and expand into Europe. Talk us through your findings and conclusion w/ regard to timing. - In preparation to make that jump, you recently talked about the challenges for "globalizing" a company and that it really starts at the CEO's desk… what do you mean by that? - As an investor, how do you prepare a CEO to shift mindset from US-centric to a more global one? - When a company makes the leap to Europe, what are some of the most common pitfalls/mistakes they make? - How do the challenges of growing a b2b software company across Europe differ from that of growing it in the United States? - Is there a particular playbook that you follow when bridging the gap between the US and European markets, if so can you share the broad strokes of what that entails? - Do you think it's more difficult for companies to start in the United States and grow into Europe or start in Europe and grow into the States? Why? - As part of the report, you talk about the difference between sales led expansion versus product and engineering led expansion, what are the primary differences? - How has COVID affected which expansion strategy to choose, if at all? - How to build a fully functioning sales force remote from the ground up - What, if any, tailwinds have emerged for the growth of the European tech ecosystem?

On this special segment of The Full Ratchet, the following Investors are featured: Leah Solivan Kane Hsieh Richard Kerby James Currier Each investor describes the most unusual situation or pitch that they've encountered as an investor. To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.