Technology
Minisode: Is It 2021 All Over Again?
In this minisode of Origins, hosts Nick Turles and Beeser Clarkson explore the parallels between the current venture capital landscape and the market dynamics of 2021. They discuss insights from their...
Minisode: Is It 2021 All Over Again?
Technology •
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Interactive Transcript
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Welcome back to the origins mini-sode. This is the podcast that dives deep into the business
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of venture capital, where we learn how the people behind the capital, both GPs and LPs,
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make decisions. I'm Nick Turles, GP at Asylum Ventures.
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And I'm Beeser Clarkson, your LP co-host from Sapphire Partners, where we aim to invest
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in exceptional early-stage venture capital managers, ranging from emerging to establish feces.
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And I'm excited to unpack our recent conversation with Alex from Slippstream.
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Me too. I love that conversation because it actually felt like us just all jamming and learning
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together, which was great. Alex would also probably be a good co-host, maybe we can rope
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him into an episode one day. I loved it. You know me, I can geek out with fellow LPs all the time
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because I learned from you, I learned from him, I adore it. What was your couple of things that
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just stuck in your head? I think you both, you know, really take the time to, I think you
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want our students of the game. Like you guys are not like just phoning it in. You take the time to
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understand the people. There's like genuine curiosity and caring. I met a lot of LPs. I do think
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that's rare. That is not maybe market standard. Your level of, you know, caring and curiosity
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and wanting to win and find the right diamonds and the rough. So I just appreciate hearing that
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as a GP. I think I guess my question is like, where, where maybe would you guys be most dissimilar?
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There's a lot of agreement. I didn't ask him his maximum threshold for fun size, but I suspect we
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will invest in larger funds than he will. We're not as concentrated. We run fairly concentrated
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books. These are all sort of technicalities. I think we actually have more similar than dissimilar.
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And I super, super appreciate because he articulated it so well. And it's, do you have this experience?
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It's sort of the serendipity of conversation where you hear somebody say something and then
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three other people the same week say it. And then you're like, how is everyone thinking the same
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thing this week? This whole comparison with 2021 has been a topic that has been hitting me
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for the last five days, which isn't that weird? Interesting. Yeah. Maybe it's because we all saw a bunch
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of 100x multiples and we're like, we just saw this. Holy crap. Did we learn nothing?
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But I really appreciated being able to discuss that and look at what's the same and what's
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different. And I hear you talk about why founders at iterate and learn. And I now try to digest and
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think about our GPs and our LPs iterating and learning. And if we saw this last time,
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what did we learn that is good and actionable and investible in this market? And then what is
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your like, oh, yeah, we saw that. That, that, that one we can leave behind. And you really educated
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me in the crypto world. And now you've got me thinking about the venture world. So I don't know.
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Thank you. Super interesting. I mean, the thing that's definitely the same is the 100x revenue
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and hard for me to imagine how that plays out differently. What is very interesting that both of
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you discussed is, is venture deployment pace not changing dramatically? So that might actually be
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an important, an important difference. I'm taking a note on that. What we haven't seen is people
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racing back to fund raise because of venture deployment. I haven't done a cap call analysis.
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So it could be people are deploying just not fundraising, which will have the obvious
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challenge for the basic math reasons. But we're definitely, I mean, two years would be the minimum.
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We're seeing people still deploy on now. We're not getting the, oh, I poured all my money in because
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we're not. Yeah. You tell me, I'm not hearing the, and now I need to do a ginormous pro-rata follow-on
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because my precede or seed is now raising at a billion and I have my five million dollar pro-rata
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I have to do. We haven't heard that yet. Maybe it's coming. Maybe that's the next shoot a drop in
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the cycle. I wonder also if perhaps the difference is like in 2021, VCs not just paid really high prices,
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but like deployed the capital crazy quick. And so I wonder maybe if there's at least today,
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this could also change in the next few quarters, but like at least today there's, you know,
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I'll pick out one or two companies and like, yeah, yeah, I'll have to like, you know, hold my nose
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a little bit and it's going to be really expensive, but like I think this is an important one to be
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part of, but I won't do the whole portfolio of that. Like, you know, you have to make exceptions and
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pay for an expensive one or two. And so maybe there is learning from 2021, which is like, I'll do a
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couple really expensive ones. I think they're important, but like the whole portfolio won't be that.
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That would be a good learning if so. I agree. I haven't heard articulated as such,
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but the data point seemed to suggest it. And again, we'll see six months from now if they're still there,
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but I, yes, I do hear people sort of the conversation is, yeah, we can't afford to do all of these,
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which ones are we going to do? And I would say one of the LP speaks that I've heard said a lot in 2020
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and 2021 is the keep the bar high, which is basically guidance to do exactly that, which is you can do
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a couple, we can all do a couple. You can't make it all of them. The other thing that I haven't seen
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yet, but I'm wondering if it's going to be different. We're seeing folks find creative exits for the
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2019 2020 stuff, maybe a little bit earlier in the in the lieu of all of the M&A and IPOs that isn't
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happening in the market. We're seeing folks trying to find liquidity in other ways. If these valuations
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do keep running and you end up with multi-billion dollar 100x revenue multiple companies in your
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fund, will people now have learned you can take some money off the table? Yeah. Right? We've gotten
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some distributions that way recently because it just was so high that again, if you can sell 10%
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20% of your stake into a big round, you tell me, but my experiences in LPs, people are not going to
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be mad at Nick because there's somebody pouring money in. They're actually grateful for a little bit of extra.
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It gives you a whole bunch of leveling in your DPI to save room for the other stuff.
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But we haven't seen it in spades, but I'm wondering if that's not the next dynamic.
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Yeah. We are honestly all very positive outcomes of learnings of 2021. If that's the case, it's like
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actually venture lives on bubbles. We're going to get one if maybe my theory is correct,
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which I don't know if it is. We're going to get one actually like maybe every four or five years
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rather than every 10 historically. One of your jobs as a venture manager is to understand
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where you are and find little bits of liquidity and not spend all the money in the first year.
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Maybe those were all lessons learned in 2021. Oh, gosh. I hope so. That's awesome.
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Maybe it ends up exactly the same in the next six to 12 months. We don't know yet.
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Well, I love learning with you and as always, and I thought Alex was great.
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Yeah, maybe we'd do part two. Yeah. Well, thank you for inviting him. I really appreciate it.
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Thanks for listening to this mini-soda of origins. The show where we discuss the venture
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capital ecosystem through the lens of myself, a GP, and BZR and LP. We'll be back soon with a new
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episode of Origins. You can find that right here in this feed, and while you're there,
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please rate and review the podcast. It's super helpful for other folks looking for venture
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insights to find our show and really helpful for Nick and I to know what you want to hear.
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I'm BZR Clarkson. And I'm Neaturals, and we'll be back soon. Thanks for listening.