Investor Stories 332: Best LP Question (Stack, Tully, Green)

Investor Stories 332: Best LP Question (Stack, Tully, Green)


On this special segment of The Full Ratchet, the following Investors are featured:

  • Risa Stack
  • Tim Tully
  • Mitchell Green

We asked guests to share the best question they’ve ever been asked by an allocator.

The hosts of The Full Ratchet are Nick Moran and Nate Pierotti of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.

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Transcribed with AI:

0:18
Welcome back to TFR on today’s special segment, we ask guests to share the best question they’ve ever been asked by an alligator. Here’s the segment called Best LP question.

0:36
On today’s special segment, we have Reese’s stack of the production board in REITs. Of what what’s the best question that NLP is asked you?

0:46
That’s a hard one, I think. You know, I think the best question is like, how do you find these people? How do you find these people to back and it’s like, well through my network, and it’s it’s through my network and finding amazing people through my network and working with people, my network, I think that’s, you know, when how do you how do you pick? How do you pick the companies invest in and I pick them based on really, truly believing in the people and either having a relationship or I know them through somebody else? And then there’s always the gut feel component in terms of, you know, does this feel like a good person?

1:27
And today’s special segment, we have Tim Tolley of Menlo Ventures, Tim, what is the best question and LP has asked you? What

1:34
I mean, the the main thing is like, why did I choose Menlo? Right? That’s the that’s the main one that we usually ask, right? Like, why is the team I love the team. I love the fact that there was no assholes on the team. I love the fact that I was gonna learn from people who had been had a lot of success. Doing it. I love the idea that there’s an opportunity to help be part of building the firm and doing more than just like deploying capital all day, I do a lot of things on the IT side of the firm, even like, pushed out a new site moved us to Gmail, it’s like, there’s a lot of like firm building stuff that can happen in the background, as you as you know, from from being part of running a fun. So like, you know, I love the team. And this is a team sport, right? And if you don’t love all the guys, and all the partners at the table that you’re working with, it’s pretty hard to do this job, I think. And, you know, it took me a while to find the right set of folks that I wanted to be a part of Menlo was it and I knew, like pretty much on the first walk that I went on with with one of the partners like, I was just gonna stop there. Right? It’s like, there’s like the stopping problem and computer science, right? It’s like, I think I had hit that 37% that I needed. No, they hit the stopping problem. But yeah.

2:47
On today’s special segment, we have Mitchell green of lead edge capital, Mitchell, what is the best question an LP has asked you?

2:56
Okay, I get all this, your returns are awesome. But like, seriously, how can you screw me?

3:05
Really, what’s the answer?

3:08
Like, that is the really the way you’d screw you is if you didn’t have like we use an outside valuation firm, we think it’s like super important. And the company’s valuation is just one input into it. I think I think every firm should use outside valuation firms. I frankly think people should just actually just only view DPI and like discount dDpi by 50%. To actually like, you know, focus on it. Other good LP questions. This is a great one. Cambridge associates asks, Is this so in our entire portfolio today? If the question is is like, how many companies do you have in your portfolio relative to the number of people that can sit on boards of companies? So if there are in the people that oh, the markets great right now great time to invest? Well, do you even have time because the average person your firm’s on the board of nine portfolio companies? So like, how do you have time to invest? Well, you’re either you’re there, you’re there for going your old stuff, or you’re going to new stuff, because there’s actually not enough time in the day. I think there’s a lot of funds that have a crazy number, that average is just like really high. And by the way, go ahead.

4:21
Well, what’s the answer to that? You just have to cycle them. You got to get in you got to

4:25
cycle and gotta get out. Right? Yeah, you gotta get out. You gotta. You got you have to have not enough firms are good sellers. There’s a bunch of firms that are good buyers. But like we have a selling committee at least edge capital and investment committee. Okay, you know what we got figured out over the next year to get out of this thing. For one reason or another price is not markets going to be tough managing team has issues. Like I just don’t think enough people think about selling you altogether I’m constantly you’ve got to run concentrated funds, I would argue to like, you know, we’re putting 15 to 20 companies per fund. There are there are funds that have 200 plus companies and it’s crazy

5:15
that will conclude this installment of investor stories. If you’re enjoying the program and would like to see it continue. Take a moment and leave a five star review in iTunes. Okay, that will wrap things up for today. Until next time, over prepare, choose carefully and invest confidently thanks for joining me