On this special segment of The Full Ratchet, the following Investors are featured:
- Aaref Hilaly of Bain Capital Ventures
- Somesh Dash of IVP
- Chris Rizik of Renaissance Venture Capital
We asked guests to tell the most important lesson they’ve learned in their career.
The host of The Full Ratchet is Nick Moran 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:
0:19
Welcome back to etfr On today’s special segment, we ask guests to tell the most important lesson that they’ve learned in their career. Here’s a segment called Lessons Learned.
0:35
On today’s special segment, we have Arif hilali of Bain Capital ventures, what is the biggest mistake or hardest lesson you learned as an investor, and what’s the story behind that lesson?
0:45
Oh, I think just calling a trend too early. I mean, you live in Silicon Valley, sometimes you think something’s old news and it’s done and it’s not. I felt that way about cloud. I mean, by the early, mid 2000s cloud was kind of obvious. No. I mean, of course, everyone would have a cloud business and would want to be by I would have bought a cloud product. But in reality, it just takes much longer for these things to get adopted and to be rolled out than you think. And there were some great cloud businesses started at the end of the 2000s early 2010s and so. So I think you have to constantly remind yourself not to get trapped in the little bubble in which you amongst people that you speak with, and that these trends take much longer to unfold than you might you might think,
1:26
yeah, I think on prem, on prem is still over 50% of all all software, exactly.
1:31
I mean, why would you run something on prem? It doesn’t make any sense. Yeah, 20 years later, we’re still running it on prem so wild, yeah?
1:41
Well, a good opportunity for AI, right? Like, maybe they can leapfrog.
1:44
Well, I think this is why we’re so early in AI. I mean, you could say that, my goodness, open AI, it’ll raise at 300 billion, or whatever it’s raising at now. And AI is so obvious when I leave Silicon Valley, I still get asked, Do you think AI is really that big? What, and and so, and there are whole swathes of the economy that are untouched right now, so it is incredibly early. Agreed
2:14
on today’s special segment, we have Somesh dash of IVP, what is the biggest mistake or the hardest lesson you’ve learned as an investor, and what’s the story behind the lesson?
2:22
So many lessons. If I had to pick one, I would say, I really believe investing is a team sport, and so when we all see an entrepreneur, we get very excited at IVP. You know, we’re a true partnership. We discuss companies every, multiple times a week, with each other. We have a partnership approval process in our committee. It’s not Congress, where people are kind of putting things. It’s it’s much more informal, but it’s got to be something that the firm is very excited by, not just the individual. And so nobody, no matter if you’re two years at IVP or 40 years, can sort of Fiat investments say, I just want to do, let’s just do it right? I think the purpose of a partnership is to look for the best 12 to 14 investments that the whole firm can make in a year. So I think one of the things, the biggest lesson I learned is, early on, I’d be very passionate that push, and I give my Brenna var credit. You know, in hindsight, can’t believe they listen to me. They’re like, all right, fine. Like, you know, let’s have a man, let’s meet him. And sometimes those investments happen, and many of those didn’t work, and many of those were tough because you took, I felt the responsibility of the firm investing in a company, LP Kappa, which is endowments, foundations, pension funds, retirement funds, and it not being, you know, I think successful over time, I’ve realized that’s part of a portfolio is no one hits it out of the park every single time. And I think that’s part of just taking risk. But the bigger thing that I really like is a small practice that we do is called, we say, sleep on it. So when you have a company present, we vigorously debate something. We go back and forth. And sometimes, you know, I just had this conversation this morning with one of my partners who we just went through this, and we just say, Hey, if you really want to do it, we’re supportive, but you want to just take a beat before you call the founder tonight and sleep on it, and think about how you feel tomorrow morning. And sometimes you distill the feedback much better when there’s silence than when there’s a lot of noise, and you have time to process. You sleep on it, you wake up and you go, you know what? Even though I could make this investment, I’m not sure I have the conviction that I need to really be a long term productive partner for this founder. I might have certain doubts I might not be in the right the level of conviction might be lower than it should be, and I think I really appreciate that more than anything, because your partners are trying to help you. They’re they’re so smart, they’re seeing things that you don’t see. So I’ve been saved by my partners many times for things that were that may looked exciting to me, but maybe were not the right opportunities and vice versa. Many times my partners have said, Why aren’t you spending more time with that founder? Like that thing is special, you know? Why aren’t we doubling down to this company, you know? So I think that’s that’s been really fun.
4:56
On this special segment. We have Chris reisek of Renaissance, what is the big. Biggest mistake or the hardest lesson you’ve learned as an investor, and what’s the story behind that lesson?
5:05
I’d probably put that in two pieces. One is, you can’t be afraid to lose money you’ve already put in it. And, you know, and the good money after bad thing everybody talks about. But you know, as particularly as a VC, I sort of lived that where it’s sort of death by 1000 cuts. You put some money, it’s not going well, and you get emotionally involved and all that, and you continue to put a little bit more, a little bit more, a little bit more, and next thing you know, it’s like, Holy mackerel. I put so much more money than I wanted to do. That was a lesson I learned pretty early on as a VC. The bigger philosophical question, I think, that I’ve learned is, when I was first in this business, if something didn’t make sense to me, I often thought it’s maybe it’s my problem. You know, everybody else maybe gets it and I don’t get it. And I came to find out if something doesn’t make sense to me, there’s a pretty good chance it doesn’t make sense, period. And it goes back to investing with conviction. If something doesn’t make sense to me, I shouldn’t be investing in it, period. Even if I just am dense and I’m not getting it, I shouldn’t be investing in it. And that was a lesson that took me a couple years to learn, because what I found out was nine times out of 10. We talked about our spices, nine times out of 10. If it didn’t make sense to me, there was a problem with it. It wasn’t me. And for young VCs, people coming into the venture capital, that’s a really important lesson. Is there’s always, there’s always the risk of groupthink, and you got people talking fast and throwing out acronyms and all that stuff like that. If it doesn’t make sense, you’ll be careful.
6:42
I love it. I can’t wait to share that with my team. We’ve got a small but mighty team of seven, and they’re young folks, but they’re super curious, and many times we’re discussing deals and they don’t get something. And I tell them, you know, it’s the founder’s responsibility to make you understand it, as long as you’re asking good questions and you’re curious, you should walk away learning more and understanding things, and if you’re really confused, it’s not your problem, right? It’s an adverse signal that it’s not the right fit for us. So I can’t wait to share that feedback with my team. Thank you, Chris.
7:16
Yeah, I actually had a founder one time who actually said to me, you just don’t get it. And he’s right, but ultimately, actually, I was right, because this company didn’t this company raised a lot of money and was out of business pretty
7:32
quickly. 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.
