On this special segment of The Full Ratchet, the following Investors are featured:
- Arianna Simpson of Andreessen Horowitz
- Navin Chaddha of Mayfield
- Ben Orthlieb of Blue Moon
We discuss major conflicts that guests have faced and how they resolved them.
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:
0:18
Welcome back to TFR on today’s special segment, we discuss major conflicts that guests have faced and how they resolve them. Here’s a special segment called high stakes conflicts.
0:35
On today’s special segment, we have Ariana Simpson of Andreessen Horowitz, without revealing specifics, talk about one of the highest stakes conflicts you’ve faced as a VC, why the issue occurred and how it was resolved.
0:48
One of the biggest categories of challenges is managing Bern, and that is something that tends to be more of an issue in well, it’s generally an issue for all founders, but I think it is even more pronounced sometimes in crypto, because you have these kind of feast and famine cycles whereby it’s 2021, and everybody’s raising a bajillion dollars, and so everybody feels very rich and like they can hire a million people and do all these things, And, you know, spend a million dollars on a party because they’ve just raised $100 million and so forth. But the flip side of that is that, you know, there are famine periods in which it’s very difficult to raise money, and users may have, you know, temporarily left the space, or things like that. And so, you know, it takes a lot of discipline and self control to be a founder who can, like appropriately manage those different cycles. And so what those cycles mean is that I’ve had to have many difficult conversations about managing burn with companies. And the reality is, some founders are willing to take that feedback and act on it early enough that there’s still time to turn the ship around. And in other cases, they don’t, and then the company ends up running out of money. So I can think of, you know, that’s kind of the general take. There are many specific instances that I can think of that, you know, I won’t address by name, but I think what as a founder, you have to remember is that you know your investor is on your team, like we don’t want the company to run out of money, and making sure that you know you’re managing the business in such a way that other investors are going to you’re going to hit the milestones that you need to in order to raise your next round is really critical. Yeah, so I would say that is, like, probably the number one class of difficult conversations that I have had to have
3:00
on today’s special segment, we have Naveen Chadha of Mayfield. Naveen, without revealing specifics, talk about one of the highest stakes, stakes conflicts you faced as a VC. You know, how did the issue happen and how is it resolved?
3:16
Highest return as an investor. But we left 5x upside, because I always support the entrepreneur. During the covid eras, everybody got bravado. We got carried away, or what the prizes were. I wasn’t able to influence the entrepreneurs to take an off ramp, and they wanted to go all the way. I supported them, but I told them, the valuation we are getting, we’re in a bubble. These multiples are not repeatable. Is the best performing investment of Mayfield. I think three years before that, we could have made another five to 10x and made history. It would have been the best private acquisition in 2021, in the history of venture capital. But I support the entrepreneur. I just went with the flow, and I can’t change it, because I’m a people first investor, I tried my best, failed. It’s okay. It’s okay. And I don’t know what I’ll do better. I think I’ll keep making the same mistake. My job, as you said, is not to be prospective giving. Put people want to go. I said go. And markets corrected. The company grew 4x multiples, went down 1/20 X can I exit when the sun is shining to support the entrepreneur? So it took me, by the way, a year to get over from that negative state. And since you’re asking it, I think. I’m going to be negative rest of the day too. So it’s okay. No, no, it wasn’t for me. We are doing well, right? Like, but, you know, 1000s of employees, their lives would have changed with that extra Delta. We’re talking here about big numbers, man, 25 $30 billion exits, right? Like, I’m not talking about when I say the largest. Let’s leave it there.
5:28
On today’s special segment, we have Ben orthlebe from Blue Moon, without revealing specifics, talk about one of the highest stakes conflicts you’ve faced as a VC. You know, why did the issue occur and how was
5:38
it resolved? It’s the story of a pass. If you focus like us on founders, personality and people with incredible drive, you find people that are on the knife’s edge, and sometimes you worry that they’re a little bit over. And so very early days we were scouts for emergence capital, working with Jason green, and we had quite a deep talk on this. And effectively he said, if they’re 50 times more brilliant than they’re an ass, you should still invest, but you should get comfortable with
6:15
that. 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.
