2025-11-09 02:05:37
The most powerful force in the world is compound interest. The second most powerful is the compounding of friendship – the chance to know people deeply across very long periods of time. A note landed in my inbox this summer from a product manager who was leaving Google after more than 15 cumulative years. We had the good fortune of overlapping at YouTube – in fact, I brought him over from Google. In the recent update email he shared a historical document – an ‘ask’ he had during that recruitment period long ago – and mentioned how much it stuck with him.
Although there were certainly things I would do differently as a leader given my own personal growth since those days, I did always take talent recruitment and development very seriously. Today when great young team members have so many options of where to work, one advantage you have in attracting and retaining them is really listening to/soliciting/helping them develop career plans. And then living up to the commitments you make to them, even if it’s aimed at helping them leave when the time is right.
Sharing a snippet from the email here with his permission
2025-10-19 22:51:50
Encountered this ‘use scale’ at a high school for how students are permitted (even sometimes encouraged) to use Artificial Intelligence tools in their work. Struck me as very smart when applied with thought on a per subject, per assignment basis. Wonder what the teacher-facing guidelines are too!
2025-10-13 03:35:47
56 investments into Homebrew IV(ever), the pivot we made in 2022 to investing our own personal dollars in an evergreen fashion, we’re in a reflective mood. The almost four years of operating in this new normal represents a ‘fund cycle’ of sorts, so we probably have enough early data to reflect on this style of venture investing versus the more traditional LP-backed deployment of our first decade. One of the most clear differences is how we treat startup valuation in our entry point. And it’s a meaningful change!
Whereas before, as a lead seed VC in a portfolio model structure, the negotiation would be a tradeoff (for us) between ownership target, check size, current fund size and total number of investments we wanted to reach for that vehicle. Now we offer a (mostly) consistently sized supporting check, are stage agnostic (although 90% of the 56 have been pre-seed/seed), possess no ownership requirement, and have an open-ended timeline. Essentially pricing, as a top line absolute concern, is less of modeled variable for us, and more of a signal to inform our decision. Valuation contributes to our conversation around four questions we ask ourselves:
A. What were the founders optimizing for? Maximizing valuation? Minimizing dilution? Enough capital to cleanly execute to next milestones? Or maybe a bit underfunded? All things being equal, we understand the market dictates prices, but just like a startup’s strategy can differ whether their strategic true north KPI is growth or margin or customer count or something else, so will the goals of a round lead you to different results. An initial financing can often be one of the first telling data points on what matters to a founding team, whom if we invest, we hope to be able to support for years to come.
B. Did the founders’ decision around pricing help or hurt the quality of the cap table? ‘Best’ investors or just the auction winners? Were there folks we believe are good partners to early stage companies who walked because of terms? Is there a lead investor and if so, are they underwriting to the same type of outcome, on the same timelines, that we’re seeking? Obviously impossible to fully know unless the founders are super transparent, and potentially subjective, but on our checklist.
C. Will the next financing be made more difficult because of the pricing set now? Good rule of thumb is to imagine what has to be achieved for the company to be worth 3x more the next time they raise. While this is likely overly precise, since startups are power laws so in hindsight the majority of a company’s financings were ridiculously cheap or insanely expensive, early on, in the Seed/A round, it’s at least a useful exercise. Start with too high a seed valuation and the degree of difficulty to get to a clean Series A is just that much harder. Since we’re investing our own capital and not playing the AUM “how much capital can I get into this company” game, our financial interests are more similar to founder/team needs: clean outcomes where everyone makes money at the end. Ahh, alignment is a beautiful thing.
D. What do we have to believe to imagine we can return 20x, 50x, 100x on this investment? Tied to the above, which is more about the pit stops along the way, we think of each dollar we invest as opportunity cost – it could have gone into a different startup. Homebrew IV hasn’t changed its return benchmarks and so while it’s still very much taking the risks involved to find generational startups early, the higher the entry cost the more we need to be convinced there’s a Large, Urgent, and Valuable problem to be solved, with a margin structure and outcome multiple.
We still firmly believe that if you are running an institutional capital firm you should err towards concentration – owning enough of your winners in order to move the needle on returns is the “easiest” way to outperform. But for our current playbook, Satya and I are hypothesizing that these four considerations will matter more to Homebrew IV’s financial performance than trying to hit an ownership target. Just need to wait 10 more years to be sure 
2025-09-24 01:53:45
“My first three ventures funds were all high net worth individuals and founders/tech folks. How should I decide if institutional LPs are right for my next fund?”
This was a question put to me earlier this week from someone I’d met via Screendoor, the fund of funds we cofounded to back new firms (sometimes called ’emerging managers’ in the industry). Of note, and to the credit of this investor, it wasn’t the typical ‘what do I need to prove/show to raise from LPs’ but rather, is this class of financial partner right for me or not?
Before answering I reformatted it to “Even if I could raise the amount of capital for the next fund from my current individual investors, or write the check myself, what conditions or benefits would cause me to consider institutional LPs of any sort [FOs, FoFs, endowments, and so on]?”
Three Reasons to ‘Transition’ to Institutional LPs
A. You Are Building a Firm, Not Just Raising a Fund (AND Know You Want to Raise at Least 2-3 More Funds After this One)
Institutional LPs are most likely signing up for longer relationships with you than any one individual LP and are able to scale with potential increases in fund size. Once you are confident – in trajectory, in strategy, in joy – that venture will be your career ongoing, it’s worth it to consolidate your capital base in this manner.
B. You Want to Take on Performance Risk Instead of Fundraising Risk
Related to the above, the tradeoff in having partners who are there to support you ongoing so long as you do your job is, well, you have to do your job. HNWs, individuals, CVCs, other VCs, etc all might invest in your fund for reasons besides absolute returns; institutional LPs shouldn’t (although even some of them have adjacent motivations such as secondary/direct investment access). Basically if you are the type of person who ultimately wants to be judged by results (and live with standard VC fund LPAs), then being in business with professional institutional LPs – especially those with evergreen pools of capital – essentially takes your fundraising risk down to zero.
C. You Are Willing to Spend the Time to Find Neutral to Positive LPs, Including Passing Up on LPs Who Aren’t a Good Fit for You
Like any group, ‘Institutional LPs’ aren’t homogenous. Based upon their institutional needs, their organizational culture, their familiarity with venture, their personalities and team construction, etc you will find folks who are more or less suited to how you want to run your business. Even in our first Homebrew fund, we focused very much on ‘mutual fit’ and turned down some opportunities to work with LPs where it didn’t feel right.
And Two Reasons to Avoid Institutional LPs That I Think Are Overblown
A. If You Take Institutional Capital They Become Your Customer and Managing Them is a Ton of Headaches
I find this to be a sign of poor LP selection by the GP or inability to run their business well. There’s nothing about the relationship with high quality, evergreen, professional, VC-savvy LPs that adds overhead disproportionate to the value they can bring (sole caveat would be it is kind of annoying when the people in the seats at an LP change – and they do change more than you would expect). LPs are our partners, founders are our customers. That’s always been clear to us and our LPs.
Most of the other overhead questions come into play when you take outside capital versus your own, not who that capital is from. Fund structures have their own encumbrances.
B. Taking on Institutional LPs Reduces Your Flexibility as an Investor
This is the old “they are going to hold me accountable to what I put in the slide deck/portfolio model” complaint. In my experience the only true constraint is what’s in our LPA around vice clauses, etc and even those just require approval (for example, in our historic LP-backed funds we couldn’t invest in cannabis businesses that touch the plants themselves since it’s not Federally legal). These were all nothing burgers for us – our LPAC has given great feedback/approved everything we’ve asked about.
When an LP backs you they are doing so because of a strategy you presented within a specific asset class they want exposure to. I can imagine that if you deviated from that wholesale without communication it would lead to mistrust. But the idea that you have to march down a specific path because of a four year old spreadsheet just isn’t true. Our LPs have always said that what they’re outsourcing to us is judgment – we should focus on being great investors and they expect us to adjust to the market, take appropriate risks, earn the opportunity (with founders, co-investors) to find some ‘off model’ investments. If you followed your strategy 100% you were probably too rigid. If you followed your strategy 0% then you didn’t have a strategy.
If you are raising and want to investigate bringing on institutional partners -> Screendoor!
2025-09-23 06:53:34
“It might not be true, but it is real.” This was the recent advice given to us at Curriculum Night by the Head of Upper School (Grades 5-8) where my daughter is a student. Loosely translated – as it relates to the parenting of teenage girls: whatever feelings they’re manifesting; whatever they believe in happening to them; whatever the probabilities they are assigning to outcomes of these situations — they might not always be logical or likely but they are 100% authentic. So if your attempt to ‘help’ them is just to bypass their emotions and go straight to logic, while unintentionally refuting their lived experience, well, that’s not going to work.
Seems like this holds true for not just my daughter’s age range but perhaps all humans? Or at least that’s what I was pondering when reading Jasmine Sun’s latest essay “
are you high-agency or an NPC?”
It is easy to think from the outside that San Francisco is the one place on earth insulated from crisis. Everyone else is living in fear of political upheaval and mass job loss, while the rich nerds discovered suit jackets and now they’re the ones on top. “My mutuals run the world,” goes one Twitter refrain.
For the tech industry as a whole, this may be true. But for most individual participants, the swagger is a gilded surface, paper-thin.
She goes on to cover the zeitgeist of the SF AI scene in a way that reminded me of the opening quote about reality and truth. What she’s describing is definitely real, but is it also true? In the question of, are the people described accurately understanding the environment around them or is it more of a feeling distorted by the echo chamber, status maximizing, and safety seeking? And is it true for enough of our community or just a narrow (but influential) segment of AI maximalist, highly online, 18-32 year old SF folks?
Increasingly talking about ‘tech’ in general conjures the Blind Men and the Elephant parable – the animal you think you’re describing is very different depending on which part of the beast you grabbed.
Jasmine, who is a wonderful writer, closes with her own metaphoric comp, a recent sauna visit
Back in the sauna, the temperature is climbing. We hold our heads in our hands, trying not to overheat. There’s a stinging on my collar and I realize I forgot to remove my necklace. A first-timer burns the soles of his feet. Finally, I’ve had enough. We file out, and plunge into cold water.
2025-09-21 04:34:41
Talent joining a company is a leading indicator of good things to come.
And talent leaving a company is a leading indicator of bad things to come.
But yet Board meetings rarely go deep on talent KPIs in thoughtful and consistent ways.