The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: a16z's David George on Leading a16z's Growth Fund Today, The Biggest Misconceptions of Growth Investing, How a16z Think Through Portfolio Construction, Investment Decision-Making and Scenario Planning & How The Entrance of New Players Has Changed Th

Jul 19, 2021

David George, a General Partner at Andreessen Horowitz, shares his journey from Kentucky to leading growth investing at a16z. He discusses common misconceptions about growth investing, emphasizing that strong business models are merely table stakes. David reveals insights on portfolio construction and the importance of scenario planning amidst new market players. He also contrasts 'pull' vs. 'push' strategies in growth investments, shedding light on the significance of unit economics and recognizing standout founders in today's competitive landscape.

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ANECDOTE

Learning from GA

David George learned valuable frameworks at General Atlantic, including recognizing successful growth investments.
This involves identifying great founders and non-consensus views on market size, exemplified by Roblox and Figma.

INSIGHT

Business Models: Table Stakes

Strong business models are crucial but don't guarantee outsized returns in growth investing.
Focus on market size and founder quality over-indexing on business models can be misleading.

ADVICE

Unit Economics at Growth Stage

At the growth stage, prioritize unit economics and their scalability potential.
Analyze mature market performance and experimental data for insights into future unit economic trends.

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David George is a General Partner @ Andreessen Horowitz where he leads their growth investing practice. Since joining in 2019 David has invested in the likes of Clubhouse, Coinbase, Databricks, Figma, Instacart, Robinhood and TripActions just to name a few. David also sits on the board of Current, Greenlight, and Workrise. Prior to a16z, David spent 7 years growth investing at General Atlantic where he invested in the likes of Airbnb, Crowdstrike, Opendoor, Slack and Uber.

In Today’s Episode with David George You Will Learn:

1.) How David made his way into the world of growth investing with General Atlantic and how that led to his leading the newest iteration of a16z growth funds? What were David's biggest takeaways from his time with General Atlantic? How did it impact his investing?

2.) Misconceptions of Growth Investing: Why does David believe that great business models are table stakes at growth today? What gives the best the edge? Why does David believe that people over-rotate on TAM? Why is it misleading in many ways? What is the right way to assess TAM at growth today? What does David look for when digging into unit economics? When is the right time to focus on unit economics?

3.) Portfolio Construction and Scenario Planning: How does David think about portfolio construction with the new a16z growth fund? What is the right level of diversification? How does David think about loss ratio today? How does David approach outcome scenario planning? What is an attractive level of upside for David to engage at growth? How has that expectation changed over time?

4.) Valuations and Crossover Funds: How does David assess the valuation landscape today? How does David determine whether he will pay up or sit out on an investment? How has the rise of crossover funds, PE funds and hedge funds entering growth impacted the valuations being paid and the investment process itself? What does David make of these new entrants? What challenges do they bring?

5.) Investment Decision-Making: How do a16z approach decision-making at growth? Who is on the core IC? Why does David strongly believe in the single trigger model in venture when it comes to decision-making? What are the biggest reasons for politics in venture firms today? What can be done to mitigate them?

Item’s Mentioned In Today’s Episode with David George

David’s Favourite Book: Increasing Returns To Scale

David’s Most Recent Investment: Loom