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20VC: CapitalG Founder David Lawee on Why People Overvalue Diversification in Venture, Why Investment Clubs Are More Successful Than Investment Partnerships & How Growth Funds Think About Portfolio Construction, Loss Ratio & Reserves

Oct 8, 2020

In this engaging discussion, David Lawee, founder of CapitalG and former CMO at Google, shares his journey from serial entrepreneur to venture capitalist. He sheds light on why he believes diversification is overrated in venture capital and emphasizes a more focused investment approach. Lawee also compares early-stage investment strategies to growth funding, discussing loss ratios and portfolio construction. He reveals how avoiding consensus thinking and fostering independent decisions can lead to greater investment success in today's market.

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ANECDOTE

David Lawee's Career Path

David Lawee's career began as a serial entrepreneur, including founding a VC firm in Toronto during the dot-com boom.
He joined Google in 2005, initially for a green card, and led marketing and corporate development before founding Capital G.

INSIGHT

Market Cycle Impacts

Operating during market crashes is challenging due to factors like competitor funding and changing market conditions.
Protracted bull markets can disadvantage investors with experience in market cycles, making them more risk-averse.

INSIGHT

Consistent Returns

David Lawee prioritizes consistent returns, aiming to make money every year regardless of market conditions.
He believes good investments can be found throughout the cycle and holds his team to that standard.

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David Lawee founded CapitalG, Alphabet’s independent growth fund, in 2013, drawing on his experience both at Google and as a serial entrepreneur. Since then, he has helped transform high-potential startups into some of the most highly valued businesses of our generation, including Airbnb, Lyft, Snap, Robinhood, Credit Karma, Oscar, Lending Club and Thumbtack. Prior to CapitalG, David played a pivotal role in Google’s growth story--first as Google’s Chief Marketing Officer and then as the instrumental VP of corporate development where his group spearheaded over 100 acquisitions for the company.

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In Today’s Episode You Will Learn:

1.) How David made his way into the world of startups, came to be the first CMO @ Google and how that led to his founding CapitalG?

2.) Having operated and invested through both the dot com and 08', how has seeing the booms and busts impacted David's investing mindset? How does David think about temporal diversification today with CapitalG? Why does David believe diversification is largely overrated?

3.) How does David think about portfolio construction today, given CapitalG is a growth fund? How does David compare early-stage to growth today? How does David think about loss ratios at growth? How does David benchmark good vs great from a multiple perspective at growth?

4.) How does CapitalG approach investment decision making today? How does David avoid consensus thinking/following the crowd when it comes to deals? Why does David believe investment clubs operate much more successfully than partnerships? How does that change the structure for CapitalG?

5.) How has David seen himself evolve and develop as a board member of the years? What type of board member would David say he is today? How does that change with the founder? Who is the most memorable board member David has sat on a board with?

Items Mentioned In Today’s Show:

David’s Fave Book: Born A Crime: Stories from a South African Childhood

David’s Most Recent Investment: Albert

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