Going All In On OpenAI, Rippling and Others | Bedrock Capital's Geoff Lewis On How How He Makes Investments | Ep. 6, IO Pod
Jan 3, 2024
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VC titan Geoff Lewis from Bedrock Capital joins the podcast to share insights on venture capital and raising funds. He discusses assessing founders, the power of authenticity, when to double down on investments, and the OpenAI situation. They also talk about the future of social media and the challenges of regaining health in a technology-driven society.
Success in venture capital requires a polymathic understanding, self-confidence, and a track record of quality investment decisions.
The combination of social media algorithmic rewiring and geopolitical uncertainty will lead to increased polarization and difficulty in finding common ground.
The venture capital industry is overstaffed and overfunded, leading to a potential consolidation, with only a few top-performing firms dominating the landscape.
Deep dives
The Challenges of Running a Venture Capital Firm
Venture capital is a highly competitive and overpopulated industry, with only a small number of investors consistently achieving strong returns for their limited partners (LPs). Jeff Lewis, a venture capitalist, believes that the key to success in this field lies in a combination of factors. Firstly, investors need to have a polymathic ability to deeply understand different businesses and entrepreneurs. Secondly, they should be comfortable with themselves and not be overly self-absorbed. Thirdly, they must have a track record of making quality investment decisions. Due to these high standards, Lewis believes that there are only about 15 investors who possess these qualities, and they continue to dominate the industry. He predicts that emerging managers have a window of opportunity to become winners, but they must navigate a landscape where the winners win even more, leading to a consolidation of AUM (assets under management) in the hands of a few top-performing firms.
The Influence of Social Media and Geopolitical Uncertainty
Lewis expresses a concern about the impact of social media and geopolitical uncertainty on society. He believes that the combination of algorithmic rewiring of brains through social media usage and the rapidly changing geopolitical landscape will lead to significant societal changes. Lewis predicts that societal perceptions of reality will diverge further as people become more entrenched in their own echo chambers. He worries that the inability to agree on facts and truth will lead to increased polarization and difficulty in finding common ground. Lewis also highlights the potential dangers posed by certain social media platforms, such as TikTok, where powerful algorithms can shape users' minds in ways that are unprecedented. He acknowledges the challenges of navigating these issues and believes it will take decades to find a sustainable balance.
The Future of the Venture Capital Space
Lewis believes that the venture capital industry is overstaffed and overfunded, leading to a potential consolidation in the coming years. While there may still be opportunities for emerging managers to become winners, Lewis predicts that half of the current venture capital firms may disappear. He suggests that the winners in the industry will continue to thrive and accumulate even more assets under management (AUM), while the bottom 50% will struggle. In order to scale AUM successfully without compromising returns, Lewis emphasizes the need to find innovative ways to expand assets without significantly increasing the size of the investment team. Overall, Lewis sees a future where a select few firms dominate the venture capital landscape.
Key Point 1: Importance of Conviction in Decision-making
Jeff emphasizes the significance of having conviction when making decisions. He explains that being highly concentrated in investments requires making bold choices and taking calculated risks. He believes in making a few, but extremely impactful, irreversible decisions that cannot be easily reversed. By prioritizing decision quality and focusing on big, game-changing opportunities, Jeff acknowledges that decision-making is a key challenge in venture capital. He also reveals the importance of continuously evaluating and re-underwriting investments to ensure high conviction.
Key Point 2: The Power of Authenticity in Building Relationships
Throughout the podcast, Jeff discusses the value of authenticity in both personal and professional relationships. He emphasizes that being true to oneself and having a unique vibe helps attract the right entrepreneurs and partners. Jeff believes that being genuine and comfortable in one's own skin creates meaningful connections and partnerships. He discloses that his authenticity stems from his childhood experiences, which shaped his quest for truth-seeking and his motivation to challenge the norms of the venture capital industry. By embodying authenticity, Jeff has built bedrock as a firm known for its high conviction and distinctive approach.
Geoff Lewis is a titan in the VC world as both the lead investor and founder of Bedrock Capital, the firm backing some of the world best-known tech companies. Geoff joins Tyler and Sterling on the podcast to share his insights on venture capital and what it takes to consistently make money for LPs. Geoff discusses the unique decision to raise Bedrock's fund size in a time when other funds are downsizing, the importance of assessing founders and their unique qualities, and the challenges and rewards of starting a venture capital firm. He also shares his thoughts on the future of social media, the venture capital industry, and the power of authenticity in building strong partnerships.
Chapters
00:04:10 - Why Bedrock Is Upsizing Their Fund Structure.
00:06:54 - How Geoff Assesses Entrepreneurs and Raises Capital.
00:10:10 - Building Relationships Brings Smart Investments
00:14:13 - Achieving Work-Life Integration For Entrepreneurs.
00:17:49 - Why The Best Founders Are Authentic
00:21:29 - Different Investment Styles in VC
00:26:44 - When To Double Down
00:38:04 - The OpenAI Situation
00:40:37 - Geoff's Hot Takes
00:57:08 - Rapid Fire and Wrap-up
We think you'll love this conversation. Don't miss hearing from one of the industry's top investors and operators.
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