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

20VC: Index's Shardul Shah on Why Market Size is a Trap | Biggest Lessons on Pricing from Leading Rounds in Wiz & Datadog | Why Benchmarks & Averages in VC are BS | How Index Makes Decisions and Why Growth & Early are the Same Investing Style

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Sep 16, 2024

Shardul Shah, Partner at Index Ventures, dives into the intricacies of venture capital, particularly in cybersecurity. He challenges the notion of total addressable market, asserting that every great deal comes with a hefty price tag. Shardul emphasizes the need for effective decision-making, revealing why initial meetings should be shorter. He shares invaluable insights on prioritizing unique strengths in partnerships and the importance of trust and clarity in investment dynamics, shedding light on his successes with companies like Datadog and Wiz.

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ADVICE

Focus on Strengths

Find your unique strengths in venture capital's core pillars: sourcing, selecting, and servicing.
Lean into your strongest area instead of trying to be good at everything.

INSIGHT

Intentionality with Time

Shardul Shah learned to be more intentional with his time, especially in meetings.
He shortened his default first meeting time from an hour to 30 minutes.

INSIGHT

Concentrations, Not Majors

Shardul Shah believes in having concentrations, not strict specializations, in venture capital.
He emphasizes the importance of focusing on specific areas like cybersecurity, while remaining stage agnostic.

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Shardul Shah is a Partner at Index Ventures and one of the greatest cyber security investors of the last two decades. Among his many wins, Shardul has led rounds in Datadog, Wiz, Duo Security, Coalition and more. Shardul is also the only Partner investing at Index to have worked in every single Index office from London, to SF, to NYC to Geneva. Prior to Index, Shardul worked with Summit Partners, focusing on healthcare and internet technologies.

In Today's Episode with Shardul Shah We Discuss:

1. Investing Lessons from Wiz and Datadog:

Why does Shardul believe that TAM (total addressable market) is BS?
Why does Shardul believe that every great deal will be expensive?
How does Shardul evaluate when to double down and concentrate capital vs when to let someone else come in and lead a round in an existing company?
How does Shardul think about when is the right time to sell a position in a company?

2. How the Best VCs Make Decisions:

How does Shardul and Index create an environment of truth-seeking together, that is optimised for the best decision-making to take place?
What are the biggest mistakes in how VCs make decisions today?
Why does Shardul believe that all first meetings should be 30 mins not 60 mins?
Why does Shardul believe it is so much harder to make investment decisions when partnerships are remote? What is better remote?

3. The Core Pillars of Venture: Sourcing, Selecting, Securing and Servicing:

Which one does Shardul believe he is best at? What is he worst at?
Does Shardul believe with the downturn we have moved into a world of selection and not just winning every new deal?
Does Shardul believe that VCs provide any value? What are the biggest misnomers when it comes to "VC value add"?

4. Lessons from the Best Investors in the World:

Who is the best board member that Shardul sits on a board with?
What has Shardul learned from Gili Raanan and Doug Leone on being a good board member?
What have been some of Shardul's biggest investing lessons from Danny Rimer?
Why does Shardul hate benchmarks when it comes to investing?