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

20VC: How I Lost Airbnb at Seed Because of an Exploding Term Sheet | Investing Lessons from Roelof Botha & Peter Thiel | Why VC is Less Collaborative Than Ever and Great Companies Are Being Destroyed by Too Much Cash with Kevin Hartz @ A*

Jul 22, 2024

Kevin Hartz, Co-Founder of A*, shares lessons from missing out on Airbnb due to a exploding term sheet, the value of spiky founders, and why he believes a barbell strategy of seed and Series C is best. He reflects on his transition from angel investing to VC, the challenges of stock selling, and the importance of supporting founders. The podcast also covers insights on challenging situations, parenting struggles, and reflections on capitalism and venture numbers.

01:02:54

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Episode guests

Kevin Hartz

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Quick takeaways

Analyzing founder fit crucial for investment success.

Losses due to exploding term sheet underscore investment risks.

Diversification in funding stages key to modern VC strategy.

Adapting to market dynamics essential for VC industry survival.

Mental health awareness important in high-stress VC environment.

Deep dives

The Growing Bubble in the Market

Nvidia's rise hints at the market's early bubble stage, with substantial future growth potential. Despite the norm, Kevin Hartz focuses on building and holding companies instead of quick sales.

Embrace the Power of One Exceptional Founder

01:23

Embrace Change: Adapt Ownership Strategies

01:13

Venture Returns Outlook

00:54

Importance of Conviction in Venture Capital

01:37

Intro

5min

Exploring Success Mindsets, Valuable Lessons, and Entrepreneurship Insights

12min

Early Days of Airbnb and Investment Experiences

10min

B-Side Investments and Transition to Venture Capital

13min

Reviving Past Products, Timing in Investing, and Creating an Incubator for Historical Failures

2min

Investor Decisions and Risk-Taking in Stock Selling

8min

Understanding Individual Needs in Difficult Situations and Challenges of Parenting in the Modern Age

5min

Reflections on Venturing and Capitalism

4min

Reflecting on Venture Numbers, Mental Health, and Sponsor Mention for Command Bar, Fundrise Innovation Fund, and Squarespace

4min

Kevin Hartz is a Co-Founder and General Partner at A*, an early-stage venture capital firm. Prior to founding A*, Kevin co-founded Eventbrite, a publicly traded company, and served as the CEO for the first 11 years of the company. Before Eventbrite, Kevin co-founded Xoom, a money remittance company that was acquired by PayPal in 2015 for over $1BN. Kevin is also a prolific angel investor having backed companies such as PayPal, Airbnb, Pinterest, Ramp, Trulia, and Anduril at the seed stage, and was an early investor in Uber, Palantir, SpaceX, Square, Gusto and many others.

In Today's Episode with Kevin Hartz We Discuss:

1. What Makes the Best Founders:

What questions does Kevin always ask founders in the investment process?
Does Kevin prefer serial or first time founders? Why?
Does Kevin prefer founders who are new to a problem or who are insiders and experts?
When Kevin has gotten a founder bet wrong, what did he not see that he should have seen?

2. The Exploding Term Sheet That Cost $10BN:

How did an exploding term sheet for the seed round of Airbnb cost Kevin $10BN?
What did Kevin see in the seed round of Airbnb that so few other investors saw?
Does Kevin agree that the best businesses often start off as ridiculous or toys?

3. From World's Greatest Angel to VC with $600M AUM:

Why does Kevin think a barbell strategy of Seed and Series C is best today?
Does Kevin agree that the Series B and growth stage is dead today?
Why does Kevin strongly disagree that seed is the hardest stage of the market?
Why does Kevin think that venture is less collaborative than ever?
How does Kevin approach when to sell vs when to hold a position?
What are his biggest lessons from seeding and holding Opensea?

4. Learning From the World's Best Investors:

What have been Kevin's lessons from his relationship with Peter Thiel?
What have been Kevin's biggest takeaways from investing alongside Roelof Botha in many deals?
What have been Kevin's biggest lessons from watching and observing the great Pierre Lamond?

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