In this episode of "20 Minutes VC," host Harry Stebbings interviews Daniel Levine, a partner at Accel, a top-tier venture firm with an impressive portfolio including Facebook, Slack, and Dropbox. Levine shares his journey from founding a Y Combinator startup to joining Accel, leaving to help Dropbox open its platform to third-party developers, and then returning to Accel to lead investments in companies like Scale AI and Sentry. He emphasizes the importance of team and market in early-stage investments and discusses the dynamics of multi-stage firms participating in seed rounds, stressing the significance of ownership and building genuine relationships with founders. Levine also touches on the venture community's need for more empathy and compassion and the positive signal an Accel seed investment can convey in the market.
"And so diving right in and I'm thrilled to welcome Daniel Levine, partner at Excel, one of the leading venture firms of the last decade, with a portfolio including the likes of Facebook, Slack, Qualtrics, Uipath and Delivery, to name a few."
This quote introduces Daniel Levine and highlights Excel's significant portfolio, establishing the context for Levine's expertise in venture capital.
"Honestly, I never envisioned being a venture capitalist right before I joined the first time around in 2010, I had founded a company called Chariot, went through Y Combinator, and candidly, I was a terrible, terrible founder for a variety of reasons."
Levine shares his background as a founder and his initial view of venture capitalism, which provides insight into his early career and mindset before entering the venture capital field.
"Fundamentally, I think almost all of the best lessons I've learned are effectively lessons of humility, like learning about what I don't know."
Levine reflects on the humility he gained from his time at Dropbox, emphasizing the value of recognizing one's limitations and the collective strength of a team.
"I mean everywhere. I mean candidly, I'm a short, bald guy. I have a lot of insecurities."
This candid admission from Levine about his insecurities humanizes him and underscores the challenges faced by venture capitalists in balancing professional and personal relationships.
"But I have a lot of insecurity about my place in the community and that I'm always going above and beyond to be contributing in a positive way."
The quote reveals the speaker's feelings of insecurity and their continuous effort to make a positive impact within their professional community.
"I've never seen the velocity of deals being done. I've never seen the pricing that's being done."
The quote underscores the speaker's alarm over the rapid pace and high valuations in the current investment market, which is unusual based on their experience.
"I try not to have opinions about the market. I just kind of try and focus on what I'm doing, my little slice of the world, and what I can control."
This quote reflects the speaker's approach to investment by focusing on factors within their control rather than trying to predict or judge the market.
"I was always so hell bent on only people being the only thing that mattered."
The quote illustrates the speaker's initial investment philosophy, which was heavily weighted towards the quality of the people involved in a venture.
"The two and a half things are people market. And then how it's gone lately, how it's gone so far, given time and money."
This quote summarizes the speaker's investment evaluation criteria, focusing on the team, the market, and the company's progress to date.
"I think the biggest risk around market timing is when an investor thinks they are really good at market timing."
The speaker warns against the arrogance of believing one can predict market timing accurately, suggesting it can lead to risky investment decisions.
"So, yeah, my core thesis is boring at software, even from a consumer perspective."
This quote conveys the speaker's primary investment thesis, which is a simple but strong belief in the transformative power of software.
"I think the best marketing is a great product."
The quote suggests that the speaker believes in the value of substance over social media presence, emphasizing the importance of the quality of one's work over personal branding.
"I don't think people focus too much on one of the challenges of Twitter is that these personalities develop, but it's hard to understand the underlying depth of value there."
This quote highlights the challenge of conveying genuine expertise and value through a platform like Twitter, where personalities can overshadow substance.
"I think VCs aren't careful enough in our ability to influence markets and we really shouldn't."
Levine is cautioning against VCs overstepping their roles by influencing markets, suggesting that their primary job is to provide funding rather than direction.
"I never want to be taking away attention from the founders doing hard work."
Levine is expressing his preference for a team-centric approach over personal branding, emphasizing the importance of highlighting the achievements of founders rather than himself.
"I think we're seeing the personalization of venture more than ever, and people want to fundamentally connect with Dan Levine."
Stebbings is highlighting the trend of personal connections in venture capital, where investors seek a direct relationship with individual VCs.
"I love contributing into a brand that is Excel and then passing that on to another group and sharing that brand with our companies."
Levine expresses his commitment to the partnership model and the collective brand of his firm, Excel, which he believes adds value to the companies they work with.
"Our first investment in slack was a seed. Our investment in sentry started as a seed. Our investment in Cloudero was an EIR."
Levine provides examples of successful seed investments by Excel, underscoring the firm's history and expertise in early-stage investing.
"I think price really matters. I would focus more on ownership mattering."
Levine clarifies that while price is important, the primary goal is to secure a significant ownership stake that aligns with the firm's brand and relationship with founders.
"I think every venture firm in the world should be attempting to do this, because I think that's the best part of the market, is that seed series a first institutional capital round."
Levine advocates for venture firms to engage in early-stage investing, which he views as a core aspect of the venture capital business model.
"This is an example of why I'm blessed to be able to work at Excel, and it's a huge advantage having kind of the firm's brand as a new investor."
Levine attributes part of his success in avoiding negative signaling to the strong brand and reputation of Excel.
"So we looked at the data on this, actually, a couple of years ago, we looked at a cohort of seed deals we'd done over the course of three years."
Levine provides evidence of Excel's strategic approach to seed investing, suggesting that the firm's methodology is data-driven and carefully considered.
"Of the 25 that were maturity at the time, 18 of them had raised follow on capital from us or other people. A series a. Of the remaining seven, I think two had died, one to an OD legal situation, one had run out of capital. I think maybe three had been acquired and a couple others had not been funded." "The signal of an excel seed is the most positive thing you can almost possibly have in the market, which we were somewhat surprised to see."
The first quote summarizes the outcomes of Excel's seed investments, indicating their strong performance and the positive signal to the market. The second quote emphasizes the unexpected but significant positive market signal that an Excel seed investment represents.
"The final concern that I have is essentially the sales process doesn't end for the founder." "It's a really interesting challenge, I think so long as you could potentially buy up." "We want to own a bunch of the company in the seed stage, as opposed to small percentage in the case of scrappy." "Our job is to help the company as best we can, as much as possible."
The first quote expresses the speaker's concern about the never-ending sales process for founders. The subsequent quotes reflect the speaker's perspective on the importance of building relationships with founders, the strategy of owning a significant portion of a company from the seed stage, and the ongoing responsibility of venture capitalists to support their investments.
"The hardest element by far is the personal relationship with all of my friends and balancing that with work." "It's very personally difficult. But again, I can't stress enough, I'm very fortunate."
The quote highlights the speaker's struggle with managing personal relationships within the professional context of venture capital, while also acknowledging the fortunate nature of their position.
"I think overrotating on things they read on the Internet." "Do we like you, do we want to work with you, do we want to help you?"
The quotes address common mistakes founders make by overly relying on internet advice and not focusing enough on building authentic relationships with investors.
"I just wish the venture community was dramatically more empathetic and compassionate and trying harder on those things across the board." "It's not really a mechanic, so that's why it's a cop out question."
The quotes reflect the speaker's desire for a more empathetic venture capital community and acknowledge the challenge in changing the industry's mechanics to reflect this ethos.
"I particularly enjoy working with them. But I also enjoy working with wonderful young people like Julia Schottzi at NEA on the board of Sentry, Christina shed on the board of Mox."
This quote highlights the speaker's enjoyment and appreciation for the diversity and quality of board members they have worked with.
"I recently invested in a company called Altinity, which is building a company around the open source project Clickhouse." "It's kind of a very, very popular project that's been adopted by huge companies like Cisco, Uber, Cloudflare, Sentry, Mux, Instana Segment, Tencent, Bytedance, et cetera, et cetera, et cetera."
The quotes discuss the speaker's recent investment in Altinity and the reasons behind the decision, emphasizing the widespread adoption of Clickhouse and the speaker's confidence in the market and team.