20VC Harry Stebbings on The Biggest Takeaways From Interviewing The World's Best Investors, What Makes A Truly Great Interview & Some Big News... with Mattias Ljungman, CoFounder & General Partner @ Atomico

Summary Notes


In this episode of the 20 Minutes VC, host Harry Stebbings is interviewed by Matthias Ljungman, co-founder of Automaco. Stebbings discusses his journey into entrepreneurship, which began with a charitable venture inspired by his mother's battle with multiple sclerosis, and evolved into creating the world's largest independent VC podcast. He shares insights into VC industry trends, such as the rise of microfunds and operational value-adds, and reflects on key advice from renowned VCs like Peter Fenton and Jason Lemkin. Stebbings also touches upon his experience with Atomico's EIR program, his strict approach to interview quality, and teases a new project in stealth mode. The episode is interspersed with promotional mentions for the Eight Smart Mattress and Full Contact contact management solutions.

Summary Notes

Introduction to Harry Stebbings and Matthias Ljungman

  • Harry Stebbings is the host of the 20 Minutes VC podcast and has recently joined Atomico as an EIR.
  • Matthias Ljungman is the co-founder and general partner at Automaco and has a significant history of successful exits.
  • Harry Stebbings shares his background and the inception of the 20 Minutes VC podcast.
  • Matthias Ljungman introduces the Entrepreneur in Residence (EIR) program at Atomico.

"So for the show today, I'm thrilled to have the tables turned on me by Matthias Youngman, cofounder and general partner at Automaco, one of Europe's leading vc funds, which Matthias launched in 2006 alongside Nick class Zentstrom."

This quote introduces Matthias Ljungman and his role in the upcoming conversation with Harry Stebbings.

"More recently though, I joined the fantastic team at Atomico as an Eir on the investment team."

Harry Stebbings explains his recent involvement with Atomico, setting the stage for the discussion about his experiences and insights into the venture capital industry.

The Role of Podcasts and Partnerships

  • Harry Stebbings founded the 20 Minutes VC podcast to fill a content gap in venture capital-focused media.
  • The podcast aims to fit within the average commute time, maintaining listener retention.
  • Partnerships with companies like Eight Sleep and Full Contact are mentioned as instrumental in productivity and contact management.

"And so I set about to do two shows a week interviewing the best vcs in the world. And that was the start."

Harry Stebbings discusses the origin of his podcast, highlighting his goal to interview leading figures in venture capital.

"With full contact, they provide the ability to organize your contacts, gain rich insights into them, and therefore build deep relationships."

This quote underscores the importance of managing and engaging with professional contacts, which is relevant for networking in the VC industry.

Harry's Entrepreneurial Journey

  • Harry's entrepreneurial spirit was sparked by a desire to help his mother, who suffers from multiple sclerosis.
  • He created a fashion line of bracelets and accessories to raise funds for charity.
  • The experience provided Harry with a foundational understanding of business operations.

"It was actually due to my mother, who suffers from multiple cirrhosis and I saw her suffering and her pain and I felt pretty helpless about it and wanted to do everything I could at the tender age of 14-15."

Harry shares the personal motivation behind his first entrepreneurial venture, which was driven by his mother's illness.

"And so that was my kind of groundwork and framework for running a business as successfully as I hope it could have been."

This quote reflects on the valuable business experience Harry gained from his early entrepreneurial activities.

Insights into the VC Market

  • Harry has interviewed a vast number of VCs, providing him with a unique perspective on the industry.
  • The interviews have informed his views on venture capital trends and practices.

"But it's quite clear you've interviewed more vcs than anybody else on the planet. 828 according to the latest numbers, which is incredible."

Matthias Ljungman acknowledges Harry's extensive experience interviewing venture capitalists, highlighting the breadth of his industry knowledge.

"So from a meta perspective, let's start with how that has informed your view of the VC market as a whole."

Matthias prompts Harry to share how his interviews have shaped his understanding of the venture capital market, setting the stage for insights derived from his conversations with industry experts.

Emergence of Microfunds and Operational Value Add

  • Microfunds have become a significant and dominant form of allocation in venture capital.
  • Operational value add has risen, with firms like Atomico and Andreessen Horowitz providing more than traditional introductions and advice.
  • Atomico provides structural improvements to businesses, especially in the early stages, through experts like Ben Grohl on growth and Dan Hines on hiring.
  • Ben Grohl's experience at Facebook and on Messenger is highlighted as an example of the high-quality talent that early-stage companies can access through such value-add services.

"Actually, over my time I've seen massive trends, be it the emergence of microfunds as a strong and dominant allocation of, you know, we've seen the rise of operational value add. The likes of Atomico and Andreessen do it phenomenally well, whereby one provides not just the traditional introductions and advice, but as many people know, Atomico, you've got Ben Grohl on growth, Dan Hines on hiring, which actually add real structural improvements to any business, especially in the early stages where that is not necessarily affordable."

This quote emphasizes the shift towards microfunds and the increasing importance of providing operational expertise to portfolio companies, exemplified by Atomico's approach to adding value beyond capital.

Carried Interest Structures and Network Effects

  • Innovative carried interest (carry) structures have emerged, incentivizing founders within a VC's portfolio.
  • Kindred in London and Upside Partnership in San Francisco are examples of firms that create network effects through carry structures.
  • Founders are often an underutilized asset in VC portfolios, and creating network effects post-investment is crucial.

"I think there's also really interesting emergencies in terms of kind of carrying upside structures. There's the likes of Kindred in London, upside partnership in San Francisco who actually create a network effect with carry to incentivize all their founders in their portfolio."

The quote discusses the innovative use of carried interest structures to foster a sense of community and mutual support among founders in a venture capital portfolio, which is seen as a way to better utilize the collective capabilities of the founders.

Insights from Industry Leaders on Venture Capital

  • Pat Grady's view on the diminishing returns of operational experience due to technological advancements.
  • The decreased cost of starting a business and the rise of cloud services like AWS have changed the landscape of operational experience.
  • Peter Fenton's advice on the importance of being a venture capitalist to become a great one, emphasizing learning and iteration.
  • Roger Ehrenberg's emphasis on investing with strict discipline and concentrated portfolio strategy.
  • Kent Goldman's perspective on using pricing as a litmus test for investment desire.
  • Peter Fenton's insights on being a great board member, including being Socratic, choosing the right moments to interject, and engaging fellow board members.
  • Jason Lempkin's benchmark for evaluating founders: whether they are at least three times better than himself.

"So I think I've obviously learned a ton from interviewing so many great vcs. I think if we start with what it takes to get into the industry, Pat Grady said to me that never has the rate of decay on operational experience been greater."

This quote reflects on the lessons learned from various industry leaders, starting with Pat Grady's observation that operational experience has a shorter shelf-life in today's fast-evolving tech landscape.

Characteristics of a Great Interview

  • The best interviews combine personal experience with broadly applicable lessons.
  • Contrarian thought is increasingly valued, with interviewees challenging conventional wisdom.
  • Rapport between the interviewer and interviewee is crucial for a successful interview.
  • 40% of interviews are not released due to strict quality control and the pursuit of contrarian thought.
  • Charisma and intellectual rigor contribute to the quality of an interview.

"I don't think so. I'm super strict on quality and contrarian thought. I never want a listener to feel like the 20 minutes has been anything but interesting and they've really learned something really tangible."

This quote highlights the host's commitment to delivering high-quality, thought-provoking content in interviews, ensuring that listeners gain valuable insights from each episode.

Importance of EQ in Interviews

  • EQ plays a critical role in successful interviews.
  • Building rapport and engagement before the interview can lead to a more meaningful conversation.
  • Generic answers are a significant issue in interviews, leading to frustration, especially when the interviewee has potential to offer insightful responses.

"This game is all about EQ. And he was so right. He took 15 minutes beforehand to chat and really get to know each other, and our rapport and engagement as a result was completely unparalleled."

This quote emphasizes the importance of emotional intelligence (EQ) in establishing a connection with the interviewee, which can greatly enhance the quality of the interview.

Decision to Join Atomico

  • The speaker's learning had plateaued, prompting a desire for deeper venture capital understanding.
  • The speaker sought to understand the intricacies of venture capital, such as fundraising, LPs' perspectives, and internal fund operations.
  • Atomico was chosen for its global brand and the opportunity to work with a highly regarded team.
  • Personal growth opportunities at Atomico, such as one-on-one sessions, were a significant attraction.

"I really wanted to learn that and I thought it was the right time."

This quote explains the speaker's motivation for joining Atomico, highlighting a desire to grow and learn within the venture capital industry.

Personal and Academic Growth at Atomico

  • The speaker experienced both personal and academic growth during their time at Atomico.
  • Sentimentally, events like Slush and team dynamics left a lasting impression.
  • Academically, the speaker learned the importance of quality over quantity in contributions and the value of having strong theoretical backing for ideas.
  • The power of specialization within a team was also a key takeaway, with team members contributing unique skills and knowledge.

"I think I learned actually the importance of word quality not count."

This quote reflects the speaker's academic growth, emphasizing the realization that the substance of one's contributions is more important than the volume.

New Project in Stealth

  • The speaker is excited about working on a new project, although it is currently in stealth mode.
  • There is anticipation for future announcements regarding this new venture.

"I'm very, very excited to be working on a new project. Very sad to be leaving Atomico, but very excited to be working on a new project in stealth."

The quote conveys the speaker's enthusiasm for their upcoming project and the bittersweet feeling of leaving Atomico.

Favorite Books and Their Impact

  • The speaker's favorite books include "Madame Bovary" for its beautiful narrative and "What I Learned Losing a Million Dollars" for its business insights.
  • These books are appreciated for their storytelling and the valuable lessons they impart.

"Favorite book and why I love Madame Bovary. I know it's a bit out of the field. I know it's probably the most interesting thing in terms of kind of Walter Mitty lifestyle and delusions of grandeur, but it's just the most beautiful story, incredible narrative, and my absolute favorite, and then another one that is an absolute from a business perspective, is what I learned, losing a million dollars."

This quote reveals the speaker's favorite literature and the reasons behind their choices, highlighting the impact of storytelling and business lessons on their personal and professional life.

Lessons from "Losing a Million Dollars"

  • The book "Losing a Million Dollars" provides valuable insights into financial loss and its lessons.
  • Reading the book can be an enlightening experience, potentially saving the reader from making costly mistakes.

biggest lesson you're ever going to learn. I hope I don't have to lose a million myself. He was like, read it. And I actually read it on the way back from a San Francisco trip, and it was my whole flight. But it was an amazing book. So what I learned, losing a million dollars, for sure.

The quote emphasizes the profound impact the book had on the speaker, suggesting it offers a crucial lesson that could prevent the reader from suffering a similar financial loss.

Entering the VC World

  • Specialization and differentiation are key for those looking to make their mark in the venture capital (VC) industry.
  • Carving out a niche, particularly in less crowded spaces such as gaming or medtech, can position someone as a thought leader and attract deal flow.
  • Understanding business models, distribution, and regulatory environments in a chosen niche can be a unique selling point to VC funds.

Oh, it's very much similar. If you're wanting to get in or if you're an associate or an analyst and you're looking to kind of make your mark on the industry, you've got to specialize now. You've got to differentiate yourself.

This quote highlights the importance of specialization and creating a unique identity in the VC industry to stand out and be successful.

  • Matamot daily, strategy by Ben Thompson, and 'drinking from the fire hose' at Lightspeed are highly recommended for thoughtful and academic content in VC.
  • Engaging with these resources can provide deep insights and a generalist perspective on venture capital.

Oh, that's a very good question. I mean, I have to admit to being an absolute fan of Matamot daily. It's my go to whenever I wake up.

This quote reflects the speaker's personal preference and endorsement for Matamot daily, suggesting it as a valuable resource for anyone interested in VC.

Misconceptions about VC

  • There's a misconception that VC professionals have a lot of free time due to the format of their work.
  • Another misconception is that VCs are solely financially driven and lack a personal connection with entrepreneurs.
  • In reality, many VCs are deeply invested in their founders' success, offering support beyond capital.

I think the biggest misconception about me is that I work 100 hours a week, 100 minutes a week.

This quote addresses the incorrect assumption about the amount of free time a VC professional has, clarifying that their workload is substantial despite what some may think.

Humanization of VC

  • The speaker advocates for the humanization of the VC industry, emphasizing the supportive role VCs play for entrepreneurs.
  • VCs are not just financial backers but also champions and supporters of the businesses they invest in.

So, yes, I guess I would like to see more humanization of VC, which is actually one of the main reasons I did the show, to show that human and personal side to the VC behind the money.

The quote reveals the speaker's desire to showcase the personal and supportive side of VCs, countering the stereotype of them being purely financially motivated.

Top 20 VC Episodes

  • Episodes featuring Naval Ravikant, Brad Feld, Ariel Zuckerberg, and Michael Scott are highly recommended for their unique insights and engaging discussions.
  • Each guest provides a different perspective, whether it's academic, fun, or intricate views on the venture industry.

So if you want, like, academic takeaways, I would recommend Naval Ravikant. I thought he was fantastic and he was just the most phenomenal brain to discuss with Brad Feld was also phenomenal.

This quote suggests that the episodes with Naval Ravikant and Brad Feld offer substantial academic value and deep discussions, making them highly recommended.

Future Plans and Projects

  • The speaker is excited about working on a new, undisclosed project in the VC industry.
  • Anticipation is built around the future reveal of this project, which aims to make a significant impact in the field.

As I said, very excited to be working on a new project in stealth. I can't wait to reveal some more details in the near future, but very excited to make my mark on an industry that's a, given me so much and b, I love so much.

The quote expresses enthusiasm for a secretive new venture that the speaker is eager to share in the future, highlighting a passion for the VC industry.

Endorsements and Recommendations

  • The Eight Smart Mattress and Full Contact are endorsed for their innovative approach to sleep tracking and contact management, respectively.
  • These products are recommended for enhancing productivity and managing personal health, fitness, and professional contacts.

Eight is a sleep innovation company with their latest product, the eight smart mattress.

This quote is a direct endorsement of the Eight Smart Mattress, suggesting it as a tool for improving sleep quality and, consequently, daily productivity.

With full contact, they provide the ability to organize your contacts, gain rich insights into them, and therefore build deep relationships.

The quote endorses Full Contact as a valuable tool for managing and engaging with professional contacts, emphasizing its utility in building relationships.

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