In this episode of 20 VC, host Harry Stebbings interviews Devin Parrick, Managing Director at Insight Partners, a leading investment firm with over $30 billion in capital commitments. Devin has made over 90 investments, including Twitter, Alibaba, and WordPress, and has been named on the Forbes Midas List five times. They discuss the resilience of the software model, the challenges of quick decision-making in the current fast-paced investment landscape, and the importance of building trust in negotiations. Devin also shares his approach to board membership, emphasizing strategic input over operational intervention, and the necessity of continuous learning and adaptation in the venture industry. Insight Partners' culture of self-critique and improvement is highlighted, as well as Devin's personal motivation to keep learning and his view on time allocation across portfolio companies.
"In the hot seat, one of the biggest capital deployers in the market, with over 30 billion in capital commitments and over 400 portfolio companies."
This quote introduces Insight Partners as a significant player in the investment market, highlighting their extensive portfolio and capital commitments.
"I was a science geek in high school... went to Penn, was studying biochemistry... I had a bunch of roommates that were economics majors... I got a job on Wall Street after my freshman year and really liked that."
This quote explains Deven's academic background and his initial interest in science, which eventually shifted to economics and finance, leading him to Wall Street and venture capital.
"The software model is incredibly resilient... when you have real companies... the software model is incredibly resilient."
Deven's quote emphasizes the durability of the software business model through various economic downturns, which has informed his investment approach.
"We have a line that we use internally, is that we never overpay. Companies miss their numbers."
This quote conveys Insight Partners' philosophy on investment valuations, emphasizing the importance of company performance over initial costs.
"Our job is to make sure that we're getting in the right ones."
Deven's quote highlights the importance of careful selection and due diligence in making investment decisions amidst a market with high valuations and enthusiasm.
"that the ones that we're paying up for are the ones where our long term growth underwriting is correct. And we won't always be correct, obviously, but we need to be correct enough."
This quote emphasizes the importance of accurate long-term growth predictions when making high-value investments, despite the acknowledgment that not all predictions will be accurate.
"How do you ultimately define insight and your success? Is there one of those kind of meta questions which is the guiding North."
This quote reflects the search for a fundamental principle or strategy that defines the success of Insight Partners.
"But what the person you spoke to yesterday said is another way of saying the same thing."
Deven Parekh indicates that aiming for a high market share in unicorn companies is synonymous with seeking good returns, which is Insight Partners' primary measure of success.
"I'm more troubled by having to make that decision over a weekend or in three days without having spent a meaningful amount of time."
Deven Parekh expresses concern about the accelerated pace of decision-making in venture capital, which could lead to less thorough evaluations and potentially problematic long-term partnerships.
"So I think what you are seeing generally, we probably deploy funds in about two and a half years."
Deven Parekh notes that the current trend in venture capital is to deploy funds over a two and a half year period, which has become the new norm for temporal diversification.
"I think negotiation that works, to me, is one where you actually build a trust based relationship with somebody."
Deven Parekh believes that effective negotiation is rooted in trust and mutual understanding, rather than aggressive tactics.
"I think the key in a negotiation is making sure both sides really understand what's important to the other party, and everybody should walk away feeling like they got something."
This quote highlights the importance of a balanced negotiation where both parties feel that their needs have been met.
"Once we decide we like something, we like to own as much as we can."
Deven Parekh explains that after deciding on an investment's potential, Insight Partners aims to acquire a significant ownership stake.
"The reality is the markets I think David talked about this at his interview right I mean the market has shown that the signaling risk is not that significant of a risk."
Deven Parekh addresses the concern of signaling risk, suggesting that the market has demonstrated that the absence of a follow-on investment does not necessarily hinder a company's ability to raise further capital.
"So early on, I think I probably overreacted to the negative and probably overreacted to the positive." "You're there to help, you're there to be a devil's advocate, you're there to challenge thinking." "I know the areas that I think I can add value and I push on those, and where I can't, there's other board members and other people who are going to add more value than me."
These quotes illustrate the learning curve Devin experienced, highlighting the importance of emotional steadiness, understanding the advisory role of a board member, and the strategic focus over operational involvement.
"I like to read history for fun, but I don't like people reading the history." "Tighter board meetings tend to focus the conversation on the things that matter."
Devin emphasizes the need for board meetings to be dynamic and strategically focused rather than a mere recounting of past events, advocating for structured and efficient meetings.
"I think if it's something around, I don't feel like our marketing strategy is really working here... getting broader kind of feedback... probably has value." "I think those conversations are better had one on one."
Devin differentiates between strategic discussions that can be beneficial in a group setting and personal or sensitive matters that should be handled privately to avoid defensiveness.
"Actually, you spend almost no time with the winners... The middle, you actually probably can influence the outcome... spending almost no time on the capital returners or the losers." "I think you want to be referenced as somebody who, when there was a problem, you didn't abandon ship."
Devin outlines the ideal versus actual time spent with different categories of companies in a portfolio, highlighting the emotional and ethical considerations that influence investor behavior.
"I constantly am worried about, am I going to be able to still find companies that are going to perform really, really well?" "It definitely keeps me on my toes because I feel like... I got to find something just as good."
These quotes reveal Devin's personal insecurities and how they fuel his ambition and drive for continued success in the competitive investment landscape.
"We spend way more of our time beating ourselves up on the things that we missed and why didn't we look at that area?" "We don't watch videos, obviously, but we..."
Devin discusses the introspective and competitive nature of the investment industry, emphasizing the need to continuously evaluate and learn from past decisions to improve future outcomes.
When firms scale inherently, even if you want a meritocracy of ideas, hierarchies are created and people have different weight of words, I think the weight of your words are very impactful.
The quote highlights the challenge of maintaining a meritocracy of ideas in a growing firm where hierarchies naturally emerge, impacting the influence of each person's words.
And my approach on those is always to start with the most junior person and go to the most senior person, as opposed to start with the most senior person and go the other way.
Deven Parekh explains his strategy of reversing the typical hierarchy in meetings to empower junior staff to share their findings and opinions first, thereby promoting a more balanced and inclusive discussion.
She suggested that all ics are done where you essentially actually document your thoughts beforehand.
This quote refers to a method suggested by Annie Duke to document individual thoughts before group discussions to avoid influence by others and have more genuine conversations.
Just as an example, just to show you the randomness of what I read the last three books I read.
Deven Parekh shares examples of his recent reading material, illustrating his broad interests and commitment to learning.
I just love to learn. That goes back to topic one.
This quote reflects Deven Parekh's passion for learning as a primary motivator in his career, emphasizing the joy of discovering new things.
It's nothing worth having comes easy.
The quote is Deven Parekh's personal motto, which encapsulates his belief in the necessity of hard work for achieving valuable goals.
I think it's constant reinvention.
This quote summarizes the ongoing challenge faced by Insight to stay relevant and innovative in a rapidly changing market.
You're never going to know the answer.
The quote expresses the reality of decision-making in venture capital, where complete information is unattainable, and decisions must be made with the best available data.
How do you get comfortable with quick decisions is, I think you just start thinking more and more about the history of what were the common themes about things that have worked, and are enough of those common themes in this deal to take the bet.
Deven Parekh discusses how to become comfortable with making quick decisions by relying on historical patterns of success and ensuring enough of those patterns are present in the current deal.
The most recent one that I've done is a company called tetrascience.
The quote reveals Deven Parekh's excitement and confidence in his recent investment in Tetrascience, indicating his positive outlook on the future of the life sciences industry.