20VC Is Now Really the Best Time to Be Investing WTF is Happening at Growth Stage Investing Why VCs Have Gotten Lazy Over the Last 2 Years Investing Lessons from Hitting with Braze and Missing with Snowflake with Logan Bartlett, Managing Director @ Re

Harry Stebbings hosts Logan Bartlett, Managing Director at Redpoint Ventures, on his podcast 20 VC. They discuss Bartlett's investment strategy and his journey from Battery Ventures to Redpoint, where he led investments in companies such as Ramp and Monte Carlo. They touch on the recalibration of startup valuations, the best times to invest, and the importance of patience in the current venture landscape. Bartlett emphasizes the value of founders and his approach to board roles, preferring soft diplomacy over direct confrontations. They also cover the competitive dynamics of multi-stage funds and the challenges of B2B marketing. Additionally, Bartlett shares insights on crypto, the state of crossover funds, and his recent investment in AcuityMD, highlighting the importance of discipline and a clear vision for future success.

• Logan Bartlett is a managing director at Redpoint Ventures.
• He has led investments in companies such as Ramp, Monte Carlo, Cribble, Crossbeam, and Acuity MD.
• Prior to Redpoint, he spent over five years at Battery Ventures where he invested in Pendo, amplitude, data, iq, braze, and customer.

"I'm so thrilled to welcome back Logan Bartlett, managing director at Redpoint. At Redpoint, Logan has led investments in the likes of Ramp, Monte Carlo, Cribble, Crossbeam and Acuity MD, to name a few."

The quote highlights Logan Bartlett's role at Redpoint Ventures and his successful investment track record, which is significant for understanding his expertise in the venture capital industry.

• Logan did not know what venture capital was until he was around 23 or 24.
• His background involved investment banking at a small boutique firm that advised software companies.
• He interacted with various investment firms, including Battery Ventures and Redpoint Ventures.
• Initially rejected by Redpoint, he joined Battery Ventures and later moved to Redpoint as a partner.

"I didn't even know what venture was until I was 23, 24, actually."

This quote reflects Logan's unconventional path into the venture capital industry, emphasizing that his interest and entry into the field were not premeditated from an early age.

• Battery Ventures is known for delivering consistent returns to their limited partners.
• They have a diverse investment strategy, including early-stage venture, late-stage venture, growth equity, and buyouts.
• Logan values the experience gained at Battery, which taught him how to evaluate investment opportunities.

"Battery in general, one, they're awesome people. Two, they're very prudent about returning money to their limited partners and consistently delivering great returns."

The quote summarizes the core principles of Battery Ventures that influenced Logan's investment philosophy, highlighting the importance of prudent investment and delivering returns.

• Logan believes the current time is one of the best for venture investing.
• He notes a recalibration in pricing expectations from entrepreneurs and a bullish outlook on tech trends.
• There is a contrast in the investment climate between the last two years and now, with more rational prices.

"I've never been more bullish about the different trends that are going on in the overall tech landscape right now."

This quote underscores Logan's optimism about the current opportunities in the tech sector and the venture capital market.

• There's a recalibration occurring in late-stage private markets and structured terms in investments.
• Series B and C rounds are experiencing a lack of activity due to companies waiting for market normalization.
• The funnel effect from public markets to private markets is influencing investment behaviors and pricing.

"I think it's a funnel, right? It kind of goes to how public markets end up flowing through to private markets in general."

The quote explains how public market trends affect private market valuations and investment dynamics, which is crucial for understanding current investment strategies.

• Logan advises founders with the luxury of time to potentially wait until after Labor Day or later in the fall to fundraise.
• He emphasizes the importance of having capital and encourages fundraising if necessary, despite market conditions.
• Founders should aim for an efficient fundraising process and choose partners that will be most helpful.

"If you're afforded a little bit more of a time horizon to wait, I've encouraged most of the founders that I work with, maybe wait till after Labor Day, maybe wait to sometime a little bit later in the fall."

This quote offers strategic advice for founders on timing their fundraising efforts to align with a more stable and predictable market.

• Logan reflects on whether he should be more aggressive in concentrating capital into his portfolio's winners.
• He considers the current stage as an opportunity to invest more capital into proven companies at relatively low prices.

"Harry, what are you doing? You should be much more aggressive in concentrating capital at relatively low prices, given the fact that they would take additional money."

The quote reveals Logan's internal debate on whether to take a more aggressive investment stance during the current market conditions, which can provide insights into investment decision-making processes.

• The level of aggression in concentrating capital into an existing portfolio is influenced by the stage of the investment.
• In later stages, public market valuations are crucial to consider because they determine liquidity for high flyers.
• Discrepancies between late-stage private valuations and public market valuations have been significant in recent times.
• For early-stage investments, it is beneficial to double down on winners or provide more runway, considering absolute valuation and blended cost.
• Fund construct and portfolio concentration must be pragmatically considered when investing additional capital.

"And we saw a dislocation that existed at the later stage versus the public markets that occurred over the course of the last couple of years." This quote highlights the mismatch between late-stage private valuations and public market valuations.

"I actually think it is a great time to be doubling down into the winners or just providing them more Runway." Logan Bartlett expresses that it's an opportune time to invest more into successful early-stage companies.

• The strategy of "spray and pray" at the early stage and concentrating capital into winners is challenging in practice.
• Building ownership in the best companies is difficult due to competition from top multi-stage funds.
• Successful funds treat initial investments as full investments and support them fully, rather than as call options for future rounds.
• Viewing initial investments as call options can lead to aggressive tactics that may alienate founders and be counterproductive in later rounds.
• Picking the right companies is crucial when taking an active role in investments.

"The people that do it well don't view the initial investment as a call option on later investment opportunities." Logan Bartlett explains that successful funds view initial investments as commitments rather than mere options for future investment.

"You have to hold a really high bar there." This quote emphasizes the importance of rigorous selection when actively supporting and investing in portfolio companies.

• Time is the most constrained resource for venture capitalists.
• Treating small investments as significant commitments can lead to an imbalance if the business does not succeed.
• The past two years have seen a shift in venture capital, from investors being courted by founders to investors having to actively compete for opportunities.

"If you're going to be treating this small investment like it's a big one, then you could be really upside down in terms of if that business doesn't work, how much you invested just from a time cycle standpoint into that company." Logan Bartlett discusses the potential time investment imbalance when treating small investments as major commitments.

• Venture capital has become more institutionalized over the last five years compared to the previous 25 years.
• Some investors have mistaken being at the right place at the right time for skill, leading to a generation of investors who may not be as adept as they believe.
• The balance of power has shifted from being heavily in favor of investors to a more equitable distribution between investors and entrepreneurs.
• The competitive landscape has changed, leading some established investors to retire rather than adapt to the new dynamics.

"And it's far more competitive than it was in their day." Logan Bartlett reflects on how the venture capital industry has become more competitive, changing the dynamics for investors.

• The venture capital world is becoming more specialized, akin to the evolution from broadcast television to personalized streaming services.
• Entrepreneurs can now find investors or firms that cater to their specific needs, whether it be early-stage focus, brand recognition, or hands-off capital.
• Redpoint, as a multi-stage fund, aims to stand out by ensuring the brand and the individual investors are recognized for their strengths.
• The goal is to win a fair share of great opportunities by having a suite of services, personalities, and domain expertise that differentiates them from the competition.

"The accumulation of the individuals, the accumulation of the brand, the accumulation of the companies we've been involved with actually stands for something." Logan Bartlett discusses the importance of building a strong brand and individual reputation within a venture capital firm to compete effectively.

• Balancing individual partner branding with the overall fund brand is challenging and can pull a firm in different directions.
• The location of blog content, whether on personal platforms or firm websites, can indicate the orientation towards individual versus firm branding.
• Some firms, like Andreessen Horowitz, have successfully elevated both individual and firm brands.
• The goal is to ensure that both the individual and the firm gain increasing recognition over time.

"I just want to make sure that both of them mean something and that both of them mean more every day than it did before." Logan Bartlett expresses the desire for both individual partners and the firm to grow in recognition and value.

• There is a concern that general partners (GPs) are not marking down book values to reflect the current market accurately.
• The valuation of investments, particularly at later stages, may be overestimated compared to what they could fetch in public markets.
• Communication with limited partners (LPs) about valuation adjustments is crucial for maintaining trust.
• A disciplined structure for valuation adjustments is more important than the actual markdowns.

"I don't think you can be a prudent manager and look every person in the eye and say, hey, this is worth exactly what we thought it was worth six months ago." Logan Bartlett emphasizes the importance of honesty and realism in valuations for maintaining credibility with LPs.

• The pace of investment and sensitivity to price have been areas of concern, especially reflecting on the past year's aggressive investment climate.
• Acknowledging the potential overvaluation and adjusting investment strategies accordingly is important for trust-building with LPs.

No verbatim quote provided for this theme.

The transcript covers various aspects of venture capital investment strategies, fund management, competition, and the importance of transparency and trust with LPs. Logan Bartlett and Harry Stebings discuss the complexities of doubling down on investments, building ownership in top companies, the value of time, changes in the venture capital landscape, competitive dynamics, individual versus fund branding, and the necessity of accurate book value markdowns.

• Redpoint's underwriting framework for growth is three to five times (3-5x) with ten times plus (10x+) upside.
• The framework remained unchanged even as public market valuations increased.
• Public market changes led to some level of lost price sensitivity.
• Optimism is maintained due to the belief in the long-term potential of investments, despite compressed returns.
• Portfolio composition built out last year is a source of pride, despite the changes in market conditions.

"Anyone that invested last year lost some level of price sensitivity... we really want to be investing in things that we think can be important, long standing public businesses... we didn't have the same price sensitivity that we had had a year two years before."

This quote explains that despite the unchanged investment framework at Redpoint, the team experienced a shift in price sensitivity due to the inflated valuations in public markets, which affected their investment approach.

• Outcome scenario planning is challenging due to the tendency to underestimate the potential of hypergrowth companies.
• The spectrum of potential outcomes is broad, and only one outcome will actualize.
• Decision-making is about the best risk-adjusted return, similar to playing blackjack with visibility of the dealer's hand.
• The right decision can sometimes lead to the wrong outcome and vice versa.
• Past investment experiences inform future decisions and the importance of not getting too fixated on precise valuations during negotiations.

"At the end of the day, there's only a single outcome... you have to take in all these disparate inputs and think through what the likely outcome can potentially be."

Logan Bartlett emphasizes the complexity of outcome scenario planning, acknowledging that while only one outcome will occur, investors must consider a range of possibilities to make informed decisions.

• Redpoint focuses on multiple on dollars rather than ownership percentage.
• Significant returns can be achieved even with smaller ownership stakes in highly successful companies.
• Early-stage teams may focus more on ownership percentages.

"Multiple on dollars... we've been fortunate enough to be involved in companies like Stripe and Twilio and Snowflake... they can far outsee the ability of owning 12% of any individual company."

Logan Bartlett clarifies that at Redpoint, the emphasis is on the return multiples rather than the specific ownership stake in a company.

• Growth stage investments can be hampered by focusing too much on market conditions at a specific point in time.
• Looking further into the future and assessing whether a company will be the one to execute on a vision is key.
• Learning from misses involves recognizing the inevitability of certain technological advancements and being willing to invest early.

"If you look far enough in the future, do you think something is inevitably going to happen?... If you feel like it's inevitable, get on board, because the details can be figured out along the ride."

This quote highlights the importance of foresight in investment decisions and the willingness to invest in a company that has the potential to execute on a vision, even if it's ahead of its time.

• Losing faith in a founder typically stems from missed opportunities to execute on the business vision.
• Trust and relationship building with founders are crucial.
• Soft diplomacy is preferred over direct confrontation when addressing leadership concerns.
• The role of a board member is seen as a trusted confidant to the CEO and executive team, rather than solely to hire or fire the CEO.

"Replacing founders, I just don't view as an ethical thing that I want to be a part of... if there are ways of soft diplomacy, of convincing founders that maybe that's the right path through enough data points and conversation, so that's the tact I hope I'll be able to take."

Logan Bartlett discusses his approach to dealing with founders and the importance of trust and diplomacy in guiding founders towards the best decisions for their company.

• The most enjoyable board experiences come from working with people who are liked and respected.
• The best board members possess empathy, passion, and a deep understanding of the companies they work with.
• The ability to communicate effectively and provide meaningful support to entrepreneurs is highly valued.

"I think he has the right level of empathy and passion, and he knows the inside out details of the companies he works with... He's willing to roll up his sleeves and be helpful."

This quote describes the qualities that Logan Bartlett admires in a board member, highlighting the importance of empathy, passion, and a hands-on approach.

• Favorite book: "Team of Rivals" by Doris Kearns Goodwin, due to its insights on leadership and decision-making.
• Views on crypto: Believes there is value in the crypto ecosystem, but not to the extent of the massive investments made last year. Speculation, gambling, and NFTs are seen as viable use cases.
• The future of crypto is uncertain, with some use cases likely to retain value.

"I absolutely love team of rivals about Abraham Lincoln... I think there's a lot of applicability to really successful ceos I've worked with."

Logan Bartlett shares his admiration for a book that offers valuable lessons on leadership, which he finds applicable to the CEOs he works with.

• The utility of cryptocurrency in cross-border exchanges is acknowledged but not commensurate with the investment it has received.
• A significant number of investments in crypto funds are expected to fail, given the disproportionate amount of money invested.

I think there's some utility there. I don't think that's nearly commiserate with the amount of money that's gone into the ecosystem.

The quote suggests that while there is some practical use for cryptocurrency in international transactions, the speaker believes the investment in the crypto ecosystem is not justified by its utility.

• B2B marketers are perceived as less talented because the best marketers typically choose consumer marketing for its larger budgets and creative opportunities.
• B2B marketing attracts people who typically fall into the field, often lacking in comprehensive skill sets needed for a company's marketing needs.
• B2B marketers are usually categorized into brand marketing, product marketing, or demand generation, which are not always fully transferable or comprehensive enough to meet all a company's needs.

Because if you cared about marketing and you were really good, you would go into consumer... And so what you're left with, with b two B marketing is typically people that fell into it from some way, shape or form.

The quote explains why the speaker believes B2B marketing is not as competitive or attractive as consumer marketing, leading to a talent gap in the field.

• Companies should in-house PR efforts to build bespoke industry relationships and receive direct feedback on their messaging.
• Relying on PR firms can lead to a lack of visibility and iterative development in the company's PR strategy.
• PR should be considered a core competency and not outsourced without careful consideration.

I think it's one of those things that you just need to in house.

This quote emphasizes the importance of keeping public relations in-house to maintain control over messaging and build direct relationships with industry reporters.

• Storytelling is a crucial skill for CEOs, as it can inspire and guide a company.
• CEOs who are good storytellers are perceived as having potential for great leadership and success.

They become CEO because they're brilliant storytellers and they can inspire.

The quote highlights the value of storytelling as a leadership quality that can inspire teams and contribute to a CEO's success.

• The current market requires patience and discipline to distinguish between good and great investment opportunities.
• It is essential to avoid the fear of missing out (FOMO) and wait for truly exceptional opportunities.

It just requires a lot of patience and a lot of willingness to not have FOMO.

This quote reflects the speaker's strategy for investment management, emphasizing patience and selectivity in a challenging market.

• Crossover funds that rapidly expanded or lack a long-term track record of returns are at risk in the current market.
• The speaker respects competitors who have consistently performed well, such as Sequoia's growth fund and Meritech.

The crossover firms that are most in trouble are the ones that got into the market hot and heavy over the last two years and didn't necessarily have the history of delivering outsized returns.

The quote identifies the types of crossover funds that may struggle due to their recent aggressive expansion and lack of established success.

• Zach Weinberg and Nat Turner are respected for their long-term, pragmatic investment approach.
• Great founders are recognized by their ability to articulate both high-level visions and detailed insights into their businesses.

The one that I just have infinite amounts of respect for is Zach Weinberg and Nat Turner.

This quote expresses admiration for specific angel investors who are seen as having a principled and effective investment strategy.

• The speaker has not experienced a complete investment failure but has been involved in a board-level recapitalization.
• It's important to be aware of all potential risks before making an investment to avoid being surprised by challenges.

It requires a level of ability to win. It requires a level of patience in making sure that we're holding the bar really high and willing to say no to stuff.

The quote reflects the speaker's belief in thorough risk assessment and the discipline required to manage investments successfully.

• Q and EMD is a recent investment in the medical device space, combining CRM and targeting technology.
• The decision to invest was based on the market's potential, the founders' insights, and the disciplined approach of the founding team.

Q and EMD was the most recent investment that I said yes to... It was a big market, a great founding team, and honestly, I think that there's not going to be a ton of venture backed competition going into this space.

The quote explains the rationale behind the speaker's excitement for a recent investment, highlighting the market opportunity and the qualities of the founding team.

• The host and guest enjoyed a free and natural conversation.
• The guest appreciates the opportunity to share insights and looks forward to future discussions.

I've loved doing this. I so appreciate you not reading the schedule very much before, otherwise you'd be totally fucked.

The quote captures the host's enjoyment of the spontaneous and candid nature of the podcast conversation.