20VC Scaling to $2BN AUM in 3 years, Fundraising Lessons and Tactics from 2,500 LP Meetings & What it Takes to Build a Firm That Stands the Test of Time with Harley Miller, CoFounder and Managing Partner @ Left Lane Capital

In this episode of "20 VC," host Harry Stebbings converses with Harley Miller, the founder and managing partner at Left Lane Capital, a rapidly growing growth equity firm with a portfolio including M1 Finance, Masterworks, and Choco, among others. Miller shares insights from his early days at Insight Partners, where he helped invest in companies like Delivery Hero and HelloFresh, and discusses the recent closing of Left Lane's new fund, which brings their AUM to over $2 billion. The conversation delves into Miller's unconventional entry into venture capital, the founding of Left Lane, and the importance of maintaining a rigorous investment process even in the face of competitive pressures. Miller emphasizes the significance of building a team from the ground up, fostering internal career growth, and ensuring that Left Lane continues to be synonymous with excellence in the Internet consumer space. Throughout the discussion, Miller's deep-seated passion for investing and his commitment to family and foundational values are evident, offering a glimpse into the driving forces behind his professional journey and vision for Left Lane's future.

• Harley Miller is the founder and managing partner of Left Lane Capital.
• Left Lane Capital is a rapidly growing growth equity firm.
• The firm recently announced the closing of their new fund, increasing their AUM to over $2 billion.
• Harley previously spent over nine years at Insight Partners.
• Insight Partners invested in companies like Delivery Hero, HelloFresh, N26, Calm, and Udemy.

"And I'd also want to say before we dive in, last week this guest announced their new funds, a massive day for him and for his firm."

The quote highlights the significance of the new fund announcement for Harley Miller and Left Lane Capital, emphasizing its impact on the firm's growth and success.

• Harley joined venture capital unintentionally, having studied at Wharton from 2007 to 2011.
• The norm for Wharton graduates was to enter investment banking or consulting.
• Harley was entrepreneurial from a young age, with various business ventures.
• Insight Partners offered Harley a position after an interview focused on his entrepreneurial background.
• Harley felt immediately engaged with the work, enjoying conversations with entrepreneurs and never feeling like it was laborious.

"I kind of fell back asswards into it."

This quote captures Harley's unexpected entry into venture capital, highlighting that it wasn't a planned career path for him.

• Harley's success in Internet and consumer technology deals led him to consider founding his own firm.
• He wanted to be a founder within the venture context.
• Harley acknowledges that leaving Insight Partners and starting Left Lane Capital was nerve-wracking.
• Despite initial rejections and challenges, Left Lane Capital refined their pitch and succeeded in raising funds.
• Harley emphasizes the importance of sticking to processes and promises made to investors.

"I knew pretty early on that I felt like, okay, I could do this. I want to be a founder, but within a venture context."

The quote reflects Harley's aspiration to start his own venture firm and his confidence in his ability to succeed as a founder in the venture capital industry.

• Timing is crucial, and a rejection may not be personal.
• Raising a fund is a numbers game, requiring many pitch meetings.
• Fund managers should focus on adhering to their processes and delivering on promises.
• Outcomes are important, but the process is what can be measured in the short term.

"Process is as if not more important than outcomes for allocators."

This quote underscores the significance of maintaining a consistent and reliable process for fund managers, as it is a measurable aspect of their performance for investors.

• While sticking to a defined process is important, being too rigid can limit opportunities.
• It's essential to be cautious when making exceptions to not deviate significantly from the fund's strategy.
• Fund managers should evolve and add new tools to their toolkit to adapt to new opportunities.

"Do what you said you would do, but if there are small exceptions to that, I think that's fine."

The quote suggests that while it's important to stick to one's stated strategy, there is room for flexibility when exceptional opportunities arise that do not fundamentally alter the fund's approach.

• Speed is critical but should not compromise diligence or comprehension.
• Left Lane Capital trains its team to use data analysis tools like SQL and Alteryx to make informed decisions quickly.
• The goal is to maintain a balance between speed and thorough execution.

"You have to move with real pace and speed, but not at the expense of execution and diligence."

This quote highlights the philosophy at Left Lane Capital, where quick decision-making is essential but not at the cost of careful analysis and execution.

• Decision making is crucial for investors, especially when dealing with complex and fast-moving deals.
• The founding team must match the investor's tempo and intensity.
• Masterworks deal was proprietary and required quick action before it became public.
• The team canceled vacations to focus on the deal, reflecting the required attitude and experience.
• Professional and personal commentary: It's important to know when to move fast in business and when to slow down in personal life, like spending time with family.

"I think decision making is critically important to kind of give you the bit of the story as opposed to theory."

This quote emphasizes the importance of decision making in the context of investment, highlighting it as a practical skill rather than just theoretical knowledge.

"That was probably a ten day exercise to wrap our arms around a really complex business from a standing start that we admittedly had little exposure to."

This quote illustrates the intensity and rapid pace required to secure a deal with a complex business in a short timeframe, demonstrating the hands-on approach needed in venture capital.

• Venture capital involves more than just picking winners or gaining access to deals.
• Both picking and access are important, but finding undiscovered opportunities is key.
• Masterworks is an example of a proprietary deal that did not require external funding.
• The ability to discover and source deals outside of major tech ecosystems is a competitive advantage.
• Conviction and original thinking are more valuable than mere persistence.

"I mean, listen, if picking is important, it's nothing without access."

This quote suggests that the ability to identify potential successful companies (picking) is ineffective without the means to engage with them (access).

"But finding something before it's obvious, before it's apparent to the naked eye or even known to others, I think is the paramount to success."

This quote highlights the strategic advantage of identifying investment opportunities before they become widely recognized, emphasizing the importance of foresight and discovery in venture capital.

• Conviction means having an unwavering belief in an investment, impervious to doubt.
• Developing conviction is a lifelong pursuit, requiring experience and exposure.
• Investment decisions can sometimes be made quickly based on instinct, but must be pressure-tested.
• Examples include a swift conviction in an entrepreneur or a gradual buildup of conviction over time.
• Conviction can evolve and is not always immediate.

"I think to me, true conviction means that nobody can tell me I'm wrong because I'm so resolute, unwavering in my belief that there's nothing and no one that can unseat that."

This quote defines conviction as a firm and unshakeable belief in one's investment decision, immune to external skepticism.

"Conviction is fluid, right? It evolves over time. Sometimes you know it immediately, and then you work backwards just to pressure test that you're not wrong."

This quote explains that conviction is not static and can develop over time, highlighting the importance of both instinctual decisions and thorough analysis.

• Success in venture capital requires more than just closing deals; it's about thinking like an owner.
• Young investors should demonstrate original thinking and substantiate their ideas with data.
• Being able to persuade others with substance and factual arguments is crucial.
• Developing an instinctual nose for deals and then empirically testing those instincts is a valuable skill.

"You have to think like an owner at all times, even if yourself are not principally an owner."

This quote advises young investors to adopt an ownership mindset, taking responsibility and initiative in their work regardless of their level of actual ownership.

"You have to be a strong and original thinker and being resolute in those beliefs, and then working to pressure test and substantiate that with a very cogent argumentation with facts and data."

This quote emphasizes the importance of original thought and the ability to back up investment theses with solid evidence and rational argumentation.

• Decision making in venture funds is not just mechanical but involves accountability and ownership.
• Encouraging junior investment professionals to take initiative is important for organizational growth.
• Balancing the push from junior professionals and the oversight of senior partners creates a productive tension.
• Rewarding conviction and allowing team members to take risks is essential for scaling a fund.

"It's about accountability and sponsorship and true ownership, whether that's one of the partners, whether that's one of the other senior members or even mid level people who really want to step up and swing the bat."

This quote discusses the importance of accountability and ownership in decision making within a venture capital firm, highlighting the need for individuals at all levels to take initiative.

"It's a compulsion, it's not an expectation, it's a prerequisite. That we have junior people who push up the curve. It's a bottoms up led motion."

This quote explains that junior team members are expected to proactively contribute to the firm's success, suggesting a culture that values upward mobility and initiative from the bottom up.

• Leading a venture fund requires attention to the business aspects of running the fund.
• Firm leaders must ensure their team is paid, fulfilled, and learning.
• The transition from investor to leader is compared to starting a family; it requires constant attention and responsibility.
• The challenge is to maintain close relationships with team members as the firm grows.

"It's like starting a family where it was just you as a bachelor, running around the city, being social, whatever it is, you were somewhat carefree."

This quote draws a parallel between the responsibilities of leading a venture fund and starting a family, emphasizing the increase in responsibility and care required.

"It's the business running a fund and the multifaceted job that comes along with that."

This quote encapsulates the complexity and multifaceted nature of leading a venture capital firm, highlighting the various operational responsibilities beyond investment decisions.

• Avoiding being a bottleneck in a busy schedule is crucial for deal flow.
• Delegating responsibility and trusting other managing partners and team members is key.
• Scaling a fund involves giving team members the opportunity to learn and make decisions.
• Empowering junior team members with deal-making and board responsibilities is important for growth.

"I literally take myself out of the equation."

This quote signifies the speaker's approach to preventing bottlenecks by delegating tasks and making room for others to make decisions.

"We will be a bottleneck unto ourselves if we don't let other people step up, do deals, take board seats, right. Empower them."

This quote stresses the importance of empowering team members to take on more responsibilities, which is essential for scaling the fund and avoiding decision-making bottlenecks.

• Building a team is crucial as a firm grows and the number of deals increases.
• More personnel are needed to manage the growth and to allow for career progression within the firm.
• Training is heavily invested in from the outset to prepare associates for rigorous sourcing and interaction with entrepreneurs.
• Repetition in engaging with companies is key for the learning curve of young team members.
• The firm's mantra emphasizes the importance of being contributory rather than just consuming.
• Providing value to founders is essential, not just exchanging information but offering expertise and advice.
• Associates undergo a rigorous training process, including reviewing investment memorandums and learning data analysis.
• The opportunity and exposure provided to team members are meant to encourage them to build their personal brand and track record with the firm.

"So if one provides a space at the top for other people to climb the ranks and make partner and stay, and we want people to come in and build them from the ground up."

This quote highlights the importance of creating opportunities for career growth within the firm, which helps in retaining talent and building a strong team from the ground up.

"The best learning curve for a young early, mid 20 something is to get that level of repetition, of putting the reps there."

Here, the speaker stresses the value of experience and repetition for young team members to become proficient and effective in their roles.

"We expect people to stay not because you force their hand to, but because you provide them with the opportunity, set exposure, and ultimately sort of the latitude to build their personal brand right, and track record on our dime and on our platform."

The emphasis is on creating an environment where team members choose to stay because they are given opportunities to grow professionally and personally, not because they are coerced to.

• The strategy involves leading deals, building positions in winners, and aiming for outsized ownership for significant capital gains.
• The firm's first fund followed a disciplined approach to portfolio construction.
• The second fund is more than double the size of the first, necessitating a change in who leads deals and takes board seats.
• Principals and senior associates are now leading deals after gaining experience and learning the necessary skills.
• The firm aims to maintain meaningful ownership stakes in companies to drive portfolio construction.
• The firm's approach is not passive but actively involves leading rounds and achieving real ownership.

"The only variable that changes is that it's not simply the four managing partners who are leading those deals and taking every board seat."

This quote indicates a shift in the firm's strategy to allow more team members to lead deals and take board seats, reflecting the growth and scaling of the firm's operations.

"Ownership stake relative to cost base, is what ultimately drives and governs a portfolio construction."

The speaker is explaining that the key to successful portfolio construction is the relationship between the ownership stake and the cost base, rather than just the size of the investment.

• The firm applies growth equity principles earlier in the lifecycle of internet consumer tech companies.
• They focus on companies with clear product market fit and customer engagement, even at an early stage.
• The firm scrutinizes consumer buying patterns and unit economics to understand the viability of consumer-focused investments.
• They recognize that not all revenue is created equal, and different businesses have varying margin and retention profiles.
• The firm conducts robust surveys and analysis to gain insights beyond what is provided by companies.
• Their approach is not to automate valuation but to account for variability and to understand the deeper layers that inform unit economics.

"All the hallmarks of product market fit can actually be ascertained and deduced at a much earlier point in that company's evolution."

This quote emphasizes the ability to identify product market fit early in a company's development, which is crucial for making informed investment decisions in consumer tech.

"There's so much more variability, and I think it can never be plugged into a spreadsheet with like a thumbs up or thumbs down."

The speaker acknowledges the complexity and variability in consumer investments, which cannot be simplified to binary decisions based on spreadsheets alone.

• Balancing professional ambition with family life is a challenge that requires creating space and prioritizing personal relationships.
• Integrating family into professional life when possible can help maintain this balance.
• It is important to recognize that family and personal relationships are ultimately the most important aspect of life.

"You have to create the space for yourself, and that has to always be 1st, second and third priority."

This quote underscores the necessity of prioritizing personal time and relationships, even amidst professional ambitions and responsibilities.

• Harley Miller integrates his work and personal life, sharing his passion for investing with family and friends.
• He acknowledges that while not all family time revolves around business, the two worlds do intersect.
• Harley cherishes his family background and aspires to perpetuate his values through his own family.

"My work is my life, and my life is my work. And if they love me, that's something they will subscribe to, and it's not burdensome to them."

This quote emphasizes that Harley's work is deeply integrated with his personal life and that his family supports this integration, viewing it not as a burden but as part of loving him.

• Harley credits his mother for teaching him the ability to connect with people and respect the human condition.
• These skills have helped him become a better investor and build relationships with founders.

"I think what she's taught me is how do you have the surface area and range to connect with people and have that fundamental respect for the human condition?"

Harley attributes his ability to connect with people and founders in his professional life to the lessons taught by his mother, highlighting the importance of respect for the human condition.

• Harley has changed his mind about the importance of media and public visibility for his investment firm.
• Initially, he was concerned that media attention might bring negative bias, but now sees the value in engaging with media.

"That we should do more media more often."

This quote reflects Harley's shift in perspective on the role of media in promoting his firm and the realization that media engagement can be beneficial.

• Harley works closely with his brother and considers him his best friend.
• He emphasizes the importance of boundaries, allowing his brother to be his own person, and treating him equally to other colleagues.

"He's my best friend now and forever... You have to treat him the same as anyone else."

Harley discusses the dynamic of working with his brother, emphasizing the balance of personal relationship and professional treatment.

• Harley reflects on missing an investment opportunity in Airbnb, recognizing the importance of having a well-founded argument and timing.
• He believes in being a later adopter, as it often indicates broader market resonance.

"If I had to say, it was probably Airbnb circa 2011 2012 right as I was getting my footing in this industry."

This quote highlights Harley's reflection on a missed investment opportunity and the lessons learned about market timing and the importance of a strong argument.

• Harley shares a memorable meeting with the founders of Leaferheld, which became Delivery Hero.
• He stresses the importance of conviction and persistence in the investment process.

"It was memorable, and not in the sense that it was awkward... It was incredible."

This quote captures the significance of a foundational meeting in Harley's career that influenced his investment philosophy and the value of conviction.

• Harley acknowledges the pressure of expectations in fundraising and the reliance of others on his success.
• He thrives on the intensity of his work and considers it his sport, with no end to the game.

"It's not something that weighs on my soul or my heart."

Harley conveys his approach to handling pressure and expectations, treating his work as a continuous game that he passionately engages in.

• Harley's ambition for Left Lane is to cultivate top investment professionals and maintain relevance in fundamental human needs.
• He envisions the firm growing, having a global presence, and transcending his own lifetime.

"We will be highly relevant and we want to define that space."

Harley outlines his long-term vision for Left Lane, aiming for the firm to become synonymous with excellence in the Internet consumer space and outlast his own tenure.