20VC The Rise Of The Celebrity VC & The Pros and Cons Of Staying Private with Logan Bartlett @ Battery Ventures

Summary Notes


In the latest episode of the 20 minutes VC, host Harry Stebbings interviews Logan Bartlett from Battery Ventures, discussing Bartlett's unconventional path into venture capital, his focus on B2B software investments, and the importance of authenticity in building a personal brand within the VC industry. Bartlett shares insights into his deal sourcing strategies, the impact of the Series A crunch, and the shifting landscape of startups staying private longer. He emphasizes the value of pattern recognition informed by historical business successes and the critical role of humility, learned from his colleague Niraj Agarwal, in navigating the venture space. The episode also briefly touches on a partnership with Lisa mattresses and data support from Mattermark, highlighting the interconnectedness of VC, startups, and market trends.

Summary Notes

Introduction to the 20 minutes VC Podcast and SaaS Feature Week

  • Harry Stebbings hosts the 20 minutes VC podcast and is active on Snapchat.
  • The podcast is celebrating a SaaS feature week due to the success of the official SaaSter podcast.
  • Battery Ventures' SaaS experts are guests during this feature week.
  • Logan Bartlett from Battery Ventures is introduced as an investor focusing on growth investments for B2B software companies.
  • Logan's background includes investment banking at Spurrier Capital Partners and Deutsche Bank, with a focus on financial technology.
  • Harry compliments Logan as a standout individual in the VC industry.

"Welcome back to the 20 minutes VC with your host Harry Stebings, who you can also find on Snapchat at H Stebbings."

This quote introduces the host, Harry Stebbings, and mentions his presence on Snapchat, inviting listeners to connect with him.

"To celebrate the release and success of the official SAS to podcast, brought to you by myself and the godfather of SAS himself, Jason Lemkin, we are doing a SaaS feature week here at the 20 minutes VC."

Harry explains the reason for the SaaS feature week, linking it to the success of another podcast he co-hosts with Jason Lemkin.

"And joining me in the hot seat today from battery, I'm delighted to welcome Logan Bartlett."

Harry introduces Logan Bartlett as the guest from Battery Ventures, setting the stage for the conversation about his experience in venture capital.

Logan Bartlett's Journey into Venture Capital

  • Logan did not initially intend to enter venture capital; his early career decisions were influenced by his parents and peers.
  • He was drawn to technology and was recruited to a merchant bank focused on enterprise software.
  • Logan enjoyed working with early-stage tech companies and sought to engage with smaller, scaling businesses.
  • He reached out to Niraj at Battery Ventures, which led to him joining the firm.

"I managed to make it to 24 without ever having made an independent decision in my life."

Logan reflects on his early career path being influenced by others rather than his own decisions, setting the stage for his eventual move toward venture capital.

"I found myself just drawn earlier and earlier. So we were working with companies that were a couple of hundred people... And I found myself really drawn to the guys that were ten to 50 to 100 employees and were really thinking through scale and so nearage."

Logan describes his growing interest in working with smaller, early-stage companies that are in the scaling phase, which influenced his career direction.

Building a Personal Brand in Venture Capital

  • Logan emphasizes the importance of authenticity in building a personal brand.
  • He found venture capital to be a secretive industry and appreciates podcasts for unveiling the personal side of VCs.
  • Logan believes in being transparent about his interests and values, even if it may not appeal to everyone.
  • Authenticity is crucial for Logan when presenting himself publicly.

"It's just about being authentic to who you are... I think podcasts like this are great in kind of unveiling who the people are and how they think about it."

Logan discusses the value of authenticity and transparency in building a personal brand and how podcasts can help reveal the personalities within venture capital.

VC Branding: Individual vs. Firm

  • The conversation shifts to the balance between personal branding and the branding of a VC firm.
  • Logan acknowledges that there are "rockstar" marketers in the industry who stand out due to their marketing efforts.
  • He contemplates the juxtaposition of promoting oneself as an individual VC versus the broader branding of the VC firm.

"And then what's your view on the kind of juxtaposition in VC branding between the branding of yourself as a VC investor? Logan Bartlett versus branding?"

Harry asks Logan about his perspective on the balance between personal branding and the branding of the firm in the venture capital industry.

(Note: The transcript ends abruptly, and the response from Logan Bartlett on the topic of VC branding: Individual vs. Firm is not included. The notes only cover the information provided up to the point where the transcript ends.)## Celebrity VCs and Personal Branding

  • The concept of "celebrity VCs" where personality overshadows investment focus.
  • The importance of branding as a means for founders to find the right VC partner.
  • The difference in perception when associated with a well-known firm versus a lesser-known boutique bank.
  • The significance of authenticity in aligning personal voice with the firm's brand.

"ms like there are celebrity vcs to some extent where the personality is first and foremost and then the investment is secondary to that." "But it's not a means to an end in and of itself." "I get the battery and now I'm smarter, I'm funnier, and people want to talk to me a lot more." "Just being authentic to your own voice, I think, is probably what's most important."

These quotes emphasize the idea that while VC personalities can often take center stage, the primary focus should remain on investment and value creation. The speaker also notes the enhanced perception and interaction they receive when associated with a reputable firm. Authenticity is highlighted as crucial, regardless of the firm's brand.

VC Branding and Deal Flow

  • The purpose of VC branding is to attract deal flow and establish leadership within a market.
  • Different methodologies for sourcing deals, including hunting and networking.
  • The speaker's personal method involves networking and direct outreach to entrepreneurs.

"I think it's always important to remember why vcs build brands." "What's your method of deal sourcing?" "So from a deal flow perspective, there are certain things that I look for in businesses, but it is very much networking and outbound kind of oriented."

Speaker A introduces the concept of VC branding for deal flow, prompting Speaker B to describe their deal-sourcing method, which relies on networking and proactive outreach to entrepreneurs. The focus is on the importance of building a brand to enhance inbound opportunities while maintaining a strategic approach to finding deals.

Approaching New Markets and Strategic Thinking

  • Assessing potential in new markets requires a balance of predefined thesis and market observation.
  • The importance of understanding why certain businesses gain traction.
  • The challenge of predicting what will resonate with customers in various industries.

"How do you approach new markets and kind of think about the strategic thinking that goes into opportunities in new markets?" "We will look at SaaS software and say, all right, well, a lot of these applications are going to need to be mobilized." "It starts to become difficult for us to have any perspective on what's going to resonate in the trucking market, right? Or the insurance market, or the field services market."

Speaker A inquires about strategies for entering new markets, leading Speaker B to discuss their two-pronged approach: having a thesis and observing successful businesses. They highlight the difficulty in anticipating customer preferences across different industries and the need to explore various aspects of growing companies.

Predefined Thesis and Its Impact on Startup Engagement

  • The potential risk of a set thesis deterring startups from approaching a VC.
  • The benefits of having a framework for understanding and quickly assessing opportunities.
  • The importance of staying focused on familiar areas to have meaningful conversations with entrepreneurs.

"Do you ever worry that by having such a set thesis that you could deter startups from coming to you with their idea?" "I like looking for opportunities that are going to turn into transformative businesses." "The more you can stay kind of targeted and focused. I think the ability to get up the curve and have meaningful conversations with entrepreneurs happens much quicker."

Speaker A raises concerns about how a VC's outspoken thesis might affect startup engagement. Speaker B responds, emphasizing the value of having a clear understanding of preferred sectors, which facilitates quicker and more productive discussions with entrepreneurs. They argue that a targeted approach can lead to better opportunities for transformative business investments.

Startup Evaluation in the B2B Space

  • The speaker's focus on the B2B sector and common investor metrics.
  • The consideration of both specific metrics and a holistic view when evaluating startups.
  • The use of pattern recognition and the "ones of stages" framework in assessing businesses.

"You're very much located in the b to b space, a space where a lot of investors are very much focused on whether you can get to 10 million ARR by two, by year two, and what your churn is and all these metrics." "Yeah, no, there's definitely two aspects of it. One is just the framework of points in time that we'll look at businesses, and this is as much pattern recognition as anything else."

Speaker A discusses the importance of metrics in the B2B investment space and asks about the speaker's approach to startup evaluation. Speaker B confirms the use of specific metrics but also alludes to a broader framework and pattern recognition when assessing startups at different stages of growth.## Pattern Recognition in Venture Capital

  • Pattern recognition is crucial for evaluating opportunities at different stages of a business's journey.
  • Different metrics are considered at different points, such as $1 million in ARR, adding $1 million a quarter, or a month.
  • Understanding markets and customer pull-through is important, but a VC must have a thesis in the area to make informed decisions.
  • Without knowledge of a business's market, a VC may not be the right partner.

"So that's certainly the pattern recognition side from a metric standpoint. But at the end of the day, we do need to understand the markets, and so seeing the kind of pull through from a customer standpoint is important."

This quote emphasizes the importance of recognizing patterns through metrics while also understanding the market and customer demand as key to evaluating business opportunities.

Developing Personal Pattern Recognition

  • Logan Bartlett discusses his approach to developing pattern recognition as a newcomer to the VC scene.
  • He reads extensively about the history of successful businesses to understand their growth patterns.
  • Learning from the experiences of seasoned partners at his firm, Battery, which has been around for 33 years, is also a key part of his learning process.

"I'm a big reader of just everything I can possibly get my hands on about businesses and how they got started, particularly in the last 20 years."

Logan Bartlett explains his method for building pattern recognition by studying the history of successful businesses and learning from literature.

Series A Crunch

  • The Series A Crunch is a prevalent topic in the VC industry, representing the difficulty startups face in moving from early-stage to more significant funding rounds.
  • Battery Ventures has shifted more towards Series A and B investments in recent years.
  • The crunch makes it challenging to discern which companies are succeeding due to the emergence of similar competing startups.

"It certainly makes it harder for us to figure out what's working because there's always a metoo company that's not too far behind."

Logan Bartlett describes the competitive landscape where startups quickly follow successful models, complicating the investment decision process.

Impact of Financial Markets on Startups

  • The entry of large mutual funds into later-stage investments has caused a shift in the VC ecosystem.
  • The decrease in computing costs and the rise of seed and angel investing have led to more startups receiving funding.
  • This shift creates a compression in the market, affecting the funding landscape for early-stage companies.

"At the end of the day, that kind of creates two different areas that are compressing into a single one."

Logan Bartlett discusses how the convergence of later-stage investors and early-stage funding opportunities creates a more competitive and crowded funding environment.

Institutional Investors and Private Markets

  • Companies are staying private longer, which has both positive and negative impacts.
  • The positives include the ability to innovate without the short-term pressures of public markets.
  • However, there are benefits to going public, and Battery encourages this at the right stage of maturity and revenue predictability.
  • A normalization in the market is expected, with a potential increase in public offerings and a slowdown in non-traditional private investments.

"I think it has both a positive and a negative impact associated with it."

Logan Bartlett weighs the pros and cons of companies staying private for extended periods and the eventual move towards public markets.## Favorite Book and Its Impact

  • Logan's favorite book is "Gang Leader for a Day" by Sidir Venkatesh.
  • The book provides an inside look at a Chicago gang ecosystem.
  • It is valued for insights into social dynamics.

"I would say the one that I've enjoyed the most recently, a book by Sidir Benkatesh, who the name of the book is gang leader for a day, and it's about an academic PhD student that gets the opportunity to go inside a Chicago gang ecosystem over the course of a couple years and actually gets to run it for a single day."

The quote explains Logan's favorite book and why it was impactful, offering a unique perspective on social structures within a gang.

Addressing FOMO as a New Investor

  • Logan references Andy Grove's statement "only the paranoid survive" in the context of venture investing.
  • He emphasizes the importance of staying competitive and avoiding missing out on high-return deals.
  • This involves actively looking for the best companies to invest in.

"I'm always worried that there's a deal going on that we're not going to be a part of. That's going to drive a ton of returns for their investor base."

The quote highlights Logan's concern about missing out on lucrative investment opportunities, which is a common challenge for investors known as FOMO (Fear of Missing Out).

Learning from Working with Niraj

  • Logan values the humbleness of his colleague Niraj despite his significant investment success.
  • This humbleness is something Logan aspires to emulate in his own career.

"I think the single one that resonates most with me is just the level of humbleness he has."

The quote captures Logan's admiration for Niraj's humble nature despite his expertise and success, which is a trait Logan believes is important and strives to adopt.

Favorite Blog or Newsletter

  • Logan regularly reads Dan Primack's newsletter for insights on the broader financial markets.
  • He finds Dan Primack's perspective thought-provoking and informative.

"I would say Dan Primac, I read every day pretty quickly. That's kind of the first one that I'll click on and go through."

The quote indicates Logan's preference for Dan Primack's newsletter as a reliable source of financial market analysis.

Value Add Improvement

  • Logan sees the company building aspect as a significant area for value addition by VCs.
  • He believes in the importance of effectively communicating belief in a company to potential recruits.

"I think the biggest value add that a VC can have is just being able to look either other independent board directors or executives that a CEO is trying to hire in, look them in the eye and explain why you believe in this team, this opportunity, and why they should come be a part of the ride with you."

The quote reflects Logan's view on the critical role of VCs in recruiting and advocating for a company, which he aims to improve upon.

Recent Investment Decision

  • Logan's most recent investment is in a Series C for a marketing company.
  • The decision was made after extensive due diligence, including discussions with customers and competitors.
  • The investment signifies the beginning of a partnership aimed at building a long-standing company.

"And by the end of it, these guys were probably a little worn out with our exhaustive diligence. But we're excited. That's just getting to the starting line now for us."

The quote reveals the thorough due diligence process Logan and his team undertook before making their recent investment, emphasizing the meticulous approach they apply to investment decisions.

Podcast and Newsletter Promotion

  • The 20 Minute VC podcast celebrates its success and collaboration with the SaaS industry.
  • Host Harry Stebbings encourages listeners to follow him on Snapchat and sign up for the newsletter.
  • The podcast is sponsored by Lisa, a mattress company with a social mission.

"And if you're loving the 20 minutes Vuc or Sasta, then you can follow me on Snapchat at htebings."

The quote is a promotional call to action, inviting listeners to engage with the podcast's content through various platforms and to be aware of the sponsor's social contributions.

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