20VC The Three Fundamental Forces in Society with Ciaran O'Leary, Partner @ BlueYard

Summary Notes


In this episode of the 20 minutes VC, host Harry Stebbings speaks with Kieran O'Leary, partner at Blueyard, a new European VC fund with $120 million under management, focusing on the decentralization of markets, democratization of capabilities, and liberation of data. O'Leary shares his unconventional journey into VC, initially aspiring to be an airline pilot before transitioning from investment banking to venture capital. He emphasizes the importance of team honesty, timing, and the right hiring for startups. The conversation also touches on the evolving European tech ecosystem, the definition of early-stage investing, and the potential for VC firms to adapt and succeed in various models. O'Leary concludes with insights on the necessity of due diligence for entrepreneurs when selecting VC firms and the dynamic nature of the startup environment.

Summary Notes

Introduction to the 20 minutes VC Podcast

  • Harry Stebbings hosts the 20 minutes VC podcast, featuring key figures in the venture capital industry.
  • The podcast offers additional behind-the-scenes content available through a newsletter sign-up.
  • Kieran O'Leary, partner at Blueyard, is the guest in the current episode.

This is the 20 minutes VC with your host Harry Stebbings, and I hope you enjoyed the previous interview with the amazing Matt Mazio.

The quote introduces the podcast and its host, Harry Stebbings, while referencing a previous interview with Matt Mazio.

Blueyard's Investment Thesis

  • Blueyard is a new European fund with $120 million under management.
  • The fund focuses on decentralization of markets, democratization of capabilities, and liberation of data.
  • Kieran O'Leary will provide more detail about Blueyard's investment thesis during the show.

Blueyard is one of Europe's newest funds with $120,000,000 under management and an investment thesis that is encapsulated around the decentralization of markets, the democratization of capabilities, and the liberation of data.

The quote outlines Blueyard's investment thesis and its significance in the venture capital landscape.

Kieran O'Leary's Background

  • Kieran O'Leary shares his unconventional path into venture capital.
  • O'Leary initially aspired to be an airline pilot and only later turned to business and finance.
  • He worked in investment banking and private equity before moving into venture capital.

I actually wanted to become an airline pilot... I decided to study business... Started in investment banking and mergers and acquisitions... Then I joined the Carlisle Group and did sort of leverage buyout.

Kieran O'Leary discusses his initial career aspirations and his eventual move into the business and finance sector, leading to venture capital.

Transition to Venture Capital

  • O'Leary's transition to VC was influenced by his desire to work with entrepreneurs.
  • He joined Early Bird after realizing his misconceptions about VC and seeing the potential in the evolving European VC landscape.
  • Opening the Berlin office for Early Bird was a defining moment for O'Leary.

I bumped into a firm I was at before called Early Bird... a good way to do that is to be at a VC firm and interact with lots of entrepreneurs... I joined them also more out of curiosity.

The quote explains Kieran O'Leary's motivation for joining Early Bird and his unexpected journey into the venture capital industry.

Blueyard's Fund Details

  • Blueyard is a small firm with a focus on helping entrepreneurs succeed.
  • The fund has a sense of responsibility towards the startups they invest in.
  • O'Leary asks for congratulations to be reserved until they have proven their success in a couple of years.

It's easy to, it's just like entrepreneurs, you celebrate raising money. That's great. But after 30 seconds you're, oh, wow, you know, look at that huge responsibility on our hands now.

This quote reflects the humility and forward-looking perspective of Blueyard, emphasizing the responsibility that comes with managing a venture capital fund.## Venture Firm Philosophy and Structure

  • Blueyard is designed to be a small, agile firm focused on direct engagement with entrepreneurs.
  • The firm is built around a thesis that considers three fundamental forces in society and economies.
  • These forces include the decentralization of markets, technology as a democratizing force, and liberation of data.

"And we wanted to create a firm that is very small and where entrepreneurs really only deal with the partners and where we can be very agile and quick and also where we can form the entire firm around a thesis."

The quote explains the strategic choice to create a small venture firm that allows for direct partner engagement and agility, as well as the intention to build the firm around a central thesis.

"One of them is the decentralization of markets. So the reduction of the power of gatekeeping items, then allowing more people to transact their markets, allowing individuals to build up an economy on their own."

This quote details the first part of the firm's thesis, emphasizing the importance of market decentralization and the reduction of gatekeepers, which allows for increased individual economic empowerment.

"The second thing is we're still at the very beginning of technology, giving people superpowers. So democratizing capabilities through technology, we think, is going to be very powerful."

This quote highlights the second part of the firm's thesis, which is the belief in the beginning stages of technology providing democratized capabilities and 'superpowers' to people.

"And the last one is companies that help to liberate data. So we all like talking about data and big data, but what does that actually mean? To make data useful? It has to be portable, it has to be accessible, you have to have a meaningful amount of control over it, and it has to be available in some kind of application layer or insights layer."

The final part of the thesis is explained here, focusing on the liberation of data, which includes making data portable, accessible, controlled, and available for application and insights.

European Market Transformation

  • The European market is evolving from mobile consumer applications and e-commerce to more engineering-driven, technical, and enterprise-focused ventures.
  • Successful European companies have created wealth, an ecosystem, and entrepreneurial role models.
  • There's a shift in aspiration among technical university students who now prefer startups over traditional industrial giants like BMW.

"So we think the european ecosystem is going to geek up and it's going to be much more supportive for this wave of entrepreneurs."

The quote predicts a positive future for the European ecosystem, suggesting it will become more conducive to technical and engineering-focused entrepreneurship.

Definition of Early Stage in Venture Capital

  • "Early stage" is a widely used term in venture capital, but its meaning varies depending on the fund size.
  • Blueyard considers itself an early-stage firm, focusing on seed investments and writing tickets from a few hundred thousand up to five or six million dollars.
  • Entrepreneurs should inquire about the percentage of a fund's allocation to early-stage investments to understand a VC firm's true focus.

"Blueyard is $120,000,000 fund, and we're focused on seed and a, you write tickets from a couple of hundred k up to say five, 6 million maximum as a first ticket."

This quote outlines Blueyard's fund size and investment strategy, positioning it within the early-stage segment of venture capital.

"So that puts us squarely in the early stage bucket."

The speaker clarifies Blueyard's position as an early-stage venture capital firm based on the size of their investments.

Transparency and Strategy in VC Firms

  • VC firms should be transparent about their fund strategy and allocation.
  • Some large funds successfully engage in early-stage investments with a dedicated and thoughtful approach.
  • European entrepreneurs need to learn to conduct due diligence on venture firms.

"I think they should. Having said that, there are some very large funds that are successfully doing early stage, and they have a dedicated strategy around it and they're thoughtful about it and they are aware of what it means for the entrepreneur to have a very large fund in early stages."

The quote emphasizes the importance of transparency and strategy for large funds that engage in early-stage investments, as well as the implications for entrepreneurs.

"I think the better firms have that and those that don't. I think the entrepreneurs just have to be very open about. They have to do their own due diligence."

This quote advises entrepreneurs to be proactive in understanding a VC firm's strategy and conduct their own due diligence.

Building a Successful VC Fund

  • Good venture firms come in various sizes and shapes.
  • Access to information on building a good venture firm is more available than ever.

"What I would say is that good venture firms come in all kinds of sizes and shapes."

The speaker acknowledges the diversity in successful venture firm models, indicating that there is no one-size-fits-all approach.

(Note: The transcript ends abruptly, so the last point is incomplete and lacks further explanation or quotes.)### Mission-Driven Entrepreneurship and Venture Capital

  • The best entrepreneurs are described as missionary, with a passion for creating something they believe must exist.
  • Entrepreneurs are not solely motivated by identifying economic opportunities but by a desire to build meaningful ventures.
  • Similarly, top venture capitalists (VCs) are also missionary, aiming to create a venture firm with a distinct purpose and meaning for both themselves and the entrepreneurs they support.

"The best entrepreneurs are really, really missionary and they're passionate around building something that they feel has to exist."

This quote emphasizes the intrinsic motivation and passion that drive the most successful entrepreneurs, highlighting their commitment to creating something they deem necessary, beyond just financial incentives.

"The best vcs I've come into, they are also just as missionary around creating not just this one fund and investing in startups, but creating a venture firm that stands for something, that means something, means something to them, means something for the entrepreneurs."

Here, the speaker points out that the best venture capitalists share a similar mission-driven approach to their work, striving to establish venture firms that have a significant and personal impact on both themselves and the entrepreneurs they invest in.

Establishing a Thesis-Driven Venture Firm

  • The decision to create a thesis-driven firm was influenced by the desire to support entrepreneurs who are building on fundamental forces.
  • A thesis-driven approach means the firm has a specific focus or perspective guiding its investment decisions.

"We wanted it to be a thesis driven firm. We wanted to kind of help entrepreneurs build on these fundamental forces we're seeing."

The quote explains the firm's strategic choice to be thesis-driven, indicating a commitment to helping entrepreneurs who align with the firm's overarching investment thesis based on observed fundamental forces.

Simplicity and Focus in Venture Capital

  • Keeping the venture firm small, simple, and focused is seen as beneficial to working effectively with entrepreneurs.
  • Avoiding politics, maintaining equality among team members, and having a singular strategy and fund is part of the firm's philosophy.
  • The firm, named Blueyard, has committed to being early-stage focused, with no plans for growth funds, regional expansion, or complex succession plans.

"Blueyard is always going to be a small firm. Everybody's always going to be equal. We're only ever going to have one strategy and one fund, and we're only ever going to have one office."

This quote outlines Blueyard's foundational principles, emphasizing its commitment to maintaining a streamlined, egalitarian approach and avoiding the complexities that can accompany larger, more diverse venture capital firms.

Openness to Future Possibilities and Legacy

  • Blueyard does not rule out the possibility of raising further funds in the future but wants to earn that right without assumptions.
  • The firm is aware of the challenges of leaving a lasting legacy and brand, which is where many VC firms fail.
  • Blueyard is prepared to exist only for a certain period, with the willingness to shut down if they are no longer effective or face difficulties with transition.

"We're probably going to suck at it and it's not going to be the foundry. So let's just assume that that's going to happen."

This quote highlights Blueyard's realistic approach to the future, acknowledging the difficulties of succession in venture capital and preparing for the possibility of ending operations if they cannot maintain their standards or successfully manage a transition.

Reasons for Startup Failure in Early Stages

  • Startups may fail for various reasons, including building the wrong product, poor product quality, or team disagreements.
  • A key factor in early-stage startup success is the team's brutal honesty and speed in assessing customer and user product satisfaction, with a willingness to make significant changes or abandon the product if necessary.
  • Bad timing is also a significant reason for failure, as demonstrated by the story of Moped.com, which was similar to Slack but launched too early.

"I think teams being brutally, brutally honest and brutally, brutally fast in figuring out how much customers and users really like their product and being very honest and tough with saying, no, this doesn't work. Next."

The speaker emphasizes the importance of startups being extremely honest and quick to evaluate whether their product resonates with customers, suggesting that this approach is crucial for early-stage success.

"Often it's also just bad timing."

This quote acknowledges that despite having a good product or idea, startups can still fail if the market timing is not right, as was the case with Moped.com, which predated Slack.

The "Why Now?" Question in Venture Capital

  • The question "Why now?" is commonly asked by VCs to entrepreneurs to understand the timing and relevance of a technology or product.
  • The speaker expresses skepticism about the ability of VCs to accurately predict technology cycles and waves, suggesting that it's challenging to determine the right time to back a new venture.

"I'm not too sure how good we are calling shots on whether cycles, technology deployment waves are for real or not."

This quote reflects the speaker's uncertainty about the predictive abilities of VCs when it comes to timing the market and identifying the right moments to invest in emerging technologies.## Technological Waves and Capital Deployment

  • Venture capitalists should participate in technological waves without overly relying on predicting their timing.
  • Acceptance of failure is part of the venture capital job, with a focus on seeking the next opportunity.

Maybe you don't want to bet the farm on it, but you should probably be a part of that wave. And if it doesn't work out, fine. That's part of our job.

This quote emphasizes the importance of venture capitalists being involved in technological trends without excessively risking their resources, and acknowledging that not all investments will succeed.

Executive Hiring Strategies

  • Boards should encourage spending on quality hires to improve the company.
  • The risk of hiring high-level executives too early must be managed.
  • Communicating organizational changes and their benefits to the team is crucial for acceptance.
  • Good hires, particularly in technical roles, can enhance the team's skills and morale.

The board should always be leaning forward on spending on people for the team.

This quote suggests that company boards should be proactive in investing in talent to strengthen the team, which is essential for growth.

Often the team will really like that because it'll increase their skill set and good developers like working with other good technical people.

This quote highlights the positive impact that hiring skilled technical leaders can have on the existing team's development and job satisfaction.

Personal Preferences and Insights

  • Kieran O'Leary expresses a dislike for predictable business books, preferring materials that challenge personal thought.
  • He is not concerned about the narrow exit funnel in Europe due to global and mobile capital.
  • O'Leary is excited about the breakdown of economies into efficient atomic units across all sectors.
  • His favorite newsletter is The Economist Espresso, and he utilizes Slack, Wonderlist, and Inbox by Google for productivity.
  • He has a cautiously optimistic view on Bitcoin's future.

I hate reading business books. I think they are nauseatingly predictable and they should be half a page instead of 200 pages.

This quote reveals O'Leary's disdain for lengthy business books, which he finds unoriginal and overly verbose.

The most the most excited about economies being broken down into highly efficient atomic units versus inefficient big entities.

This quote indicates O'Leary's interest in the transformation of economies into more efficient and smaller units, which he sees as a positive trend across various sectors.

Investment Pipeline and Blueyard

  • Kieran O'Leary hints at potential upcoming investments for Blueyard, though nothing is ready to be announced.
  • The discussion acknowledges the enthusiasm surrounding their investment pipeline.

Close to a couple, but nothing we're ready to announce.

This quote suggests that Blueyard is in the advanced stages of finalizing some investments but is not yet prepared to make them public.

Podcast and Community Engagement

  • Harry Stebbings promotes behind-the-scenes content and updates available through the podcast's newsletter.
  • The new podcast collaboration with SaaStr's Jason Lemkin is highlighted, and listener feedback is encouraged.

Then do sign up for the newsletter on the Twentyminutevc.com where you can stay up to date with all the new episodes and updates.

This quote is a call to action for listeners to subscribe to the podcast newsletter for exclusive content and updates.

It really would be fantastic to hear your thoughts on that.

Harry Stebbings is inviting feedback on the new podcast collaboration with Jason Lemkin, demonstrating an interest in community engagement.

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