In this episode of "20 Minutes VC," host Harry Stebbings interviews Puneet Agawal, a partner at True Ventures, discussing the significance of True Ventures as a leading early-stage VC fund with successes like Fitbit and Peloton. Puneet shares his journey from product management to VC, highlighting the serendipitous nature of entering the venture world and his time at Mayfield. He stresses the importance of empathy in venture capital, where understanding founders' human challenges is key. Puneet also touches on True Ventures' investment approach, emphasizing the balance between maximizing risk on product market timing and minimizing risk on founder quality and investment size. The conversation includes insights into remote team building, spend management platforms like Airbase, and performance review transformation with Culture Amp. Lastly, Puneet underscores the value of diverse geographic investments and maintaining a culture of trust and risk-taking within the firm.
"But I couldn't be more excited today to be joined by one of True's rock stars in the form of Punit Agawal, partner at True Ventures."
The quote highlights Harry Stebings' excitement about having Punit Agarwal on the show and acknowledges Punit's significant role at True Ventures.
"So I began my career really early. I was part of a group called the Mayfield Fellows, which is a kind of fellowship at Stanford where they take ten or twelve engineering students and they put them into various startups and that was back in 97, 98."
The quote explains Punit's early career start with the Mayfield Fellows program, which provided him with hands-on experience in startups.
"To live through that was pretty remarkable. So when I got there in 99, Mayfield had done, I believe they had done 50 deals in 99, one deal a week."
The quote provides insight into the intense investment climate during the dot-com boom and how it shaped Punit's understanding of market dynamics.
"Venture capital to me is fundamentally a human business."
This quote underscores Punit's belief that venture capital is deeply rooted in human relationships and emotional intelligence.
"I think a board member, an investor, can bring two emotions at a very high level inside of a boardroom. They can bring fear, or they can bring safety."
The quote captures the dichotomy between fear and safety that investors can introduce into board meetings and how it affects the dynamics with founders.## Investment Strategy and Risk
"We invest a very small portion of our fund to begin with. It's $2 million, for example. Maybe that's one half of 1% of the fund."
This quote highlights True Ventures' strategy of starting with small investments to mitigate initial risk and allow for creativity and flexibility in decision-making.
"We are very open about the fact that 40% to 50% of the companies we invest in will probably lose or go to zero."
This quote emphasizes the acceptance of high failure rates as a natural part of investing in early-stage companies, which is factored into their investment approach.
"We maximize risk on product market timing, which means that you have to build failure into the model."
The quote illustrates that True Ventures intentionally takes risks on the timing of product-market fit, understanding that failure is an integral part of venture capital.
"We minimize risk... on the actual dollar amount... and on the founder quality."
This quote explains how True Ventures reduces risk by investing small initial amounts and by thoroughly vetting founders through their network and due diligence.
"We do about 45 to 50 investments per fund."
This quote outlines the portfolio size and strategy of True Ventures, indicating a higher deal count than later-stage funds.
"Not with every check, not all the time. We do have a big team, though, so we have about 13 partners who can actually take board seats."
This quote explains True Ventures' approach to board involvement, highlighting their capacity to support companies without needing to take a board seat for every investment.
"We started with $165,000,000 fund. And I think Mike Maples was around, first round was around, some of the other funds were getting started."
The quote provides historical context for True Ventures' position in the seed market and their evolution alongside other early-stage investors.
"We don't have a consensus driven approach. We actually encourage dissension, and we want dissension."
This quote describes the firm's unique decision-making process that values diverse opinions and healthy debate, which they believe results in better investment choices.
"We think about the person and the team and the founder... the market... and then is the deal make sense for us."
The quote breaks down the three critical factors in True Ventures' investment decision-making process: the team behind the company, the market opportunity, and the deal's alignment with their investment criteria.
"We're playing basketball here, not tennis, I would say is an analogy to think about, because we think about everything as a team."
This analogy illustrates the firm's team-centric approach, emphasizing collaboration over individual success in their investment strategy.
"It's very much a star culture. It's very much about the Midas list. It's very much about what deals have I done?"
This quote criticizes the traditional attribution culture in venture capital, which often focuses on individual achievements and can create a competitive rather than collaborative environment.## Culture of No Attribution
"And you end up sort of doing weird trades like, okay, I'll support your deal if you support my deal. That doesn't really further the business in the correct way."
This quote highlights the problematic nature of deal attribution within venture capital firms, where personal interests can overshadow what is best for the company.
"And people make the right decisions for the company at the right time. Not the right decisions for themselves, but the right decisions for the company."
This quote emphasizes the importance of decision-making that prioritizes the company's interests over individual ambitions or gains.
"We're very open about how our decision making occurs, but the one thing we always say is, yeah, we like dissension, but they're not necessarily hard no's."
This quote clarifies that dissent within the firm's decision-making process is not a sign of disapproval but a way to explore further questions and align with the founder's perspective.
"So we may disagree or dissent, but then it's all about commitment."
This quote emphasizes that despite any internal disagreements, the firm's ultimate goal is to support the investment with full commitment.
"I think one of the challenges, as we have in the venture industry, is we don't take enough risk."
This quote speaks to the tendency within the venture industry to avoid risk, which can limit potential opportunities.
"And so, yes, I've been lucky, and the firm has been lucky to have success, but we got to be very careful not to just look for the perfect deal."
This quote acknowledges the trap of seeking only 'perfect' investments and the importance of taking chances on less than perfect opportunities.
"It's one of the most important skills you can have as a board member to actually just listen and absorb and let the founder go through their process."
This quote underscores the value of listening over speaking for board members, allowing founders to navigate their own processes.
"If you can be that calm, rational voice, you'll earn more trust with the founder as well."
This quote highlights the importance of being a source of stability and reason within the boardroom to build trust with founders.
"There's no real lessons for how you handle yourself in that moment, but we at that moment, instinctively said, no, you keep the money."
This quote captures the human element of venture capital, where investors must sometimes make decisions based on empathy and support rather than strict business considerations.
"It means respect. It means love for another individual. It also means honesty and transparency."
This quote defines friendship in the context of a board member-founder relationship, highlighting the positive aspects that align with the duties of a board member.
"I don't think you can be ruthless in the business. And I think some of the time allocation statements that people make about, hey, you need to spend more time with the winners are maybe a little bit off base."
This quote challenges the notion that venture capitalists should focus their time solely on the most successful companies, suggesting a more nuanced approach to time allocation.
"Great companies are being built everywhere, and we source them because our network has grown."
This quote reflects the belief that talent and potential are not confined to traditional tech centers and that a strong network is key to discovering these opportunities.## Investing Philosophy and Strategy
"We've put a shingle up on top of true and said we're fine with investing in any company anywhere."
This quote emphasizes True Ventures' open investment strategy that does not limit opportunities based on geographic location, distinguishing them from other more location-focused VC firms.
"It's about an individual named Joe Low, who embezzled tons of money from the Malaysian government and ended up investing in all kinds of areas, everything from movies with Leonardo DiCaprio to all kinds of businesses."
This quote provides insight into Punit's interest in real stories that read like fiction, showcasing his preference for books that combine entertainment with educational value about real-world events.
"Rich is sneaky good... he's got so much authenticity and he really understands his business at a depth that is quite remarkable."
This quote highlights Rich's subtle yet effective leadership style and his comprehensive understanding of his business, which Punit respects and values.
"Maximizing risk is such a core tenet to what we do."
Punit articulates the importance of embracing risk in venture capital, which is a foundational aspect of True Ventures' investment approach.
"Only a person who risks is free."
This quote reflects Punit's personal philosophy that taking risks is essential to achieving true freedom and success.
"Our partnership... just has a lot of love between it."
Punit values the strong and loving relationships within the True Ventures team, which he considers a highlight of his journey in venture capital.
"If I knew it, I think I'd be walking in too fearful, or I would have tried to mimic a journey that wasn't my own."
This quote reveals Punit's perspective that naivety can sometimes be beneficial in venture capital, allowing for a more authentic and instinct-driven approach.
"It is a monstrous space... they're really upending this $70 billion old state industry with a consumer-facing product that is brilliant and beautiful."
Punit is excited about Upse's innovative approach to the warranty industry, seeing it as a transformative business with significant growth potential.