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"We Don't Fund Good Companies" : A $1.5B VC Explains Why | Ben Lerer, Lerer Hippeau

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Ben Lerer, Managing Partner and Founder of Lerer Hippeau, has built one of New York's most influential early-stage venture firms across nine funds and nearly $1.5B in AUM. In this VC edition of the GTMnow podcast, Ben sits down with Max and Paul to unpack how he actually picks founders, why he wants to be the "worst investor" at his own fund, and the contrarian belief that backing good, sensible businesses is a mistake.

Ben got his start in media, building Thrillist before it merged into Group Nine, then turned those relationships and that operator empathy into a venture career writing early checks into companies like Warby Parker and Casper. He shares what's changed about winning deals in a more competitive, sharp-elbowed market, how Lerer Hippeau runs its investment committee on conviction rather than consensus, and the process failure behind passing on Peloton.

We also get into the debate every investor is wrestling with right now: the crazy, fast-moving AI-native founder versus the second or third-time operator with deep domain expertise, and why the answer is rarely a silver bullet.

A real venture-nerd conversation on firm building, IC decision-making, founder selection, and what it takes to chase the power law.

Topics covered:
- The "worst investor at my own fund" philosophy
- Conviction vs. consensus in the investment committee
- Why Lerer Hippeau funds "crazy" founders, not good companies
- The Peloton miss and what it revealed about process
- From Thrillist and digital media to venture capital
- AI-native founders vs. domain experts
- How to win competitive deals as a smaller firm

Chapters:
00:00 Intro
00:52 Max and Paul on the episode: IC process and founder selection
14:36 Conversation with Ben Lerer begins
15:02 Nine funds, $1.5B AUM, and the early-stage strategy
23:00 From Thrillist to venture: the media springboard
28:00 What's changed in picking founders and winning deals
33:00 How the investment committee grew and evolved
37:40 The "magic" deal and chasing high-conviction bets
50:43 Why Ben wants to be the worst investor at his fund
53:00 Funding crazy people, not good companies
51:35 Yankees or Mets?

Connect with Ben Lerer: 
https://x.com/BenjLerer
LinkedIn: https://www.linkedin.com/in/benlerer/

Connect with Max: 
https://x.com/hackitmax
linkedin.com/in/maxaltschuler

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The GTMnow Podcast
The GTMnow Podcast is a weekly podcast featuring interviews with the top 1% GTM executives, VCs, and founders. Conversations reveal the unshared details behind how they have grown companies, and the go-to-market strategies responsible for shaping that growth.

Visit gtmnow.com for more episodes and other interesting content. 

SPEAKER_02

Every dollar that we put into a good sensible business is a dollar that you take away from a company that is gonna go after the power law. Our job today is not to find people that want to build good companies, but find people that okay.

Max Altschuler

Van Lair, managing partner and founder of Lair Hyperventure, would you do it the same or would you do it differently?

SPEAKER_02

The reality is that like social media came and took all the money that like everybody in digital media thought that they were gonna get access to. Really good small businesses. It was not the right kind of business for me and like the kind of ambition that I have.

Max Altschuler

What has changed in how you do your job and how you pick founders? All right, we're back with another amazing episode of the GTM Now podcast. This is our bonus VC edition. I'm Max Outchuler. I'm joined today by general partner at GTM Fund, Paul Irving. Today's guest is Ben Larr from Larry Hippo Ventures. Excited to have Ben on, and he's uh he's certainly a character. Got a start in in media thrillist, uh, ended up getting acquired by Group Nine, and then uh Lair, Lara Hippo Ventures. I mean, I think he's a phenomenal angel, uh, phenomenal seed investor. We had a great conversation. I think it was interesting to hear about kind of how he got a start. You know, his his father was in the space as well, so it's kind of good to hear the all in the family talk track. And then, yeah, we we talked a lot about the investing process and how it's been refined uh over there over the years. So we'll get into all that. But Paul, another great day in Vancouver. How are you doing? You are not on the road today. I am not on the road today. Obligatory not on the road start to the podcast.

SPEAKER_00

Uh yes, an obligatory not on the road start to the podcast. We just got back from New York now, Lair Hippo Territory. Um, they built such an awesome presence there. And it's been crazy just to see how much New York has grown from a venture perspective and startup perspective. I mean, that's always been the case. I mean, we we're investors in Howard Learman's newer company, Rome, but like back when you talked to him about building YXT, you know, 15 years ago in New York, everyone thought he was crazy staying there. And, you know, Ben and Larry Heppo team have been part of that I don't want to call it a renaissance because but but part of that really cool arc of uh a vibrant, busy, very active um startup community in in New York and some huge companies there.

Max Altschuler

I remember when I got my my started my career in tech in 2011, very early tech, nober existed, Airbnb was in its infancy, it was just you know, you rented rooms in somebody's place, and I wanted to get out to San Francisco, wanted to get you know uh into startups, but New York was an option too. And I looked up the st like the silicon alley, you know, what startups existed. It was really Kickstarter and Skillshare and not much else. It was not much up, but but San Francisco had so many different opportunities. Anyway, it actually came down to like Skillshare and Udemy, and Skillshare didn't hire me and Udemy did, and then I had a chip on my shoulder because I was like, ooh, I get to compete, I'm gonna take all their instructors, all that kind of stuff. Uh both companies I think Udemy ended up doing a lot better, but both companies still do well. But it was uh it's interesting to see how far it's come. And then yeah, I mean he talks about kind of missing on Peloton. Peloton became kind of a a staple in the New York tech scene. A lot of healthcare companies uh came out of New York City uh over the past 15 years, some really great, great startups. One of the themes we talked about a lot was kind of this investment committee, you know, running your IC. Uh, and he talks even funnily enough about like he wants to be the worst investor at his at his fund. Actually, he says we screwed up if I'm not the worst investor at my fund. What are your thoughts on kind of you know the conviction versus consensus, you know, the modern IC process and and some of the stuff that Ben talked about there?

SPEAKER_00

Yeah, for sure. Um let's do let's do the IC process first because I think that's such an interesting topic. There's not one way to do it right, of course, just like there's not one way to do a venture correctly. But I love this episode because I'm an I'm a venture nerd. Obviously, we wouldn't be doing this if we weren't, but it's a it's a real like ventures nerd uh type of podcast of getting into the nitty-gritty of how these decisions are made, tools they've built internally, and firm building. On investment committees, you you know, typically you hear people have two different structures, just as some context for everybody listening. Like you have the some people call it conviction versus consensus, but the voting-based system, which is a little bit more consensus-driven, where you have your voting partners on the investment committee, somebody is leading the deal and the diligence, but they bring it to the table. Sometimes founders present to the full group, sometimes they don't, and you have the lead partner or investment team member, you know, doing the presentation, and then you vote. There's certain thresholds you have to hit for a deal to be able to go through, you know, you you try to avoid the middle numbers, like you have to either be in or out uh on a scale of, you know, I think you talk about this a lot internally of scale of one to ten, no sixes, sixes aren't allowed, you know, you got to be on one side of the fence or the other. Um, and then you have the conviction, not consensus. So you need to have someone banging on the table. Uh, you need to have somebody leading the deal and leading the charge. And because so many of the most important companies that get built in venture capital, especially early stage, and the LairHelpo team are our early stage investors, are non-consensus ideas. They are non-obvious ideas. Not everybody is going to grok with it. That is fine, but you need to have somebody who's willing to stake their career on it to get it across the line. The thing that's always been interesting for us internally, I mean, we're we're uh an investment committee of two on that front, but it is difficult to truly act conviction, not consensus, when you know you have a room full of the same people you work with day in and day out, you have to vote on their deals. It it is uh a lonely position to be in, but often a pathway to get some of the more compelling or interesting non-consensus deals over the line.

Max Altschuler

Yeah, I think one of the things he mentioned on the Peloton Mist too was like a process failure in the IC. So, you know, as the GP or a GP at a fund, like you're kind of you're stretched in at times. You might be working multiple deals or certain things happening in the business. And he talked about how he had a warm relationship with the Peloton folks, saw the deal early, but kind of passed that off to somebody in the fund. It was their job then to take the baton, build conviction, etc. etc. And they didn't end up investing in Peloton. I think one of the things for me is when I do have that warm relationship or when it is a hot deal or something like that, you want to stay engaging it, you want to stay close to it, you want to stay involved, even if you can't do a lot of the the background work and you have to pass that on. And I think that's fine. The interesting conundrum for me sometimes also is like if I am too close to a company, do I pass it off? Because I don't want to make an emotional decision. I write that person an angel check because it's hey, you're a friend, you know, I believe in you, here's some money, right? But like it's a lot more to make that decision with other people's capital. So you know, for me, it's I I I think like there's actually some value in saying, okay, listen, I gotta I gotta remove myself from a lot of this process beyond just kind of what I know about you, what I know about the business, all that kind of stuff, and you know, help allow the team to kind of do their their version of diligence on the deal. But then of course there there are the ones that are like, I don't care what this person's doing. Like Manny was a good example of this. Like we were uh blank jack, right? So I guess it all depends on kind of the level of that relationship and and you know the working relationship you've had with the person previously, right?

SPEAKER_00

I think you've especially done a great job of internally as we've built, you know, scaled our investment team, and obviously as the fund grows is is uh something that you just mentioned there is uh you have a personal relationship, you've known this person as a founder, were an angel investor in their last company, you know, we have executives that work closely with them and you have a relationship there. Is almost running those two in parallel and not handing it off like you're outsourcing it, but Paul, you got to take two calls with this founder. Don't give me any sort of background or context and let me, you know, run through a process almost independent in parallel, where you have so much depth of relationship, you have a ton of context on how that person builds and who they are. But if you feel too close to it, like who's someone I can tag in to run diligence in parallel and just make sure from a sanity check perspective that all the things that you would normally want to see looking at this with fresh eyes, this is a 10 out of 10 deal and we have to do it. And I think whenever we've run that, we end up in the same place, but coming from you know different perspectives going into it, which is I think that's the consensus versus um conviction conversation as well, is you know, we can differ in levels of conviction, but as a small firm, I think both of us want to be able to look at a company and a team and say, you know, we would we would you know risk our careers on on uh you know betting on these folks and what they're what they're gonna build and what their vision for the future is.

Max Altschuler

Yeah, and there's certainly the calculus of like, you know, oh they were successful last time, do they still have the chip? Do they still need to do this? Like, you know, is the do they still have their fastball? Like, are they gonna put in the the the time and the hours that they did at the previous one? Like, why are they doing this business? Are they obsessed with this problem? So I think a lot of that, you know, is is is part of it. And even some even the best founders, I mean, if you're in the wrong space that's not in a tailwind, you know, or the jet stream, you know, it could it gets really it gets really tough. But I I still think, you know, if somebody's you know, um we we go back to Manny at paid, you know, Manny caliber, manny determination, and just battery drive energy, then it's kind of like okay, we'll just you know, the they'll they'll figure it out. You just have to trust that they will. You know, one thing he did say about founders is he's he's trying to figure out like, is there a a winner direction in terms of like the crazy young AI pilled AI native first time founder versus like a second or third time operator with domain expertise and you know can grok the tool in quickly and hire and recruit well. What are your thoughts on how kind of that's changing in the AI world? Or is it is it even? I mean, I got because maybe the answer is both can be great, and I'm not sure there's a silver bullet there.

SPEAKER_00

I'm gonna make an argument for both because we've heard arguments for both. And and I do believe you you as an investor and and whether you're an angel investor or your investor, or or even as an operator joining a company, you have to decide which you know which side you believe in, and is does this framework fit the context of the exact company and team? But uh, you know, we had Tomas Tangas from uh Theory Ventures on recently, and he said, and this would be the case for the second or third time founder with domain expertise, is if the AI and Frontier Model Company, sort of the technology layer becomes more commoditized and available across new startups and companies and incumbents, then what allows you to build the deepest workflows, the most ingrained value proposition for the customers you're selling to, what allows you to see surface area that no one else is able to understand or a green space that no one else was able to identify, that's usually depth and domain expertise. You've lived it, you've seen it, you know how to take the technology side of what's available to everybody today and package it, reformat it, restructure it in a way that is uniquely valuable to the customers using on the other side. And that would say, hey, domain expertise is as the technology and product building side becomes more commoditized, then that will be more valuable. The flip side is, and some really great investors have talked about this in on numerous platforms and podcasts, is when you do the side-by-side comparison, and um the one of the most difficult things that a company can do right now is hire exceptional AI talent. You need to do it on the engineering side of the company. And as great as it is to have domain expertise and understand a problem in a market, the young 19, 20, 21-year-old, you know, uh Stanford or MIT computer science graduate is gonna be the one that's gonna be able to convince their top classmates and friends and contemporaries to that are also AI native in the way they build and think about company construction and completely rethink the way a market is structured or the company building is structured and hire great talent on the product building side in the early days where you know you learn the domain expertise and you become deeper over time, but you are so on the forefront of the technology curve and ahead of the hiring curve when it comes to talented engineers, you know, you're gonna beat someone with domain expertise over time. As usually is the case, the world is more boring and it doesn't have extremes on both sides, and the truth lies somewhere in the middle. I think you need to provide, you know, we layer on that context and I think framework to every company that we get to meet. And there are people who are gonna be successful because of their domain expertise, and there's others where you want them to just say, like completely white canvas, blank canvas, AI native, aggressive, focused, you know, group of young entrepreneurs are gonna be the people who can win this market.

Max Altschuler

I agree. And you've got you, you know, you're still gonna have your Brett Taylors of the world and folks like that who, you know, seasoned veterans in the space, and then you've got, you know, uh Weston Weinberg, for example, from Harvey, I think is went from college to JD to essentially founding Harvey. Uh so you know, it's it's it's um no silver bullet, I think, in that space, but it was certainly a good topic uh from the podcast to talk about with Ben. So yeah, without without any further delay, let's get into the episode with Ben Larer, GP at Lara Hippo Ventures. Let's take it away. Our LP base spans from individual operators to institutional allocators, and Angelus has been instrumental in supporting all of them. They handle everything from investor onboarding and accreditation to distribution and tax documentation, creating a seamless experience across geographies and fund types. Plus, all of this is available on a single modern platform. For an LP base like ours with over 300 C suite and VP level operators, this kind of white glove service and seamless workflows is so important. Also instrumental that we support our institutional LPs that we're fortunate to work with, and Angelus is able to do so every step of the way. If you're looking for a platform that can support any type of LP investing in your fund, learn more at angelist.com slash GTM fund. All right, welcome to another episode of the GTM Now Special Edition VC episodes. Today I'm joined by Ben Larer, managing partner and founder of Larry Hippo Ventures. You're on fund nine right now, is that right? Sir, yes indeed. When's he see that X? At some point, we gotta do a good job on nine first. There you go. All right, so uh 200 million.

unknown

Yep.

Max Altschuler

And have have all the funds been around kind of the same size?

SPEAKER_02

No, no. Each one has been a little bigger than the one before. Uh the strategy's always been the same, which is like true early stage, so pre-seed and seed only, but each one has sort of grown incrementally with, you know, some version of inflation and the size of the startup market and our confidence.

Max Altschuler

Yeah. And then New York based, but you invest everywhere.

SPEAKER_02

Invest everywhere, New York based. The whole team is here, and uh, and the whole team has always been here. About 60% of the deals that we do have some New York roots. That might mean one co-founder in New York or something like that. But I mean, we're pretty distributed.

Max Altschuler

So we we talked before we pressed record here, but you're from Manhattan, I'm from Long Island. The kid in Manhattan back in the day, you know, that was like running around the city, he, you know, ice cream truck kid. Did he did he see himself in venture capital one day?

SPEAKER_02

Uh when I was a kid, I I didn't actually learn what venture capital was until I had been doing it for like a year. Um no, I mean, I I truly had never heard of venture capital when I graduated from college. Uh but I but I grew up in a house where my dad was an entrepreneur and built a business, and I sort of like watched him do that. And and that was I would say there was like a lot of permission to to sort of like be an entrepreneur myself, and and that was something that was very natural for me. And so, you know, my my my start in business was building a company and and investing came as sort of an offshoot of that, just based on the relationships that I had from being a founder. And uh but but I do think that sort of entrepreneurship was something that I was around a lot. Your dad was Huff Post? He Yeah, that was sort of like the I don't know what what act in his career it was. That was not what he did for most of his career. He built a sort of an agency uh business, a consulting business um in New York for my whole childhood. And then after he sold that, um, was very interested in politics and sort of the internet and started Huff Poe really as like a hobby, like got to know Ariana and and started the business with her. And then it, you know, became a thing. And then he spent a few years sort of full-time focused on it. But that was that was after he had sort of retired and and came back to to do like one more thing.

Max Altschuler

I want to get into the media stuff and I want to get into obviously like how Thrillist has helped you become a better VC and all that. But what I'm I guess what I'm like super fascinated about is what are some of those things that like he did when you were growing up that you felt enforced entrepreneurship? And are you doing that with your kids? That's a great question. Like I'll give you an example. Like my dad was really into like entrepreneurship, he had his own financial advisory firm and it was just a one-man shop. He he just wanted to be his own boss, but he always kind of pushed me to like bend-ish the rules, like not really break, like like push the boundaries. And one time we went to an Islanders game and there was like uh players only beyond this point, it was like a curtain, and he's like, Oh, let's sneak back there and go see the players. And he's kind of like, Well, it says players only. What do you mean? Like, no, like the worst thing that's gonna happen is they'll just send you back to your section. They're not gonna like kick a father and son out because they got lost going behind these curtains, right? So, like, we'll go, we'll go get a better look, and then like, oh, if like we get a slap on the wrist, we we'll go back into like the stands where we came from, but they're not gonna kick you out of the arena. So it's like a measured risk in that sense. And like exactly that happened, right? So, like, I don't know, do you have anything like that? Because you're I love that. I love that.

SPEAKER_02

Um, that's you know, it's a good it's a good question. I think for me, the thing that I think I saw was just that he had a lot of agency in his career. I remember like going and visiting his office as a little kid and seeing that it was really an extension of him. Like it wasn't going to some company and and him showing me the desk, but I remember going into the office and you know, sort of as the thing that happens, you know, he was the founder. Like everyone took an interest in me as like, you know, like the boss's son or whatever. And I thought that was so cool and went around and I felt like some I felt a comfort in his office and saw him feel a comfort in his office that I think was appealing to me. And then look, like right as I was starting my in fairness, when I started Thrillist, he was starting Huffpo. And so I saw him do a tech startup right at the same time that I was sort of building a tech company, and so got to got to again see him sort of behave that way and chart his own course. And and and so I think it was very inspiring.

Max Altschuler

Did you share notes or did you feel in like even in competition at all? Like let's see if the build is bigger or faster?

SPEAKER_02

No, I we definitely didn't feel in competition. And I think that's just like the nature of our relationship that he's always to be honest, he's always been much more interested in me being happy and successful than him being happy and successful. And so, like, you know, if I wanted to go and compete, he'd be like, it's yours, take the take the win, dude. Like I, you know, so we just didn't that there wasn't like space for that, but we shared notes. I mean, we were both building media companies. They were very different with very different, like, you know, I was so on the ground doing all the things, and he was, you know, in sort of a chairman role and had more access to capital and was hiring people, and we we were just like on very different sides of the same market, but we were both playing in digital media. And so there were, you know, I I think that there were some places where we got to sort of talk about like the digital ad market or I I think more than anything, we both felt like we were part of this really exciting, very disruptive thing, which was digital media.

Max Altschuler

Yeah. And that, and that those years, you your class was kind of like, what was that? Bob BuzzFeed?

SPEAKER_02

BuzzFeed was a little later. So if you think about it, Jonah Peretti was one of the co-founders of HuffPo. So he was there through the HuffPo thing, and then sort of not after HuffPo per se, but but like years into the Huffington Post, he left and started Buzzfeed. Yeah. And so Buzzfeed was there, you know, a few minutes later. College humor was like the the sort of one of the like the New York poster children of early digital media, Gawker.

Max Altschuler

I was gonna say the Hogan one. That's Gawker. Okay, that was Girl.

SPEAKER_02

And you know, Nick Denton was like, you know, loomed very large over that sort of New York digital media world. Buzz Barstool was around the same time.

Max Altschuler

Barstool was a little later. Later, okay.

SPEAKER_02

A little later.

Max Altschuler

Not like a lot later, but a little later. So you should so Thrillist turned into group nine, billions of views over the years.

SPEAKER_02

I mean, like it got uh like the sh the short version is like Thrillist was you know a singular digital publication in sort of like the travel and food space focused on like young guys and a lot of the you know, quote unquote infrastructure that we built in terms of some of the back end tech stack and a lot of the sort of advertising go to market stuff, and just like a lot of the a lot of the like the G and A back office stuff we thought could be better leveraged against a portfolio. And you look at Condi Nas, do you look at Hearst, do you look at Like by the way, like all the big TV companies, everything was always organized around portfolios of brands and media where you sort of were able to get leverage from that like fixed cost base. And digital media was going the way of consolidation. You you saw sort of like Vox as a buyer, you saw Vice as a buyer, BuzzFeed was becoming a buyer. And I, as at Thrillist, felt like I was a good operator operating an asset that was independent that was never not going to sort of like meet the ambitions that I had. And so had this idea to create sort of like this new co, which was to turn Thrillist into an anchor tenant of a holding company. And then it became about like access to capital and and discovery came in and put 100 or 120 million dollars into giving us the sort of ammo to go out and buy and build. And so we did that and collected a portfolio and and honestly, I think did like, I think we did a really, really, really good job in what turned out to be a really, really, really bad space.

Max Altschuler

Would you, and it's a great segue into, I guess, this question, if you were doing it today back to Thrillist before you, you know, pulled it into group nine, before you pulled in the portfolio, would you do it the same? Or seeing what happened with like TBPN to open. Yeah, right. I mean, would you would you do it differently? Like uh media is now in is a marketing distribution. Like when I think of like billions of views that you were able to pull into Thrillist, I'm like, wow, would that that be an extension, a marketing extension of a company that exists right now, one of these massive companies?

SPEAKER_02

I mean, look, you you saw that like the infatuation was bought by JP Morgan, Resi was bought by American Express. I mean, Resi was more of like an actual tech company and and you know, like a infrastructure. Yeah, but but um and and by the way, we were, you know, one of the first checks in Resi and like saw that whole journey. But what I would say is, I mean, would I do it differently? I'd do everything differently. Like I was a small, naive, like moron. Like we were like, I didn't know what I was doing. I was learning it. But what I like it was it was such a fun time. We we were really sort of like moving fast and breaking things, the culture and the people, like the relationships, like there, you know, there are so many like thrillist babies out there, like people who met on the job and like families that got built. Like it was one of those companies. It really was a real and and and and like people who who worked together there, just I'm like looking out of my desk over there with like a a box of you know, beverages that that I just got sent from a guy who was an editor at Thrillist 15 years ago that's gone off and is an entrepreneur now and is like building CPG brands. Like, there's dozens of those people. It's not exactly the PayPal mafia, but like there was like a there was like a real spirit to it. I learned so much, I had a great time, but like it was not the right kind of business for for me and the way and and like the kind of ambition that I have. I think these digital media brands are really good small businesses. I think, you know, it's amazing the TPPN. Like, I think what they've done is so cool. I love going on. I think the guys are amazing, but like that's a anomaly and a moment in time, and like, you know, lightning striking at the right angle and like great for them to go do that deal. But I don't think that like TPPN as a standalone business was going to go be a billion dollar company. I don't think they thought that. That wasn't the goal. Um, and I think it's not, I think it's, you know, I'm I'm I remain on the the board of Vox today, which is like really like the last man standing in this whole digital media sort of like roll up, like, you know, unbundle, bundle, unbundle, bundle thing. And, you know, we thought that we were gonna go and like by disrupting magazines and newspapers, build some gigantic category. The reality is that like social media came and took all the money that like everybody in digital media thought that they were gonna get access to from traditional decline.

Max Altschuler

Well, you know, and it acted as obviously a great springboard for you into venture capital, because you've all these relationships as um, you know, a media entity, a journalist, all that type of stuff. You know, you're doing rewards for tech, things like that. You're you're meeting all the founders. I think you're, you know, writing angel checks into what like Warby Parker and Casper.

SPEAKER_02

That was our fun one.

Max Altschuler

Fun, fun one. Okay. And these are New York City darlings too, right?

SPEAKER_02

Warby Parker, Casper are Yeah, these were and these were founders who in the early days wanted to talk to me because I was a founder. Yeah. And, you know, I had raised some later stage capital. And I, you know, had some of the like we were able to have conversations that were like real two-way street conversations where I was a peer and providing capital versus, you know, sitting in an ivory tower telling them how to run their business. You know, I could sort of empathize with them about how hard it was and how lonely it is and how shitty it is, and you know, sometimes complain about how the investors that I have don't get it. And so I think that that was like a real value add in the early days. And not to mention, like understanding media is a very valuable long-term skill. Um, I I mean this literally today. We approved a deal in our partner meeting that is a company that I can just like I know with certainty we were not, we would not get access to this deal. This is like top 1% of 1% of 1% of 1% kind of founder. We're not we would not get access to this except that they want this media expertise. Like that's the role that they want us to play in this like pick your investor pool. Um, and that's not the role that we play all of the time, but like that's a strong thing to fall back on.

Max Altschuler

Nine funds and a you know, almost a billion and a half AUM later. What's changed in how you do your job and how you pick founders? I mean, obviously a lot, but like what what what are the big big ones?

SPEAKER_02

Yeah, I mean, look, I think in terms of how we the first principles are actually very similar. And and you know, you and I have talked about this. It's like this is a people business, right? We're early stage investors, there's more art than science. Like, how do you go find people that you think are incredible and are scary and are just like folks that you know are gonna win? Um, that's still the business today. And and you know, the the process for how we do that and how we try to make sure that we're in front of the right talent networks and you know, the the quality of work we're able to do to, you know, back channel somebody and to assess a market and understand the you know what's possible and what the competitive set looks like and you know how to value these businesses and how to go out and win competitive situations is like day and night different. I mean, you know, at the beginning you met somebody. By the way, you go back to New York, you know, 10, 12 years ago, there wasn't that much capital floating around. It was less competitive. Every round was a party round. Fund sizes meant that everybody could share. Now this is like, you know, every you you do it with a smile, but it's sharp elbows. It's like, I can't go share rounds with most of my friends. Everyone's funds got bigger. We all want, you know, 10% on the low end, but like we take 12, we take 15. So, you know, some people need 20. It means that like you win a deal or you lose a deal if it's one of those deals, or you're doing things that are like proprietary and you're tracking and developing, I mean, you know the game. And so it's not the same business that it was. And so if we were doing things the same way, we would be cooked.

Max Altschuler

Are you looking for then a different type of founder these days than you might have looked for 10 years ago?

SPEAKER_02

Like I think like it it ebbs and flows. I think we're always looking for people that like, you know, are spiky and that are like this kind of outlier talent. I think sometimes we've we've had periods of time where we tend to sort of fall back a little harder on experience, what we sort of have called like fully formed humans. So people who are doing this for the second or third time and have like real domain expertise and right to win. Right now, with AI, there's definitely a pull to this like younger, more naive, faster-moving AI native talent that looks a little more out of central casting and a little more consensus. And I understand why. And so I think we see a little bit of a bifurcation between doing the like really crazy 19-year-old and doing the like tried and true second or third time person that we have proprietary access to that we're doing that wants to work with us again. We we sort of think about our deal flow as like half unknown to the market and half known to the market, or maybe at least the deals that we get to a yes on. Half of it is gonna be repeats for us or things that we're taking out of market early, or people that we have, you know, sort of like partner level relationships with that are that aren't going to try to run like, you know, dollar maximizing competitive processes and and maybe some things that are like quite non-consensus. And then the other side is gonna be stuff that's gonna be in market, that our peers are gonna see, that you're gonna see, that like I think the you know, the people that see the best stuff are gonna see, and we're gonna need to pick the ones that we love and be willing to like go be competitive and fight and and know that like some of them are gonna be more expensive, maybe, and you know, you have to sort of hold your nose in certain situations, but but you know, we're gonna get to a no on you know, 99 out of a hundred of the consensus ones. Um, and then you know, sometimes you get to a yes.

Max Altschuler

From a sourcing standpoint, then like you know, fund one, you were Ben the media guy who has a checkbook and write a VC checks, and now in fun nine, you're Ben the VC guy in media has been you know was a long time ago, right?

SPEAKER_02

Like I'm not the source of most of our deal flow, right? I mean, we're we're nine investors on the team today, just dedicated. Like we're yeah, oh yeah, yeah, yeah. I mean, I think that like, you know, will I source my will I pull my weight in terms of sourcing from like, you know, my relationships and blah, blah, blah. Of course. Like, I'll pull my weight, but this isn't going to be we're gonna do, you know, 20 investments this year and Ben's gonna source 16 of them. That's not how we operate. I'll do my, you know, few deals a year that I source, where I think I probably add more value is, you know, helping us run a good process and ask the right questions and challenge each other the right way. You know, very importantly, like, do we have the right people on this team? And so, like, you know, I take the responsible, you know, partial responsibility for making sure that happens. And then winning, right? And, you know, when you do get into that competitive situation, how do we go and and get to be the partner of choice? And, you know, that's that I think some of the experience and having been around and done a lot of deals and referencing well with a bunch of people and treating people well for a long time, like plays out and hopefully lets us, you know, win our, you know, more than our fair share.

Max Altschuler

How has I see investment committee grown and changed since the beginning? And and and how many partners were you when you started? Like that's also fascinating to me is if you're one or two partners to start and you're nine now, those people that you add, obviously when you hire them, you trust them. You've already built that trust. And so the trust is theirs to lose. But how do you create an environment where they can come into the IC, put their deal up, you know, for the first time or fifth time or whatever it is, but in their first few years and they're like still trying to make their way, right? And um, have you had partners that just it haven't worked out where you know you you thought it would, but they brought deal, they you know, I guess the deals didn't work that they were bringing to the table on VC wasn't really their thing.

SPEAKER_02

I mean, you know, we've been around long enough, we've had most of this shit happen, right? Yes. Uh look, when we started, it was three equal founders who started the business um together. And as time has gone on and we've brought more people in, I think the process has obviously changed in terms of like the how we have discussions. The the way that we've always made decisions have has generally been around conviction, not around groupthink. Are there times where everybody says, hey, we love this deal, let's do it? Yeah, there are. But generally, the way that a decision gets made is somebody on the team says, I'm doing this deal, and then we spend a bunch of time having everybody try to convince them not to do the deal, or you know, sort of like pushing back. But but a decision is ultimately made by an individual on the team who pounds the table and wants to drag it over the line. That doesn't have to be the person that sourced the deal. Sometimes someone will source something and someone else will take it. I mean, you know, it's sort of, I think we work very collaboratively. The way that we're compensated is everybody shares in the same pool. You don't get more for your deals. We all are here to like help one another make the right choices. This is not a lone wolf culture. It's like, it honestly is a team culture. I think a lot of that comes from the the fact that the, you know, the founders were operators and like built companies where teams were responsible for success. And so that's always been the belief here that like we are as good as the sum of our parts. This is not the Ben show at all. And by the way, as time goes on, in the in the not so distant future, we'll be in a situation where like I will be the, I'll be 45 next year and the oldest person on our investment team. Oh wow. Right? Like that is now we've got like we've got a lot of reps, we've deployed a lot of money, we've done a lot of deals. I think that there's like a lot of wisdom in the room. But I think that this is like generally a um, particularly as you see like the speed of technology continuing to to go and and and you know, with the rise of AI and whatever's next, um, we are gonna be in a place where like more and more of these interesting founders are gonna be younger and we're gonna need a team of people that are out and living in that culture. And like if I'm the rainmaking investor at age 55, like we fucked up. Like for real, we fucked up. From three to nine partners then and it's not exactly nine partners, but it's it was three managing partners. You know, today we're still three managing partners, you know, a different makeup, but but but nine people on the I team and anybody here can do a deal. I would say that like, you know, newer and more junior members of the team are like A, doing probably fewer, and B, you know, wanting to get sort of sponsorship from others on the team. But, you know, there's a deal that we're working on this week that somebody on the team who, you know, does not have a partner title is like pushing and fighting and advocating for. And like, are we putting him through his paces to make sure that like the conviction's there and the quality of the work is there? Yes, but like that's what I want. I don't want people on this team like like agency, man. Like, I don't I don't need what do I need? People here to like go do analysis. Like, have you like used Claude yet? Like, I like like you know, I this is not this is not a business where you need like I don't I don't think early stage VC is a place where you need a bunch of analysts. I think it's a place where you need a bunch of like people that know how to build relationships and build conviction. And everybody who we hire as an investor here, the deal is if you are epic, this place is yours.

Max Altschuler

I was gonna say, so uh most of the people that are that end up in the IC, are they promoted from within?

SPEAKER_02

Everybody, everybody has been promoted from within, with sort of one exception where we we hired a venture partner from the outside, but like a long-term relationship. But everybody else here has been homegrown, like myself included.

Max Altschuler

What's the what's a deal that you've had that maybe you brought to the table that you've had the most conviction in in like the last two or three years? Is there anything that stands out where you're just like I met this person or I knew this person, they came to me. We were like, I have to do this. And like, what's the process like when you are the one with the most conviction?

SPEAKER_02

Like I'll just give like an example of like a a recent, a somewhat recent deal that sort of like met that. Um, it's a company called Magic. It's like an announced deal of ours. It's a you know AI CRM in the hospitality space. I got introduced to Maggie, the founder, by a sort of former entrepreneur from when I was coming up, turned angel, who I've known for a long time, who I think has good judgment and trust, who, you know, introduced me and said you should meet Maggie, you'd like her. She went to Penn. You like, you know, I I sort of have because of thrillist and because of a bunch of stuff that we've done here, have been around the sort of hospitality space and and know a thing or two about it. And she said, you know, the guy said you should meet Maggie. And and this was one of those meetings where, you know, I met her on a Thursday and I was like, I want to do this deal. I want to show her that I can add a lot of value. You know, she had multiple term sheets in seven minutes, like you know the vibe. And but I had I had strong conviction. Um, interestingly, one of my colleagues had met her at the prior round and past. And by the way, he like he wasn't wrong. Um, it was it was a different company, the timing was different. He liked her, he he marked her to track and and watch. And when it came back around, I just had like a spidey sense that she was somebody I wanted to work with and that the problem was big and that the product was awesome. You know, I diligenced the product with some customers who I knew personally who I knew would give me like a very honest read. And the feedback was it's a product they can't live without. And so that was one where like fast moving, high conviction. I brought it to the partnership probably the following Tuesday from a Thursday and was like, I want to do this deal. Obviously, I have some more back channeling and you know, box checking, but like I want to do this. And, you know, what what I what I would like, what I'm trying to create is a culture where people here feel comfortable saying that's not a good idea, asking hard questions, pushing back on me. And we have, I think sometimes I get that, and I think sometimes I don't, um, is is the honest answer. And it's something that we're working on. And and uh, in fact, this year for for when we're doing ultimate decision making, we we actually made a small change to our partner meeting where previously everyone in the fund was in the full meeting for decision making. And we we are doing a test right now where people who are not on the investment team aren't in the room for like formal decision making as a way to try to create an environment where there's more where people feel more comfortable sort of pushing back on, you know, power or whatever. Um, and and you know, seeing how that works and so far, so good. Um, the quality of the the sort of dialogue is better, but like I think that's that's a problem that we're all we'll always deal with is like how do you how does the rest of the team say no to the managing partner?

Max Altschuler

Do you work your own deals that you have high conviction on where you meet the individual? Like the rest of it is you running the process.

SPEAKER_02

I'm trying to do that. If I look back historically, times where I hand that off, I think I have regrets. Oh, interesting. Um, I think there's just some times where I've like handed stuff off to more junior people on the team and they've sort of thought that I wanted to get a deal done. And so I think that their diligence becomes too confirmatory. Okay. Versus diligence. Um, and so, you know, I want to do more of my own work. You know, the Maggie example's a really good one. Like, you know, I got on the phone with like one of her classmates from college and talked about her character and like who she was back in the day. I did all the customer calls myself, and that helped me get to like full conviction, yeah. Versus like reading notes or getting like, you know, read into someone else's conversations and they're like, Yeah, it was really good. Like, you know, you you know this. There's there's diligence and there's diligence.

Max Altschuler

It also reinforces Maggie in a competitive deal that she's gonna get you focused on this business and not somebody kicked to somebody more junior, right?

SPEAKER_02

And by the way, we won the deal with the low term sheet.

Max Altschuler

Yeah. And that effort, that extra effort was was integral in doing that. I mean, I think so. I think so. There are times where you know, I'll get a deal through my network, which is vast, and so I we get decent amounts of those deals. And my whole thing is I don't want to make emotional decisions with other people's money. So, like, I would write an angel check with my own money emotionally, because uh that's fine. Like, I would do that for a friend, right? Here's a 25k check, whatever it is, but certainly not with a check from the fund. So one of the first things I do after I hear the idea, hear the pitch, all that kind of stuff. We had the first meeting is I will kick it to my team and say, like, okay, I'm respectfully, like my team is going to another partner here, is going to run this as if it is, you know, any other deal, and then we'll get to a decision. And obviously, I will be a reference internally, but I've done that, and I I'm back from that.

SPEAKER_02

That yeah, that's why I said as an Yeah, I used to do that, or like, dude, you want to hear this is like one of the most famous examples that that will like kill you. And and I don't even know if he'll remember this, but a really long time ago, a guy who I had known for a while, not a good friend, but like, you know, I I knew I knew through business and a bit socially, came in and pinged me and said, Hey, I'm starting this thing in like this, like, you know, it's sort of like a spin, spin class bike idea thing. You should take a look at it. And I got it and I was like, Oh, you know what? Like, you're a buddy. I'm gonna kick it over to like my colleagues because like I don't wanna, you know, I don't wanna like put our friendship in the middle of it. And I kicked it over, and it was like a quick and a quick pass from whoever I passed it to. They didn't like it, and that was Peloton.

Max Altschuler

Yeah.

SPEAKER_02

And doesn't matter where Peloton is today, but like that would have been a good thing for us to be in, let's call Spade a Spade. And John's obviously like an incredible, I think like an incredible talent and founder and all that. And that was me doing that. Like, oh, like business and pleasure. Like there is no business and pleasure. And and like, you know, if it's my relationship, I should take responsibility. Responsibility for it. Now, there might be like real conflicts, but like that wasn't one of them. And so, you know, I I don't want to make it sound like I I don't I don't pull people in for help. Of course I do. And there's people here who have all different kinds of perspectives. And I don't like to do deals that I don't have other people's eyes on, but but I do think that like my I think it's okay to like make some emotional decisions.

Max Altschuler

Yeah. Are you so then are you coming at these deals with a like a prepared mind or is it about the founder? I mean, do you have spaces or an underrated like an underwritten thesis where you're like, oh, these are the areas we want to do deals. Here are some areas we don't. Um is there, or is it just mostly about, hey, we got a great founder, let's go do the diligence on them after we meet the founder. They they present us what this kind of their take on the space is, and then we go corroborate that.

SPEAKER_02

Yeah. So A, you know, we have a we have a lot atop a funnel. So we see a lot. It's rare that there's a space that's like totally novel to us at this point. Obviously, when you know it happens. Um, we are not a thesis-driven fund. And so we talk about there's sort of areas. So there's things that like, you know, we've done a lot in and we feel like we know really well, or we we're seeing sort of like a rising tide in a space and we get a little bit and we get interested. We'll bring people in to sort of meet with the team and educate us on a space that we are like curious about and maybe don't have a bed in and want to like feel out if it's a space that's interesting. But we're not here like writing a big blog post and going out and hunting. Individuals on the team will have sort of these these areas or maybe minors that are areas that they want to go and and and be a little bit more sort of attuned to, then in terms of like how we we we we do come with a prepared mind. And so, and by the way, AI is an incredible resource for that, of course, right? Which is like, you know, I'm now I'm not coming into a meeting with I talked to one of my colleagues for 30 seconds and they gave me an update and they said that, you know, the founder's great and like he's impressive and they're building something in X space. I've read like a decently detailed analysis of both of all available information we have about the company, including like, you know, sort of the granola notes from the prior meetings, plus like, you know, some deep research on the space. And, you know, I'm coming in with areas that I'm trying to like dig into or or poke at. By the way, you know, sometimes I'll go I'll the conversation will like run off the rails and I won't get to any of the stuff that I want to talk about. And sometimes like I'll have a organized list of questions and bang them out.

Max Altschuler

All right, and and your firm obviously is doubling down with AI. Oh my gosh. Have you have you as a management team said, like, hey, here's the deal, everybody gets a claude license, here's a bunch of resources, like we've got a stipend for any kind of educational stuff you want. Like, are you building a program around getting your team I would say the stipend is like effectively unlimited at this point?

SPEAKER_02

And I mean, but we we have we have spent a lot of time and energy getting all of our fund data and all of the historical data and all of our context, including me sitting around at night yapping into it about how I think about exceptions or biases and training and training and training are sort of like an an instance where there's effectively another member of the investment team that is AI. We're not their their vote is not relevant, but their vote is placed. And trying to, you know, it's interesting. I I think that there's there's nuance. There's things like understanding, everybody on the team knows that we have a $200 million fund, and everyone knows that, like, you know, we'll write about 55 or so core checks, and that generally speaking, we like to have more than 10% ownership at first check. But the AI system understands exactly how many checks we've written, how we're thinking about how we force ranked that portfolio so far, what our pacing is, what categories we have exposure to, what in other funds, what categories we have exposure to here, what the how we need to think about underwriting return math, et cetera, et cetera. Like, by the way, this is particularly relevant in follow-on financings. When when we go and say, hey, blank is coming back to market for a series B, how do we think about what our role should be? Having that data asset that we can sort of like push that information against and say, this is the 14th ranked company in the portfolio. You've got 26 million more to deploy. The way that you're you you've mapped it right now says that you've got a million of reserves against this. That being said, this company just beat plan two quarters in a row. You've actually seen two other companies beneath it that just missed plan. This price is actually pretty good, and the partner's a strong signal based, like you know, and all of this done in real time. It's helpful. Like, who am I who am I kidding? It's it's it's helpful context to help us. Again, it's directional, but it it makes us uh better educated and helps us make, I think, sort of like bolder decisions.

Max Altschuler

Yeah. We've we've gone through a couple of those exercises recently also because we're in follow-ons from fund two. And it is incredible what you can uncover with AI in such a short period of time. And again, like it's it's informational, like it's not a decision maker, it's not one of those things where, oh, this made it cut and dry. Okay, we're just gonna do what it says. But it's certainly a great data point to add to everything.

SPEAKER_02

I mean, we we're operating very, very, very differently. And, you know, the the the automations that we have and that we're continuing to build, that the you know, how how everybody on the team I think is gonna is much better educated and up to speed on what's happening in other portfolio companies. I mean, it's it's astounding. It really is. And and anyone who is not you know, no, look, I think a lot of this is table stakes. I think that we're at like the you know, the front of the train in terms of like really leaning in and doing this stuff. But I think everything we're doing is like ultimately table stakes and not the like critical differentiator for us versus one of our peers, but it is saving a lot of time. It is making us smarter, it is helping us get to know more quickly, and um, it really does feel empowering. And then stuff like you know, quarterly letters and other kinds of comms and keeping people in the loop about what's going on, it's gonna save time, and that time is gonna get put into you know going out and fighting new top of funnel.

Max Altschuler

How much time would you say you're spent? Like I it's a it's a good segue into like as an MP, you have to spend your time on firm building, fundraising, funding companies, and then supporting those companies. Like, would you say that that time just ebbs and flows, or would you say you're doing one of those more than the other?

SPEAKER_02

I mean, I think it ebbs and flows a little bit at the end of the day. You know, I I think my my I want to spend my time investing in supporting portfolio companies, but to do that well, like you can't do that if you don't have LP relationships and you don't have an amazing team.

Max Altschuler

Yeah.

SPEAKER_02

And so the, you know, at the end of the day, my core responsibilities are making sure that like this place operates and acting as like a sort of CEO type for the fund. And and frankly, you know, I think we will be our best if I'm our worst investor. That's my job. My job is to have a team of people here who are better at this than me. And by the way, create space for them to do it, create the capital for them to do it, create the framework for them to do it, like let them go be awesome investors. And, you know, I I you know, I I I like to think I know a thing or two about investing, but like don't make this like the Ben show.

Max Altschuler

Yeah, I love that point of view. Uh, last question.

SPEAKER_02

Yeah.

Max Altschuler

Who's gonna go further, Yankees or Mets?

SPEAKER_02

Ooh, I mean the Mets. That's a stupid question. Uh by by the way, I say that, but like as a Mets fan, it like is it it's almost sounds ridiculous to sound confident. Uh we had it, we were so close to a subway series like a couple years ago, weren't we? It was like two years ago. That didn't happen. But the look, I uh the Mets are if nothing else, the Mets are like a really fun team right now. I just you know, it last year was so gutting, and and I really respect the fact that it's not just sending the same team out there, like a little bit for the Yankees this year. Like the Yankees are really good, but it's it's not, it's sort of the same show, yeah. Right. And like the Mets is the Mets lineup, five of nine dudes are new. Say what you will about so exciting, it's just like a totally different team, which I which I'm excited about.

Max Altschuler

He's doing a good job. I mean, he cares about the team, he's trying to put a good product on the field.

SPEAKER_02

By the way look, I mean I I adore the beltons. Like, I just think that like this is a fun time in terms of like being willing to be unsatisfied with like a good team and really, really striving for a team that's going to be competitive is cool.

Max Altschuler

Yeah.

SPEAKER_02

That by the way, that's our job here, right? Uh, some of the questions that you did not ask that you sent over beforehand was about like this idea of like not wanting to invest in good companies, but wanting to invest in like great companies. I do think that like the Mets have that energy right now, which is they want to be a playoff team, they want to be a championship team. And I think that like our job today is not to find people that want to build good companies, but find people that are crazy. So you're just you're just trying to find the craziest people that want to go build generation. Look, you know, it's it's a really slippery slope, right? Like we could go deploy a ton of money into you know, a hundred companies that aren't gonna like ever generate a dollar of revenue. But I do think that every dollar we put into a good, sensible business is a dollar that we take away from a company that is gonna go after the power law.

Max Altschuler

Yeah.

SPEAKER_02

And so it's a delicate balance and it's something that we talk about in terms of, you know, like what is the best case scenario? What could we imagine? And if the best case scenario isn't like a real multi-fund returner, we we're just I don't think we're gonna get there.

Max Altschuler

So that company Magic, which is like a vertical CRM, that's gonna be a nice enterprise play, enterprise revenue kind of durable growth play, but it's not gonna be a lovable, it's not gonna be like this crazy spiky 200 million in ARR in you know six months.

SPEAKER_02

No, it's it's not, but I do think that like the product is the product is so beloved by customers and adds such obvious value overnight in terms of both cost savings and new revenue. And yeah, I think that the the way that she's building the company extends into all hospitality. And so she started in restaurants, she's moving and she's already moving into retail and hotels. I think there's like actually a really big TAM to build like again, like a multi-fund returning company for us. I don't think going like we are not a fund that's particularly good at or willing to go and try to do the lovables. By the way, those are companies that raise at like seed rounds at prices that like we can never underwrite. But by the way, like for them the magic type company, not and and and but like you know, and it'll it it remains to be seen. Like if lovable ends up, like if that is you know, really if that's right, if that's if that's really durable revenue and stuff on like amazing and the people who are in it who like paid up for that expensive seed, like god bless, that's awesome for them. Like, it's unlikely that that's gonna be us.

Max Altschuler

Yep. Well, this was great, Ben. Thank you so much. Of course, dude, thank you. Love looking at the background, love looking at your face too. Like the painting, but uh it was great having you on, and um yeah, we'll end it at that. That was another fantastic episode of the VC series on the GTM Now podcast. Head over to Apple Spotify or YouTube and give us a like and subscribe, and we'll see you on the next one.