Your second point is the dynamic that makes the least sense to me. In public markets, if a stock is cheaper relative to future earnings, that makes it a better buy. In our corner of the world, the opposite often holds true.
There should be a tipping point where greed beats ego, but have not yet figured out how to find it.
Fwiw - my general premise isn't that the "majority of VCs are not good investors." My point is that there's a serious disconnect in the markets right now, and that it is rooted more in fear than a lack of opportunity.
On the second point - you're right that the cash isn't literally sitting around, but VCs (generally) do not have to ask LPs for approval on a deal by deal basis. Capital calls can happen either as tranches or in response to a deal, and it is unusual for an LP to successfully refuse a capital call because of a specific deal.
If you just view VCs as any other business, it involves revenue (exits) and costs (investments). The market turmoil is affecting the volume and size of exits in at least the short term, which means they are cutting costs. It's not clear the number of opportunities have grown/shrank but i guess fewer people trying to invest means the number of available opportunities to you as a player has grown.
I didn't end up assigning explicit scores to things. In general, I gave more weight to the long term in my head. At least, to the long term that would happen if my bet was right.
Congrats to Jon and Chandan on the milestone. Pretty rare to see a company go from seed to unicorn in a single round! Anything particular you learned during that jump?
Excited to see how you and the team continue to build.
Thanks so much Aaron! Having amazing YC partners certainly helps.
The biggest learning for me has been the power of trust. Working with amazing people, partners, investors, etc. who are deeply trusted means that the friction of every task, project, job, launch, deal is much easier. A small decrease in friction at each small step of the way compounds into a faster and faster flywheel of momentum over time.
I agree that there's quite a lot going on now, but you could have said the same of many other periods. The 80s saw PCs, but also new kinds of music, the fall of the Iron Curtain, and more. That's always going to be true (hopefully), and each of those shifts creates opportunities.
But I do think you're right that the trend is accelerating and will most likely continue to do so. It's that compounding trick, applied to history.
I guess the founders would mostly argue that boilerplate is the price of admission for angels these days. But it would be great to see it work this way.
Do you mean in a down round or just a round at a low price?
In my experience, any down round requires massive changes to ownership across the cap table, previous rights or not. The only way to stop this is with even more onerous terms that one doesn't normally see in VC term sheets.
You say "haven't quite figured out" - does that imply there are things you wanted to convert but didn't see the path for, or that the question hasn't truly come up?
This is why I spent so much time working on the series a program before I left yc. many of these tactics/strategies can be taught or partially outsourced to the right advisor.
There's a lot of truth to "outsourcing to the right advisor." Sounds like the venture studio model, IMO a net gain for investors, companies and founders. However the "right advisor" is probably even rarer than a decent founder.
