Santosh Sankar 00:06
Do you think there’s a sweet spot age to be a high functioning DC?

Earnest Sweat 00:12
I think in the past there used to be. I don’t know if it’s a sweet spot. I have my biases, but I think at certain points in this role, there’s a in this industry, there’s this sweet spot lifestyle, right?

Santosh Sankar 00:35
Yeah.

Earnest Sweat 00:38
This industry feels a lot more like life, where you can meet people and there’s like no payoff from it at all, or you can meet people, invest in their company and it goes all to hell, and you’re just trying to take in all the information to bridge a strategy going forward, and so I think sometimes having the space to think, it does feel like yeah, there’s a sweet spot. You know, you can associate that with age,

Santosh Sankar 01:17
yeah,

Earnest Sweat 01:20
or you can associate that with lifestyle.

Santosh Sankar 01:22
Yeah, I, I ask because at the end of July, Dynamo has been around for nearly 11 years, 10 years since we raised and closed our first funds. I’ve been doing this for over a decade. Let’s

Earnest Sweat 01:41
clap up to that.

Santosh Sankar 01:42
Appreciate that, but with that comes a like, hey, like things have been relatively good. How long? How long do you have? And I like your framing as to some of it. It’s like a lifestyle. Like, if you get to a point where you’re honest enough with yourself where you go, this is a grind. Like venture is a grind. You have to be out there, access. We’ve discussed that in in prior episodes, but I am also cognizant of like making room for the next generation, and being able to step back and not have to be the one in the limelight that has all the answers, helping someone else take that charge, they may not have all the answers, but they can equally benefit from the counsel. Like I had John, I have my partner Ted Barry. They can then have me as someone they could lean on, who isn’t going to encumber them and limit their growth or their ambition and where they want to take the firm, but there’s also, and I think every generation feels this to some degree, right? When you’re a generation of a certain age, and there’s a new generation coming up into the ranks of whether it’s like corporate America or startup building, are we the best generation to provide counsel, advice, tutelage, and guidance to this group of founders? And I know like there was a bunch of the boomer generation that looked at us as millennials and like these millennials, and there’s all those stereotypes, but there’s also the like. At what point am I going to age out and not be the best person to deal with this cohort of founders? Can I even relate to them? Can I convince them at a personal level I’m the best partner to go on the journey, fight shoulder to shoulder? Because that’s my style. That’s how I go when founders are over. I go, we’re not, we’re not an investor. We’re going to be shoulder to shoulder. We’re going to war together, and you can either be with me, who’ll pick up your call at any hour, or you’re going to be with that guy gal who, sorry, it’s 11 o’clock on a Wednesday, not happening.

Earnest Sweat 03:53
Yeah. There are a couple things that you brought up that I think we can unpack, but let’s put to the side like making space for the next generation that we want to also, you know, take the limelight and have answers as we continue our podcast. But yeah, the other is around the question I have for you is this sweet spot of like, what are the characteristics that you assume is makes a best investor, and why is that associated with a certain

Santosh Sankar 04:32
age? I think, I think the ability to relate and connect at a personal level with the generation of founders who are coming up, that’s not to say there’s not going to be older founders and middle-aged founders to complement the younger founders, and maybe depending on the sectors you invest in, there is that varying distribution. But I think there’s a part of it we do. An affinity for more youthful founders who’ve had some exposure to industry, who had a lot of success there historically. So I think that’s important. I also think it’s willing to have the hustle, and some of that is energy, bandwidth. I frequently tell young people who call me for advice, I say you will not be more risk seeking and risk bearing than you are when you’re right out of college. If that’s what you ended up doing after high school, because as you get more responsibility, there’s a liability associated with that to some extent. You might not be willing to also take a risk as well, and that might be more like a GP centric founding GP centric statement.

Earnest Sweat 05:49
So that’s what I assumed that you would say is around kind of like the time and ability to show and execute on hustle. Adaptability, I would say, is another one. Adaptability, the ability to be present and relate, relatability you mentioned, and then also the risk tolerance. I would push you on that, and how much of our view of what a sweet spot of age, lifestyle is shaped because we were raised by boomers, both both personally and professionally. And I’ve said this in private. I’ll say this here, whatever. I think you know, and everybody comes from different socioeconomic backgrounds and all that, but just by the time of when that generation was born, it was its factually the most coddled generation of all time, and there were certain truths that were taught to them that they passed along to us that are no longer true, and so this idea of like risk tolerance because it’s the last, it’s the least you’ll have. Like even then, that is a world that is shaped by hey, we go up into the right. 2008, we go up to the right. You know, like that’s fair. And so, I think that’s had impact on the generation After us, of kind of having and also remember their parents for the most part are Gen X, so they’re shaped and so this idea of like risk tolerance I don’t know is always true and so I think it’s really about the characteristics of a person than kind of us even thinking about this in a generational perspective, and since we’ve been so like our generation has drank the Kool Aid a lot,

Santosh Sankar 07:50
I went down the path to see whether I could find some data because I grew up and and you started a generation as well where we had folks like Fred Wilson, Brad Feld, Bill Gurley, who were like active. You could argue in like in the peak of their careers when you and I entered venture, and I was trying to figure out like, hey, they. I thought they did a great job. One leaving at a perceived top of their career, and to some people that might be valuable to others. They may not care, but a lot of people will come to find that up until Michael Jordan, you know, lost his father, retired from the Bulls. I loved basketball. It was my favorite sport, and I felt so betrayed, and I could never get back on, even when he came back to the Wizards. And the one thing I wish is maybe he didn’t come back because he left at such a high. Even though it was heartbreaking, and I lost love for a sport.

Earnest Sweat 08:49
Yeah, yeah.

Santosh Sankar 08:50
It’s like that that sits on me a bit. And what is that like? There’s an ego under that statement because I think part of that is like you leave a legacy. What are you remembered by? I think each of those three, everybody remembers them as being great investors, yeah, yeah, good stewards to their partnership, and I think generally like good advocates and allies to their founders. Let’s put the

Earnest Sweat 09:17
Uber yeah

Santosh Sankar 09:17
benchmark situation aside, and I think part of it also is like when when might be the right time to leave because like we we’ve talked about on this podcast things are changing faster than they ever have in the subject matter we’re all investing in, but that’s also impacting venture where in the last four years we’ve seen capital concentration that’s like profoundly changed what we think about, talk about strategically as as as VCs, and so at what point might it actually be? Hey, like the skill set you have, the tools you’ve built, is it actually better to say hey, let’s draw a line that’s been a good run?

Earnest Sweat 09:58
I’m still,

Santosh Sankar 09:58
and I’m. Go do something else. I, for one, I don’t think my wife also would ever let me fully retire and kind of hang around the house. I think as a personality type, that would drive me nuts. But I think about this, but I also come from a very unique partnership circumstance where I’m the youngest of four partners in my firm. I have two partners who are roughly 10 years older than me, and I have another who’s 20 years older than me. So I kind of also see and have to operate in this difference where I guess some of that is a great push back to your point on like risk seeking, yeah, and risk seeking not necessarily being totally tied to age, but I I think a lot about as to like what is the optimal time for me to step back for the firm the LPs are founders for myself and what is that and I guess age was a simplistic way that I I thought about it because also when you go fundraise when you’re of a certain age LPs will start asking you so how many more funds do you have left in you? Yeah. If you get real old, it might be asking a lot of other questions as well. And so part of it is like seeing that, hearing that, being being around this kind of age dynamic as to what when is a good time to go hang

Earnest Sweat 11:19
it up.

Santosh Sankar 11:19
That’s not to say you won’t invest, but maybe you don’t invest as a GP on the dotted line, so to speak.

Earnest Sweat 11:26
Yeah, I think with all those questions, they fall into a thing that we do as humans, and it is like, how do we simplify very complex concepts and for decision, future decision making, and how do we predict the future with limited information? And so, I think the assumption is that with age and success, you typically become stale, your thinking becomes rigid, and you can become less relatable. It’s like I remember when some friends when Jay Z came out with Magna Carta, Holy Grail, and you know we were talking, giving our kind of like very immature or amateur critiques of the album, or just thoughts on the album, and I asked one friend. I was like, “What do you think? And he was like, “I don’t know what he’s rapping about, but it sounds like rich shit. And so it’s just like sometimes that’s cool, but it’s not always the relatable thing, right? And you can become lazy at your craft, and I think that’s the question. But you know, taking another analogy is with sports science and with kind of work ethic, we’ve been able to see people like the LeBrons, the Bradys, Ovechkin, right in in Washington, right. These people are able to defy Messi right now. That’s right. Be able to defy kind of like Father Times ultimate, like hey, you’re going to be done. And we have examples of investors that you know you get

Santosh Sankar 13:08
Pierre Lambon,

Earnest Sweat 13:10
who people are like they have as much hustle. And if you go outside of our asset class, you’ve always seen hedge fund fund managers who are like they have all the money, more money than God, and they still have like the desire of like I’m going to win, and so I think the rule of thumb is just like, hey, with age and success, your willingness to do what you had to do when nobody’s looking, the work you had to put in is going to diminish.

Santosh Sankar 13:41
So I was trying to find data around this, and you probably wouldn’t be surprised that there’s not a whole lot of data. But I I try to distill it down to kind of founder ages, because ultimately, at least the the way I practice ventures, I’m ultimately in service to the founders that agree to be in partnership with me, and there’s some academic research I came across where the mean founder age across approximately 3 million U.S. founders is 42 years old. So, the highest growth, one in 1000 mean founder age is 45, and founders at age 50 or over have twice as much of a likelihood to deliver top tier outcomes.

Earnest Sweat 14:30
Yeah.

Santosh Sankar 14:30
So there’s also kind of that contrast to hey, like as you’re kind of approaching 50, you might just now be like getting in your golden years, and maybe those golden years are kind of a finite three to five year period of time, but everything you worked in your career for maybe like

Earnest Sweat 14:44
for this moment

Santosh Sankar 14:45
for it is for this moment, and it’s complex. I think your point is around when you feel like you lose the hustle, and like how I think about it. I go through a week, and on Fridays we spend most of our Fridays working with our portfolio. And like one of the checks I have is when do I wake up on a Friday consistently not excited to be on the phone with the people I’ve decided to back, and I haven’t felt that. Yeah, like are there some Fridays with other things going on? It’s kind of a rough day, yeah, but I’ve never consistently felt excited to work with the people I choose to work with. Yeah, and I think that’s some of it as well because we’re very privileged to be able to work with really ambitious, smart individuals who oftentimes are some of the brightest minds in the space that they’re operating and building in, but like I I have that in the back of my head as to hey like don’t don’t sit here longer than you should

Earnest Sweat 15:50
yeah

Santosh Sankar 15:51
and there’s the the personal but I think we should definitely follow up in in a future episode as too but for your firm and for the others in your firm when it might be time for you to step back because equally a lot of those non venture firms where you see 6575, 85 year old professionals, there’s damage that’s being done to their franchise.

Earnest Sweat 16:11
Yeah, and it doesn’t

Santosh Sankar 16:13
matter if your name’s on the door. Yeah, that’s still net negative for you and your legacy if you’re a founder of a firm.

Earnest Sweat 16:19
Yeah, and some don’t, you know, they frankly don’t care. And

Santosh Sankar 16:24
Now a word from our sponsor. Hi

Leia Slosberg 16:28
There, I’m Leah Slothberg, and I work on the venture relations team at AngelList. AngelList builds modern software paired with premium services to help firms of all sizes launch new investment vehicles and streamline their fund operations, from first-time emerging managers to institutional multi-fund firms. Today, we’re sitting down with Sarah Smith. Sarah is the founder and managing partner of the Sarah Smith Fund. Before launching her own firm, she spent four years at Bain Capital Ventures and worked as an operator at companies like Meta and Quora. Since launching her rolling fund in 2022, she has since closed a $16 million fund one, and in her career has invested nearly $100 million into over 100 companies and is a personal LP in 15 venture funds. She is originally from outside Milwaukee and is an alumni of University of Wisconsin and Stanford GSB. We’re going to dig into her journey from Bain to deciding to go solo, what that transition looked like, how she thought about fund structure as she was building, and what it actually takes to show up credibly to institutional LPs as a solo GP. Sarah, you spent four years at Bain Capital Ventures before going solo. What was the moment you knew it was time to do this on your own?

Sarah Smith 17:40
Yeah, it’s really hard to leave a storied and wonderful firm like BCV. So I don’t think it was necessarily one particular moment, but really the culmination of a few things I saw during my last year or two there. To put it in context, I was there sort of during the peak period, and at that time, I felt that the math for a billion-dollar fund worked best if we had high ownership, and for me, that felt at the time most of my investments were done pre-seed and seed. It just so happens that I also figured out fairly quickly that that is the stage that I love the most. I love the ambiguity of that stage, the ambition of that stage. But if you’re a managing director in a billion-dollar fund and you look at the math, you do really need to likely invest something like 50 to $100 million a year on average on an ongoing basis, and I think it’s pretty hard to do that at a high quality level with just pre-seed and seed. So that was one sort of thought in my mind, and the other I’d say is that there’s just a lot of data that shows conviction-led investing at pre-seed and seed is the best way to maximize returns versus more of a consensus-driven approach. And I think it’s harder for larger firms sometimes to deploy that kind of decision-making framework. So I felt pretty strongly that to do pre-seed and seed investing, I needed to be in a conviction-led environment, and obviously, there’s no more ultimate conviction-led environment than being a solo GP. But lastly, I was also running the fund of fund, so I was able to invest in roughly 40 emerging managers in a few years, and worked very closely with many of them, and saw how they were operating and running their firms and building their own value proposition for founders, and I just really fell in love with the way that they were working and the way I wanted to show up for my founders. So, it was a really hard decision. I love the team at BCV and I’m very proud to have them as an LP in my fund and still partner with them today. But ultimately, it became clear to me that being solo was the right decision for me as an investor.

Leia Slosberg 19:44
Yeah, that makes sense. I can understand it being like a series of data points collected over a couple of years that led you to the next stage in your own career. So you started a rolling fund with AngelList in 2022 before transitioning to a more traditional fund one. Can you walk us through that decision? What did the rolling fund give you, and when did you know it was time to move on to a more traditional setup?

Sarah Smith 20:08
Yeah, I had been an early LP running the fund of funds at BCB. I had invested in a number of rolling funds, like Allison Pickens, for example, with New Normal Fund, and there were a number of attributes I really liked about the model. In fact, I was so bullish. I thought that might be the long-term approach for all solo funds. There’s a few things that I think are really great about rolling funds. First, it’s very easy to get started. So when you are spinning out of a fund or starting brand new, it can be pretty daunting to think about what you may need to raise to get started to to begin investing and deploying your strategy, with a rolling fund you can actually start your very first quarter. You know, within three months you can be making your first investment. So for people who have a very active deal flow, a large type of funnel that doesn’t want to turn that off, a rolling fund is a great option to get going and to prove out your strategy with a few quarters or maybe even longer as almost like a concept fund. So for me, that was very appealing to be able to get going immediately and start writing investments, even with just a few LPs. The second thing I really like about the idea of a bullying fund is that you are never only fundraising and you’re never only investing, so it helps smooth out the sort of seasonality of fundraising. And I I really like that opportunity to opportunistically meet a great LP and be able to bring them into the fund right away, versus having, you know, now with a traditional fund, I have to wait sometimes a couple of years to bring someone in who might be interested, so it allows you to to opportunistically bring in LPs at any time, and it and it allows a very flexible structure in that way. So there were a lot of attributes to the rolling fund that I really liked, but those kinds of timeliness, optimistic nature, the key reasons.

Leia Slosberg 21:58
Yeah, that makes a lot of sense. I’m curious. Was there a point within what was the point, or what were the factors that led you to move from the rolling fund structure over to the more traditional structure?

Sarah Smith 22:12
Yeah, honestly, I would have loved to continue with the rolling fund forever. There’s a lot I like about it. At the same time, there are logistically a few challenges with the model. One, it’s pretty cost prohibitive. At least as of today, AI might change this, but most LPs of any scale do require audited financials. And with a rolling fund structure, because it is a series of quarterly funds, you would actually have to perform an audit on every single quarter bond. So if you imagine a typical fund is over three years, you’re basically doing 12 audits in the same amount of time you would do one audit furnisher fund, and that’s just that’s just cost prohibitive. So, I really reached sort of a point where I had enough LP interest from those that required audited financials that a rolling fund structure just was simply going to work for them. There is another point to note that you also do need to issue K ones every single quarter, and so it does proliferate into quite a large number of K ones. Most larger LPs can handle that, but for some individuals or maybe smaller funds of funds, that can feel like a little bit of overhead. So there may be a solution for that in the future. But today, it does feel a little bit excessive to have that many K ones over time. So for me, a rolling fund was perfect for five or six quarters as a chance to prove out my strategy and my concept, and then ultimately I decided to switch over to the traditional fund structure.

Leia Slosberg 23:38
Yeah, that makes a lot of sense. The tax burden of 1516 20 k1 adds up really quickly. So you were the LP on the other side of dozens of solo GPs and micro funds at BCV, and you talked about this a little bit at the start. How did the experience of watching these solo GPs operate sort of shape what you were looking for in a fund administrator when you went out on your own.

Sarah Smith 24:06
Yeah, I’ve personally invested in funds for almost 10 years now, so I have probably seen every single back office fund administrator and logged into all of the portals. For me, it was a no brainer. It was very clear to me that I would work with AngelList. I felt like by far has invested the most in robust software, both for the GP and the LP side. So everything from having real-time visibility into your SOI at every given moment, being able to easily issue capital calls to your investors, and probably for me, the biggest part of the LP experience, where you interact with the fund administrator, frankly, is in the subscription process. And I have just been baffled by how many fund admins still send often something by DocuSign where it isn’t even formatted correctly. It takes half an hour to an hour or more. To subscribe, whereas as an LP on Angel List, once you know my entity and you know my selections, like I shouldn’t have to re-enter all that information every single time I subscribe to a new fund. And so Angel List just really streamlines the process for LPs to make it really easy for them to subscribe and to have full visibility to all the documentation, the LPA, everything else. So I really wanted a really, really delightful and seamless LPA experience, especially on the subscription side and on the tax side. And that for me was very obvious on AngelList.

Leia Slosberg 25:37
Awesome, definitely. I know our team is always really happy to hear when it’s a seamless process. So happy to share that with our investor management team. I’m sure they’re aware as well.

Sarah Smith 25:46
Actually, one other thing I’d mention too on the GP side is actually making investments. I think people may not realize how easy it is when you make an investment. There is a very clear form that I fill out on AngelList with sort of minimum information about the company, the company name, the structure, the founder names, and the terms of the deal, and a little bit of information about the company. But all told, it probably takes me five minutes to fill it out, and then it immediately generates a kickoff email with the founding team to get to closing. They review the documents. The team, you know, there’s a number of people, you and many others who review this, and so the response time is incredibly fast, day or night, even sometimes holidays and weekends. Like it feels like it’s just something I never have to think about. I know that that part is always going to be very very quick and which is which means a lot when you’re working with founders who are trying to close around very quickly.

Leia Slosberg 26:47
Yeah, I mean that’s something that we work really hard to to deliver is that like true seamless end to end experience. So obviously like we never want to be a blocker to getting capital out the door into the company. So I think it’s something we’ve spent a lot of time investing to make you know just as hands off as possible. So I’m glad that’s your experience. So you closed a $60 million fund with institutional LPs like Pair VC, Ulu Ventures, and Verdis. Those investors have sophisticated requirements, like you said, audited financials, tailored LPAs, side letters, white glove LP relations. How did Angelist? How did having an angelist behind you help you show up credibly to that caliber of investors in your fund?

Sarah Smith 27:32
Yeah, I think probably the thing that stands out the most to me is the support I got on operational due diligence. So a few of my LPs had pretty lengthy questionnaires around operational due diligence, and the team at AngelList was very happy to jump on a call for an hour or so with me and the LPs. And I think what’s really great and hard to estimate when you’re first launching a fund is that when you go with a provider like AngelList, they often have already interacted with any LP you might be raising money from, and so the conversation isn’t new. You know, they already have an understanding of oh, this LP really cares about this, or they have a preference for this, and this is how we handle this kind of situation. And so, you know, I went into operational due diligence. Frankly, you know, reading all the questions, I knew many of the answers, maybe not all of the answers, and anything that I wasn’t sure of AngelList 100 had covered. And I just felt like I was in great hands in those phone calls, and I felt really proud too. It just shows, you know, I’ve selected a great vendor that’s going to give us great support and make sure that we have full compliance and security and everything else that an LP might be concerned about without it taking a lot of my time. So that was probably one of the biggest areas that there was a lot of support, especially also I’d say with international LPs. Sometimes there’s challenges with bank verification or other things that they might need as they’re signing your sub docs, and Angel has definitely rolled up their sleeves and helped get those folks what they needed and get them over the line, even if it required you know some extra steps or extra works and and coming up with creative solutions to make that happen. So, I think all of those things were great. I also happened to work with an excellent lawyer, Scott Kitchens at Cole Freeman and Mallon, and he has worked with other funds on AngelList, and so we were. I’m self directed. I have my own LPA, but we had a good awareness then as a result of what AngelList platform can support, and made sure we tailored everything.

Santosh Sankar 29:39
And now back to the show. The

Earnest Sweat 29:43
age has always been there’s definitely been ageism in our industry, and I felt it when I first moved out to San Francisco and decided to plunge into this industry as post MBA and. And you know, thank goodness, you know, going out for associate, senior associate roles, principal roles. Thank goodness, people, due to my genes, didn’t know how old I was, because I always felt like there was this rule of 27. I don’t know if that’s real or if I’m thinking about the rock star rule, but people feel at top tier firms. If you hadn’t done something exceptional by 27, why should we bring you in? What kind of access would you be able to bring? What kind of expertise? What kind of momentum would you be able to bring and a cachet that goes along with our firm and branding, and what will people know you for?

Santosh Sankar 30:44
Yeah,

Earnest Sweat 30:45
and so that always felt kind of a little disheartening. Like, oh, did I miss the opportunity? But as I’ve grown in this industry, the goal that’s if you’re thinking about average above average success. Maybe it does have these little bands of like the average age of a successful principal or junior partner. Maybe it has those things. But if that’s it, your goal is to be an exception that invests in exceptions. You’re not. You’re going to be that weird dot point. He’s like he was this age, and it was like we’re going to be that weird dot that’s successful, and that’s what you should be aiming for.

Santosh Sankar 31:28
Yeah,

Earnest Sweat 31:28
and so it’s always been something that I’ve felt was unfair, and that’s why I was pushing you earlier on. Hey, what are the qualities that you need, and I think you know if we if we move more into what founders need today, and if that sweet spot has shifted, you already mentioned the data around the founders, but has the sweet spot sweet spot shifted for VCs to now, when intelligence and access to intelligence and expertise has gone down,

Santosh Sankar 32:08
There is some data that you’re actually seeing. There’s NVCA data actually that the share of partners at venture firms who have been at their current firm for 10 years or more has increased over the last four or five years, and the reason for that it’s it’s not entirely clear. Maybe competitiveness has shifted one’s ability to laterally move somewhere else. There’s also what you said before, where like at some point, especially at a larger firm, we have a large AUM base. Those fees might be giving you some nice income, where life is very comfortable and you can kind of sit, and you don’t need to worry too much. Status quo is tolerable, but then you have other folks who, as I think about Jeremy Liu, who used to be at Lightspeed, Bijon from Spark, these are people who left their firms. They were by no means necessarily old, but they were at a point of like success, and yeah, there was monetary success, but they’ve decided there’s other adventures they want to go on in their life, and venture was one of those adventures. And I think that’s also important as to, I think startups venture draws generally, you know, in order to be an outlier, you have ambition, you have the ability to adapt all the things, and so it might also be that as as a cohort, we also want to do a lot of different things and make impact in in different ways, which I I personally also think about because I have people who frequently ask me, they go like, “Would you ever go like build a business, and I go could be. That was actually the plan before Dynamo was conceived, and it ended up being that the third business I built was Dynamo, and it was a venture firm. It looked very different from a traditional operating business, but I think also having enough of that intellectual honesty at that time, like, am I still going to put in the work? Do I have a passion for it? What is the alternative? There’s an opportunity cost as well, and how do you kind of parse all that together? And that’s partly also why it’s important to have kind of coaches, mentors, people around you who can not only see you for like a year, two years, they can kind of draw a decade long line and say, “Hey, like it might be actually important that this is a good juncture for you to off ramp.

Earnest Sweat 34:48
I think one assumption is that people let’s look at a positive assumption of why firms have individuals who have stayed longer than 10 years, more of those individuals. Going on that trend could be a result of the market and founders seeking out more expertise and more just experience, right? And this idea of like over time you have a compounding of pattern recognition. I think that’s where things are moving. I think that’s where things have been, but I think that’s where things are moving. Yeah, it’s going to be

Santosh Sankar 35:24
further,

Earnest Sweat 35:25
furthermore. But is that fair, given that the people, the individuals who have been, you know, a GP or started their career, you know, 2015, 2025, years ago, is that experience weighing that too much?

Santosh Sankar 35:46
Yeah,

Earnest Sweat 35:46
that pattern recognition,

Santosh Sankar 35:47
especially to do your earlier statement around what founders needed 10 years ago. Is it still valid today? And will whatever they need today be valid? Let’s say 10 years from today.

Earnest Sweat 35:58
Yeah.

Santosh Sankar 35:59
Some of it, yes, but some of it probably not. And AI is going to do profoundly strange things to that. Don’t know. Don’t know the answer. I think. I think in general, every firm probably benefits from having someone at the table who has seen multiple cycles, and how history may not repeat, but it often does rhyme, and we could even see some of that. And I think people take that to a point of hyperbole where everyone’s trying to, in the present environment, call the next.com. Yeah, part of this is you’re not going to be able to tell until it happens, and you have hindsight of 2020. You’re like, oh, there was that sign. There was a sign. It’s very hard to tell that on the way through. But I personally benefited from John, who can hold dishonesty and see multiple cycles and say, hey, like this is not this is not like the first time something like this has happened. And he’ll kind of go and explain, hey, in the 80s like this happened, in the 90s this happened, the 2000s this happened. But there, I think perhaps that speaks to firm constitution and part of it is as leaders of firms there has to be the awareness and dare I say vulnerability that you’re willing to pull in young people who think about the world differently, who are developing different types of skill sets that complement your experience. Experience alone, I don’t think, will be valuable because in the age of intelligence, you can tap into experience in a non-humanistic way that’s still sufficient.

Earnest Sweat 37:42
Yeah, it’s. I believe that because you brought up this point of like making way and and and teaching the next generation and the generation after that, and giving them the space to be able to thrive and co collaborate in this industry, right? My mind goes like I think there, this next generation is being asked to contribute in very different ways. Just like we at you know 41 and how old are you again? 3838, Oh, I used a bet. Hey, this is carry on. We keep it real. We both look great, but we were expected as leaders of firms to do things a lot different than the past, right? And so we have these micro cycles that happen a lot faster than the previous generation. And how do we give and provide that same kind of like, hey, in Q2 of 2023, this is kind of what happened, and provide people with that intelligence, that perspective that helps them guide through. But I think what’s needed is you’re going to have to find individuals who have the hustle, who have the curiosity and still have the risk profile, and it’s not just by looking at where they went to school, where they where they grew up, what they’ve accomplished, because things are getting extremely wacky now.

Santosh Sankar 39:14
That’s right. On the reverse side, right? We’ve talked about this general concept as a young person’s sport, so to speak, and I think we’ve got to a point where age isn’t necessarily the best parameter. It’s like, it’s your desire, will, ability to do the key things to continue to win at a high level and perform at a high level. But let me take it on the other side because we’ve danced around it. What’s your advice to young people that are trying to break into venture, and like what? How might that advice look like to the 22 year old calling you from name your university versus let’s take the 27 year old who’s had you know one or two employment experiences under their belt and. Is trying to, you know, be the next great VC.

Earnest Sweat 40:04
First, before I answer that, I’m so big on language and idioms and where they come from. Why do we use break into our industry more than like any? I don’t remember saying when I wanted to be an investment banker that we have to break into being an investment banker. Like I don’t remember that. Somebody threw me liars poker. Somebody, it’s a great book.

Santosh Sankar 40:30
I had a similar experience. I think something about the term break in also alludes to an underdog, and my experience to get to Wall Street and a part of my career that I don’t talk about unless you really poke me. It was very much like that. I went to a stage school. I had to hustle. I spent three years going to New York, networking my way through kind of the concrete jungle, only to work through the financial crisis and realize there’s half as many institutions that would employ you at that point. I don’t know, but I think part of it is there’s scarcity and there’s a perceived prestige.

Earnest Sweat 41:14
Okay, that’s interesting.

Santosh Sankar 41:16
And

Earnest Sweat 41:17
there’s also a perception. I’m curious if everyone uses that language. One and two. If there is a venture , just call a lot of people who are high functioning, inferior, complex individuals, and I don’t know. Just something to think

Santosh Sankar 41:41
about. I think so. Yeah, there’s a bit of a psychopath, but yeah. Oh, totally. I mean, but I think ties back to working with founders who have a very high desire, ambition, and they’re not necessarily going to partner with somebody who doesn’t have some of those skills, or sorry, traits.

Earnest Sweat 42:04
Yeah. Okay. So what I would tell someone who’s looking to pursue a career in venture is one, I think there’s some things that just haven’t changed. If you need to try to do the role before you have it, one to see if you even like it. I think the best thing about the management consulting industry, and I can’t say many things great about the management consulting industry after doing it for a little while, but they do give young people a perspective of what that job is about in the interview process, and so venture. If anybody’s been through the venture interview process, it’s like a conversation. You have to drive it really, unless you’re at a firm that’s really like a firm like Dynamo, who’s really thought about what each role provides, and so they probably have more structure, but most have are very unstructured. So, how can you provide structure to the unstructured? How do you show ambition when nobody has asked you to do anything? How do you like to find insights when no one else is looking? Having those abilities to be able to do that, and so on. In my other podcast, we talk about what LPs look for, and I would say probably GPs look for this for associates and principals. Is like what is your ability for the 3s: the sourcing, selection, and stewardship, and how you can show that you spike high in all the experience you’ve had in the past helps you spike high in getting access and sourcing at great companies. And after finding a great company, you have the ability to select: Is this the company you should invest in, and how much, and why? And then once you invest in that company, what does your skill set of relationships and experience give you the ability to actually help that company scale? Even some of the best companies don’t need your help at all, but the only reason they’re going to give you money is because you have the perception and the ability to help them when they need it.

Santosh Sankar 44:07
Do you think that a great VC has to spike on all three of those functions, or do they need to know the one that they’re spiky at and just triple down into

Earnest Sweat 44:16
it? Yeah, I think when you’re younger, you try to be a jack of all trades, and be like, I’m going to try to spike it all, and it probably dilutes what you’re really good at.

Santosh Sankar 44:25
Yeah,

Earnest Sweat 44:26
I think those who are ahead of the curve understand keenly what they’re really good at, and so being able to show that in all that you do, and it’s a different world from when we started, right? In 2013, 2014. It was like, okay, let me build a thought resume or a blog that nobody’s going to read, but like I’m going to send it to all my parents and my parents and my friends and all that. And hopefully now there’s a treasure chest of information when people do due diligence. On me of saying, hey, this guy has always been interested, but now we can move to like you can have reach, you can have a podcast, you can have like a newsletter, but you can have different ways to get access to people, and and nothing people like doing more than talking about themselves and pontificating. So now you have a Trojan horse of how to get to meet people and extend your network, and then the last thing is about just fitting in and understanding what you want to do and having it again. You said you don’t like to be in rooms where people don’t have opinions. Having an opinion and a perspective like this is what I’m going to do and why. Where people get in trouble and it’s kind of set up in more industries. It’s like, hey, I just want to work at Goldman Sachs. I’ll do anything, back office, front office, side office. Don’t care. You cannot do that in Venture.

Santosh Sankar 45:51
I agree. I agree. We’ve we’ve covered kind of the gamut from what it looks like if you’re thinking about exiting Venture, but I think ironically, finishing on what it might look like to kind of, dare I say, break in, depending on where you are in your career. But it sounds like that could be fodder for a continued future conversation as well.

Earnest Sweat 46:15
Yeah, there’s no perfect age.