S1E2: Beezer Clarkson

Beezer Clarkson leads Sapphire Partners‘ investments in venture funds domestically and internationally. Beezer began her career in financial services over 20 years ago at Morgan Stanley in its global infrastructure group. Since, she has held various direct and indirect venture investment roles, as well as operational roles in software business development at Hewlett Packard. Prior to joining Sapphire in 2012, Beezer managed the day-to-day operations of the Draper Fisher Jurvetson Global Network, which then had $7 billion under management across 16 venture funds worldwide.

In 2016, Beezer led the launch of OpenLP, an effort to help foster greater understanding in the entrepreneur-to-LP tech ecosystem. Beezer earned a bachelor’s in government from Wesleyan University, where she served on the board of trustees and currently serves as an advisor to the Wesleyan Endowment Investment Committee. She is currently serving on the board of the NVCA and holds an MBA from Harvard Business School.

You can find Beezer on her socials here:
Twitter: https://twitter.com/beezer232
LinkedIn: https://www.linkedin.com/in/elizabethclarkson/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[02:57] Who was Beezer’s first mentor?
[06:57] How did Beezer get to work with the founder of eBay?
[10:45] The strength of diverse backgrounds
[14:11] How Hustle Fund convinced Foundry Group to invest in their fund
[15:27] Why should another venture fund exist in this world?
[19:41] What does proprietary “access” to deal flow mean?
[23:53] Superpowers on the Sapphire Partners team
[25:35] How does Sapphire resolve disagreements?
[27:11] Why does entire Sapphire team meet with GPs?
[28:18] A sneak peek into Sapphire investment process
[33:34] What does Sapphire look for in a pitch deck?
[34:58] The art and science behind Sapphire’s own portfolio construction
[43:37] How does Sapphire look at fund managers’ portfolio construction?
[47:50] Meaningful fund metrics in the first 5-7 years of a VC fund
[52:44] How to think about recycling
[56:15] What keeps Beezer humble?
[58:22] What is an investment opportunity Beezer missed because what she didn’t do?
[1:04:03] Thank you to Alchemist Accelerator for sponsoring!
[1:06:39] Legal Disclaimer

SELECT LINKS FROM THIS EPISODE:

QUOTES FROM THIS EPISODE:

“It’s the access and why do the great people pick you that is much harder. And that speaks to what it is that you, the investor, are bringing to the table. There’s an LP-GP corollary to this too. The strongest GPs can pick their LPs, what gives the access from the LP side. So it’s a really different way of saying why are you so special. But it’s repeatable.”

“The good and the bad of being an LP is that you’re the peanut gallery to the show. So yes, a VC doesn’t exist unless LPs back them. The LPs are limited partners. We’re limited, which is there for a reason. You’re not driving the bus. There’s humility in that. I liken it to being a parent. There’s all sorts of things you take pride in in your kids. But at the end of the day, it’s your fund; it’s not me. You’re the one making the choices. The same way, it’s the entrepreneurs that make the companies.”


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

S1E1: Chris Douvos

Chris Douvos founded Ahoy Capital in 2018 to build an intentionally right-sized firm that could pursue investment excellence while prizing a spirit of partnership with all of its constituencies. A pioneering investor in the micro-VC movement, Chris has been a fixture in venture capital for nearly two decades. In addition to successfully identifying and catalyzing nascent funds, he bridges a gap between the providers of capital and the consumers of capital by creating platforms for transparent dialogue. Chris authors the blog SuperLP in which he chronicles his adventures investing in venture capital and private equity; and his brick oven pizza parties, small gatherings of LPs, GPs, and entrepreneurs, are well-known in the Valley. He is sought after not only for investment capital, but also for his advice, and serves on numerous managers’ advisory boards.

Prior to Ahoy Capital, Chris spearheaded investment efforts at Venture Investment Associates, and The Investment Fund for Foundations. He learned the craft of illiquid investing at Princeton University’s endowment. He started his business career as a strategy consultant at Monitor Company. Chris regularly speaks at industry conferences and business schools and is a frequent resource for tech and business media. He earned his B.A. with Distinction in history from Yale College in 1994 and an M.B.A. from Yale School of Management in 2001. He was awarded the CFA Charter in 2004.

You can find Chris on his socials here:
Twitter: https://twitter.com/cdouvos
LinkedIn: https://www.linkedin.com/in/chrisdouvos/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[03:01] What Chris learned from the founder of Greylock and the Chief Investment Officer at Yale’s Endowment.
[06:25] How a timber pitch and losing the nose game earned a Chris a front-row seat to venture capital.
[10:35] How 2001 is similar to 2023.
[12:44] What legislation makes California special?
[13:11] Do firms need to have geographical presence?
[16:44] How did Chris first start to build his deal flow?
[23:17] What needs to go in a good cold email
[24:53] Breaking down how Chris constructed his first opinion on great venture capital firms
[30:04] How did Josh Kopelman build ‘ecosystem as a service’ in 2004
[33:28] How did Chris end up backing Data Collective
[37:52] What are the 4 leading indicators of fund manager outperformance?
[48:46] Which firm of Chris’ recent portfolio is willing to be wrong and alone?
[51:32] Chris’ Peter Dolan impression
[56:09] Thank you to Alchemist Accelerator for sponsoring
[58:45] Legal disclaimer

SELECT LINKS FROM THIS EPISODE:

QUOTES FROM THIS EPISODE:

“Entrepreneurship is like a gas. It’s hottest when it’s compressed.”

“Have an opinion. Have a viewpoint. There are so many investors who are just caught up in these tides. They’re heat-seeking missiles, looking for the new, new thing. The reality is that by the time, the new, new thing is new to them, it’s already a little bit longer in the tooth in the ecosystem — all the great deals have been done.”

“I’m looking for well-rounded holes that are made up of jagged pieces that fit together nicely.”

“OPM is like opium. It’s a hell of a drug.”


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on Instagram: https://instagram.com/super.clusters

Launching Superclusters

Hello friends,

I did a thing.

I started a podcast.

So why the name Superclusters?

I’ve always been a fan of easter eggs. Cup of Zhou also happens to be one of them. Superclusters is another. But this time, rather than leaving it for surprise, I’d love to spell out why and with that, the purpose of this podcast.

In the startup world, we always say startups are the stars of our universe. They shine the brightest and they light up the night sky. We also have tons of aphorisms in the startup world. For instance, “Aim for the stars, land on the moon”. Startups are often called moonshots. They need to achieve escape velocity. And so on.

So if startups are the stars of the universe, galaxies would be VC firms that have a portfolio of stars.

And if galaxies were VC firms, superclusters would be LPs. Superclusters are collections of multiple galaxies. For example, the supercluster that the Milky Way is in is called Laniakea (Hawaiian for “immense heavens,” for the curious).

So why a podcast on the LP world?

  1. The LP industry in ten years will be much bigger than it is today. We are not even close to the TAM of it.
  2. The LP industry will be a lot more transparent than it is today. FYI, as many of you know already, the industry is very opaque. Many want and still like to keep their knowledge proprietary. But what’s proprietary today will be common place tomorrow. I’m not here to share anyone’s deepest, darkest secrets, or anyone’s social security number. That’s none of my business. But the tactics that make the greatest LPs great are already being shared over intimate happy hours and dinners between a select few. And it’s only a matter of time before the rest of the world catches up. We saw the same happen with the VC industry, and now people are moving even more upstream.
  3. I think of content on a cartesian X-Y graph. On the X-axis, there’s intellectual stimulation. In other words, interesting. On the Y-axis, there’s emotional stimulation, or otherwise known as fun. Most financial services (for instance, hedge fund, private equity, venture capital, options trading) content tends to highly index on intellectual stimulation and not emotional. And for the purpose of this pod, I want to focus on making investing in VC funds fun AND interesting.

You can find my podcast on YouTube, Spotify, and Apple Podcasts for now. In full transparency, waiting on RSS feed approval for the other platforms, but soon to be shared on other platforms near you.

You can expect episodes to come out weekly with ten episodes per season, and a month break in between each to ensure that I can bring you the best quality content. 🙂

You can find my first episode with the amazing Chris Douvos here:

Or if you’re an Apple Podcast person, here’s the Apple Podcast link.

Thank you’s

I am no doubt flawed, clearly evidenced by my verbal “ummmm’s” and “likes” in the podcast. But nevertheless pumped to begin this journey as a podcast host. I expect to grow in this journey tackling the emerging LP space and running a podcast, and I hope you can grow with me. So, any and all feedback is deeply appreciated. Recommendations of who to get on. What questions would you like answered. Formats that you find interesting. I’m all ears.

That said, I’m grateful to everyone who made this possible. My mighty editors, Tyler and JP. Without the two of you, I’d still be struggling telling head from tail on how to do J-cuts and L-cuts. The sole sponsor for the pod, Ravi and Alchemist. And while the pod itself is separate from Alchemist altogether, Ravi pushed me to make it happen. And for that and more, I am where I am now. Every single LP who took a bet on me for Season 1 when all I had for them was an idea and a goal. Chris. Beezer. Eric. Jamie. Courtney. Ben. Howard. Amit. Samir. Jeff and Martin.

And to everyone, who’s offered feedback, advice, introductions and pure energy to fuel all of this. Thank you!

And to you, my readers, I appreciate you taking time out of your busy day when there are so many things that fight for your attention, that you spend time with me every week! If I could just be a bit more self-serving, if you have the chance to tune in, I’d be extremely grateful if you could share it with one LP or one GP who could take something away from it.

Cheers,

David

P.S. Don’t worry. I’ll still continue to write on this blog weekly about everything else in between. That’s a habit I’m not willing to give up any time soon.

P.P.S. I’m already working on and recording for Season 2 of the pod, and I can tell you now that things will only get spicier.

P.P.P.S. Due to a million bugs and a half, I’m still working on launching a dedicated website for the podcast (superclusters.co), but until then, I’ll be sharing the show notes of each episode here.


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

Non-obvious Hiring Questions I’ve Fallen in Love with

read, book, child, question

Recently, I’ve been chatting with a number of GPs and LPs looking to make their first hires. Many of whom hadn’t built a team prior. Now I’m no expert, nor would I ever claim to be one. But I’ve been very lucky to hire and work with some stellar talent.

They asked me how I think about interviewing, selecting, as well as onboarding. I’ll save the last of which for a future blogpost, but for the purpose of this one, if you frequent this blog, you’ll know I love good questions. And well, I get really really nerdy about them. So, as I shared my four favorite, nonobvious interview questions as of late with them (some I’ve used more than others), I will also share them with you.

I won’t cover the table stakes. Why are you excited to be here? What skills are you a B+/A- at? And what are you A+++ in? Why you? Etc.

If you had to hire everyone based only on you knowing how good they are at a certain video game, what video game would you pick?

I recently heard Patrick O’Shaughnessy ask that question to a guest on his podcast, and I found it inextricably profound. While the question was directed at Palmer Luckey, who has a past in video games, the words “video game” can easily be replaced by any other activity or topic of choice and be equally as revealing. Be it sports. Or an art form. Or how they grasp a certain topic. Even, putting them in front of a Nobel Prize winner and see how quickly they realize they’re in front of one.

The last example may be stretching it a bit, but has its origin in one of my favorite fun facts about the CRT — the cognitive reflection test. Effectively, a test designed to ask the minimum number of questions in order to determine someone’s intelligence. But in a parodical interpretation of the test, two of the smartest minds in the world, Daniel Kahneman and Amos Tversky, decided to make an even shorter version of the test to measure one’s intelligence. The test would be to see that if one were to put you in front of Amos Tversky, one of the most humble human beings out there despite his intelligence, how long it would take you to realize that the person sitting across from you was smarter than you. The shorter it took you, the smarter you were. But I digress (although there’s your fun fact for the day).

The reality is that any activity that requires a great amount of detail, nuance, resilience, frustration and failure probably qualify to be mad-libbed into that question. Nevertheless, it’s quite interesting to see what someone would suggest, and a great way of:

  1. Assessing how deep a candidate can go deep on a particular subject,
  2. How well they can relay that depth of knowledge to a layperson, and
  3. How they build a framework around that.

I hate surprises. Can you tell me something that might go wrong now so that I’m not surprised when it happens?

Simon Sinek has always been one for great soundbites. And the above question is no exception. It’s a great way of asking what is one of your weaknesses. Without asking what is your weakness? Most, if not all hiring managers are probably accustomed to getting a rose-tinted “weakness” that turns out is a strength when asking the weakness question to candidates. It is, after all, in the candidate’s best interest to appear the most suitable for the job description as possible. And the JD doesn’t include anything about having weaknesses. Only strengths… and responsibilities.

At the same time, while the weakness question makes sense, when there is an honest answer, I’ve seen as many hiring managers use the associated answer to discount a candidate’s ability to succeed in the role, before given the chance. While this is still throwing caution to the wind, for one to be open-minded when asking this question, at the very least, you’re more likely to get an honest one. At least until this question becomes extremely popular.

Another version, thought a lot more subtle, is: What three adjectives would you use to describe your sibling?

I won’t get into the nuances here, but if you’re curious for a deeper dive, would recommend reading this blogpost. The TL;DR is that when we describe others (especially those we know well), we often use adjectives that juxtapose how we see ourselves in relation to them.

What did you do in your last role that no one else in that role has ever done?

This is one of my favorite professors, Janet Brady’s, favorite questions, and ever since I learned of it, it’s been mine as well. Your mileage may vary. Of particular note, I look for talent with entrepreneurial natures to them. Most of what I work on are usually pre-product-market fit in nature. In other times, and not mutually exclusive to the former, requires us to re-examine the status quo. What got us here — as a team, as a company, as an industry, or as a citizen of the world — may not get us there.

And there is bias here in that I enjoy working with people who push the boundaries rather than let the boundaries push them. And I love people who have asked the question “What if?” in the past and has successfully executed against that, even if it meant they had to try, try again.

What haven’t you achieved that you want to achieve?

Steven Rosenblatt has always been world-class at hiring. By far, one of the best minds when it comes to scaling teams. For a deeper dive, and some of his other go-to questions, I highly recommend checking out this blogpost.

When you’re building a world-class team, you need people to self-select themselves in and out of the culture in which you want to build. Whether it’s Pulley’s culture of move fast and ruthlessly prioritize to build a high-performance “sports team or orchestra” or On Deck’s non-values, it’s about making it clear that you’re in not because you’re peeking through rose-tinted glasses, but that you know full well, that you will be confronted by reality, yet you still remain optimistic. To do that, you need:

  1. A tight knit team who hold the same values
  2. And folks with a chip on their shoulder

The latter is the essence of what Steven gets at with the above question. And does one’s selfish motivation align with where the company wants to go and what the role will entail.

Photo by Aaron Burden on Unsplash


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

DGQ 18: If you lived your life 1000 times, what would be true in 999 of them?

luck, clover, serendipity

I first heard this question from Morgan Housel quoting a Navalism (for the uninitiated, that means has its source tracing back to the one and only Naval Ravikant). And it makes you think, that in the multiverse, where each version of you lives a different life and makes different choices, what would stay constant?

These are things that are not attributed to luck. And as Morgan mentioned, “those are the things you want to focus on in life.” When predicting the future, many try to predict what will change, but the best bets with long time horizons are on those that don’t change. Things that aren’t attributed to luck. Or chance. In this world we live in, you’d be quite surprised the number of small, accidental decisions we make that lead to life-changing events.

Like you being 10 minutes late to a party meant that you somehow just showed up at the same time as your future spouse. And it was because of that, that led you to have a two-hour long conversation with him/her. Otherwise, you’d have spent the entire party hanging with your college friends.

Or because you forgot to bring your umbrella on a day it rained, it made you run into a hotel for shelter, where you stumbled upon the investor who led your Series A round. Because he/she too forgot to bring an umbrella.

Of course, I could play hypotheticals forever. Although I find it’d be a fun exercise to really examine how much of your most life-changing moments were due to serendipity.

As someone who makes their living on attempting to predict the future, that means we have to go back to first principles. For instance, human nature. Reid Hoffman’s framework that all great consumer products tap into one of the seven deadly sins. Something that despite innovation is timeless. Anecdotally, I do find some of the greatest investors — LPs and GPs alike — to be avid students of history, philosophy or psychology.

In the same interview I alluded to above, Tim Ferriss mentions another line once written by Don Knuth when he was quitting the use of email:

“Email is a wonderful thing for people whose role in life is to be on top of things. But not for me; my role is to be on the bottom of things.”

In life, while catchy and interesting and the talk of the town for that brief moment, sometimes it’s better to get to the bottom of things than to stay on top of things. After all, you only have so many letters on your tombstone.

Photo by Yan Ming on Unsplash


The DGQ series is a series dedicated to my process of question discovery and execution. When curiosity is the why, DGQ is the how. It’s an inside scoop of what goes on in my noggin’. My hope is that it offers some illumination to you, my readers, so you can tackle the world and build relationships with my best tools at your disposal. It also happens to stand for damn good questions, or dumb and garbled questions. I’ll let you decide which it falls under.


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

Emerging Market Funds Seem to Have Longer Deployment Periods

market

This past week, one particular graphic stood out. Endeavor shared some research they’ve been working on for a bit on the common themes in unicorn founders. And the below graphic is what came out of that.

Source: Endeavor

For any VC out there, the above may be interesting to compare to your own deal flow and portfolio. For any founders out there reading the piece, and while this is a loaded term that comes with a lot of baggage, the above is where you might see a lot of investors regress to pattern recognition. So if you don’t look like a founder that’s illustrated above, be sure to address the implicit elephant in the room early on in your pitch. The best way to do so is through metrics. The second best way is to share leading indicators of grit and market / problem obsession.

While the study itself is fascinating, and I highly recommend you taking a deeper dive into it, one particular portion is worth underscoring. “Another difference between the emerging market and US founders is how fast they grow their companies. Founders in emerging markets achieved unicorn status for their companies in an average of five and a half years, while US founders took more than six years.”

Why is that noteworthy?

So I will preface that this is completely anecdotal. I’ve seen about two dozen or so emerging market funds myself, and have chatted with about the same number of LPs who have invested in emerging market funds. And the statisticians out there may say that isn’t statistically significant. So take what I’m about to say next with a grain of salt.

In the decks I’ve seen and the conversations I’ve had, I’ve noticed something else. That funds investing in the US and Western European markets tend to have an expected deployment period of 3-4 years. I’ll caveat that this period in practice may differ from the pitch. But nevertheless the model holds. LPs in US-oriented funds often expect 6-8 years before any exits or liquidation events happen. Which is why so many LPs say it takes a fund an average of 6-8 years to settle into its quartile. (And, here’s another example.)

And it is because of that, GPs are incentivized to deploy their last net new check before year 4, and for others year 3. ‘Cause compounding takes time.

But on the flip side, I’ve seen emerging market funds err on the side of longer deployment periods. Usually 4-5 years. At least in the pitch. In my very, very basic diligence, aka asking lawyer friends who help funds set up in emerging markets, that seems to corroborate with their experience.

Reading the tea leaves

So I don’t know how much of this deployment period pitch is intentional by design, or accidental. The latter in the sense, that at least in Asian and SEA markets, professionals tend to be more conservative than in the US. So longer deployment periods help investors proceed with caution. In fairness, some investors are more intentional than others. But the logic seems to hold. If it takes less time for exits to materialize in emerging markets, for the same 10-year fund, one can afford to deploy their last net new check later.

All this to say, Endeavor’s piece was quite thought-provoking for an LP, just as much it’s been for a VC or founder.

Photo by Mark Pecar on Unsplash


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.