Thread by @knowledgenets

Last week, @HarryStebbings had a wonderful @twentyminutevc podcast with @ScottDSandell. In the spirit of @twentyminutevc, here are 20 highlights from the podcast:

#VentureCapital #startups #innovationeconomy

thetwentyminutevc.com/scott-sandell/

1) Scott Sandell is the Managing General Partner at NEA. He is frequently named in the Forbes Midas List for being one of the top VCs in the VC ecosystem and has led investments in Salesforce, Data Domain, Tableau Software, Workday, and more.

2) Sandell considers his father to be one of his key heroes.

3) Sandell joined the venture capital industry at NEA in January 1996 after leaving his previous role at Microsoft.

4) “Hot Take”: @HarryStebbings was born in June 1996, which implies that Sandell has been in the VC industry for longer than Stebbings has been alive.

5) It’s important for companies to maintain reserves on the balance sheet to be prepared for economic downturns, particularly when capital becomes less available during steep recessionary periods and in times of crisis.

6) In the innovation economy, the world is rapidly digitizing itself. The coronavirus crisis has accelerated trends in digital transformation.

7) There is a balance of power shifting from the incumbents to the upstarts, and it is quite likely that several companies created in this time could become market leaders in the future.

8) Software & the internet have fundamentally transformed how quickly companies can grow over time with innovation. For example, Sandell cited the following stats for the average revenue growth rates of software companies when they go public:

1990s: ~18%
2000s: ~28%
2010s: ~50%

9) The growth rates of software companies have accelerated over the past 3 decades. With the help of several technologies and open source platforms, the development of software is about 5x more productive today.

10) The power of a “free” business model enables rapid nationwide and global expansion of users and customers.

11) The high availability and dollar amounts of VC financing today for startups represent both a challenge and a wonderful blessing. Companies are staying private for longer, more company formation can occur, and liquidity timelines have been extended.

Liquidity is valuable.

12) NEA operates multi-stage venture funds and therefore has an advantage of not being constrained to simply one area in a startup’s company life cycle.

13) SPACs provide a new source of liquidity for private companies and provide a new source of risk capital for investors.

14) NEA believes that the best decisions are made in small groups, and NEA uses a “process decision framework".

15) “What I worry about is what I don’t know”. ~Sandell

16) “Great deals are worth paying up for, but not all deals that you pay up for are great deals”.

17) “We don’t live in a world with black and white. We live in a world with judgement, intuition, art, and science”. ~Sandell

18) “Every board meeting is a learning opportunity”. ~Sandell

19) Sandell’s favorite book is “The Old Man and the Sea” by Ernest Hemingway.

20) Hope you enjoyed this summary thread of thoughts from this podcast! 😃