Investor Stories 483: Best LP Questions from David Ulevich, Eric Ries, and Larry Cheng: Mission, Partnership Culture, and Enduring Institutions (Ulevitch, Ries, Cheng)

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0:23Welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

0:39Welcome back to TFR. On today's special segment, we ask guests to share the best question they've ever been asked by an allocator. Here's a segment called Best LP Question.

0:57On today's special segment, we have David Ulovich, GP of Andreessen Horowitz, American Dynamism. David, what's the best question a founder or LP has asked you? I think the best question is generally one of the questions we often ask them, which is like, why are you doing this? Why is this an important thing to work on? Why do you spend your time this way? You sold your company for a bunch of money. In my case, why keep working? Why keep doing this? I think that's probably the best question. I think the worst question I get from LPs is why don't Catherine and I go do our own – why don't we break off and go do our own firm?

1:30And why be part of Anderson Horowitz when we work at a 650-or-something-person firm? As much of a corporation as any venture firm probably has ever been. I think that's the worst question because it just says to me that they don't understand how our firm works. We're a very small team that has the resources of a huge organization. And in terms of why do I do this, I think it's the highest and best use of my time. I don't want to start another company. I'd rather work with great entrepreneurs. feels both really important and a huge opportunity and a necessity for our country. I believe in our way of life.

1:58I want it to continue. I believe in America as the world's superpower, dominant superpower, and ideally exclusive superpower. I believe in America as the world police. And I think we're at a technology transformation moment where if we don't lean on superior technology as our defining edge and capability, we are at very, very serious risk of losing that historically dominant position. Well said.

2:26On today's special segment, we have Eric Ries, founder of the Long-Term Stock Exchange and author of The Lean Startup and Incorruptible. Eric, if you could sit down with any person living or dead and ask them one question about how to build an institution that survives its own success, who would it be and what would you ask? You want to, I mean, you want to talk to any person living or dead. You want to talk to someone who's built something that like truly, truly has endured. Right. You want to talk to like the founders of the Catholic Church. You want to you want to ask, I want to ask a Roman emperor what they what they realize, like the level of influence of our modern our university.

3:02Like there's there's all these institutions that have endured for a really long time that we kind of take for granted. And we don't see ourselves as capable of doing that same thing because it's like, well, you've already got one. So we don't need to make a new one. So, yeah, that's I would want to meet people like that. Almost not because I admire them so much. Maybe Marcus Aurelius is awesome guy or maybe like maybe not. Like, you know, we hardly it's hard to tell. But just for me, even just to humanize them and be like, what was this person really like? I think for a lot of times, like I see this because I tell a lot of these famous stories and I bring characters out of history often to teach in my own work.

3:38And part of the job is just to demystify them, for us to see ourselves in them. I'm like, yes, even telling the Nova Nerdist story. Like, Nova Nerdist is a huge, big company. So people tell me, like, why don't you tell me more startup stories? And I'm like, I did tell you a startup story. It was just August and Marie, and they made this lab. Their MVP took three months. Like, you can't see them that way anymore because you know how the story ended. But if we insist only on stories that we don't know the ending to, then we can never learn anything.

4:10are you still managing expenses with outdated apps and spreadsheets if so it's time for ramp the leading u.s spend management platform covering corporate cards travel ap and more all built to save time and extend runway we use ramp at tfr and it's been a game changer as our preferred partner they're offering listeners 150 just to take a demo no need to sign up. Head to ramp.com slash partners slash TFR to claim your$150 before the offer expires. Now back to the interview. On today's special segment, we have Larry Chang of Volition. Larry, what is the best question you've been asked by an LP? Believe it or not, I think the LPs should spend more time understanding the dynamics between the partners.

4:59And sometimes, and I think we make this mistake as investors looking at companies as well. That is where the magic is made. It's the intersection and interplay of the people. And so sometimes I think the best LPs really ask softer questions like, what did you and your partner argue about most recently? What's something that your partner thinks that you think is totally wrong? Like what is those types of things? And what have what's been something that you guys have disagreed on for the last 15 years that you haven't totally figured out? Like those types of questions that get into the relational dynamics rather than sort of torturing the return spread, which I mean, you have to do.

5:35And it's kind of like us torturing the financial model of a business and ignoring whether the management team is working well together. And I think the best LPs over time, they really learn to focus on the people, which seems a little sounds a little trite now that I'm saying it. But that is that you're investing in a blind pool of capital that lasts a decade plus. If you really need to know how the people are interacting with each other. How does a partnership group, you know, coexist when they're in, let's say, significant opposition over some issues in tech and investing, but also, you know, appreciate each other like each other and are willing to let, you know, their partners do some investments that they just think are fundamentally bad ideas?

6:14I think it comes back to culture, which is does the culture value disagreement and conviction or does it want homogeneity and consensus? And the cultures that are more in that latter bucket, that second bucket are absolutely like partnerships will break up over those types of issues. And and you have to really function in the first bucket. You have to be intentional about creating that culture where it's almost like what's what's disallowed is having no alternative opinion. You know, those types of things need to be played out. And so so I really appreciate one of our core values is that. Oh, gosh, I'm going to forget the exact naming.

6:51It's just embrace opposites. Embrace opposites is one of our core values. And it's been with us since the very beginning. And I think that's true. Like you have to see that in the disagreement is the magic of the firm, not the headwind of the firm. That all comes down to your perspective on it. So that's what's helped us.

7:12That will conclude this installment of Investor Stories. If you're enjoying the program and would like to see it continue, take a moment and leave a five-star review in iTunes. Okay, that will wrap things up for today. Until next time, overprepare, choose carefully, and invest confidently. Thanks for joining me.

7:43Thank you.