NYC’s Early Stage Venture Evolution with Lerer Hippeau Managing Partner Ben Lerer | Ep 89

I realized that we were better as a company when I surrounded myself with folks who in some situations were, you know, who were better at doing the things than I was.

Mm-hmm.

And I think a constant battle for sort of an early stage fund.

Yeah.

Which is how you balance quantitative and qualitative. At the end of the day, you know, we all want the hope, we all want the dream, we all wanna think we have some sort of a pipeline or, or we have a lead on the line or whatever it is.

Hello everyone, and welcome back to Seed to Harvest with me, your host, Paige Finn Doherty, the founding partner behind Genius Ventures, an early-stage venture firm focused on investing in pre-seed and seed-stage founders. And I'm also the author of an illustrated children's book about venture capital called Seed to Harvest. And I'm really excited to welcome Ben onto the show. Ben, can you please introduce yourself to our listeners?

Sure. Thank you for having me. So I'm Ben Lear. I'm a managing partner At Lerer Hippo. We are an early stage venture firm based in New York. We've been doing this for a while. We're on our 8th seed fund now. True generalists leading or co-leading pre-seed and seed rounds in sort of every possible area of the universe. And in a sort of prior life, but a job that I did while building the fund for the last decade was At a company in the digital media space I started called Group Nine, where we a very long time ago started a brand called Thrillist, which is a men's sort of food and travel media business. That was my first foray into the venture capital universe on the other side of the table as a founder going out and raising money and built that company for a really long time through a bunch of twists and turns. And, and sort of got to live the whole founder journey and sold that business 2 years ago. And now for the first time, I'm a full-time investor, which has been fun and, and hard and interesting.

Yeah, you were, you, we were joking about it before the show, but you said that venture is your true passion. I was wondering if you can share what was that moment that sparked the passion of wanting to become a full-time investor?

Well, I would say, look, I mean, I think my true passion is the New York Mets and my children and family, but But no, I, I, look, you know, professionally I started in media.

Mm-hmm.

I, I've always been, I, I grew up in sort of a house where my, my dad always worked in sort of corporate America, but like per referral to, or at various times in media. And so I guess through osmosis, I sort of was like, I was around the media business. Yeah. And grew up in New York and, and, you know, just like in a media town and started a media company. And I think as time went on, the thing that I realized I loved about my job was not the media of it, but was the, the building of it.

Mm-hmm.

Was the getting to work with really smart and interesting and fast, just like, just working with amazing people and building teams and fucking stuff up and having to learn after fucking stuff up.

And yeah.

And then getting to be an investor while I was building my operating company. I, I just over time was feeling pull from, I think sort of the, the day-to-day job of doing things that, you know, there, there's obviously moments of sort of steeper learning curves in an operating role, but then there's also moments of just like rote repetitive execution.

Mm-hmm. And, uh, Andy Wise, one at USB, always calls it that. He's like, I'm like, how are you, Andy? He's like, I'm in details mode. I'm doing good.

And you really like end up in these like vacuums.

Yeah.

And, and it can get, and if, and if things are hard and if your business isn't in a phase where you're ripping and where you have, you know, tailwinds and product market fit and the right financing and all these things lined up, it's just a grind and a slog. And, and I all, as I started to invest a few things, and there was a few things that sort of struck me. Mm-hmm. One was, I don't think the thing that I was best at was necessarily details mode. I, I think I tended to get somewhat bored quickly, and over time I realized that there were people who enjoyed details mode and were— yeah, now I'm using details mode.

I'm just— I love it. Osmosis.

But there were, there were people who were, who enjoyed it more and who were better at it. And I realized that we were better as a company when I surrounded myself with folks who in some situations were, you know, who were better at doing the things than I was.

Mm-hmm.

And I also, as the company got bigger, I, I would get frustrated that naturally when something gets bigger, there's some, it, it sort of gets diluted.

Mm-hmm.

Um, I think it's inevitable that you, you make, you have to hire people faster. You have to make less sort of nuanced and specific decisions and, and like the thing takes on a life of its own in a way where whenever I would, I, I just felt that there was, I was just frustrated with areas where I felt that I had to accept mediocrity.

Mm-hmm.

And then as an investor, the time that I spent, I felt I always, I was getting time with these just like fascinating, really interesting people solving these Big challenges and the learning curve was always super steep. And just my days, my meetings as an investor were often my most interesting meetings. And so over time, I've just felt this pull to wanting to spend more and more of my time doing that. Not to mention, as I became more of like a hardened criminal as an operator and thought that I was getting sort of better at it, I actually felt that I could get more leverage for those learnings by helping others.

Yeah.

Than by just singularly staying in my lane. And so that's how I sort of transitioned from operator to investor.

Hmm. And one of the things we were talking about is your first fund was an $8.5 million fund. And I love the way that you talked about it. It was like you and the other partners were a part of the New York ecosystem, watching it grow up over time. And with it, Lara Hippo also grew up. I would love if you could share if there was like a couple companies in the early days that, you know, as a small fund, you're capital constrained. Like what are the companies that you wish you could have invested more in from that first fund?

Well, I think if you generally look back at like the performance of our earlier funds, like you would've said you'd like to just invest more in all of them. They were all pretty good funds and, you know, I wish that they were bigger than they were.

Yeah.

You know, we had, we were the first investors in, in our first fund and, you know, probably the most pronounced, you know, early company that we, we backed in Fund 1 was, we were, we were in Venmo and we were in MakerBot and we were in Warby and we were in BuzzFeed. But like, we were really first check into Warby. And I remember being there with those guys in the earliest days. I'm like, we just had this little bitty fund. And so we wrote a little bitty check and, you know, if this was today, we would've owned a We would've had a different seat at the table and, and that's okay. And like amazing learnings and, you know, those are my guys and I love them and, and, you know, I've, I've gotten, I've, I've, I, you know, I, I loved being a part of that story. But, Mm-hmm. One of the things I'm proudest about in terms of our sort of story at, at, at Liter Hippo is, you know, and, and, and, you know, just do we stray from this every so often? Sure. But like, On the margins, like we really are purists in terms of like we do one thing really well and that's it. And we, we haven't let the tail wag the dog in terms of just like chasing AUM and chasing like building some platform.

And, yeah, I liked when we tried before, you called it like the boutique approach to venture, which I really appreciate where you're, just focusing on like the strengths of the partners that built the firm and the team that you've built. And even in times where there was like more capital sloshing around in the market, staying true to your principles, which is something I feel like we connected with the first time that we chatted. I would, I'd love to hear more about like what drives you to conviction as an investor and has it shifted from like I feel like sometimes when you start out, your intuition is more like qualitative. Has it shifted quantitative, like as your fund has gotten bigger?

It's a great question and I think a constant battle for, for sort of an early stage fund. Yeah. Which is how you balance quantitative and qualitative. At the end of the day, we need, we, we need to do both.

Yeah.

Um, I think that when we were really little, it was overwhelmingly gut-driven.

Yeah.

In a way where, you know, I think on the one hand, I think we, you know, we had a good gut and we were a, we were a pretty good judge of character and we were pretty good pickers.

Yeah.

That being said, it was an easier time. It was a time where like every giant market was wide open and hadn't been disrupted by technology. And so, You didn't, there was less work to do. Companies go-to-markets were sort of like driving a, you know, great big truck through a great big door. And now you have to like find a way to sneak in through the window.

Yeah.

In some markets. And so, you know, we have as a team, as, as our funds have grown, even though our strategy has remained, you know, maniacally focused on zero to one, as our funds have grown, we've been able to sort of build out A, a larger team with stronger analytical resources.

Mm-hmm.

To help us do good work to basically validate or invalidate what is still ultimately a judgment call on a team.

Yeah.

And on a market. And, and I think that we're doing the best work we've ever done now because we are doing far better analytical work. Mm-hmm. But we are not letting that analytical work overwhelm our process in a way where we end up only doing safe stuff. And I think that that's the trick of this market also right now. Everyone's scared to be wrong. I'm scared to be wrong. We're all scared to be wrong. And I think a lot of that is because people have been wrong a lot.

Yeah.

Over the last few years. And so there is this instinct to sort of flock to safety, to flock to consensus.

Mm-hmm.

And, you know, we're trying to balance understanding consensus and understanding markets and understanding models and technology really in, in really sort of, I think, smart and holistic ways, but then not letting that, not just doing the thing that like it all checks out.

Yeah.

But, but our heart isn't in making that bet on that team.

Yeah.

And so that's a, it's a really, it's a really delicate balance. It's something we talk about.

Yeah.

Relentlessly. And, you know, one of the, one of the simple sort of principles is if it's not a hell yes, it's a no.

Yeah. I say that internally as well. I, I love that. And I think it's, it's challenging sometimes to communicate that with founders. Like, I feel like just being honest about like, I want you to have someone with a seat at the table that feels that way. And unfortunately it's not me. It, Sucks.

I think that's the old, that's the old George Costanza. If it, you know, it's not you, it's me type, uh, situation.

Yeah.

Yeah.

I think they, it, it's been interesting cuz I feel like a lot of what got me into venture was chasing conviction and like really incredible founding teams. And then I think one of the surprising parts of the job that I learned was like a lot of the job is saying no. So how do you think about thoughtful nos and communicating those early in the process? Cuz I'm sure that you look at Like thousands of deals.

Yeah. Uh, most of the job is saying no. Yeah. The overwhelming majority of the job is saying no. And, you know, look, we, I, I think we run a really good process because it's a really simple process.

Mm-hmm.

Which is, yeah.

What does that look like, your process?

Well, I mean, one of our first principles is pass as quickly as you possibly can.

Mm-hmm.

Um, you know, I, I pass in the room most of the time. Mm-hmm. During first meeting. And that may be a first meeting where multiple people have already met with them.

Yeah.

And, but I don't want, time is the most valuable thing we have and it's the most valuable thing founders have. And getting, you know, we all want the hope, we all want the dream, we all wanna think we have some sort of a pipeline or, uh, or we have a lead on the line or whatever it is. But the reality is the best thing that we can do for ourselves and our own process and for founders is to very quickly let them know that it's not going to be a fit. And when we do, do so really clearly and transparently and, and, and try to add value in that response. I don't think that this is like something that is, that every investor doesn't know and say.

Yeah.

The percentage of investors that ghost Is horrific and shocking.

Yeah.

You know this.

Yeah. I mean, I know this.

I, I imagine that LPs don't really know this, and I think founders until they go out and raise for the first times don't understand how bad the, like how bad investor behavior is.

Yeah.

But it, it's, it's, it's really horrific. And we, I, you know, I really, it's a very important part of our brand. As I think about what we're building, I'm trying to build something that's gonna be around for 100 years.

Yeah.

And to do that, you need to build something like, you need to take this very long-term sort of like karmic view on how you behave matters. It really matters. It doesn't matter like, oh, it matters 'cause like tomorrow it matters.

Like, 'cause 100 years.

'Cause 100 years. 'Cause 100 years. And so how you, if how you behave really matters, that means, you know, great brands Get this, like everything communicates and the way that you pass is as important as the way that you go win a deal. And the way that you treat your LPs is as important as the way that you treat your failed founders.

Yeah.

And like, it all matters. And it doesn't mean that we don't screw up sometimes, 'cause we do, 'cause everybody does. But we, I really try to, you know, hold the team and frankly, I don't need to hold people's feet to the fire. I think we like culturally understand that we're in the business of service to founders. And part of that service is to be really respectful, whether it's a fit or not.

Yeah. Well, and I mean, I feel like in early stage venture, one of the most important currencies is information and like how you communicate it thoughtfully and how you value founders' trust if they tell you not to tell someone else something. So I feel like part of that is just communicating very clearly when things are not a fit. I actually have a question more on like the design side of things. Since you all focus so heavily on like really great consumer, and I feel like I picked out some of the best consumer brands, how do you think about delineating like a good, a good design from a great design? Hmm.

Come on. I wasn't ready for that one. Look, I, I, I think unfortunately, yeah, my answer is You either got it or you don't.

It's vibes, right? Okay. I've been, I've been like, yeah, checking this cuz I feel like one of my like running hypotheses is like, it, like you can have a different taste. Like for example, there could be people who build in like, uh, super like grunge '90s, whatever. There could be people who build like the linear model, but I feel like having an opinion and like Really deeply building to that helps. But yeah, I guess I was curious. I've been thinking about it a lot recently, so I was curious.

Yeah. Look, I think, I, I mean, I think it all comes down to like being authentic.

Mm-hmm.

To whatever you are about as a brand.

Yeah.

And, and then like from all, you flip the table and like from, from our seat as an investor, and this does, this is for a consumer brand, this is for a non-consumer brand, this is for anything.

Yeah. Yeah.

Is like, taste is taste. There are people who have it and there are people who don't, and there are people who really have it.

Yeah.

And there are people who really don't. And I think part of being good at picking certain kinds of companies, and obviously I think like, you know, a certain breed of consumer company.

Yeah.

Is you don't have to have the taste yourself, but you have to know when you see it.

Yeah.

And, you know, I, I, there's a bunch of things that I have deep self-doubt about, but one of them is not that.

What are some other things that you think are like real strengths of yours? Like where do you feel like you shine in the context of the broader partnership of Clara Hippo?

I'm a big believer that everyone, that, that most people's sort of biggest strengths are also their biggest opportunities.

Yeah.

Or, or, you know, of course, better said, weaknesses. That's how it works. And so I think that, you know, my, my One of the big strengths is also one of the things that I need to manage, which is I'm, you know, I'm paranoid and I'm really competitive and I, you know, and I, and I bring that, that I think like, you know, work ethic, but also that just That energy, which I think makes us really good. And I also think, you know, can drive people crazy. Mm-hmm. Um, and figuring out how to balance that, you know, with, with, with other personalities and, and is, is always, you know, part of the, the, you know, the sort of magic and challenge of, of building these kinds of businesses.

Yeah, it's incredibly, you know, very sort of people-driven dynamic as well. Like, I feel like you need a good push and pull to build something really meaningful. I, I have a question on my friend Grace Gong interviewed you on her Smart Venture Podcast. One of the questions that she asked was, who's on your board of directors? Um, and you mentioned Bob Pittman, who was the CEO of MTV and then also iHeartMedia. I would love if you—

Yeah, Bob created MTV. I mean, Bob was like the, like the godfather. I mean, this is now, it's a long time ago.

Yeah, but I was wondering, are there any like lessons or frameworks that you've taken from him that you've applied in your investing as well? Because he was one of your first investors, right? At Thrillist.

He was my, he was my first investor.

He was your first.

He had a fund called the Pilot Group. Um, and that he was my first investor. Um, and really, and actually my only investor for 3 or 4 years.

Wow.

And, um, Bob, um, you know, I learned so much from Bob and I would say my, my, you know, it's, it's funny because it connects back to that same thing, which is both, I think, one of the great lessons was, has also at various times been a liability for me, which is one of Bob's big, big, big founda— foundational beliefs is that the CEO is the head of sales.

Hmm.

And by that I mean like, like the CEO's job is to physically push the thing to success.

Yeah.

And to do whatever it takes and I think that there have been times in my career that that has been an incredibly, incredibly true and a real driving force to, to helping, you know, wherever, you know, my organization achieved things.

Mm-hmm.

I do think it also at various times has been limiting for me.

Mm-hmm.

Where I didn't, it took me a long time to, it's really easy to say surround yourself with people who are smarter than you and like know the cliché.

Yeah.

And like, know that that's the thing that you're supposed to say.

Yeah.

It's really hard to actually believe it and execute on it. And it took me all of my 20s and some of my 30s to graduate from, from sort of like that, that original Bob lesson.

Yeah.

Which I probably took way too deeply to heart. And by the way, this This is like, I'm aging myself and Bob, and this is like a very old lesson, and I'm sure Bob has, you know, outgrown that in a bunch of ways too.

Yeah.

But it took me a long time to build, to be able to build real trust with the people that I worked with, where I genuinely came to believe that they were, that I could be comfortable working with people who are actually better than me at other things.

Mm-hmm.

And once I got there, I was able to See real acceleration in the organizations that I was a part of. And actually my, you know, somebody who, who is, you know, much more of sort of like a peer in terms of someone who, you know, has grown up in, in sort of the industry with me. But we bought a company at Group Nine called PopSugar. And the guy who was the founding CEO is a guy named Brian Sugar, who by the way now has a VC fund called SugarCap, which I'm a proud LP in. And Brian's a great friend. And Brian and the team that he, the exec team that he had built at POPSUGAR was very different than sort of the team that I had built philosophically. And Brian's role as CEO was very different than the role that I had had as CEO at my company.

Mm-hmm.

And in bringing his leadership team in and bringing Brian into the company, that was a really rapid moment of maturation for me. Mm-hmm. To see the way that he had built his business.

Yeah.

And to see the strengths in the way that he had thought about empowering his leadership team. And, and so Brian's another person who, you know, obviously sort of like a very different flavor of, of relationship, but somebody who I really learned a lot from. Hmm.

That's so interesting. I feel like some of the best advice that you get expires and then you go on to a different step function. What like step function learning curve have you been on recently? Like where are you finding a lot of your learning coming from? Woo.

I mean, it's been a, I would say it's been a, it's been steep. I, I, I think it's been steep in a bunch of different ways. You know, personally it's been steep in, you know, I have 3 kids who are all, you know, different levels of people. My oldest is 9 and, and I'm at this, you know, I'm, I'm like really in it. Like, you know, I got 3, 3 little kids and I'm in it. And so I think that there is, there's something when you, you know, you're, you know, you're done having kids.

Mm-hmm.

And your parents are, are older and are in a different phase of life where you're, you know, you're in a transition as a, like, actual human, not as a business person.

Yeah.

And you go from looking at your life as I'm setting up the pieces To like, this is it. Like, this is the thing.

Yeah.

Like, I'm not, I'm not like prepping for the good days. This is it. Like, if these aren't the good days, like we're gonna have a pretty disappointing outcome here. Um, and so that's been just like a lot to sort of like really process and think about like what, what that means. And, and by the way, bringing that into work.

Yeah.

What that means in terms of how do I want to spend my time? What do I take? What, like, what gives me energy? What makes me happy? And I think I've really gotten some sort of peace around sort of being willing to know what I am and what I love, which is I love finding founders before they're famous.

Mm-hmm.

I could think about how to make this into some giant platform and bring a bunch of different vehicles and, and, and, you know, I look at people who I grew up with in this business who manage multi-billion dollar funds in all these different spaces and like, I could, I can go do that. I really believe if that's what I sort of wanted to do, I could go do it. But I also am like, I think really comfortable or getting comfortable in my own skin to know that like, that's actually not me. That's not what I want. Yeah. And, and, and it's okay for us to be a, like you said, a boutique and a really specific thing that, that is gonna do something and get, and, and get obsessively better at this one thing.

Mm-hmm.

And build something really lasting in this one area versus Taking the bait versus having the FOMO. Like I have the FOMO, like I'm a human.

Just not acting on it.

But, but like not acting on it and actually like really closing the door to it and deciding that you're going to really commit to something deeply. And it feels, and it feels really good. And then, you know, the learning curve to get here has been steep. And then now in saying, okay, I'm gonna be the best in the entire world at this thing and I'm gonna build an organization of people. Like-minded that wanna do this thing for the long term and get everybody swimming in the same direction.

Yeah.

And be comfortable surrounding myself with people who are better than me at everything and like really take that step as a person has been a super steep learning curve, but also like wildly fulfilling.

Oh, I love that. Yeah. Well, it reminds me of one of my advisors has this quote. I, I was like going on about something FOMO related and I remember she goes, Paige, are you playing peewee soccer or are you playing in the big leagues? And I was like, that was, that was, that, that felt deeply personal. Thank you so much for that comment. Right, right, right. But I, I feel like when you start to be really comfortable in like who you are as like manager, as business person, like as person in general, then, well, you can't be a really, you can't be really comfortable as a business person if you're not really comfortable as a person person. Yeah. Ooh, yeah, that's a good point. Hmm. I like that. To close this out, I know we're coming up on time here. I always like to ask my guests if they have any questions for me. Do you have any questions for me? Wow.

Come on. You're like, I, you didn't gimme any prep on any of these things. I mean, I guess, you know, in, in, in terms of my, my learning curve stuff.

Yeah.

And, and, you know, where, where are you, like, where are you in your Person, person development relative to business person development?

Oh, I feel like my, my journey with therapy has been really interesting. I feel like I actually learned a lot personally building a business that now I'm starting to apply personally. It's like, okay, if I in business, like, am thinking through a deal and there's like co-investors, like, do I wanna be swayed by those co-investors? No. Like, I wanna build my own independent conviction. And I think like in my personal life, there were times where I would be like very open to hearing people's opinions and like weigh them heavily against my own. And I think one of my big learnings recently has just been like, I need to have an independent conviction, like my personal decisions as well. So I feel like I've actually learned a lot personally from like Paige, the business person, which is a very interesting journey, but.

Yeah.

Because I've had so much independence and agency with BGV, I feel like I've gained a lot of confidence in like my ability to first, like find conviction, second, define it, and third, chase it. I would say I'm like, when I know I want something, I'll go after it, which has made me feel more confident.

Well, but that's amazing. And, and look, I think if you're, are you doing it for You, or are you doing it for others' people, other people's, like, yeah, it's, it's interesting what other people think of you. And that is a, it seems like a really obvious or easy thing, or like, of course I do it for me, or, but like, yeah, when it like gets like big decisions though, I feel like those are harder.

Like it's easier to make like smaller decisions in your own bubble, but I feel like when you're making Bigger decisions, then you're like, oh, what is like the public perception? I think there's also some really interesting dynamics around like growing up online and like seeing what social media was at like 13 kind of breaks your brain a little bit. Like you do think about the outside world. Like I think more growing up like that.

I think way more, terrifyingly and horribly more. And as someone with little kids, I'm like, Can we limit screen time? Remove, not limit screen time. Can we literally like, like shut down, like the, like, can we eliminate smartphones from the planet? Yeah.

The cottagecore dream. I mean, that's like why cottagecore is a trend is popping off.

It's like, I mean, come on.

What if we can live with, I don't know. It's, it's an interesting thing. I go back and forth being like early stage investor in new technology is I feel like personally I have a lot of aspects of my life that are like very analog. Like I love like vinyl records and like I learned how to sew and like I love building things that are physical, like woodworking. But I feel like I get the most joy out of just backing really great founders who are building interesting things. So coming to terms with that, steep learning curve. But yeah, well, that is all the questions I had for you today, Ben. Thank you so much for coming on.

Thank you.

And answering these all off the cuff. This is wonderful.

I'm very happy I was here. Thank you for having me. And, you know, sorry if I'm too like waxing philosophical on—

No, this is perfect. This is like what Seed to Harvest is for. It's why I started it.

Great.

And a very special thank you to Seed to Harvest podcast Editor Tate Doherty for his amazing work on this episode.