E35: How Jason Lemkin Built SaaStr

I would still say I am lucky to see one company where I fall out of my chair a month. Everyone talks about deal flow. I think they all lie or are delusional. Right. I was just talking to someone watching a video this morning where someone was saying how they had to see a thousand deals last year. I'm like, well, I mean, I guess it's possible.

Today's episode features Jason Lemkin, founder and CEO of Sastra Fund, a venture capital firm specializing in early stage enterprise investments. We discuss the challenges for scaling a venture firm and how he thinks about media and event strategies. Here's Jason.

Well, this episode I'm trying to do something different than what I've heard in other episodes and I've heard almost every podcast I think you've, you've been a guest on. And I'm trying to go deep on the business.

I don't do that many actually, but.

Yeah, yes, I'm trying to go deep on the business of Saster, both the fun and the business. So first I'll just start by saying thanks for coming on the podcast. Really excited to have this conversation.

Thanks for the time.

Okay, Jason, why don't you give us from the origin. You're one of the very few people who's built a sizable venture fund and also a sizable business next to each other in ways that complement each other and are synergistic with each other and very seemingly so. Yes, very few people have done that. Right. You know, Harry Steppings has done it in a smaller capacity with vc. But why do very few people do that? And why have you decided to. To do it that way?

Well, look, I mean, Harry's done it in a big capacity. Ultimately it'll be. He will do it in a way much bigger than me. I think I was, you know, I was kind of a historical accident to both investing and I guess to building a media company, if that's what we want to call Saster. I think of it as a community. The term community has evolved a lot, so we can call it media. But I started early. I started in 2012. I started the day I left Adobe after my last startup was acquired, a company called Echo Sign. And I queued up 100 blog posts of my learnings as a founder and I wasn't allowed to do them as a corporate vice president. It wasn't a negative for Adobe. It just required a lot of oversight. So I didn't end up publishing my top hundred learnings. And whenever the first Saster post was in 2012, I had 100 queued up in WordPress and. But it was really just me sharing my learnings. And I myself in some ways was inspired by Mark Sister's blog, which a lot of us who've been around a long time used to read. And I wanted to do a SaaS version of it and all the mistakes I made, I had. You know, I started at the same time as David Sacks at Yammer and Rene Lacert at Build and Aaron at Box and Peter Gassner at Viva and. And obviously they were all much more successful than me, but I was the first with an exit, so I was the first one that had, like, nothing to hide. I didn't have to pretend. I didn't have to pretend I was better than I was or things were better. So I just shared my learnings. And in fact, the original dumb title was Catharsis. So stupid because it meant to be. It wasn't meant to help me. It was meant to be cathartic for other founders. But Catharsis rolled off the tongue even worse than Saster. Although I may own the Don't Steal whoever's listening to this or watching Don't Steal the domain name if I didn't take it. But that was actually the original title was Catharsis, but we could talk about why it actually took off and, you know, now that I watch what other folks have done. 202012 was very early for social media, because social media has changed so much, right? But it did take off, at least within CEOs and founders, right? Within a core group. And then not much later, I got recruited to join the VC firm, one of the VC firms that had funded me. And I really had never done investing before. I'd been a founder multiple times. I'd ra pitched 150 VCs. I wasn't even particularly interested, passionate about V. But, you know, in the early days, the deal flow was really good, right? So my first deal was Pipedrive, which sold for 1.5 billion cash. The next one's Algolia, which hopefully will IPO next year. I was first seed investor there. Third one is Talk Desk, which is doing hundreds and hundreds of millions. It'll ipo. The fourth one was Greenhouse, which was bought for almost a billion and will IPO. The next one was Salesloft, which was acquired for 2 and A. I was 5 for 5. And it wasn't intentional. It wasn't that I was, you know, a Bill Gurley or Keith Raboy or whomever. It's just at the moment in time, it was a great intersection between not that many people interested in sas. And there weren't. David Sacks was still running Yammer. I mean there weren't that many people. Now fast forward to today. There's a hundred founders with investing that were much better founders than me. Right? And they're investing on many levels. There aren't as many people that have built up the body of content in a media company because it takes a lot of time. Certainly Harry has. There are others we could chat about, but it was an accident. By just wanting to. By not trying to monetize this, not trying to go big, not trying to sell courses and horses, but just sharing my learnings and stumbling into venture. And it has worked out. But that's the long story. But I will say I have reflected over the years, I don't know that the tour is synergistic as outsiders and LPs and folks think it is. I'm not sure they're synergistic. I'm not sure Harry agrees they're synergistic. For that matter, there. There is a. There's a partial synergy. And then I will summarize this. What I have learned from all this. If you just want to do venture. If you want to do venture, you could do no marketing. Okay? But even if you do mo marketing, folks that do no marketing, they don't have a Twitter account. They don't do social media. They do marketing. You know what they do, Eric? They drop by the office of pre seed investors. If they're an A investor, they invite the seed investors to dinner. They're always doing marketing. Sometimes they're doing enterprise marketing. Like they're not. They're not always doing consumer marketing, which is in a sense what I accidentally did. But they're all VCs do some kind of marketing. Okay, some kind of marketing. But my learning from Saster for investing, if you do too much, it's bad.

Oh really?

What you want to do the per. I can't draw my two by two or my whatever for venture alone you want to do. You want to do the least amount of marketing that generates the maximum number of decacorns or unicorns. And any minute you spend doing a podcast, doing writing a blog post, responding to a crazy tweet from a billionaire that has nothing better to do any. Any ounce of energy you don't put into investing beyond what it takes to get whatever the sales loft or Airbnb or any It's a wasted isn't it should go into deals.

Fascinating.

And I don't think anyone gets this. Right. And. And every. I think almost everyone in venture that has been doing it for a while has felt like their edge has eroded. I was just talking last week, and I won't say it was one of some with a very low profile that has to be one of the top five seed investors of all time. Certainly there's not anything to bb. I will leave him nameless. But he's so good. And he's mostly retired, although he's young. Mostly retired. Not, not. Not retired on a ranch. Actually retired as a builder building. And I chat a while. He's like, I feel like I've lost my edge. I'm like, I mean, I have a pretty good track record, but anyone looked at your, they would fall out of the chair. It's like, I feel like. And I don't think he's lost his edge, but everyone feels like this. And so, so many VCs are trying to do podcasts or create newsletters or YouTubes and I think it's all good for founders because that's helpful. But I don't know, I think it's just like table stakes or misguided marketing or it just. So anyhow, you want to do the perfect amount. Yeah, you do. Vcs have to market, but they all market differently. And some of them don't even realize they're doing marketing.

What do you mean they don't realize they're doing marketing?

Look, if you're. If you're, say. Let's say you're someone like Mamoon Hamid, okay. Who runs Kleiner? People love Hamun up and down the stack, but he does a lot of lunches and dinners. Yeah, you don't see. I mean, Moon does. And I love. He. He taught me about ventures. One of the first people I met when I started to invest, Aaron Levy, told me to go meet him and I met him and I gave him Greenhouse and Front and a bunch of other deals that we did. And you know, he. He does. You don't see him on 10,000 YouTubes, do you? A couple. Right. But it's like a favor. Yeah, but he. In his own elegant way, I talked to so many top VCs and like, oh, you know, I was just. Had this lunch with Mamoon or I was just at this thing. So in his own way, he's got to build out his spiderweb to create deal flow with founders and other folks. So. But that's not. That's not what it looks like on Twitter. Twitter, everyone with a $3 million fund is doing 88 tweets a day. That's their marketing.

Yes, exactly. Yes.

Sharing all their brilliant learnings from their 1 markup. This is how you do venture. I got 1 Series A markup last week. I know everything.

Yes, yes, definitely. A lot of that.

A lot of that.

And so what does edge look like in venture anymore? What are real edges?

I don't know. I'm still trying to process it. I don't know. I think, I don't know that there is a true edge. I know LPs want there to be an edge. I think that there is. So look, there's so much capital at the seed and pre stage. It's so much. Since there's so much that you still want to be picked. Being picked is the edge. Being picked remains an edge today. But beyond that, some of it, I think it's just tough if a founder that is in the upper right of the two by two of like hot and a little bit of traction and they have the right kind of hot. You know, it's just, I don't care outside of March 2020, like, it's just not that hard to get funded. Right. It used to be like if you were a hot series D company, there were only 20 investors, but you'd get 20 term sheets, right? If you were at 50 million growing 100% low burn, you'd go meet with all the growth and crossover investors and you'd set a data room and you negotiate. There were no data rooms for seed investors eight years ago. Now they all have data rooms. I'm being fish. I mean it is still, it is still seed and precede. To have that experience, you still have to be privileged. You have to have the right background. You, you might have to come out of stripe or Y combiner or have the perfect pre precedent. Like it's not easy. I'm not. But, but, but I don't know that there's a magic edge, but it really still helps to be picked and, but I think folks that are just good pickers, it's tough in seed. It used to be great that seed vestors, people struggle to raise it and you could just be a great picker. But I just, I don't know that there's room for great pickers in seed and precede anymore. There should be, but I don't know, I don't know that there is.

Right. It's just too crowded.

I think you can still. I think you have a luxury of time when you hunt for outsiders, when you hunt from outsiders. But too many folks want to be in the upper right of the two by two. They want the person that came out of Databricks or, or OpenAI and they want early but a little bit of strong growth and they want the right thing. And they're just those should be priced to perfection. That's the marketplace. Right. And in fact the problem with venture is the stuff that's priced to perfection in the short term is horrendously overpriced in the short term, maybe not the long term. Right. But we thought what did OpenAI do the penultimate roundup? 20 billion.

Yes.

We thought it was crazy, but you could have flipped your pseudo shares in a year for 80 billion. So it wasn't crazy, but it was certainly priced to perfection. So I don't mean that this media, this if you want my you can do with this overlap of like media community and venture. I do think it's interesting but I would just caution folks to not over expect from it. And like many things, don't try to emulate what else you see there because I don't know that it's more nuanced and harder than it looks. Right. You know, I would say I am still. I have a pretty good following in cloud and SaaS.

Okay.

I think it's pretty good. It's high on the list for many years. I would still say I am lucky to see one company where I fall out of my chair a month. Everyone talks about deal flow. I think they all lie or are delusional. Right. I was just talking to someone watching a video this morning where someone was saying how I they had to see a thousand deals last year. I'm like, I mean, I guess it's possible, right? Yeah. I think I could see three a week. That's all I could do is three.

Right, Right. Three. Three actual deals that are. Yes.

To be present, to be present, to be thinking through it, to follow up, to do work. Three, Three. So. And I'm lucky to see one with whatever I have, the community, deal flow, brand life experience, catharsis, whatever. I'm lucky to see one not good. But where you fall out of your chair. And when I reflect on my learnings from the last 24 months, learning since 2001, the worst investments I made, I didn't do any. I don't have enough money, but I didn't do any like 100x crazy deals myself. I had a couple in the portfolio but I didn't do any myself. But the mistake I made in 2001 that I'm now having to dig out of today is when I invest in anything that wasn't great. Right. And so all this energy, 10,000 blog posts and 782 this and 4,000 Quora answers and millions of newsletters to meet one a month. I fall out of my chair on one fascinating one. If you had a more efficient way to do it, don't do the social media, don't do the community, don't do the kind of find one other way to just like just be my moon. Go meet with the best precedent and have him just say, hey, this is the best one in my portfolio. Just go meet with that one. Don't do all this other stuff. It's dumb.

The, you're being, you're being modest. It's worked for you. But you're, you're saying you spent too much time or too much. You could have done it in a more efficient way.

I think folks who have the problem with these, this is a very niche topic, but the folks who have really large communities and media businesses and I think of Sastor Moore as a community first and an accidental $30 million business second because it's not intentional and it's not heavily monetized, but it just becomes, it just becomes a 14 month a year job. I mean, you know, you talked about Harry and you know Harry I've known since Harry actually dropped out of college because he read saster in 2015 and was a fan.

Yeah, you gave him the podcast. The Saster podcast.

Yeah. And you know his like the amount of energy it takes to produce that. I mean, you're producing podcasts now. It's a full time job. How are you supposed to produce multiple pieces of a tier content a week and deal with 12 boards and eight struggling portfolio companies and do a thousand pitches a year and deal with angry partners and force out the partner that has no good deal and force your partner off the, the board of Karna and then undo that like it's just, how could you do all of it? You can't.

Right. And so you mentioned Media Community Fund. When I think about in the last 20 years, who's done that, you know, as good as anyone or the best. Maybe it's yc, right. They've done a phenomenal job, you know.

With their sort of book face, better than anyone realizes. And YC has created billionaires. What other entity like this has created billionaires? Nonce. Not what my, my, my made up word is nonce. Nonce has Nonce.

And so what I've wondered about you, given that you've, you've been the best content guy and brand guy and media guy and community guy for, for SaaS is why not create the YC for SaaS?

You know, it's funny, when I started my own funds, I got a lot of pressure from the LPs to do it. And I'll tell you that the answer, which may be less interesting, but it's not my passion. You know, I sat down, I said, listen, if I want to do a YC for SaaS in 2016, 2016 would have been very easy to do. YC was, you know, YC then went through a phase change where Most of it's SaaS. Now it's all transferring to AI and others. But it would have been very easy to do in 2015. 2016 would have been very easy to do. We had a co working space with 100 great startups, multiple unicorns in it. Could have easily asked everyone for 7%. But I thought about it, I'm like, God, then I got to hire like 20 people. I got to divide the carry up 20 ways. I got to deal with their headaches. I'm like, I regret selling my last company, but one of the reasons I did it was not to have these headaches. A lot of founders want to get rid of the headaches. Now I got to deal with 20 ego driven pseudo partners, each arguing over 1% carries, squabbling with each other, backstabbing each other. Then I got to sit in the damn meetings and listen to the hundred stupid companies they want to do. And then even worse, you know what they do at yc. Maybe Gary doesn't have to do this. And I do love Gary since we started investing together, but I can't read all those applications. I would jump off the roof. I hate, you know, I'm a decent investor. I hate pitches. I can't stand them. You'll never see me at a pitch competition. I used to go to the YC demo days when they're live, but it's mainly to say hi to people I just couldn't even list. Like, I don't think there's anything more boring than a pitch. Now meeting. Meeting with that one founder a month where you fall out of your chair is magical. That one meeting, any other pitch I literally like, I sold my company to not go to meeting to crappy meetings, right? I want to go to crappy meetings. I would have kept running my company. That's what I think. Every time I'm in a crappy pitch, I'm like, oh. Or I take a favor, a favor Pitch. There's nothing worse than a favor pitch. Could you please meet with Eric? All right, Eric, how are you doing? Well, we haven't grown the last four months, but if, if you help me full time, I really think, and help me hire a whole sales team, I really think we could grow again. I'm like, yeah, I want to end the meeting immediately, but will, will they write. Will he write about me on book face? Like, okay, I don't know what to do, right.

And I mean, Paul Graham's life doesn't look that hard. Or did, of course, maybe, you know, 15 years ago when he was just starting, he had to maybe had to do a lot of terrible meetings.

And those guys, listen, I, the guys I've talked to, when I've talked with Nicholas to say who used to see that invest, and he's a partner there. When I talked with Justin Khan back in the day when he was there, actually, those guys love reading the pitches. I even, I think I asked Michael Cybo backstage at Sasser Industry. He loves reading those, right? I don't know, it's just not me. Like, you have to play to your strengths. They, they'll, they'll sit, I guess, you know, they used. I don't know what it's like today. It's more professional under Gary, but in the old days, Justin told me they, they'd sit in a room, right? Eight of them, and they bang it out for like three days. They'd read, not literally like scripts, but they'd sit in front of their monitors and for three days they'd read what, thousands of applications. You know, they get that you'd read 1 in 90. I get it, right. It's probably like Hollywood a little bit, right? But to me, that's a kiss of death. So people ask me what. It's just, it's just there. The other thing about seed investing is there are exceptions, but mostly it's not the best way to make the most money, especially measured against unit time. You want to manage billions, you want to do series A to B rounds, you want to only invest, you just want to win the bet. This is what I learned from Byron Dieter early on. Another mentor for me who, you know, runs the Bessemer cloud practices His. His job is to win the best deals. He's like, that's the job is to win them. People founders love Byron. He gave me a term sheet back when I was a founder, so I knew him when we just started our careers, when he was. Just started as a non partner, I think. But you Know people love Byron and he, he didn't need to be the first guy. He just needed to be in every deal. And then people like, and they, they like others too. I think Mamoon has some of these characters as well but he would just win the deal. That's what you want. Put 10, 20, 30, 40, 50 million into whatever Procore Twilio send grid just. And just do them like, like clockwork. Forget about these little checks. That's a waste. That's so that's too much work. Little checks are, are for suckers or for starters. They're for starters or suckers.

If your picking is good then you want to be focused on make sure you have enough time for the. To win the best companies or if the market is efficient. If, if it's hard to know who is the next send grader, who is the next Algolia, then the YC approach makes sense which, and that's why they do it super early when it's hard to know and get special economics for it or the you know, precede and seed.

Well maybe or maybe if I think about these, if I think about the Gary's and the Byrons and the Mamoons and the others maybe and I, and I think about why I didn't do some of the things you asked. Right. I think people will disagree, I think but I think you gotta play to your strengths and people's life experiences, their tolerances, what they actually line up to different check sizes and stages and it doesn't necessarily mean you get to start there. Right. But like for me I'm naturally a late seed guy. Okay. I'm all about this. I love, I'm very passionate about sales as a practice, as a craft and I have people love Saster for, for this but that doesn't help for pre revenue, does it? I mean a little bit but. But it's not that and it doesn't help for growth. Right. But for folks between 100k to a million in revenue they're searching for the questions that Saster has the answer. But it's my passion. That's my passion. Right. And Gary left you know, initialized and you know the economics are none of my business but he. We have, we have a large LP base overlap between initializing me and. And they were sad. The lps were sad. You know I don't know how the last funds will do but the first couple funds under. I mean phenomenal, right? Yeah man. And so like the. I, I'm sure Gary will make insane amount of money running yc, but I can't imagine he would make that much more money than, than just running initialized the way he did. So what my, my point of the Rambley story is it's his passion, Gary. You know, I, you know, I wrote some tweet about Gary going to yc. I forget what I wrote. And he wrote back, YC saved me. It's his passion. Right. And, and for late stage folks, I think their passion is purely making money. And you got to respect it. It's not me. I'm a founder. They're not founders. Late stage guys usually aren't founders sometimes. Right. But they're all about, you know, how big's my house and what's going on at Palm beach and which house I got to upgrade at the Yellowstone Club next season because it was embarrassing to be high up on the mountain. And it sounds dumb and douchey, but it's a goal right. At the late the growth guys. And if that's you, then you should go figure out how to do the next Tiger or insight, but make it work better. Right. And so if you really want to be serious about investing, you gotta find the match for you. And for me, it's quirky. It's doing three to four, ideally latest seed deals a year where it's founder led and they're trying to figure out sales and they want me. And it's pretty quirky. But anything else I've done, I have not enjoyed. I've not enjoyed. Right. I've not enjoyed it.

And so say more about how you've netted out on your sort of portfolio size, fund size, because you've, you've been successful, so you've had flexibility or different forks you could have taken. Were you close to taking any of them? Did you ever, you know, were you close to wanting to scale or scale up the operation in some way or take a lot more money and fund or. How did you think about this?

Well, I definitely think the way I've done investing is dumb.

What way seems to have worked?

Yeah, but basically I've raised, you know, two small, what now would be smallish funds of about 70 million and then two small growth or opportunity funds to complement them. And then actually I put my LPs into a lot of deals. So my LPs have invested another, say 70 million direct into the best ones right through me. So. But this is dumb. What is smart? If you have a platform of any sort of, you want six people doing all the work for you. I look at what, for example, someone that is under the radar that should not be is David Cummings. Most folks that have not been in SAS world don't know David. David may be a billionaire, I don't know what it doesn't matter. But David started a company called Pardot that was acquired not long after EchoSign was. So we started at the same time. It was acquired by Exact Target and then Salesforce bought it and Pardot now does 500 million under Salesforce. Adobe signs in decline but it still does over 200 million of Adobe. Our lives were parallel. The main difference was he bootstrapped his company and owned 80%. So he walked out of exact target with 80 million in cash. He turned around, bought a decrepit skyscraper in Atlanta for 15 million, turned it into a tech village. I copied that with our co working space back in the day. And then he just started co creating companies. He co created Salesloft which sold for two and a half billion. He was the first angel in calendly. The list goes on and on. He became the kind of the quiet king of Atlanta and played to his strength and he's got, you know, he's got this group and that group. He's got 50, 60 people doing all this stuff or whatever it is. I did this dumb thing of I was unable to find. We have a pretty good team on the community event content side. Like it's pretty good. But I wasn't able to find the right people on the right journey with me on investing. I tried and I failed. I brought multiple people on to work with me and maybe if I was more a money manager I would be more Machiavellian about it. But I'm not. I'm a founder and I have not. I didn't find my co founder at investing. Let me put it this way. If I'd found my co founder and I had one not that long ago, there was one person who will go nameless. I have pretty good right. I offered this person half of all the carry. No one does this in venture, right? Does anyone offer you half the carry off the bat? But I knew that this wasn't just another investor. I knew this was could be my co founder, right? So what do you. So I said listen, like I know that if I give you half of everything, either one plus one will equal three or at least my life will be better. My quality of life one of the two. Either my quality of life will be better or I will make more money or it will be better, we will do more or we can go out and raise more money. And you can deploy it so I don't have to deploy it. Right. Ultimately didn't want to do it. Wanted, wanted to join a huge mega fund, which is what this person ended up doing. But that's what I failed at as an investor was finding my co founder rather than finding a bunch of mercenaries, which is the truth is most funds have investor, but they're kind of a bunch of mercenaries. There's rare examples like ENIAC that really were friends in elementary school. And Homebrew is very interesting. Satya in particular was very helpful for me when I started in. I always thought he and Hunter were an interesting pair years ago, but they really are venture spouses, aren't they? But it's rare. It's rare that you find your co founder. And I think Sachin Hunter did and I think the ENIAC guys did. But that's what I needed to scale and I failed. I failed to find my co founder. Right. And I haven't given up because I literally offered someone this 50% carry in the last, whatever, 24 months. So I'll, I'll never give up until they roll me out in a wheelchair. But I didn't want to scale on my own. It wasn't fun enough. It's not enough money. I don't need that. I don't. It's just not worth it. It's. It's 14 years to get the carry and it's a lot of drama and like, you know, I already have a car and.

And so do you think you found the sort of final form factor of what Saster is and will be at the fund level? And it's just, hey, how do we rinse and repeat? Just do amazing fund after fund or.

No, I don't think I figured it out yet. I just learned. I want, you know, there's the fund and there's Sasser Inc. I would like to get Saster Inc. This year will actually be a tougher year, but I would like to get it to 100 million. That'll be fun. That'll be fun to get it to 100 million. And I have never fully figured out venture at all. But what I have learned is it's hard, but you just, if you, if you, you got to be patient. There's no point in doing dumb deals. There's no point in forcing things. There's no. There is point in going all in, like, go all in on your best deals. Like, don't hold back. But there's no point in going further than that. Right? So, you know, if you can see one fall out of your chair deal per month and do a couple of those a year and end up with three or four fund returners per fund. You do pretty good. And I don't actually like the way I invest, but I know we will always make money. Like 0% chance. Like if I only pick the best of the most high velocity inbound saster fans that have good growth and good metrics and great CTOs and I just pick a few of those a year. I may never approach the returns of the best of the best, but I think I could do top decile, right? It's like enough, like it's, you know, I don't think, I don't think a venture is like a mitzvah, right? I think being top decile is a good goal. Like forget about Twitter. But like I feel like, I feel like, and I also feel like this approach, I, I don't really believe that like doing 50 investments per fund is such a great thing. Like I don't believe the math diversifies risk, but I do believe if you have enough good deal flow and picking, you can almost guarantee you're going to make money in venture. You can almost guarantee it. You, you just need, if you can. Again, venture is about making one great investment a year until you're a mega fund, right? One a year and you can even, even 18 months is okay, right? Even 24 months is probably okay. Like as long as you have some good ones, right? It's not if you have an engine and I think I suspect all the best investors one or like it is stressful, right? But I think they all have an engine that at least sort of works so that they can get one or two great deals a year done, right? It's all that matters. Nothing else matters in venture except getting one or two. It doesn't matter if you add value, it doesn't matter if your MPS is low. All that matters is every year you get into one or two good deals. And maybe in a small fund, maybe even just one's enough.

So the person who joined the mega fund instead of joining you separate the person that decision. The economic calculus between co founding something smaller or joining a mega fund is basically there's higher risk, higher reward. That is if you perform really well, you make more money in the early, earlier stage. What's the way of thinking about it?

No, I think the interesting learning was that this person in particular just wanted the benefits of the mega fund and was okay with the downsides. Like okay, if you go join a mega Fund. You know what? You know what? The one thing is for sure, you work for somebody. Whoever it is, you know, people may not get it who listen or watch. The bigger the fund, the fewer the people that run it. The bigger the fund, the less democratic it is. Some of the biggest funds literally have just one true managing partner, right? Many of many of the biggest funds have partners, general partners, but the boss determines half or more of the economic distribution. This is a classic hedge fund model, right? Hey, listen, Eric, I'm going to pay you half a million a year, and you're going to get a half million and this and that. And at the end of the year, I'll take the 50 million in profits and I'll just decide whoever. Steve Cohen, whoever just decides who gets the 100 million. Venture funds are run this way too. The big ones are. So the good news is, if you go to a megafund, you can make a million bucks a year easy in salary, right? And you can make more in carry. And actually the carry sometimes is very generous. It's surprisingly generous if you have a small number of partners with a lot of dollars, the carry can be. You're not gonna get half. But 5% out of 10 billion might be better than half of 100 million, right? Do the math. But you'll never run the place. So you got to decide who do you want to be? You want to run the place, right? And. And what I've also learned is, you know, there are CEOs going into venture is very different than like a SVP going into venture. The latter is usually more successful.

Why is that?

Because they know how to work for some jerk like me or you or whoever it is, whoever's running the fund, whoever runs, you know, whatever, you know, they, they know how to. They. If you're an svp, a successful SEP at a really good company, not only do you know a little bit about technology and areas you know how to work for, whoever founder, CEOs are quirky, right? They're great, but they're. They're not easy to work with, are they? Even the nicest ones are hard to work for. They're. Because at least we're demanding. Like we're demand. We don't even know we're demanding. Founder, CEOs we're like every minute of the day we're demanding. Even, even when we're having a beer or, or just socialize, we're constantly just, just our presence is demanding, right? So. So founders, CEOs don't even realize this. And so if You're a founder, a successful CEO and you go into venture. Be careful. A lot of them, it's not well written, but a lot of them bounce. A lot of them bounce. A lot. Like okay, who. Okay, because if, if you're a CEO, you don't mind working for someone better than you, but working for someone worse than you or not being a real. Being a. You show up and you find oh, I'm not a real partner. What's. What's this management company that I hear of but. But I don't get to go to those meetings. And what is the how does this backload investing over 10 years work? And why is Carrie deal. I thought you said it was a partner.

Right. It's funny one example of this without. I don't even know the details but just, just it sounds like it's example this Phil Libbon was like CEO at Evernote for I don't know, 15 years or something. And then he joins General Catalyst for like three to six months or something and then goes out and starts his own incubator again. And my just guess I'm not close to him is just like he did some calculation of what you just, you just described of. Hey, I'm used to running the thing.

I'm now it just wasn't a vibe shack. It just didn't work for him. No matter how much they pay. I mean General Catalyst, not everyone knows him. But I mean they're off. They're very. They could pay him whatever they want in salary, right? The megafund salary doesn't even matter. It doesn't. It does. I mean it matters if you have a thousand people working at your fund. But if you're. Forget all your. It's just if your partner's title at a mega fund, it doesn't matter, right? If you're, if you have 100 million in fee, people think these fees are not free. You have to return the fund like it's real work. But the short term economics, the folks that run the fund, you know, if you're whatever. Who's the guy that runs Vista? Robert. Whatever. I mean he's making billions, right? And probably used to have the majority of the economics. But if he's got to pay you and me two million bucks a year and we deliver, he doesn't care, does he?

Right?

He doesn't care.

Hey, we'll continue our interview in a moment after a word from our sponsors.

Let's get into the Sester media business, particularly sort of the business model and the different things you could have chosen but decided not to. When you talk about sort of the evolution of the business. And then let's talk about how you get from 30 to. How do you get to 30? And then let's talk about how you get to 100.

Yeah, well, look, it was all an accident. I mean, unlike folks today, are much more intentional, I think, because there's more people to copy. I didn't have anyone to copy other than that little bit of Mark Sister's blog copying. A blog is copying, but it's not really copying much more than that.

You built on top of it.

Yeah, a verticalized version. It was just more an inspiration. But I mean, the simple answer is, look, I started writing this blog and then like the first day I wrote it, the first real post was called Everybody Lies. And it was about real revenue for a whole bunch of people before they IPO'd. And I wrote it and I got, and I got a, like from Aaron Levy. Okay. So I knew Aaron, but I didn't think he'd write. So I kind of got inspired, right? And so it took off and I saw more things happen. And then I'm like a couple months, like, okay, well, I've never been to a meetup in my life. Like, I'm not that social, but let's do a meetup with nothing. No content, no. No anything. And like it sold out 400 people. And I'm like, oh, that was cool. And they're like, okay, let's do another. That was, that was like in, in 2012 and like in 2013, let's do another meetup. And now I had like one session with my old VP of Sales. Like 800 people, 700 people came. And I'm like, wow, that's a lot. I'm like. And so I said to a friend of mine who did these small events, I said, let's do a Sasser annual in 2015 for a day. And you know, it sold out. We had 1800 people come and then we did. The next year was 3,000. So the point of that story is I did not intend to like be producing mass scale events with hundreds of sponsors and media and stuff. It. It was truly organic in a way that I don't think would happen today. It was very innocent, right? It was literally like, I don't like meetups, but. And like it was really born out of me being forced to go to like parent events at school and not knowing what to talk to people about unless they were the SAS CEOs. Like, I would hide in the corner and see the couple of folks at school who were sassy is because I knew what to talk. I'm not. I just. I couldn't just talk about, like, skiing or the grass or football. It's just not. I just. I got, like, eight minutes of that, but I could talk about sass for two hours. And so I. So I'm like, okay, I kind of like. Like these meetups, even though I wasn't that. And so anyhow, so this event thing took on a life of its own. But then the problem was. The problem was, Eric, is that it all broke every year because events are so expensive and complicated that I just couldn't. I. I outsourced the first two years. Okay, first year, we had 400k of revenue. It wasn't. I didn't even. I wasn't even paying attention. Okay, we had 400k of revenue without trying. It cost 200,000. I gave a hundred. So we had a 200k profit. I gave 100k to the guy that spent, you know, 10 hours or 20 hours putting together, and I gave 100k to the person that was helping me work part time. I took 0,100k to each of them.

Great.

Next year, 3.6 million. Okay with that? And I didn't do anything. And the great thing was, it's about a week before the second session in 2016. We got 3.6 billion revenue. And the outsourced person that's helping me says, good news. We got a $2 million surplus. Whoa. Like, I didn't even look at. I didn't know how anything worked. Like, I didn't care. I had a life to live. He's like, yeah, you take a million, I'll take a million. I'm like, well, you keep your million. I will pay some of my millions to the team that's helping me, and I'll put some away for next year. I don't actually need any of the dollars, but you take your million. Great. That was like, Thursday before the Saster annual. On Saturday, we get an email. He's like, oh, I forgot to put food and beverage into it. He Forgot to put 1.6 million into the budget. And then the mistakes compounded.

I know.

And we went from a $2 million surplus to nothing out of the 3.6 million. It was all wasted. And then everyone that worked on it quit because of that. They didn't want to own up to their mistakes, so they all quit. So after the second one, I got no help. And it's like, oh, you're well it's 04,403.6 months. I got no one help. I start interviewing everyone on the planet. I've never met a less ambitious industry than events professionals. I interviewed a hundred people. I've never, I've never met less ambitious people. And every year, until we kind of have a co SVP Amelia that runs things now, until she took over, which was really during COVID it never functioned. Each year it was so hard to find anyone good. Then there's like these agencies that help you produce these mass scale events. I mean we have 12, 13,000 people in SF. These agencies, they're all basically built on ignorant clients and ripping them off. This is an industry of rip offs. And so what would happen is someone would come in and they would be like, well you have to use this terrible AV company that's $2 million a year and be like, I don't think I have to. And it turns out it's their cousin's company. And it turns out of the 2 million, they're taking a 500k kickback themselves. And it turns out for one year they're only willing to record audio. One year we didn't even get video off three stages because the captive person that was a cousin was only willing to do audio. So you know how much time it takes to work through that level of mediocrity and all the other. And like, and this whole industry is based on every bigger event you've been to at like the bigger ones, they're all basically, no matter what anybody says when you interview these folks, they all lose 2 million bucks. They all lose 2 million bucks. And I didn't want to lose 2 million bucks every year. Like it wasn't fun for me, Eric. Like if, if I had to, to like save the world from COVID I would lose $2 million, right? Or, or, or save people's lives. But I really didn't want to lose $2 million every year. Put it on disaster annual, you know, with, with 11 thank yous. So anyhow, maybe that's much more than you asked. So it's very, it's very interesting. But there's, we can talk about the business itself. A meta life lesson is I'd never been in an industry before and I've done all as a founder, I've done hard tech, I've done software, I've done, you know, crazy stuff. I never found an industry where I couldn't find like these incredible people. Like even if there's only like five, like you hunt them like a heat seeking Missile. Find the best scientists in your industry, the best technologists, the best developer, the west, like you know, do whatever it takes, give them whatever they want, like just ask them and. But in this, for this mass scale events thing, and trust me, I, I know now, I know the people at shop talk, money 20 20, so many places, a few folks at website, they don't exist. There is no, there is no, there are no gurus.

Interesting. But I mean aren't these businesses massive? Like money 20 didn't sell for like $300 million.

Money 2020 does about 100 million revenue today. It's sold for 100. Yeah. You know, a lot of the stories on the Internet are always inflated, aren't they?

Yeah, yeah.

Hooray. Our startup sold for 400 million, we raised 600. You know, the stories are, there's always some asterisks and daggers against the operator version of most stories, but Money 2020 is very successful. Shop Talk, Shop Talk sold for 150 million at about 25 million in revenue. So there are stories. If you're really interested in the business model, if you really want, I consider Saster community plus events plus digital media. We do about $2 million a year of digital media. We should do more, but we do about 2 million of podcasts and newsletter and other stuff and then whatever the balance of the 30 is, is ultimately events related primarily, not entirely, but the real play of these events things is the unit economics are terrible until you break through massive fixed costs. Okay, so for example, SAS Tranual costs $10 million to put on determine the lights. So if you bring in 6 million, it stinks, right? If you need 500 people, it stinks. But if you can have a small team and do 20, then actually you can make 10 million. Right. So what the handful of public companies in this space do is they aggregate three or four properties and the operating margins are pretty good. Right. They find folks that are at scale that have 30 plus percent, you know, real operating margins, real free cash flow and maybe, maybe, maybe, you know, money 2020 can only do 100 million and Con lion does like 150 and Shop Talk does 80. But if you get four or five, if you buy one every couple years, you can, you can have a, a business that deserves tech like multiples, doesn't it? If it can do hundreds and hundreds of millions, growing 30% or more a year with 30 to 40% operating margins, that's a, that's a tech like business with some, some recurring characteristics. Some recurring characteristics, right.

And so getting from 30 to 100. Is it you're doing more events or just the events get bigger or are you adding different business lines or what's the biggest lever there?

Well, look, the last 12 months have been hard because we were. This will be our first year without. We'll be lucky to be flat. We'll probably be down because of the unicorn implosion because about 30% of our sponsors just don't exist. Okay, you can't make that up. We're making that up in some extent with better folks. We have a bigger partnership with IBM, bigger partnership with Oracle, bigger partnership with Cisco and that, that's great stuff. But you can't make up for the, the willful abandon of marketing spend of 2021. It'll take a few years to get back there. But the simple answer is just this is look, and people don't get this. 40% of all marketing spend goes into field. 40% of all marketing dollars go into field marketing. Field marketing is annoying. It takes a lot of work. It takes humans. You gotta fly places, you gotta have a popcorn machine. You gotta do a lot of things that feel very old school, don't they? A booth. But the thing is it works. And the reason field marketing works, which took me about eight years to figure this out, I didn't know when I was doing field marketing, I didn't know when I was doing this is look, it's really basic. The best events, the best events in business. We could talk about Coachella and some other things that I've learned about too. But the best business events do something very fundamental. They bring by their nature the best buyers and sellers together. They are a marketplace. It is a weird marketplace. It is not ebay, right, or whatever. But the best buyers go to one or two events a year and they go and they go either to meet their existing partners or they go to meet ones in the pipeline or they go to ones they are interested in buying. Oh, you know, hey, Drata or Vanta or whomever I need to do this. SOC 2, it's good to see you here. Tell me a little about it. That's super valuable, you know, you know, hey, like I've got, I'm a little bit on Google Cloud, I'm a little bit on aws. I'm thinking about doing this aws. I can't talk to anybody. But Google Cloud's a five year Saster annual sponsor. If I can talk to someone good there, it can tilt the deal. So my point is not everyone's good at this stuff like you and I probably aren't good at field marketing but it's 40% of spend so that's the thing that's not obvious. Right. So how could Sastry get to 100? Well, how much is cloud growing each year?

Significantly.

Significantly. So the simple idea is look, if you have a top brand and you attach to something that has certain macro growing characteristics, if you can even increase market share a little bit over three or four years, if SaaS overall is growing 20% a year, grew much faster last couple years and you do that for five years and you increase your market share, you should be able to go from 30 to 102. Not in a week it's not. You can't even. It's going to take five years. It can't be done in a week like OpenAI. But you have certain, you have, you have been a strong brand where you create that marketplace and you have the macro trends and these macro trends, you know in investing it takes us a little while to see them but you know I've got a couple of investments that are in the Shopify ecosystem. You can literally see them accelerate as Shopify accelerates. Right. It's like high correlation. Right. So that's, that's how you get to 100 is just the cloud is a. For even with this last year being weird with a lot of budgets being cut but so much money going to AI it's like a weird year. It's still a force of nature. Right. It's, it's SaaS is 200 billion but overall business software will cross a trillion this year. A trillion in spend. Right. So but this 40% of field marketing I did like 6 angels till I even knew this.

Yeah, it's passing. I've been trying to study these businesses like Industry Dive or Informa is kind of like vertical specific.

Yeah. Informa is one of the ones that does these roll ups and other things. Right. Some do it better than others but. But yeah, but you gotta have some of them used to have like an old. If you study and I haven't. You've probably studied informal more than I have. Some of the old model was have 200 events. Right. I think the old Informa, the old essential. The other model was look we're going to have, we're going to have the, the oncologists of the Florida panhandle and we're going to have the whatever the hematologists of North Saskatchewan because you know they're all we can make a 500k or a million on these and we rolled them up. But I think the margins got so compressed in these subscale events that all, I think all of them abandoned this, this broad category and they're like, hey, we want, we want some hundred million dollar type properties, right?

Yeah, totally.

There's more of them than you think. If you really dig right. There's more of them than you think.

You mentioned at the beginning of this interview kind of offhand that Harry might make more money than you with his media business.

No, I think he'll make more money investing and will invest. I think Harry will invest an order of magnitude more than I will. At least an order of magnitude.

And, and that's because he just wants to. Wants to.

Well, he's starting earlier. One, two, I love that my portfolio companies. One, he started earlier. Two, he has more passion for investing as an investor and three, he's going to raise a lot more money. Harry will raise billions of dollars. He will raise billions of dollars before you know it. And he will, he will ultimately be whatever he builds on his team, he will be, you know, a very successful managing general partner of billions of dollars. I'll never manage billions of capital. I'm out before I ability. I'm just, it's not my passion. But Harry will manage billions and the LPs love them. And he's a good capital, he has a very specific model and he's a good capital allocator.

Yeah, it's interesting. I'm trying to figure out my passion with this stuff too. And it's interesting because I'm, I, you know I helped start Product Hunt. I started on Deck so that, that's you know, community media stuff. I helped start Village Global sort of wide ranging seed firm and I'm figuring out in 2024 kind of like what's the, what's the combination of my passion and the best business model for it? Because in some ways it's been kind of like a hybrid or intersection between and so right now it's trying to build this media company that is something like a Lenny or Harry for X. You're trying to find, you know, what you were able to help Harry do in terms of build his, his. I mean in some ways I used to say saster for X. Right. Like you know, vertical media. You went really deep able to create a, both media business and event business. If we could help other people do that for their areas of expertise and you know, help them get started, give them a platform, you know, pay for their salary to, to leave their job and go do it, maybe there's some roll up there. I'm curious for your reaction to that idea or your, your broad advice for me. You know, we're just, you know, chatting for the, for the first time in person.

Well, maybe two things. First of all, the, a lot of these things like when you, when you really get to know them, they're more nuanced than they look. So what Saster is, is very different than Lenny or Harry, both of whom, you know, I just, I, I just got to know Lenny. I've known Harry since literally he was 18 years old or 17, I think. But Saster is a trusted resource for first party knowledge. First and foremost. Harry is an interviewer and now a truly an expert inventor, like off the charts expertise. When he started he was just a student of Venture. Now he is, he still has, you know, we all have more to prove as investors our whole life, but as a, as a, but he is an expert in every part of Venture. Lenny, I think is a classic curious mind. He's like to me and I only know him a little bit, but having now interacted with him a bit, he's like the talk show host of product. Like he has this curious mind which you, you too many people do podcasts and they talk about themselves or their product they don't have curious. So he's great. But he is not like a trusted subject matter expert for scaling the product of your company, is he? He's a creation of media around it. Right. And Harry is like that for Venture. So I actually think you can build Sasters, but I don't think they're like that. I think they're more like freight waves and other things like this where you have deep knowledge and they're better than Saster in some ways. I think you could build that. That's. I just, my point is it's, it looks similar to those, but it's not. People go to Saster. It has to be incorruptible, it has to be unimpeachable. It has to be honest. It has to not be a game. It has some primary 95% of, you know, 90, 99% of Saster is free. No one's ripping anybody off, no one's trying to over monetize you. Right. Not that Harry or Lenny are doing that, but it's, it's, but it's different. Right. And so there aren't that many trusted sources of knowledge that aren't selling you crap. Right. So. But I do think you could build those. You could find the subject matter experts that are able that have passion around producing and creating lots of knowledge and package those up very thoughtfully. But it's not the same as the, the, the podcast thing, I don't think. I think the podcast is just one way to distribute that knowledge.

Yeah, right.

So the, the other point you said, for what it's worth, I really think pursuing your passions profoundly dangerous. I, I think it's a sucker bet. And I. Even worse, I think it's become almost toxic on TikTok in 2024. It's terrible advice to pursue your passions.

Right.

Pursue what you're friggin good at. I, I have done so. I have built implantable batteries that have saved hundreds of lives. I have done so many things. I have help founders be. Make hundreds and hundreds of millions of dollars. I've created jobs like. I don't have passion on any of that, Eric. But it's what I'm good at and I'm driven to do it. And I'm driven to do it. But passion, I just feel like passion. And I don't. I'm being, I'm not being facetious. I don't mean to, to, to. I know that's not exactly what you said, but I just think for folks that if this part goes out, be wary of your passion. Do not pursue your passions. Pursue what you're good at. I don't. You know, I don't. You know, I, I do. You know, I. There part. There's a lot of this stuff. I, I just don't enjoy that. I do. I don't hate it or anything. Like, I don't do the stuff I hate anymore. Like I'm done. Like, I have enough success in this world. I could do anything I hate, But I do what I'm good at. Not where my passion is, not where I don't do where my passion is.

It's a good dose of, of realism there.

Yeah. Because the world is in 2024. Everyone's a quitter, Eric. Everyone's quitting. Everyone's a quitter. And everyone just wants to be a manager and not do work. And I can't stop this, but I just want people not to pursue their passion.

Yeah, you got to do the hard work if you want to be.

No, just do what you're good at and you will become passionate about it. But it may not be your passion.

And then the question is, if you're good at building, you know, community and networks and media stuff and, you know, a little bit good at investing. It's kind of like what is the.

You can't be a little bit good at investing. It's not worth it. No, no. You want to know their lesson? It's not worth it being a little.

Good if you're great.

No, it's more like. Listen, there are exceptions, okay? There's the, there's the classic Uber angels, right? But in today's world, if you're a little bit interested in investing and you can't lead deals because you don't have a lot of money and you're whatever and you're putting 25k or 50k checks into companies, even if they exit for a billion, you don't make enough money. It's not worth it. It's not even worth it, frankly, to invest in. Unless it's a Decacorn or better. It's not even worth investing if you can't own 8% of the company. Right. Really more because there's so much dilution today. And so investing a little bit looks good on Twitter and, and it can make you, it's something to talk about at cocktail parties in Miami or Austin or wherever. But I, I, I mean I literally will not write, I will not write any small checks ever. The worst. Yeah, they're like, they're, they're also a sucker trap because you're asked to help the company a lot. But, but no, I don't think, I think you gotta like, you gotta be, you can only win in venture if you're, you got to be relentless. You have to win large positions in iconic companies. It can't be a side hustle. Right?

And so if you were advising Lenny, Lenny said, hey, how should I grow my business and assume I'm equally excited about any path? Should he take the Harry path in raising a bunch of capital and using the content as sort of, you know, lead gen or distribution for it? Or should he, what should he do?

Listen, I don't have access to Lenny's financials exactly. Or if I did, I certainly wouldn't share it with you. But to answer the question more in a hypothetical, let, let's, you know, Lenny's done some things saying that his business does half a million a year. Maybe it does more now. Grow it certainly gross. I could see it doing more. Right? I could. Let's say it does 700,000gross and 500k net to him just for fun. So he makes $500,000 a year and he's actually an angel investor in some pretty good companies. So let's say. But he's not on 10%, doesn't own 10% of linear or whatever. So let's say he's made some good, I know he's made some good ones. So let's say, you know, adjusted for time, eventually he, he gets a couple $2 million checks back. 1,000,800. So he's making 4 to $500,000 a year from investing and 4 to $500,000 A year from his media business. Really just getting to know Lenny, you really have to, you, you, I, you, you have to decide how ambitious you are in this world. If he can make a million, half million dollars a year in current income and then half million dollars a year in qualified small business untaxed income, that takes years to come. But, but, but, but, but produces itself over time. I think 98% of the world's happy with that. I know Harry is not. Harry's an empire builder. To his credit, to his, to, to his credit, Harry is. I feel like I'm one of the most driven people on the planet, but Harry is more ambitious than me. I'm not even that ambitious. Harry is very ambitious. I don't know if Lenny is, I just don't know. I just don't know.

But let's assume he is.

Most people would, would cut off their left ear to have Lenny, Lenny, what Lenny has today. But he didn't get it overnight, did he?

No, no, no. And I think he makes a bunch more. I'm not sure, but I think he's, he's absolutely crushing it.

He might make a lot more. There was just an article that like a year and a half ago that said he made 500 that he was on. I listen, if Saster Digital Media does 2 million, he could make more, right? It's not in my, and it's literally not if I knew it's none of my business. I'm just having fun with a published thing that said it was 500k whatever.

Two years ago and I'm just using him as a standard for Packy or just any business creator who's an expert on a sector or a position and does investing on this on the side is the best way for them to make money. Because I'm kind of in this position as well to some degree just, just going all in on investing or is it building?

I don't know, I listen, I've never talked, I don't even know Pat. I've never read anything he's written. I know people love him, but I do think he's raised like 5, 4 or $500 million. Right. It's a lot of money.

He's raised a lot.

But he's right. I know he's raised hundreds of millions of dollars. I think we have an LP in common. I think he's raised hundreds of millions of dollars. Okay. So if you raise hundreds of millions of dollars and a lot of the. And a lot of these small managers charge 2 1/2% in fees per month. As a solo GP, yeah. It's hard for your podcast ads to keep up but, but probably if he had. My guess is he really is a full time investor with, with this media on the side. Lenny is a full time media guy that is brought in that great investors bring into the cap table. It's a different model and being brought if you have a brand like it is something I thought about in the earlier days of Sasser. Do I want to be the guy that's brought into the cap table? Do I want to bring the. Because I would get these deals in the early days brought in. Right. Harry was that guy in the beginning too. And you know what I quickly realized is they all want me to hire their whole sales team for them. I can't do that for a 25 or 50k check. I just blow my brains out. But someone like Lenny, who people love and has great distribution, he might provide just the right amount of value for a 50k check. That might be the perfect. Going back to our conversation, I'm just hypothesizing that could be the perfect match to his where he's good, his strengths, his business model and maybe pack. He's got to write $10 million checks given this fund size. Five million, I'm guessing. Right. He can't write 50K checks. They got to be seven. He's got to write seven figure checks. Right. And Harry writes five million carries. Average check size is five million. Harry's average five million. That works. His model.

What do you think about the Tigus business model or sort of this business model of like, or Pitchbook or crunch like paywalled data product that sells to. Sells to investors, late stage or hedge fund, private equity, etc.

Well, listen, I mean I've gotten a few pitches over the years and I haven't taken them far enough to really be an expert. I guess. Here's the thing, but I'll tell you my, my somewhat informed opinion. So what Pittsburgh sold for like a couple hundred million dollars a way back. Right. I think Crunchbase may have been on the block, but you know, it's got a real, you know, it's, it's had its upset but as a real business, it has a real data. I think the thing I know when you're thinking through all these models, okay, in today's world, it's a weird world, people are mixing up so many things. Can a solo entrepreneur have a trillion dollar business per Sam Altman? But then we have buzzfeed, which needs a thousand people to fuel the engine. Right? I think we're not, we need to be honest about the amount of humans that a model takes. And for anything that is like you're talking about anything that is media or data related, is there a ceiling? And anytime I talk to someone trying to sell things to PE and vc, there's clearly a real market, right? But no one, no one I've talked to has, has told me how this, their businesses are going to accelerate after 200 million in revenue. So, and you know, I, for, you know, if I just would not. I just think people, you gotta be in the right box. What was the media company that raised 40 million that collapsed after a year the other day? I can't remember, some veterans, some veterans of whatever, Business Insider, whatever, raised 40 million for their next generation and they spent it all, it's gone, right? Because they needed 80 reporters and all of this. So I don't know, can, can like I'm interested in those models. If they can, if, if they can clearly accelerate after nine figures of revenue, like clearly accelerate. Not, but not. But too many things. Like I want Sasser to get to 100, but Saster itself cannot get to a billion. It is not possible. I'm not trying to be pessimistic. I could actually build you a PowerPoint that says it. I could build you a Google Slide. But it can't, it can't happen. This is, this is my life learning from Saster. It can't. There are certain businesses that cannot get to a billion, right? And pros and cons, I think keeping them lightly, lightly capitalized and lightly employed. Sometimes, well, it's always the right place. Sometimes the economics can be favorable, right? I mean, you know, sell a company for 100 million you own 100% of. Is that better than selling a company for a billion you own 10% of? It's actually an existential question. It's an existential question. It's because it's what journey do you want to be on? Right? But anyhow, I'm rambling, but I see too many data businesses decay. I see too many that have trouble scaling. And so that's why this is my really long winded question of saying I'm not sure. I'm not sure. But VCs are cheap.

Yeah. And yeah, maybe you only do that business if you own 100% of it or something.

Yeah. But you can't invest in if you're going to be a VC. Like you can't own 100 of the company. Like it might be nice if management owned any of this. I'm also a skeptic. The other thing, okay, everything we've said so far, I feel like I have some life experience and some good knowledge. I'll add one other thing which I do have some life experience on, but maybe I'm wrong on this one, this next one. But I'll give you my opinion. Way too many people are trying to build too many income streams, too many compound businesses, too many charlatans on Twitter or X are claiming, hey, I've got 11 $2 million SaaS businesses each putting out 500k a year. So I'm making 6 million personally for my 11 SaaS businesses. Bless their soul. I don't know anyone that can run 11 businesses at the same time. I know Harry and I are both struggling to do what we do. Harry's struggling and here's wildly successful. We were just, we're both struggling just to do what we do. That's like one and a half right now. You could hire 100 people, right. But way too many people want to do 11 pitchbooks or 12 data plays together. And you know the folks that really do that? Well, the PE firms have armies. They have armies. So I would caution people to, to pursue their passions. I see so many folks these days and I see it with some fountain with mediocre founders and I see it with a lot of sales executives. Now I can't say how many VPs of sales I inter that have three, two or three jobs now. And you know what? Some of them do fine, Eric. Some of these VPs of sales do fine, but they never do great. How can you run, how can you be VP of sales at two different companies and run a real estate business and do another business all at the same time? How can you, If I, when I write this on LinkedIn or anything, I get, I get lit up as toxic or whatever. But how can you run three maybe with 30 people? How can you run three full time businesses? Right? So that's why I just. And so my point is, I think I'm right about this. My point is I'm just, I'm wary of these seemingly easy to aggregate businesses. I'm wary of it now I do think if you can do it and maybe you'll do it with these, with these verticals. I do think if you commit a thousand hours a week and figure it all out and do new things, I do think it's a superpower. If you can do this, if you can. But, but it is not to be done lightly. Right? Combining 10 full time jobs is just, it can be done, but it should be done intentionally, right? Not, not, not, not. 10 lifestyle businesses do not equal one great lifestyle. I think they, they, they, they create instant decline in all 10 businesses. They instantly all go into decline. Right?

Yeah. That's a good cold open. The, the last question I'll ask is if you're an empire builder like, like Harry, do you end up building sort of this massive fund of funds or like what is an empire builder in VC to, to, to do? He's already started with the sales and his product thing.

I think. I don't know. We'll watch, I love Harry. We'll watch where he goes. He has a long run ahead of him. I think it's funny. If you go to, if you go to sasterfund.com I, I have some dated testimonials on it from when I raised the first fund and one was from Josh Stein who now runs Threshold Ventures. And for the first one he's like $60 million. That's jaw dropping for a first fund. And it was, that was just 2016. It was jaw dropping. 68 million, 70 million. Okay, whatever that was. Now Harry is part of an avant garde of. He has help but solo gps that manage hundreds and hundreds of millions. How much does Elad Gill manage, Bill? He manages billions of dollars as a solo gp. Who's the Trip Actions guy that hangs out at Cafe Veronica in Palo Alto? He manages billions. That Israeli American VCs. He's in all the good ones. He manages billions. Billions. Eli manages billions. I believe Harry will manage billions. And maybe these other guys that I don't know packing those, they'll manage billions. They will manage billions. And will this model break at some point? Maybe. Is it efficient though? It's very efficient. Is it attractive to LPs? It remains attractive to. Here's maybe the last point. It remains attractive to LPs in 2024. It remains very attractive to LPs to pick their manager, not their fund. LPs still want to pick the best manager. They don't want to be forced into a fund they don't want. And LPs have gotten to grips with that. Hey, I May have to write a larger check into a solo GP than I used to. There may be risk hit by the bus, risk gets tired, risk doesn't have a team risk. But my learning from the last 18 months is they're willing to do this with very large checks they're willing to take. And it's a risk, right? LPs all have a portfolio themselves, right? They don't have one mat. No one has one manager. But you've got to have a couple of outliers in that portfolio where the math breaks, right? And they're willing to take this risk that, hey, I'll fund a Solo GP with 400 million. When in 2016. A solo ish. Not even. Not even. So a soloist GP with 70 million was seen as very risky. Very, very risky. 400 million is not seen as risky. Right. So I don't know if that's exactly what you're asking, but that's the world we're in. And it's not so much that I think Harry's going to build an empire and he may, he already is sort of building a mini empire. But what I think Harry is doing and a few others are doing, which I don't, just don't care about, is they're hyper attuned to the markets and the landscape and what the. What LPs want and where venture is. And I haven't changed. I want to write one to $4 million checks when things are just taking off. I wrote those checks in 2013 and I wrote them in 2021, and I wrote them and I didn't write them when the world ended in March 2020. But other than that, I've read the same checks, Mr. Fuddy Duddy here, I've written the same checks even as the world has changed. But Harry, Harry and the others you described, they play the, they play the market as the market has evolved. Right? And I think that's, that's the right. I think that's why when we started this, I. It's one of the many things I think I've done wrong. I haven't changed. I'm not interested in changing. Right. It's not that I don't recognize the power of it, it's just I, it's, you know, it's, it's, it's my mistake because it's, it's not where my passion is, Eric. So I'm making a mistake.

Well, you've stayed true to, to what you're good at and how you want to spend your time, which is for for better and for worse as you as you've described in this episode. I let's, let's wrap on this. I appreciate you sharing your your learnings and your wisdom with with us. I've really learned from, from watching you build Saster and the content you've put out for all of us entrepreneurs. So thanks so much Jason.

The only one I'll add. You can end it the one I'll add. I always want to be positive and helpful. I would just caution people you asked all the right questions. I think, you know, I didn't. I wouldn't have even gotten this 24 months ago. Media businesses are hard. Not only are the buzzfeeds hard and the Lenny is hard, but you know, even just selling courses is hard. It's hard media business. The weird, the funky thing about media business I don't get is like look, if you have product market fit, you can scale fairly quickly. But then you hit a point and then we can break you hit a point. And I didn't, I didn't really get this until 12 months ago after all this time. At some point, the fact that it's not recur truly software recurring revenue at some point, no matter what you tell yourself, no matter what you blind at some point it bites you. It bites you because the way these software businesses scale is with north of 100% NRR. That's the way they scale because it gets harder and harder to get customers and you deplete markets and you have to expand. You do this and these media businesses can seem to have very similar characteristics. But just be thoughtful about where the headroom is and where they hit and that. If I had my biggest investing mistake of 2021, I made quite a few. I still did okay in that batch, but I could have, I'm still, I'm also gonna have my two biggest losses ever, even though they're not that large. My two biggest mistakes was confusing pseudo recurring revenue with recurring revenue. I asked David Sachs the same question as SAS random this year. You can watch the session onto he said, me too. He said I did a bunch of these. He's like, for example, I invest in a real estate brokerage that we thought was SaaS. Turns out it's just a real estate brokerage and there's elements in media. So just be, don't be suckered in by the small amounts of easy money in the earliest because there's small amounts of easy money, right? There are issues that don't exist in software. You don't get the scale benefits you don't get the lift. Right. At some point in software it never gets easy. But it gets a little bit easier when you have 120% NRR. Right? If you have 120 NRR and you're at scale. We know we're going to grow 20% this year, don't we? But a media business could go from 100 million to 10 million in one year, right?

Unless you're freight waves and you figure out how to convert media to data or media to SaaS.

Yeah, but even there it's interesting that they're dumping the media business, right? And they're converting to data. So there, there are, there, you know, there's Crunchbase too. There's a few other examples like that. But, but, but my, but, but I don't think that challenges my point. I think it reinforces it is that they. He hunted to find ways to do more with this. Right? But if he left the, if he, if he'd, if he just enjoyed his 20 million dollar year media business or whatever it was, it sounds good, but I think he'd hit the ceiling for it. Right? That's the, that's the thing. And just be, just be thoughtful because it's, it's just I, I, the, I think it's just, it doesn't, when you're growing, you don't see the seal, you don't feel the ceilings. So anyhow, sorry to add to tack that piece on.

If it's helpful though, I appreciate it. It's, it's real talk. Jason, thanks so much for coming to the podcast.

All right man, let me know what else you need. I'm here.

Perfect.

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