A short recorded conversation where Jason M. Lemkin and an interviewer discuss common venture-capital assumptions ("VC-isms") that can cause investors to miss opportunities. Lemkin critiques the idea that certain markets (e.g., payments) are "commodities" or a "race to the bottom," using Stripe as a counterexample, and notes the recurring VC objection that incumbents (Microsoft, Google, Salesforce) would block startups—arguing that such assumptions have historically led investors to pass on successful companies like Stripe, Calendly, and Outreach.
For me, the thing that I always run away from is kind of commoditization products. And what I mean by that is products where it's just a race to the bottom. Now you could see payment processing as part of that. I know many investors lost on Stripe and Adyen because they viewed the market as that. Yeah, but how do you feel about commoditization products where it simply is a race to the bottom?
Listen, I'm with you and you know, all things being equal, I'd rather have a product that hits small, medium and large customers. Right. And has a bit of a mid market or enterprise element that isn't very low end or race to the bottom. But I also think that is an AVC ism and you're going to lose great deals due to VC isms. All these VC isms are truths. And you know, when I started investing they harked back to the dot bomb era when everyone knew things didn't work. I don't know where we're harking back now to 2016, 2017. There was a famous tweet that David Sachs had before he started investing in Craft that all the good ideas in SAS were done after he sold Yammer because this was, you know, we were of the same co class and it seemed like for a couple years there it was done like all the categories had been built out until maybe 2015. And so my point is this race to the bottom thing, like is it true or is the fact that Stripes API was so elegant and disruptive and that they could build so much functionality around it that why would you use anything else? Maybe, maybe we missed the whole point and that this is not, I do not believe Stripe is a commodity. Right. Whatsoever. And if I were building the SaaS company today from scratch and, and I wish I'd invest in Stripe because this was also in my top 10 problems as a founder was payment processing. I would use, I wouldn't even if anyone, if my engineering team want to use anything but Stripe, I would really challenge them. I'm like, it's proven, it works. Everyone uses it. I'm in. I don't even care what the fees are that much. There might be like, they might say, hey, look, use something like Pilot that can handle billing and automation too. And they might, I might do that. Right? But for the pure API piece, no. So I don't know that this, this, this race to the bottom thing, like you, you, you, you, you might just miss some things. All these, the tough thing is all these VC isms are accurate and they'll all lead you to miss deals.
You said VC is in that multiple times. What are the other mistakes that VCs make or you always laugh at when you hear them talk about competition.
I think the one, look, I'll give you a version of it, the one that we all hate, of course, of the old, the old, old version of is why wouldn't Microsoft or Google or whomever do this? Right? Then it became why wouldn't. Then it became why wouldn't Salesforce do this? Like, you know, I, I was involved, invested in sales off pre revenue, right? We sold for two and a half billion last year. Everyone thought this was a terrible category. Sales, often outreach. Outreach is worth 4 billion. They all thought it was a terrible category because of course Salesforce is going to do this. Of course. Like automating sales communication with customers. Like why would the number one CRM not do this? There's no way they're going to let these guys get big enough before it's. It's just built into Salesforce, right? So why wouldn't they do it right? Why, why could, why should Calendly even exist? Google should have built that, right?
That, that is so true. I mean, Calendly, why?
Why? I mean, listen, Tope had a couple incredible workflow insights in this product that, that, that were profound. But you know, like, so, so that's the ism. Like the worst ism is why didn't somebody do it? And I think that you can ask that question in a thoughtful way, but it's a lazy question if you don't. If you don't ask it in a thoughtful way, right? I want to know what it's not. What it's not. Tell me why didn't Google build it? Just, just so I always use the Columbo type approach. Like I honestly don't know. Like why, why do you think Google has not built this into their calendaring function? Ask the question why haven't, why doesn't Salesforce built sales after Outreach back in the day? It seems so core. Tell me why they haven't built it right and the smart founders will actually tell you why they didn't build it.
