Ben Gilbert: evaluation

Transcript context

…You can feel that way all you want, but don't argue about it. Right. Speaking of things that are specific to institutional VC, like we discussed on our VC fundamentals episodes in the LP show, there is an investment process that has to happen because there's a lot of partners. You need to figure out, we raised this fund, we got these 22 people. Isn't that crazy? It's 22 now, but even imagine a smaller partnership earlier on, 5, 6, 7 people, like how do we make decisions to invest this fund? An interesting thing that they do is they do not have a consensus-based approach. I think, and this is according to the information which is LinkedIn sources, any GP can pull the trigger on any deal on their own. They can say things like, I'm going to bat for this. The way Marc describes it in some podcasts is that they assemble a red team. The way we've talked about this at PSL and I think I've talked about on LP episodes in the past is to have a foil if you're advocating. To turn a project into a spin out, someone should be the bear case on it or your foil. Marc calls it the red team. He's like, we basically staff someone with the responsibility of going and trying to figure out why this is a bad investment. Because if you don't have the consensus of the partnership, and you're putting your name on the line, sure we should do that investment, maybe, like it's a good non consensus bet. Also, you should have to go argue with someone who's going to present the other side of the case. He's like, we figured this out because Ben is my red team. I can come in and be super optimistic about something and Ben is naturally good at it because they fight like dogs. He’s naturally good at presenting the other side of my argument, and we decided to institutionalize that in the firm, which I think is really an interesting approach that both forces you to be diligent but also allows for non-consensus bets. Interesting. I like that in theory. I wonder in practice how much it actually goes. You and I know these deals happen in days if not hours.…

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