20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 17 June 2019

⏱️ 30 minutes

🔗️ Recording | iTunes | RSS

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Summary

Jonathan Hsu is Co-Founder & General Partner @ Tribe Capital, one of Silicon Valley's newest funds on the block being founded by Jonathan, Arjun Sethi and Ted Maidenberg. To date, Tribe has invested in the likes of Carta, Cover, Mode Analytics, Prodigy and SFOX. As for Jonathan, before founding Tribe he was a Partner @ Social Capital where he utilized data and technology to augment sourcing, evaluation of investment opportunities and the management and value add for portfolio companies. Before that he led the creation of the analytics and data science team at Facebook, including leading the hiring of 200 of the world's leading data scientists and analysts.

In Today’s Episode You Will Learn:

1.) How Jonathan made his way from leading 200 data scientists at Facebook to the world of venture and founding his own firm in the form of Tribe Capital today?

2.) If we structure VC simplistically, there are 4 core components:

Sourcing: How does Jonathan think about the role of data in actively surfacing the best opportunities? that are the leading data fields that Jonathan would track? Why does Jonathan believe most early-stage firms are just using Linkedin Sales Navigator intelligently?
Evaluating: How does Jonathan think about the potential for data to really aid in the picking process? At what stage does this really become possible? How much data is required for data to evaluate opportunities?
Winning: Winning deals is seemingly a case of human relationships but how does Jonathan think intelligent data usage and benchmarking can actually help firms win the most competitive deals?
Value Add: How does Jonathan think about portfolio management with data? How does this differ from the more traditional "value add" that other VCs provide? Where are the common pitfalls Series A companies you work with face in not achieving product-market fit?

3.) Given the data-driven nature of the approach, does Jonathan think that there is an optimal portfolio construction? Why does Jonathan strongly believe that historical loss ratios are too high? Does data allow firms to really intelligently price these assets at the Series A and B? What are the challenges in pricing these assets so early?

4.) How does Jonathan think about reserve allocation? Why is data more critical than ever in the decision to re-invest or not? What are the leading data signals that Jonathan looks for when determining reserve allocation? Why does Jonathan think that so many firms go wrong in how they approach reserve management and distribution?

5.) Question from Henry Ward @ Carta: What does N of 1 markets mean to you Jonathan? Why are they so inherently attractive? How do pricing dynamics play out in markets that are N of 1? How does Jonathan think about defensibility when analysing opportunities today? Is anything truly defensible anymore?

Items Mentioned In Today’s Show:

Jonathan’s Fave Book: The Origins of Political Order: From Prehuman Times to the French Revolution

Jonathan’s Most Recent Investment: Carta

As always you can follow Harry, The Twenty Minute VC and Jonathan on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Transcript

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0:00.0	You are listening to The 20 Minute VC with me, Harry Stebbings, and I'm doing more and more on
0:03.5	Instagram these days, and so if you'd like to see behind the scenes here, you can on Instagram
0:07.6	at H. Stebbings, 1996 with 2Bs. But to the episode today, and many of our guests have similar
0:13.2	ish backgrounds, but few have led 200 person strong teams of the world's leading data scientists
0:18.7	at one of the most transformational companies of our time.
0:21.4	Well, today's guest has, and with that in mind, I'm thrilled to welcome Jonathan Sue,
0:25.4	co-founder and general partner at Tribe Capital, one of Silicon Valley's newest funds on the block
0:29.7	being founded by Jonathan, Arjun Sethi, and Ted Maidenberg.
0:33.1	To date, Tribe is invested in the likes of Carter, cover, mode analytics, prodigy and S-Fox. As for Jonathan,
0:39.5	before founding Tribe, he was a partner at Social Capital, where he utilised data and technology to
0:44.1	augment sourcing, evaluation of investment opportunities and the management and value ad for portfolio
0:49.1	companies. Before that, he led the creation of the analytics and data science team at Facebook,
0:53.6	including leading the hiring of 200 of the world's leading data scientists and analysts.
0:57.9	And I'd also want to say a huge thank you both to Arjunsethi and Matild Colin at front
1:01.7	for providing such fantastic questions suggestions today.
1:04.5	I really do so appreciate that.
1:06.5	But before we dive into the show today, at the end of the day,
1:09.1	your customers have to be at the center of everything you do, and that's why M Particle is just so crucial being your real-time
1:14.7	customer data platform, or in other words, M Particle is the fastest, most efficient way to
1:19.4	keep customer in sync everywhere, from marketing to analytics to customer support.
1:24.2	M Particle empowers different teams to execute on their KPI's independently,
1:28.6	whilst understanding the customer holistically. But don't take my word for it. They have the
	...

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