“Every concentrated manager will say that we win 90% of the deals we want to win. And I think that's total BS. I think it's like 20%. … I think you actually offer that deal to upwards of 120, maybe 150 companies to get your 30. And I don't think people admit that. So I do believe that the best companies, the ones you're most excited about, don't always make it into the portfolio.”
sputnikintelligence.com
Harry Stebbings asked where his criticism of Tisch's low-ownership, many-company model went wrong. Tisch argues that funds built on owning a big stake in a few companies overstate how often they actually win the deals they want.
the second part is, yeah, maybe that's it. Or maybe the lack of dilution part that I made before is what you get at the beginning actually stays pretty consistent. Whereas I think in the past, you would probably put like a negative 80% on that number.
With Jason Lemkin, who I do a lot of shows with every week, we do the weekly show. And he's like, 100%, 60%, you'll be diluted. Is that not true in your life? I don't think of the best
…to get in. Meaning every concentrated manager will say that we win 90% of the deals we want to win. And I think that's total BS. I think it's like 20%. And so in a given fund cycle, if you're funding 30 companies that you have this immense conviction in, concentration of 30 names with 10%, you need, obviously, you need because it's vital, need 10% of the company in order to make the deal work. I think you actually offer that deal to upwards of 120, maybe 150 companies to get your 30. And I don't think people admit that. So I do believe that the best companies, the ones you're most excited about, don't always make it into the portfolio. And so just because you have 30 that you own 10% of, it doesn't mean those are the 30 that you would have liked to be in that portfolio. I think in our model, what we're able to do is get into more of the companies that we're excited about than other people.
I get that. And you know what worries me though so much? And I'm asking here, but it worries me is I completely agree with you in terms of that supposed win rate. What happens now though is they just say, David, okay, fuck it. I lost to Sequoia and Box Group. Let's do another round. I'll do it at…
That is like a babysitting problem. It is. Sometimes that's going to happen for sure. But to attribute that fear to every founder, some founders are going to tremendously benefit from having more runway, higher valuation, more momentum, more buzz in order to recruit people, in order to show that…
Why was it totally awful? Because name a