In his own words: Why Snap and Affirm investor Jeremy Liew stepped back at Lightspeed Venture Partners

October 15, 2021, 2:56 PM UTC
Jeremy Liew of Lightspeed Venture Partners, and a board member at Affirm and the Honest Co., discusses why he stepped back, “fake it till you make it” culture, and dragons on maps.
Bloomberg/Getty Images

Lightspeed Venture Partners’ Jeremy Liew is not where you’d expect to see him.

The venture capital veteran known for being the first investor in Snapchat maker Snap announced in mid-September that he’d be taking a step back from investing after building up Lightspeed’s consumer investment chops, beginning 15 years ago.

With what felt like pressure off his shoulders, it would have made sense for Liew to be enjoying his newfound freedom from the comfort of a living room couch or even relaxing poolside. Instead, Liew sat, as he had since the beginning of the pandemic, within the four walls of his bootlegged home office when we started our conversation on Zoom: his neighbor’s cheery guest bedroom covered with light-green, plaid wallpaper.

And those who call him may see him in that setting for a while as he continues to operate on the boards of his companies, and helps build Lightspeed itself. For Liew, the September news is no retirement—but he does see this step back from investing at the still relatively young age of 50 as a natural evolution as private market investors are attached to portfolio companies for longer and longer—putting the time horizon for a full retirement further and further out. While the median age of a company that went public via IPO sat in the single digits between 1980 to 2000, it shot to 11 years over the past decade.

But perhaps more poignantly, COVID, too, has reset the investor’s way of thinking about work/life balance.

“You don’t miss what you don’t remember…[but] when COVID started, all that time spent on commuting and on travel accrued to me and my family. I was able to do more pickups and drop-offs at school. It accrued to workouts and to family movie nights,” he said. “Then over the course of a pandemic, the world just crept back, and back, and back…So as I started to lose that, I began thinking, ‘If I step back, I don’t have to lose that; it doesn’t have to go like this, because now I remember this.’ And so I feel the loss.”

Liew is not alone in his decision to step back. In September, Spark Capital’s Bijan Sabet and IA Ventures’ Roger Ehrenberg also announced similar plans, signaling a broader trend at play. Each had his own reasons, but the expectation is they won’t be alone in this time of record dealmaking, rich exits, COVID-induced tragedies, and exhaustion.

But here, at the very least, is Liew, in his own words.

This Q&A has been edited for clarity:

Let’s jump into it. You stepped back from investing responsibilities a few weeks ago—something that traditionally is thought of as a kind of retirement in venture capital. Why did you step back at 50?

I don’t really think of it as retirement because I am still a full-time partner at Lightspeed. I’m still going to be on all of my boards, and will be for years, right? Affirm [a buy now, pay later portfolio company] went public this year, and it was seven years since our first investment. I’m going to be on the board for a few more years. So it’ll be at least eight to 10 years before my engagement with it stops. The Honest Co. [the clean home goods firm], same thing. Just went public. And the last company I just invested in and attended board meetings for was about three weeks ago.

So it could be 10 more years. I think of this as a pretty slow, long, glide path to retirement rather than the beginning of retirement.

Basically, this is also about the longer time to exit, one that you don’t expect to get any shorter anytime soon.

Unless you stop putting new deals into the top of the funnel, the pipeline never gets empty. So if I do want to get retired by the time I’m 60, I do need to stop putting new deals at the start of the funnel now because of this longer engagement.

It’s not a retirement. But you are stepping back from investing. So looking back on that part of your career at least, what do you wish you had done differently or learned faster?

When you first start, it’s actually hard to tell the difference between the one in 100 and the one-in-one-thousand company. When you first start as an investor, everything sounds awesome; you meet these entrepreneurs with great plans and fantastic views of the future. So you think, “That is awesome, we should do that. And that’s awesome. We should do that! And that! And that!”

That’s when these rules of thumb start to be helpful early in your career. But the trick is to not let that be restricting: It’s not a filter, it’s a guideline. It’s learning how to break the rules.

That sounds like something you perhaps experienced yourself earlier in your career, where you missed an investment by sticking too hard to the rules?

Absolutely. For example, one of the rules of thumb in venture, if you’re an early-stage investor, is that ownership matters. You want to get 20 points of ownership if you can. And there were instances where I had opportunities to invest in companies, but we didn’t have the option to get 20% ownership. By the way, this was at a time when a big—a huge exit was $500 million. So ownership was important—you needed to own 20 points to get $100 million back.

But then something changed, and we started seeing $1 billion outcomes—then $10 billion and $50 billion outcomes. You didn’t need 20% anymore to have a real impact on the outcomes for the fund and the limited partners.

So part of it is understanding why the old rule of thumb was developed, and whether circumstances change that might actually mean that that rule doesn’t apply anymore.

Think of the really janky maps of the Middle Ages that had something that looked like a misshapen Europe, with maybe big section that says, “Here be dragons.” 

It’s not because anyone saw a dragon out there—it was more because every time they sent a ship off, it’d never come back. So the rule of thumb just became don’t send ships—until one day, a ship comes back, [and they realize] the reason the ship never came back was because they were being sent to the doldrums where the wind wasn’t blowing. But I’m not a historian, this is just a metaphor.

What about a deal that you completely missed?

I always say the very first deal that I lost was Yelp. And I lost that to Peter Fenton at Benchmark. I thought I was the right investor for that company because I used to work for a company called Citysearch, one of the first-generation city guide businesses. I had a really good conversation with Jeremy Stoppelman, CEO and founder of Yelp, about what we’ve done there. I had a term sheet in, and I thought we were in good shape—so I ran off to a friend’s wedding that weekend. And when I came back, I found out that Peter had gotten it signed up over the weekend.

Peter was really relentless: While I was off having a great time with my friends because I thought I had that deal and thought I was the “right investor,” he had CEOs and people calling Yelp.

Obviously I didn’t know what it took. Venture is like a sales job, right? And I didn’t understand that until Peter Fenton taught me that lesson about what it takes to win a competitive deal. And I’m grateful for him.

It’s funny that you talk about it like that. I read your Q&A with The Proof, where I feel like the implication was that you had some semblance of work/life balance. Hearing you now, or at least in that moment, that doesn’t seem as true.

I aspire to a lot more balance in my life than I actually achieve. For sure. Because it’s easier to measure success in work, but it’s harder to measure balance in life. Maybe it’s hypocritical because I know what I aspire to is not what I achieve. 

I mean, frankly, that’s part of the reason [I stepped back from investing]. As I hit 50, I sat down and said, “The way you spend your time isn’t matching up with your stated priorities.”

And what are your stated priorities?

Family. My family definitely has not seen as much of me. 

It’s a bit like you don’t miss what you don’t remember. And certainly pre-COVID, I was on the road three weeks a month and lots of evening meetings, too. But then when COVID started, all that time spent on commuting and on travel accrued to me and my family. I was able to do more pickups and drop-offs at school. It accrued to workouts and to family movie nights. 

I had never had a time when I had that much time to be present for my family—for my kids—as the beginning of the pandemic. So like, that was a bit of, “Oh, it could be like this,” you know?

Then, over the course of the pandemic, the world just crept back, and back, and back. 

I was talking to a colleague of mine at another firm who did a calendar study of their team and found they were now working 20% more than before the pandemic. And that rang true to me: I can’t remember a weekend that I didn’t work at night in the last couple of quarters. That was not because I’m so great or I’m so hardworking, but just the pace has really picked up. 

So as I started to lose that, I began thinking, “If I step back, I don’t have to lose that; it doesn’t have to go like this, because now I remember this.” And so I feel the loss.

I do wonder, from your perspective as an early-stage investor: What is your view on the ever-growing size of the funding rounds, in which startups use cash as a differentiator against competitors? Greylock for instance now has a fund to deploy $20 million seed checks. Do you think that works in the early stages?

The SoftBank kind of winner wins by the size of their checkbook? I think we’ve seen the limitations of that approach. A lot of capital can be incredibly helpful when you’re still finding the right playbook or if you’re still finding product market fit. Money can buy you that time.

But sometimes constraints actually increase creativity. When the team feels a little uncomfortable, it almost spurs insights, innovation, and rigor to home in on the thing. So I don’t think there is a clear answer at the earliest stages.

You also think the consumer space is a different place today than when you first began investing.

Back in the day you needed to have a bunch of money just to even try something because the problems were all technical ones that hadn’t been solved before. That’s still true for infrastructure and deep tech. But in the consumer world, you can go to a boot camp and set up an app. You can set up an e-commerce website with Shopify

I think consumer technology today is pop culture. It’s pop culture insight that has become a scarce resource: For example, “Lips are going to be prominent as a beauty marker, and I, Kylie Jenner, have the right to brand and create a brand around it because I am already recognized for the look and don’t need to advertise around it.” 

Which, by the way, is why we’re seeing a massively diversifying base of consumer entrepreneurs, right? Because if you ask yourself who leads pop culture in America today, well, it’s young women and the African American community that are the adopters of pop culture—just look at music and dance. So now you are seeing a diversifying base of entrepreneurs, which is now backing up to a diversified base of investors.

Last question: Quite a few venture capitalists have disowned Theranos’s Elizabeth Holmes story, saying many of her investors aren’t related to the industry. While you didn’t write on Holmes, you did opine on the story of Ozy Media, saying it fell outside the “acceptable startup space-time-truth continuum.” While each story falls on different parts of the acceptability scale, they both are used as criticism of “fake it till you make it” culture in startups. Do you think disowning Theranos was fair?

So I’ve never met her and don’t know anything about her beyond what I’ve read, so it’s hard for me to opine.

But I do think there is pressure for many entrepreneurs to fake it till they make it, and I think that that is part of the culture in the startup ecosystem. 

How are you doing? “Oh, we’re killing it. Everything is awesome. We just raised another round of capital. Business is booming.” You can’t actually answer anything but that, because everyone’s expectation is that if you don’t say that you’re a loser. There is a real pressure. 

It’s almost like Instagram, right? 

And the sad thing is it drives a couple of things. It creates significant mental health, stress, and depression among some startup founders because that [rosy picture] is not what’s going on most of the time. Most startups have a really tough time, and in fact even the best ones go through zigs and zags. I’ve been involved in a lot of companies, and not one goes continuously up and to the right without running into a problem. But [these stories make] founders think, “I’m a failure, because I see everyone else is succeeding, so what is going on with me?”

And then the other thing it perpetuates is people faking it by not just telling people things are great, but faking real data. And that’s where you go from putting on a front to fraud. I don’t know much about Ozy beyond what I’ve read. But I believe if you impersonate a third party, as a reference, that’s pretty freaking bad. That’s not on the gray side, that’s on the wrong side of the line.

Have you personally experienced the latter consequence of the “fake it till you make it” culture?

I’m lucky that in my personal portfolio, as far as I am aware, I have not run into that problem. We talk about Ozy and Theranos—but then you start to run out of names. So it’s not a widespread thing.

So in your view, while “fake it till you make it” culture is a real issue, instances of crossing the line into fraud are still relatively rare.

It seems to me. I mean, I haven’t done the study, right? So I don’t know. But can you name another? I can’t.

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