10+ hours of podcasts, in 5 minutes.
4 quotes from 1 episode on 20VC with Harry Stebbings, each with a timestamped link to the source.
Jason Lemkin questions the ethics of selling a profitable startup to private equity buyers planning deep staff reductions. Acquiring firms regularly eliminate 80% of workers within weeks of taking control.
Large investment funds routinely direct lawyers to draft term sheets that strip early seed backers of future participation rights.
“As a seed investor this happens all the time. The big funds in fact they put in their term sheet without even checking it. Their lawyers immediately put in that my pro ratas waived in every single round.”
Venture capitalists occasionally file lawsuits against their own portfolio companies over operational disagreements.
“I've observed VCs suing their portfolio companies for doing the wrong thing…”
Founders running cash flow positive operations have stakeholders to consider during an acquisition. Jason Lemkin questions the morality of handing a healthy business to a buyer planning immediate mass layoffs.
“Do you have any moral obligation to sell to someone that's going to lay off 80% of your team within weeks? They are stakeholders, especially if you're cash flow positive and growing.”
Decisive internal restructuring can rapidly reset company performance. Matthew Prince eliminated 20% of staff in a single day, which drove an 80% increase in stock value and pushed the business past quarterly estimates.
“Matthew just came in and said I'm laying off 20% of the team. Just doing it. He did in one day and they beat the quarter. They accelerated growth even more. The stock price is up like 80% this year.”
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