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Fred Wilson & Andy Weissman: Managing Generational Change | Upfront Summit 2017
45 segments available
Fred Wilson and Andy Weissman of Union Square Ventures join Lindel Eakman of Foundry Group Next to discuss managing generational change at a venture capital firm.
Segments Timeline
Setting the Stage for Succession
In this opening segment, Lindel Eakman introduces Fred Wilson and Andy Weissman, partners at Union Square Ventures, to discuss the topic of succession in venture capital firms. He highlights the importance of this conversation and sets the tone for a candid discussion about generational change and transitions within VC firms.
"[Music] hi everybody we didn't plan that out we really didn't plan sort of much about this in fact so this is going to be a conversation more uh than anything I hope um it is fun to have two friends s..."
The Importance of Succession Planning
In this segment, the speakers introduce the topic of succession in venture capital firms, highlighting the challenges and the importance of discussing generational change. They reflect on their own experiences and the necessity for transparency in these transitions, setting the stage for a deeper conversation about managing change in the industry.
"[Music] hi everybody we didn't plan that out we really didn't plan sort of much about this in fact so this is going to be a conversation more uh than anything I hope um it is fun to have two friends s..."
Learning from Successful Transitions
Fred Wilson and Andy Weissman discuss the few venture capital firms that have successfully navigated generational change. They emphasize the value of learning from these examples and the benefits that come from effective transitions, while also acknowledging the resistance many firms face in adapting to change.
"prepping for this as I was thinking about uh do LPS actually even care uh about this topic Andy and Fred and I felt like we could have covered it in maybe 90 seconds um quickly it's interesting to me ..."
The NASCAR Analogy
Lindel Eakman draws an analogy between Limited Partners (LPs) and NASCAR fans, suggesting that while LPs are interested in the race of venture capital, they are often more intrigued by the failures or 'wrecks' of firms. This sets the stage for a discussion on the importance of alignment and incentives during transitions in VC firms.
"friends here that are working through and processing that now uh I'm at Foundry group where we've decidedly said we're not going to deal with that issue it's literally Turned the Lights Off uh when we..."
Disruption vs. Sustaining Legacy
The conversation shifts to the concept of disruption within venture capital. The speakers debate whether succession should be viewed as a disruptive force or a means of sustaining the firm's legacy. They explore how maintaining core values during transitions can lead to continued success.
"experience how often have you seen this work how many examples are there in the market that you looked at as as models for your own transition well uh you know I think there are particularly in Silico..."
Successful Transitions in VC
Fred Wilson discusses the rarity of successful generational transitions in venture capital, noting that only a handful of firms in Silicon Valley have maintained their top-tier status across generations. He emphasizes the benefits of effective transitions and the importance of learning from successful models in the industry.
"about uh do LPS actually even care uh about this topic Andy and Fred and I felt like we could have covered it in maybe 90 seconds um quickly it's interesting to me to note that these two are willing t..."
Disruption vs. Succession
The conversation shifts to the concept of disruption in venture capital. Fred Wilson argues that succession is more about sustaining the firm's unique qualities rather than disrupting them. He contrasts this with the idea that some firms may resist necessary changes, ultimately affecting their performance.
"and that is certainly the case um and this case I want us to focus on the positive and not name names necessarily but to think about the alignment and the incentives it's my favorite topic when I do d..."
The Role of Leadership in Transition
Wilson and Weissman delve into the responsibilities of leadership during transitions in venture capital firms. They discuss the importance of allowing new leaders to make decisions independently while ensuring the firm's identity and values are preserved, highlighting the balance between guidance and autonomy.
"know Andy should talk about we have a number of companies in our portfolio that are uh reimagining how you know startup Capital should be invested I mean Andy's on the board of a company called circle..."
The Role of Leadership in Transition
Andy Weissman shares insights on how leadership transitions can maintain a firm's identity. He discusses the importance of allowing new leaders to make decisions independently, which can foster innovation while preserving the firm's core values.
"three four generations and those franchises are really really powerful franchises as a result um and I think every LP would want to be able to become uh an investor in those those firms and those fund..."
Challenges of Poor Transitions
This segment addresses the negative consequences of poorly managed transitions in venture capital. The speakers share anecdotes about firms that failed to adapt, emphasizing the risks of complacency and the importance of recognizing when it's time to pass the baton to new leadership.
"seoa they said that um they wanted to step away to give room for that disruption versus a different argument you're making here of continuing the brand I think what Jim GS was saying was he was going ..."
Equal Economics and Shared Vision
The discussion concludes with insights into the economic structures that facilitate successful transitions. Wilson explains how an equal economics model at Union Square Ventures fosters collaboration and shared vision among partners, making it easier to transfer leadership and responsibilities while maintaining alignment on the firm's future.
"absolutely um so let me I play this role well but let me play the role of cynical LP so um there are a couple of different ways that you could approach this conversation many firms just deny it and do..."
Challenges of Poor Transitions
Fred Wilson reflects on the challenges posed by poor transitions in venture capital firms. He highlights the dangers of founders overstaying their welcome and the negative impact it can have on firm dynamics and decision-making.
"talk about uh my favorite quote was uh dis disruption is at the heart of our business it's what creates opportunities for the entrepreneurs and it's what helps them produce great returns for the LPS i..."
Navigating New Partnerships
Andy Weissman offers advice for professionals considering joining a new venture capital firm. He discusses the significance of understanding the existing culture and dynamics within the firm, and how to integrate oneself into a partnership that is already making critical decisions. He emphasizes the importance of assessing cultural compatibility before focusing on economic aspects.
"is completely aligned on that so you know I I think a lot of it was just about um you know giving giving the people who are doing the majority of the work the recognition and responsibility that that ..."
The Economics of Succession
The discussion turns to the economic aspects of succession. Fred Wilson explains how at Union Square Ventures, the transition of management responsibilities was not primarily about financial economics but rather about ensuring the right leadership and management of relationships with limited partners.
"model we we do invest in companies that we think will disrupt our model we hope to profit from them but I don't think we discussed us disrupting what we do in fact I think we tried to do it we tried t..."
Shared Values in Leadership
Andy Weissman emphasizes the importance of shared values and alignment among partners during transitions. He discusses how the established understanding of the firm's reputation and investment philosophy made the transition smoother and more effective.
"market place and so I think it's sort of anti-d disruption if anything I mean it's interesting because specifically at seoa they said that um they wanted to step away to give room for that disruption ..."
Establishing Roles in a New Firm
The conversation shifts to the process of defining roles and responsibilities when joining a new partnership. Andy Weissman shares his experience of integrating into USV, highlighting the importance of established relationships and how they can expedite the adjustment process. He discusses the balance between fitting into an existing culture and contributing to its evolution.
"economics and do you do they should they even be bringing up you know eventual succession when they when they go talk to wouldbe Partners so first of all I appreciate you calling me a 35y old thank yo..."
The Need for Humanity in Leadership
Fred Wilson emphasizes the importance of bringing a human touch to leadership within venture capital firms. He reflects on the need for partners who can foster a caring and supportive environment, contrasting this with the more analytical aspects of the firm. He discusses how Andy Weissman fulfills this role and the value of diverse perspectives in leadership.
"difficult decisions and can you work within that that's the primary one I think we I think we talked about that when I joined the most and then kind of afterwards was the economic stuff I mean in my c..."
Recognition and Responsibility
Fred Wilson concludes by discussing the importance of recognizing the contributions of those who take on leadership roles during transitions. He highlights that giving responsibility to those doing the majority of the work is crucial for a successful succession.
"crowdsourced questions and one of the questions was you know is is there going to be a usbl office that's opening up soon so that was that that came on a tweet earlier today unless you include you kno..."
The Economics of Partnership Transfer
Fred Wilson discusses the unique economic model at Union Square Ventures (USV) that allows for equal partnership among members. He explains the rationale behind transferring management responsibilities to Andy and Albert, emphasizing that it was more about responsibility than financial gain. This segment highlights the importance of shared values and responsibilities in a venture capital firm.
"the risk to go raise why would you why would you transfer that in the first place well so our model at USV is is equal economics so um uh we have a usually One Fund where somebody joins the firm and i..."
The Dynamics of Managing Partners
Fred Wilson shares insights on the benefits of having multiple managing partners in a firm. He discusses how the dynamic between different partners can enhance decision-making and contribute to a healthier partnership. The conversation highlights the importance of diversity in leadership styles and perspectives for the success of the firm.
"least right look Andy's an incredibly nice decent warm caring human being thank you FR and I'm not and Albert's not and Brad on a good day might be so we needed John's not either John can be Charming ..."
Counseling on Cultural Fit
The discussion turns to the importance of cultural fit when considering a partnership. Fred Wilson recounts advising a principal at another firm to create his own culture rather than remain in a misaligned environment. He emphasizes the significance of finding a partnership that aligns with one's values and investment philosophy.
"yeah you you need one too we're very cognizant of that exactly uh when when I think there's a lesson in in what we're talk where we're ending up talking about is how to join a partnership and the less..."
Cultural Fit in Partnerships
Andy Weissman reflects on the significance of cultural fit when joining a new firm. He shares his experience at USV, where established relationships and shared values made the transition smoother. This segment underscores the importance of aligning with a firm's culture and vision for successful collaboration.
"that a prerequisite though for the ability to make a transfer like this so that that shared economic model because most many firms I would say most in my experience are not equal partnership shares do..."
Ensuring Succession Success
Fred Wilson concludes with thoughts on succession planning within partnerships. He highlights that successful succession is easier with a strong partnership and discusses the importance of continuity in leadership. The conversation underscores the need for diligence in assessing the stability and strategy of a firm when considering investments.
"know had his piece of the carry well I I don't know the specifics of the situation but I want to go back to something that you said which I think is very insightful which is succession is easy if you ..."
Navigating New Partnerships
Andy discusses the challenges and considerations for new partners joining established firms. He emphasizes the need to understand the existing culture and dynamics, and how to integrate effectively. This segment provides insights for professionals contemplating a move to a new venture capital firm.
"know I I think a lot of it was just about um you know giving giving the people who are doing the majority of the work the recognition and responsibility that that they are doing majority of the work t..."
The Role of Relationships in Succession
Fred Wilson and Andy Weissman talk about the importance of established relationships in facilitating smooth succession within a partnership. They discuss how prior connections can ease the integration of new partners and the significance of defining roles and responsibilities early on.
"appreciate you calling me a 35y old thank you very much Lindon there was 35 to 45 but but that was so I I don't you know the way I the way you know every place has a different culture right and so it ..."
LP Concerns on Succession
The conversation shifts to limited partners (LPs) and their concerns regarding succession planning. Wilson addresses how LPs can assess the continuity of strong returns and the importance of understanding decision-making processes within the firm. He emphasizes the need for transparency and diligence in evaluating new leadership.
"you want to take well I think with with you know you had the advantage of that with USV because it was the same group of people we just kind of Shuffle the chairs around a little bit and so you knew e..."
Navigating Difficult Conversations
Wilson shares insights on the challenging conversations that arise during fundraises, particularly regarding leadership transitions. He reflects on the importance of addressing succession issues early and openly, noting that proactive communication can ease the transition and maintain investor confidence.
"amongst ourselves how did you communicate or I guess who raised the question first so was it was it something that Andy you brought up or that Fred you brought up first or how did the conversation beg..."
Bringing Humanity to Venture Capital
Fred highlights the need for emotional intelligence and humanity within the firm, particularly in leadership roles. He reflects on the qualities that new partners should bring to enhance the firm's culture and effectiveness. This segment emphasizes the human aspect of venture capital partnerships.
"within that that's the primary one I think we I think we talked about that when I joined the most and then kind of afterwards was the economic stuff I mean in my case we spent over a year thinking abo..."
Communicating Change to LPs
The discussion focuses on how Wilson and his team communicated changes to their limited partners. He acknowledges that their approach to communication may have been too public and early, leading to confusion and concern among LPs about the firm's future direction.
"know Albert had been by the by we we had this conversation with our limited partners last year so Albert had been a partner for eight years and Andy been a partner for 5 years maybe nine and five year..."
The Importance of Diversity in Leadership
Fred and Andy discuss the necessity of diversity in venture capital leadership. They acknowledge the need for varied perspectives and backgrounds to foster a more inclusive environment. This segment addresses the ongoing conversation about representation in the industry.
"nice decent warm caring human being thank you FR and I'm not and Albert's not and Brad on a good day might be so we needed John's not either John can be Charming um but you know I mean you know we one..."
Feedback from Portfolio CEOs
Wilson recounts the feedback received from portfolio company CEOs regarding the communication of leadership changes. He describes a tense moment during a CEO Summit where they expressed their frustrations about not being informed about significant changes, highlighting the emotional investment these CEOs have in the firm's brand.
"before we talk the LPS for probably a pretty long period of time it wasn't like intense the whole period of time but it might have been almost a year or six or nine months we were you know we had been..."
Creating a Strong Partnership Culture
The conversation shifts to the importance of establishing a strong partnership culture from the outset. Fred shares insights on how to ensure that new partners align with the firm's values and how to navigate potential cultural mismatches. This segment offers guidance on building a cohesive team in venture capital.
"cognizant of that exactly uh when when I think there's a lesson in in what we're talk where we're ending up talking about is how to join a partnership and the lesson in getting succession right maybe ..."
Lessons in Communication
Reflecting on the feedback from CEOs, Wilson discusses the lessons learned about communication during transitions. He emphasizes the importance of informing stakeholders directly and promptly to prevent misinformation and anxiety, reinforcing the need for transparency in leadership changes.
"us feedback and they just they just just were so angry at us for like you know plotting this change and not communicating it to them so we they destroyed us I was going to start they knocked us down y..."
Ensuring Continuity in Investment Strategy
Fred discusses how limited partners (LPs) can assess succession planning within a firm. He emphasizes the importance of continuity in investment strategy and the need for LPs to conduct thorough due diligence. This segment provides valuable insights for LPs concerned about maintaining strong returns amidst leadership changes.
"don't know the specifics of the situation but I want to go back to something that you said which I think is very insightful which is succession is easy if you have a really good partnership and I thin..."
LP Concerns on Succession
The discussion shifts to limited partners (LPs) and their concerns regarding succession in venture capital firms. Wilson explains how LPs can assess the continuity of strong returns and the importance of understanding decision-making processes within the firm.
"us you knew that but if it's the new group of people you're kind of questioning them about the decision- making and trying to understand how those interactions work again it was easier for us cuz we j..."
The Importance of Entrepreneurial Relationships
Andy Weissman discusses the significance of maintaining strong communication with entrepreneurs over limited partners (LPs) during transitions. He stresses that the entrepreneurs are the core of the venture capital ecosystem and should be prioritized in discussions about change, reinforcing the idea that relationships are vital in managing generational shifts.
"life so the number one rule well I don't know it's the number one rule in life I'll take that back it's a rule in life kids right that's what you taught [Laughter] him uh so I I guess as I think about..."
Cultural Adaptation in Venture Capital
Andy Weissman addresses the challenges of adding new partners to a venture capital firm while maintaining its culture. He acknowledges the need for diversity and adaptation within the firm to avoid becoming a monoculture, which can hinder growth and innovation. This segment explores the balance between preserving culture and embracing change.
"we'd probably take um from your own example I want to hit two more things before we end our time one is future tense how do we think about both um changing so that you can um do less falling asleep in..."
Communicating Change
Wilson and Weissman reflect on the communication strategies used during their firm's transition. They discuss the timing and manner of informing limited partners and portfolio companies about leadership changes, emphasizing the need for transparency and proactive communication.
"know Albert had been by the by we we had this conversation with our limited partners last year so Albert had been a partner for eight years and Andy been a partner for 5 years maybe nine and five year..."
Navigating Leadership Transition
Fred Wilson discusses the complexities of transitioning leadership and the need to step back to allow new voices to emerge. He reflects on personal challenges in relinquishing control during meetings and the importance of fostering a culture where others can rise. This segment encapsulates the delicate balance of influence and empowerment in leadership transitions.
"because we think that's a deficiency that we have and how and how do you push Fred all the way out the door now that you've rested the title from him he's in La it's okay well I do think it's I think ..."
Lessons from Portfolio Companies
The conversation reveals the reactions of portfolio company CEOs to the leadership changes at USV. Wilson shares insights on the importance of managing perceptions and ensuring that portfolio companies feel secure about the firm's direction amidst transitions.
"anything and I don't think that would change the funny thing is that the people who reacted the worst were our portfolio company CEOs yeah so let's take it from their perspective how did you communica..."
The IPO Call to Action
In a light-hearted conclusion, Fred Wilson advocates for all portfolio companies capable of going public to do so in 2017. This segment captures the enthusiasm for public offerings and the collective ambition of the venture capital community, emphasizing the potential for growth and success in the market.
"that thank you all yep thanks guys"
The Importance of Entrepreneurial Relationships
In this segment, Wilson and Weissman delve into the significance of maintaining strong relationships with entrepreneurs during transitions. They discuss how the focus should be on communicating with entrepreneurs rather than just limited partners, ensuring that their concerns are addressed and that they feel secure about the firm's future.
"I mean it's the classic example you know want anybody to hear something you know on Tech crunch when you should have told them right I mean that's number one rule in life so the number one rule well I..."
Cultural Adaptation in Venture Capital
Andy Weissman reflects on the cultural dynamics within Union Square Ventures and the challenges of introducing new partners. He discusses the need for a consensus-based approach and the importance of diversifying the firm's culture to avoid becoming a monoculture, which can hinder growth and adaptability.
"big thing that a learning that I think we'd probably take um from your own example I want to hit two more things before we end our time one is future tense how do we think about both um changing so th..."
Navigating Leadership Transition
Wilson addresses the complexities of transitioning leadership within the firm, acknowledging the need to step back and allow new voices to emerge. He shares personal insights on managing his influence in meetings and the importance of fostering an environment where others can thrive, ensuring a smooth generational change.
"because we think that's a deficiency that we have and how and how do you push Fred all the way out the door now that you've rested the title from him he's in La it's okay well I do think it's I think ..."
The IPO Call to Action
In a light-hearted conclusion, Wilson expresses his belief that all companies in their portfolio should consider going public in 2017. He advocates for a collective IPO celebration, emphasizing the importance of public offerings for growth and visibility in the venture capital landscape.
"that thank you all yep thanks guys"