Seed Investing at Scale | David Tisch, Managing Partner at BoxGroup

Investment Philosophy & Approach

BoxGroup operates on a fundamentally different principle than traditional venture capital scaling models. Their core philosophy centers on one unwavering goal: investing in the best companies, regardless of ownership requirements or traditional VC constraints.

Key Investment Principles:

1. Human-Centered Approach - They want to be founders' "favorite investor" rather than their "best investor"
2. Dream Partnership - Meeting entrepreneurs at the beginning of their journey and providing capital to help achieve their vision
3. Best Companies First - Never letting business model requirements conflict with investing in the highest quality opportunities

Why They Stay at Seed Stage:

• Embracing the Mess - Seed investing is inherently messy, and most VCs don't want to stay in that complexity
• Romantic Element - Witnessing the transformation from initial idea to industry-important company over 5-15 years
• Authentic Impact - Being present from day one provides a different perspective than joining at year two

Collaborative Model Benefits:

• No Ownership Conflicts - Avoiding "winner take all" scenarios where percentage requirements create competition
• Access to Best Deals - Not being constrained by leading requirements allows investment in top opportunities
• Flexibility - Structure forms around investment goals rather than forcing investments to fit a rigid model

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VC Industry Structure Analysis

David Tisch breaks down venture capital into three distinct stages, each requiring different skills and approaches, challenging the notion that all VCs work in the same industry.

The Three Stages:

1. Seed Stage - "Dart throwing" - Messy, artistic, requires appreciation for uncertainty
2. Series A & Early B - Still involves art in company selection, narrative formation, and founder conviction
3. Series B & Later - "Spreadsheet jockey" work - Primarily financial orientation focused on scaling proven concepts

Stage-Specific Characteristics:

Seed Stage Reality:

• Inherently messy and unpredictable
• Requires comfort with high uncertainty
• Most decisions will be statistically wrong
• Majority of startups will fail despite venture backing
• Involves real human dreams and emotions behind each failure

Later Stage Focus:

• More finance-oriented work
• "Plowing capital into things that are working"
• Different lens and evaluation criteria
• More stable career model
• Easier to manage concentrated portfolios (2-3 deals per year)

Why Most VCs Evolve Away from Seed:

• AUM Scaling Challenges - Harder to scale assets under management at seed level
• Perceived Importance - Less board presence and visible credit for company success
• Career Stability - Later stages offer more predictable, stable career paths
• Industry Perception - Seed investors often dismissed as "random" rather than strategic

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Scaling Collaborative Seed Investing

BoxGroup has successfully scaled a collaborative seed model that defies conventional venture capital wisdom about fund growth and concentration strategies.

Conventional VC Scaling Model:

• Start small and collaborative at seed stage
• Scale by writing bigger checks with higher ownership
• Move to later stages for more concentrated portfolios
• Focus on 2-3 deals per year with significant board positions

BoxGroup's Counter-Approach:

Power Law Advantage:

• Smaller checks enable significantly more investments
• Higher volume increases probability of hitting mega outliers
• Power law distribution makes this mathematically advantageous
• More shots at the extreme ends of return distributions

Structural Benefits:

• No Ownership Requirements - Can invest in any high-quality company regardless of other investors
• Collaborative Flexibility - Not competing with other investors for percentage ownership
• Best Company Access - Structure never conflicts with investing in top opportunities
• Model Consistency - 15-year track record of maintaining the same approach

Why Others Don't Scale This Way:

AUM Limitations:

• Harder to scale assets under management with smaller checks
• Fee streams grow more slowly than concentrated models
• Less obvious path to traditional VC firm growth metrics

Perception Challenges:

• Less visible importance without board seats
• Can't take direct credit for company success
• Industry tends to dismiss seed investors as less strategic

Success Formula:

The model works because it prioritizes investing in the best companies above all other considerations, including business model constraints, ownership requirements, or traditional scaling approaches.

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Essential Insights:

1. Philosophy Over Structure - BoxGroup prioritizes investing in the best companies above traditional VC scaling models, maintaining collaborative seed focus for 15 years
2. Industry Segmentation - Venture capital operates as three distinct industries: seed (dart throwing), Series A/B (strategic art), and later stage (financial spreadsheet work)
3. Power Law Mathematics - Smaller collaborative checks enable higher volume investing, increasing probability of hitting mega outlier returns that drive fund performance

Actionable Insights:

• Embrace the inherent messiness of seed investing rather than seeking false certainty of later stages
• Structure investment approach around core goals rather than forcing opportunities into rigid business models
• Recognize that most seed decisions will be statistically wrong, but the outliers justify the approach
• Consider collaborative models that avoid ownership conflicts and maximize access to best opportunities

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Volume-Based Investment Strategy

BoxGroup's approach is fundamentally different from traditional concentrated investing. Their model is built on the premise that early-stage venture investing is inherently unpredictable, making volume a strategic necessity rather than a weakness.

Core Investment Philosophy:

1. High-Volume Necessity - The model requires seeing and investing in many companies to capture the few that will generate exceptional returns
2. Bar-Based Decision Making - Instead of trying to perfectly rank opportunities, they set a quality threshold and invest in everything that crosses it
3. Acceptance of Uncertainty - Recognition that even experienced investors cannot accurately stack-rank early-stage companies

The Reality of Early-Stage Prediction:

• Impossible to Stack Rank: No one can reliably predict which of the top 25% of companies will be the ultimate winners
• Ego vs. Reality: Claiming to know winners from day one would be "egotistical" - if it were possible, everyone would be concentrated
• Industry Pattern: All VCs invest in baskets of companies, then highlight successes while downplaying failures

Why This Approach Works:

• Captures companies that might pivot successfully (like Cursor)
• Accounts for long development cycles (Clay took 7 years)
• Reduces the risk of missing breakthrough companies due to initial misjudgment
• Aligns with the fundamental unpredictability of startup success

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People-First Investment Framework

At the seed stage, investing is fundamentally about people, not markets. This represents a core philosophical difference from later-stage investing where metrics and market dynamics take precedence.

Seed Stage Focus Areas:

1. People Over Markets - The primary evaluation criterion is the founder's potential, not market size or current traction
2. Long-Term Relationship Building - Investments are made with 10-15 year timelines in mind
3. Potential Over Performance - Betting on what someone could become rather than what they've already achieved

Evolution Across Investment Stages:

• Seed Stage: People-driven decisions, founder potential assessment
• Series A & Beyond: Market frameworks, traction metrics, revenue analysis become primary factors
• Growth Stage: Quantitative analysis dominates, making people-first investing nearly impossible

The Challenge of People-First Investing:

• Counterintuitive Decisions: Sometimes investing in great people working on ideas you think won't work
• Requires Exceptional Conviction: Only possible when founders give you "butterflies" - that rare feeling of meeting someone truly special
• High Bar for Bad Ideas: If the idea seems poor, the person must be in the "greatest" category, not just "great"

Why This Approach Is Sustainable:

BoxGroup maintains consistency in their approach because founders are signing up for 10-15 year journeys. If the VC constantly changes their investment thesis or stage focus, they become misaligned with their portfolio companies' needs over time.

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Leadership Assessment Framework

The fundamental question BoxGroup asks when meeting founders is: "Can this person lead a thousand amazing people?" This evaluation happens when meeting someone leading just 1-2 people, making it one of the most challenging aspects of seed investing.

Core Leadership Evaluation Criteria:

1. IQ and EQ Package - The combination of intellectual capability and emotional intelligence
2. Scalability Assessment - Can they grow from leading 2 people to leading thousands?
3. Talent Attraction Power - Ability to recruit, inspire, and retain exceptional people across all disciplines

The Leadership Challenge:

• Talent Wars Reality: Founders must compete for outlier talent in every company function
• Multi-Year Retention: Not just recruiting great people, but keeping them engaged year after year
• Organizational Growth: Managing the complexity of scaling from startup to enterprise

Assessment Process:

• Remote Evaluation Possible: You can identify exceptional leadership potential over Zoom calls
• Rare but Recognizable: Only happens 3-5-7 times per year when you get "butterflies" meeting someone truly special
• Immediate Recognition: Great founders create an instant, visceral reaction of excitement

Two-Part Framework:

1. Leadership Capability: Can you lead and scale a large organization of exceptional people?
2. Mission Importance: Is the problem you're solving actually important and meaningful?

The intersection of these two factors - exceptional leadership potential working on important problems - forms the foundation of BoxGroup's investment decisions.

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Essential Insights:

1. Volume Strategy - BoxGroup invests in many companies because early-stage success is fundamentally unpredictable, making concentrated betting ineffective
2. People-First Philosophy - Seed investing is about backing exceptional people rather than analyzing markets, which distinguishes it from later-stage investing
3. Leadership Assessment - The core evaluation is whether someone can scale from leading 2 people to leading thousands of amazing people

Actionable Insights:

• For Investors: Accept that you cannot accurately stack-rank early-stage companies; focus on setting quality bars rather than perfect prediction
• For Founders: Understand that seed investors are betting on your long-term leadership potential, not just your current idea or traction
• For Industry: Recognize that successful venture investing requires patience for 10-15 year timelines and consistency in investment approach

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Sector-Specific Investment Criteria

Understanding the scale of impact required varies dramatically across different sectors, and BoxGroup has developed specific frameworks for each:

Consumer Products:

• Scale Requirement: Need hundreds of millions of users to matter
• Impact Threshold: 10 million users typically isn't sufficient for importance
• Key Question: Can you get hundreds of millions of people to care about what you're doing?

Enterprise/B2B:

• Revenue Focus: AOV (Average Order Value) must be substantial enough to create meaningful impact
• Adoption Strategy: Wide enough adoption in bottoms-up sales models
• Scale Consideration: Fewer users needed but higher value per customer

Healthcare:

• Partnership-Driven: Success depends heavily on strategic partnerships
• Regulatory Navigation: Understanding complex approval and compliance requirements
• Market Access: Ability to work with healthcare systems and providers

Fintech:

• Barrier Breaking: Must overcome enormous regulatory and partnership walls
• Design Partners: Critical relationships with financial institutions and regulatory bodies
• Compliance First: Heavy emphasis on working within existing financial infrastructure

Developer Tools & Bio:

• Technical Depth: Deep understanding of developer workflows or biological processes
• Specialized Impact: Different metrics for success compared to consumer products
• Niche Expertise: Requires sector-specific knowledge to evaluate properly

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The Hiring vs. Teaching Debate

BoxGroup's philosophy centers on hiring for taste rather than trying to teach it, based on fundamental beliefs about how investment judgment develops.

Core Philosophy - Hire for Taste:

• Natural Ability: Great investment taste cannot be effectively taught through training programs
• Life Formation: Taste develops through lifetime choices in music, movies, restaurants, relationships, and interests
• Broader Foundation: Investment taste reflects wider life experiences and personal preferences

Team Consistency Benefits:

• Long-term Partnerships: Core team (Greg, Nim, Adam, Claire, Adena) has worked together extensively
• Trust Building: Consistency creates deeper trust and better collaborative decision-making
• Institutional Knowledge: Stable teams develop shared understanding and communication patterns

The Osmosis Question:

• Learning Limitation: Even sitting with experienced investors doesn't transfer taste effectively
• Experience Requirement: Seeing "enough reps in deals" and life experiences shapes judgment
• Personal Development: Each person must develop their own taste through direct experience

Hiring Strategy:

• Pre-existing Taste: New hires should arrive with established preferences and judgment
• Scalable Perspective: Look for people whose taste can grow with the organization
• Betting on Potential: Hire people whose judgment you believe in from day one

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Individual Authority vs. Committee Consensus

BoxGroup operates with a radically different decision-making structure that empowers individual judgment over group consensus.

BoxGroup's Unique Approach:

• Individual Decision Power: Every team member can independently say yes to a deal
• No Voting System: Eliminates committee-based decision making entirely
• No Consensus Required: Removes the need for group agreement on investments
• New Hire Authority: Even brand new team members can approve investments

Problems with Traditional VC Models:

• Incentive Structure Breakdown: Big firm voting creates misaligned motivations
• Political Considerations: Decisions influenced by job survival and promotion rather than deal quality
• Deal Negging: Partners undermining each other's deals for internal political reasons
• Process Overhead: Complex approval processes remove the essence of believing in something

Risk Acceptance Philosophy:

• Embracing Failure: Team members must be completely unafraid of losing money
• Probability Reality: Accepting that most investments will fail
• Founder Parallel: Similar to founders accepting the risk of probable failure
• Pure Alignment: Maintaining focus on helping founders rather than internal politics

Core Principle:

• Belief-Driven: Investment decisions should stem from genuine belief in founders and ideas
• Founder-Centric: All processes designed to stay aligned with founder needs
• Dream Supporting: Primary mission is helping founders build their vision

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The Art of Strategic Collaboration

BoxGroup has mastered collaborative investing over 15 years, creating a distinctive approach that benefits both founders and the broader ecosystem.

First Principles Approach:

• Founder-Centric Mission: Job is to help people achieve their dreams, not make BoxGroup the most important factor
• Individual Deal Analysis: Look at each situation and determine what that specific founder needs
• Service Orientation: Focus on providing value rather than claiming credit or control

Collaborative Mindset:

• Ecosystem Thinking: Understanding that everyone constantly plays in different spaces
• Long-term Perspective: Recognizing that successful companies will need multiple rounds of capital
• Relationship Building: Maintaining positive relationships with other investors across the ecosystem

Practical Implementation:

• Follow-on Reality: Even when leading pre-seed rounds, companies will need additional capital
• Universal Need: Every portfolio company will need to raise more money
• Fundraising Expertise: Developing deep knowledge of where to find appropriate capital for different stages
• Network Leverage: Using relationships to connect founders with the right investors

Competitive Advantage:

• Deal Flow: Collaborative approach leads to seeing more opportunities
• Reputation Benefits: Other investors want to work with BoxGroup on deals
• Founder Preference: Entrepreneurs appreciate the supportive, non-territorial approach
• Ecosystem Position: Builds strong relationships across the entire venture capital community

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Essential Insights:

1. Sector-Specific Evaluation - Different industries require vastly different scales of impact, from hundreds of millions of users in consumer to strategic partnerships in healthcare
2. Taste-Based Hiring - Investment judgment cannot be taught but must be hired for, as it develops through lifetime experiences and personal choices
3. Individual Decision Authority - BoxGroup empowers every team member to independently approve deals, avoiding the political complications of committee-based investing

Actionable Insights:

• Evaluate startups based on sector-specific success metrics rather than universal standards
• Build investment teams by hiring for existing taste and judgment rather than trying to train these qualities
• Implement decision-making structures that preserve individual conviction and avoid consensus-driven compromises
• Approach collaboration by focusing on founder needs rather than firm positioning or credit-claiming

Timestamp: [16:05-23:56]

Collaborative Seed Investment Strategy

The Evolution of Seed Funding:

1. Historical shift - Follow-on funding that used to exist at different stages has moved down to seed level
2. Current reality - Series A, B, and C firms now also lead seed rounds
3. Collaborative approach - BoxGroup works alongside future follow-on investors from the seed stage

Building Non-Competitive Relationships:

• "Pick us and them" mentality - Rather than competing directly with other investors
• Network compounding - Relationships build and strengthen over time through consistent collaboration
• Authentic partnerships - Avoiding constant competitive positioning in favor of genuine relationship building

Creating Market Currency:

• Deal sourcing value - Finding and participating in deals before they reach the broader market
• Market handoffs - Passing quality companies to follow-on investors who appreciate early access
• Mutual benefit system - Building goodwill that results in favorable treatment in future rounds

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The Long Game of Venture Capital

Time Requirements for Success:

1. 10-20 year timeline - New emerging managers need this duration to build relationship depth
2. Consistency over novelty - Staying disciplined with the same approach is harder than trying new strategies
3. Authentic evolution - BoxGroup's model developed naturally rather than being forced

BoxGroup's 15-Year Consistency:

• Same investment style - Maintained identical approach throughout their existence
• Unchanged founder relationships - Same relationship-building style as 15 years ago
• Nuanced scaling - Growth in size while maintaining core methodology
• Proven scalability - Potential for 3x growth with proper team scaling

The Discipline Challenge:

• Execution difficulty - Easier to talk about the strategy than to actually execute it consistently
• Long-term commitment - Success requires years of persistent relationship building
• No shortcuts available - Cannot achieve collaborative scale overnight

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The YC Success Formula

Core Success Factors:

1. Exceptional funnel strength - Thousands of high-quality applications create massive selection pool
2. Superior filtering ability - Amazing judgment and taste in selecting companies from huge applicant pool
3. Low acceptance rate - Highly selective process ensures quality batch composition

The Scaling Machine:

• Hundreds of companies annually - Processes massive volume while maintaining quality
• Brand signal value - YC acceptance provides strong market validation
• Founder preparation - Entrepreneurs enter knowing how to maximize the YC opportunity
• Economic alignment - Good deal structure benefits both YC and founders

Generational Firm Status:

• Differentiated approach - Operates completely differently from traditional competitors
• Superior execution - Outperformed all early competitors through consistency
• Unchanged essence - Core accelerator product remains the same despite scale growth
• Evolution without deviation - Tried new initiatives under Sam Altman while maintaining core model

The Underappreciation Problem:

• Criticism from threat - Other investors criticize YC because they feel threatened by its success
• Magical execution - Ability to scale at earliest stage is genuinely remarkable achievement

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The Reality of Venture Capital Value-Add

The Credit-Taking Problem:

1. Investment vs. building - VCs need to take credit for investing, not for actually building companies
2. Transitive property fallacy - "My companies are great, therefore I'm great" mentality
3. Possessive language - Using "my companies" and "our companies" language that Tisch finds "weird and possessed"

Realistic Impact Assessment:

• Employee comparison - The 50th employee at a great company likely has more impact than the second-best investor
• Board member value - Even exceptional board members are roughly equivalent to a good (not top) executive at later stages
• Operational help myth - Maybe five VCs globally can actually provide meaningful operational assistance, despite most believing they can

The Real VC Value Proposition:

Primary Function - Access and Introductions:

• Capital access - Helping companies raise follow-on funding
• Customer introductions - Connecting startups with potential clients
• Design partners - Facilitating product development relationships
• Employee recruitment - Leveraging networks for hiring

Two Types of Relationship Value:

1. Door opening - Initial introductions and access
2. Deal closing - Using relationships to help complete transactions

Scaling Advice Philosophy:

• Fewer VCs, more operators - As companies grow, reduce VC input and increase operator guidance
• Stage-appropriate mentorship - Surround yourself with operators 1-3 stages ahead
• Realistic expectations - VCs make great investments and take credit, but don't magically build companies

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Essential Insights:

1. Collaborative seed investing - BoxGroup builds relationships with follow-on investors rather than competing, creating a "pick us and them" mentality that compounds over time
2. Time investment required - Building a successful collaborative seed fund takes 10-20 years of consistent relationship building with no shortcuts available
3. YC's scaling mastery - Y Combinator succeeds through exceptional funnel strength, superior filtering, and maintaining core essence while scaling massively

Actionable Insights:

• Relationship building - Focus on creating market currency through deal sourcing and authentic partnerships rather than competitive positioning
• Consistency over novelty - Maintaining disciplined approach for years is more valuable than constantly trying new strategies
• Realistic VC expectations - Understand that VC value primarily comes from access and introductions, not operational expertise

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Investor-Founder Relationship Strategy

BoxGroup's approach centers on being responsive rather than prescriptive. Their philosophy is built around three core principles:

Primary Service Model:

1. Real-time responsiveness - When founders ask for something, BoxGroup tries to do it immediately
2. Clear boundaries - If they can't help, they say so quickly to avoid distracting founders
3. Relationship-first approach - Focus on building genuine connections rather than showcasing capabilities

The "Favorite Investor" Philosophy:

• Goal: Be the founder's favorite investor, not necessarily the "best" investor
• Approach: Treat founders like humans without misleading them
• Strategy: Underpromise and overdeliver consistently
• Selection criteria: Want founders to choose them because they genuinely want to work together

Why This Matters:

• Avoiding distractions is crucial for founder success
• First-time founders often get "tricked by the handwaving" of promised value-add services
• Second and third-time founders specifically don't want outside distractions
• All VCs have essentially the same basic pitch (money for equity), so differentiation comes down to personal fit

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The Hidden Risks of External Input

Strategy advice from investors poses significant risks that go beyond just being unhelpful - it can actively damage companies and founder confidence.

Core Problems with Investor Advice:

1. Confidence erosion - Wrong advice rattles a founder's mind and causes them to lose confidence
2. Mission disruption - External input that isn't helpful disrupts focus and mission clarity
3. Attention mismatch - Investors spend "8 seconds during the day" thinking about ideas while founders are "obsessed" and think about their company constantly

The Dangerous Dynamic:

• Investor perspective: Diversified portfolio, external interests, occasional "great ideas"
• Founder reality: Living and breathing their company 24/7, deep domain expertise
• Problematic outcome: Founders feel their investor is doubting them and struggle with how to respond

Specific Harmful Behaviors:

• Sending random competitor articles or TechCrunch links
• Sharing unsolicited strategic ideas
• Providing course corrections without being asked
• Creating doubt about the founder's direction

When External Input Can Help:

• Only when founders are actively seeking it
• When founders specifically trust the source
• When it aligns with their existing focus and mission

The fundamental issue: If investors know more about operations and execution than the founder, they shouldn't have invested in the first place.

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Focused Value Creation in Fundraising

BoxGroup has identified one specific area where they can provide genuine, measurable value to every portfolio company.

Their Core Competency:

Fundraising assistance - The only thing every company they invest in needs to do

Why This Works:

1. Universal need - Every startup must raise follow-on funding
2. Specialized skill - Fundraising is "foreign disconnected thing to operating"
3. Real impact - They can "move the needle" by making the external fundraising process easier
4. Teachable expertise - Help founders learn to be great at fundraising

Their Fundraising Capabilities:

• Extensive network connections where "people trust the brand"
• Ability to "line up ridiculous processes in parallel for people"
• Deep understanding of investor psychology and market dynamics
• Experience from 500+ seed investments over 15 years

Strategic Boundaries:

• What they don't do: Operations, product development, execution strategy
• Why they avoid it: "If we know more than you, we shouldn't invest in your company"
• Founder expectations: Want founders who "see the world differently" with "10, 15, 30-year vision"

The Challenge:

This focused approach can be "hard to sell" because other investors are "overpromising and eventually underdelivering" with broader value propositions.

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The Reality vs. Myth of VC Signaling

The concept of "signaling" in venture capital is more nuanced than commonly believed, with different effects depending on company performance and market conditions.

When Signaling Doesn't Matter:

1. Top-performing companies - Signaling "just isn't relevant" for the best performers
2. Fast funding cycles - Current market speed from "C to A, A to B, B to C is so fast" that signaling risk is minimized
3. Competitive situations - Great multi-stage firms don't call each other about deals; they try to "get ahead of the process"

When Signaling Does Matter:

• Bottom half of portfolio - When companies are struggling and existing investors won't step up
• Clear negative signal - When current investors refuse to participate in follow-on rounds
• Medium performance cases - Companies that aren't obviously working yet but show potential

The Preemption Dynamic:

How it actually works: When a great multi-stage firm funds your seed and another wants your Series A, they typically:

• Build relationships directly with founders
• Give offers before the seed investor can react
• Create competitive pressure that benefits the founder

Positive Signaling Effects:

• Brand attachment increases probability of raising next round
• Top-tier VC involvement (like Sequoia) significantly improves Series B chances
• Recruiting and customer benefits from prestigious investor brands

Key Insight:

Venture capital is "the only financial asset class where brand matters and brand is a real thing" - making it one of the most helpful things VCs actually provide.

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Essential Insights:

1. Relationship-first investing - BoxGroup focuses on being founders' "favorite investor" through genuine human connection rather than overpromising value-add services
2. Focused value creation - They excel specifically at fundraising assistance, the one thing every portfolio company needs, rather than trying to help with operations
3. Signaling nuance - VC signaling effects vary dramatically by company performance, with top performers largely immune but struggling companies facing real negative signals

Actionable Insights:

• Founders should prioritize investors they genuinely want to work with over those promising extensive value-add services
• Strategy advice from investors can be actively damaging, especially when unsolicited, as it disrupts founder focus and confidence
• Brand matters significantly in venture capital for recruiting, customers, and future fundraising success
• Fast funding cycles in current markets reduce traditional signaling risks for well-performing companies

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The Power of Brand Association

Brand partnerships create unfair advantages for startups by increasing their probability of survival and success. When a great brand attaches to a company, it significantly improves the startup's chances of staying "default alive" - the fundamental requirement for all startups.

Key Brand Benefits:

1. Better fundraising outcomes - Great brands lead to stronger seed rounds
2. Increased experimentation capacity - More resources enable more testing and iteration
3. Higher success probability - Brand association creates momentum and credibility

The Brand Leverage Effect:

• Y Combinator example: YC's brand reputation provides tangible advantages to portfolio companies
• Unfair advantage creation: Unknown entities must demonstrate significantly more progress to achieve the same outcomes
• Narrative building: Creating compelling company stories builds momentum that translates to permission and opportunities

Understanding the Gap:

The difference between progress and permission is crucial for challengers. A larger gap between actual progress and perceived permission makes it easier to fulfill promises and achieve success.

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The Truth Behind VC Rejections

Most rejection reasons given by VCs are "lovely sound bites to make you feel better" rather than the actual reasons for passing. The fundamental truth is simpler: the opportunity didn't cross the investment bar.

Primary Rejection Factors:

1. Team quality concerns - The VC doesn't believe the team is strong enough to warrant investment
2. Market/idea excitement - The market or concept isn't compelling enough to justify the risk
3. Combined weakness - Neither exceptional team nor exciting market opportunity

The Honest Reality:

• Team assessment is critical: If working on an obviously interesting market but getting rejections, it's typically a team evaluation issue
• No one says "you're not good enough" - VCs avoid direct negative feedback about founders' capabilities
• Feedback challenges: Desire to help conflicts with inability to give brutally honest assessments

VC Decision-Making Truth:

• Most decisions are wrong: VCs are wrong about most yes and no decisions
• Team misreading is common: Even experienced investors consistently misread teams after 15+ years
• Timing matters: 30 minutes vs. three months of evaluation time creates different outcomes
• Early impressions stick: Seeing teams too early often leads to persistent negative first impressions

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Debunking the "Too Early" Excuse

The phrase "too early" is fundamentally flawed as a seed investment rejection reason. Nothing is actually too early for seed investors - the market determines readiness through funding availability.

Market Readiness Reality:

• Market decides timing: Ready when investors say yes, not ready when everyone says no
• Overnight changes possible: Markets can shift rapidly, making "wait and see" strategies risky
• Binary choice requirement: VCs must choose yes or no - gray areas don't exist in competitive markets

What "Too Early" Really Means:

1. Insufficient team understanding - Need more data about founder capabilities
2. Capability assessment gaps - Uncertainty about execution ability
3. Risk of missing out - Waiting for more information often means losing the opportunity

The Competitive Dynamic:

• No waiting luxury: Three term sheets eliminate the option to "see more progress"
• Multi-stage advantage: Only multi-stage funds can wait for later rounds
• Conflict risk incentives: Growing fund sizes create incentives to wait and pay higher prices for proven winners

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The Evolution of Venture Scale

Exit expectations have dramatically increased over the past 15 years, fundamentally changing what constitutes a successful venture outcome.

Historical vs. Current Benchmarks:

• 15 years ago: $1 billion was considered a significant exit
• Today: 99th percentile exits are $20+ billion
• 20x increase: The bar for "big enough" outcomes has risen dramatically

Public Market Compounding Power:

1. Shopify example: Went public at $1B valuation, now worth $120B (119x return in public markets)
2. Facebook growth: Up over 10x as a public company since IPO
3. Late-stage value creation: Often more valuable than early-stage growth

Strategic Implications:

• Compounding mathematics: 20-30 billion in value creation is easier than the first billion
• Hold vs. sell decisions: Public market compounding can exceed private market returns
• Winner concentration: The biggest companies can become much larger than historically assumed
• VC strategy evolution: Early-stage investors benefit enormously from holding winning positions longer

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Essential Insights:

1. Brand power creates unfair advantages - Great brand associations significantly increase startup survival rates and funding success
2. VC rejections are usually about team quality - Most rejection reasons are diplomatic; the real issue is typically team assessment or market excitement
3. "Too early" is a misleading concept - Nothing is too early for seed investors; markets determine readiness through funding availability
4. Exit expectations have increased 20x - What constituted a big exit 15 years ago ($1B) is now dwarfed by today's 99th percentile exits ($20B+)

Actionable Insights:

• Build narrative and brand momentum early to create permission that exceeds current progress
• Understand that VC feedback often masks real concerns about team capabilities
• Don't accept "too early" as valid feedback - push for specific capability or market concerns
• Consider the long-term compounding potential when evaluating exit strategies and investor partnerships

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Geographic Investment Philosophy

Core Investment Approach:

1. Location Independence - BoxGroup invests based on opportunity, not geography
2. Bay Area Focus - Majority of investments and dollars historically go to the Bay Area
3. Strategic Presence - Maintains offices on both coasts with partner Greg in San Francisco

New York vs. Bay Area Dynamics:

• New York DNA: People go to New York to win - incredible ambition and tenacity
• Natural Friction: Everything in New York is harder, creating resilient entrepreneurs
• Industry Centers: Fintech, fashion, and adtech naturally center in New York
• Developer Tools/Consumer Tech: Building these in NYC is "slightly hard mode"

Geographic Investment Reality:

Historical Pattern:

• BoxGroup Fund I (2010-2013): Majority of companies were Bay Area-based
• Natural Migration: NYC startups like Plaid moved to Bay Area to scale
• Talent Depth: Bay Area offers deeper talent pools for scaling

Current AI Era Shift:

• Center of Universe: Has fully shifted back to San Francisco
• Talent Concentration: More depth of AI talent in SF, though great people exist everywhere
• Scaling Limitations: Most cities can support 1-5 great tech companies, very few can support 10,000+ employee companies

Timestamp: [48:09-51:54]

The Gold Standard of NYC Venture Capital

Why USV Stands Out:

1. Exceptional Returns - Absurd VC returns that are underappreciated
2. Anti-FOMO Approach - Opposite of multi-stage firms, no fear of missing out
3. Focused Excellence - Find what they like and lean in hard consistently

Investment Philosophy:

Core Thesis Execution:

• Networks First: Original thesis centered on network effects
• Thesis Evolution: Subsequent theses were "good enough" but built on network foundation
• Crypto Early: Had cryptocurrency investments as part of network thesis
• Consistent Framework: All investments tie back to network concept

Operational Excellence:

• Small Funds: Maintain smaller fund sizes for better ownership
• Early Stage Focus: Fund great companies at earliest stages
• High Ownership: Secure significant ownership stakes
• Repeat Success: Execute this model "constantly" over time

What Makes Great VCs:

• Simple Formula: Fund great companies early with lots of ownership
• Execution Over Brand: Don't seek same style of credit as big multi-stage firms
• Consistent Performance: Do excellent work repeatedly without fanfare

Timestamp: [52:25-53:45]

Investment Philosophy Foundations

Laissez-Faire Investment Approach:

Market Acceptance Principles:

1. Market Price Reality - "The market price is the market price, don't whine"
2. Unknowable Early Outcomes - Early-stage success is largely unpredictable
3. Portfolio Strategy - Need a big basket approach due to uncertainty
4. Market Humility - Don't try to "big brain" markets you likely don't understand

The Paradox of Strong Beliefs:

Despite the seemingly hands-off philosophy, Tisch acknowledges holding certain strong convictions that have been essential to building BoxGroup's success.

Geographic Philosophy Integration:

• Personal Life Foundation - Geography matters for where you want to live and build your life
• Work Excellence Framework - Being comfortable outside of work enables greatness at work
• Software Investment Reality - Fund software regardless of location, but acknowledge historical Bay Area concentration

Team Building Priority:

The conversation cuts off just as Tisch begins to reveal his most important north star: "I think the most important thing is to build a team that..."

This suggests team building and organizational development may be his primary guiding principle, though the full insight remains incomplete.

Timestamp: [54:56-55:54]

Essential Insights:

1. Geographic Investment Strategy - BoxGroup maintains NYC headquarters but invests majority of capital in Bay Area, recognizing talent concentration realities
2. Union Square Ventures Model - The gold standard NYC firm focuses on network effects, maintains small funds, and achieves exceptional returns without seeking traditional VC fame
3. Investment Philosophy Balance - Despite laissez-faire market approach, successful investing requires strong north stars, particularly around team building

Actionable Insights:

• Don't let geographic bias limit investment opportunities - the best deals may be elsewhere
• Focus on network effects and consistent thesis execution rather than chasing trends
• Build comfortable personal foundation to enable professional excellence
• Accept market realities while maintaining core investment principles

Timestamp: [48:03-55:54]

Team Culture and Mutual Respect

David Tisch emphasizes that BoxGroup operates on a foundation of genuine mutual respect and trust among partners. The culture is built around several key principles:

Core Partnership Philosophy:

1. Implicit Trust - Partners assume their colleagues are significantly better at the job than themselves
2. Mutual Admiration - Each partner believes others will make great decisions they personally couldn't have made
3. Genuine Enjoyment - Team members actually want to work with each other, which Tisch notes is incredibly rare in venture capital

Team Structure:

• Senior Partners: Greg, Nimi, Adam, Claire, and Adena form the core experienced team
• Growing Talent: Earlier-career professionals are developing within the supportive environment
• Collective Goal: Everyone genuinely likes each other and wants to build something together

What Makes It Work:

• Individual Excellence: Each person is recognized as being great at their specific role
• Happiness Through Competence: The team's happiness stems from mutual respect for each other's abilities
• Rare Industry Dynamic: Most venture firms don't have this level of genuine interpersonal connection

Timestamp: [56:05-57:18]

Investment Philosophy for Billion-Dollar Outcomes

BoxGroup's approach to identifying transformative investments centers on understanding true scalability rather than market timing or magical thesis development.

Scale Assessment Framework:

1. Irrational Bigness - Investments must have potential to become so large it seems irrational
2. Leadership Capacity - Can the founder hire, inspire, and manage thousands of exceptional people?
3. Growth Trajectory - Ability to scale from 2-4 people to 10,000+ employees
4. Market Impact - Potential to become one of the most important companies in their industry

The Mathematics of Venture:

• Big Outcomes Drive Returns - Only massive successes make venture math work
• Scale Requirements - Growth from small teams to 10,000+ employees indicates funding something truly important
• Industry Leadership - Companies must have potential to dominate or transform their sectors

Investment Criteria:

• Founder Assessment - Can this person build and lead at massive scale?
• Vision Validation - Can you realistically see this becoming a world-changing company?
• Ambitious Targeting - Shooting for huge, transformative investments rather than incremental improvements

Timestamp: [57:18-59:46]

The Human Impact vs. Financial Returns Paradox

David Tisch addresses the complex relationship between life-changing founder outcomes and venture capital return requirements, highlighting an important industry tension.

Life-Changing Impact Reality:

• Personal Transformation - $100-200 million exits completely change founders' and families' lives
• Dream Achievement - These outcomes fulfill entrepreneurial ambitions and financial security
• Meaningful Success - Founders achieve their goals and transform their circumstances permanently

Venture Math Disconnect:

• Return Requirements - Venture funds need billion-dollar outcomes to drive portfolio returns
• Scale Mismatch - Life-changing founder outcomes don't necessarily create fund-returning investments
• Industry Perspective - VCs sometimes dismiss these successes as "not important" due to return math

Balanced Approach:

1. Appreciate All Success - Deeply value outcomes that change people's lives regardless of scale
2. Emotional Meaning - Aligning with someone's dream and seeing them achieve it is profoundly meaningful
3. Relationship Building - Many lasting friendships form through these successful partnerships
4. Dual Recognition - Acknowledge both personal transformation and business requirements

The Heart of the Business:

• Human Connection - Witnessing people's lives transformed through entrepreneurial success
• Personal Fulfillment - Seeing founders "win" and achieve financial security and life goals
• Meaningful Relationships - Building lasting friendships through shared entrepreneurial journeys

Timestamp: [58:04-59:27]

Essential Insights:

1. Rare Team Chemistry - BoxGroup's success stems from genuine mutual respect and enjoyment among partners, which is incredibly uncommon in venture capital
2. Scale-First Investment Philosophy - Success requires identifying companies with potential for "irrational bigness" and founders capable of managing thousands of employees
3. Dual Value Recognition - While venture math demands billion-dollar outcomes, $100-200M exits create profound life changes for founders and meaningful relationships for investors

Actionable Insights:

• Build investment teams based on genuine mutual respect and individual excellence rather than just complementary skills
• Evaluate founders not just on current capabilities but on their potential to hire, inspire, and manage at massive scale
• Appreciate and celebrate all founder successes while maintaining focus on the rare transformative outcomes that drive venture returns
• Recognize that the most fulfilling aspect of venture investing is witnessing entrepreneurs achieve their dreams and transform their lives

Timestamp: [56:00-59:46]