Yoni Rechtman, a partner at Slow Ventures, is a prolific writer and speaker in the venture capital space, known for his insightful and often counterintuitive takes on investing, startups, and the broader tech landscape. Through his Substack newsletter, "99% Derisible," and various interviews, he has shared a wealth of knowledge.
On Venture Capital and Investing
- On the Core Function of a VC: "As a VC you don't have much (any) control so you can't make anything HAPPEN."[1]
- On the Importance of Honesty: "VCs unwilling to take that risk are protecting their downside, not maximizing your upside."[1]
- On the Simplicity of Venture Capital: "At its core, VC is about finding really awesome people with really awesome ideas and giving them money. If they're right, they all can go on a nice vacation."[2]
- On Competitive Deals: "Just because a deal is competitive doesn't mean it's a good company. In fact, it could even be a negative signal."[2]
- On the Different Games of VC Funds: "Mega VC funds and small VC funds play different games. Mega 5 billion dollar funds have to deploy $1.5B a year. They are in the business of deploying capital not parsing."[2]
- On the "Liquidity Crisis": "There's plenty of liquidity, just not at the price you want. The issue isn't that there's no liquidity for quality assets; it's that most of the assets are low quality."[3]
- On Investment Focus: "So rather than obsessing on how to get out of assets, focus on the hard part: getting in. If you actually have an asset worth owning, getting out won't be hard and parting with it will be."[3]
- On the Role of a Seed Fund: "It's clear here that the best place for a seed fund to spend time is in the lower left quadrant (illiquid and illegible). That's where our ability to operate subscale is an advantage (we can take our time figuring out novel ideas in illiquid markets)."[4]
- On Pre-Seed Investing: "VCs don't add anything to execution (running the biz, shipping, etc) but can be helpful in preplanning and conception (problem selection, formulating hypotheses, etc). So if we ever have anything to contribute, it's going to be at pre-seed."[5]
- On the Goal of Early-Stage Investing: "The job of seed specialists is to invest early and help illegible founders/companies become undeniable."[4]
- On the Nature of the Job: "Pretty much the only way to actually be happy as a professional venture capital investor is if you love the game itself. You have to create joy directly from investing and want to work on that as its own skill with little crossover value."[6]
- On the Solitary Nature of VC: "Venture is not a team sport. Even if you dig your team (the people at your firm) you're responsible all on your own."[6]
- On First Principles Thinking: The last two and a half years have "led to a lot of you know humility and beginner's mind. and trying to do real first principles thinking about like what we're doing here and what our capital is for."[7]
- On Investor Specialization: To a specialized investor like a "software investor everything should be a software company or it sort of doesn't exist at all it's just kind of totally blind."[7]
On Founders and Startups
- On Founder-Investor Relationships: "Every important relationship is ultimately built on trust, respect, and honesty; it takes some risk to get there."[1]
- On What VCs Provide: "Number one we give you money that is by far the most important thing we will ever do for any founder...and number two is we will help you get more capital."[8]
- On Durable Businesses: "I don't think you can build healthy businesses by just hacking it, cheating, and cutting corners. You can maybe do something quickly, but you can't build something durable. And what matters is building something durable that will outlive you and be a long-standing, important company."[8]
- On Pre-Seed Freedom: "At pre-seed can put all/most of your efforts toward wayfinding, the idea maze, and seeking truth vs cleaning up messes. There's no path dependence at that stage."[5]
- On Artificial Growth: "Founders are under immense pressure to hit those benchmarks, even if they have to manufacture progress 'artificially.'"[9]
- On "Captive Customers": The idea of "captive customers owned audience" is a unifying theme across different investment strategies, from buying customers to focusing on inbound interest.[10]
- On the Goal for Founders: "Our aim should be to fund opportunities to the point of intrinsic legibility/quality and, eventually, significant liquidity - narrative and financial."[4]
- On the Importance of Vision: He looks for founders with a clear vision and the ambition to build something significant, not just a "quick flip."[8]
- On Avoiding Mistakes: An investor's role is to "draw on breadth to limit the repeatable/avoidable ones and be a coach and sounding board to improve judgement over time."[1]
On Strategy and Frameworks
- The Growth Buyout Thesis: Instead of selling software to operating businesses, "buy the business instead and build software into its DNA."[7]
- Legibility and Liquidity Matrix: He uses a 2x2 matrix of legibility (can you underwrite) and liquidity (can you transact) to evaluate investment opportunities.[4]
- The Meta Game: "It's not just about who's good and who's not; it's about understanding the deeper incentives at play. Who is structurally incentivized to collaborate with you?"[2]
- Studying History: "Study the history of startups, markets, and venture capital. It'll help you understand what a good business looks like and whether it is the right time to invest."[2]
- On Franchising: He sees franchising as a powerful, though often misunderstood, model for growth that can be paired with venture capital.[8]
- The Power of Systems: In franchising, it's not just about the product, but about "creating systems that work."[8]
On Career and Personal Philosophy
- The Optionality Mind Virus: "This idea that there is always something better so you should never settle is a mind virus. It's a deadly meme."[11]
- The Importance of Presence: "You have to be present to accomplish, achieve, or enjoy things. You have be part of making something good/better rather than hoping someone else will do it for you."[11]
- On Career Growth: When asked where he saw himself in five years, he told his boss, "Not here," reflecting a desire for continuous growth and challenge.[12]
- On Learning: "Working with the fantastic people at the firm made it clear just how much I don't know. My rate of learning, improvement, challenge, has stayed high at Slow and there's still so much more for me to do and learn here."[9]
- On Focus: "To truly lock in means to foreclose other possibilities. Otherwise you're just cosplaying focus."[11]
Additional Learnings and Insights
- Vertical Software Inefficiency: Selling software to fragmented, analog industries is "deeply, deeply inefficient."[7]
- The Creator Economy: Slow Ventures invests in creators at the holding company level, focusing on the "long tail of the creator economy."[10]
- Simplifying the Mission: "The more you can just like simplify what you're doing and and kind of keep that as the northstar."[10]
- The Job of a Seed Investor: "I'll always look for the earliest rounds of companies where a bit of money can help transform an ineligible idea into an undeniable story."[9]
- The Unsexy Truth of VC: "When people do talk to you about your work, they'll mostly know of it from some of the most dishonest, dumbest, loudest people in business and will judge you similarly."[6]
- The Importance of Capital Markets Physics: The shift in the market has required a renewed understanding of the "physics of capital markets overall."[7]
- Backing People, Not Companies: He loves "backing people before they are companies (instrumental to how I approach pre-seed)."[4]
- The Goal is a "Money Machine": For franchise investments, the aim is to create businesses that are "money machines" for their owners.[8]
- The Value of Being "Weird": Slow Ventures embraces "weird takes on the most important stories in the biggest markets."[9]
- Invention in Venture: "Seed investing was really hard until people like invented the safe and startup investing was really hard until people figured out um like preferred and common stock like all of these things had to be invented."[10]
- The Role of a Firm: The job of his firm is to "match early stage capital with entrepreneurs."[10]
- On Personal Investment: He notes that in venture capital, there are "vastly different levels of personal investment/exposure."[1]
- The Difficulty of Criticism: He acknowledges that "it's not fun to be critical and sometimes founders get mad at you."[1]
- Being Wrong: He is candid about the reality that "Very often you're just wrong, etc."[1]
- The Power of Inbound: Slow Ventures is "100% focused on generating inbound instead of orchestrating outbound."[10]
- The Long-Term View: "What matters is building something durable that will outlive you and be a long-standing, important company."[8]
Sources:
- 99% Derisible Substack: https://99d.substack.com/
- X (Formerly Twitter): https://twitter.com/yrechtman
- Interviews and Podcasts: As cited in the search results, including appearances on "New to Venture," "Random Walk," and others.
Sources
