20VC: Greylock's Jerry Chen on The 2 Fundamentals To Assessing Startup Risk, Why Good Investors Have To Be Optimistic & Why VCs Get In Trouble When They Move Outside Their "Strike Zone"

Jerry Chen is a Partner @ Greylock Partners, one of the world's most successful VC funds with prior investments in the likes of Facebook, Instagram, LinkedIn, AirBnB, Dropbox, AppDynamics, Coinbase and many more incredible companies. As for Jerry, Jerry invests in entrepreneurs building new enterprise SaaS applications and in all aspects of AI and cloud infrastructure. Jerry currently sits on the Board of Docker, Cato Networks, Gladly, Rhumbix, Spoke, and Blend. Prior to joining Greylock, Jerry was Vice President of Cloud and Application Services at VMware where he was part of the executive team that scaled the company from 250 to over 15,000 employees and $5B in revenue. Check out Jerry's recent writing on Risk: The Game of Strategic Investment here.

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In Today's Episode You Will Learn:

1.) How Jerry made his way into the world of VC with Greylock from being on the exec team at VMWare, responsible for their scaling from 250 to over 15,000 people?

2.) What does Jerry believe are the different frameworks for how investors should measure risk? Why does Jerry believe to be a good investor, one has to be an optimist? What does Jerry find the most challenging element of risk assessment? What types of risk can Jerry tolerate and which can he not in a potential investment?

3.) How does Jerry break the theme of risk down into 2 very different categories? How does one define "uncertainty" in an investment? How does this compare to "probability"? How does both "uncertainty and probability" alter when comparing differing sectors? Does Jerry think that current pricing takes fair account of both "uncertainty and probability"?

4.) What does Jerry mean when he says, "you have to have product go-to-market fit"? Why does Jerry believe that platforms shifts are fundamentally distribution model shifts? Where does Jerry see an inherent opportunity within these net new nodes of distribution shift?

5.) How does Jerry evaluate the SaaS world today of bottoms up or top down? Why does Jerry believe that if you are budget additive, bottoms up with small ACVs is the current strategy? What does this mean for those that are budget replacements, both in sales model and ACV?

Items Mentioned In Today's Show:

Jerry's Fave Book: Skin In The Game

Jerry's Most Recent Investment: Blend

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Cooley is a global law firm built around supporting start-ups and the venture capital firms that fund them. Now we have spoken before about their forming the first venture fund in Silicon Valley, and forming more VC funds than any other law firm in the world but Cooley also represents more than 6,000 high-growth startups across the globe – through the full company life cycle. They are the #1 law firm for VC-backed exits (M&A and IPO) ranked by PitchBook, and since 2014 has represented more companies in their IPOs than any other law firm. Simply head over to Cooley.com or you can check them out at Cooleygo.com.