20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs

**Harry Stebbings** (0:00)
We are back for another week in the world of The Twenty Minute VC with me, Harry Stebbings, at H. Stebbings, with two Bs on Snapchat. I'd absolutely love to see you there. But diving straight into the show today, as I'm very excited for this guest, he's been a huge source of inspiration for me as I've progressed with The Twenty Minute VC. And so I'm thrilled to welcome Michael Dearing. Now, Michael's established himself as an icon of early stage venture over the last decade. With his founding of Harrison Metal in 2006, he's backed the likes of Twitter, MoPub, Birchbox, 99Designs and PagerDuty, just to name a few of his incredible companies. As an addition, I've also had more previous guests suggest Michael than I can remember. Genuinely, it's been incredible to hear. But prior to being in VC, Michael spent six years at eBay across numerous roles. And before that, held positions at Shoe Warehouse as CEO, The Walt Disney Company in corporate strategy, and then Bain & Company as a consultant. And I'd also love to say a huge thank you to both Christopher Jones and Zach Bloom at Fleet Smith for the intro to Michael today. Hugely grateful for that. But before we move into the show state, if you're a founder or operator, your most important job is people operations, whether that be hiring execs, developing managers or retaining top talent. And that's why you need Lattice. Lattice is the number one performance management solution for growing companies. With Lattice, it's easy to launch 360 performance review cycles as often as you want. And you also get an incredible continuous feedback system with OKR goal tracking, real time feedback and one-on-one meetings to ensure employees get feedback between reviews. So find out why the likes of Coinbase, PlanGrid, Birchbox and WePay trust Lattice as their performance management solution by heading over to lattice.com to start investing in your people. That's lattice.com, the number one performance management solution for growing companies. And speaking of number one there, you must check out Recurly, the company powering subscription success with Recurly's enterprise class subscription management platform providing rapid time to value without requiring massive integration effort and expense. And they have the ability to not only increase revenue by 7% but also reducing the all-important churn rate. And that's why thousands of customers, from Twitch to HubSpot to CBS Interactive, trust Recurly as their subscription management platform. And you can check them out now on recurly.com. That really is a must. But I'm now so thrilled to hand over to Michael Dearing, founder at Harrison Metal.
You have now arrived at your destination.
Michael, it's such a pleasure to have you on the show today. The videos on Harrison Metal have been foundational to my learning. Huge thanks to Chris Farmer at Signal Fire for the intro. But thank you so much for joining me today, Michael.

**Michael Dearing** (2:31)
Thank you for inviting me, Harry.

**Harry Stebbings** (2:32)
I'd love to start today with a little on you and how you made your foray into what I call the most wonderful world of venture capital.

**Michael Dearing** (2:39)
Wow, you are really rounding up to describe it as the wonderful world of venture capital. It is fun, but a very unexpected place for me to land. I left eBay in 2006
I had been there about seven years and I was convinced that my next job was going to be inside a company and probably a small company. I set about to go meet as many founders and very, very early stage companies as I could. In the process of doing that, I found not one, but more like three or four that I really loved and started spending time with them, day or two a week, sometimes more. After about three or four months of doing that, I said, this is really fun, I'm going to keep doing it. About three or four months later, a couple of them were raising money, and I decided to put my money where my heart was and back them. A year later into this, I realized I was having the most fun of my career. I was also doing some really fun work with terrific people.
I realized that this was actually a portfolio. A friend of mine, Jim Getz at Sequoia Capital said, you realize that you can do this full time.
I asked what he meant and he started telling me about the gap that he saw in the seed market, the space between inception of a company and their A-round. I had noticed that too and in fact, it was the only reason I was able to invest in some of these great companies. It organically grew and I was lucky enough to figure out that I loved it. I was pretty good at it and it was making me really happy, which was a new sensation for me when it came to work.