20VC Cyan Banister on Her Relationship To Money, Risk, Her Investment DecisionMaking Process, Why We Will See A Reckoning in the Early Stage Market, Her Biggest Takeaways from HQ Trivia & The Future of Silicon Valley

In this episode of "20 Minutes VC," host Harry Stebbings interviews Cyan Bannister, a prominent early-stage investor and partner at Long Journey Ventures. Bannister's notable investments include SpaceX, Uber, and Affirm. She shares her journey from working at ISPs to becoming an early employee at IronPort, which led to her first financial windfall and subsequent investment in SpaceX. Bannister discusses her investment philosophy, the importance of founder stories, and her approach to risk and conviction. She also touches on her thoughts regarding San Francisco's political landscape and its impact on homelessness and startup exodus. Additionally, Bannister highlights her recent investment in Cash Drop and the founder's inspiring story as a dreamer and polymath. Throughout the conversation, she emphasizes the value of diverse perspectives in politics and startups, as well as the transformative power of personal struggles in shaping successful entrepreneurs.

• Harry Stebbings expresses excitement about having Cyan Bannister on the show.
• Cyan Bannister is a renowned early-stage investor with a portfolio including SpaceX, Uber, and others.
• She is currently a partner at Long Journey Ventures and has a history of successful investments and operations.

"I'm thrilled to welcome Cyan Bannister, one of the most successful and renowned early stage investors of the last decade."

Harry Stebbings introduces Cyan Bannister, highlighting her successful investment history.

• Cyan started in the startup world in the late 90s, working at ISPs before moving to San Francisco.
• She experienced several startup failures before a successful exit with Ironport, which was acquired by Cisco.
• Cyan's first investment was in SpaceX, which she describes as a difficult decision due to its high risk at the time.
• After her initial investment in SpaceX, Cyan continued to invest, learning from both successes and failures.
• She noticed a change in the early-stage investment landscape with more angel investors and higher valuations.
• Cyan worked at AngelList to help with syndicates and met her future partner, Lee Jacobs.

"My first check was into SpaceX. And I have to tell you, like, taking everything that I worked really, really hard on for many, many years because it was true sweat equity, and putting it into something that was literally blowing up on launch pads at the time was an incredibly difficult decision for me."

Cyan discusses her challenging decision to invest her earnings from Ironport into a high-risk venture like SpaceX.

• Cyan's experience with AngelList and her alignment with Lee Jacobs led to the founding of Long Journey Ventures.
• She was recruited by Founders Fund, where she worked for four years but realized late-stage investing was not her preference.
• Cyan prefers early-stage investing, which led her back to partnering with Lee Jacobs at Long Journey Ventures.

"So that's kind of the genesis of long journey."

Cyan explains how her experiences and partnerships led to the creation of Long Journey Ventures.

• Cyan describes her investment style as high risk, often being the first or largest check in a startup.
• She emphasizes the importance of having conviction in one's investment decisions.
• Cyan's approach is qualitative, relying on pattern matching, gut instinct, and trend observation rather than data-driven analysis.
• She acknowledges that her high-risk approach may not work for everyone but trusts her own conviction.

"I take extraordinary risk, and sometimes it makes people uncomfortable, but it often means that I'm the first check in. I'm sometimes the largest check, and I move very quickly, and that's how I win some of the deals that I win."

Cyan discusses her high-risk investment approach and how it enables her to be decisive and competitive in deal-making.

• Cyan's relationship with money has evolved from a dislike to an understanding of its power and value.
• She used to be averse to money but now enjoys making it and reinvesting in startups.
• Cyan describes her investment approach as evergreen, often being cash-poor due to reinvesting in the startup ecosystem.
• She views financial exits as opportunities to support more startups rather than personal gain.

"I get really excited when a company does really well and there's an exit, and then I can redeploy that money into yet another company."

Cyan reflects on how successful exits allow her to continue supporting new startups.

• Cyan has always trusted her convictions, stemming from her background and need to make survival decisions.
• She makes quick decisions and reassesses only if necessary, adjusting future reactions accordingly.
• Cyan's trust in her convictions has been constant, even before becoming an investor.

"I think I've always trusted my convictions even before I was an investor and partially as a survivor, as someone who depends on making decisions, just literally to survive."

Cyan emphasizes the importance of conviction in her life decisions and investments.

• Cyan does not research founders before meeting them to ensure an unbiased impression.
• She asks founders to share their personal stories to understand their motivations and resilience.
• Cyan looks for founders who have overcome hardships and are solving problems that are personally meaningful to them.
• She relies on pattern recognition and curiosity when evaluating founders' potential for grit and resilience.

"The first question I ask every single founder is, tell me their story. Like, not the business. I want to hear about how they got to where they are and why this problem them."

Cyan explains how understanding a founder's personal journey helps her assess their resilience and suitability for investment.

• Cyan Banister expresses the importance of understanding the person behind a business venture.
• She believes that initial pitch meetings should be used to truly understand the entrepreneur, rather than just exchanging pleasantries.
• Banister finds it odd that other investors don't ask more personal questions that she believes are critical to understanding an entrepreneur's motives and capabilities.

"And a lot of times people are really surprised that I asked this question. That means that other investors don't, which I find weird."

The quote emphasizes the speaker's unique approach to investor meetings where she asks personal questions that surprise entrepreneurs because other investors typically do not ask such questions. It highlights her belief in the importance of understanding the entrepreneur's character and background.

• Cyan Banister discusses the startup world's negative view of founders who openly aim to make a lot of money.
• She believes money should not be demonized as it can lead to freedom and the ability to give back to others.
• Banister mentions Elon Musk as an example of someone who may have initially sought wealth but went on to use it for transformative projects.

"I think there's nothing wrong with anybody on this planet wanting to make money."

This quote reflects Banister's stance that the desire to make money should not be criticized and that wealth can be a positive force when used for good purposes.

• Banister acknowledges that she has been wrong about market timing in the past.
• She emphasizes the importance of believing in the entrepreneur's vision and their ability to execute it.
• Banister discusses the challenges faced by companies like Uber and Lyft, highlighting the aggressive strategies required for market-changing companies.

"It's all about timing, right? And sometimes I invest in a company that's too early, and then what happens is they fail, and then five years later, the timing is right, and then somebody else does it and they succeed."

The quote acknowledges the inherent risk of market timing in investments and the possibility of failure due to being too early, even if the idea eventually proves successful.

• Cyan Banister discusses the current high valuations in startup investments and the potential for a market correction.
• She values discipline in investment decisions, citing her partner Lee Jacobs as an example of a disciplined investor.
• Banister criticizes the fear of missing out (Fomo) and emphasizes the importance of price sensitivity for long-term returns.

"You'll never find me ever demonizing a single human being that wants to make money."

This quote underscores Banister's belief that the desire to generate wealth is not inherently negative and should not be condemned.

• Banister discusses the strategy of multistage firms investing aggressively in seed rounds to secure future ownership targets.
• She prefers a collaborative approach to investing, allowing multiple investors to contribute to a startup.
• Banister points out the potential downsides of having a single investor with a large stake in a company, especially if they choose not to follow on.

"So it's a strategy, and it's a strategy to cut out the seed ecosystem and other series A investors down the road."

The quote explains the strategic approach of multistage firms investing in seed rounds to preemptively secure ownership and influence in future funding rounds.

• Cyan Banister admits to being conflict-avoidant and finding it challenging to give founders tough feedback.
• She emphasizes the importance of being mindful of power dynamics and the impact of criticism on morale.
• Banister reflects on her experience with HQ Trivia and how it influenced her to ask more questions about co-founder relationships and conflict resolution.

"I try to be very careful with what I say and how I say it to people because there are power dynamics, right?"

This quote highlights Banister's awareness of the delicate nature of investor-founder relationships and the care she takes in communicating criticism.

• Banister discusses the lessons learned from her investment in HQ Trivia, particularly regarding founder relationships and market signals.
• She now places more emphasis on understanding how co-founders resolve conflicts and has adjusted her investment strategy accordingly.
• Banister expresses a preference for investing in family-run businesses due to their proven ability to resolve conflicts.

"It definitely changed my style of investing. Probably we'll see in the future, but"

The quote indicates that Banister's experience with HQ Trivia has had a lasting impact on her approach to investing, particularly in how she evaluates the dynamics between co-founders.

• Cyan Banister reflects on a company that failed due to founder conflicts.
• Emphasizes the importance of a good culture and cohesive team, especially in fast-moving companies.
• Suggests that founder conflicts can be more detrimental than market timing or product relevance.

"So that company failed entirely because of founder conflicts. It was the right time. It was the right product. Hq trivia was transformative and could have been how we consume media in the future had they played their cards right."

The quote illustrates how founder conflicts led to the failure of a potentially transformative company, despite having the right timing and product.

• Cyan Banister discusses the misinterpretation of her words and the negative aspects of Twitter.
• She denies ever speaking against Black Lives Matter (BLM) and supports the movement.
• Banister criticizes the tendency of people to infer things from tweets and the polarizing nature of online discourse.
• She argues against the oversimplification of complex issues into 140 characters.

"One of the things I've learned recently is that people like to infer things, and if you speak in what sounds like a declaration, they try to infer or piece in things that they think might be true about you."

The quote addresses the problem of people inferring incorrect conclusions from public statements, particularly on platforms like Twitter.

• Cyan Banister expresses how online criticism can be hurtful and lead to emotional distress.
• She shares personal experiences with receiving death threats and the emotional toll it took.
• Banister discusses understanding troll culture and the motivations behind online harassment.
• She emphasizes the importance of resilience and knowing oneself in the face of online attacks.

"Kind of sure, it hurts. I've had days where I'm just going to be honest with you, where I've cried all day long because I can't understand how people come to these conclusions and how they could have so much hatred in their hearts."

The quote candidly reveals the emotional impact that online criticism and threats can have on an individual.

• Banister believes that silencing voices can lead to radicalization and extremism.
• She discusses the dangers of a society that is intolerant of differing opinions.
• Banister argues that challenging assumptions is necessary for reaching the right answers and preventing radicalization.

"The more we try to silence other people, the more radical they're going to become."

This quote highlights the potential negative outcomes of suppressing free speech and the importance of open dialogue.

• Cyan Banister criticizes the approach of labeling everyone as part of a problem without addressing the root causes.
• She prefers to focus on issues she is passionate about, such as the Second Amendment, mass incarceration, and homelessness.
• Banister questions the sincerity of those who vocally support causes without genuine understanding or commitment.
• She advocates for meaningful, informed activism over performative gestures.

"I think that systemic racism exists. I think that profiling exists. I think that a lot of the things that they're talking about are real issues that exist, but I think the solutions to the problems are not necessarily the best."

The quote acknowledges the existence of systemic issues while critiquing the common responses to them.

• Banister suggests that political diversity is the solution to homelessness in San Francisco.
• She argues for centrist political candidates to address the city's problems.
• Banister believes that both conservative and liberal perspectives are necessary for societal balance.
• She credits conservative thinking for long-term planning and cautions against rapid changes without consideration of consequences.

"Diversity is the solution to that. So we have no diversity in politics."

The quote proposes political diversity as a means to solve social issues, like homelessness, by incorporating a broader range of perspectives.

• Cyan Banister discusses the exodus from San Francisco to states with different political climates.
• She attributes the migration to safety concerns, taxation, and the failure to prosecute crimes.
• Banister predicts that the concentration of power in San Francisco may diminish if current political and social issues persist.

"It's interesting to me how a lot of people have fled San Francisco to red states."

This quote reflects on the recent trend of people leaving San Francisco for states with different political views and policies.

• Banister addresses the issue of a district attorney in San Francisco who does not prosecute certain crimes.
• She suggests that the DA's personal history may influence his approach to criminal justice.
• Banister expresses concern over the impact of such policies on public safety and community well-being.

"We have a DA [district attorney] who will not prosecute crimes."

The quote points to specific issues with the criminal justice system in San Francisco and its effects on the population.

• San Francisco residents are increasingly changing their opinion on the Second Amendment.
• More people are owning guns and supporting home and self-defense.
• This shift is seen as a silver lining by some and a nightmare by others.
• The state of California's policies are thought to be driving this change.
• People are moving to other states for a better quality of life and safety.

"I can't tell you how many people's opinions of the second amendment in San Francisco have changed. If anything, the silver lining of all of this is that there's more gun ownership and more people who are pro home and self defense than ever before."

The quote illustrates a significant shift in public opinion regarding gun ownership and self-defense in San Francisco, highlighting that more residents are becoming supportive of the Second Amendment due to local circumstances.

• San Francisco's current state is leading to an exodus to other states.
• People are finding better living conditions elsewhere, like Colorado and Arizona.
• The desensitization to safety and cleanliness issues in San Francisco is a factor in the move.
• The decrease in rent and property values could attract a more conservative population to San Francisco.

"I know that people are really happy moving to Colorado and wherever they've moved, Arizona. And they're like, gosh, I have a swimming pool in a yard, and I live in a neighborhood where I can walk around and I'm not stepping in feces."

This quote underscores the contrast between the quality of life in San Francisco and other states, explaining why some residents are choosing to relocate for a better living environment.

• Cyan Banister admits to reading very few books due to being busy and having ADD.
• She recommends "Snow Crash" and "Diamond Age" by Neal Stephenson for their vision of the future.
• Banister believes science fiction can be as valuable as business books for thinking about the future.

"I'm going to say my favorite book. It's going to be very cliche, but it is what it is, which is snow Crash by Neil Stevenson and probably seconded by diamond age by Neil Stevenson."

The quote reveals Cyan Banister's favorite books and suggests that science fiction has the potential to inspire and inform business thinking by exploring future possibilities.

• Observing her children's interests has given Banister insights into future trends.
• Children's use of technology, like Roblox, provides a window into how future generations will interact with the world.
• Banister has become more focused on time management since having children.
• She discusses the generational differences in privacy and minimalism.
• The COVID-19 pandemic is seen as a defining moment for the current generation of children.

"Well, I'm fascinated by what they're into. I think that it helps me. Like, I understood that Roblox was going to be a thing before it had its meteoric rise just by watching kids play it."

This quote emphasizes the value of paying attention to younger generations for insights into emerging trends and technologies, as exemplified by Banister's early recognition of Roblox's potential.

• Banister's most successful investment was in Uber.
• She was introduced to Uber by her driver, Roger, who was one of the first drivers for the service.
• Her decision to invest was influenced by her assessment of Travis Kalanick's aggressive nature and potential to lead the company.

"Well, that'd be Uber by far."

The quote succinctly states that Uber has been Cyan Banister's most successful investment, highlighting its significance in her portfolio.

• Cash Drop is Banister's most recent publicly announced investment.
• She was impressed by the app and the founder's story as an undocumented immigrant and polymath.
• The investment aligns with her bias towards immigrant entrepreneurs who appreciate the opportunities in America.

"Cash Drop might be the most recently announced public investment. Cash drop's amazing."

This quote introduces Cash Drop as Banister's latest investment and conveys her enthusiasm for the company's mission and founder.

• Banister values privacy and has been cautious about sharing information about her children online.
• Her 18-year-old daughter now wants to be discussed openly.
• Banister observes that the current generation values privacy and maintains different personas for public and private interactions.

"But recently, we had a discussion, and she was very excited about joining me on pop Shop Live and me discussing her openly."

The quote reflects a shift in Banister's approach to discussing her children publicly, in response to her daughter's wishes, and touches on the broader topic of privacy in the digital age.

• The current generation is more private and minimalistic than previous ones.
• Their ambitions and goals differ, focusing more on happiness than material success.
• The COVID-19 pandemic is shaping this generation's experiences and outlook.

"They also tend to be very, very minimal. They want for very little. All they want to be is happy."

This quote captures the essence of the current generation's values, which prioritize happiness and minimalism over traditional markers of success.

• Banister believes that spending time with young people is valuable for learning about the future.
• She sees children as a source of insights into changing behaviors and expectations.

"I learned a lot from young people, and I think that people, if you have kids or don't have kids, should spend time with younger people because they have a lot to teach us."

The quote encourages engaging with younger generations to gain perspective on the future, emphasizing the educational value of their unique experiences and viewpoints.