20VC: How We Made $800M on Coursera | We Lost Money on Uber and Made Money on Lyft | We Did 3x on Postmates in 18 Months | DPI is King, MOIC is BS | We Dodged Theranos and I Still Lost Millions with Larry Aschebrook @ G Squared
🎯 Summary
20VC Podcast Summary: How We Made $800M on Coursera | Larry Aschebrook @ G Squared
This episode features Harry Stebings in conversation with Larry Asherbrook, Founder and Managing Partner of G Squared, detailing his unconventional and highly successful journey in venture capital, marked by significant wins, notable losses, and a unique investment philosophy centered on secondary market access and concentration.
1. Focus Area
The discussion centers on Venture Capital and Private Market Investing, specifically focusing on the strategy of secondary direct investing (buying shares from existing private shareholders), portfolio construction, navigating market cycles, and the importance of operationalizing a differentiated firm strategy.
2. Key Technical Insights
- Early Secondary Direct Value Proposition: In the early 2010s (post-2008 crisis), being a secondary direct buyer provided significant value, often securing shares at 35 cents on the dollar compared to primary buyers, due to a lack of liquidity options for early shareholders.
- Micro-Transaction Data Advantage: G Squared leverages frequent, smaller transactions (micro-transactions) in secondary deals to gain primary-level data and touchpoints with founders/companies, which acts as a “Trojan horse” to identify when to triple down (e.g., in Wiz).
- Concentration Strategy: Asherbrook favors high conviction, concentrating risk: 90% of their risk is typically held in just 10 companies across a vintage, driven by the need for velocity of capital return for early LPs.
3. Market/Investment Angle
- The Extended Private Market: The thesis underpinning G Squared’s start was the observation that companies were staying private longer (average age to IPO increased from ~3 years pre-2010 to ~15 years currently), creating an opportunity for secondary liquidity providers.
- DPI Over MOIC: Asherbrook explicitly states that DPI (Distributions to Paid-In Capital) is king, and MOIC (Multiple on Invested Capital) is “BS,” emphasizing the critical need for LPs to see actual cash returns, especially for first-time managers needing to prove track records.
- Differentiation is Mandatory: In today’s crowded VC landscape, simply being a seed or growth-stage fund is insufficient; firms must differentiate their business model (e.g., G Squared’s focus on media/content alongside investing).
4. Notable Companies/People
- Larry Asherbrook (G Squared): The central figure, detailing his start from fundraising for endowments, investing his own money (including retirement funds) into early private shares (Twitter, Uber), and building a $5B+ AUM firm.
- Coursera: A massive success, returning $800 million to LPs from this single holding.
- Major Portfolio Wins/Losses: Significant money made on Lyft and 3x return on Postmates in 18 months. Losses were incurred on Uber and Getir/23andMe. Spotify represented 40% of the third fund, requiring a difficult pivot and additional capital raise to protect the position.
- Theranos: Asherbrook successfully sued to exit an investment in Theranos, though he notes still losing millions elsewhere due to poor judgment calls.
- Key Founders Mentioned: Jack Ma (Alibaba) and Daniel Ek (Spotify).
5. Regulatory/Policy Discussion
The discussion touched upon the regulatory differences in the US for direct secondary buying, noting that firms engaging in this activity at scale often need to be regulated similarly to a hedge fund, which G Squared has adopted.
6. Future Implications
The conversation suggests that future successful VC firms must be highly differentiated, leveraging unique access points (like secondary markets) and focusing intensely on generating real cash returns (DPI) rather than just paper valuations (MOIC). The ability to maintain founder relationships and data access while operating at scale remains crucial.
7. Target Audience
Venture Capital professionals, Fund Managers (especially emerging managers), Institutional Investors (LPs), and Private Market Strategists seeking candid insights into building a successful, differentiated fund structure.
Comprehensive Summary Narrative
Larry Asherbrook of G Squared shared an extraordinary narrative detailing his transition from academic fundraising to managing over $5 billion in venture capital, emphasizing radical honesty about both his triumphs and failures. His entry into VC was entirely unconventional: starting with his own money (including cashed-out retirement funds) after a divorce, he began buying shares in nascent tech companies like Twitter, Uber, and Spotify directly from classmates and contacts, using a simple, self-created one-page transfer form.
The initial thesis was built on the extended private market, anticipating that companies would stay private longer, creating an arbitrage opportunity for secondary buyers who could secure shares at favorable valuations. His first fund ($35M deployed over three years) saw massive momentum from early secondary purchases, most notably from Alibaba (bought from Jack Ma’s family office via a connection made through an alum). Asherbrook attributes early success to a “go big or go home” mentality, leading to high concentration in winners like Alibaba, Spotify, Palantir, and Twitter, while acknowledging he also bought “flaming bags of turds” (like certain clean tech investments).
A critical strategic insight shared was the importance of velocity and DPI. Because early LPs demanded quick returns, Asherbrook focused on fewer, high-conviction bets where he could force liquidity, contrasting sharply with the modern environment where many managers raise massive funds quickly without proving cash
🏢 Companies Mentioned
💬 Key Insights
"I am focused on DPI, not MOIC."
"Even though the dilution is so intense. See, now you're talking like an early-stage investor, Harry. I don't give a shit about the dilution. Why? I care about the price I pay in dollars and the price I'm going to sell it at in dollars. I am focused on DPI, not MOIC."
"Have them call me. I'll buy all their shares of Anthropic at $61 billion. You would buy? And I would buy all day long today and twice on Sunday. Are you serious? 100%."
"Do I see this being a $1.5 trillion dollar company in five years' time? Easily. I do. That is a 5X with fair confidence, but very large confidence in a five. The period."
"I will put my whole fund into OpenAI. You would? Yeah. Yeah, it's if you know, you know."
"What's what's holding back the next generation of the LLMs to get to Anthropic and OpenAI scale in three years? Who's going to rival them? No one. You just answered your own question, Harry."