20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Max's formative experience as first product manager at Zenefits working directly with Parker Conrad. He learned that customers don't know what they want, founders need product intuition, and that sales/growth cure everything - though sometimes to a company's detriment.

• •Parker would ignore customer requests and build what he knew they actually needed - customers loved the results
• •The 'WTF?' email management style: Parker would send just 'WTF?' with no context when something went wrong
• •Sales and growth cure all ailments - the culture was amazing because everyone was winning
• •Learned to prioritize joining the fastest-growing company over mission/product when advising friends

Details of leading Rippling's seed round at $25M valuation with a $1.35M check for ~10% ownership. Max explains why he bet on Parker's chip-on-shoulder mentality and why price sensitivity at seed can be a mistake when backing the best founders.

• •Co-led with Initialized (Gary Tan, Alexis Ohanian) putting in $1.35M for ~10% at $25M post
• •At the time (2016), this was considered really expensive for a seed round
• •Parker's motivation: 'I cannot lose to Andreessen. I can't lose to David Sacks' - the competitive fire was the signal
• •Still holds significant position in what's now a $20B+ company, though didn't maximize pro-rata in follow-ons

Max candidly discusses the challenge of being Sam Altman's brother and why he left to build Saga Ventures independently. He explains how ego and pride drove him to prove himself without family brand halo, despite the difficulty.

• •Left after three funds with Sam/Jack to build own firm purely for 'ego and pride'
• •The family group chat joke: even Jack building a multibillion-dollar business gets called 'Sam Altman's brother'
• •Biggest fear: 'I can't fail. How embarrassing would it be?' - uses family pressure as motivation
• •Got Sequoia/Founders Fund level training by living in a Mission house where top investors visited regularly

Max reflects on running a $200M fund from his living room in Pac Heights, the mistakes of not following on to winners, and why investing in SF-centric products (on-demand dry cleaning) led to zeros. Key lesson: stay focused on products that work beyond SF/Manhattan.

• •Ran $200M fund casually from living room without proper portfolio construction strategy
• •Biggest mistake: not following on to winners - didn't model reserves properly, only got 70-80% of pro-rata
• •Multiple zeros came from SF/Manhattan-only products that didn't scale to Austin or St. Louis
• •Best deals came from giving money to best people in network, not from other VCs sending deals

Entered Reddit at $600M, owned ~7% of the company, sold after IPO lockup at $9B market cap. The fund left approximately $2B in gains on the table as Reddit climbed to $39B. Max explains why they sold and how this changed his thinking on distributions.

• •Fund owned ~7% of Reddit, sold at $9B market cap (now $39B) - roughly $2B in unrealized gains
• •Standard VC practice: distribute after lockup ends because 'we're not public market investors'
• •Many institutional LPs have auto-sell policies, so holding can actually help them
• •New approach: call anchor LPs on case-by-case basis rather than automatic distribution

Max argues climate tech is a luxury concern dependent on carbon pricing that won't deliver VC returns. When the economy struggles, companies won't choose carbon credits over employee layoffs. Government should handle climate, not venture capital.

• •Climate change is real, but it's not a VC-backable category - government should handle it
• •Climate is completely dependent on the price of carbon, which fluctuates with economic conditions
• •Companies won't spend billions on carbon credits if it means laying off employees - same pot of money
• •Apollo fund's climate investments were driven by curiosity, not strategy - regrets the distraction

Max explains why he can't compete at Series A against Sequoia's network (they sent a list of Collisons, DoorDash founders as references) but believes seed is still winnable. He argues multistage firms doing seed creates opportunities, not threats, if you stay in your lane.

• •Sequoia Series A pitch included references from 6 most valuable private companies - impossible to compete against
• •Seed strategy: get in before the big firms or partner with them, don't try to replace them
• •Only need ONE winner at 10% ownership going to $10B to return a $125M fund (7% at IPO = $700M)
• •Data shows: of first 40 AI unicorns post-transformer, only Andreessen had 2 lead checks - market is distributed

Detailed breakdown of Saga's $125M fund construction: 20-25 seed leads at $2-2.5M entry for 10% ownership, with 30% reserves. Max discusses why pro-rata is earned not guaranteed, and how to sell against multistage firms doing seed.

• •Target: $2-2.5M checks for 10% ownership at seed, though market has shifted to $5M+ rounds
• •After fees, realistically 25% for reserves - pro-rata is 'earned' not a legal right, expect 70-80%
• •Sell against multistage seed programs: 'You won't get GP time, we're 3 GPs only, we'll get you to Sequoia at Series A'
• •Price alignment matters: if Sequoia does your seed, they're not optimizing for your next round price

Max's framework for investing in 'second order effect' AI companies that won't be crushed by OpenAI/Anthropic. He visualizes what these labs will offer at $3T market cap and invests in areas world-class SF engineers won't want to touch (like trucking logistics).

• •OpenAI/Anthropic will try everything on path to multi-trillion dollar valuations - don't bet against them
• •Investment in Fleetworks (AI voice for trucking/logistics): SF engineers won't want to deal with late orange shipments
• •Doesn't call Sam to ask about roadmap - wants to earn success independently and not compromise Sam's position
• •ProFound (insurance underwriting with computer vision) is far enough from OpenAI's core to be safe

Max discusses the hardest part of venture: knowing when to sell. A 4x fund in 17 years equals a 2.6x fund in 10 years due to duration. He reflects on holding Gusto too long and why being already rich helps with 'let it ride' mentality like Sequoia.

• •Duration matters enormously: 4x DPI in 17 years = 2.6x in 10 years, need 7-8x to justify 15-year holds
• •The 'last double' (e.g., Anduril going 18B to 36B) represents $18B in value - more than rest of portfolio
• •Sold Gusto too late - was at $10B in 2022, probably should have taken chips off table
• •Being rich changes mindset: Sequoia can 'let it ride' because they don't need the money, emerging managers can't

Saga's 5-6 month fundraise for $125M targeting institutional LPs directly. Max learned that endowments care about brand/strategy fit over returns, while family offices/FoFs care about money. Biggest mistake: talking to LPs before locking anchors.

• •Went straight to endowments/foundations (not traditional emerging manager path) - ended with 6 endowments
• •Endowments want brand intact and good relationships, not max returns - they're not paid on upside
• •Family offices/FoFs are financially incentivized - tell them how much money they'll make
• •Critical mistake: don't talk to other LPs until high-quality anchors are locked (Sam's advice he ignored)

Max argues there's a brutal squeeze on traditional seed firms (First Round, Floodgate, Uncork) as multistage players moved down and new boutique firms moved up. Every generation needs a refresh - he gives himself 15 years before becoming irrelevant.

• •The messy middle: $700M funds can't compete - need to be massive platform (a16z) or boutique specialist
• •Multistage firms (Sequoia, Founders Fund) now do seed efficiently with lower cost of capital
• •New generation (Conviction, etc.) must replace old guard - not enough room for everyone
• •Steve Anderson (Baseline) taught him: focus on doing a few things well, don't cover whole market, need 1-2 wins per fund