March 2, 2015

About a year ago, Nancy and I were spending some time with Hardi Meybaum and his family.  Hardi is the founder of our portfolio company GrabCAD which was acquired recently by Stratsys.  It had taken us a long time to schedule this get together (our girls are of similar age, so we try to all get together now and then) and I commented that I heard that he’d been on the road a lot.  Hardi then went on to recount his recent travels, including one trip that had him in 5 cities in one day.

When I reflect on Hardi’s experience and on my observations about many successful founders, I notice something very obvious.  Many great founders travel… A LOT.  And this is especially true for founders in our core market of the east coast.

Traveling a lot stinks.  It’s tiring, throws off your daily rhythms, takes you away from family and friends, feels lonely and depressing, etc etc.

But I think it’s something that entrepreneurs really need to do. And honestly, I find that most don’t do enough of here on the East Coast.  The benefits are pretty obvious – it makes you more effective at BD, gets you in the information flow of your industry much better, gets you in front of a broader set of customers, partners, or investors to build your network, and so forth.

There are also some increasing returns to scale in travel.  When you are planning one off trips, you kind of need to build momentum around each one, and each meeting is more of a big deal.  When you are just visiting someplace very regularly, it makes it easier to fill your time and get entrenched.  Is a key decision-maker not around during this trip? No problem, you’ll be back next week!  Want to take a meeting that has a small chance of being super valuable but might also be kind of a waste? No big deal!  Weather or other mishaps ruin your schedule, no problem, you’ll be back!

I think in the early stages of a business, founders often end up looking inwards a bit too much.  Going out on the road forces you to maintain a broad perspective, and keep tabs on what your company’s ecosystem is up to so you are better able to see around corners.   When a company is young, it’s a bit scary to be away too much for fear that the team will lose focus without you around.  But that’s just another argument to have a strong co-founder and/or have team members that are self-motivated and self-directed.

There is no one-size-fits all here, and I don’t want to prescribe behaviors for founders – everyone’s experience is going to be different. But I think if you aren’t on the road at least a couple times a month,  I wonder if you are being hungry enough about the outward facing side of your job as a CEO.  I know some founders who will laugh at that last sentence, saying that you need to be on the road multiple days every week.

Maybe you are in an industry where all the action is local to your area, or maybe you are at a stage where it doesn’t benefit to be in front of people in different cities.  But I think that’s more the exception than the rule.

Note: Thanks to Bob Mason who contributed some thinking to this post

February 26, 2015

Over a year ago, I wrote a post describing what I was seeing happening in the early stage financing market, especially as it pertained to what I call “genesis rounds“.  Today, genesis rounds or “pre-seeds” are fairly common nomenclature, and in fact, some folks are forming funds specifically targeting these types of opportunities (like my friend Nick Chirls and his partner Alex Lines who recently announced the launch of Notation Capital).

This has led me to quickly take a look at our own investing activity to make sense of how we think about these sorts of rounds. If I look back on the 10 investments we made in 2014:

3 had prior pre-seed rounds before we invested

1 was an extension to a prior seed round

3 were bootstrapped to seed  (so the founder essentially provided the pre-seed through their own capital or cash flow of their business)

3 were genesis stage but were larger institutional seed rounds

Some thoughts and observations on these:

  • The 3 companies that had prior pre-seed rounds were ones that we did not see at genesis. I think of the 3, we probably would have invested in 2 at the pre-seed round.
  • The 3 genesis stage companies were very early, pre-product companies that raised capital very early on.  Two of these companies started out as “genesis rounds” but because of investor demand, ended up looking more like institutional seeds.  This is why I consider them “genesis stage” companies that raised institutional seed rounds.
  • We have been more likely to invest at the genesis stage when the founders have relatively more experience.
  • We tend to think of pre-seeds and normal seeds the same way.  I like to say we are a “one product company”.  Even if we are investing at the genesis stage, we treat every investment as a full-scale investment that takes up a full slot of partner time.  This means that we would end up saying “no” to a lot of companies (regardless of stage) unless we have very high conviction around the team and the thesis around the product and go-to-market.
  • I’ve always been perplexed by seed investors that don’t invest early.  The rise of pre-seed focused funds shows that there is a market gap around these opportunities, and I’m glad to see good investors trying to capitalize on this.  It’s great for founders, and will keep seed investors honest.  If seed investors want to hang back and invest later, what will happen is that some of the best pre-seed companies will actually make so much progress on their small dollars that they will skip their seeds altogether and raise a larger series A next.  Suddenly, some seed investors will find themselves stuck between true early stage investors and life-cycle VC’s .
  • We don’t think of ourselves as a seed fund or pre-seed fund.  We try to invest in the best companies we can, as early as we can, with as much conviction as we can.
February 11, 2015

Today it was officially announced that Microsoft has acquired our portfolio company Sunrise. It’s a fantastic outcome for everyone involved and I know that Pierre, Jeremy, and the team are going to have a huge impact within MSFT. As someone who uses Sunrise every single day, I’m super excited for what’s to come.

Personally, this day is a bit bittersweet because I loved working with this team. I was originally introduced to Pierre through Jeremy Fisher (the founder of our portfolio company Wander) and was privileged to be on the company’s board during its seed stage. During the past two years, I’ve learned so much through this collaboration, and two things in particular stick out.

First, speed and a maniacal obsession with user experience tend to beat fancy features and functionality. Sunrise launched in an interesting time when multiple other companies emerged targeting similar problems. The approaches of these companies varied considerably, but some of the other funded companies had a major emphasis on algorithms or AI. In the midst of this, Pierre and Jeremy stuck to the belief that there was so much fundamentally broken about the mobile calendar experience that great design and rapid improvement would be a much better strategy than trying to implement or invent complex features out of the gate. It was a counter-intuitive move, but this principle is something that tends to work time and again in end-user focused applications (either consumer or B2B). Pundits like specs and features, but users like products that are fast, natural, and just work.

Second, in Pierre and Jeremy, you have entrepreneurs that have a deterministic and complete view of product design. By deterministic I mean that they had a very particular point of view of how and why things should work and where the category is headed, even if it differed from conventional wisdom. They also have strong convictions about how everything ought to fit together – from the smallest interactions to big bet-the-farm product bets.

Their approach was also very complete in that they spent just as much time thinking about launching products, onboarding users, handling support inquiries, and growth as they did on designing how their product works. In particular, the team was obsessed with growth from the beginning, and it was always in the forefront of their thinking and a factor in most decisions.

Congrats again to Pierre, Jeremy and the team.  It was great to work with them, as well as with our coinvestors Balderton, Resolute, Lerer, Box Group and others. Looking forward to the next time!

February 5, 2015

On Tuesday, we put out two different sample pitch decks that we think can guide entrepreneurs as they try to communicate the information behind their companies. Although pitch decks are well-trodden territory online, we tried to introduce decks that were specifically designed for how they would be used in practice. In particular, we introduced a version that I lovingly refer to as the “super-short deck with kitchen-sink FAQs.”

You can see the example deck embedded at the end of this post, but in summary, it’s a very short document (five to seven slides) followed by an extensive appendix that maps to the most frequently asked questions a founder is likely to face.

What distinguishes this deck is that we think it’s designed for the way most seed stage fundraising conversations actually happen.

The days of walking into a VC’s office, putting up a deck on a screen, and then going into your song and dance are largely gone, at least for your first few interactions with a firm. In particular, this is very foreign when you are talking about pitching an angel investor or seed fund, especially if you have done your work to get a good, qualified intro.

Instead, this structure of a deck is super useful in the various interactions that actually happen. For example:


Often, first interactions begin via email. You may be able to open the door through an intro, but often, an investor would love to see a deck. This ask is sometimes made of the referrer, or else it’s made directly (e.g., “Can you send me a deck so I can see if this is a fit to ensure I don’t waste your time?”). Usually, this leads to a conundrum. Founders don’t love the idea of sending a full deck with all of their hard-learned information to investors with whom they’ve had very little interaction. But it’s also hard to say no to a request like this.

What you are able to do with the short deck is to send along the first 5-7 slides without the appendix. This should give the investor the gist of the status and progress of the company, and you as the entrepreneur can tell the investor that you have materials that go really deep into the details in a subsequent meeting.

As part of this, I’d also include a link to the LinkedIn (or Behance, Dribbble, GitHub, etc.) profiles of the team for reference. This just allows for a natural and appropriate level of information sharing via email.

First Meetings

Usually, your first few interactions with a VC are with one or two team members. In that context, what is the most natural thing to do? I promise you it is usually not to go slide by slide through a 15-20 page deck. Even if that’s how a VC is wired, I think founders can kind of guide these conversations to seem more like discussions and not a pitch.

In almost any scenario, when you meet someone to have a discussion, you start much more casually. You introduce yourself. You talk about how you know the person who referred you. You tell your story about how you decided to start your business and how you met your co-founders. It’s more of a narrative that initially doesn’t fit into slide form. From there, it’s usually helpful to have some structure, which is why having some slides is usually a good thing.

So, the setup for these meetings is something as follows:

“Let me tell you a bit about who we are and why we started this business. We can keep it conversational, but I have a handful of slides that can help guide the discussion.”

You should be able to get through the 5-7 slides pretty quickly. But along the way, an engaged investor will pepper you with questions. This will require some improvisation, but some questions warrant just a verbal response (even if you have a slide) to keep the conversation flowing. But in other instances, you’ll hit pause, and then flip to the FAQ slide and dig deep there.

(Oh, and if the investor isn’t asking questions or isn’t engaged, just end it and move on. Your time is too valuable, and early stage fundraising isn’t about convincing skeptics, it’s about finding true believers.)

If things go well, you leave the investor feeling like:

  1. There is a simple, coherent, and succinct story behind your company.
  2. You have exuded a mastery of the details of your business and good preparedness.
  3. The beginnings of a rapport has been built through the flow and authenticity of the conversation.

After the Meeting

After a meeting, many investors will ask for a copy of the deck. This is used for a document of reference and for sharing the story with one’s partners for feedback.

As a reference item, this format is again very helpful, because it’s very neatly organized by topic. Story matters a lot less for this purpose. And hopefully, this structure reinforces to the investor that this founder really has their act together as a result.

As a sharing deck, the short explainer-plus-kitchen sink deck leaves a good “blink” reaction as it gets passed around from colleague to colleague within the firm. If the recipient is checking it out while on the go, the fist seven slides allow them to get the gist really easily and quickly. They probably won’t dig deep into the FAQs in this context, but having them present again communicates that you have your act together.

For colleagues that have more time at the firm, they aren’t really looking through the story but instead focus on the details. Often, as a second opinion for a partner, I see my role here as digging deep into one or two questions that I have particular expertise on, so I can quickly get to the thoughts that the founder has presented and evaluate from there.

Other Thoughts:

Later in the process: If there are further discussions, usually you stray away from the deck at that point and instead dive into specific questions. But if you are going through the process in a parallel fashion (i.e. with multiple investors progressing along similar stages in your fundraise), and you decide to create material to answer an important question that came up, this material can just be easily slotted into the deck without messing up any sort of flow. So this short-plus-kitchen sink structure is also very flexible later in the process if you are still using a deck.

Time to create the deck: I submit that this deck format takes a lot less work to create than some other formats. It’s actually pretty hard to think about how a story comes together in a coherent fashion, and the more you decide you want to say in your story, the harder it is to weave everything together. This structure allows you to focus hard on a five- to seven-page story, and from there, you can think about how to best communicate the discreet pieces of your business and strategy that are important to understand.

Warning: Don’t feel like you need to create every single slide in the templates we offered. This list is a superset of what you’d want to include, but it also might leave things out that are critical for your specific business. If you don’t have real meat around a question — or just think it’s not that important to include — don’t force it. I remember in the old days when a lot of founders wrote text-based business plans. I found that most of the content was useless because it was clear that a template was used, and thus many sections were filled just because they existed.

Less is still more, even in a set of FAQs.

Good luck!

January 26, 2015

I had lunch with Brett Martin this week, an entrepreneur I’ve gotten to know a bit over the years. We were talking about a decision that I’m thinking through. I was kind of waffling.

He asked a really good question. “How will it feel when you have the right answer?”

This got me thinking in a completely different frame of mind. Usually, I think of decisions in terms of logical factors. Pro’s and con’s. Mental scoring across some set of attributes. Things like that.

“How you feel” is a bit different, and asked to answer how I would feel strangely put a lot of clarity around my thinking.

When I talk to some VC’s that are new to the role, we often talk about how one develops conviction around an investment opportunity. Again, we talk about factors one evaluates when looking at an investment opportunity. These are definitely important.

But I tend to also suggest something that is more akin to a feeling. I’m not sure where I heard it first. I definitely didn’t invent it. I think my old colleague Bijan has mentioned it in a blog, so maybe that’s where I first heard it. I encourage the investor to ask themselves “would I want to work for this company?” and “would I want to co-found a company with this founder?”  Often these feelings are completely supported by rational arguments or objective measures.  But framing it this way cuts through the clutter of uncertainty.

What are other feelings you want to have when you are making important decisions? Maybe for hiring decisions, or major strategy decisions? How will you feel when you come across the right choice?

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