221. Crisis Coverage w/ Grace Isford – GTM Playbook; Building a Career in VC; Societal Challenges and Opportunities Post-COVID; and a Comprehensive Analysis of Successful GPs and Venture Investments

221. Crisis Coverage w/ Grace Isford - GTM Playbook; Building a Career in VC; Societal Challenges and Opportunities post-COVID; and a Comprehensive Analysis of Successful GPs and Venture Investments
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Grace Isford of Canvas Ventures joins Nick on a special Crisis Coverage installment to discuss the GTM Playbook; Building a Career in VC; Societal Challenges and Opportunities Post-COVID; and a Comprehensive Analysis of Successful GPs and Venture Investments. In this episode, we cover:

  • You’re an extroverted, people-person… how you holding up w/ the quarantine?
  • Quick overview of your background and path to VC?
  • Your focus (and thesis) at Canvas?
  • You developed a 30 page GTM Playbook based on interviews w/ 10+ CROs/VPs of Sales across major B2B companies. First of all, is this publicly available and also what were some takeaways that really stood out?
  • There’s a segment of VCs that believe that one must be an operator to be a good VC… what’s your stance?
  • Examples of successful non-operators?
  • You completed a comprehensive analysis of the portfolios of over 200 venture firms, looked at 100 successful GPs, and winning, U.S.-based investments w/ a valuation greater than $500M… what were your key takeaways?
  • A bit about signaling… Many in the industry and those observing determine the value of a startup based on whether a brand name venture firm is in the deal… “If Sequoia is in the deal, startup must be great”… what are your thoughts on this common perception?
  • What does your weekly routine look like and how have you prioritized the various demands of the job?
  • What have you found to be most challenging in your career as a VC?
  • What advice do you have for young folks trying to make an impact as an investor or board observer?
  • You wrote a great piece that analyzed three areas where VCs could invest to address the societal challenges of COVID-19. Can you walk us through each of these and why the opportunity here is greater?
  • What do you think the future holds for venture & entrepreneurship in a post-COVID world?
  • The old playbook for winning deals is gone… Any idea on how one might win a deal virtually?

Guest Links:

Transcribed with AI:

Intro 0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran, and this is the fool ratchet.

Nick Moran 0:23
Today Grace Isford joins us today from Greenwich, Connecticut. Grace is an investor at Canvas ventures, a Series A and B fund that focuses on FinTech marketplaces, digital health and new enterprise. Grace has undergraduate and graduate degrees from Stanford. She’s worked in product management at handshake, and she’s a board member for the Stanford Technology Ventures Program. Grace, welcome to the show.

Unknown Speaker 0:46
Thank you so much for having me, Nick. Absolutely,

Nick Moran 0:49
we’ve, me and the team have really been enjoying a lot of the content that you’ve been publishing. But before we jump in, can you give us a sense for your background and what brought you to VC

Speaker 1 0:59
happy to. So as you mentioned, did my undergrad and Master’s at Stanford in the MSME program there, which is kind of like a techie business major. At Stanford, I was actively involved with Stanford open in business, and also the Mayfield fellowship program. And you know, prior to that, I had never really heard of venture capital, or early stage technology. So that was a pretty awesome program that really threw me right into it, and expose me to what it was like to work at either an early stage venture for, or an early stage tech company. And so as you mentioned, I worked for but in product, a handshake, also in growth equity at a firm called stripes group in New York, and actually had the pleasure of getting to know the Canvas team while I was still at Stanford, I was helping them out with a few kind of Stanford campus related activities, activities to find great student entrepreneurs on campus. And ultimately came became great mentors to me. And it seemed like a really logical fit to join them after graduation from Stanford.

Nick Moran 2:04
Good congrats on that. You know, I know you as a sort of a people person and an extrovert. How are you handling the this quarantine situation? People

Speaker 1 2:14
I miss people? Oh, yeah, I have two dogs entertain me here. But I just don’t think the Zoom happy hours are really doing justice. They’re kind of awkward, right? But otherwise, we’re really grateful for my health and for my family. Awesome.

Nick Moran 2:28
Can you tell us more about your focus and also the thesis at Canvas?

Speaker 1 2:33
Totally. So as you mentioned, canvases generalist firm, we usually invest across series A and B rounds across consumer and enterprise. But me specifically, I spend most of my time with companies in the b2b space. So enterprise SAS marketplaces, I’m especially excited for those with a technical innovation, or some sort of earn insight about their users to offer ultimately, a more compelling value proposition and compelling product and market opportunity.

Nick Moran 3:02
What is an earned insight, man? Yeah,

Speaker 1 3:05
good question. So company understands their users in a unique way. I think a good example of this would be, you know, in Ubers case, they figured out from the beginning, that a lot of people didn’t want to kind of order taxis. Just through phone, they wanted to do so more through their app. And so they had an earned insight, there was an opportunity to, to change the face of transportation.

Nick Moran 3:35
Interesting. Yeah, we have a box on it sort of the the series of templates that we fill out as a venture firm, called The Secret. And it’s kind of where you

Speaker 1 3:45
go is exactly like that, right? Like, what is Uber know? Or how did they figure that out in a way that no one else did. And ultimately in a way that is better and provides greater value for either one side of the market or for a given customer? Love

Nick Moran 3:59
it. Love it. So I want to hear a bit about your, your go to market playbook. Right. So you develop this 30 Page playbook based on interviews with more than 10 CEOs and VPs of sales across major b2b companies. So I guess, first of all, is it publicly available? Because I would love to read it. And also, you know, what were some of the major takeaways that stood out? Yeah,

Speaker 1 4:22
not yet. It will be published soon. We’re still working on refining it across a few of our portfolio CEOs and CROs. Before I tell you more about it, I do have to thank a lot of the people who put a lot of time and effort into that, especially my colleagues at Canvas, Paul’s out and Ripley Hart Meyer, who worked with me on it. But fascinating exercise. I really enjoyed writing it. I think the impetus for creating it was a lot of the companies we work with at the series A and B stage struggle with go to market strategy, right? There’s a lot of material out there on product market fit and how to kind of create that but not as much on go to market and we were I think that’s, in many cases, kind of the main driver or differentiator between, you know, 10 million revenue companies and 100 million revenue companies. So kind of main takeaways from that a lot of companies cannot clearly articulate their value proposition to their users. So that’s why how, what and for whom the company exists and ultimately delivers value to the customer. The second is not being able to clearly articulate their ICP or ideal customer profile. And, you know, why are customers by you? And what are their kind of sorts of attributes like, as as detailed, as you know, what publication is your customer reading, and who, within that company, that buyer, that department, that budget is your product being bought. And then ultimately, I think another really interesting takeaway was just a lack of alignment. A lot of times, you know, the CEO thinks their company or their product is going one direction, but maybe the sales or the sales rep, or even the product lead may not be aligned on that same vision. So getting alignment across the organization was a really another key takeaway there.

Nick Moran 6:07
Love it. I was just speaking with an entrepreneur two days ago, and he’s doing sort of a local food marketplace business. But it was pretty, pretty interesting, pretty compelling. But I was asking him about customer acquisition, we’re unpacking some of the the digital marketing. And he said, You know what, the funny thing is, the most impactful thing we’ve done is target Facebook users that have liked food documentaries on Netflix, like rotten, and some of these others, like, if you like that you are 80% likely to, you know, buy using our service. I thought that was such a unique insight. But I think it it kind of connects to your point about you know, what are what’s your ideal customer profile? What are they reading? What are they consuming, etcetera? Totally,

Speaker 1 6:51
I mean, clearly, that entrepreneur knew his or her customer, right? It’s a great example of doing your market research, not just saying, oh, you know, there’s someone who watches Netflix, it really going a level deeper.

Nick Moran 7:02
So I’m a customer and a user of handshake. We have sourced a number of different interns and and analysts associate level folks using the handshake platform, assuming we’re talking about the same one, I think we are. Can you talk a little bit about your experience there, and maybe the go to market approach?

Speaker 1 7:21
Yeah, happy to? Well, awesome to hear us handshake, it’s awesome to see the growth since I actually worked there. It’s hard to believe how big the company has grown. And that’s, you know, a big attribution just to get Lord and the whole leadership team there. So a big fan of the company, I think what handshake did really well is going back to the earth inside thing, they understood that their key to unlocking a lot of the enterprise revenue, and companies like yourself that want to hire on the platform, was getting the students on the platform. But in order to get you know, every Stanford student on the platform, they had to lock in with the University Career Center. So Garrett, and all the co founders there had a really clever hack, to basically get all the admins at these career centers, and really provide tools that were beneficial to them. And then ultimately, they grew massively grew their user base when every Stanford student has a handshake profile. Right. So that was one of their really clever early hacks about understanding kind of their university career center administrator, and then go into market from there. And understanding that was almost like the bait to draw the bigger revenue streams from, you know, these big enterprise companies coming on to hire afterward. But yeah, I really enjoyed my time at handshake. I mean, I, even though I only worked there a short time, I think I gained a great exposure for what it takes to really build a great product. And really think about the user, I was working more specifically on the student product at the time. And that was a really great experience, and just gaining a lot of empathy for how difficult building a startup is, right? I mean, every day, there’s something there’s a fire going on, there’s something to work on, something has changed. But also kind of the impact you can have and I recently actually saw job posting for handshake was they were helping a lot of students find internships and jobs right now. So you know, one of the things I also really liked about it was just helping students find jobs in a way that they we weren’t able to before, especially if they weren’t a university, like Stanford or on the coasts. Got it.

Nick Moran 9:17
So going back to the go to market so the insight there was going after the Career Services offices as an access point to the students. Exactly. Yeah. Got it. You know, while we’re talking about the operator side of things, you know, there’s a segment of VCs that believe that one must be an operator to be a good VC. What’s your stance, Your Grace?

Speaker 1 9:35
Yeah, I believe you do not need, you know, decades of operating experience or, you know, have sold your company to Google or Facebook to be a successful VC. I just think you need to be able to develop or create a sense of empathy with operators, right. So you can gain that in a lot of ways, like working for a short time at a startup, or by interviewing a lot of great operators at a startup, or doing hands on projects in your portfolio. accompanies. I don’t think you need a bunch of operating experience,

Nick Moran 10:04
who are some examples of people that you look to for mentor mentorship guidance, or, you know, just look to for inspiration that are non operators.

Speaker 1 10:15
Yeah, I think I mean, Bill Gurley and Mary Meeker are two great examples of fantastic, fantastic venture capitalists. And they both came from from finance backgrounds. So I think I everyone would agree that they’re, they’re fantastic VCs, but they did not come from the operating side. And I think there’s even more, especially those with maybe just a very limited operating experience under one to two years that are general partners at several venture firms across the bay and across the United States.

Nick Moran 10:40
Do you see the news about Bill stepping away?

Speaker 1 10:43
I did. I did. It’s like a sad turning,

Nick Moran 10:47
you know, page turn there. But, uh, you know, I’m sure it’s really good for him and taking the next step and kind of moving on transitioning things. I mean, benchmark kind of has that model. And we’ve seen that over time, but it’s still, it’s still hard to think about, you know, him not being, you know, active at benchmark.

Speaker 1 11:06
Yeah, I mean, he was such an inspiration for so many and continues to be right. And I just love reading his kind of thought leadership, but big inspiration for me, I tried to be a student adventurer. And he’s definitely seems to be one of one of the great teachers so grateful for his leadership in that space.

Nick Moran 11:21
Yeah, aspiring VCs out there. aspiring young investors. If you haven’t seen his talk, I think it’s called running down a dream. He gave it his, I think his MBA alma mater, which was Texas, but if you haven’t seen that, check it out. So great, you completed a comprehensive analysis of the portfolios of over 200 venture firms. You looked at 100 successful GPS, I’m sure Bill included, and winning US based investments with a valuation greater than 500 million. What were the key takeaways from this analysis?

Speaker 1 11:54
Yeah, fascinating study. One of the things, as I just mentioned, I tried to do is be a student and learn as much as I can and be very data driven. In everything I do in venture. I think one of the most fascinating takeaways from that analysis was no early stage venture investor. And I’m categorizing them as series A and B stage, I didn’t unfortunately get to the analysis for seed investors. But no investor at the series, A or B stage as an entry point was in more than 10% of the top 600 ish, have venture backed winners across roughly the last 10 years. So from 2018 to 2019. So really fascinating insight there. The second really interesting thing, Was there really a roughly 50 ish investments a year that mattered or made it to that winner valuation $500 billion. Exactly. Wow. Okay. Yeah. So that was also something really unique from that analysis as well.

Nick Moran 12:53
Why do you think that is?

Speaker 1 12:56
It’s hard, it’s hard to make business, right. It’s a hard business we’re in. And I think it’s really actually quite easy, maybe to build a business to 2030 or even 50 million revenue, but to reach over that 100 million revenue threshold, when you start to get, you know, above 5 million valuation, the combination of talent, Product Engineering, and alongside just complementary market dynamics, right, like, Why does a given user or a given company need your product? It’s hard. And so I think it’s, it’s to me, it’s unsurprising actually, that that number is that low.

Nick Moran 13:30
Any other things that stood out to you? You know, I’m, it’s interesting that the upper ceiling on number of successes was 10%. But any other things that stood out to you on these, you know, successful successful GPS successful venture firms that routinely pick huge winners? Yeah,

Speaker 1 13:49
in terms of GPS, it’s really interesting to focus on some of the really successful ones and how they focused, you know, on a given either industry or sector or vertical, right, I can go back to Bill like marketplaces, right. And so I think one of the things that differentiates some of the top investors is having conviction and ability to move quickly and focus based on kind of a depth of knowledge or understanding of a space. So building that kind of verticalized conviction, it seems to be really helpful. The other interesting dynamic I did see is a lot of venture firms kind of assume, you know, Sequoia or Andreessen, or some of these top firms are in every single investment. I think there’s a lot of kind of signaling risk, but in reality, they’re, they’re not or oftentimes they’ll come in later. So for example, a different venture firm I was actually just looking at Figmas round fundraise history recently right? Greylock led the A I’m pretty sure Kleiner looked at B. And then you saw Sequoia and Andreessen come in at like a C and D and later rounds. And so, you know, a lot of people think, Oh, they’re always in first. Oftentimes, they actually are coming in later. And so, at the earlier stages, where I’m playing same seed series A Series B, there’s a lot more opportunity for a bunch of different venture firms to take some market share.

Nick Moran 15:07
Can you give us a couple of names of maybe up and coming venture firms that could be under the radar? They showed up on your list, and might be a surprise to some and maybe do the same thing for GPS GPS that maybe a lot of people don’t know, like, like the Marc Andreessen, but clearly, you know, have have a early track record of success?

Speaker 1 15:28
Yeah, that’s a great question. I think in terms of up and coming venture firms, I’m a big fan of the Susa ventures portfolio in the seed stage. That I don’t know if you call them up and coming, but they’re a certainly a great firm. I also really like the uncorked ventures portfolio and the 1984 portfolio. And then one more I’ll add that most people don’t know as much about is the burst capital portfolio, former operators from Yelp, really great and collaborative investors as well. They lend their former awesome operating experience to VCs. In terms of kind of GPS specifically, I think one that’s done really well, in the past few years. And I’ve been tracking at Andreessen is Martine casado, he’s been in a lot of really awesome enterprise investments recently. I think chayton at benchmark also is making a lot of really good investments. And there’s more up and coming, I think it’s oftentimes right now, it’s, you’re just seeing the beginning of the next generation, as we know, it takes roughly 10 years to know whether or not a GP is a successful investor. So I think we’ll continue to see a lot over the next five to 10 years of bubble up as well. But

Nick Moran 16:41
yeah, I really liked your point about the signaling, too, I think a lot in our industry will see, or maybe even determine, you know, the value of a startup based on whether you know, Sequoia or an Andreessen, or or a benchmark, for instance, are in the deal. Right? They think, oh, Sequoia is in it must be great. Any additional thoughts there?

Speaker 1 17:01
Yeah, I think it’s just good to stick to the data. Right? And and really think about why you’re investing in a company, are you investing in it? Because you think there’s an insight, there’s a unique value proposition, there’s a really unique market opportunity here? Or are you investing in it just because you think that other investor thinks it’s great, right, I think it’s important to develop your own conviction and investment thesis in a given company, and, and that will stay strong. I also think it’s just important to keep track of, of why you’re investing in companies, or why you’re passing on companies, right? Both are really important. And I try to do that with every company I meet with, just to see how I’m tracking in a shorter feedback loop over time.

Nick Moran 17:42
Transition, maybe a little bit, talk to us about your routine, like your weekly routine. And also, you know, how do you prioritize the the different demands of the job? I mean, there’s so many. For me, I mean, there’s a lot of LP management and fundraising, there’s also a lot that goes into deal flow sourcing, vetting, negotiating, there’s a lot that goes into Portfolio Management. And then there’s, there’s everything else, you know, branding, marketing, writing, operational admin stuff, talk to us a bit about how you’ve kind of structured your routine and how you prioritize all the demands of the job.

Speaker 1 18:20
Yeah, it’s, it’s the million dollar or billion dollar question, right? How can I best structure my time, it really comes down to the person and when they’re most productive for me, in the mornings, I’m most productive. And so I like to block out that time just for heads down work. So whether that’s following up by emails, or cleaning up the inbox went up on action items, or just deep diligence or thesis work, writing articles, etc. I like to schedule most of my meetings in the afternoons, if I can, so when other investors, other entrepreneurs, and with my team as well. And then I try to squeeze in the other stuff, when I can I usually do kind of a weekly data analysis on given GPS and investment firms, usually the on Sundays. And then I try every day to have just two to three focuses, right. So you know, Tuesday, I’m gonna get you diligence on this company, finish up this aspect of the go to market work and, and write this article, right and keep it focused. Otherwise, I think the to do list gets way too long. And it just kind of sits there and you never check off any checkboxes. So that’s how I try to think about it. But again, it really depends on when you’re most successful, and when you’re most productive at different times a day.

Nick Moran 19:29
Got it? Got it. You know, as somebody who’s earlier in their career as a VC, what have you found to be most challenging so far?

Speaker 1 19:39
Yeah, I mean, I think time management is a big one. Right? Like, in an ideal world, I would be, you know, meeting with hundreds of companies every day and no every investor and and on top of that, you have tons of experts to really deepen my conviction or expertise in a given space. But I really only have, you know, time to do two to three of those things. In, in a day or in a given week in great depth, so I really have to be selective. I like to constantly be prior reprioritizing and prioritizing what is most important to do today, okay, this is a time sensitive deal needs to get done now. But you really have to make the time intentionally for these longer term projects, like building your network, like working on research projects, because those will pay off in the long run, even if you’re not going to see the immediate result of you know, passing or or moving forward on an investment.

Nick Moran 20:31
Couple quick questions about, you know, getting into Vc and making an impact. Do you have any advice for young folk, young folks that are trying to break into the industry?

Speaker 1 20:40
Yeah, it’s a question I get a lot, I think, really try to network and illustrate your unique insight you can bring to the industry, I think, for me, it was partially my Stanford network, and also kind of some of the projects I’d already done to illustrate my interest in both tech and venture when I was at Stanford. So really kind of build and craft a story. And the story you think, illustrates both yourself well, and also illustrates your hunger and excitement for the job. I think just get to know people get to know other entrepreneurs, as well as investors, maybe help them out in odd ways. Oftentimes, there’s no formal job VC postings, and they come much more through your network. And through people, you know, you know, oh, my gosh, yeah, I know, Nick, he’s awesome. I know, he was looking for a job. Why don’t I connect to you guys, right. And one thing I tried to do is just reciprocal relationships, even as an investor now, right, trying to help other people out. And even if maybe they’re not helping me out right now, in the long run, keeping that kind of relationship there. Can can really pay off? How

Nick Moran 21:47
about, you know, post getting the job? What, you know, how can young folks in the industry make a real impact as an investor or, or maybe, you know, early as on boards as maybe an observer? Yeah,

Speaker 1 21:59
find ways to be helpful. I mean, you may not have as much board experience, or just operating experience or other experiences, people, other people around the table. But you could have other things to offer, right? Maybe you have a great investor network. And you can introduce said entrepreneur to other growth investors for their next funding rounds, maybe you could just be the person who makes sure every follow up is done, right, and assigning action items. And that can be really helpful. And then, as I found is, once you do you know a few of these things, and prove your credibility, and that you can be helpful, you get more work to do, right, and people enjoy working with you. And so I would just just find ways to be helpful, be crafty, and always be there. So people can continue to think of you and work with you. What

Nick Moran 22:47
are some of those primary ways that investors should be helping founders? Or maybe one of the categories? And what are some specific ideas? Yeah,

Speaker 1 22:56
um, a few different buckets. I think one is an investor network. So it’s just as important as kind of helping operate, the company is helping to get future funding rounds or having a path, you know, where are we going eventually, with this company, even at the series, A and B stage right? Are we taking this IPO? Is it an m&a opportunity, right? Oftentimes, you have really, really big ambitions, and you can’t get there unless you have other funding rounds. And a lot of times, the entrepreneur is gonna look to you for that investor network. So growth investor network is definitely one of them. I would say second, operating help. So that’s one of the reasons why I wrote the go to market playbook, right? How can we help you better operate your business, especially for some of these higher level strategy things, from part of market fit, to go to market fit, to thinking about a strategy of switching out your executive team, or any of those sorts of things as your company kind of grows, and those growing pains? And then the I think the third and one of the more important things is just being a sounding board, right, you’re there to be the adviser and give advice and help. And so I think I heard this from an another investor, but just asking questions, right, rather than kind of imposing your opinion and trying to help guide the entrepreneur to the right solution. And I’d offer advice or perspective and let ultimately the entrepreneur make the decision as they’re the one running the company.

Nick Moran 24:19
Does does Canvas do anything on the clearly on the fundraising side? I think all of us are pretty active. But do you guys do anything on with regards to customer introductions, for instance? Yes,

Speaker 1 24:32
actually, that’s a great example. And I found a lot of venture firms have kind of made their claim to fame through great customer introductions and expert introductions, and we try to do as much as that as we can. certain verticals, I think we’re stronger than than others, but it’s a total weapon, right. It’s also a great way if you have a good relationship with a customer that you’re introducing them to to reference check the company either before you’re investing in them, as well. Right. So definitely, and I think that that’s a way that you can continue to kind to set yourself apart, going forward, you can build the expert, you know, customer network or introduction network. How

Nick Moran 25:05
about on the talent side? You’re based in the Bay Area. Canvas has as a strong brand out there. Do you guys do anything actively when it comes to cultivating talent in the region for, you know, early stage startups that are looking for high powered talent?

Speaker 1 25:23
Yes, we do. I need to talk to our head of talent and community Ripley hardmeyer Because she’s doing all that work more than I am. But we try to do more bespoke approach to talent. So we’ll, we’ll do a few things. One will be data driven, you know, tracking great alums at a really top companies that may be interested in joining a smaller thing, or starting their own thing, too, will be creating almost like little networks of like minded folks. So we’ve done you know, head of data science breakfasts or lunches, we did a CPO dinner, we’ve done VPs of supply chain dinner across different cities. For us, our portfolio is mostly concentrated across, you know, SF, New York and LA. We have a few companies in Seattle as well. But yes, we definitely try to do that It’s crucial.

Nick Moran 26:10
You wrote a great piece that analyzed three areas where VCs could invest to address the societal challenges of COVID-19. Can you walk us through each of these and why the opportunity here is, is greater? Yeah,

Speaker 1 26:22
happy to. Thanks for reading. So three main areas in that article, were kind of areas of opportunity for investment in post COVID. One was healthcare. So you know, telehealth, healthcare marketplaces, given a lot of the shortages. One was remote, so kind of remote work tools or different social tools. And then the third was infrastructure. So that goes two ways, right? Ecommerce and fulfillment infrastructure, and also web infrastructure on the other side. And so I wrote that article, because I think there’s no time like the president to kind of see the problems that currently exists in our ecosystem and in our economy, and use entrepreneurship, to solve those problems. Right. I think a lot of times, we forget that we’re trying to make the world a better place and invest in companies that are, are moving the needle and helping our society. And so that’s why I wrote the article. And I think there’s massive opportunity. And each of those, I mean, all three of those companies in those categories are experiencing massive growth right now. I think the the key that I think I mentioned briefly in the article is which of these companies will be able to continue to maintain that growth rate, especially on the more consumer side, convert those kind of digital users to in real life users or or users that continue to pay a post? COVID?

Nick Moran 27:38
Yeah, I think that’s part of the challenge. Right, we had Tom Tong who’s on the program earlier this week, and he and I were discussing how it could be difficult to sort of unwind the COVID related, you know, growth that might not be sustainable from just the core growth.

Speaker 1 28:00
Exactly. As a question, we asked ourselves a lot. And I think, you know, when we’re looking at a bunch of companies in September, or maybe December of 2020, how has retention been, and that’s what we’re focused on more, I would say, than revenue growth, I think a lot of companies are just going to experience flat or just slow growth in revenue this year. But if they can retain those users, that says something about the strength of the product and the business,

Nick Moran 28:23
right, yeah, I’m sure you know, all these investors are in and founders alike are analyzing their cohort data. But it’s such fast cycles, right? I mean, going forward over the next 1218 months, I’m sure we’re gonna see data that it never really returns to a steady state or an environment like pre COVID, nothing will. Everything will be forever different in a way. And so it’s it’s kind of, it’s going to be difficult, I think, to get clarity on, you know, How sustainable are the metrics for a long time? I

Speaker 1 28:58
totally agree with that. I think, yeah, two to three years, probably before we’ll see a full market correction is my lose prediction.

Nick Moran 29:06
Have you changed at all the the metrics you’re assessing? You mentioned churn, but are you changing the way you’re assessing them? Or are you prioritizing? Maybe nice to have metrics more highly? Considering the situation? Yeah,

Speaker 1 29:21
it’s a good question. I like to think I’m evaluating companies in the same way, I think the the extra analysis I’m doing is really thinking about how they’re going to be affected by COVID, you know, so over the next 1218 months, and if they’re raising now making sure that this capital will get them through that 12 to 18 months as well. And then also understanding kind of, okay, what are their kind of realistic revenue upside downside and base case scenarios and really stress testing them, right. What are the assumptions made to back up those those revenue and growth assumptions? What

Nick Moran 29:58
do you think happens to the category of companies that is just super adversely affected by either the pandemic itself the quarantine nature of it, you know, this is probably going to be a long period of extended isolation, whether it’s, you know, a rigorous shelter in place, or people slowly, you know, those are lifted and people slowly kind of acclimate to, to the way that we used to do things. Yeah, just some some thoughts there. Yeah.

Speaker 1 30:29
So two ways to answer that question. I actually think there are some companies that will adversely affected now, we’ll have a bounce back in the next six to 12 months and could actually represent a great investment opportunity right now, you know, things like in lending, housing, sorts of things that maybe you’re on pause right now. But we’ll come back to normal, then there’s another bucket of things where I wonder, right, how will restaurants be changed forever, right? Like is Instacart and, and kind of DoorDash, the new norm, and we’re just really not going out to eat as much. And so those are ones where time will tell. And so I think two buckets there, I do think it’s a great time to be building a product, if you’re an entrepreneur addressing and seeing a lot of the problems in our world, clearly exploiting the opportunity to build a great thing. And then also, I think, right unique point in the VC funding cycle where there’s just so much dry capital. And you’ve if you’ve been following the news, so many funds have recently closed, pretty massive funds. And so there’s no shortage of capital, in the sense that, you know, if you’re build a great product, addressing an important problem, capital will be there. And so I do think we’re going to continue to see if movement in the market, maybe just not quite the same cadence as it was before.

Nick Moran 31:41
Do you think entrepreneurship or the venture industry at large changes at all post COVID?

Speaker 1 31:50
I think all VCs will actually have to adjust to the to the norm of not meeting people in person, it’s really important to our job, especially, you know, the series A and B stage where you’re taking a pretty major equity stake and risk on your on your firm. That being said, I think there’s just a new normal, you have to get used to getting to know someone virtually. And I think a lot of VCs that kind of turned their noses up at that and said, Oh, my gosh, we could never invest in a company and that we didn’t meet in person. I think that will change.

Nick Moran 32:19
Yeah. So on that point, you know, there is no homecourt advantage really anymore. So any ideas out on how one might win a deal? Virtually? Yeah,

Speaker 1 32:29
I think totally right, like home court advantage no longer exists. Pretty, pretty cool. And it’s exciting to think about that, what that means from a variety of perspectives. But I think as an investor, you just have to find ways to add value virtually, you know, you I know some investors take people out to dinner and do all these sorts of things in person. And so you have to find ways to kind of prove your value to the entrepreneur in different ways. So one way, as you mentioned before customer expert introductions illustrating the value you can provide even from afar. And then the other one that I’ve been thinking about a lot recently is proving your knowledge and thesis or perspective on the space, right? Have you done your homework? Have you kind of really gone through and understand, understood the nuanced perspectives, that and communicate almost the same language of that entrepreneur even virtually? And so I think that will just become more important, because otherwise you’re just an email or a phone call? If

Nick Moran 33:24
you’re being totally honest, how many touch points? Do you think it takes? Like verbal touch points or not email? But how many touch points do you think it takes before an investment? You know, offer is made?

Speaker 1 33:37
Depends on the stage? For sure. So I think See, that number is a lot lower, it could be you know, two to three, I think series A and especially big a bigger, it’s, we’re looking at upwards of five to 10, maybe 20. And I would include in those touch points, talking to lots of customers. And so there, although there’s maybe you know, you and I have five or six calls, just investor entrepreneur, I make, you know, 15 more calls to other investors, other experts in the space and then a bunch of your customers. So I think still a lot of touch points. But I think the maybe the weighting of the in person touchpoint is just lessened to a greater amount.

Nick Moran 34:15
Grace, if we could cover any topic here on the program, What topic do you think we should address? And who would you like to hear speak about it? Yeah,

Speaker 1 34:21
nuances of being a board member from A to Z. So everything from governance to cap tables, voting rights, you know, nitty gritty, I think most investors including myself, are undereducated on it. And you just learned through experience or mentorship will be great to have you know, really experienced board members. Speak about that on your show.

Nick Moran 34:42
Grace was the one thing you know, you need to get better at

Speaker 1 34:46
focusing. I think that a lot of VCs will probably tell you that as well. It’s super easy for me to get pulled in many directions. Oh my gosh, data Ops is cool and open source and all these other things, and easy to chase companies you can constantly be you know, free the sound of a new deal, but it’s I think it’s much better if you can focus on, you know, one or two sectors or industries, get to know kind of the intricacies and nuances of that industry or company. And then when those deals, I think those are ultimately kind of the the life defining your career defining and investments for a lot of investors.

Nick Moran 35:17
Great advice for the startups as well to stay focused. Grace, what investor has influenced you most?

Speaker 1 35:25
Yeah, we already talked about him, probably Bill Gurley. just fascinated by his depth of knowledge and strong point of view. And again, that article, in addition to the podcast, you mentioned the article on, on Uber, that is posted on his blog. Yeah, it kind of explained the market sizing, would recommend that genuine blog

Nick Moran 35:43
is above the crowd, I believe. Yeah. Love it. And finally, Grace, what’s the best way for listeners to connect with you?

Speaker 1 35:51
Yeah, just reach out to me, my email is grace@canvas.vc. Pretty simple. I do not check LinkedIn frequently. I get a lot of messages on there. So I would recommend the email channel if you want me to read something.

Nick Moran 36:02
Any last words of wisdom for founders or investors out there in the audience?

Speaker 1 36:08
I think just just enjoy it. I think we have some of the coolest jobs, right? It gets to learn and build and think about things. And so I mean, although it can seem like a high stakes job, don’t think don’t take yourself too seriously. I enjoy working with people and getting to know I think one of my favorite parts is learning from really smart people, investors and entrepreneurs like,

Nick Moran 36:28
well, Grace here again, the entire team at NASDAQ has just been following your work and really enjoyed it can’t wait for the go to market playbook. When it’s available. Please send me a copy. And we’ll help to get it out to the listeners. I’m sure there’ll be anxious to read it. Yeah, you’ll

Unknown Speaker 36:43
be the first to know. Awesome. Well, thanks

Nick Moran 36:45
so much again for joining us.

Unknown Speaker 36:46
Thanks so much.

Nick Moran 36:52
That we’ll wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest competently. Thanks for joining us