281. Overlooked Opportunity in EdTech, Letting the Entrepreneur Be the Guide, and Defy’s Sage Program (Neil Sequeira)

Neil Sequeira of Defy joins Nick to discuss Overlooked Opportunity in EdTech, Letting the Entrepreneur Be the Guide, and Defy’s Sage Program. In this episode, we cover:

Walk us through your background and path to VC.
Remind us of the thesis at Defy?
Tell us a little about your team at Defy. How it has grown and evolved and all of the things each person brings to the table which makes the firm stronger?
What do you think is one of the most underappreciated skills of the great venture investor?
How do you think founders have changed since you first started investing, if at all?
Why is leading a round of financing and ownership important to venture capital firms?
At the later stages and growth stages, what’s the biggest risk or mistake you’ve seen founders make when bringing on investors, and/or what’s the biggest issue that investors may impose that causes issues?
What resources would you recommend to the listeners that you found valuable on founding startups or being a long-term sustaining venture investor?
What do you need to get better at?
What is the best way for listeners to connect with you?

Guest Links:

Transcribed with AI:

0:00
Neil Sequeira joins us today from Woodside, California. He is Co-Founder and Managing Director at Defy Partners. Prior to Defy he was a GP at General Catalyst holding board seats in companies like The Honest Company, Highwinds and Elemental Technologies. Neil, welcome to the show.

0:14
Thanks, Nick, really appreciate you having me.

0:15
Yeah, I really appreciate you doing this. You know, we had a chance to have Trae on the show gosh probably a year ago. I have to check. But I mean, she was like a breath of fresh air and had a lot of good things to share about Defy but you know, we’d love to hear about your background, your path to VC, what took you to GC and what led to the launch of Defy?

0:33
Sure. I’m happy to and I appreciate you taking the time. It’s a listen to you for a while and learn from every every podcast. So thanks for watching my path to VC. You know, it started as an immigrant family who came from Goa in India. And my parents actually had me in Oakland, California, and I grew up in San Jose, California. So I grew up born and raised in the valley. My father went and worked at IBM for 35 years after going to night school, my mother became a lawyer. And it really got me to appreciate the valley and the amazing things that were getting created at that time and led to technology in the mid 90s. And the areas that I was interested in. And after Business School focused more around investing in venture capital. So sometimes it scares me, Nick, but I’ve actually been doing venture for 21 years.

1:27
And you know, it started at a during the height of the bubble. So I joined a firm called CMGi, which had ownership stakes in Lycos and AltaVista and a bunch of companies that don’t exist anymore. And, and joined in March of 2000. Actually, right after Business School, so so we were a publicly traded venture capital firm at the time, roughly $58 billion for being publicly traded for and by the time I got there, the bubble had burst. And I learned the most during that time, because I was forced to sell companies to keep the business alive. And and you know, there was I got there with the idea that I’d be investing and having fun during this incredible time of value creation. Instead, you realize that during the hard times when you learn about and working with entrepreneurial teams who love their teams and love what they were building, but weren’t able to find the product market fit, but had a great technology. And so we went and we tried to sell companies to get cash in the door. And we ended up selling one to AOL. And I was lucky to meet a team at AOL with Steve Case, and Len Leader who were starting an investment firm at the time inside of a well a venture capital firm called AOL Ventures and they said, hey, you’re on a sinking ship, you should come join us. And so by selling and learning about the the hard part about venture early in my career, I joined corporate venture, which again, is a bit of a non traditional path to the to the business, but when I got to AOL was able to actually start working and investing with great entrepreneurs who many I’m actually still investing in today, I went on Nick to continue to destroy value because AOL merged with Time Warner stock went from about $200 billion to about 40 billion in a matter of a couple of years. And, and it was, again, a great learning experience. You see the great, heady times I remember getting a big poster that I still have today, that was AOL’s 30 million subscriber 30 million subscribers. And, and by the time I departed four years later, you know, we were down to single digits, and the company was really the Time Warner assets at that point, the cable business and Warner Brothers and a few others, and I transitioned to run Time Warner’s Investment Group, and luckily had worked with Joel and David, the two founders of General Catalyst for many years as they work with strategic investors and joined in 2004. The firm was actually the first institutional fund was 2001. So they were about the same size as Defy is today and you know, it was an amazing ride, watching and being a part of that team and spending 11 years there and watching how they approach the business, which to me was very different. They hustled, they worked really hard. This is a hustle business actually funny before you and I jumped on you were just doing a little work on your end and that is the business sorry, it is. It is it is exactly what you have to do to be successful, which is you are a servant to your entrepreneurs. And as the firm grew and we grew while I was there we raised in new over the 11 years, we raised six venture capital funds and I was lucky to be managing directors we invested in some pretty amazing companies. So those included Kayak, HubSpot, Airbnb, Stripe, Snapchat, some real important businesses. While I was there, I was the lead investor in companies like the Honest Company, which you mentioned and some great companies that were acquired by Amazon, Elemental, Highwinds and and others And, you know, eventually when we reach 2010, I’d been there for five and a half years and the firm was still which people don’t realize a Boston East Coast firm in a lot of ways. And we had an initiative to open up the California office. And since I was the partner who was from there, I raised my hand and in 2010, open Palo Alto office and the West Coast has really been a foundational part of the firm since then. So that was five and a half years, another five and a half years. So 11 total, and, and that that’s when Defy started, you know, the days when I first got there, where we were artisinal investors and sat on the board of series A companies and were the most hardworking part of the management team, if we could be was what really drove me and I was passionate about so joined, joined up a Trae, and then I brought my partner, Purvi over from General Catalyst, and the Chief of Staff Phebe and the four of us set out to build Defy now, almost five years ago, so it’s been a fun run.

5:54
Awesome and can you refresh us on the thesis at Defy

6:04
Sure, five years ago is an interesting time we were coming out of a period where seed had just really exploded, and there was a lot of seed businesses that were that were developing and being created. And a lot of the larger firms that we love and respect, had grown up market, which five years ago created a little bit of a window, where he had a lot of interesting companies that were ready to go to market that maybe didn’t have the metric to justify a big growth round yet. And that’s the moment where we think we shine and where we can be the most helpful, which is writing a real check, we tend to lead rounds of financing with three to $10 million for the initial check. And we reserve two times that plus for future financing rounds, where we’ll be your lead, sit on your board, be an active investor, and, you know, really helped get you as an entrepreneur and your team to that growth round. And, you know, we were lucky that a lot of incredible institutions, a lot of me through General Catalyst, you know, believe that that was a story that made sense in this artisinal venture, this getting your hands dirty, being really involved was was differentiated in the market, because that’s really important in our industry, as you know, Nick, and that we were able to raise our first fund at 151 million, about 16 months later, we raised our second Fund, which was 262 million. And we’re super lucky, because it’s really amazing endowments, nonprofits, foundations, and hospital groups, we were able to pull pick and select the most elite LPs, where when we show great returns, it goes back to incredible institutions. And that actually carries a lot of weight with our entrepreneurs. You know, we’ve been successful as investors and you know, we focus on where we can add value and be helpful. But when we were successful, it goes back to great causes. And you know, that theory around being, you know, your lead in the early stage has played out well. And so the only development maybe that’s a little different than what we expected as we have done a fair amount of seed investing over that period of time. And having that background and knowledge of getting dollars to an entrepreneur early so that they have the capacity to grow and invest in in companies at the stage when they are nascent, but don’t need a lot of capital, we have actually found to be important to us. So while most of our deals, probably 90% of the total capital invested is in a series a type round and how that is defined. Nick is still question for a lot

8:30
Is still moving, I think

8:31
It still moves. We tend to you know, focus there. But we’ll do seed investing and sometimes do things a little bit on the later AV side, when it’s an area we can really impact and help.

8:41
Got it. Got it. you’d mentioned your partnership, chief of staff as well as the sages. Can you tell us a bit about the team at Defy how it’s grown, evolved? You know, the things that each of these core members bring to the table and you know, making your firm what it is?

9:00
Sure it is the people that define any firm and of course, it is not necessarily the founders, it’s the folks who have come in and developed an incredible set of entrepreneurs and ecosystem and Defy it’s no different. There was the four of us who started the firm with Trae who you’ve met and Purvi, who’s a partner here and really runs the operations of the firm and Phebe has been with us for more than a decade. The first partner who joined us is Brian Rothenberg. The reason Brian joined was we wanted to bring on folks who had real operational talent and experience and Brian brought that to the team. We brought on Madison McIlwain and Madison similarly was had actually done venture in different ways and startups, you know, really building the consumer interface between the enterprise which is important to us, Madison really helped spearhead and lead our initiatives around seed and so it gives us that benefit of that really early stage. Focus Bob Rosin joined as our partner, you know, early on in Defy’s history, a lot of people don’t know the story Bob and I were chatting and I was like we need someone with the operating experience that you have with these amazing organizations being Stripe, LinkedIn and Skype. You should think about joining like, yeah, and I’m thinking about that. But I have this opportunity to join Stripe and I didn’t even hesitate. I was like join Stripe. It’s an amazing company is lucky to be an investor through General Catalyst. And I said when when the time’s right, you should join us and he did. And so job Bob really brings us another set of relationships and experience that important or recently we added a partner Kamil, Kamil joins us from having actually a real deep venture experience went to Bain very traditional path. And then join Teresa and aspect team in the early days of aspects, you know, really saw the development of firm from scratch and realize how you know, important creation and starting businesses is which is important to us. Finally, as you mentioned, we have the sage team, our sages are venerable and Brian Lee, Steve Miller, Christa Chorals, Brian Goldberg, and they are really amazing. You know, it just it’s a really spectacular team of CEOs who sit on boards for us and allow us to extend our scale and reach as a firm, which is important,

11:20
Neil, what do you think is one of the most underappreciated skills of the great venture investor? You know, you mentioned some things earlier, you got to be people oriented, you gotta hustle. What’s something maybe that a lot of folks don’t talk about? But is is super important that you found in the business and developing young folks and learning yourself over 21 years?

11:40
it’s gonna sound a little trite. But fundamentally, being a good person and prioritizing other people in front of yourself in your firm will, if you want to be a venture person for a couple decades plus, that is the only way to be successful in this business. I think people forget that if you are fundamentally a good person, and you make decisions that are sometimes maybe hard aren’t always in your best interest, but will serve the entrepreneur right? That last with you. Because when you have to invest in the next entrepreneur, who are they going to call, they’re gonna call your CEOs. And when you have to raise new funds and capital, that reputation is what LPs care about. And you know, while anytime you’re in a financial focus business and a finance world, there’s a overarching need or desire to kind of maximize the next dollar. That is not the best decision. If you want to do this business for a really long time. You got to listen to your entrepreneurs, you got to find the right opportunities. We’ve actually just in the last month announced a couple of really successful exits. One was a company called Securly that we invested in a couple of years ago. It was acquired by Golden Gate Capital. And yesterday we announced Skubana, which is an e commerce infrastructure company that was acquired by 3PL Central in both those cases, you know, we the businesses were growing 100% year over year, we loved the areas they were in, we’re actually in education. And for Securly, we’re also an investor in Honorlock. And in for Skubana. In e commerce infrastructure, we’re also investor in sound commerce, these are areas we know well, we can, you know, support and build the companies, the entrepreneurs came to us at a at a point when they were getting inbound and said, Look, for a lot of reasons we think this is the right decision. This is the right decision for us, for our families, for our teams, we want you to believe and we want you to make sure you’re doing the right by your LPs. But we think that finding an exit earlier in the usual life cycle in both these cases, these investments for less than two years, were will, you know will be the right thing for a lot of different reasons. And and you know, a lot of venture folks in the world today will say no, that’s not gonna, you know, that’s not how we do this, we’re going to keep going. And we should go raise money at a really high price. And get yourself caught a couple of years from now, when you haven’t reached those projections and haven’t reached that that inflection point. And you’re going to you’re going to come up short. And guess what it’s going to get really painful. And you’re gonna see that that over these last couple of years have a really hot market where folks are just raising money, because they can. And they they when they have to then produce the returns and they’re not there. There will be challenges. So we love going long, it is fundamental to venture capital. And we believe, you know, the financing events today, the late stage growth rounds are exactly what the old IPOs used to be. And we are huge positive believers in that like our company Airspace who just raised a huge growth round and others. But you know, sometimes it’s better to listen and treat the entrepreneurs with the respect they deserve about when the right time is to kind of exit the business. And hey, in these cases, they ended up being massive returns for the firm. So it was great. But you know, if you keep that type of trying to listen being a good person at the top of what you do every day You know, other things will solve themselves, which means, you know, you’re going to get the next entrepreneur who wants to back you, you’re going to back those folks, again, it’s not a surprise to every one of our sages who dedicate a lot of their time as full time CEOs to us, we’re all people we’ve backed before, known for a couple of decades plus, that doesn’t happen by coincidence.

15:20
It’s kind of astonishing to me that there are a short number of loud voices that come off pretty arrogant, on Twitter, or wherever else, right that have sustained in the industry and had and have had success. And from afar, their behavior suggests maybe more agents than principal and maybe more transactional, I do feel like they’re the minority of you know, the folks that have sustained and shown persistence over time,

15:49
there’s a reason people are arrogant in this business, I understand it, it is a, it is the best job in the world, there’s nothing I get up every day with a passion to get up and do this job everyday work with entrepreneurs invest, and I love it, there’s nothing I would rather do. Not only that, when we’re successful, and I’ve been lucky to have amazing partners and made some good investments, economically, it’s, it’s great. And what that does is start to make you believe in your own mind that you’re great. And not take into account that we are investors and entrepreneurs, and you have to have some humility, and you have to believe that there’s a little bit of luck involved. And you have to, and you have to understand that over time, you know, you need to, you need to show what’s right. But I right by your teams and your entrepreneurs, but I get why people have an arrogance in this business. You know, it’s a little bit of a Masters of the Universe type of industry. And people feel like, the more they pound their chest, the more other entrepreneurs want to be attracted to them, we’ve found that a lot of those entrepreneurs aren’t necessarily the ones we always want to back. And so, you know, it’s okay, that there are some folks who love the chest pounding screamer at the top of the mountain type investor. And that works. Sometimes we don’t believe it works to if you’re not going to be thoughtful, and, you know, respect what your entrepreneur wants long term. And you’ve seen that happen. There’s some great stories from big companies, where entrepreneurs showed up at partner meetings that weren’t too happy with how they were treated. And, and and so, you know, I think, I think it does, you know, there’s a reason folks have that sense of arrogance. Our belief is that the folks who want to invest in here at Defy, tend to have a bit of humility to and tend to put their teams and the people around them as as, as as really important, and longer term, especially, you know, life is long. That’s where you want it back

17:54
It was funny, because I was on a clubhouse chat recently with a panel of other VCs and I had described a group of our entrepreneurs and how they have humility, and they are open minded. And they work with customers to find the right path, right stubborn about vision open minded about the journey, and this other VC, sort of, he just, you want to pick a fight with me. And he’s like, I think that you’re investing in a narrow portion of the Midwest founder market, where these people don’t have conviction, and they don’t know what they’re doing. He’s like, with our portfolio, we can’t tell them, we can’t give them advice. We can’t tell them, you know, what we’ve learned in the past, like these entrepreneurs, they know what they’re doing. And they’re not. They don’t want to listen to us. And it was just like, I was just astonished at how different mindset was, and I don’t think I’m, you know, well, who knows, I don’t think we’re investing in a bunch of people that are, you know, loosey goosey. I just think having a humble and open mind, whether you’re an investor or a founder is is a very valuable tool.

18:55
Absolutely. And, you know, there is a little bit Nick of the valley mentality around some arrogance, and it’s a balance of confidence and humility, that really, you know, you believe you can run through a wall. That’s what being an entrepreneur is, you get up every morning, and I’m gonna get through that wall. It doesn’t mean you have to break a lot of glass to do it, you can get through that wall in unique and thoughtful ways. And, and I think one reason perhaps, that, you know, we’ve seen a lot of investments outside of the valley do really well for us, in the Midwest and the south and Seattle and Southern California in New York. Maybe perhaps, because a lot of the entrepreneurs don’t get as much of the kind of deep valley, hey, we have to be a little, a little different. A little off center, a little bit more arrogant to get the attention of folks doesn’t mean we don’t love people like that. We love first time entrepreneurs who have an incredible sense of confidence and security and what they’re doing. But across the country, there’s great entrepreneurs who want to do the right by themselves. Their teams and their investors. And we do love backing folks like that.

20:04
Neil, how do you think founders have changed since you first started investing, if at all?

20:11
founders have changed quite a bit in a few ways, and then not as much others, let me touch on where they have changed. When I first started a couple decades ago, venture capital was very different business. It was, it was a smaller industry. And there were some really elite names. And there was a group of folks who were developing and coming up, if you think about that period, you know, the firm’s that really prosper General Catalyst and Spark and Union Square, who haven’t been around for 40 years. And they, they, they really built their reputation during during those, you know, late post 2000. And, you know, entrepreneurs have have been able to, I think command a lot more, as the industry has grown, and the industry has expanded, entrepreneurs command a lot more of the influence and control than then that smaller set of VCs had 20, 30, 40, 50 years ago. So that is a fundamental change is that we, we always worked for entrepreneurs, if you didn’t think that and you’re in this business, do you have bigger issues, we always were the surface of entrepreneurs. But today, it’s too much greater extent, because for smaller dollars, you can accomplish a lot more as an entrepreneur and for then you could 20 years ago, and there aren’t, you know, 10, great firms and then 10 others, there are quite a few excellent firms, quite a few firms that have started coming out of big firms. So you get the partner that you want, without having some of the overhead of the big firm. And that is that is a huge change. And that entrepreneurs can pick and choose and make decisions about who they want as their partner much easier than they could 20 years ago. And I think a second way they that entrepreneurs have changed, generally speaking is they don’t, you know, necessarily, you know, want to, they have an understanding about what dilution and dollars raised and how that impacts their business. So, you know, they, they have a much keener understanding of cap table in terms and things that, you know, a GC 20 years ago, we loved having very clean term sheets, and it was one of our huge selling points in to two entrepreneurs, it was, hey, we’re gonna treat you fairly, don’t don’t take that super pro rata, or don’t do this just will do apparently, entrepreneurs today, I think, have a much more sophisticated understanding of what you know what it takes, and to keep their ownership at a fair level. And they know how important that is. And because of the way communication has happened between entrepreneurs, they can find resources and others to help them walk work through that, that could be in an incubator, it could be just using LinkedIn to connect to somebody who can help them. It’s a much more sophisticated group of entrepreneurs that I think you would have seen 20 years ago, where it hasn’t changed is, you know, entrepreneurs, like we talked about VCs, you know, the ones who hustle, work hard, and you know, have a have a clear vision for what they’re building will when it is it is, you know, it is a maniacal focus. And sometimes it can truly be maniacal, but it is a maniacal focus that leads in great entrepreneurs to build something special. And that will never change. If you know doing this kind of halftime or not, you know, spending the time really developing and building business is something that is consistently will always be a great as entrepreneurs move forward.

23:44
You know, we’ve seen this, especially at seed, but we’ve seen a proliferation of syndicates and rolling funds and angels, even overall a huge benefit, I think, to the ecosystem, more capital sources, more of them. Many, though are, you know, smaller checks in their co investors. And I think I heard the stat this morning that for every seed investor that leads there’s four that follow Why do you think it’s important to you know, lead rounds, and get ownership as a venture capitalist?

24:19
We love the seed ecosystem, we’d love that there are moments in time when bringing a few groups together to help you get started and maybe each provide a very specific set of value to you is the right thing as an entrepreneur. So we go out of our way to nurture and build that relationship with seed firms. And of course, it leads to us also doing seed investments because we’re okay unlike some larger firms to write smaller checks in a seed round when, you know we can maybe be contributing a lot of experience in a certain area, recruiting help, etc. We believe that leading For that, like first real institutional round is, is critically important. Because you’re really entering in a partnership with this, this, this team and this entrepreneur, you were becoming part of their management team, you are becoming an integral part of how they think about their strategy going forward, you have to have somebody who catalyzes that for a lot of reasons, not for one, you only want, you don’t want to take so much input when you’re, you know, you know, your product, you know, your team, you have a vision about what go to market will be, you’re getting a bunch of input at that moment in time from 10, 15 people isn’t necessarily helpful, finding a partner who will sit on your board, dedicate real time, price around to financing simplistic, simple, simple tactical things you need to have happen, who can help you raise the next round of financing, right, who’s gonna who’s going to be able to go speak to their friends in the community and say, This is why I love this team. This is why I love this business, that you doesn’t come usually from a party round. And with smaller investors, you will always get help with your lead team investor and your lead your leads, when we get to larger rounds of financing, having someone who is really your right hand person is a partner of you, who you can call on at any time of day and will always be there and, you know, is is trusted, and a real friend in many ways. That’s what we what we strive to be. And what we strive to do is to try to develop that type of relationship with entrepreneurs. And it’s different, it is a different than just, you’ll see because sometimes we’re always open to adding a small strategic investor adding in our rounds of financing or adding someone who could add very points that value if we invested in a particular region, you know, bringing in a small local investors positive for us, because they can be there physically. And so there’s reasons you would have other small investors, but you still need that lead, who does all the things that you know, you want when you think about building a longer term business future as a financing, hiring, recruiting, PR, those types of things that are important to business going forward?

27:15
You know, I’m curious, after the stage that you all invest. So later stages grow stages, are you seeing any common threads or, you know, big risks are mistakes that either a founder makes and selecting a partner, or maybe mistakes and issues that investors will impose on a startup that causes a lot of issues? You know, at those growth stages, after you know, you had invested early?

27:41
Yeah, it’s a great question. And this will sound a little bit self serving. But I truly believe it the problem that entrepreneurs, I think, in that stage often will purely select based on price at that, at that next stage of financing after us And generally speaking, and I actually believe this usually in our in our stage, so there’s outliers like Clubhouse in their first round, and a few others that tend to, you know, get the 100 million dollar valuation, generally speaking, a great entrepreneur, that we would back an excellent team, a big idea would have been a huge market, because we wouldn’t we wouldn’t invest otherwise, even generally have a sense, within a standard deviation of where the price is gonna come in. for that type of company. There are outliers. So don’t get me wrong, if jack goes out and starts a company, it’s going to be price quite high, when when max started a firm, but the price is a little different. those are those are one on one founders and put them in a slightly different category. Similarly, for that next stage growth round, there’s usually a variance, but the variance is rarely, significantly different. And you have to make the right decision because that partner is potentially your pre IPO partner, or it’s the person who’s then gonna go out and raise this billion dollar round after. And I think you should choose them as carefully as you chose us. When you chose us, we’re you’re probably your only board member, as an investor, we’re probably you’re kind of the person you call. Most my CEOs I talk to you every day or two or the other day, we’re the person you know, who is there in the foxhole with you that that that next semester is often in that same kind of realm of importance to an entrepreneur. So when you’re talking about a Oh, a, let’s just use a round of financing at 200. And the difference in prices 20 20 million, $20 million from an elite, great growth investor, like an IVP or a GC or the firm’s that we think of like, hey, we’d love these working with these folks, and we respect them a great deal and they can be really helpful in this in this stage. Versus, you know, something who’s higher, right? That type of amount. Do the math it’s 10%. Right? And making the trade off of dilution. When you know, your run that 10%, it’s hard to convince Don Brewer that the right thing to do is going with Sequoia growth that sometimes it is because that growth group can do well, for this particular business, or Ameritech does really great work for growth businesses, and there’s firms that we just respect a lot who can really help get you then to maybe your kind of big billion dollar next round. And, and those, those decisions for entrepreneurs are hard, because it is often a difference in price, we just went through this with honor lock, where it’s a remote test proctoring service, they have an unbelievable product exceeded planned last year by 600%, as you would expect during a pandemic, they move from they moved from they they have multiple term sheets in front of them and the entrepreneur is going to, you know, make the right decision. And in and that’s, that’s a, that is not an easy thing to do. Because a lot of people, your mom and dad are whispering in your ear, like take them take the higher price your uncle, Uncle Larry is saying like they are braced and the reality is it along every round of financing. You know, finding the right person who’s there with you and can help you the most is probably is the most important. On the flip side investors because investors make mistakes too. One thing we haven’t totally gotten our grip around, because it’s not necessarily where we play. But we do work in a business, Nick, where there’s a fair amount of a lemming mentality when you see something hot and you see something other people like, you dive in, and people run to it and and aggressively fund those business and fight. And the reality is that will work sometimes, and you’re seeing it in front of us with a few companies who are really early bit are making great progress. But that’s not necessarily the right bet at the time, right? You know, the, the, the mentality of like, well, if everyone else likes it, we should like it. We don’t believe that carries a lot of water, you really need to understand space, love an entrepreneur, you know, not just, you know, you hear stories of well, throwing in term sheets after one meeting or, you know, having a really lightweight approach to doing the business that’s just really hard. And we’re not, we’re not big believers in it, we do think that is when look, we have lived through two downturns like, see what happens in o one and o nine, I don’t predict another one anytime soon. But you know, things will change at some point. And, and when it does, you know, you want to make sure that the person you’re you’re going to battle with is somebody you really connect and and love and think the world of and not just because a bunch of other people want to do the deal.

32:40
Neil, what resources would you recommend the listeners that you found really valuable on founding startups or being a long term sustaining venture investor?

32:51
So in founding startups, there are some great resources and people out there the people, you know, I think are, you know, pretty straightforward one, people don’t talk about that much as Paul English, who was the founder of CTO, one of the co founders of Kayak, currently founder and CEO of Lola, you should check out some of his work that he’s posted. Because Paul, you know, has some great theories around hiring and about, you know, you know, how you really should, you know, kind of turn your workforce, which isn’t a very popular thing to talk about, in how you bring in great talent into your company. And I think as an entrepreneur, that’s, you know, critically important. And so I, somebody you don’t hear you hear about Paul from icom. And obviously, he has a lot of resources. The Paul English is somebody who and I would recommend Paul for my comms info as well as a resource. But I think Paul English does a really nice job of how to build companies. And he also has a very straightforward approach is these great blogs about how he started he started multiple companies. And he it’s a great read, because it’s just like, Hey, here’s how Kayak was founded. And if you read through why he founded and how that happened with, you know, it’s a it’s great Dharmesh Shah, who’s a founder of HubSpot also has an incredible background, both writing and providing excellent resources to entrepreneurs, again, culture and team and you’re seeing a theme about where I think it’s important for entrepreneurs to spend time Dharmesh is incredibly thoughtful about building culture and team he’s had he and and Brian, his co founder and CEO, who are still at the company mind you have built what I think is the best company in the northeast, and it you know, culturally, it’s always ranked as the best place to work for folks in Boston. And, you know, you think incredibly, highly, of, of what they’re doing and building you know, ventures a little harder, because I think there are different successful approaches to venture obviously, you know, we we, we have our own approach, it does not mean that we think that this is the end all be all to how we how we how we believe, how we believe venture should be done. You know, I think that there are many incredibly thoughtful, smart folks in the venture world, I think it’s straightforward to find out who, you know, those people are and which firms you think are the ones that really are outliers and why and what I love about the business is that, and I use this as kind of a guide for entrepreneurs, if you’re an entrepreneur, Nick, let me use an example. You can get to anyone Now granted, you have a unique, you know, show, right? Again, you you talk to a lot of people who can be sometimes difficult to get in touch with, right, but if someone knows you, right, they can probably get to a lot of people, right. And, and that’s what being entrepreneur is all about. Right? And, and when someone says we don’t know, we really want to be in touch with x, or we want to be in touch with y, we want to I want to I want to take girlies brain at benchmark brain, an entrepreneur will find a way. And it’s a great litmus test in terms of how scrappy you are, and how if you, you find a way to get to the person that you really want to get to, because there is one degree of separation between you and that that individual there is there’s a way to get to almost anyone, if you really work hard enough at it, and it is true, I get a fair amount of over the transom email. And those are hard for me to respond, right. But when it comes in from anyone I am close to and, and the connection could be, you know, pretty random. It’s really easy. I’ll give you an example of a CEO who invested in who’s you know, a 19 year old Yale grad, Yale, non grad, right. And in everything about him screams, you know, entrepreneur, and thoughtful, you know, smart individual right? Here is me to another 19 year old Yale student who is building a really interesting business. And if that student and probably cold called right, it wouldn’t, would have been hard for me to make the time, I heard a quick pitch, introduce him to two folks who can be helpful to him. And I think it’s gonna raise the seed capital on and off to the races. And and the people who we were able to introduce him to were, you know, really, industry leaders in that area and thoughtful. And so I think, on the venture side, as you think about building, it’s those people that you can get in touch with and I think entrepreneurs can find ways to do that. And we live in a world where your one LinkedIn connection away or your, you know, find going to find a creative way to reach out and and I love that I think it’s what makes this business fun is, you know, it thinking through how to actually make those connections happen and making those outreaches actually work.

38:13
Yeah, I mean, earlier today, funny parallel, but I was on a call with a bunch of emerging fund managers, and they were talking about how building relationships with fun 234 large LPs that are too big for you. Now, still really important, because when they give an introduction to another LP, maybe a family office or somebody who is of the right size, the hit rate goes, you know, the conversion rate goes way up. Because it’s like the credibility is transferable. It really is.

38:41
It makes a huge difference. LPs is a perfect example. Like it’s really, it is and it’s because everyone is busy, right? Everyone has a certain you can only handle so much intake when it comes from someone you trust, or it comes to somebody you respect. Even better. It just makes a huge difference.

38:57
Same thing with bad intros. Don’t do crummy intros, especially to service providers. That’s my pet peeve is getting intro to two, you know, folks that just dropped the ball and don’t follow up or whatever else. Okay, sure. We’re over time here, Neil. Quickly, what do you know, you need to get better at

39:16
I need to get better at a lot of things, Nick. I need I need to spend more time one on one with my kids. Because I have three of them. And then I always do activities with them as a group and I feel like it’s one on one time I learned this from Matt McElwain, who’s a part of one of the lead partners of a drone he actually did a lot of one on one time with his daughter and others and it means a lot when you can get some one on one time you have one child so you get a lot of one on one time right now. But it is it is a that’s that’s one thing I could definitely get better at. I think it probably the crux of your question is that adventure adventure, you know, really continuing to push on finding outlining consumer thought process process and entrepreneurs, who are just not thinking about anything you and I would come up with, you know, in a dialogue, and you know, things where there’s a lack of comfort. You know, you and I both have business degrees. And, you know, sometimes we get a little caught up in, like, is this a model that’s gonna work? Is this a, you know, business that can can work and I’m like, don’t get me wrong that has served me personally quite well over the last two decades, you know, I’ve tended to invest in great entrepreneurs with real businesses, real business models. And there’s nothing wrong with that. But you know, as as, as you as you look forward, you know, Twitter, you know, with jack thought of no one believed in for a long time. There be around they had to go to the conference park on the East Coast, right? Not, not everyone in the valley really believe there’s, there’s, there’s a, there’s a orthogonal way of thinking about consumer that I every day, think about before I go to sleep, but how am I going to find that person that that young man I mentioned from Yale might be that person. But that that is interesting, because I think at this point in life, you know, meeting an incredible enterprise executive who can help kind of, you know, educate me about why this is important. And then I can do some diligence of work that remains, I think something that is very diligence oriented, and you know, thought oriented, this consumer, like where you’re really trying to continue to push pull, push the, push the ball forward and find something great, and it doesn’t exist today, I will, I will go to my grave, just keep you thinking that we can always look for that. And we can always be better at that. And we can always suspend disbelief, right? suspend it as much as you can, sometimes, and make the bets that you think are like I don’t even I don’t even know what this is. And I don’t know what they’re talking about. I would love to do that a little bit more. Because, you know, it’s easy to come fall into Hey, this fits into box adventure in our in our world venture loves it when things fit in a box, right? I think it’s great if we can keep pushing ourselves on thinking outside of that, and looking for the great next entrepreneur who’s building something that we don’t even know what they’re, what they’re thinking about today, or what it will be tomorrow.

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