295. Product Manager Turned Investor, Navigating Turbulence pre-IPO on Robinhood’s Board, and Unique Sourcing Strategies (Vanessa Larco)

295. Product Manager Turned Investor, Navigating Turbulence pre-IPO on Robinhood's Board, and Unique Sourcing Strategies (Vanessa Larco)

Vanessa Larco of NEA joins Nick to discuss Product Manager Turned Investor, Navigating Turbulence pre-IPO on Robinhood’s Board, and Unique Sourcing Strategies. In this episode we cover:

  • Walk us through your background and path to VC.
  • Why did you leave product to join NEA?
  • Give us a update on NEA – AUM, stage, thesis, etc.
  • What is your focus area at the firm?
  • Are you ever tempted to jump back to the startup side (or launch your own startup)?
  • You have significant and formative experience leading product.  How do you think that shapes your approach as an investor.
  • Do you think product managers are born or made?
  •  I also have a background in product and that has contributed greatly to our culture here at New Stack…  I’m curious what, if any, blind spots one might have if they are an investor with a very strong product background or orientation?
    • What KPI’s/north star metrics do you use to hold yourself accountable?
  • I’d love to hear the details of your process for sourcing and leading an investment.
  • Everyone getting into tech gets the cliche advice…  you’ve got to network… or “you are your network”… and that leads to a lot of productive and unproductive behavior.  What is your approach to building and strengthening relationships and what advice would you give to newer folks in the tech community?
  • Up until the recent IPO you were on the board of Robinhood.   You’re a board member for four companies and a board observer for several more–  How has your perception of being a good board member differed from the reality of the role after having had some experience on very notable boards.
    • Re.  Robinhood What did you learn from Vlad and Baiju that surprised you?
    • I have to ask, take us behind the scenes a bit — what was happening at Robinhood during the Gamestop and AMC run-ups when trading was halted?
  • Do you invest in emerging tech hubs outside of NY & SF? If so what are the areas of highest interest and how do you see the evolving in the coming years?
  • There’s a lot of VC content across many blogs and Twitter threads. How do you cut through the noise? What do you read to stay educated?

Guest Links:

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Transcribed with AI:

Vanessa larco joins us today from San Francisco. Vanessa has extensive background in product including key leadership roles at box in Twilio. She is now a partner at NEA leading investments in Mejuri, Cleo, Forethought AI, Greenlight Card and was a board observer at Robinhood up until their recent IPO. Vanessa, welcome to the show. Thanks for having me. So I gave a very quick overview of background. It doesn’t do it justice. I’m also curious to hear how you went from Georgia Tech to Silicon Valley. So can you fill us in on your quick background and your path to VC?

Yeah, it was a nonlinear path. I never aspired to be in venture. And most things I’ve never heard of it. I grew up in Miami, Florida, my parents immigrated from South America to come study in the US, my mom was computer science in the 70s. So that’s what inspired me to, to pursue it a technical degree. never intended to leave Miami, this is before Miami, at any height. But I definitely enjoyed the life on the beach and on the boats and diving and fishing. And so it was never my intent to leave. But I was really good at math and science. And my mom said that I had to go to top 10 school my chosen major, I chose computer science, Georgia Tech was the closest to home. That’s kind of how that’s kind of how it went. And, and I missed home a ton. So I was like flying home every two to three weeks on standby to go back home. But I got through it, I finished my CS degree and took a job at Microsoft as a product mate. Well, they call them program managers working on surface when it was a really big table. That’s how old I dated I am. And I remember being just so exciting, like, wow, touch technology, that’s the future. And I had just come out. And I wasn’t wrong. I was just, it’s so dated. Um, and I remember us fighting with Apple to try to figure out who could patent the pinch to zoom gesture. Turns out no one but at the time. We were like in a patent war that patent gestures. So I have some very random patents and gestures, think are impossible at all. But it was really fun. And my job was really to convince developers to build touch interfaces. And I remember a lot of the debates were, how am I supposed to build something? If I don’t have a mouse? Like, where’s the right click menu? Like this is never gonna work? There’s no context menu. That was like the biggest debate. And then

the plight of the product manager have been there. Yeah, yeah.

And it was crazy. Because like, well, you don’t need a context menu, you can just changed the frame menu, and they were like, what he’s like, You are crazy. Um, it’s funny now looking back, um, and then I went and joined Xbox to work on Connect when it was v1. And we didn’t know if we would ever pull the thing off. Like, nothing worked. Like pieces would work. But like stitching it all together, I had like six xboxes on my desk, each with a different build to use a different features because we couldn’t get it all to ever work on one bill till the very last like five weeks. So I worked on speech recognition. And that was also a blast trying to convince developers to build speech recognition into their video games. And then when we launched that I moved down here to work at a gaming startup that like a week after got acquired by Disney, and couldn’t see that one coming, and then did my own startup. And in gaming, and it didn’t work out. And I got very burnt out and sad. I thought I was done in Silicon Valley took like a one way trip to Greece. And then came back shortly because I was very bored. And decided then at that point that I would give up gaming for the rest of my life never doing gaming again. But I would do. I’d work on enterprise software. And so I worked at Twilio. And then I worked at box. And after a few years at box and some of the folks had known at NEA for close to a decade reached out and we spent about a year talking and then in like one of those YOLO moments. It’s like all right, my whole life. I’ve been wanting to be a Chief Product officer but this team at NEA is like really cool, really smart. I think about the world in a different way than I’ve thought about it. And I don’t know seems like a really cool job. Whatever. I’m just gonna go for it and see what happens. Here I am five years later.

Amazing. Amazing now a partner at NEA and Are you have you still sworn off gaming? Are you looking at gaming startups for investment?

I’ve recently started looking at gaming startups again, but like it took, I don’t know what it’s been, like 10 years, 10 years since my gaming startup got acquired. So if you know, PTSD sometimes takes a long time to work its way out of the system. But it is in such a cool space and really creative people in it. And there’s a ton of opportunities to build really big companies. So it would be foolish to just wear it off permanently.

It’s funny, because long ago, one of my first loves in life was gaming. And I also gave it up, and completely cold turkey, but more as a enthusiast and user, not as a startup builder. And coincidentally, our one gaming investment as a firm is a bunch of Georgia Tech CES and engineers. Very excited about that one. But yeah, you know, Vanessa, can you give us an update on NEA? You know, it’s been some time since we’ve, we’ve covered the firm on the program, you know, can you bring us up to speed a un stage thesis, etc?

Yeah, yeah. So, um, look, I I’d like to start by just saying that, um, I don’t know that I could have been happy, successful fulfilled at any other firm. And I mean, that, genuinely, I nbas, maniacally focused on the entrepreneur. And so we we have a funding of a small but mighty team of investors, and everyone is felt really excited and passionate about a few areas and a few stages. So as a whole, we cover pretty much every stage, and we’re geography agnostic. And we’re sector almost sector agnostic at this point, as well. But each individual really focuses on a specific area. And the really fun part is, in the last five years, since I’ve been here, a lot of these areas are merging together, right? We have a healthcare team, we have a tech team, now there’s healthcare tech, and we get to really work together and leverage people’s deep expertise, and form these Tiger teams, which is really been one of most rewarding things. So, you know, am I think we’re 30 billion, I don’t keep track of things. Um, but but big. In terms of capital under management. Our last fund was about 3.6 billion. But our our model, I think, is pretty interesting. Because, you know, you asked like, how do you deploy 3.6 billion with a small but mighty team? And the answer is we we actually get in at the series A and B, right, with an initial check size, and then we double down on those companies round after round after round. And so in total, we’re able to deploy a bunch of capital into a few companies. And we’re able to really focus our time and our energy on those companies. So it’s a pretty cool Model A, it’s very nuanced, but I found it to be just a really great place to build relationships with entrepreneurs and and be on this side of the ecosystem.

And then what is your focus at NEA? Vanessa,

I’m more of an early stage person, as a product person. My favorite thing is like, evaluating founding teams and getting in the ground with them, and then just tinkering around with product and product metrics. So I, you know, when I get introduced to founder, the first thing I do is like, go to the website, see if I can try the product. See if I can sign up, what does the signup flow look like? What does the onboarding look like? It works for some, especially for consumer companies and product lead growth companies for you know, top down enterprise sales, not so much. But I do sign up for a demo and have like an SDR walk me through as if I was a customer. So that’s my favorite part. And it’s all early stage stuff. Um, but I have I’ve led series B’s, and I’m looking at a few series C’s

love it, you know, I I’d love to talk more about products a bit. That’s kind of your background. You have significant and formative formative experience leading product, you know, how do you think that shapes your approach as an investor? Yeah, so

um, this is super cliche, but it does feel like investing is a bit of an art. There’s some science, but it’s more of an art and everyone has their own creative process. And my creative process starts at product, because I just love it. And because I’m a Tinker. And so it’s influenced me in the sense of I, that’s where I start. And look, there’s a lot of great companies that are built with not great products. We’ve all seen them. We’re all like, Huh, how did that happen? Yeah. But I I’m just much more inspired on the products Great. So I’m less likely to back something where the products aren’t particularly good. Even though there can be a great opportunity there, and and then all the other aspects, like when I’m doing diligence, it’s feels very similar to when I’m building a product roadmap, right? What’s the competitive landscape? What are the competitors doing? Who would the customers be? How do they extract value from what we want to build? Or what this team is wanting to build? Um, you know, what’s the market size? How could they price this? What are some pricing experiments, they could run to figure out, you know, what the actual addressable Tam looks like. And so a lot of it just feels very familiar from, you know, building product roadmaps, and then, um, you know, building teams is a big part of early stage investing. So helping the founders recruit, and interview and onboard and all of that, which is very reminiscent of building product teams. And then on the other side of it, and bringing an opportunity to the partnership feels very much like a product manager job. You know, when you, when you do put together a roadmap, you can’t just say like, this is what we’re building, right? You have to get like engineering, buy off and CEO buy off and like all these people, and you have to influence with no authority. And that’s exactly how a partnership works, right? Like, I find myself like, telling people about it. And like side meetings I attend, everyone gets into the meeting, everyone’s already really excited. But like there was pre work, and you kind of have to be lined up. total product management skill, like, like, this feels very familiar. And then when you get tough feedback, everyone’s like, Are you okay, I’m like, this is cake compared to product feedback. So, and I think it was a good training ground. I can’t imagine not having had that background and doing this job. Well. Love it.

Love it. You know, I’m curious, I also have a product background have founded a few products. And it has driven much of our culture here at New stack. I’m curious, what if any blind spots does the product minded venture investor have

tons, I think the biggest risk, at least for me, is really hearing the founder about what they want to do and how they want to pursue these opportunities. Because it’s very, very easy as a product person to see the seedlings and then run off with what you think it could be, and get super excited and spin up this whole story. But it’s actually like, not the story The founder wants to pursue. And so to really like, Oh, this could be so cool, we could do this, this and this and this and be like, you are not the chief of product here. You are not the co founder, you are the investor, you are the enabler, but not the driver. And so to like, really rein that back when you get so excited about the potential is hard. And I constantly have to check myself. And yeah, even tell founders, like if they want my help with product stuff, that I’m when I go come in through the door to talk about product, like I’m taking off my board hat, putting on like product consulting hat, if what I say makes no sense to you then fire me as product consultant. But don’t treat don’t mistake board member for product consultant, because those two things happy, very, very separate. How do

you handle a situation where you have maybe a bit of an impasse, and so amazing founder, you love the team, the market opportunities huge, but their vision doesn’t map to years of you know, the future of the product and how that evolves.

It’s really hard, I would probably be inclined to not do it. And I think that would be doing the right by the founder. Because if we’re not rowing towards the same north, if we’re not excited about the same Northstar, there’s gonna just be friction at every intersection. And like, that’s not pleasant for anybody. I think when you’re a founder, you should really find an investor that believes in the future that you believe in, so that when any decisions have to get made, or when any hard times come to pass, you know, you’re completely aligned in like the direction. And so any debate or argument or whatever that happens, there’s this layer of trust that like you’re both trying to get to the same place. If that trust doesn’t exist, if you feel like the founder is always trying to go this way. And you always want to go that way, then, like the foundation for those difficult conversations doesn’t exist, and they don’t go anywhere. And like, that’s just not fun for anybody. And I don’t think it’s, it’s a good it’s a good matchup and very likely unlikely to have a good outcome at that point. So it doesn’t have to be a good match on a lot of on a lot of vectors, which is why you know, VCs make one or two investments a year at this series amb. Have you

thought maybe a more of a macro perspective what types of businesses lend themselves to superstrong product Where, as you know, are there types of businesses where the product, you know, and its, its, you know, its product market fit, and the the, you know, the customer experience, etc, maybe less important than other factors,

um, kills me to say yes to this question as a product person. But yeah, I mean, I think history has shown that not the best product can win multiple times. And in that sense, it’s a lot of like, go to market and connection and things that feel really unfair. But yeah, I think, look, if it’s, if you’re going for bottoms up adoption, if it’s a productivity tool where you want it to spread virally, like all the things that slack and air table and all of these, like, you have to have a great product. Um, it doesn’t have to be the best I’ve seen actually better products. But it has to be a fantastic product user experience. And then a pretty clever go to market. For a top down sales, like, you know, cybersecurity or HR tech and stuff that like, you can’t do bottoms up, like you really need it to be deployed and had be set up and integrated with other systems in your organization. Then, like, for the most part, like how easy is it to integrate? How secure is the software, like all of these, you know, requirements that get put together, when they’re doing a Bake Off? And then pricing and all of that stuff matters? A lot? Sure.

Sure. Um, you know, I’d love to hear more about the details of maybe your process for both sourcing, and then also, you know, running diligence and leading an investment.

Yeah, sourcing, again, everyone has their own style, I am not one to like, love doing mass networking. So the way I sourced is really, I get really excited about a space, right? Like, I’m, I really like HR tech, right? And then there’s specific pockets, where I’m like, Oh, that’s really interesting. And then I talked to a bunch of leaders buyers in that space, and ask them, like, what are you using? What do you like? What are you It’s a lot like a product discovery sprint, right? Like, you get a lot of user feedback on, you know, what could be better? What could be? What things are they really excited to replace? Because they hate so much? Or where do they spend a lot of their money, right? And then it canvass? Like, okay, who are the startups that are solving this? How are they solving this problem? And what does attraction look like for them, and who’s the team behind them. And so then I started, like, mapping everything out, I’m like, Oh, this team has a really interesting background, or this product, this company has a really interesting product, or this buyer told me, they heard of this startup, and they really love the product, I need to go reach out to them. And then I start networking within a very like targeted group of people. And then I learned from talking to founders about how they see the future. And then most of the time, there’s one founder and I that just like, totally click, I’m like, Ah, you’re my person. And we see the future very similarly. And the product you build is awesome. And the people you’re recruiting are great. Um, and then at that point, I’m like, kind of all in, and then I started doing the diligence, right? And what does diligence look like? diligence looks a lot like it typically, or have most of it already done, because I targeted them for a reason. But a lot of like competitive analysis on pricing technology integrations, we look at metrics, if they have them, right. If it’s a seed, there’s not a lot to look at. But if they have product metrics I look at basically try to define what are the metrics that showed up, someone’s getting the value out of this piece of software? So if someone’s supposed to be using it every single day, like, Okay, well, how often are people using it? How many sessions per user per day? What’s time on site look like? How many actions are they taking? If there’s supposed to be some like viral coefficient? How quickly does it go from one person to 10 people to 30 people in an organization? And what does that look like? And then is it all within within one function? Or does it spread to other functions? And then what does that look like? There’s a lot of work I do around Tam. So like how it’s a really easy if it’s just replacing something that already exists, it’s a lot harder when it’s a category that hasn’t really existed in the past, or it’s been homegrown solutions, or it’s been a hodgepodge of features from other platforms. That gets really hard to figure out Tam but I just directly want to know that people would spend some amount of money that makes sense. And then I at that point, I also love to run it by my portfolio companies like would you use this? What do you think? Have you You heard of it. That’s the best investment if when I performed companies like, Oh my god, I love this company, I’m just introduced me right away. Um, and then at that point, I write a memo about all these things, all the different pieces that are exciting about this business and with potential could be, I start socializing with a bunch of my partners, typically, someone else on my team will say, I love this idea, I want to work with you on it. And so there’s two partners now on it. And then the founder brings it to the partnership, typically four or five people that really get the space or have seen the space or have some relationship to the space. And then ideally, we use a term sheet after that. So we can move as quickly as like a week, if I’ve already done a lot of work in the space. Maybe a day if I meet the founder, but I’ve already like, teed up all the research. Or if it’s something that I’m totally new to, I haven’t heard of this space, but I’m like really intellectually curious about it, then that will probably take me three to four weeks to, to like, figure out if it’s a space, I want to spend 10 years 20 years of my life in, and then is the product and the team and the opportunity that I want to bet on. And so I go through, like those two phases of, of commitment. It’s,

I mean, it still sounds incredibly fast, right, a day, a week, a few weeks. I mean, it’s amazing. You can get through that in such a short time. Yeah, on your mind, I guess.

I yeah, I guess it’s easier when it’s a category really like, for instance, greenlight was my first investment, it was a seed deal. Out of Atlanta, it’s a debit card for kids. It just made sense on so many levels. Like I had at the time, I didn’t have kids, my niece, I would babysit all the time. She was just like five or six. And she’d do a chore. And I’m like, Well, here’s $1. Good job. And she’s like, how do I get this into my iPad? I’m like, what she’s like Roblox How do I get this into like my iPad. And I was like, oh, oh, I guess I have to pay my credit card, you can only spend $1, that athletes that have a credit card and an unsent my credit card, and I was like, and they were like a debit card for kids, you’d like Venmo money to their card. And then they could have their card to Roblox or Amazon or whatever. And I was like, Ah, this is great. This makes so much sense. And I was looking for a product like that, you know, before and so I’d already done some research. And so it was just very easy to make that investment, great team, they’ve had a lot of background in the space. So it was just kind of obvious. Some of the other companies actually all the series B’s that I’ve led, is because I tried to lead the series A and I got perfectly honest, I got beat out by someone else. I was like, I will not let this one get away. I’m pre empting the series v. So at that point, it’s like, you know, we’ve known each other for a year, I’m super excited about what you’re building, we, you know, I’ve had the cc’s wrote the memo did all the work for the A, just update some numbers for the bee and we get a term sheet done pretty quickly.

Awesome, awesome. You know, you mentioned, part of your approach to sourcing is, is the networking. And I feel like everyone getting into tech, you know, gets the cliche advice, you got a network, you know, quote, you are your network. And that that can lead to a lot of productive, but also unproductive behavior in the ecosystem, you know, what is your approach to kind of building and strengthening relationships? And what advice would you give to newer folks in tech?

I don’t know that I’m like, the best networker to give advice. But um, I’m not a quantity kind of person. I like I go to these networking events. And I’m like, okay, I just need to meet two people that I’m like, really excited about that I want to keep in touch with for a long time. And once I meet those two people, I’m like, Alright, I can go home now. And that’s kind of my approach that but I think like, for me, depth of relationship matters, people that we click, I feel like I’ve known you forever. There’s, for some reason, high trust very quickly. And I want to be helpful to that person. And that person feels the same way. They want to be helpful towards me and my networks comprised of a lot of people like that, I probably don’t have the biggest network, but again, when it works pretty deep. So if I need thoughts on something, and I reach out to someone that I’m become good friends with, and they’re likely to extend their networking to right, and so they’ll say, Oh, you know, I don’t know anything about XYZ, but I have someone I work with, or someone I used to work with. That could be the great person for you to talk to. So I have a smaller network, but it’s a very tight knit very much like we’ll help each other through thick and thin and then they open up their broader networks to me, when it makes sense. I think it’s a great lesson. I mean, if you have five Incredible contacts and you get to leverage their networks because you’ve built so much credibility and rapport. It’s a lot stronger than having 25 marginal transactional relationships with folks. So well taken. Yeah, I generally find like, venture capital can mean to be very transactional, because it’s, there’s so much volume to this, right? Like, if I can introduce, like, 1000 companies. Last year I looked at it was, like, 1200 companies last year that I got introduced to, like that amount of volume, it’s really hard to like, not go through like, Hi, nice to meet you. My name is Nestle. Erica, we’re gonna need a partner, like, what do you do? What’s your revenue, you know, like, just go through the motion over and like, next next. And that’s not fun for anybody. It’s not fun. For me, it’s absolutely not fun for the founder. And same thing with networking, like, Oh, you can fill up your calendar, find networking things a week, and then you just go and meet with dozens of people and like, no, remember anyone’s name. Like, that’s just not fun for anyone. And, and I think that like, this business works best, at least for me, when it’s authentic, and when the connections are real. And so like, while I would love to take every intro, if it’s just not a space, I’m excited about it’s not productive for anyone for me to, to sign up to do that meeting. So yeah, I think that maintaining the human aspect of it, adventure can be actually pretty challenging.

Good. So we mentioned this sort of at the top, but up until recently, the recent IPO you were on the board of Robin Hood, and you’re a board member for for companies, and maybe an observer for several more. My question is, you know, after a few years in venture capital, you know, how is your perception of would good Board Governance and being a good board member different from maybe the reality of the role?

Yeah, first, I think people glamorize, being a board member too much like your job is not to run the company, you’re not job is not to be the boss of the CEO, or any of that, like, I don’t know, power, trippy things that people think comes along with being a board member, I really see it as like, figure out what your value add is on the board. It’s different for every board, you’re on, actually very much like product, when European depends on which team you join, like the needs of those teams, and those engineers are just very different, and you have to mold, right and figure out how you’re going to add value and how you’re going to best bring out the best work out of people. That’s your job on the board? How do you get the best out of the sea level? Right? And where can you help and where is your value add and then stick to that job. Um, you know, yes, keeping folks accountable, but like, all the great entrepreneurs are way harder on themselves than you will ever be. So at best, you know, you can help them look around the corners, you can take, you know, the one thing that we have the benefit of is, we get to see dozens, hundreds of companies, similar stages, similar industry. And so we can put together some case studies for them, or we can draw on like a benchmark, have a metric for them. And so like that I think is useful, we can help them fundraise because that’s what I live in breathe all day, I’m either helping people fundraise or getting pitched fundraisers. So like that’s my world, I can help them understand like, what is market what I’m seeing how things are happening, because they’re not in fundraise mode. 24 seven, for the most part. So I think like, that’s, that’s your job on the board. And if you really focus on enabling people to get their best work done, then I think you’re doing a good job, if you are terrorizing, blocking, bossing around, whatever, because that’s a not a good board member. And I, when I see it, I cringe. And if I’m in the right setting, I’ll try to redirect those efforts. When possible, it’s eye opening, for sure to see true board behavior versus maybe what,

what one would think the board operates like, some are very high functioning. Some are some are not. But yeah,

I think for the most part, like I learned that lesson being observed at other companies, and now I do look to see if I’m doing a series B or C, I look to see like who’s on the board, and do I want to commit to them to it matters, it matters who put on your board for for creating future board members. And it matters who’s on your C level suite. So like if your board is all male, and like abrasive males and your sea level is all Males like an abrasive males. Do I want to join this board? I don’t know. I don’t know, like, what does it say about the team and what how they prioritize things. So I do look at that, because I’m not just building the relationship of the phone, I’m gonna be working with all these people all the time. And so like, be thoughtful about that composition, if you want to recruit the right set of folks for the next age.

Any anything you learn specifically from the founders of Robin Hood, you know, vladan baijiu, that surprised you.

And I’ve learned so much from them. Um, first, they have like democratizing finance has been the mission for ever. And they picked a really good mission, Northstar, whatever, it’s clear, it’s concise. Everybody knows at the company and the board what it means and and so when we’re making decisions, it was like that he would prioritize like, is that furthering the company in that direction? Or not? Is that are we taking it in a different direction? Are we getting closer to our vision? Are we getting further from our vision with this effort? So I was impressed by like, how important that has been. And they’ve scaled so fast. I mean, I remembered it was 20 people in an office. And now it’s like 1000s of people. And I don’t think you can do that in like, five minutes. It’s been seven years since I met them seven years without having something that unites everybody, and has everybody very clearly working on the same vision. The other thing is, like, handling all the criticism with I think, Grace, I don’t know that I would be as graceful with, with, you know, everything that they’re dealing with. I think they’ve handled it really, really well, for this being like their first foray and into the type of spotlight. Yeah, I think that I’ve learned a lot. I’ve learned a lot.

And, you know, I’ve got to ask you take us behind the scenes, you know, what, what was it like going through this, this situation with the GameStop, and EMC, you know, run ups when trading was halted?

frustrating on so many levels, so many levels, right? Like, you know, when, when the board got the call, saying we need to post up so much amount, because of the volatility in the market. Then what was unprecedented. So, like, everybody was covering, even the regulator’s that called us were like, well, this equation, I’ll put it like this amount, and we’re like, what? And they’re like, yeah, we don’t know, either, like it is unprecedented. Firstly, it was unprecedented for everybody. And nobody knew what to make of it. But everyone wanted to do the right thing, right. Like, the regulators were like, well, we have to put this collateral, because if these trades don’t go through, like, we need to protect trades and the, the trust in the market. So like, that’s why you have to put in, like, think about it as a deposit, right. But the mountain was so high that it was like, well, no one’s able to post this, like, what do you answer? They’re like, yeah, you’re right. What do we do? Right? Like, what do we do here? No, one, very few workers would be able to post this, um, and. But if we don’t post this, then there’s a huge risk of the market if these transactions will go through. So what’s the best? What’s the best thing we can do right now in this moment, with what we’re facing? And it was? Well, we can reduce the risk, right, let’s reduce the risk. So let’s pause trading, and like all trading, and then we’re like, well, that’s really hard to let people sell, you can’t like pause, I’ll trade He’s like, Okay, well let people sell. But then how do we balance it? So it was a, you know, it was actually a lot more collaborative than people think. And with everyone around the table trying to do the right thing, we landed on pausing trading for it was a good doesn’t it selling is selling stocks for like a dozen securities until everybody could like regroup and figure out what the next step, what’s the right amount for deposits, what’s the right amount for trades would this cool off, right? And so, you know, it felt like everyone is trying to do the right thing. And then the backlash, which was like, all these conspiracy theories was like, What? And I was like, oh, they’re evil, or like, what we’re trying to protect, like, we were trying to predict the market, you’re trying to protect the investors from any fault happening in the market. Like, how, how did this get misconstrued? Um, I still think about that a lot. I just, I don’t know. I have theories on how it all got, like, you know, the backlash happened. But it was just so fascinating because it was such a departure from what everyone was trying to do. And we weren’t focused on the messaging we were just focused on like, making everything run smoothly and You know, they gotta get the lessons learned, like, we should have focused as much time on the messaging as well. But yeah, it was it’s it’s kind of crazy. I mean, at the time, the blowback

was significant. And I recall being pitched. I think it was three startups, challenger startups or Robin Hood within a week or two of that event. And lo and behold, they IPO and the stock has been quite a bit up. So it looks like, you know, they stem that tide. But yeah, at the time, it was, I mean, big story. And some headwinds.

Yeah. Well, any competitor that had any amount of trade volume had to do the same thing. Right. So like, everybody from large established brokers to startups, like everybody had to comply, right? with putting up either a deposit or reducing activity on those securities. So I thought that was also really interesting. We’re like, well, we don’t have to put in like, you don’t like, oh, now we do. I’m like, that’s what I thought. Like, huh.

So yeah, transition a bit. Talk to us about, you know, investment outside of San Francisco, in maybe New York, you know, do you are you actively pursuing companies in you know, emerging regions? And what? If so, you know, what are some of the regions that you have your eye on and think, you know, have a lot, a lot more tech innovation coming, you know, over the next few years?

Yeah, um, I personally am looking at Atlanta, and, and also, Utah, but mostly spend time in Atlanta, we have an office in New York. And there are folks in New York, that look at Chicago that spend time in Boston, some of my peers here in San Francisco, look at Seattle, and we have a partner that spends half his time in LA. So I’d say every partner probably has one or two alternate cities there, outside of where they’re based. And I think it’s really important, I think it’s really healthy for capital to be flowing into other cities and for startups to be everywhere. I think, you know, for a lot of reasons, it had to start in a few like hubs. But if it stays concentrated in those hubs for too long, I think we risk a lot of political backlash, I think, a lot of social backlash. And so I think it is important to bring some of these opportunities to the rest of the country and bring everyone along for the ride. Because if you just keep it to only like two major cities, I think, you know, there’s a lot of criticisms that would be valid at that point. And I, you know, I look for cities outside of the Bay Area, what do I look for, I think you have to have a top 10 engineering school to anchor it to be able to pull talent from, I think, you I ideally, the benefit would be a lower cost of living than the Bay Area, or New York so that you burn less capital to get further. And I think, ideally, you have customers nearby that you can sell to, and, like, I think, a lot of startups in San Francisco, I remember working at Twilio, our first customers were like, Uber square, you know, like, other lifts, WhatsApp, pager duty, right. So, like, Jeff was able to be like, hey, buddies, like in the area, like network and try my product and you know, have, you know, hackathons or whatever. And the concentration of potential customers just made it really easy, much easier for them to get going than if they were in the middle of nowhere trying to break in to get a few early adopter customers. So what I like about Atlanta, is that you have like a dozen fortune 500 companies there who are all very eager to try new tech. And so you can be a small scrappy startup, recruit some engineers from Georgia Tech, raise a little bit of money, build something cool. And then like, you can pile it with Coke. You can pile it with ups, you can pilot with Delta Airlines, right? And then you have these like three logos. You’re like, well, I’m I sold to delta I sold to at&t, right? And then you have these great logos, and now everyone else can follow. I think that that’s, that’s pretty magical. And then the last piece is reinvestment in time and money from other people who have scaled big businesses in that region. So in Atlanta, I think like, it’s funny to see how like Internet Security Systems ISS was like one of the biggest exits 30 years ago. Those founders put money into other cybersecurity. So cybersecurity was like the only real startup thing in Atlanta. And then it was like, well, cybersecurity and FinTech, like infrastructure, FinTech kind of go hand in hand. So then the FinTech muscles started growing. Then, I don’t know how Pardo founded or goddess going. But Pardo had an exit to Salesforce. And then those founders were like, oh, let’s fund marketing tech startups. So now like sales loft, and there’s a few others and kalindi was bottoms up, but came out of the same incubator. So like other people who have made money to reinvest that money into the ecosystem and help other founders dream big, right? Like, we want billion dollar outcomes in Atlanta. And I think that’s, that gets a flywheel going. And that’s what a lot of cities don’t have yet. You know, in Miami, I was like, oh, chewy exit, maybe those founders will, like, invest in start incubators and like, invest back in the system. And I’m pretty sure they’re like on a yacht somewhere.

I was just gonna ask you about Miami. I don’t know that it has all the ingredients that you mentioned, huh? No, no, a lot of VCs was second homes or were first homes.

Yeah, so Okay, here’s the Yeah, Miami has a lot. That’s not going for it, I’m sure. But here’s the one thing that is really interesting about Miami and I’m dying to see how it pans out is in every other attempt, right? Like Austin’s annex Silicon Valley, it hasn’t really panned out yet, maybe but not yet for I think a lot of reasons. And like Portland, like, not, not yet, maybe Seattle, like not yet, for a lot of reasons. But maybe. But Miami is interesting, because all these other cities are trying to like, well, if we build the startups, the funding will come. So they’re like, doing all these incentives, and state local governments are giving, like grants to, like, try to get the ecosystem going. Um, and it’s just been hard. But Miami is interesting, because they’ve done the inverse. They’re like, we’re just gonna bring all the money to Miami, and then maybe the startups will come. And like, I haven’t seen anyone do that yet. Like that hasn’t been done. It’s like, will it will that be what makes it work? I don’t know. But like,

interesting, you could argue argue crypto, but it’s, it’s not a geography. All the money comes up front instead of at the end of the journey.

I have a lot of theories as to why crypto is that Miami is a perfect hub for crypto. But yeah, my name is like a Chinese spent there. But it’s one of the top cities for money laundering,

Puerto Rico with tax favorable tax treatment on many of these things.

It’s also like the biggest drug port, um, like illegal drug court. So it’s a big deal in Miami. And it’s like a really big like industry. Ironically enough, it’s kind of everywhere. And so it was like, Oh, kryptos taking off Miami. I’m like, not surprised. People who would really like for crypto to be a thing in Miami.

Experience, experience begets, you know, opportunities. And in this case, it might be some unsavory experiences.

I mean, it’s part of Miami’s history, and it’s part of Miami’s fabric, whether people want to admit it or not. Yeah, it’s kind of how the city was built, was a lot of that money in the 80s.

Interesting. Vanessa, if we could have anyone on the program here, who who do you think we should feature? And what topic would you like us to discuss?

Um, are you talking like investors or founders,

it could be either.

Um, you know, for investors, I’m a huge fan of Heidi Patel. With rethink, I think she’s fascinating. She invested in really interesting companies, you know, is very thesis driven. And I also think she’s done a ton for the community, the venture community as a whole. And she’s just a lovely human being, I would highly recommend having her on the show. And then founders. Hmm, I’d have to think a little bit about that one, because I feel like it’s a cop out to nominate someone in my portfolio. So I’d have to think of folks outside my portfolio. And there’s I mean, Dylan from figma, I think is fascinating. crosses outside my portfolio. Desmond, he’s the founder of workstream. And they’re in a really cool space that is very relevant in a post pandemic world. So I would check them out as well. Awesome.

Vanessa, what do you know, you need to get better at

everything. I think the hardest thing about ventures are, unlike product, the cycles are so long, and it’s very hard to figure out if you’re any good at anything, right? Are you good at sourcing? Are you good at investing? Like I don’t know, when this upmarket where everything just gets marked up? I don’t I have even less of a signal. So I want to get better at sourcing and want to get better at being a board member and being there for the founders. I want to get better at driving outcomes and the whole the whole thing I don’t know how good I am or not good. I

am always getting better every day. And then finally, what’s the best way for listeners to connect with you and follow along with NEA?

Yeah. Um, for sure. I think Twitter DMS works best. And I say that because LinkedIn is a disaster. I think so much spam. Like please don’t send me LinkedIn messages. I’ll never find them between all the other spam I get. So yeah, and then my inbox I have some very strange routing rules. So the best way to get through my filters and routings and all of that is to just hit me up on Twitter. You know, it’s bad when like Twitter DNS is like, best way to cut through the spam

well as one product manager to to another former, I guess, this has been a lot of fun, you know, thanks so much, Vanessa, for spending the time with us today and congrats on all the success I look forward to, to revisiting in a few years and hearing about many more wins. Likewise, like and like, honestly, once a pm always at the end, so it’s great to connect. That’s right. That’s right. Thanks, Vanessa. Take care.

Transcribed by https://otter.ai