Kyle Harrison and Eric Tarczynski of Contrary Capital join Nate to discuss Finding Product Market Fit As a Venture Firm, How to Identify World-Class Founders Before Anyone Else, And Debating Whether or Not Venture Has Hit The Bottom. In this episode we cover:
The thesis and investment approach at Contrary.
Content and content marketing?
Ideating and scaling the MVP?
How much time are investors spending on other areas?
How do you differentiate your company?
The host of The Full Ratchet is Nick Moran, General Partner of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI: 0:07 On today’s episode, we have Eric Tarczynski, the founder and general partner at Contrary, who’s joined by his colleague, Kyle Harrison, who is also a general partner at Contrary, collectively the two have made investments in Ramp, Zepto and Hallow among many others. Guys, it’s not too often that we have two guests on the show at the same time. But thank you so much for joining me today. 0:40 Yeah, thanks for having us. 0:41 This is gonna be fun. 0:43 Awesome. Eric, can you start by giving us a one to two minute background on yourself and how you came to found country? 0:49 Yeah, for sure. So quick background of me, I grew up in New Jersey school Boston, really kind of fell my interest in tech and startups while I was in school to start a payments company there. And, and then a few years after that moved up to SF was was an early employee at a startup that got bought by Lyft, it kind of knew that I wanted to build another company and kind of kept coming back to this idea that had been in the back of mind for several years, I think this idea, really, that the next chapter of venture would be focused not on the company, but on the person. And you know, I spent a lot of time over the past decade or so now, around a lot of people that were, you know, super sharp, ambitious, entrepreneurial, and any kind of folks that we thought would inevitably kind of go on and do great things. And we fast forward a decade later to today. You know, that’s exactly what’s happened right there. They started unicorns, they, you know, our GP said, great venture funds, that everything that you would expect, but I think what was really interesting for us was, you know, when you took a step back, even though that success felt largely predictable to us, nobody was actually doing anything in a systematic way to identify and invest in in those people in the companies that they were building. And so we said, Okay, well, you know, we feel like there’s an opportunity here to build a really, really special venture firm off of that insight of kind of a person before the idea in many ways, especially in an industry, you know, that might say that they’re focused on people. But oftentimes, it’s really the transaction right there waiting for a founder to kind of put their hand in the air and say, Hey, I’m raising, and it devolves into this kind of bloodbath, right? And it’s really a point in time deal oriented endeavor. But if you go just one notch earlier than that, and focus on building kind of like a deep authentic relationship with someone, you could do something really powerful. And so that was kind of the the kind of framework and kind of bedrock of, of it, and kind of what we built country on top of and kind of jump right in, hit the ground running. And and the rest is history. And that’s actually I met Kyle in the very, very early days of the country journey as well. So maybe it was two weeks after we start. 2:55 Oh, really that early? Well, I’m curious to pick your guy’s brain around the community portion of country in a moment. But Kyle, why don’t you share one to two minutes on your background? How you met Eric, and I know you’re an index prior to joining contract. So it’d be curious if you could quickly share, what prompted you to take the leap to such a story firm and index to join contrary? Yeah, 3:19 yeah. So my background, so I actually when I got into college, I was a film major, I had every intention of like, going to Hollywood and making movies and I was making videos to pay the bills, you know, weddings, commercials, whatever. And as I was doing that, I sort of it got to the point where I had too many clients. So I just casually started farming them out to other creatives. And I say, Hey, can I take 2%, whatever, I got your job. And eventually, I realized I was much better at getting business than I was at making videos, I was actually never very good videographer. And that quickly became I found myself sort of running a company I didn’t even know to call it a startup. I always just referred to it as a project. But I ran that company for about four years and then sold it and kind of around the time I sold my company, I was helping teach an entrepreneurship class at BYU and Utah. That was when I got connected to Eric. So he started a country reached out to basically say, Hey, I’m just trying to connect with the most entrepreneurial entrepreneurial young folks in Utah, who do you know, and funny enough, I introduced him to a friend of ours now a good friend now, John caulker, who at the time became a venture partner, contrary, went on to work at LinkedIn, Uber, went to GSP started a company and we were able to be there their first check. So there’s kind of this like long history over kind of five, six years of Eric and I sitting in touch, but didn’t work together at the beginning, just stayed very close. And then I had kind of a Goldilocks experience of tasting a lot of different types of investing. So I spent a couple of years at TCV and sort of cut my teeth, and then actually spent a little bit of time at Cotu before I joined index, and so for the last few years before before contrary I was a partner index, and each of those firms have a very different style of investing like very one is very private equity. One is very hedge fund one is sort of venture classic, so I got a lot of different tastes, but in the back of mine mind I always even when I was at those firms and extra great firm worked with a lot of great people. But there was always this feeling that Eric described which is like venture is what I like joke is like, hurry up and wait game where you’re like, I like this person, I think they’re really sharp, like start a company, whenever you start a company, I’m ready to go. But like, all I can do is invite you to a monthly dinner before that, like, there’s not that much I can offer you. I always felt that. And then when Eric and I caught up once, we were talking about how country was broadening where it wasn’t just doing pre seed and seed rounds, but they were also investing in series A Series B, where even if they weren’t the first check, they were identifying these really exceptional talent, vortex is where you have these companies that are attracting exceptional people. And so ramp was an example of that, I think five of the first 50 employees were country community members, and we were able to invest in this series B. And so when I saw that case study, I thought, Man, that is exactly what I want to do is be able to just invest in these exceptional for the pockets of people, and especially if we know the people well in advance. So that sort of sold me on country. And so about a year ago, that’s when I when I finally after five years, Eric finally got me to join, and it’s been killer ever since. 6:07 I’m curious, it will go into country in a moment. But you said, index coach, you TCV most people know those names. And you’ve alluded to each style is very different across them. But what would you say are the principles that you’re taking away from your past experience, having seen success at some of the largest names in VC and what what parts when you say you’re leaving behind? 6:31 I think that every firm had a style that is a fit for them, like every firm has a different sort of way of doing things and works different ways. And that’s fine. I think that I sort of built this framework for myself, as I went through each firm, where, you know, TCV has a very, at least when I was there had a very private equity mindset, where it was very, almost like a value investing approach to investing in tech companies a lot of times, and I think that I come back to this idea that, you know, doing anything, if you’re gonna do anything, it’s going to cost a lot of time effort, there’s a lot of risk of whether or not it’s going to succeed. And so you might as well try for a big outcome and try and be the absolute best that you can be. And that was one of the things that I sort of decided for myself was that if I’m going to be investing in companies, I you know, there are, there are a lot of interesting businesses out there doing a lot of interesting things. But for me, I wanted to be investing in the absolute best companies that I possibly could. And so I sort of evolved the way that where I focus and things like that. And then Cotu has this very hedge fund mindset, where it’s very much about this big idea, like finding this sort of massive market that other people aren’t appreciating and going after that. And I learned a lot from that in terms of appreciating what’s going on. But I think that what shaped my perspective as an investor is that those are muscles, you can have like thinking about the size of a market, thinking about product market fit, all of those are muscles that I appreciate getting exposure to, but it ultimately comes back to this idea that you have to invest in an exceptional person. Because I think that even a and even in a massive market with perfect product market fit a sort of soso founder is really going to struggle to take full advantage of that business. And so I feel like each of those styles sort of crafted my way of thinking, 8:12 got it, got it. And I know contract is very focused on the person. And we’ll we’ll talk more about the community in a moment. But Eric, can you tell us just more generally about the thesis and your investment approach at the firm? 8:25 Yeah, for sure. So So really, the the way we think about it, and kind of our entire north star at the firm is, is we think about ourselves as being in the business of identifying the brightest people in the world, one notch before the rest of the world recognizes how special they are. And then basically kind of building this this infrastructure that allows us to continue to kind of invest in them and support them for their entire founder journey. And then in some cases, even beyond as well, right? I mean, like, like Kyle said, it can be beyond or it can be sometimes a couple of years before, right? You know, we sometimes get to know people 1234 years before they’re even starting something right. And so I think it kind of extends on both sides, but but ultimately kind of like we’re looking to kind of invest in them continuously throughout their journey. So that’s kind of conceptually how we think about it, right? And then we’ve built our entire firm really around being the best in the world at at doing just that, right identify, identifying those folks kind of one off before everyone else, right. And so we have an entire, you know, engineering and data science team and Talent Team events team and, you know, we have more engineers on the team than we do investors, right. And, you know, like, this is the kind of very much the ethos with which we operate the firm and everything kind of cascades from that right, whether it’s programs that we have, whether it’s, you know, the kinds of people that we’re talking to the kinds of companies that we invest in. It all really stems back from us doing our absolute Best to have an unfair advantage with an individual that we think is exceptional. Now, you know, as Kyle mentioned, the entry point can vary over time, right? You know, sometimes we can write that first check be their largest kind of investor at the seed, let’s say, which we really enjoy doing and do quite a bit of, you know, but if we miss for some reason, you know, obviously, we’re imperfect as well, right? Like, we still continue to kind of systematically track both individuals and companies across stage. And so, you know, if we wish, at the seed, right, you know, maybe we get a crack at the A or the B, and actually, over time, build even more conviction in those kinds of companies based off of tracking the talent flows as well. So yeah, everything that we do, whether it’s the seed, or the A, or the B, or the C, it’s it really kind of all stems back to talent as kind of that first pass and, and then kind of, you know, making a decision from there. So. 10:54 So how do you guys actually go about identifying the talent? I know, technology’s evolved, as you said, you’re more engineers on staff than investors? And that was something I was going to pick your brain on as well. But how do you find the talent? And then what is the hope and to join the country community? And then how, what is the recourse to keep them involved? 11:14 Yeah, so. So look, I think there’s no silver, there’s no one silver bullet, right, I think you’re kind of on a very high level, the way we think about it is, you know, I know from from, you know, talking with a bunch of friends at Sequoia over the years is, you know, they, they kind of think about their car cardinal sin as not seeing every company that comes out, right, they expect to be fallible when it comes to company selection, right? They expect to not always pick the exact right companies, right, and all that kind of stuff. But if they’re not seeing all those companies in the first place, they feel like they’re doing something wrong, right? Whether it’s maybe the brand is suffering, or their processes suffering, who knows? Right, and so that is kind of their Northstar, right as, as a firm, I think for us, we can basically substitute companies for people, right, where we want to be building infrastructure that allows us to see, essentially, everybody or every kind of unique or interesting person in tech, through some way, shape or form, you know, you know, kind of within the country infrastructure, whether that’s, you know, our engineering and data science team, whether that’s, you know, the couple 100 scouts that we work with, whether that’s our talent team, whether that’s inbound, and you name it, right, there are many, many different prongs, that we have kind of helped us build that top of funnel, right. And then ultimately, we’re doing our best effort to kind of narrow that down, based off of lots of different criteria, or whether it’s recommendations, or what, what people have to say, or, you know, what our software is, is kind of telling us, right, and then we’ll go out to those folks individually, quite often, and just get to know them on a one to one level, right? So you kind of ask the question of, hey, why, why why would somebody kind of do this? Why would they want to be a part of this? You know, the reality is, is, you know, we’re going in and finding, you know, Senior Engineer x at, you know, Top Company Y, who has been there for three years, maybe they’re on a four year vest, they know these four other people in our in our network very well. They’ve worked at, you know, these companies that we kind of, as Kyle said, like, rate very highly as like, you know, talent vortexes, right. And so we said, hey, let’s get to know you, right, tell us about you. You’ve been here for three years. What are you thinking about next, right? Are you thinking about starting a company? Are you thinking about being an early employee at the next, you know, hyper growth startup, like, how can we help you, let’s get to know you. And then we make a decision from there, right? If they want to start a company, cool, maybe we’ll sit down with them and help them kind of brainstorm, right, or we’ll connect into a founder, if they want to go join the next hyper growth startup, awesome, we’ll make some interest there, right. And so we kind of are able to kind of triage based off of their interest level and what they want to do, and also use that as a great opportunity to get to know them on a personal level, right, and get to know kind of like, how we feel about them as well, right? Like, if this is the kind of person that we would back with conviction, or not, or whatever it might be. So that that’s kind of really how it works. And from that point of view, I mean, it’s kind of a can’t lose deal for that individual. Right. So I think that’s really why, you know, folks are excited about it. And then you marry in all the other events in the community in the network. And is this really content funnels? The downside for the individual? So 14:22 I’m gather is I would say, like, I would say, like we have built, we’ve built a really specific organization. Like I think that a lot of times it does feel like we are built a lot more like a company than a venture fund. There are other people doing other things in terms of talent and events and engineering. And what we try and do is identify like, what like, quote, products could we build that keep us relevant throughout someone’s career, whether it’s very early when they’re getting exposed to tech, whether they’re getting their first job, whether they’re going to their first startup, whether they’re starting their own company and throughout? We’re constantly trying to think about how do we build products to stay relevant? 14:58 Got it. Kyle is out. Where contrary research came about? Because where I want to segue next is as you guys are thinking about these products within the venture firm, so community being one of them, and then you have content, which country research is a part of that? And I know that’s been an effort for you over the past year. I’m curious, is that also part of that same strategy? Or how do you guys think, content in general fitting into this broader strategic focus that you guys have for contrary and cultivating the community? 15:29 Yeah, that’s exactly right. And Eric can speak more to this, because I think he has this, he’s really articulated this vision of like, where are the areas we need to build most effectively. But contrary research came out of this idea. Originally, it sort of formed, because we have this broad community, a lot of times, what we have is, these are really talented folks like these are not necessarily like, It’s not often that we are helping them get jobs, per se, we are often just like helping them think about things because they are highly sought after folks. And so one of the questions we often get is, hey, I have offers to these three, four companies. I met the people, I liked the people, I’m interested in the product. But what’s the investor’s perspective on those companies? How do I understand this from a different lens, and we would do that ad hoc, but it’s like, hey, we can productize this and turn this into a valuable perspective. And then the reason for sort of open sourcing it and putting it out into the world is because we you know, we can see a lot of companies and know a lot of things. And I’ve worked in with a lot of these companies that we’re writing about. But I obviously can’t know every company super well. And so by putting this content out into the world, we allow people to effectively tell us when we’re wrong and say, hey, that’s actually not how I would frame that company, or this isn’t the right way to think about their market. And they come back to us with feedback. And so we have that iteration loop, where we can build the absolute best content. And now the vision of country research as a product is to be the best starting place in the world for anybody to understand any private tech company. And that’s the vision that we build towards. And that can be helpful to people, if they want to join a company, if they want to start a company and potentially compete with some of these businesses or even partner with some of these businesses, or whatever. throughout their career. This is a valuable product for them that keeps them engaged with country. 17:05 Yeah, well, you guys do a great job with it. I always enjoy reading them. I know you’ve been pumping them out. And I would recommend anyone that hasn’t taken a look at contrary research definitely to do so. Because it’s, it’s they’re very interesting. I think I so from, we’ve talked about a lot of things that you guys have done community, which is sort of the foundation of which country is built upon and talent. Content seems to be more new over the past year or two, what are some of the ideas that you guys had? But you didn’t pursue? Like, is there anything you tested? And you found it just didn’t work? Well, how do you guys in general, go about ideating to creating the MVP, if you will, to stand? Okay, we need to productize? This, like, let’s scale it? 17:50 Yeah, I think short answer is for sure. I think it’s just one of the things that they can have, like really makes country unique is we run contrary, like a startup. Right. And, you know, I think the vast vast majority of venture firms do not operate that way to put it lightly. You know, they, they operate as what I’ll call a consensus based decision making partnerships, right. And so, you know, people ask why venture hasn’t changed all that much. And I think I think like that is a large component of the equation. But so, you know, with us, right? I mean, we have kind of, as I mentioned, but we have an entire engineering, data science, you know, designer with the director of product, we have a talent team events, team, writers investment team, right. So all of these folks are kind of working together, you know, in one, right. And I think this is, this is why, I think number one, like we’ve been able to hire great folks like Kyle and and others, our team is filled with people from, you know, a bunch of the top venture firms in the world. But But I think also kind of, you know, like, there’s, there’s real purpose, there’s real mission there. Right? You know, I think kind of like traditional venture firm, for the most part, people are just kind of mercenaries, right? It’s why like, venture salaries are generally so above market, right? It’s like, you can’t there’s no other motivating factor other than let me just pay a lot of money. Right. And I think a country like we all understand that, you know, we are building a really special, unique firm together that does lots of different things. At the same time, as we’re making high quality investments, right? We’re doing things like research, we’re we have, we have the community network, we have all of these things. And so it feels like the energy feels like that of a startup. And I think to answer your question around, like, what are some of the things that you know, haven’t worked out? I think generally, they tend to be around we’ll call like, some of the some of like, the programs fronts. So So for example, like, you know, we had an initiative that we launched during the early days of COVID. And it was kind of like an online and kind of like, you know, Slack A vast community network. And, you know, we brought in cool speakers and we have like Steve Hoffman from Reddit drop by, and people did kind of, you know, co working groups together. And and this isn’t like the very early days of the pandemic, right, probably three years ago now. And you know, it lasted and was pretty active, I’d say for a few months, right. But But over time, I mean, communities are really, really hard. And so having something that kind of lasts in perpetuity, where people’s energy engagement levels stay very high for a multi month period of time, it can be challenging if if we as a team aren’t investing a lot of our own time and effort and energy into intensive maintenance or something like that, you know, so we made the decision to wind that down after after a couple of months and, and kind of move on, right. And so I think we, we communicate everything to our network and kind of a broader community as an experiment, right, like, nothing is too good to be killed, essentially. And I think knowing that from day one, I think gives everyone a certain degree of comfort, right? Where sure, you know, if you invested a lot of time and effort and energy into something, can it be bittersweet? Can it be frustrating? If at times, it might not work out, of course, right. But at the same token, like we also kind of embrace the failure, I think, and are constantly kind of reallocating our resources to things that are working right. And so like, research is a great example of that, right? Where you kind of spent six months working on research, you launch it, you see what happens, if it works great. You pour a lot more time, effort, energy resources into it and kind of keep it going. If it doesn’t, you kind of pull the plug and you move on. Right? And like that’s it, you embrace that kind of culture. So that’s kind of like how we operate as a firm. And I think most folks would take, you know, probably yours to make a similar decision as to whether or not you should, 21:55 yeah, in do you guys actually, like define what success looks like for a particular initiative? So for example, if you’re launching contrary research, is it as discreet as saying, hey, if we get a few deals from this, or if we have website traffic go from 10,000 visitors per month to 50,000? Over six months? Like this is success? Or how do you actually make the decision? We want to double down on this? Or, you know, it was a fun experiment. We tried. But what let’s move on to something else. 22:27 Yeah. Yeah, I was gonna say I think like short answer is yes. I think at the end of the day, like I remind the team very often that everything that we are doing, needs to tie back to one unifying thing, which is, does this has this? Or will this lead to high quality investments. That’s it. Like, that’s the only thing that matters. And so that could be researching be talent, that could be any of the programs that that could be anything that we’re doing, it all needs to tie back to that because at the end of the day, we are a venture capital firm, right? At the end of the day, like we are focused on investing in the best companies in the world full stop. And so there needs to be a tie back to that with everything that we do. I don’t know, kind of if you’re gonna mention anything there. But yeah, that’s kind of how we think about it. 23:15 Yeah, well, I think it, it is another sort of piece of evidence in terms of like us running this very much like a startup where we have, there’s sort of like the the global view of this needs to allow us to invest in the best companies, but it’s like, okay, how do you get from sort of A to Z? How do you get from A to B to C, like we have very specific product roadmaps that we lay out that we get feedback on that we go test, and we think, okay, if we launch with a little bit of this, how do we make sure that that’s successful? And what are the three things that we’re measuring the most likely indicators of this leading to enabling us to invest in great companies down the road? And we kind of think about it as this big country flywheel where everything we want it to feed like, is this connecting us to the best people? And then if we get connected to those people, do we have other products that we can offer them to bring them into the community? And if we bring them into the community? Are we building a high quality experience? And if there’s a high court experience, then we might be hopefully it will be their their first call, when they raise money when they start a company? Like we’re we’re constantly trying to think about the long game of how do we how do we increase the number of positive touch points we have with people and that and that’s that success in the micro? 24:21 Yeah, it personally for you guys? How much time are you spending per week on some of these other areas outside of new investments versus the content or the community? Like from just an investor standpoint? Eric, you mentioned like moat most firms, you know, they’re not doing this stuff, right. Like they’re solely doing investments or consensus based in that is the same model that sort of rinse and repeat it for 90% of firms. For you guys, and you’re taking on so many different areas within the firm. How do you guys allocate your time? And generally, how do investors allocate their time in terms of what percentage of their time is focused on investments? versus, versus some of these other areas? 25:03 Yeah, I think the good news is, we’ve built a team. Right. And so, you know, I think everyone is exceptional in their swim lane. Right. And so, you know, I mean, Kyle, frankly, he might be the lone exception here on the team where, you know, he spends, you know, definitely most of his time, the vast majority of his time investing, but, you know, a little bit on unresearched as well, but I think only that’s because it’s very complimentary to the work that they’re doing. But I think for really everybody else on the team, right? If, if you’re, you know, our designer, Ryan, right, like you’re spending all your time designing right, if you’re, you know, Jason, and will on early stage team, you’re spending essentially, all of your time, you know, you’re going out and meeting with, you know, kind of early stage founders, right, if you’re, you know, our, you know, Talent Team, right, like, you’re spending all of your time talking to folks that, you know, we should be engaging, you know, in our broader network, right. So, even even for me, right, you know, I, I spend quite a bit of my time investing still and working with our founders. And, you know, I think it there’s a fair question around, like ensuring that you are not being pulled in too many different directions, right. But I think the reality is like we’ve we’ve built a team at this point, to enable us to do the things that we were hired to do, essentially. So but yeah, yeah. Yeah, go ahead. 26:30 Just in terms of like, you take research as an example, like there are these sine waves of involvement, because we are effectively going through product launches, right. And so I was super involved, sort of frame working, what is research? And why are we doing it? And how are we going to what are our standards and things like that, but then we have a great director, you know, VP of product, who has built the website and thinks about all our tracking and a growth manager who helps us think about how do we get distribution and an editor who makes sure that our content is exceptional. So Derek’s point, like, that’s an example of like, I was very involved, but it’s because then I have a team that can come in and sort of support the thing we’ve watched. And then I can, you know, use it as it as it supports my investing ability, right? It’s not that I crap, I have this side job that’s totally unrelated to what I’m doing it like very much works hand in hand with going and working with companies. Yeah, 27:19 yeah. Makes a lot of sense. It more broadly Do do you guys think over the next couple of years and more venture firms are going to go this route and adopt sub areas within the firm outside of solely making investments? Or how do you guys see venture capital changing over the next couple of years? 27:37 I think they will, or they will die? You know, I look I think I think venture didn’t change much for its first 50 years or so. Right? until probably rectally, probably 2016 2017, around the time, when, when, when when countries started. And I think some of the some of the manifestations, some of the changes are kind of like, you know, peak bull market kinds of things, right, like all of the, you know, everybody their brother, who was kind of like raising a fund while they were being the CEO of a startup full time, right in life, you know, like, I think those kind of manifestations are kind of wild. And I think you’re already seeing most of those kind of the dial back. Right. But I still think there are some structural changes to venture writ large as an industry. That yeah, I think the short answer is like we fully expect, for example, over the next decade, technology to become a pretty important part of the stack of any venture firm. And I think that, you know, today there are relatively few firms doing something like that I can probably count on one hand. But our view is that that will be table stakes in 10 years. And if and if it’s and if you don’t have it, you’re probably toast right? Now, I think there’s a case do you need of course that, you know, it’s called like sub 100 million dollar funds can continue to kind of operate off of the old model, if you have a particular niche, if you’re not always focused on leading rounds? Like, you know, of course, I think there’ll be room for, for folks kind of that have smaller funds to do things kind of, you know, the more traditional way, let’s say, but I think once you get over that, right, once you try to start building, if you’re if your goal is to build an institutional grade venture firm, you’re just gonna have to play ball because the reality is the bar and the level of competition rises every single day in venture, and, you know, including right now, when we’re in the trough of Dinoco, the worst, you know, kind of pullback we’ve seen in 10 or 15 years, like, you know, venture is still 10x larger today than it was in 2009. Right. So like, this isn’t like, you know, we’re just gonna we’re gonna have this kind of period of higher lows, basically. But venture is an asset class is just going to continue to get more competitive. And if you want to stay relevant, if you want to win deals, if you want to compete, you’re just gonna have to have these kinds of things. So, 29:52 Kyle, I mean, what firms from your perspective do you think are the most at risk for disappearing as well? 29:58 As just Yeah, yeah. 30:03 I mean, I think that the reality is that and I mentioned this a little bit of in terms of some of the firms that I’ve worked with, like, every firm has a very different style. And the framework that I use to think about it more, because I’ve done a lot of this and sort of writing on my, on my blog, and stuff like that, where I think about different the sort of business of venture capital and different approaches to it. And so like that, I think it’s not like we have a very specific model and a very specific product that we offer people. And I think that the thing that got a lot of people in trouble is that they tried to be everything for everyone that we have a fund for every stage and sector, we have specialists, we have a million people doing talent, things, we have all these different pieces, we’re there’s not a company out there, that we won’t be the perfect fit for. And I think that that’s a mistake, because it’s sort of this feature creep in venture funds, where there’s just You’re doing too much, and you’re doing all of it sort of a little bit poorly. And I think that the framework is not, oh, every venture fund is going to have to become country or they’re going to die. I think our product is unique. And we’re pretty good at recognizing like, Hey, this is not a good fit for us, like there are certain, and they might be great companies, they might be great ways to make money and to generate returns. But it doesn’t fall within this sort of defined parameter that we’ve crafted our product around. And I don’t think that product has to be what everybody else does. But I think that people have to justify other venture funds have to justify their existence more than they ever have before. Because it used to just be like, hey, you know, if you have, you know, some capital and go nuts, like whatever, and you can probably get into some decent deals and things are going up into the right. Like that’s not necessarily true anymore. Because in part because there is this like thing times are harder and leaner and more companies are going to struggle and stuff and you have to fight tooth and nail. But also, I think that founders have become much more conscientious of the fact that like, hey, all these venture funds look and sound identical. Like you take the logos off these things, and you describe them, you might not know what you’re describing, right. And I think more venture friends are gonna have to lean into having a very specific defined product, where they can say, hey, like, this is the sort of job to be done, that you hire my money for. And if you need that job, great, I’m a good fit for that. If you don’t, that’s okay. Like, we’ll go find the folks that are a good fit for us. But it’s these people who sort of languish in like, we’re everything and nothing all at the same time. Those are the people that I think are gonna die. 32:22 That’s why we love asking founders, how they differentiate their companies. And then they asked the same to us. And we largely Sarah brand. 32:29 Collins, sorry about that. But yeah, maybe that’s 32:33 fine. Any anything we’re sharing on that on that end? Yeah. 32:37 Yeah, I do have a good story about this. So a friend of mine did this survey where they basically is that a firm top firm, went and talked to all their founders, they’re basically trying to answer this question of like, how do how do we differentiate it? Other people see us as different? And they basically did this, like, pre emptive. Like, here’s what we think is different about us and all these different things like why are you Oh, well, people, people take our money because of this thing that we’ve done, and this thing we’ve built and this blah, blah, blah. And he went and surveyed like think 90 Different people asking the question, why did you decide to take our money, and it was totally anonymous. And so nobody had to worry about like, blowback or anything, like saying anything very honest. And I think like 85 plus percent said, just the brand, like, we just wanted to attach this brand to our name. We don’t care. Like they were like, would you care about our talent offering? Not even a little bit? Do you care about these events that we put on couldn’t care less like, it was 100%. We just wanted the brand, that halo effect. And like, there’s reality, like that’s, that’s true, like, there is value in that, like people companies see the value of like having this big brand, and it helps with customers and partners and, and all this stuff. But I think the what that is indicative of in this sort of future state that we’re talking about, is that you know, that that’s a lack of product market fit, like when it’s just like, hey, we’re doing all these things for you, you’re exerting all this effort and energy on all these things. And you’re like, yes, sick, I just want you to stand there and look pretty like that is the best example of your product, not finding product market fit that I’ve ever seen. And that’s the kind of stuff that venture friends are gonna have to fit. 34:13 Yeah, yeah. It’s interesting, too. Because if you want the brand, like there’s a derivative reason, right, like to your point, you said, it helps with partnerships helps with customers helps with talent. But if you can fill in some of those other gaps, do you think that is the path to finding product market fit for some of these firms? 34:29 I think that’s right. And I think like and I think that we it’s less about, you know, balking at brand in general. Like, we certainly work to build our brand and make sure because if nobody’s ever heard of you, it doesn’t matter if you have the absolute greatest product in the world. They’ve never heard of you and so they’re not going to come ask you for that great product. So brand is certainly important. I think that it’s the conversion like if you go talk to a lot of founders, again, you have to do this in a very safe space anonymized way, you know, very friendly way because nobody wants to piss off the people that are getting the money. But if you go ask him very Honestly, like, how has it been working with so and so and it’s like, oh, like, it’s fine, like I haven’t. And there’s probably a lot of like, after the fact, disappointment of like, I actually thought that the product would be good, like the brand was great. And that’s one of the reasons I maybe made the decision. But I thought that all these things would be really meaningful in my business, and they just haven’t been. And I think the way that we take that, because it’s also, you know, it’s difficult to build a product, like companies are different, they need a lot of things, it’s very hard to build a business. And I think one of the reasons that country is is unique in that regard, as well, even among people who do build products, for specific companies, whatever, is that we’re not just focused on the company itself, like we are focused on the relationship with that person throughout their life. Like to Eric’s point, there are people that we have built products for, who are four or five years away from building a company, like we’re doing specific things with them, to help them be more prepared to be a founder. And then when they become a founder, great. We have specific products for people who are in the early days of that founder journey. And then it’s like, great, they’ve sort of built customers, they’re generating revenue. Awesome. We’re building products for those people, too. That is very different than the people who say like, I don’t know, people need talent. Like, here’s a 200 resumes, Godspeed, hope that works out. It’s like, that’s not a good product. That’s an afterthought. 36:18 Yeah, 36:19 I think there’s a lot of buyer’s remorse from great, we’re 36:23 the same our portfolio too. Yeah, I mean, from from the outside looking in, the name is great. A lot of times you speak directly, and you get it from the horse’s mouth, and it doesn’t live up at times. It’s also interesting, because some of these firms have just gotten so large with 100 Plus investors, and you’re, you know, partnering with, I’m not going to name names, but partnering with the large firm that has 100 partners, very different based off of the partner that you’re ultimately working with. Right. So then that influences the product that you ultimately received from the firm that you’re that you’re backed by. That’s not that’s not talked about too often. I do want to switch gears prior to wrapping up, though. I am curious to get your perspective. So we just reached the end of March. I think we’ve seen the fewest series C’s since the financial OA crisis. We did a data poll the other day, I believe it was like 44 series C’s across the US. So lowest count that we’ve seen. I’m curious from your guys’s perspective, have we reached the bottom yet? Or as you guys looked at q2, what have you What do you forecast for q2 Just in terms of a broader ecosystem in the fundraising environment? 37:32 You know, first Cali and then I’ll give more of a macro thoughts. Yeah, yeah, 37:37 I mean, on when within specific rounds in particular, I think that unfortunately, there, it’s actually, we, if we’ve hit a bottom, we’re going to keep digging into the red, like into the negative because I think one of the reasons you’ve seen such low activity at the later stages is because it was such a spike in every basically every company that had any meaningful meat on the bones that could raise a later stage round effectively did. And so you have, I mean, you look at the numbers, right, it’s like 1000, plus unicorns, and a huge chunk of those businesses were billion dollar valuations for single digit millions of revenue, if revenue at all, like so many of those companies are desperately trying to avoid having to raise it down round, knowing that if they do go out to raise, there’s no way they’re going to get anywhere close to the valuation they got. And in many instances, they got preempted two or three times. So we’ve seen companies that have, you know, even if they tripled their burn, they have five plus years of runway, because they have a hundreds of millions of dollars in the bank, and they’re and they’re still fairly tiny. And so those kinds of things, like you have a wide variety of different companies. But none of those companies want to go back out to raise unless they absolutely have to, because they know that there’s going to be that marked down. And there’s not I guarantee you that a lot of those companies, they’re not going to be able to grow into their valuation to sort of grow fast enough to get out of this, this sort of negative, you know, correction. And so you’re gonna see a lot of stuff where it’s like, we’re gonna start to see more rounds, but you’re gonna start to see like dramatic down rounds. And I’ve already hearing about firms again, even top firms that are the marketing is very founder friendly, that it’s just filled with structure on the round, right? Like you’re gonna start to see a lot of bad behavior. term sheets get pulled, we’ve seen this exploding term sheets with 12 hour deadlines, like just just really awful behavior. Because we see see themselves as receiving power. And founders see themselves as they’re desperate. And that’s a really crappy situation to put people in. And I think the focus for a lot of founders who are in that situation should very much be to managing expectations down rounds are not the end of the world. Like there is a way to come back from these massive valuations. It’s very uncomfortable, it can be really bad for morale, but there are ways to do that. It’s great in this instance, to have a partner who will help you through that rather than just like desperately trying to keep you from raising another round. because they don’t want to have to mark down their own portfolio, you should be much more pragmatic and realistic about the situation you’re 40:05 in. Yeah. Yeah, I think on a broader macro point of view, I think our view is that, you know, really, this year and into next year is going to be quite challenging for folks. You know, I think pre SVB, I think our view was, you know, that, in some ways, we might already kind of be having the worst find us, you know, and that kind of, I mean, oftentimes, official declarations of recession, for example, are kind of lagging indicators. And so, you know, that, yes, the rest of this year was going to be soft, right. But for the most part, people were taking half of last year all of this year to kind of recalibrate, get their ducks in a row, you know, kind of figure out, you know, they’re kind of path ahead. And it’s kind of slowly and surely start building comfort in slowly deploying capital. And, you know, are we getting back to 2021? Next year? Obviously, not right, but like the pace, but at least kind of increase a little bit, I think, now, our view is that, you know, next year will probably be relatively soft as well. So yeah, like, I think, you know, that’s what happens when you have, you know, a 15 year kind of bull market piece, like we had in 2001. And I think it’s an unfortunate, I mean, there’s an entirely separate conversation, probably, that could be had around how this affects managers from an LP point of view, right, you know, the vast majority of LPs that I know are on ice this year, for example, you know, I think those that I’ve talked to have expressed kind of hope or desire to get back to more of a semblance of normalcy, you know, kind of next year, early next year, first half of next year. But I mean, the ripple effects for that are going to be tremendous as well, you know, I think, yeah, the injury sins of the world and kind of the, you know, the the top multistage firms, of course, will be fine, though, even they might have, you know, smaller font sizes, but I think kind of emerging managers are going to be crushed in this kind of environment, which is really unfortunate. But that’s just kind of how the lvlp cookie crumbles. Kyle, if 42:12 we could feature anyone on the show, who should we interview and what topic would you like to hear them speak about? 42:17 I think it’d be great to see you guys interview Anja Mossad who’s the CEO of Restlet servlets, a portfolio company, but just from an investment perspective. So I was hanging out with him again yesterday at this conference. And he was telling me that just in the last few months, he’s written probably 30, Angel checks, like still just super active, super active as an angel. And it’s kind of interesting, because his approach is a little bit of a spray and pray that he trusts his gut. And he is really focused on working with people who are building in areas that he’s really passionate about. So obviously, like developer tools, and AI, but also education, we’re co investors in another company with him and a tech company. And so he’s just a just super thoughtful investor to have, and I would love to see him on the show. 42:56 Awesome, cool. Hopefully, we can get him. And last, what is the best way for listeners connect with you guys? And contrary, 43:03 so yeah, me. So kW, Harrison, 13, on Twitter, much to my wife’s chagrin, I’m probably too active on Twitter. And so that’s a great place and then and just country.com We’re pretty we’ve got a lot of ways to work with us and get engaged with us is 43:17 great. Yeah, I think it’s probably the probably the best place is Twitter. I mean, a lot of the teams pretty active on there, Kyle more so than me, but I do my best as well. So 43:25 awesome. Well, guys, appreciate having both you on today. Again, it’s rare that we have, you know, two general partners, but appreciate it and hopefully we can do it again sometime. Thanks, Nate. 43:35 Yeah, it’s just fun. Thanks. 43:42 All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email, let them know what particularly resonated with you. I can’t tell you how much I appreciate that. Some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same accomplishment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over prepare, choose carefully and invest competently. Thanks so much for listening Transcribed by https://otter.ai