440. Building First Mark, A Leading VC in NYC, Will New York Overtake the Bay Area, Insights on Unicorn Selection from a Perennial Midas List Investor, and Why Remote Work can Ruin Great Startups (Rick Heitzmann)

440. Building First Mark, A Leading VC in NYC, Will New York Overtake the Bay Area, Insights on Unicorn Selection from a Perennial Midas List Investor, and Why Remote Work can Ruin Great Startups (Rick Heitzmann)


Rick Heitzmann of First Mark joins Nick to discuss Building First Mark, A Leading VC in NYC, Will New York Overtake the Bay Area, Insights on Unicorn Selection from a Perennial Midas List Investor, and Why Remote Work can Ruin Great Startups. In this episode we cover:

  • Consumer Investing
  • Investing in DraftKings Despite Regulatory Risks
  • AI’s Impact on SaaS Development and Deployment
  • AI and GLP-1 Impact on Quality of Life
  • Evaluating Entrepreneurs’ Potential for Success

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Transcribed with AI:

0:18
Rick Heitzmann joins us today from NYC. He is Founder and Managing Director at First Mark, an early stage venture capital firm. FirstMark is focused on consumer technologies including e-commerce, media and gaming. Rick has led investments in market leaders including Pinterest, Riot Games, DraftKings, Airbnb, StubHub, and Discord. Rick has been named to the Forbes’ Midas List as one of the world’s top venture capitalists for the last three years, and has received similar distinctions as one of the world’s top VCs from CB Insights, Insider, and the New York Times. Rick, welcome to the show!
0:57
Oh, thanks. Great to be here. I appreciate you guys reaching out, you know, longtime listener, obviously, first time participant. So it’s great to be here. It’s
1:05
a sincere pleasure, sir. We’re long overdue. But I’m glad we got you here today. So can you tell me a bit about your backstory in your path to venture? Sure,
1:14
I probably have what would be now considered a non traditional path of venture. But when I got into venture in the 90s, there was no traditional path. So I came out of my my alma mater, which I love very much with Georgetown University. And there was no real path of entry even necessarily to tech in the early 90s, there was no internet and venture capital as a small cottage industry. So I went to Wall Street got involved in investment banking, I then went and got involved in distressed buyouts and the opposite end of the spectrum of technology. But I became very interested in involved in technology, as the Internet came into being you seeing things like amazon.com, I was reading things and decided to go and do something completely different and go back to business school and see if I could change careers. And the good thing was at that point, venture was just starting to open up. So even a guy with was not an engineer had limited technology experience except reading and and trying to understand as much as I could affirms, that would take a chance on me. So I went, I went to a firm out of school. And that went well for a while. So I was able to see the beginning of that great tech ride of 9899, which might have been similar in some people’s eyes to you know, what, maybe 2020 and 2021 were like, right in this stage. And then And then obviously, there was after a big party like those, there’s a big crash and a big correction, and live through that. And during that time, I left the firm, to start a company called first advantage, which was the biggest provider of information services around people. And we grew that company, we took it public, and sold it to a company called first American. And even in 2005, or 2006, who was still early enough, it was so close enough to that tech downdraft that many people thought, hey, venture capital, even technology wasn’t that important. And maybe the internet was a pet rock, it wasn’t gonna be that important in the changing of the economy, and therefore not not very interesting. And even if it was, you know, a place like New York was a terrible place to do it, that there would be a handful of venture capitalists, which would could remain in a place like the Bay Area, or even Boston. And New York was a bad place to do it. But I did what some people thought was maybe stupid or a bit crazy, and paired up with a couple of partners, and launched first mark in New York almost 20 years ago, on the desire to say, hey, we’re just getting started. And a lot of the digital transformation hadn’t even been thought of yet. And so began to build first mark, from that point forward,
4:02
what percentage of your large outcomes have been New York headquartered companies?
4:08
This I don’t know what the percentage is a fair amount, but we’ve had large outcomes and a lot of different places. In a very funny way. A lot of people don’t realise that Pinterest was started in New York and then moved to the Bay Area. So there’s been ties like that, but even ties by companies like Shopify, although based in Ottawa, you know, part of the reason they wanted to work with us in the series A was we were from New York, and we have access to commerce and commerce, ecosystem, things that are part of the grain of New York. So, you know, we do about half our deals today in the New York City area, but then a lot of our other deals have a Nexus back to New York if people who want access to the financial services ecosystem want access to the advertising or media ecosystem, or might be selling into for the fortune 500. We’re in New York has More fortune 500 companies that a city in the
5:03
world does New York take over the bay area in the next decade. In terms of I don’t
5:08
think it takes a decade. I think there’s I think the New York has New York created more tech jobs in San Francisco last year, a couple of the last quarters, I think it’s been a dogfight of who created more companies where New York had pulled ahead, I think San Francisco caught up. And then there’s gonna be an interesting thing. I think the some of the large AI companies have staked out San Francisco, New York has a couple and then has a big base under the meta AI ecosystem. And then London and Paris have surprisingly strong AI ecosystems. So I think that’s going to be a big driver. But I think, you know, people still want to live in New York. And I think, you know, young people who want to make their mark in the world are how a lot of great companies are started. And that New York seems to be the best place for that, as it always has been. You
5:57
know, it’s funny, because over the past few years, it seems like places like Miami and Austin got all the fanfare for investors and founders moving there. But, you know, I think about a number of folks I’ve had on the show. And in recent memory, there’s been scores of folks that have moved from the Bay Area to New York. I think Shardul Shah vindex, my buddy, Rania, D, but 1984, and many others. Is this a good thing for New York is this. Thanks, Mark.
6:23
I think it’s great, I think it will, there’s two things you’re seeing, I’ll tease apart. So you saw a lot of people who left you know, big urban areas during COVID, to get either a place where it was warm, and you can spend some more time outside or people who felt like they wanted to be, you know, a little in a little bit different scenario. So New York left loss of people, San Francisco lost a lot of people, people moved to places like Austin, Miami. But then as we’ve seen, as COVID, has ended, people moving back. And we’ve seen more people move from back from Austin back from Miami to New York. And then even a lot of people who went from the Bay Area into those cities have moved to New York. So it’s become even more of a talent lead magnet than it ever has. And then therefore we’re seeing is we’re also seeing more venture capitals, right? So you’re seeing a lot of firms either open a satellite office here, or have individuals come here. The good thing is, we’ve seen more founders come here than VCs. So if you think about a supply and demand, you’re still we’re still winding up ahead. There’s still a lot of great opportunities here that we see on a day to day basis.
7:30
Awesome. So tell us about first mark, you know, what is the thesis was the investment approach of the firm. So,
7:37
amazingly, we have substantially similar strategy that when we started the firm, almost 20 years ago, and when we started the firm, we thought we had to be different. And it was a time where people were doing clean tech, and there was a whole bunch of different strategies that were going on. And we thought we had to do three non obvious things that were different. And you know, the first one was, as we talked about New York, hey, we think New York can be a great venture ecosystem, New York were at the time was the seventh biggest venture venture ecosystem, and wasn’t growing that much. But we thought about all the industries that are centred here, and all the companies are centred here. And we were in the first inning of digital innovation, and that digital innovation was going to have to touch those industries. So we said, okay, from a geographic basis, we’re making an obvious choice to be in New York. From a stylistic perspective, it was definitely an era prior to that, where a lot of people were taking small positions in companies and providing a small level of care. When we thought we want to be high conviction, we want to be in there early, we want to take board seats, we want to be your lead director, we want to be your first call. Good bet. Good news, bad news, whatever it may be, we want to be your partner. And then in order to even win those deals, despite having those two things, right. We have to be industry experts. So we want to be deep and strong in those verticals. So you could really help the companies by not understanding what it’s like to go through a scaling process as a venture company, but also being really good in the sector that you care about. And around those things. We want to wrap it with an ethos of being a true partner. So part of that being that lead director, we want to be on the same side as the table as you. So having been an entrepreneur, you know, and working with a board that might have had a 1990s ethos of the board is there to beat the entrepreneur until results improved. I think the difference is, we sit on the same side of the table as you we are we’re all shareholders together. We’re addressing these problems in the best interests of the company. And although we might not always see eye to eye, we’re we I have all the same aligned interests, and we’re going to get from here to there. And I think having a focus strategy in terms of The types of deals we did, why we did those deals, and how we want to work with you was able to even before we had a brand was able to filter out the type of entrepreneurs we want to work with. Perfect.
10:12
And can you give us a sense for the phone number, you’re investing out of sort of the size structure and number of companies? You’ll do? Sure,
10:18
is it we started again, almost 20 years ago, one, our six, early stage fund, one our fourth Growth Fund, I think, you know, we were in both businesses, probably before it was good. And, you know, we view that as not only in our growth fund, and it’s the opportunity to continue to support companies where we’re active. And there’s a lot of companies, we’ve been actively directors that we want to continue to support in every round of their financing. And occasionally, because maybe we missed something, or we got something wrong early, we want to be able to circle back and invest in those companies. So we can do things outside of our outside of that current portfolio of our growth fund. And we raised 1,000,000,001. About two years ago, we started investing both of those funds early last year. And so we probably have another two years of capital, I think we’re a bit old school and that we like to invest funds over three years to get a little diversification on vintages and everything that goes along with vintages. So fortunately, we still have a bunch of dry powder. And we’ll probably invest in you know, 40 to 50 companies in our early stage fund across across that form.
11:30
And is there a typical stage entry point is it most often series A is it most often,
11:34
it’s most often series A so you know, our classic entry point is a you you’ve probably raised maybe a little bit of seed capital, you’ve gotten a product you’ve gotten into market, you have some customers either on the consumer enterprise side, you’ve gotten to maybe a million dollars of revenue. And now you want to use it goes from being a project or a seed company to being a series a company where you’re getting ready to scale. And that’s, you know, we come in, we’ll you know, we’ll do you know, form the board, join the board, be able to surround that company with some infrastructure to help at scale, as well as some, you know, our platform team, they can do things by providing talent via book like customers as we go and do that. So our typical deal would be writing a five to $10 million check out of a classics to lead a Series A and then once we get involved at that point, we continue to work with that company throughout his life. You know, I’d love to well
12:35
I’ve Gachi I’d love to get your taking consumer. Surely you know in the intro, it’s a who’s who have household names that first mark has invested in the Airbnb is the DraftKings, the Pinterest, etc. Recently, fairly recently, we had another New York VC firm on the show ben lair from Lehrer hippo. And you know, the reorientate reorienting and doing more b2b investing. So my, my question for you, Rick is, you know, is consumer still a good place to invest? Why or why not?
13:06
It is, it is. I mean, I love I love Ben, he’s, he’s been a good friend for a long time. I also love when smart VCs decide that we’re doing is stupid, because it means there’s more opportunity for us. So, you know, I think that they’re, I think that consumer is going to continue to evolve. I think consumers much more broad than, you know, direct to consumer product companies, which I think might people might have misread you know, what we love, you know, we love marketplaces. And you know, we think about you know, I did StubHub, Airbnb DraftKings, even Pinterest is a marketplace of ideas, because there are natural use of the Internet and creates a natural barrier and network effects in the cycle. So that facet of consumers fantastic. We just did an investment in a company called pickle, which is a person to person commerce company around apparel, and being able to share your closet, not dissimilar from Airbnb, how you share your home, here’s how you share your closet. The company is doing very well and scaling quickly. You know, the other other other place we see in consumer is video games. And obviously that’s taking more and more time and dollars and attention. As you as that as that market grows, you have the opportunity in that media landscape using social connections and everything around social to be able to very quickly scale that business with network effects, especially indie games. So we like those businesses, and we like tend to like consumer businesses, which can scale nonlinearly so you know, it’s it’s often really hard when you have a single person purchase commerce company to scale that business up nonlinearly but you know, all the other businesses we feel were really great and we’re seeing great opportunities that pop up constantly.
14:52
So right off the top you establish that, you know the original thesis that at first mark has kind of remained consistent. What would you say is different about your consumer lens today versus, you know, your original approach to consumer and, you know, eight.
15:11
So I think consumers changed a lot. You know, one thing I’ve learned is that consumer has a much broader results. So you know, if you, if you’re investing in consumer, you’re going to be wrong, more, you’re going to lose your money more, but the back of the power career was much greater. So you know, it’s much easier, you know, SAS companies, which tend to be the enterprise companies, if you call it the last 15 years, or 20 years, such as 10. Ups, although some of them have a great slope to the line, they tend to be a linear base, where you’re adding salespeople in order to scale that growth, consumer companies due to network effects are able to grow very quickly. And you think about the snaps the Pinterest, even commerce companies like Airbnb, how quickly they can grow. So you’re able to drive bigger outcomes, but you have more failures, didn’t realise that was the case. And obviously, I hate losing money. So that was obviously really hard at the time, but really informative. So therefore, you know, I wish I knew then now then what I know now of how that’s how it works. At the same time, I also had some unsuccessful investments that might have followed a more linear curve. And really understanding you know, there’s a subset of consumer that can really create power law like returns. And a you have to invest in that sub sector and be when that’s working. And there’s things you see around network effects and supply side demand components, which, when that’s working, that is so powerful, that you have to continue to follow those trends, and invest in them as soon as that happens. So, you
16:50
know, as you’ve outlined, the outcomes and consumer can be quite a bit larger than they can be on the b2b side. But consumers are also pretty fickle. Right? There’s hype, there’s trends there, you know, degree of churn can be a lot higher AC vs can be lower, like, how do you even begin to underwrite these factors that are so hard to predict? You know, at the time you’re doing a seed stage or a Series A investment?
17:21
And a seed and series a I mean, sometimes anecdotal, I get sued people seem to be on it, you know, do are my friends on this social network? Does this feel like a good company, but even knowing that the first time user experience for a seed company is as often awful, and often very different than where that company evolves from? If you remember the early days of Twitter, or Facebook or Pinterest, very different product experience what you see today, but are you seeing something that’s so different than if it works like no different than the rest of venture of, you know, you can only lose 100% of your money. But if it works, you could see a huge outcome, right? And therefore, you know, is there such an asymmetric bet that you’re making, that if this works, it will be huge, and therefore, that’s super important. So you’re able to see something that’s completely different. And you’re making an investment that that could work. So Riot Games, do you believe that video games are going to be more social, and that will be both competitive, as well as collaborative, and people want to pull folks into an online video game to make that work? Yes, that would seem to be logical. And although the first first game was a bit wonky, and the Polish wasn’t there, and it was done that cheap, oh, some of those gameplay dynamics work, or those of us were early at other social networks, it wasn’t perfect. But that core use case was really good. The core use case of using Snap as a messenger as well as picture sharing was really good. Hey, people, really, although it wasn’t perfect, people really like to share pictures, especially filtered pictures on early Instagram.
19:03
You know, one of your investments that stands out a bit, I’d love to hear some of the backstory on is DraftKings. This has a whole additional layer of risk than some of the others, you know, consumer business, but there’s legal and legislative risk. And I imagine at the time that you invested, you know, all this stuff wasn’t where it is today. So how did you think through that investment? And how did you get comfortable that, you know, legislation could change over time and open up that opportunity? So
19:36
we’ve gotten comfortable a couple times or handful of times regulatory risk, Airbnb faced regulatory risks, StubHub faced regulatory risks back in the day, some of our healthcare companies today, direct consumer healthcare have some regulatory component to them. And so, you know, therefore, you know, that something could go wrong and can be shut down. And obviously, in the arc of our time is DraftKings investors as they got shut down or close to shut down several times, and I think, you know, where we got comfortable in the beginning was hey, does this feel like an inevitable trend? Does this feel like you have a macro trend at your back? And do you feel comfortable that that team has the grit to persist across a elegance, a lot of headwinds. And I would say, you know, Jason, and Matt and Paul and the team at DraftKings were incredibly gritty, they understood regulatory as well as anybody. And therefore they were being very, very thoughtful. And knowing even if they’re, they got pushed back, they how to continue to persist to succeed. So one of the key elements was, Hey, are we doing our independent homework? So therefore, we really understand what could go wrong. Oftentimes, it comes back of oh, you could lose all your money, the company get shut down, and then having some ability to say, well, what are the chances of that? And then feeling comfortable is that as that’s that’s a nonzero outcome. And then, is there a team which is thoughtful about it, you know, is that the founding team of Jeff floor at StubHub, and we could go through all the individuals because, you know, it’d be really easy if the attorney general’s doing whatever it is. And, you know, I think Jason Rodman says, joke that, you know, it’s time to, you know, call his wife and say, Hey, I’m not going to jail today, that’s good. And we might run out of money, but I’m not going to jail. And so that was, you know, that was kind of the thing of like, Hey, you have to have that attitude, where you’re being served by an ag, you know, some people are proposing laws, which unfairly are targeting you, you hear rumours of regulatory trends by, you know, incumbents with tonnes of lobbyists, which are doing the wrong things, but, you know, in your heart, you’re doing the right thing, especially if you’re a consumer, and that the trends that you’re back, and you will have to persist through this to succeed. So like most of our investments, be investing in great people, you know, overcomes many of the risks that are out there.
22:06
Perfect, Rick, in what sector industry, do you think, or what sector or industry do you think will produce the largest consumer outcome in the next decade
22:19
to really interested in versus healthcare, so healthcare is the biggest part of our GDP in the US, it’s the fastest growing part of the GDP. And it’s probably the most dysfunctional part of our GDP. So, you know, if you’re looking for an enormous outcome, you need a large Tam, you need a growing tam that provides opportunities for new entrants to get a get their foot in the door. And you need to be a little bit broken, that provides windows to have a tip of the spear be able to get in there. And I think all those things exist in healthcare. And we have a bunch of different companies, which are trying to help the consumer help benefit the consumer and putting the patient first in ways that make that healthcare experience better, faster, and cheaper. And all those things are going against the people today where you’re seeing a higher deductible rates longer time to see physicians and quality of outcomes not being as good. So I think you there’s a couple of different plays in both our portfolio and outside our portfolio where those megatrends will produce enormous 10s of billions of dollar outcomes. And the other thing, which I think is going to be harder on the venture industry, but I think it’s there’s still we’re still early innings, the megatrends video games. So I think, you know, especially as I think about consumption, if I look at my, my parents consumption of media versus my kids consumption, immediate, you know, it’s, it’s completely opposite, either my mom might still even watch broadcast news. And but my, my kids are, you know, a lot of time on video games a lot of times on social social apps. And I think that that’s still going to be a constantly changing trend. And there’s, you know, different dynamics within games that will have better hooks to get people to, you know, invite their friends play competitively play collaboratively. And I think we’re still early days of figuring out how that industry evolves.
24:20
Love it. So Rick FirstMark recently hosted cloud, New York 2024 Give us some of the most impactful company building lessons that that came out of the event.
24:34
Yeah, I think the key things are coming out of the event, I would say, What are you What can you learn today? So we had clutton New York, cloud, New York all started. We had a number of some of the best CEOs of the the SAS ecosystem in New York, for a thing we’ve had on for about a dozen years now called Cloud New York, which is bringing together the best SAS used in the industry to come and speak to our founders and speak to us and come together of the premier SAS conference. And you know, therefore we bring, you know, CEOs of all ages together and say, Hey, what did you learn? And why is that important? So you know, the key thing that we’re probably who’s new this year, which shouldn’t be unsavoury, unsurprising is, you know, what is aI mean, for SAS? What does it mean, for SAS development? What does it mean for SAS deployment? And what does that mean for ROI for our customers, and it affects every piece differently. So, you know, as part of his first work, we have a whole programme called guilds, where we bring together networks of people to discuss current issues, and it could be CFOs talking about how are they doing taxation in Europe for online delivered goods and services? But it also could be how is AI affecting product management and development? So you know, developments a whole track, we thought about that talked about that, you know, are you really going to be able to get 10x You’re gonna really be able to 10x or 10x engineers? And what does that mean for the cost and time to develop products? What is that if you’re able to decrease costs? What does that mean for your pricing? And what does that mean for your ROI? So that was really the mega trend that, you know, not dissimilar from those business over the last, you know, 12 to 18 months? What does aI mean, for us? Was that key thing? And the other thing is how, where, and how do you scale. And I think one of the key things, it’s funny, it’s got, you know, it’s cloud, New York, obviously, New York based, but one of the key lessons we’ve heard was, you know, being around your customer, for enterprise customers, for enterprise companies. And you’re just more customers in New York, and the ability and how much of a competitive advantage you could have by building your Salesforce in a place where your customers are, and not only your Salesforce, but your whole go to market team, and having, you know, not only the go to market team, but product and product, and then Dev, having all those folks close to the customer, and how that increases both velocity and product development, as well as velocity on sales cycle. Perfect. So
27:17
while we get into AI here, I’m gonna give you a bit of a curveball. And it’s a two part question. Rick, what do you think will create more economic value in what do you think will create more impact on quality living GLP ones or AI? I’m
27:36
gonna split the question. I think those are the two megatrends, right, if you if you watch anything from CNBC or listen to podcasts, they tend to be the most impactful things that we’re seeing in both the venture landscape as well as a more broad economic landscape. So I think in terms of creating value, I think AI might create more value because it’s touching everything. And I think it’s touching any kind of work systems and processes. However, creating impact on humanity, it might be GLP ones, I mean, what we’ve seen, and it’s been broadly reported, being a bit of a wonder drug, being able to really impact people’s lives. And you’re just fully understanding by take by seeing the obesity curve shift, how much that just all the negative repercussions of obesity, and the ability for not only the US, but also everywhere around the world to either cut down the obesity epidemic or nip that in the bud, and what that means for healthcare costs. But actually, as importantly, to your question, really what that means in terms of quality of life, and why that will be so important to everybody to be healthier and increased both healthspan and lifespan will have the best impact on people’s quality of life and ever more much more of a human impact than AI. I
29:02
know that you have your investment in ro that’s doing a number of things on the GLP one side, are there certain areas or applications? Or is there a certain framing with regards to AI that, you know, first mark is using as you think about where to focus and where to not spend time?
29:20
So, you know, the way we looked at software, when we first started was, you know, is this software doing the job? And can you get an ROI that someone will pay for. So you know, oftentimes people create a widget or science project that looks really cool. And you might be able to have pilots or temporary customers. But unless that software and even to a certain extent the consumer side is doing the job. People aren’t going to pay for it. They’re not and they’re not going to be they’re not going to retain. So is is that software doing a job is is kind of the key framework that we looked at all SAS investments, and we’ve kind of persisted with that framework. If we looked at it Next Generation of software with AI, and is, you know, is artificial intelligence core to that value prop of that company. And is that is that artificial intelligence creating a competitive advantage. And that can be, as we talked about before, creating code faster, being able to deliver answers faster or results quicker, or being able to deploy in a much different way, and therefore, deliver a high ROI. So, you know, as we think about all the and you can only imagine the amount of pitches we’ve gotten around artificial intelligence companies over the last year, year and a half. Oftentimes, they don’t address hey, here’s the key question are going to people going to be willing to pay because it’s creating real value? That’s the question. It’s front and centre in our mind as we look at any and we’ll think about any business or business plan. So
30:54
Rick, prior to the interview, I asked you what three factors are impacting your investment focus most right now? And your answer was founders, founders and founders. So the question I have for you is, you know, what characteristics Did you optimise more for in the early days that you no longer prioritises highly? And then sort of the other side of that, you know, what are some of the factors that may be used to consider less important in the early days that now you weighed much more heavily in your evaluation?
31:24
I think historically, you looked a lot at resume. And, you know, where do people work? Where do they go to school? And why was that important? And yeah, I think that we’ve probably overweighted that, as we’ve seen people from a wide, wide walks of life high school dropouts, and you know, Toby, from Shopify, as a famous, you know, high school dropout, all the way through people who dropped out of high school dropped out of college, you know, bounced around in their professional career before starting something had, you know, a range of unsuccessful startups before starting something like Ben Silverman at Pinterest. And you come to realise that founders and startup executives come from all walks of life from all types of background. And you know, you have to be clear, pay close attention to what they’re telling you. And I think that that’s, you know, the flip side of what we learned, you know, don’t focus on the resume focus on the person and what they’re saying what their unique insight is, and how they’ve thought about it. So, you know, I think your resume has nothing to do with your passion, and it has nothing to do maybe even how you understand your market. And what you understand. And regardless of what’s on paper, because we’ve had people with a lot of a lot of letters in degrees after their name, who didn’t have the grit to really understand their market, or didn’t really care to understand their market, maybe because they historically had so many letters and so much credibility from a school or from a prior job. They had to not have that grittiness to really understand competitive dynamics, or how a market how market operates. So we are very helpful and thoughtful of, Hey, what is this person really saying? Do they really understand their market? Do they live for this market? Is this a personal problem, that they can’t sleep at night? Because they’re looking to solve? And that attachment, we think is much more correlated to success, as opposed to what historically was someone put on their LinkedIn profile?
33:28
You know, Rick, sometimes it feels like, there are different skill sets required to go from zero to one versus one to five versus, you know, five to n. You know, how do you think about that when you’re evaluating entrepreneurs? You know, there’s kind of this hustle phase growth phase scale phase, obviously, we would like to find people that we think can do everything and can be like, a Jeff Bezos type, but not everyone is like that. So how do you think about that when you’re evaluating potential investment? Well,
34:00
very few, very few people like that. So we like to have people who if you can’t get the first base, you’re never gonna get home. Right. So, you know, can this is this person, the right person for the job now, so necessary, but not sufficient? You know, do we think they really understand their market, they’ve been thoughtful about their go to market and their product strategy, that’s your baseline. But if we think that they are unscalable, because of, you know, some huge gap they have in either their personality or how they wish to work or whatever that is, we might not still invest, because all of our best companies have been founders that we’ve backed with the earliest stages, but have continued to execute, you know, through the public market or public market equivalent. And so do they have the work ethic, the tenacity, the intellect, and desire to build a big company in which the CEO and it’s very funny we I’ve done a couple Apple podcasts recently with founders. And they’ve, you know, the interesting thing they always think about if, you know, someone asked him if you weren’t doing this, what would you be doing? Thinking about like most people, I have these other passions. And they’ve all said, now this is, this is what I’m gonna do forever. I’m going to sell I believe I could solve this problem. And I’m headed sound focus on this. And I, some of which don’t even have any hobbies, that this that this company this project, you know whether you’re Ezrin, you’re curing cancer or whether you’re looking to build healthier humans, and helping people in their care journey row, you know, those CEOs are excellent, because they’ve taken a very personal problem. And they’ve made it their life’s work and life’s passion. I think those are the types of folks who can who are infinitely scalable.
35:52
Amazing, you know, I love your take. At the beginning, we talked a bit about founders moving around and venture capitalists moving around with, you know, how do you how do you vet? And what’s your opinion on these increasingly distributed teams and remote teams in, you know, this post pandemic zoom world that we live in?
36:13
Yeah, I mean, we’re on quasi zoom now, in generally, I hate it. So I think that it’s been proven, at least when we’ve got our analyses either through the first mark guilds or even through our board meetings, that it’s not as effective. So, you know, in person being able to work elbow to elbow with people being able to say, I have a question, I’m gonna go grab someone, I’m stuck, I’m gonna, I’m gonna go grab someone works better for everybody, right, going, going back to going back to the caveman. And having the caveman having an apprentice, we’d help them, you know, figuring out how to start a fire, you know, the apprenticeship model seems to have worked for for 10s of 1000s of years. And it still is how largely how you know, how people work how people learn to help people grow, and that can be in venture capitalists, or that could be in software development. And being able to have someone there, who you can reach out to him, which generally works in person is important. And collaboration is important, I would even say, you know, your ability to have strong mental health and being able to be in a functional relationship, where it’s proven to have more empathy in person matters more. So you’re going to have stronger relationships with your co workers, deeper relationships with their co workers, a more empathetic relationship with your co workers, which is going to produce greater results. So if your job as a founder as CEO, is to create the best company possible. I think it’s it’s lazy to be able to be distributed first. And I think that, you know, there’s companies have made some decisions, and they’ve done certain things to make it work for them. But I think it’s an exception, rather than the rule about how the next great companies will be built. Break.
37:59
If we can feature anyone here on the show, who do you think we should interview? And what topic? Would you like to hear them speak about? You know,
38:06
I think I’d like to hear, I think, as you think about Yeah, who would I really love to have on the show next? And why is that important? I’m a huge sports fan. And I and I’m a huge business nerd also. So I think that, you know, some of the things that Michael Lewis has, has written, I’ve read them all, probably, and you know, and I’ve, you know, pulled some money block Paul elements into my life. You know, a long time ago, I worked on Wall Street and could have understood liars, poker, and everything else. I think his ability as a storyteller and his ability to drill into key topics would be awesome. And, you know, forcing him to cast that light on the venture capital industry, it’d be interesting to see what his takeaways would
38:54
be. What are your favourite teams wreck?
38:57
New York Yankees, so which are currently of the best record in baseball, and then having grown up in Philadelphia, I love the Sixers. I love the Eagles. And I think it’s going to be both of their years next year. Also.
39:10
Love it. Rick, what book article or video would you recommend to listeners?
39:17
I still stick with the Michael Lewis thing. I mean, I think the Moneyball in the ability to think differently because, you know, even if you’re at a bigger firm or have a lot of market power, you know, that’s going to go away if you follow the crowd. So it’s, you know, a great story about not following the crowd thinking differently, and being able to make independent decisions based on that is incredibly important lesson. And I’m having my son read that now. I had him read a shootout, which is a great story around entrepreneurship and Nike as well. So I think that those two, I think are the most important things as as you’re developing as a person as an entrepreneur. The continue to be thoughtful about thinking differently.
40:03
Rick, do you have any habits, tactics or techniques that are a secret weapon?
40:07
You know, I think some people would say this, I’m not sure if it’s a secret weapon, but I love food. I love great restaurants. And and I spend a lot of time thinking about with this person, where would we go? Where would I like to eat? Where am I excited to eat. And my friends who I’ve taken to restaurants or events or food related things love going because they just see how excited I am to be there with them. And therefore that makes it an experience, and it makes it an incredible bonding experience. And, you know, even my partners would say, that’d be That’s great. You know, some people I don’t care what I eat, or you know, whatever, whatever is on the counter is fine. But I think the the the ability to share something you’re passionate about, and to share a meal with somebody are both really awesome things that I think, you know, is a key to some of the ways I bond with people over time.
41:04
And then finally, here, Rick, what’s the best way for listeners to connect with you and follow along with first mark.
41:10
So there’s two things I would probably say, you know, my email address is pretty simple. It’s just Rick at first mark.com. We also have also have happened to have got as a birthday present from some great friends at Rick, is my Twitter handle so people can reach out to me directly at Rick. And then at first mark cap is the Twitter handle for the firm. And you could fall over doings whether it’s cloud, New York, whether that’s our participation in great podcasts like this, or other things we want to put out there in the world. It’s and first mark.com would be that would be the site, if you want to learn more about us, or my partners and my our team, as well as our portfolio and portfolio news. So all those all those are ways it’s hard to hide in today’s world. And so you could find us a million different ways.
42:04
Perfect. Well, the man with the Midas touch five years running now he is Rick Heitzmann and the firm is first Mark, thank you so much, Rick, this is long overdue, and I really enjoyed it.
42:15
I was great. Thank you very much for having me. This is fantastic.
42:24
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 confidently thanks so much for listening