Craig Shapiro of Collaborative Fund joins Nick to discuss The Villain Test, Lessons from an OG at Sequoia, Spotting Superstars at Seed, Mastering Follow-on, and the Future of Consumer Tech. In this episode we cover:
- Mission-Driven Founders and Impact Investing
- Future of Consumer Products and Personalization
- Consumer Behavior and Building Long-Term Brands
- Data Privacy and Consumer Behavior
- Later-Stage Investing and Identifying Breakouts
- Hiring and Talent Development
- The Villain Test and Consumer Decision-Making
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0:17
Craig Shapiro joins us today from New York City. He is the founder and Managing Partner of Collaborative Fund, an investment firm and network managing over $1 billion in assets. Before founding Collaborative Fund, Craig spent a decade as a successful entrepreneur and operator. Collaborative Fund has invested in companies including Kickstarter, Reddit, Lyft, Sweetgreen, OLIPOP, WHOOP, and Dandelion Energy. Craig, welcome to the show!
0:43
Thanks, Nick, happy to be here. It’s
0:46
a pleasure to finally meet you. So I’d love to hear you know the quick backstory in your path to becoming an investor.
0:52
Yeah, absolutely, you know my so on the one hand, my journey has been pretty typical. You know, it started out as, you know, really, I had a passion for tech growing up and a desire to make a difference. I got started in the kind of startup world. I graduated school in 1999 so it was a really interesting time to kind of, you know, jump into the work world. I worked at a really early stage startup that was amazing. And that’s where I kind of fell in love with the entrepreneurial spirit and just, you know, building, we actually originally were working out of my apartment, and it was, it was kind of one of those, you know, you know, bootstrap stories, and that that company ended up getting acquired. This is now in 2006 and that’s why I started making angel investments. So it’s, it’s a on the one hand, it’s a pretty typical journey on the other hand. And actually, I think maybe more importantly, my my journey is, is maybe far from the norm. I think about so many successful VCs have kind of a very similar background. They, you know, went to Stanford, went to Harvard, wherever, you know, kind of studied engineering or economic maybe they worked at a bigger firm, like a Blackstone or Bessemer. And that’s, you know, very, very different from my path. I went to a great school, but I, you know, I went to Washington University in St Louis, and I studied, I didn’t know what I wanted to do, and I studied a bunch of things there. I studied architecture, history, computer science, and, kind of, like, found myself by accident, almost in the startup world. And when I started making angel investments, that’s really how I learned. I kind of learned by doing, you know, it was, it was trial by fire in my case. And I share that because I think there’s a lot of people out there who think they might not be qualified to be a VC investor because they don’t have that prototypical background, but I think that’s a huge opportunity. I think a lot of people, we want, and need more people in this industry with a bunch of different ideas. So, yeah, that’s been my path.
3:13
You know, I’ve often said that the gating factors to getting in VC are not the same as the success factors. Once you are in curious, how many angel investments did you make before you became more of an institutional
3:24
VC? I made about a dozen investments, angel investments. I was investing. I made my first angel investment, I think towards the end of 2006 and I made a handful of investments, maybe three, possibly four, in 2007 and then, and then did, did a bunch, maybe a half a dozen, kind of, you know, in 2008 when the market was actually the global financial crisis, and there was so much chaos, and I, that was when I really, really got interested. And so, in total, I probably made, you know, almost a dozen angel investments, awesome,
4:01
and talk about the thesis in sort of your investment approach at collaborative fun,
4:06
yeah, Our firm focuses on backing companies that live at the intersection of for profit and for good. It’s this kind of idea of that I came up with when starting the firm, and my belief is that there’s there’s kind of this magical sweet spot that exists when you create products or services that kind of balance the realities of a human’s kind of both self interest as well as their broader interest. And that’s where I think the best returns live, you know, I think the most, or the easiest, maybe illustrative example is Tesla. You know that the self interested person, maybe, historically, wanted to drive a Ferrari, you know? But maybe the person that was maybe. You know, much more focused on the broader interest might have driven a Prius. And I think an innovation like Tesla really met at the intersection of those two things. And I think that’s, that’s kind of the the, you know, core of our our thesis.
5:16
Do you find that that exists not only at the consumer layer, but also the founder. The founder sort of got a selfish as well as a altruistic motivation. You know,
5:27
it’s a great question. Short answer is, yes, I I saw this is a tweet from years ago, and it’s it. I don’t even remember who, who tweeted it, but it was the basic the premise of it was like something along the lines of the five levels of wealth. And it was, it was level one, no watch. Level two, Apple Watch. Level three, a Rolex level four, a Patek Philippe level five, no watch. And so it was, like, this full circle. And I think that’s, I think that applies, it like, when I read that, I was like, I think that applies to mission driven founders. You know, I kind of wrote, and I had, I had this post it note on my desk, but it says it’s a take off of that. But it’s the five levels of entrepreneurship, and it’s level one, hoping to change the world. Level two, hoping to double your valuation. Level three, hoping to get acquired for 10x level four, hoping for an IPO, and level five, hoping to change a world. So there’s this like, I think the mission driven element for the very best founders is kind of like core both, you know, at level one and, you know, level five. I don’t know if that makes sense, but it is something that I think about a lot. I love it. I love it.
6:57
You know, many have said that mission driven and impact companies are going to return less money to their investors. Of course, we’ve seen various impact associated waves green tech and, you know, in the aughts and the 10s, and you know now we’re in this moment where it feels a little different. But you know, is it going to be Groundhog Day again. Do you agree or disagree that mission driven impact companies will return less than their
7:27
capitalist counterparts? Yeah, it’s a good question. I mean, the short answer is, you know, strong disagree. I think that impact investing is is a correct idea, just historically kind of poorly executed. In fact, I think you know, as you sit down with some of the best founders out there, you see that they’re, they’re truly on a mission that they they’re not just building to create wealth, but they’re, they’re building something that that they believe is going to create a legacy. And I think in the venture world, those founders typically are attracted to firms and investors that have a track record of success and that that hasn’t necessarily aligned with more impact driven firms, but I think that’s an opportunity. So that’s that that was, in some ways, Nick That was the premise behind starting collaborative was, can we be more mission driven? Can we partner with founders in a way that aligns with their mission, but in a non sacrificial way. You know, it kind of goes back to that earlier Tesla example, like we’re not, we’re not asking our investors to drive a Prius where we’re scratching that itch of the you know, their their capitalist itch, if that makes sense,
8:56
how do you handle a situation where you meet a founder? It’s very compelling. You know, you’ve gotten it through a few meetings with them, and you can tell that their mission has societal benefit. But the more you get to know the founder, you know their ambition is of self interest alone. You know, how do you how do you handle that?
9:19
Yeah, it’s a good question. I you know, I think that, I think that, generally speaking, you’ve got kind of folks who are are kind of, what I would describe as, like the mission is kind of at the core of their soul, like they’ve decided, hey, I’m all in on this new idea, because I want to change the world. But they may actually lack the skills to build something to scale, and then maybe on the other side of that equation or spectrum, are people who have the skill and the capability, but the mission driven component is a means to an end. So they may reference, you know, some McKinsey Report, hey, I learned that, you know, you know, such and such industry, whatever you know battery recycling is, is going to be a $200 billion industry, and so, you know, I want to jump on that bandwagon. But generally, I find that people that don’t have that, that core mission, you know, at the you know, kind of deeply embedded within it’s more of an opportunistic piece. They give up early. You know, as soon as they run into problems, they’re like, why am I? How did I get, you know, so deep into, like, the battery recycling space, like it, you know. So that’s the trick. I think the pattern recognition, understanding where the balance is between those two, because I think investing it at either edge of that spectrum is where, where you can run into trouble. Interesting,
10:51
yeah, so I want to talk consumer a little bit. I know that you’ve invested in in many companies in the consumer space, and you have some expertise and experience there. So, you know, how do you think consumer products will look different in the future, you know, versus what we know today?
11:11
Yeah, it’s a great question. I think for me, something that that I think I think about a lot, and we as a firm, spend quite a bit of time on is this notion that consumer products are becoming much more personalized, that as technology makes its way into more of the products that were Purchasing, there’s opportunities to really personalize those consumer products. We see it obviously, you know, I don’t know that. Maybe a very simplistic example is, you know, 20 years ago, probably everybody was just taking the same vitamin or supplement, whereas today, you know, with with all of the testing, blood work, etc, you can get very granular in the types of supplements that you’re taking. And there they can even be, you know, specific to your, you know, your gut bacteria, your biome, etc. So I think that’s just one simple example, but maybe even a more mainstream one. I think about, you know, a brand like sweet green and and just how much energy and resources they put into really understanding their consumer and like catering to those needs, they obviously launched, you know, your protein plates, you know, caramelized steak, like it’s, there’s, You know, there’s new offerings that you know that I think were a recognition of, like, where consumer behavior is headed, and specifically down to, like, the taste profile of the people that are walking into, you know, their restaurant. So, yeah, I think personalization is is kind of where things are headed on the consumer product side,
13:00
interesting. So we both know that consumer tech has been down. Is this still an area you’re bullish on? And if so, why should we be optimistic as investors?
13:11
I am. I’m very bullish. You know, I mean the markets are, they’re funny in the sense that, you know, when things are good, everybody everything is too exuberant, and when things are bad, people are ready to, you know, cast it aside. You know, for dead. You know, I think about like when we originally invested in Blue Bottle coffee or even Sweetgreen for that matter. You know, the most common feedback that I got was like, that’s not a venture investment. You know, what are you doing? You’re supposed to be a tech investor. And and then, you know, into 2013 2014 like these, there was like a renaissance of consumer products, you know, thinking I couldn’t ride the subway in New York without seeing an ad for all birds or Casper or you name it. And valuations went up. Customer acquisition costs went up because there was more competition. And it just it. Things got way overheated. And now, as you pointed out, you know, a lot of those businesses have, have struggled, but I’m still when you, when you, when you zoom out and you look long term, I think we’re still at the at the kind of cusp of a massive, you know, positive trend in consumer tech. I mean, I look at chat, G, p, t as maybe the easiest example, but it this is, we’re, you know, very, very bullish at what’s coming down the line. How do you handle
14:48
or compensate for consumer behavioral changes? And specifically, what I’m curious about are kind of attention spans. Good. And, you know, we could talk about social media, for example, we can talk about fast fashion, right? People’s interests, people’s proclivities, people’s you know, attention span is just changing at a rapid pace, and that’s causing a lot of consumer brands to kind of lose, you know, their relationship with these long term embedded, sticky customers that come back again and again and again over time. Yeah, and we could argue cause and effect, you know, is it? Is it social media that’s rewiring brains, or brains wired this way and now just options are available for new things all the time, like, how does a company build a long term sustaining brand that you know, like an apple, that people just love, and go back to again and again, in this environment we now find ourselves,
15:53
yeah, yeah. Great question. I think there are a couple different ways. One is, as you pointed out, like an apple, where maybe they, there is, you know, there’s superior technology, and maybe you couple that superior technology with some closed system. So now, once you’re in the Apple ecosystem, you’re much it’s stickier, like, even if you were curious about Android or, you know, as an alternative to the iPhone. You’re like, ah, you know, it’s, it’s going to be a pain. So I think there is, there’s like, there are ways to build moats into consumer businesses. But from our perspective, the one that, you know, I think, gets us most excited is thinking about these businesses less as consumer products, because you’re right. Consumers are so fickle. But more is community. You know, these are, these are these are businesses that are building a community, and the product is almost tertiary to the community. Like, I think about maybe whoop as an example, I think less about, you know, the the band on my wrist and the hardware, but more about, or, you know, Strava is another, you know, but more about the community, like I’m connected to my friends on whoop we, you know, we compete to see, you know, who has the highest recovery, like those are. That’s a much stickier business model than just, you know, building a widget, selling it to a consumer who may wake up tomorrow and want, you know, something different. So it’s, I think the community piece is, is something that we we think about quite a bit as it relates to consumer technology companies love it. Do you have some frameworks that you use, or like buckets and categories within the consumer tech landscape that you kind of look at from an investment profile standpoint, yeah, we do. I mean, it’s going to sound silly, but we categorize consumer tech into three main buckets, it’s happier, healthier or more successful. And sometimes it’s two of those, but it’s a it’s a framework for kind of again, when you go back to that silly example that I gave about the different cars, Ferrari, Tesla Prius, happier in a consumer product, there is like consumer delight in some of the better consumer products, I think about like a Spotify healthier is, is, you know, whoop, I obviously talked about, but there’s, there’s many. There’s, you know, calm. There’s more ring, there’s there. There are many kind of new tools and products out there that are allowing consumers to live a healthier lifestyle and then more successful. It’s like people want to make money. I know that sounds silly, but it’s like this is when you think about human nature. People want to be happier, they want to live longer, and they want more money. And so backing something like a Kickstarter or a gum road like this is, you know, these are tools that allow creators to make money and and I think that’s kind of how we how we bucketize these things, is really trying to get to the root of like consumer desires. And then, you know, which of the products are are kind of meeting those needs. If that makes sense. Is there a point
19:17
at which data consumers freely giving away their data stops, right? Like we’ve we’ve had these moments. We’re all giving our data constantly to all these tech companies, whether it’s, you know, our Gmail clients or our iPhones, you know, they, they know a great deal about us. And a creepy moment happened maybe a year ago, maybe a year and a half, when all of a sudden we realized that they were listening to everything and then serving up ads based on something you said to your your wife or partner, right? And yet we’re still kind of complicit. You know, it’s like the value we’re getting from them knowing what we want seems to supersede, you know, the value. From, like, shutting that off. Does, does that? Do we? Are we ever gonna, you know, cross a Rubicon there and, like, get into a tough situation where consumers are kind of rebelling against the way they’re being manipulated? Or do you think this
20:14
kind of continues? I think it’s, it really is about the value proposition that trade off. I think, you know, it’s interesting you think about, you know, a browser, for example, you know, thinking about DuckDuckGo as an alternative to Chrome or Safari, and like privacy, I don’t know. I mean candidly, and this may be a bit contrarian, I think, I think consumers, if you create enough of a value proposition, I think consumers are actually going to be, continue to be very willing to to, you know, give up their data. I just do, you know, I think that it’s something that we all it’s a little bit it makes you cringe. I think there are moments of hesitation. But I think the realities some of these tools and some of the products that we use have become so integrated in our daily lives. And maybe they, you know, they increase convenience, you know, I bet you, if you asked, Hey, would you rather go back to using, you know, just, you know, regular cab, or taxis or or, or use Uber. But if you’re using Uber, you know, we need more of your data. I think people would make that trade all day long. So I generally am, you know, skeptical that, like you’re going to see this mass exodus from consumers, away from, you know, kind of, you know, giving up their data,
21:42
you know, Craig, I dread the day that, you know we’re on, you know, podcasts, and you’re a prominent VC, right? So you You’ve spoken on shows and you’ve been videoed, and I dread the day when our likeness and our voices are used to, like, manipulate family members or LPS or something, in some way, because I feel like it’s almost inevitable. But I don’t know how you put the genie back in the bottle. I mean, it’s, it’s, it’s probably too far gone, you know, just to transition a bit, I know that you invest out of a large opportunity fund as well. Talk about your approach to following on, you know, how do you think about size in selection? How do you think about tickets into subsequent round of fun, subsequent rounds of funding?
22:32
Yeah, yeah. We do. We do. We do invest out of a later stage fund as well, I would say as as a kind of just a overarching thesis for that later stage bond. You know, it may kind of sound silly, but the the mantra of get rich by being concentrated, stay rich by being diversified, I think we, we we push ourselves to be much more concentrated as we lean in to the later stages or later rounds of some of the companies that we’re either involved with or interested in. So it’s it. It is a it’s an opportunity for us to kind of really, kind of not just double down, but triple down into, you know, the best opportunities I so I’m despite all of the amazing blogs and hot takes out there, I actually think there are very few truths in the VC world, yep, but one of them is the Power Law, like that’s it’s it is, it’s real. And so I do think challenging ourselves to get better at identifying the potential breakouts and then having the kind of courage to focus our energy and dollars behind those in kind of a maximalist way is the purpose of that vehicle.
24:00
How do you identify the breakouts, and when do you find that you know or feel very strongly, right? We’ve debated this for many years on the show. I’d love to hear your experience. Yeah,
24:14
yeah. I mean, I wish I knew, but I would say, I would say, for us, one of the real key ingredients is reporting. I know that sounds kind of silly and a little bit of a throwaway, but companies who do a great job at communicating with their investors have such a massive edge, and the reality is, we’re not really looking for certainty around the opportunity. I think that’s what people perceive our job as being. But the reality is, we’re looking for certainty around the team’s ability to see things clearly, kind of adapt to the realities and then execute really. Ruthlessly. And I think once you have conviction around that it’s that’s where, you know, we have a much easier time writing a much bigger check and getting behind a company, because you’re never going to get certainty around the opportunity. There’s too many variables. The market changes so quickly. There’s a competitive landscape, etc, but you can, I think if somebody once told me that follow on investing is kind of the last legal way of executing insider trading like you if, if you have the right information, you can make a much more informed decision. So for us, that reporting component is key, and it’s, it’s really trying to understand the team’s ability to, like, see things clearly, even when things aren’t going well, by the way, but, but, you know, seeing them clearly, adapting and then, you know, making hard decisions. That’s kind of the magic equation for us. Do you
25:58
find that that’s a function of the duration that you’ve been working with a team, you know, is it after 12 months or 24 months? Or do you find that you usually have clarity on that at a certain stage, like, usually it’s at Series B that we kind of have signal on that, you know, is there, is there some variable that helps you
26:21
No, you know, it’s, it’s more of a well for me, at least, it’s more of a, an innate kind of, you know, characteristic, or just mode of operation, you know, I like, I pay attention to, you know, when founders are sending out investor updates, do they copy their investors, or do they blind copy their investors? And it’s a subtle, subtle difference, but there is some people are just more transparent and they’re more comfortable kind of speaking truth, even when it’s hard, and that doesn’t you know. Sometimes that can take some time, because they’re easy to build trust. And there’s, it’s a relationship, but sometimes people get there quickly. So it’s not really a stage thing, I don’t think as much as it is, you know, just the the chemistry of the founder and the operator, the the management team and and their ability to trust, you know, their investors, perfect. Yeah, Craig, what’s something you’ve done, like, on the selection side, right when it comes to, like, early entry into in first checks into startups, what’s something fun or innovative you’ve done to win a competitive deal? Yeah? Well, I mean, one fun one is, I don’t know if, I don’t know if you’re familiar with the company Gumroad to really, really neat one. I met Sahil, the founder, when he was still at Pinterest, and he had written about a side project that he was working on. I think he was 19 at the time, and I reached out to him cold and said, hey, I’m interested. I checked out his side project. And it was, it was, it was really interesting. It was kind of early, early, early version of what Gumroad is today. And he was like, Craig, I don’t, you know, I don’t even have, I’m just, I just did this over the weekend, like, I don’t have a company anyhow. Long story short, I was like, hey, when you’re ready to do it, I’d love to invest and he we had a call, I think, with his mom, because he was too young. He hadn’t even set up a vehicle yet. So we had a conference call with with Sahel and his mom, where she wanted to get to know me. And he spun up an LLC, I think it was called Little, big things. And I put the first check in. And about six months later he, you know, he decided to change the name and make a Gumroad, and he raised a proper seed round with a great group of investors and and he was off to the races, and that that business today, I think they’ve, they’ve, you know, generated over a billion dollars in revenue for for creators. So that’s a fun one. The other one that comes to mind, it’s not necessarily at entry, but we were in. We were we were competing for a deal recently, it was a slightly later stage, and I know the founder is a like myself, a huge dog lover. And so in our term sheet, we we committed to donating a portion of the proceeds, if you know, if and when the company is successful, to a senior dog rescue in San Francisco called Mud bill, and the factor, the founder loved it, and she ended up selecting us, even though she had term sheets at higher valuation. So that’s a that’s another fun one.
29:54
That’s amazing. That’s amazing. How do you talk to your team and how do you try and. Teach the skill of being a VC, you know, do you think it’s an innate thing that some of us have and some of us don’t, and, you know, if not, or even if so, like, how do you try and reveal some of these skills and things that have helped you select and win and and be effective
30:18
as a venture capitalist? Yeah. I mean, I do think, I don’t know, I think that so one of collaboratives, LPS is a guy named Tom McMurray. He’s, he was a general partner at Sequoia Capital back in the day, and he was, he worked on the series A for Nvidia and their investment in Yahoo and a bunch of just, you know, insane, just amazing experience. And what he has, I think it’s hard to articulate the things that he’s shared with me, but maybe, maybe two, two of the biggest learnings that he has kind of imparted on me. One is, he gives me permission to paint outside the lines. You know, he’s always encouraging me to to not just, you know, follow the straight and narrow, but to look for, you know, the tree trails, and look for the areas that there’s fresh, you know, fresh powder, and that’s where the Alpha lives. And I think most VCs, particularly younger VCs, don’t have that permission. They they’re nervous. And I think having someone give you that permission is like such a blessing. I think the other thing that I tried to share with the team that Tom, you know that I’ve worked with, together with Tom, is just learning to focus your energy on kind of your your core beliefs, like, what is it truly at your core that You believe and and kind of tuning out the noise. You know, it’s like, in a world where there’s so much noise, people are on Twitter, there’s it just is, you can’t go a day without some something crazy. I think, I think it’s hard sometimes to, like, to just put all the noise aside and also tune out. Like, what are people gonna think? Like, are people gonna, you know, when we invested in Ali pop, like, you know, people getting comfortable with being misunderstood? I guess maybe that’s the most succinct way to say it. So, yeah, that’s I try to, I try to impart that to the rest of the team, but I feel like I’ve been a beneficiary of that myself.
32:42
It’s funny, you bring that up. I was speaking with our team the other day about similar concept. I said, you have to be really comfortable looking dumb in the short term in order to look smart in the long term. Because the majority of the VCs that are out there, you know, they want to look smart short term. They want to invest in something really flashy. Post about it on Twitter and LinkedIn and LPs are thrilled, and they see the CO investors, and everyone’s very excited. But often the consensus ones are not the
33:15
best. I mean, it’s you, you articulated that so well, and it’s, it’s, actually, it’s an easy thing to say, but it does take a lot of courage, you know, for people to step out and and and get comfort with being misunderstood or being ridiculed or, you know, looking silly in the short term, like it’s, that’s, It’s like that that’s hard. You have to, you have to be, you have to have, I think, a comfort, like a security in, you know, in in your decision making, in yourself and those around you. Like, I think, you have to be in the right setting, where you don’t worry that your boss is gonna, you know, like it’s, it’s a, I really respect investors who who do things that make you scratch your head go, wow, you know that’s, didn’t see that coming, because it’s, it’s, it’s so much easier, like you said, to just pile into a round that lots of amazing People are doing, and you get, you know, everybody claps, and it’s, you know, that’s, that’s the easy path, but it is. It’s a kind of a reversion to the middle. That’s, that’s not where the Alpha lives. Craig, back in 2010 you wrote about buying Amazon and Netflix monthly for 10 years. Did you do it? And if so, how did it work out? Yeah, that’s I appreciate that you you found that blog post Yes is the short answer. I did. Wow, did. I didn’t. I didn’t execute it exactly as I had laid out in the blog post, because in the blog post, I talked about buying the same number of shares every month for. 10 years. But the, the easier way to execute it is just to fix it on $1 amount. You know, you can just cost average with the same dollar amount. And, yeah, and it, you know, back at the napkin that yielded, you know, roughly a 10x return. And, you know, it’s easy to look back in hindsight and be like, Wow, so amazing. You got that right. But I think what I was doing, one of the reasons that I wrote that blog post was the hypothesis of kind of taking a long term approach, almost like a venture style approach to the public market. It was like, Okay, if you instead of investing in a startup, if you bought two public market companies that had exceptional leadership in Bezos and Reed Hastings that were building, I mean, it was clear that the world was moving in a direction where a lot more commerce was going to be happening online, and a lot more media would be consumed digitally. Like those were not controversial ideas. It kind of gives that strategy the opportunity to compound, like you get to see you get to see it. And so, yeah, that was, that was a good one. That was, that was a lot of fun, someone that listens to their own advice. I knew that there would be a first on this podcast today. Craig, would love to hear your quick take on talent, right? We could talk about selection. We could talk about development of talent. There’s, I mean, it’s, it’s one of the most critical components in every startup, right, building an incredible team. What is one piece of advice that you share with your founders with respect to talent? Yeah, yeah. First of all, hiring is a superpower. You know, the the, I think the best entrepreneurs that I’ve worked with are the ones who are fantastic at hiring. It’s, it’s a make or break kind of feature of a founder. I think the only advice that you know is is somewhat, you know, kind of common. So it’s not necessarily novel, but the the that old notion of, you know, hire, slow fire, fast. It’s like, take your time when you’re making a critical hire. Really get to know the person and their capabilities and and if it’s not working, and if you know that in your gut, you know make, make the decision quickly. On the other side of that, it’s hard. I’ve seen too many, particularly, you know, in a time where there was so much money flowing into early stage startups. You know, people were reticent. They didn’t want the like, they didn’t want to lose momentum. They didn’t want morale to go down. Like, there were, there all these headwinds against kind of, you know, letting go of people who are underperforming. So that’s, that’s kind of the, like, higher, slow, fire, fast. I think is, is, is one of those silly, you know, monikers. But I actually think it’s, it’s, it’s really good advice. Craig, what is the villain test? I came across this. Yeah, the villain test. The villain test is, it’s, it really is a kind of a provocative way of evaluating a product’s viability and kind of the market size for that product. You know, when we meet with founders who are building products that, particularly in the consumer space, you know, they talk a lot about innovation, or they may talk about sustainability, or, you know, some other feature, but it kind of dovetails back to what we talked about earlier in this conversation. What matters is, does it actually scratch an itch for that consumer like humans want to live better lives? We may not want to admit that, but we’re, you know, we’re inherently self interested, and so recognizing that isn’t just okay, it’s actually kind of necessary, you know, you think about, you know, I feel like a broken record, but that Tesla example, it’s like a whole lot of people raise their hand the Prius is such an amazing and I, you know, It’s electric. But they didn’t, they didn’t feel awesome going and picking up their date in a Prius, you know, whereas, you know, it’s, you know, stepping foot in a Tesla, you feel bold and creative and sexy, like there’s that the villain is a is a really strong kind of component to consumer purchasing decisions. And there’s, I think there is a segment of the market who is willing to make sacrificial decisions to do good in the world, right? I would say maybe my wife is a good example. Of that, like if it’s if she perceives something as being better for the world, she’ll, she’ll pay more for it, or she’ll, you know, she’s okay with sacrificing. Most people aren’t. They may say they are, or they may want to, but when push comes to shove, you know that villain, there’s, there is a, there’s a real component to recognizing that self interested piece of the equation. So that’s the that’s a kind of a fun way of, you know, trying to articulate it. The villain test is a fun way to articulate the recognition that, you know, humans make decisions based on self interest. Love it, yeah,
40:41
Craig, if we could feature anyone here on the show, who do you think we should interview and what topic would you like to hear them speak about? I
40:47
mean, it’s an impossible question. There’s so many interesting people out there, you know, I don’t know. I love I just reread being digital by Nicholas Negroponte. It’s a book. I don’t know when he originally wrote it, but it was it. There was a long time ago. Had to have been in the mid 90s. And I’ve read it, you know, probably three times. And I feel like every time I read it, I learned something new. But, you know, I think it would be fun to hear from somebody who was being asked to predict the future. Look into the future. You know, some of the things that he talked about back in the mid 90s have he was spot on, and other things still feel very out there. So I don’t know. I think some of the OGS, some of the people who were, you know, were really kind of around at the advent of a lot of these technologies would also, I think it would be interesting to hear their perspective on AI and just what’s happening in today’s world.
41:50
What was the name of that book? Craig, it’s being digital. Being digital. Okay, awesome. Craig, do you have any habits, tactics or behaviors that are a force multiplier. I
42:02
mean, I don’t think so, sadly, but, but maybe walking, I just, I’m a huge, you know, I used to walk. We used to live off a Prospect Park in leopards gardens, and I would walk to work every morning, which was, you know, something like a four and a half mile walk, and I would walk home at the end of the day, and people thought I was crazy. It was like, why aren’t you taking the subway, you know? But I do think that is, it’s an opportunity for me to think, I think better when I’m moving and and it just is, I think it’s helped my productivity, maybe more than any other you know, tool. So yeah, 222, votes for walking from me.
42:52
Love it. And then finally, here, correct, Craig, what is the best way for listeners to connect with you and follow along with collaborative
42:58
fund? I’m old school, so the best way to connect with me is on LinkedIn and you know, and I think that’s also, you know, if you’re interested in collaborative that’s, that’s kind of the the right spot to hear the latest and greatest.
43:12
Well, Craig, it was a huge privilege to finally do this interview. Congrats on all the success and the amazing logos, and looking forward to running this back in in five years, and hearing about, you know, companies like Gumroad and others that have achieved even greater heights.
43:28
So thank you amazing Nick. Thank you so much. This was a lot of fun.
43:37
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, a compliment 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.
