On this special segment of The Full Ratchet, the following Investors are featured:
- Pejman Nozad
- James Joaquin
- Rick Heitzmann
We asked guests to tell the most important lesson they’ve learned in their career.
The hosts of The Full Ratchet is Nick Moran 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:
0:19
Welcome back to TFR on today’s special segment, we ask guests to tell the most important lesson that they’ve learned in their career. Here’s a segment called Lessons Learned.
0:35
On today’s special segment, we have Paige mon nozad of pear. Paige Mon, can you tell us a story, highlighting a critical lesson that has changed the way you invest.
0:44
I think the more you do, you realize, the more you don’t know. I think I had I was for many years. I was chasing certain type of founders. I learned that each founder, each sector, is different. So I go with the no assumption to evaluate founders,
1:03
what did you find yourself looking for previously?
1:06
It changes. When I started, it was kind of the Google era, I thought. And this is the mistake I made, like anybody with PhD would be a great founder, and this wasn’t me. Every VC was chasing, who’s the next Sergei and Sergey Brin and at Google, and then things change. Today, for me is what I told you, your relation with the market, your ability to build the team, your vision, and you could have variety of different skills that for me wasn’t really clear. These are the best skills you should have, but it’s a combination. If you look at our founders, there’s one thing common among them, they’re really, really good people. So that’s for us, we have a very high bar integrity, empathy and being good to others and really doing it for the right reason. You
2:05
on today’s special segment, we have James Joaquin of obvious ventures. James, can you tell us a story highlighting a critical lesson that has changed the way you invest?
2:15
Yeah. Let me share, you know, a lesson I learned around co founder breakups. I’ve been doing this long enough that I’ve seen a few examples of the core two or three person co founding team essentially getting a divorce, right? And these are really hard when they happen. And in one case, it actually killed the company, it destroyed the company, that these two founders had such a bitter breakup. So what I take from that lesson is that now in every deal that we lead at obvious we add what I call the Buddhist monk clause to our investor documents. And the idea of the Buddhist monk clause is that instead of co founders being hardwired into board seats forever in perpetuity, our clause says that those those board seats, which are controlled by the founders, the person in the seat, needs to Be a then active, full time employee or consultant to the company. They need to be part of the team and the business. And the reason this is important, not just for us, but I think it’s important for founders, is this can protect a co founder if her co founder, one day decides I’m going to move to Tibet and become a Buddhist monk, right? That co founder should no longer still be serving on the board of that company. And I know that’s a hyperbolic metaphor, moving to Tibet and becoming a Buddh monk, but I think you get the idea, Nick that it’s bad for all shareholders if you have two co founders that are that are fighting, that are have some bitter acrimony, and they’re on the board of a company together, it’s not going to go well in terms of the governance of running the business, and so we try to put this prophylactic in to prevent that edge case.
4:11
How receptive are founders to that at time of investment?
4:16
It varies. I think it’s been a fight in some cases. I think the company Council often pushed back on this. You know, the Silicon Valley lawyers do a great job of advocating for founders and for pointing out potential risks, and they know that the harder they do that the longer the legal back and forth is going to be, and the more fees they’re going to generate. They’re going to generate. So some founders understand that, some founders don’t, but in general, I’ve had great success with this Buddhist monk clause, because I think it really does protect each co founder if their co founder decides to bail. You
4:58
know, it’s funny, because I feel like. 50% of the time, five, zero. We get pushback on vesting schedules, but I’ve never in 50 deals. I’ve never had a founder that regretted the vesting schedule, and I’ve had many that were very thankful it existed.
5:14
I mean, and it sets a precedent right, if they’re not leading by example, how are they going to then hire their COO or their VP of sales with a vesting schedule right
5:30
on today’s special segment, we have Rick heitzman of FirstMark. Rick, can you tell us a story highlighting a critical lesson that has changed the way you invest? I
5:39
generally think, you know, I’ll go back to Ben Silverman, where, you know, I remember the company, although started in New York, moved out to the Bay Area, first in the Palo Alto, then in San Francisco. So, you know, as as I was still in New York, I’d fly out to the board meetings and be able to quickly, you know, review all the materials. And I probably reviewed the materials on the weekend, took some notes. Then, you know, you’re brushing up to, you know, hopefully be prepared to go through it and you know, and therefore, as you’re getting ready to go, you’re taking all these notes, and you think you have a complete perspective on what do you think is going to happen and where? And it just so happened at the beginning of the meeting. I think because I was on the airplane so much, I kind of had lost my voice, and because I lost my voice, I was like, Hey, I’m not going to jump in on this. I’m going to I’m going to sit back and let them talk. And I realized that I was wrong. I was completely wrong, that I misconstrued probably some of the data and therefore drew the wrong conclusions. And I think the important thing you have to learn as especially as a board member, where you know you’re not leading the bus, you’re hopefully providing some guidance and some feedback, is, you know, you know, take time. You know, be prepared. But then listen before you jump in with any conclusions, because oftentimes jumping to conclusions does not help anyone.
7:07
That’s great advice.
7:14
That will conclude this installment of investor stories. If you’re enjoying the program and would like to see it continue, take a moment and leave a five star review in iTunes. Okay, that will wrap things up for today until next time over. Prepare, choose carefully and invest confidently. Thanks for joining me.
