On this special segment of The Full Ratchet, the following Investors are featured:
- Jeff Bussgang of Flybridge Capital
- Nnamdi Okike of 645 Ventures
- Charles Hudson of Precursor Ventures
We asked guests to describe the biggest change to their investment philosophy over the course of their career
The host 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:
0:18
Welcome back to TFR on today’s special segment, we ask guests to describe the biggest change to their investment philosophy over the course of their career. Here’s the special segment called rewriting the playbook.
0:37
On today’s special segment, we have Jeff busgang of flybridge, how has your philosophy or approach to investing changed over the course of your career?
0:45
I guess the biggest change for me is that I feel like I have a better sense of what the bar really is for exceptional founders and exceptional companies in my early years. And this is true. I think of many VCs, I had only a certain number of swings, and I had been a part of building two companies that had been successful. I had been around many successful founders, but I didn’t know what truly exceptional look like. I didn’t know what not you know again, a 10, 10% 20% 30% better founder, but a 10x founder, 100x founder, look like. And as you know, power law in our business means you only need to find one or two or three of those, but you want to pursue 30 or 40 of them in a portfolio, because things don’t go exactly as you hoped, and hopefully one or two of them play out. So I think my my bar has just gotten higher and higher over time and and I know that I’m more discerning about the founders that I back as a result.
1:43
What’s a pre investment insight there on the 100 Xers, share all your best secrets with us.
1:49
Jeff, there’s a certain there’s a certain combination of impatience and stick to itiveness that founders, great founders, have. They’re just really impatient to win, and they’re super stubborn about sticking to their their mindset and their approach. I have, I have a running joke with with one of my partners, that I think my best founders are the slowest to respond to me because they’re so focused on what they’re doing and so locked in that they don’t have time for distractions, and they don’t, you know the you know, even if their board member wants to ask them a question about this or that, they’re just locked in and they’re just really impatient. You know this, this is a world and a business where you got to move fast, and if you don’t have founders who have that high clock rate, they’re going to fail.
2:42
You in today’s special segment, we have namdi okike of 645, ventures. How has your philosophy or approach to investing changed over the course of your career?
2:55
Yep, so going from being a growth stage investor in the first half of my career to now being an early stage investor, I really had to evolve. And I think I went from an investor that primarily focused on financial traction and metrics as well as kind of known market size, to an investor that had to really focus much more on on people, as well as having a very open mind around market opportunity. And so if you think about how 645, analyzes deals today, for example, take market sizing. We will size a market, but we are very open to saying, look, the market may be very small today doesn’t mean it’s not going to be very large tomorrow. We look a lot more at market growth than absolute scale and size, and I think that’s a learning I had seeing some companies get to very large scale in markets that we’d sized as quite small. I think the other thing, as I mentioned with founders, is really focusing on founder quality, and some of the subjective elements of founder quality. As a growth investor, you kind of take for granted that, hey, like the company got to extra revenue, the founders must be good, right? Or the folks running it must be good, but when you’re investing at the seed or even the series A it’s very highly dependent upon founders, and so we spend a lot of time getting to know founders and really trying to figure out what makes them tick, and looking at some of those subjective qualities that you could not see from the outside, looking at perfect
4:22
you on today’s special segment, we have Charles Hudson of precursor, how has your philosophy or approach to investing changed over the course of your career?
4:30
Wow, I think the biggest change is when I started in venture I was mostly a markets person, and now I’ve become mostly a people person. And every year this like, right now the slider is like 70% people, 30% market. Most of the companies we invest in don’t have a product, so product is just set to zero. And every year my team goes, Why don’t you just go 100% on people? And I tell them, with a million dollars of a pre seed round, the idea does count for something. You have to have some idea of what you want to build. But we. Started doing more directional people bets with smaller dollars, like, here’s 150 or 250k to go, come back to me with a good idea and idea that I could put more money by and we’ve started doing more of that, because every year, I’m more convinced than ever at at early stage that it really is the people love it.
5:22
You 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.
