Floodgate

“It's thirty-five million dollars, and my great idea is that you should drop out of your PhD program and be my co-founder.”

“Brand can be proprietary, but I think it's very hard to assess whether or not you have brand at the very, very early stages where we invest, and so brand is more of an existence proof in my mind rather than something theoretical that you can build over time.”

“Product market fit is not just about whether or not it sticks with any kind of market. That market has to be incredibly sizable, and that market also has to have such a powerful need that it literally pulls the product out of the hands and Of the company.”

“What we found is that at five hundred million dollars and greater, there is roughly somewhere around 25 companies Plus or minus five to 10 that exit every single year, and those are the companies that really actually move the needle for venture capital.”

“And in fact, if you look at Zimride, it was an extraordinarily capital efficient business. And in fact, they were extraordinarily capital efficient until they were in competition with a company that had a huge budget to play with, and so it was a matter of sur…”

“A lot of times that the founders, when they're picking their opportunity to go start a company around, they rush the pick and get straight to doing the product, and a lot of founders would be better off if they didn't rush the picking part of it, just like a l…”

“We've observed that the best companies that we've invested in have been pretty crazy at the time you had to decide, right?”

“No, we'd never be that big. I don't think we'll ever be as big of a fund as like the Series A guys.”

“The number one reason I pass on companies is I don't think the idea is worthy of the founder's talent.”

“When I would talk to entrepreneurs, they literally couldn't raise a million dollars in Silicon Valley. They could either raise a tiny amount of money from angels and friends and family, or They had to go straight to a five million dollar series a round with a …”

“We have a rule at floodgate where there's no voting system. And for a deal to happen, someone has to pound the table.”

“The earlier you invest, the more important picking skills become, right? So if you're If you're investing later stage, branding obviously matters a lot because you're going to have a company that's becoming a more obvious breakout win, and you're going to be c…”

“The problem with most firms is that they have less than or equal to one really good investor, and then they force the, what's called the limited partners or the LPs to buy the bundle of everybody else who's not a good investor.”

“In our sector of the business, everything is so crazy, early, risky, and maybe even legally ambiguous. It's hard for me to say that, that our very best wins have been hotly contested and competed for, at least at the time we invested.”

“We start out saying, okay with the beginning of a fund, everybody's going to roughly have a certain size checkbook. And the reason that we do that is we want everyone to understand that when they make an investment, that we all have to be accountable for our d…”

“You know, I would say that I think the way the floodgate describes it is probably accurate most of the time. It's really difficult, I think, for companies to be able to transition through these periods, and if you've gone out and talked to a bunch of investors…”

“So I love Mike Maples from Floodgate. He's been, I've been on a couple boards with him. What he does is so well, he has high empathy for CEOs. It seems in every board meeting, he says at least one thing that's game changing.”

“A startup isn't a company because it starts out dead and has to prove it's alive. And so I like to say there's a sequence of breakthroughs. There's the insight breakthrough, and then there's the value proposition breakthrough, and then the growth breakthrough.”

“I like to assert it should be a minimum three years.”

“And so I think fundamentally in venture, you can do more with scale or you can do less, but better. And you just have to decide.”

“And then I came up to California to see what was happening in California this about 2004, and I decided if I was going to be in venture, I needed to do it in California. So I came up here without a job, and my kids were in school, so I'd fly up every Sunday ni…”

“I believe that you can't really skip a step. You got to have an insight before you do customer development, and you got to do customer development before you do smart growth. And so to the extent that raising too much too soon Causes people to skip those steps…”

“And I think that the other extreme would be what I call the joy of finding greatness. And in the joy of finding greatness, you say, look, I'm going to be comfortable with the fact that I'm not going to see every great deal. I'm going to be comfortable with the…”

“Yeah, and I think probably more often than not, an insight will be wrong.”

“Our best founders come through recommendations from our existing founders.”

“The thing that we were betting on was the Facebook Connect, to be honest. We thought that that was going to create more trust in this network, even within Zimride. Now, that was the thing that we thought was the real change element. It turns out that wasn't, r…”

“None of us had a boardroom. So I didn't have a boardroom. John and Logan were working in this one room office. I think Manu Kumar at Canine Ventures also, like, we're all just being scrappy at the moment. So we need a place where we can meet as a board to go o…”

“At the seed stage, we often say we're not investing in a company because a startup isn't a company. It's a set of insights. It's a development of a set of secrets that you have.”

“So when I invested, I think there were five of them in a one room office in Palo Alto, and now we're an organization of a few thousand people.”

“The last two investments that I've done, I had a month-long process through which we got to know each other, and it was a commitment to one another”

“We made our investment in 2010, and the actual change didn't happen until 2012.”

“So we're in July. I've only made two investments at the seed stage.”

“I only make Somewhere between three and six investments every year.”

“What we do at Floodgate is seventy-thirty”

“85% of the founders that we worked with, and I feel really lucky, we made good choices of who we decided to go into business with, but 85% of the founders were just like on it, and we were just like taking care of business, right, and not wasting time on the s…”

“When you're on too many boards, sometimes you don't learn fast enough. You're not present and mentally awake enough, and you're not incorporating lessons quick enough.”

“Yeah, and I mean, like that's not the decision I would have made, right? I'm not gonna judge who made what decision, but my view is that it's not my money. And you know, if I was the Stanford Endowment, if I was you know, Sloan Kettering, what would I want Flo…”

“We have a partner dedicated just to follow on investing, and so the person that writes the first check Doesn't get to decide who writes the follow on check.”

“I believe that the outliers usually start out at a low price, because they're outliers. Because they're non-consensus and right. People tend to believe that the world is divided between low price deals with low upside and high price deals with high upside. I d…”

“As much as we loved Lyft and Okta, you know, in those years leading up into twenty-twenty, we're like, okay, we need to monetize these things, right, because there's a lot of excitement about tech stocks right now, and these prices are really high, and it does…”

“And so, you know, I think that part of why people want mulligans on their twenty-twenty-one funds is they were investing their funds in an eighteen-month cycle. And, you know, what they should have been doing is investing in a five-year cycle because the, ever…”

“Yeah, for me, the job is sort of like, you know, when you're in the Galapagos Islands and you spot some, Finch with a weird looking beak that nobody's ever seen before. Like, I think that's kind of what Eric and I try to do, right? We're trying to, but like, i…”

“When you're on 22 boards, it's blowing up all the time. There's always something totally screwed up. You're not as awake to the possibility of what Pinterest could be when you get pitched by Pinterest, right?”

“No. Actually the reverse is true, but I don't know if that would still be the case.”

“Our biggest failures have been failures of imagination. You know, it's like when I passed on Airbnb, or you know, what, what's another one we passed on, we would have done really well. Data dog.”

“We were better, we're better at a hundred fifty million than we were at 75.”

“We had a dedicated partner, Iris Choi, do follow-ons and that's all, and she's accountable for follow-on returns, which more, more seed funds should do.”

“I've never made money or lost money based on common or preferred ever in the ones that worked”

“Similarly, in 20, 21, I only made one investment the whole year this company Hadrian. And why is that? Well, I just didn't find any companies that met my criteria.”

“Twitter was a little over 300 X and gets all the credit for Lyft, that was like about two, 205 X what else? Applied. Applied is probably encroaching on a hundred X in the first check. Twitch got close, but not quite there. It got to 94 X.”

“Probably about as low as I would go as half a million bucks.”

“Applied was expensive. It was 40 post.”

“Ann funded Lyft at five and a half million post money.”

“We settled on 70% up front, 30% in reserves.”

“We raised a pre-seed from Peter Thiel, and Floodgate, and then our seed from Mike Volpe at Index”