Oct 10, 2016 · 30m · 20vc
20VC: Floodgate's Mike Maples on What Makes Category Kings, What Most Venture Funds Do Wrong When Hiring & 'The Dance Of Product Market Fit'
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In this episode of The 20 Minute VC, Floodgate Founding Partner Mike Maples shares his foundational venture capital philosophies on seed-stage investing, defining Category Kings, and navigating the dance of product-market fit. He discusses Floodgate's unique governance structure, high-conviction decision-making, and long-term vision for backing non-consensus, transformative startups.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 26.7% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 3.9 Guest disagreement 1.7 Harry pushing back 1.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:21 Mike counters Harry's access-centric thesis
Mike directly refutes Harry's premise that venture is purely an access game, explaining why picking remains the primary value driver at the early seed stage.
Hardest push from Harry ▶ 18:58 Harry pushes back on picking versus accessHarry explicitly challenges Mike's focus on picking by putting forward his contrarian view that top-tier returns are driven almost entirely by allocation access.
Biggest teaching moment ▶ 19:21 Distinguishing LP access dynamics from seed GP pickingMike educates Harry on how venture dynamics vary by stage, explaining that while access matters for LPs and growth funds, early seed investing relies heavily on picking non-obvious ideas.
Harry holds his own ▶ 18:58 Harry asserts contrarian industry viewHarry demonstrates deep industry context by bringing up the power-law concentration of top 1% funds to challenge the guest on whether picking still matters.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| The Origins of Floodgate and Early Seed Gap | 1 | 3 | 1 | 0 | Harry asks introductory questions about the founding of Floodgate and the early seed gap. Mike explains how structural shifts lowered startup costs, establishing the 500k is the new 5M thesis. | |
| Decision-Making Dynamics and the Table-Pounding Rule | 2 | 4 | 1 | 1 | Harry inquires about decision-making shifts when moving to a institutional fund format. Mike outlines common venture firm failure modes like groupthink and details Floodgate's table-pounding rule. | |
| Capital Allocation, Accountability, and Follow-On Strategy | 3 | 4 | 2 | 2 | Harry offers his own perspective on bridge rounds causing anxiety. Mike educates on capital allocation discipline and distinguishes true bridges from bad bridges that lack clear milestones. | |
| Team Building and Culture Alignment at Floodgate | 2 | 3 | 2 | 0 | Harry references team member Iris to ask about Floodgate's hiring practices. Mike explains why hiring for domain expertise is a mistake in venture and advocates for upfront cultural alignment. | |
| The Dance of Product-Market Fit and Early-Stage Picking | 6 | 5 | 3 | 7 | Harry openly challenges Mike's core thesis by arguing venture is about access to top funds rather than picking ability. Mike reframes the premise by clarifying how stage and investor role change the access versus picking balance. | |
| Defining Category Kings and Customer Spending Behavior | 3 | 5 | 1 | 1 | Harry brings up category creation using Snapchat as an example. Mike provides a framework on how category kings reframe customer mindset and alter spending patterns. | |
| Quickfire Q&A: Key Books, Lessons, and Long-Term Vision | 3 | 3 | 2 | 2 | During quickfire questions, Harry asks if Floodgate plans to scale up to hundreds of millions in fund size. Mike refutes this trajectory, preferring to remain focused on micro VC performance. |
Statements from this episode (15)
Maples: 2007 Silicon Valley Founders Couldn't Raise $1M Seed Rounds
“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 …”
Maples: Most VC Funds Have at Most One Great Investor
“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.”
Maples: Top Seed Investments Look Irrationally Crazy at the Start
“We've observed that the best companies that we've invested in have been pretty crazy at the time you had to decide, right?”
Maples: Invested in Twitch When Justin Kan Wore Camera Cap
“Twitch.tv started out as justin.tv and literally I invested when Justin Kahn walked into a coffee shop with a camera on his baseball cap with wires going into a backpack.”
Maples: Floodgate Rejects Voting Systems, Requiring Table-Pounding Conviction
“We have a rule at floodgate where there's no voting system. And for a deal to happen, someone has to pound the table.”
Maples: Backed Cruise Over Internal Pushback Because Kyle Vogt Made Him Money
“I came in and I said, I want to do this cruise deal. I think that Kyle's really smart. He made me money on Twitch and I, you know, I've decided I want to do it. And a lot of people read me the riot act and said, this is crazy.”
Maples: Floodgate Assigns Individual Checkbooks to Partners at Fund Start
“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…”
Maples: Most VC Bridge Rounds Are Actually "Piers to Nowhere"
“Most bridges really aren't bridges. They're what I would call a pier. So, you know, sort of like, yeah, we need more money. I'm like, a bridge is like when somebody's come in and said, I'm going to put money in this company, but we're out of money until the de…”
Maples: Founders Fail by Rushing Opportunity Selection to Build Product
“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…”
Maples: Early-Stage Venture Requires Picking; Late-Stage Relies on Firm Branding
“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…”
Maples: Floodgate's biggest venture wins were not competitive deals when funded
“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.”
Maples: Category Kings Build Movements Beyond Employees and Customers
“Category kings are trying to create not just a company, but they're trying to create a movement. And they're trying to enlist people to their cause outside of even the employees of the company, and outside of even necessarily just the customers of the company.”
Maples: Category Kings Capture 80% of Total Market Profits
“If you're the king of a category, you change the way a customer spends their money, which is ultimately why category king gets 80% of the profits.”