Jun 8, 2020 · 36m · 20vc
20VC: Lightspeed Partner, Merci Victoria Grace on The Future of Collaboration Tools, Bundling vs Unbundling, Synchronous vs Asynchronous & What It Means To Productise The S*** Out of Venture
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Merci Victoria Grace, Partner at Lightspeed Venture Partners, exploring her transition from Head of Product at Slack into venture capital. They discuss strategies for productizing venture capital workflows, key product and evaluation metrics for collaboration software, and tactics for building passionate bottom-up user communities.
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 41.6% of the talking time here. How this is scored →
Harry as informed peer 4.0 Guest teaching 3.9 Guest disagreement 1.7 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 25:10 Merci counters Harry on Twitter authenticity and taking public stands
Merci directly pushes back against Harry's approach of avoiding controversial tweets, arguing that taking principled public positions creates strong affinity and support.
Hardest push from Harry ▶ 8:01 Harry presses on compressed timelines cutting into evaluation timeHarry challenges the fast-paced deal environment, asking how VCs can maintain thorough evaluation when decision timelines are compressed.
Biggest teaching moment ▶ 20:39 Merci lays down exact benchmark metrics for SaaS winner identificationMerci delivers an authoritative masterclass on quantitative benchmarks, specifying that top productivity tools require >60% DAU/MAU ratios, >140% NRR, and >60 NPS.
Harry holds his own ▶ 12:59 Harry articulates specific deal-loss dynamics from personal experienceHarry showcases his own experience in VC deal-making by detailing post-mortem feedback where lose conditions stemmed from execution speed rather than relationship quality.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Merci Victoria Grace's Career Journey to Venture Capital | 3 | 2 | 1 | 1 | Harry introduces Merci and asks about her path from operating at Slack to venture capital. He cites advice from Peter Fenton about getting into VC directly, while Merci shares her background as a founder and product leader. | |
| Transitioning from Angel Investor to Institutional VC | 4 | 3 | 1 | 2 | Harry asks insightful questions regarding the differences between angel investing and institutional venture, as well as the compression of fundraising timelines. Merci explains the immense scale of institutional deal flow and her approach to evaluating founders quickly. | |
| Internal Deal Workflows, Decision Making, and Tech Stack | 4 | 3 | 1 | 2 | Harry probes into the exact tech stack and process Merci uses to run deal evaluation, asking about specific apps like Evernote or Roam. Merci details her structured workflow using Google Docs, Slack channels, and Excel. | |
| Conducting Deal Post-Mortems and Learning from Lost Deals | 5 | 3 | 1 | 2 | Harry shares his own experience and feedback from losing past deals due to lack of speed, offering an informed perspective on VC competition. Merci outlines her retrospective process and how founder feedback shapes future conviction. | |
| Early Founder Engagement and Operator Network Dynamics | 4 | 4 | 2 | 3 | Harry questions how VCs can engage founders early when founders prefer to focus purely on product, and frames the macro debate on bundling versus unbundling. Merci outlines her strategy of offering high-value operational sessions to build relationships early. | |
| Synchronous vs. Asynchronous Communication Workflows | 3 | 5 | 3 | 2 | Harry asks about why collaboration tools fail and how to navigate agency problems. Merci educates on the common mistake of selling to managers rather than individual contributors who drive true organic adoption. | |
| Attributes of High-Performing Collaboration Tools and Core Metrics | 5 | 6 | 3 | 3 | Harry demonstrates strong knowledge of SaaS evaluation metrics and challenges whether VCs should give public opinions on Twitter. Merci schools on top-tier quantitative benchmarks such as 140% net revenue retention and over 60% DAU/MAU ratios. | |
| Post-COVID Growth Sustainability and Market Consolidation | 4 | 5 | 2 | 2 | Harry asks how to differentiate short-term COVID spikes from sustainable growth and whether a graveyard of tools is coming. Merci clarifies that COVID actually delayed the expected consolidation wave by accelerating baseline remote needs. | |
| High-Touch Onboarding Strategy and Customer Service Advantage | 4 | 4 | 1 | 1 | Harry leads a lighthearted quickfire section covering onboarding strategies, books, personal anecdotes, and diversity in venture capital. Both speakers maintain a highly warm and collaborative dynamic throughout. |
Statements from this episode (25)
Silicon Valley actively rewards certain types of startup failure
“Silicon Valley really rewards some types of failure.”
Merci Victoria Grace grew Slack from 500K to 6M daily active users
“There I became the head of product and I started and ran the growth team in the effort to drive our daily active users from 500,000 to over six million in about three years.”
VCs lack operational leverage and must aggressively filter their time
“In most of my working experience, I've been a leader and a manager and someone who had not just the leverage of a team around her, but also the leverage of the software that we were building, and so in venture, you have to be incredibly choosy with how you spe…”
In venture capital, founders are customers and investors are the product
“In venture, founders are customers, and the core loop is really similar. Evaluate, compete, and adapt. But when you're a VC, the product you're improving is really yourself and how you work with your firm.”
Merci Victoria Grace prefers Excel over Google Sheets for deal evaluation
“Depending on the stage, obviously we'll use Excel. Less likely to use something like Google Sheets just because Excel is so powerful.”
Harry Stebbings lost two investment deals by moving too slowly
“I've lost a deal, and it's happened twice, and the feedback was actually the same for me, which was great relationship with me. Trouble was, I wasn't there quick enough, and so, although the relationship was great, they had deeper, more trusting relationships …”
Investors should offer immediate operational help to engage early-stage founders
“One of the things that's been helpful for me is I have a lot of very relevant operational experience, and so I can say, hey, let's do a working session on product market fit. I would love to talk to you about go-to-market things that are really low effort for …”
Venture funding must rely less on exclusive operator networks
“I hope that venture funding becomes less of a closed circle, and actually that these networks become less important, and that access to this life-changing financial tool is democratized for many more people who didn't have the incredible luck That Jana and I h…”
Future startups will address the needs of an increasingly traumatized workforce
“So I think the companies that get started in the next years will be companies that wouldn't have been possible if not for this seismic shift. They're going to be responding to very new needs of an increasingly traumatized workforce.”
Bundled software only works for customers with stable, predictable needs
“A bundle is a perfect product for customers with a stable, predictable set of needs.”
The arc of the future of work bends toward asynchronous communication
“But on the whole, I think the arc of the future of work bends toward asynchronicity. It enables people to work together across time zones and countries, and we're really a global workforce now.”
Poor go-to-market execution is the primary cause of collaboration startup failure
“In my experience, the number one reason that collaboration companies fail is they have a poor go-to-market despite having a high-quality product.”
Collaboration startups fail by targeting managers instead of end users
“I think the next thing that I see is selling into managers instead of individual contributors. At the end of the day, it can be counterintuitive to approach it this way, but the end user is your customer, even if they're not the person who's taking out their c…”
Collaboration software growth relies on account expansion over top-of-funnel acquisition
“Strong revenue growth in this sector really comes from expanding within customers you've captured, more so than just the top of funnel.”
Great collaboration tools need 60% DAU/MAU and 140% net revenue retention
“Over 60% of your monthly active users should be daily active users. You should have a power user curve showing customers using the product every workday and net revenue retention of over 140%.”
Revenue retention is the single best metric for collaboration startups
“If I had to choose one metric for collaboration and productivity companies, it would be revenue retention, because that tells the entire story.”
Being good at Twitter is a competitive advantage for startup founders
“Being good at Twitter is a competitive advantage even though it sounds kind of silly. So, you know, a lot of organic growth flows through the conversations taking place on Twitter, and that's largely because that early core customer of a collaboration startup …”
Superhuman and Roam Research built growth via Twitter superfans
“Super fans of all these products, you know, the cult members of these cults, will show up and overwhelmingly recommend their tool, and I know Superhuman, for instance, benefited a lot from that, and it looks lately like Rome Research is really benefiting from …”
Sharing contrarian opinions on Twitter yields positive user engagement
“There's being mean on Twitter or attacking someone on Twitter, and I think that's very different from taking a principled political stand or just sharing maybe a contrarian opinion. My experience has been, when I do things like that, which I do often. I will g…”
The COVID-19 remote work boom forestalled expected collaboration startup failures
“Almost all of these collaboration companies are proving to be counter-cyclical with COVID 19, and so far the mass adoption of remote work, I think, is really forestalling what you and I both thought would be a die-off of the first big wave of collaboration com…”
Superhuman's manual onboarding process is a sustainable category-creation mechanism
“One of my favorite sustainable growth mechanisms that a lot of people think is unsustainable, and we mentioned Rahul, is the superhuman for onboarding, which is, in my mind, a total category creation play in how they've kind of mechanized onboarding in that wa…”
High-quality customer service is an unsung competitive advantage for startups
“Companies like Slack and superhuman are not only really active on Twitter and things like that, but have highly engaged high quality customer service too. And that is a really unsung competitive advantage.”
One human interaction can turn low NPS users into promoters
“And people move from being a zero or one NPS to being a nine or a 10 off of one human interaction, and that's It's unchangeable, because that's about human nature.”
VCs cannot oversell themselves or show too much excitement to founders
“You can never be too early or too excited to work with the founder. And at first I was nervous about coming on too strong or being too aggressive, but it's really not possible to oversell.”
Venture capital needs more female and diverse check-writers
“Venture-backed companies are this outsized engine of wealth creation and societal change relative, right, to the dollars at work. Venture funding changed my life, and it changes the lives of founders and employees. And venture-backed companies have the scale a…”