Aug 12, 2021 · 41m · 20vc
20VC: The Lyft Memo: Floodgate's Ann Miura Ko on Why Successful Seed Investing Is Not Investing In a Company But The Development of a Set of Secrets, Whether Capital Is a Defensible Moat Today &How Startups Should Approach Competition
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In this episode of TwentyVC's 'The Memo' series, host Harry Stebbings interviews Floodgate co-founding partner Ann Miura-Ko on the inside story of her early seed investment in Lyft. She breaks down the transition from Zimride to Lyft, Floodgate's core seed investment philosophy, strategies for capital efficiency, and how founders build enduring companies amid intense competition.
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 26.3% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 3.0 Guest disagreement 0.5 Harry pushing back 1.1
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:53 Dismissing the 'too nice to compete' narrative
Ann forcefully pushes back against the recurring question from investors about whether Logan and John were 'too nice' to compete, rejecting the idea that ethical behavior and killer competitiveness cannot coexist.
Hardest push from Harry ▶ 26:48 Challenging the capital requirement premiseHarry pushes back on the ideal of capital discipline by articulating the intense real-world pressure founders feel when direct competitors raise $100M mega-rounds.
Biggest teaching moment ▶ 7:31 Reframing pivots as a processAnn corrects Harry's assumption that pivots happen in a sudden lightning-strike moment, explaining that seed pivots are multi-year processes of endless micro-iterations.
Harry holds his own ▶ 29:24 Asserting VC limits on recruitmentHarry firmly asserts his own expertise on VC value-add, declaring that top founders don't need investors to build candidate pipelines for them.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome Back and Zimride Origin Story | 1 | 2 | 0 | 0 | Harry introduces Ann and invites her to share the origin story of meeting the Zimride team. Ann provides a detailed background narrative about early introductions, meeting while pregnant, and the initial inspiration behind Logan and John's vision. | |
| The Evolution from Zimride to Lyft | 2 | 5 | 1 | 1 | Harry asks when it became clear that the business model needed to pivot. Ann gentle reframes his premise, educating him that seed pivots are a multi-year iterative process rather than a single eureka moment. | |
| Fanatical Customer Development and Founder Commitment | 3 | 3 | 0 | 1 | Harry asks insightful questions about whether early capital prevents modern founders from doing hands-on customer development. Ann elaborates on Floodgate's philosophy of investing in the speed of insight development rather than static ideas. | |
| High Conviction and Selection in Fast Fundraising Markets | 3 | 3 | 1 | 1 | Harry inquires about navigating compressed fundraising timelines. Ann outlines Floodgate's disciplined counter-strategy of forcing a choice and maintaining a month-long process, then details the launch of Lyft's early hacky experiments. | |
| Pivoting 100% to Lyft and Shutting Down Zimride | 2 | 4 | 1 | 1 | Harry asks how they decided to shut down Zimride and questions how the founders balanced being 'nice people' with competitive drive. Ann rejects the notion that ethics and fierce competitiveness are mutually exclusive, arguing that winning requires defining your own game. | |
| Playbook for Market-by-Market Expansion | 3 | 3 | 0 | 1 | Harry asks about market-by-market expansion mechanics. Ann explains marketplace dynamics such as driver ETA, liquidity, and adapting strategy across different regional urban environments. | |
| Financing Battles, Uber Competition, and Capital as a Moat | 4 | 4 | 1 | 2 | Harry asks pointed questions about competition from Uber and whether capital served as a primary moat. Ann agrees capital is powerful but likens it to weapons-grade plutonium that requires precise strategic direction to avoid self-destruction. | |
| Capital Efficiency vs. Massive Funding Rounds | 5 | 4 | 1 | 3 | Harry challenges Ann with a realistic dilemma founders face when rivals raise massive funding rounds. Ann responds by contrasting PR-driven fundraising with true capital efficiency, citing Veeva and Qualtrics as evidence. | |
| The VC's True Role: A Reflective Mirror for Founders | 6 | 2 | 0 | 2 | Harry takes a strong stand, arguing that top founders do not need VCs to assist with talent recruitment. Ann agrees and redefines the investor's core role as serving as an objective reflective mirror on product-market fit. | |
| Quickfire Round: Lyft Insights, Pre-Mortem, and Unsung Heroes | 2 | 2 | 0 | 0 | Harry runs through quickfire questions regarding pre-mortems, culture, and key contributors. Ann highlights general counsel Kristin Svercek's critical role in early regulatory and ethical decision-making. | |
| Memorable Moments: Stanford Law Dorms and Meeting a Lyft Driver | 1 | 1 | 0 | 0 | Harry asks for Ann's favorite memories. Ann shares stories about holding board meetings in law school dorms and introducing a surprised Lyft driver to the founders at her dinner table. |
Statements from this episode (24)
Miura-Ko: Floodgate's best founders come from existing portfolio referrals
“Our best founders come through recommendations from our existing founders.”
Miura-Ko: No tech transportation innovation occurred between Zipcar and Zimride
“Literally there was nothing really, no innovation had really happened since that period of Zipcar in the transportation space.”
Floodgate Invested in Zimride Two Years Before Its Lyft Pivot
“We made our investment in 2010, and the actual change didn't happen until 2012.”
Miura-Ko: Startup Pivots Are Iterative Processes, Not Single Moments
“And so, if you think, like, a pivot in many people's minds is just like a moment. It's like the singular decision, and it's like a lightning strikes you, and you know. In reality, what happened with Lyft was that Zimride went through hundreds of iterations.”
Miura-Ko: Customer development is hand-to-hand combat, not an intellectual exercise
“So a lot of people think customer development is like intellectual process. And in fact, it's hand to hand combat, right? You're trying to uncover secrets that other people may not know.”
Lyft Co-Founder John Zimmer Promoted Zimride Wearing a Beaver Suit
“The fact that John Zimmer, when he was selling the platform to universities, would go to a university campus dressed in a beaver suit to try to convince people to just engage with this platform gives you a sense for, like, it wasn't that they felt like someone…”
Ann Miura-Ko: Seed investing is about developing insights, not static companies
“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.”
Ann Miura-Ko limits her seed investments to three to six per year
“I only make Somewhere between three and six investments every year.”
Ann Miura-Ko Made Only Two Seed Investments by July 2021
“So we're in July. I've only made two investments at the seed stage.”
Miura-Ko ran month-long processes for her recent seed investments
“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”
Lyft Founders Built the Original App in Three Weeks in 2012
“And like when I say we were experimenting, I think John and Logan emailed a bunch of Zimride users in the San Francisco area, and they built Lyft in like three weeks because they felt like this was an experiment that they wanted to run.”
Lyft Originally Launched Using Suggested Donations to Bypass Regulations
“We also, there was no payment mechanism because there was sort of this regulatory gray area. And so there was a suggested donation. And so you could technically ride for free. Most people actually paid the suggested donation.”
Zimride Generated Millions in Revenue Before Pivoting Entirely to Lyft
“You have, like, a few million dollars of revenues coming here, and, like, that's what investors invested into, that was really powerful, because you don't have a ton of data points.”
Miura-Ko: Startups Never Win Competing on an Incumbent's Terms
“When you're put on the field and someone has a game that they're really good at, if you then try to engage in that battle on their basis, you're never gonna win. If you see that happening, You change the rules.”
Lyft launched 24 markets simultaneously in 2014 as Miura-Ko left board
“It wasn't until I think it was 2014. This is when I rolled off the board the first time they went live with 24 markets, just as I was rolling off the board.”
Lyft tracked driver ETA as key signal of market liquidity
“Ultimately, we were always looking at ETA, right? So when was driver going to be able to reach a rider? And you would see that the market really worked for the rider if you had a driver that was just a few minutes away. In that metric, you see sort of the dyna…”
Miura-Ko: Lyft had only a few months of cash left at times
“For a while there were moments where I think Lyft had just a few months of cash left.”
Ann Miura-Ko: Misdirected Startup Capital Is Like Weapons-Grade Plutonium
“I believe that capital is a very powerful weapon, but you actually have to really know it's like weapons grade plutonium, right? Like you have to know which way to direct it. Otherwise you can actually become the victim of that weapon.”
Veeva Systems Raised Only $7 Million Before Reaching $40 Billion Valuation
“You have Viva Systems only raised seven million dollars ever and is now a forty billion dollar company.”
Qualtrics Hit $50 Million in Revenue Before Raising Venture Capital
“You have Qualtrics that the first time they raised, they already had fifty million dollars in revenues.”
Stebbings: Top founders do not need VCs for talent recruiting
“I do believe something which a lot of people get angry at me for, and it's that the best founders do not need VCs to help them get talent.”
Miura-Ko: Lyft Had Five Employees When Floodgate Invested
“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.”
Floodgate's Initial Zimride Investment Thesis Incorrectly Relied on Facebook Connect
“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…”
Early Zimride Board Meetings Took Place Secretly in Stanford Law Dorms
“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…”