The Exchanges

Q Do you like entrepreneurs to include the risk element in their, in their slides and in their Pitch in terms of these are the potential problems that may arise, and then potentially ways that we could combat this. Do you like to see that, or do you think it's potentially, uh, not something that needs to be included? I quite enjoy it personally.

A I do too, uh, because I chose a real self-awareness and a realistic sense of the challenges in front of you, and you still need the optimism and excitement about the future, but, but ultimately being able to identify the things that Can go wrong is awesome. I remember seeing Jack Dorsey's pitch for squares series a, and he literally started with like, these are 75 things that could kill this company in the short term. And I thought it was a very confident, it was almost a little cheeky because 75 things is quite a few risk factors. Um, and so maybe it was a form of a humble brag or humble confidence, but I thought it was overall very effective.

AI assessment note: “I do too, uh, because I chose a real self-awareness and a realistic sense”

Q No, I agree. I love that. Another big question that a lot of entrepreneurs ask me, and I always liked Again, I'd be intrigued to hear your thoughts. Should they include the dollar raise in the slide of how much they're raising and potential utility of their, the capital that is being presented? Do you like to see that?

A I actually do like to see the amount you're raising. It's sort of an important fact, and it has implications for how much ownership may be available, valuation, how capital intensive they think this first phase is going to be, what sort of milestones they could achieve. I don't particularly find that There's a whole lot of variance in how they're going to use the funds. So I don't need to spend a lot of time there because I assume, uh, you're going to hire a bunch of people to build your product and sell your product. Sometimes there's some unique things and details that are important, but I wouldn't spend a ton of time there, but I do think you need to let the, the VC know, are you raising two million dollars or ten million dollars? That's kind of an important thing.

AI assessment note: “I actually do like to see the amount you're raising.”

Q No, I agree. And then, what's your most recent publicly announced investment, and why did you say yes?

A It's a company called Socrates, and what we're trying to do is be like Alexa for the enterprise. Very large companies that might have 50,000, 100,000 employees or more, to provide assistance in all the various corporate services, whether it's HR, or benefits, or approvals, travel, expense reporting, facilities requests, book a conference room, etc., etc. All the things that take you away from productively doing your job, but are nonetheless necessary, and which would otherwise require calling an HR help desk, or logging into a dozen different systems, depending on what the need is. We want to create an intelligent chat-based Agent that can answer these questions and perform these actions automatically, and if we don't understand you or we can't perform it automatically, then hand you to the right live help desk person who knows exactly what you're trying to do and is trained and capable of providing that answer. So it's, it's really a form of providing a great employee experience because most of what companies have focused on the last 10 years is customer experience. But the employees have been left as second class citizens when it comes to optimizing all these touch points.

AI assessment note: “It's a company called Socrates, and what we're trying to do is be like Alexa”

Q No, absolutely. But, but kind of providing this insight, I'm really intrigued now to hear what's the best pitch you've seen and why was it so compelling?

A A perfect example of the phenomena that I mentioned earlier of set up the problem really well was Castlight Health. This is a Venrock investment. They're now public, so if you like the, uh, like the story, you can go buy the stock, um, but, but they, they set up the problem as follows. In healthcare, unlike any other market, the consumer, the patient doesn't know what things are going to cost until they've already received the service, and in fact, 30 days later, when you get this This nearly incomprehensible bill that's called an explanation of benefits and has some, you know, lots of numbers and, and, uh, and jargon on it, but, but you can't go in and shop for an MRI or much less an exam or a bunch of other things in general. And they set up this problem so well, I compared it to what, what would it be like if you went to a grocery store and you had no idea what things cost until you, you were checking out and then they sent you a bill 30 days later that they didn't even have to say what, Exactly. They did to solve this problem. By the time they were finished outlining the outlandish state of U S healthcare on the problem, you were ready to give them money because they were going to solve it. They had gotten you so riled up that this was a problem worth solving that it was like a done deal by slide five. And I just thought that that was exactly what one needs to do to generat…

AI assessment note: “A perfect example of the phenomena that I mentioned earlier ... was Castlight Health.”

Q No, I agree. I love that. Another big question that a lot of entrepreneurs ask me, and I always liked Again, I'd be intrigued to hear your thoughts. Should they include the dollar raise in the slide of how much they're raising and potential utility of their, the capital that is being presented? Do you like to see that?

A I actually do like to see the amount you're raising. It's sort of an important fact, and it has implications for how much ownership may be available, valuation, how capital intensive they think this first phase is going to be, what sort of milestones they could achieve. I don't particularly find that There's a whole lot of variance in how they're going to use the funds. So I don't need to spend a lot of time there because I assume, uh, you're going to hire a bunch of people to build your product and sell your product. Sometimes there's some unique things and details that are important, but I wouldn't spend a ton of time there, but I do think you need to let the, the VC know, are you raising two million dollars or ten million dollars? That's kind of an important thing.

AI assessment note: “I actually do like to see the amount you're raising.”

Q No, absolutely. But, but kind of providing this insight, I'm really intrigued now to hear what's the best pitch you've seen and why was it so compelling?

A A perfect example of the phenomena that I mentioned earlier of set up the problem really well was Castlight Health. This is a Venrock investment. They're now public, so if you like the, uh, like the story, you can go buy the stock, um, but, but they, they set up the problem as follows. In healthcare, unlike any other market, the consumer, the patient doesn't know what things are going to cost until they've already received the service, and in fact, 30 days later, when you get this This nearly incomprehensible bill that's called an explanation of benefits and has some, you know, lots of numbers and, and, uh, and jargon on it, but, but you can't go in and shop for an MRI or much less an exam or a bunch of other things in general. And they set up this problem so well, I compared it to what, what would it be like if you went to a grocery store and you had no idea what things cost until you, you were checking out and then they sent you a bill 30 days later that they didn't even have to say what, Exactly. They did to solve this problem. By the time they were finished outlining the outlandish state of U S healthcare on the problem, you were ready to give them money because they were going to solve it. They had gotten you so riled up that this was a problem worth solving that it was like a done deal by slide five. And I just thought that that was exactly what one needs to do to generat…

AI assessment note: “A perfect example of the phenomena that I mentioned earlier... was Castlight Health.”

Q Can I ask, to what extent do you think VCs can be both board members and kind of the sounding board that we are in a businessman? Sense. And also a friend on the side who is kind of the personal alliance. To what extent can you be both friend and VC, do you think?

A Well, I think it's definitely possible. It doesn't have to be the case. I think there needs to be mutual respect and trust in general, like spending time with each other, because you, you will spend a lot of time, and it could go for a lot of years. But it can also go all the way to the point of very, very close personal relationships. One of my favorite entrepreneurs, Brent Lang, who's the CEO of Ocera, he and I knew each other for A good dozen years before we invested, and then I was on his board for 12 years, so like a 25 year friendship that started in our first jobs out of college, and then business school, and family, friend, the whole nine yards, and, and we went through tough times in the business, and then good times, and all the while our friendship endured because we trusted each other. The friendship didn't get in the way of the inevitable and necessary hard conversations, and it was a testament to his confidence and ability to trust that Sharing all the tough stuff with me wouldn't result in something bad happening to him. Instead, I would, I would help him, and so our friendship only deepened. It's wonderful to do business with your friends, frankly.

AI assessment note: “Well, I think it's definitely possible. It doesn't have to be the case.”

Q Do you like entrepreneurs to include the risk element in their, in their slides and in their Pitch in terms of these are the potential problems that may arise, and then potentially ways that we could combat this. Do you like to see that, or do you think it's potentially, uh, not something that needs to be included? I quite enjoy it personally.

A I do too, uh, because I chose a real self-awareness and a realistic sense of the challenges in front of you, and you still need the optimism and excitement about the future, but, but ultimately being able to identify the things that Can go wrong is awesome. I remember seeing Jack Dorsey's pitch for squares series a, and he literally started with like, these are 75 things that could kill this company in the short term. And I thought it was a very confident, it was almost a little cheeky because 75 things is quite a few risk factors. Um, and so maybe it was a form of a humble brag or humble confidence, but I thought it was overall very effective.

AI assessment note: “I do too, uh, because I chose a real self-awareness”

Q Can I ask, is there any advice you'd give to people looking to make their way into venture today? It's probably one of the most common questions that I get in terms of their entrance into venture. Is there anything that you'd advise Um, people looking to make their way in.

A Well, there's kind of two paths. You beat and kick and scratch and claw your way in as a young person who doesn't yet really have much to bring to the table by way of a track record or proven deal flow based on your stature as a founder or senior executive at a platform company. So you get in at the bottom and you climb your way up through performance. And that was kind of the track that I took joining early as a Kind of an associate. Or you do it late in life when you're being invited in because you do have a track record and you have something that will be immediately appealing to entrepreneurs because you founded a successful company, you were a senior at a great company. So both tracks are very worthwhile. It really depends how compelled you are that you absolutely want to be a VC when you're younger. It is the harder path. The numbers are slightly against you. But I always say, if that's what's in your heart, then go pursue it, and there's always room for one more, and there's certainly always room for one more good one.

AI assessment note: “Well, there's kind of two paths.”

Q absolutely. I love that. We spoke about the portfolio company there and the investment made a lot of Entrepreneurs forget the post-investment relationship when they're in fundraising mode, and the importance of choosing the potential partner that will be your VC and potential board member. So I'm super intrigued to hear how you evaluate the ideal relationship then between the entrepreneur and the VC. What's your thought process around this?

A This is my most fun part of being a VC. While I enjoy a good pitch, I really love the relationships that That I get to form with entrepreneurs and executive teams at our companies. And what makes for a really healthy relationship is trust, transparency, and approaching it as a true partnership. And the trust goes both ways. If you're going to make a safe environment for a founder to share all the problems and challenges and setbacks and even mistakes that they face, then you as a venture capitalist have to ask, uh, react in a constructive help Helpful, non-threatening way. I assume going into every one of our companies that we're going to spend most of our time in board meetings and outside of board meetings, solving problems, fixing things, trying to make it better. We actually spend very little time congratulating ourselves on the great quarter or the wonderful press we got from a launch or what have you. So if there's a good two-way street of, I'm going to tell you all the stuff that you need to know and the things that are going wrong and I'm going to pitch in and help and be calm, cool, collected, and collaborative, then that's the ideal relationship. And you know, when you go through the tough times and you're then enjoying a spell of good weather and sunshine, it's, it's a beautiful thing. The thing I love about venture is the alignment. Sometimes you can get out of alig…

AI assessment note: “what makes for a really healthy relationship is trust, transparency, and approaching it as a true partnership”

Q Dan, what's your thoughts on demos internally within the pitch? Do you love to see them? If so, what do you think makes a great demo, or do you think they're not necessary?

A I do love a great demo. As a former product manager who gave lots and lots of live demos, I think they can be super compelling, but again, you need to craft it as a little short story with characters and a plot, some tension, and then ultimately resolution. So when I say characters and a plot, I think it's very important to set up who you are as the user. Pretend, put your, put your audience in the shoes of the user who's going to use this And what their problem is, and then walk them through a scenario or two of why they're using this product and how it makes their life better, rather than just clicking through a bunch of features and menu items, and here's the next thing that this thing can do. Like, put it all in a story in the service of why you make the world better.

AI assessment note: “I do love a great demo. As a former product manager who gave lots”

Q Can I ask, is there any advice you'd give to people looking to make their way into venture today? It's probably one of the most common questions that I get in terms of their entrance into venture. Is there anything that you'd advise Um, people looking to make their way in.

A Well, there's kind of two paths. You beat and kick and scratch and claw your way in as a young person who doesn't yet really have much to bring to the table by way of a track record or proven deal flow based on your stature as a founder or senior executive at a platform company. So you get in at the bottom and you climb your way up through performance. And that was kind of the track that I took joining early as a Kind of an associate. Or you do it late in life when you're being invited in because you do have a track record and you have something that will be immediately appealing to entrepreneurs because you founded a successful company, you were a senior at a great company. So both tracks are very worthwhile. It really depends how compelled you are that you absolutely want to be a VC when you're younger. It is the harder path. The numbers are slightly against you. But I always say, if that's what's in your heart, then go pursue it, and there's always room for one more, and there's certainly always room for one more good one.

AI assessment note: “Well, there's kind of two paths. You beat and kick and scratch and claw”

Q Dan, what's your thoughts on demos internally within the pitch? Do you love to see them? If so, what do you think makes a great demo, or do you think they're not necessary?

A I do love a great demo. As a former product manager who gave lots and lots of live demos, I think they can be super compelling, but again, you need to craft it as a little short story with characters and a plot, some tension, and then ultimately resolution. So when I say characters and a plot, I think it's very important to set up who you are as the user. Pretend, put your, put your audience in the shoes of the user who's going to use this And what their problem is, and then walk them through a scenario or two of why they're using this product and how it makes their life better, rather than just clicking through a bunch of features and menu items, and here's the next thing that this thing can do. Like, put it all in a story in the service of why you make the world better.

AI assessment note: “I do love a great demo... you need to craft it as a little short story”

Q Absolutely. But before we dive into sectors and the technology itself, now as a VC, a lot of entrepreneurs ask me, how would you like me to pitch? And more specifically, how do I start my pitch? So I'd love to hear your thoughts on this. And the advice that you give entrepreneurs in terms of kind of the expectations that you have and how you like them to start.

A I love pitches. I think, you know, as a VC, you have to be an eternal optimist. A good pitch is a story well told about how the future is going to be better than the present, and so who, who wouldn't like that? I think the first bit of advice is to have a pitch. There's a current meme out there which is Says that you don't want to have slides. You want to have a conversation, and you want to seem like you're not actually looking for their money. They'll be lucky to get their money into your company, and I appreciate the sentiment of where that's coming from. I don't favor pitches because I like a power dynamic between, you know, the seller and the buyer. I like pitches because it's putting your best foot forward in really crafting a beautiful narrative around your vision for the future, and I think that's Generally, a lot more effective than winging it in a freeform conversation. It's why they have Academy Awards for, for movies, and there's, to my knowledge, no category for improvisational sketches. Plus, you, you want to get quantitative and use pictures, pictures worth a thousand words, all that sort of stuff. So my first advice is to have slides. They're not only useful for fundraising, but the PowerPoint deck has become the de facto business plan. It can substitute for your mission statement, vision statement, etc. Like, there's never not a good time to have a good short d…

AI assessment note: “I think the first bit of advice is to have a pitch.”

Q Absolutely. But before we dive into sectors and the technology itself, now as a VC, a lot of entrepreneurs ask me, how would you like me to pitch? And more specifically, how do I start my pitch? So I'd love to hear your thoughts on this. And the advice that you give entrepreneurs in terms of kind of the expectations that you have and how you like them to start.

A I love pitches. I think, you know, as a VC, you have to be an eternal optimist. A good pitch is a story well told about how the future is going to be better than the present, and so who, who wouldn't like that? I think the first bit of advice is to have a pitch. There's a current meme out there which is Says that you don't want to have slides. You want to have a conversation, and you want to seem like you're not actually looking for their money. They'll be lucky to get their money into your company, and I appreciate the sentiment of where that's coming from. I don't favor pitches because I like a power dynamic between, you know, the seller and the buyer. I like pitches because it's putting your best foot forward in really crafting a beautiful narrative around your vision for the future, and I think that's Generally, a lot more effective than winging it in a freeform conversation. It's why they have Academy Awards for, for movies, and there's, to my knowledge, no category for improvisational sketches. Plus, you, you want to get quantitative and use pictures, pictures worth a thousand words, all that sort of stuff. So my first advice is to have slides. They're not only useful for fundraising, but the PowerPoint deck has become the de facto business plan. It can substitute for your mission statement, vision statement, etc. Like, there's never not a good time to have a good short d…

AI assessment note: “I think the first bit of advice is to have a pitch.”