The Exchanges

Q partner role at Precursor, and we mentioned the changing kind of evolution of the venture environment. So I want to do a little background on, on solo GP funds and why we've seen this massive increase. We said, obviously, Jeff was a, was a solo GP fund with SoftTech before it obviously enjoyed massive success. Why have we seen this massive increase in the last 10 years, do you think?

A I think that there's two reasons that it's happening. I think one is that because the micro VC folks like Jeff and Aiden and Mike Maples and Steve Anderson and Michael Deering, and I think that first wave of micro VC pioneers, they created an environment where it was okay to To raise an institutional fund of less than a hundred million dollars and to have that thought of as actually a viable venture model. So it's really hard to go raise a hundred million dollars as yourself for a solo GP. So just the kind of entry table stakes of raising a fund kind of meant you had to have two people just in order to get to what was thought of kind of as the threshold level of capital required for the business. I think the other thing is that there's just more third party services And things you can use to make your life easier as a solo GP. So for example, I don't have an in-house CFO. I have a third party firm that does all of my kind of fund administration and back office for me. I have a large chunk of my portfolio companies on eShares, which simplifies kind of keeping track of cap tables. I use Angelus. So there's a bunch of tools that have been developed. That mean as a solo GP, you don't have to own all of these things in house, and that has tremendous implications for the management fee overhead you need to run a fund.

AI assessment note: “I think that there's two reasons that it's happening.”

Q And I'm intrigued. You spoke about the market there at the pre seed stage. Often, uh, the market is very undetermined and, uh, you know, to many extents, the company will pivot into potentially different markets. So how do you approach that as an investor with the inflex, with the flexibility that can occur with markets? Yeah.

A Markets are, markets are really tough. I mean, my, my basic investing pieces is sort of team is Greater than market is greater than product, which to me means I have to have real conviction about the people and their ability to execute. And then the next thing of almost equal importance for me is the market. And by definition, like I'm usually looking for markets that don't yet exist. Or that aren't yet quantified or quantifiable, but where I think in the next 12 to 18 months, there's gonna be some inflection point that causes them to happen or causes them to become more interesting than they used to be. And for a lot of that, I always ask myself, well, what do I have to believe to believe what this company's telling me? And is their general worldview consistent with where I think things are headed? You know, when I think back to when we first invested in Postmates, Postmates did not have meaningful delivery volume at all, but this was sort of in the shadow of Uber, and I think the knowledge that, hey, a subset of people are comfortable ordering a car from a stranger using an app gives us confidence that the core behavior here is not truly novel.

AI assessment note: “I'm usually looking for markets that don't yet exist”

Q partner role at Precursor, and we mentioned the changing kind of evolution of the venture environment. So I want to do a little background on, on solo GP funds and why we've seen this massive increase. We said, obviously, Jeff was a, was a solo GP fund with SoftTech before it obviously enjoyed massive success. Why have we seen this massive increase in the last 10 years, do you think?

A I think that there's two reasons that it's happening. I think one is that because the micro VC folks like Jeff and Aiden and Mike Maples and Steve Anderson and Michael Deering, and I think that first wave of micro VC pioneers, they created an environment where it was okay to To raise an institutional fund of less than a hundred million dollars and to have that thought of as actually a viable venture model. So it's really hard to go raise a hundred million dollars as yourself for a solo GP. So just the kind of entry table stakes of raising a fund kind of meant you had to have two people just in order to get to what was thought of kind of as the threshold level of capital required for the business. I think the other thing is that there's just more third party services And things you can use to make your life easier as a solo GP. So for example, I don't have an in-house CFO. I have a third party firm that does all of my kind of fund administration and back office for me. I have a large chunk of my portfolio companies on eShares, which simplifies kind of keeping track of cap tables. I use Angelus. So there's a bunch of tools that have been developed. That mean as a solo GP, you don't have to own all of these things in house, and that has tremendous implications for the management fee overhead you need to run a fund.

AI assessment note: “I think that there's two reasons that it's happening. I think one is that”

Q Uh, now I'd love to start by hearing a little about you and how you came from the world of entrepreneurship to now being managing partner at Precursor. What's the kind of brief synopsis?

A Yeah, the brief synopsis is, you know, my first job out of college was as a venture analyst for In-Q-Tel, the CIA's venture capital group, and that really gave me some early exposure to venture, and it taught me a lot about the job and the career, but it also kind of humbled me and made me realize that without kind of a deeper set of business experiences, there was limited value I could provide to the companies that we had funded. So it took a, took a stint in In the operating side, worked at Google and a handful of games companies, learned a lot about business development, was a founder myself, raised some money for a venture backed startup myself, and really felt like I wanted to have the full suite of experiences as a founder and exec before I returned to venture. And then I was fortunate enough to reconnect with Jeff in late 2009, and we started talking about sort of his future vision for soft tech and taking it from A solo GP shop to more of an institution, and I really liked Jeff's vision for what he wanted to build with SoftTech, and so we started working together, worked together for about five years, and then I think like many of the micro VC firms of that vintage, SoftTech's had a tremendous amount of success backing companies like Shippo and Fitbit and Poshmark and Postmates, and In venture, when you're successful, you know, LPs trust you with larger and larger amoun…

AI assessment note: “my first job out of college was as a venture analyst for In-Q-Tel”

Q I spoke to another solo GP the other day, and he said that it's important to be very rigid on your check size. So he always went for a hundred K every single time, regardless of the company. Do you agree with that? Uh, and how do you approach this theme? Because you can't always do exactly a hundred. That might only be 75. Or how do you approach that?

A I generally agree with that strategy. I, I think having a pretty consistently sized check Makes life easy. A, it makes life easy for your co-investors, because they always know how much money they should pencil you in for. Two, it also takes away this question of, like, Let's say you write a 500 K check and a million dollar check. You don't have to ask yourself, do I like this 500 K or do I like it a million? There shouldn't be that kind of conversation. Like you either think it's a great company and you should invest in line with what you typically do, or you don't think it's a great company and you shouldn't invest at all. So I'm a big fan of having a pretty narrow check size range or having a pretty narrow, if you're ownership driven, Ownership target range. I think it helps keep you having your own set of checks and balances and not falling in love with something that you think is amazing and writing a gargantuan check.

AI assessment note: “I generally agree with that strategy. I, I think having a pretty consistently sized check”

Q And I'm intrigued. You spoke about the market there at the pre seed stage. Often, uh, the market is very undetermined and, uh, you know, to many extents, the company will pivot into potentially different markets. So how do you approach that as an investor with the inflex, with the flexibility that can occur with markets? Yeah.

A Markets are, markets are really tough. I mean, my, my basic investing pieces is sort of team is Greater than market is greater than product, which to me means I have to have real conviction about the people and their ability to execute. And then the next thing of almost equal importance for me is the market. And by definition, like I'm usually looking for markets that don't yet exist. Or that aren't yet quantified or quantifiable, but where I think in the next 12 to 18 months, there's gonna be some inflection point that causes them to happen or causes them to become more interesting than they used to be. And for a lot of that, I always ask myself, well, what do I have to believe to believe what this company's telling me? And is their general worldview consistent with where I think things are headed? You know, when I think back to when we first invested in Postmates, Postmates did not have meaningful delivery volume at all, but this was sort of in the shadow of Uber, and I think the knowledge that, hey, a subset of people are comfortable ordering a car from a stranger using an app gives us confidence that the core behavior here is not truly novel.

AI assessment note: “I'm usually looking for markets that don't yet exist. Or that aren't yet quantified”

Q Uh, now I'd love to start by hearing a little about you and how you came from the world of entrepreneurship to now being managing partner at Precursor. What's the kind of brief synopsis?

A Yeah, the brief synopsis is, you know, my first job out of college was as a venture analyst for In-Q-Tel, the CIA's venture capital group, and that really gave me some early exposure to venture, and it taught me a lot about the job and the career, but it also kind of humbled me and made me realize that without kind of a deeper set of business experiences, there was limited value I could provide to the companies that we had funded. So it took a, took a stint in In the operating side, worked at Google and a handful of games companies, learned a lot about business development, was a founder myself, raised some money for a venture backed startup myself, and really felt like I wanted to have the full suite of experiences as a founder and exec before I returned to venture. And then I was fortunate enough to reconnect with Jeff in late 2009, and we started talking about sort of his future vision for soft tech and taking it from A solo GP shop to more of an institution, and I really liked Jeff's vision for what he wanted to build with SoftTech, and so we started working together, worked together for about five years, and then I think like many of the micro VC firms of that vintage, SoftTech's had a tremendous amount of success backing companies like Shippo and Fitbit and Poshmark and Postmates, and In venture, when you're successful, you know, LPs trust you with larger and larger amoun…

AI assessment note: “the brief synopsis is, you know, my first job out of college was”

Q And then which sector are you most excited by? Obviously, you know, you're sector agnostic, but do you have any particular leanings?

A Um, I really like robotics at the moment. I've spent a fair amount of time Um, looking at that space, and it's one that I think is, is very, very interesting. I continue to be interested in core consumer. I just think consumer internet usage patterns are just not stable, and every three to five years, there's an opportunity, largely because of hardware improvements on smartphones, to rethink many core experiences on the phone. So those are two areas where I've been spending a lot of time, and I think the third one is Kind of consumer facing digital health. I'm not a med tech, deep health tech person, but I've certainly been seeing some really interesting companies that bring the power of digital health to the consumer.

AI assessment note: “I really like robotics at the moment.”

Q Absolutely. And kind of going back to the venture landscape as a whole and the ecosystem, as we said, there's now a plethora of solo GP VC funds. So how do you look to differentiate in this sea of, uh, emerging VCs?

A Sure. You know, I think there's a couple of different ways one can differentiate. I'll tell you the things that I think about. One, I know this sounds maybe a little too touchy feely, but I think Not every entrepreneur is for every VC and vice versa. I think there are sort of personality types, market spaces, worldviews that tend to cause people to gravitate towards people who have shared views. And so I think, I think that can be hard for LPs to understand sometimes, but people are looking for that human connection. Two, you know, I think the other question is, you know, what's the value prop to the companies that you back? You know, there are some people who say, I do a very small number of investments. You will get deep engagement from me, but I'm super picky. And if you get chosen, you'll get this kind of bespoke white glove service. I think there's sort of the other end of the spectrum, which is We're fast. We don't have a complicated diligence process, and we can make decisions quickly, and we can signal to the market that we're interested, and we can tag along and create value that way by adding capital to help you close out around. Like, I think, like, 500 startups or SV Angel, there's a lot of different strategies that can work. I think the question is, like, what strategy do you believe in? And what I've, what I've told folks is my goal is to have a portfolio that's l…

AI assessment note: “my goal is to have a portfolio that's large enough that allows me to take risk”

Q And I'm really intrigued that now you've got the new fund and you can kind of, you know, it's completely yours. You can choose the waiting in terms of follow on to initial investments. So how did you choose that fund structure and what kind of thesis did you lend towards in the end? Did you go very follow on heavy, quite initial funding heavy? What's your thoughts on this?

A I've been influenced by a lot of people that I've co-invested with in my time at soft tech. And I also try to apply one additional lens, which is stage. And the way I think about it is pre-seed is generally the lowest possible price at which you can get into a company. At the end of the day, my job is to produce returns. And for me, the best way to produce returns is to have the most money in at the lowest dollar cost average. I'm not trying to deploy a billion dollars and turn that into two or three. I'm deploying a lot less capital. So my view is, given that pre-seed companies will have a higher failure rate than Series A companies, it's better to have more first check investment debts on the table, and it's better to be more aggressive in getting into companies. And for those that graduate to the next level, make sure that there's appropriate reserves to at least do the next round. Beyond that, it may or may not be appropriate for a small fund to stay in that company, or there may be other structures like SPVs That provide a better mechanism for continuing to participate, but for the main fund, my view is that the LPs I've talked to, their goal is to have me deploy that capital against really early stage, high potential new companies, and to get into as many winning ones of those as possible, as opposed to Accumulate ownership in a relatively small number of names.

AI assessment note: “better to have more first check investment debts on the table”

Q And I have to ask that, going back to the operational days that you had at Google and at the gaming companies, what were the biggest takeaways for you from those days?

A I think the biggest takeaway, and I encourage a lot of my friends who are in venture who haven't had as much operating experience to try it, because I think as a VC, it's easy to sit in the boardroom and see strategically that there's something off with the business and to kind of dictate, Hey, we should fix sales or, Hey, we've got to fix marketing. We've got to fix product. But until you've actually been in an organization and seen what it actually takes to To change the way that a company or a group of people behaves, it gives you a much better sense of just how hard it is to tell a founder that like, hey, we need to fix marketing, and fixing marketing is probably a two-quarter project. Or hey, we've got to, we've got to revamp the product. Revamping the product probably is going to take an entire year. I think it gives you a much better nuanced sense of the interdependencies that happen inside of companies, because most venture, most venture funds are small. You've got three or four people, so there, you don't have a, Maybe a sense for the coordination costs or the internal machinations that have to happen in order to make change happen.

AI assessment note: “it gives you a much better nuanced sense of the interdependencies”

Q And I'm really intrigued. You said about tying the dots together there. And how often does it happen that you do have a failure or a chink in the dots? And where does that often occur? Is it with the technology, the team, the go to market strategy? Where's often the problems that you see in the time together?

A It, oftentimes it ends up being the connection between the product that they're building and the way that they want to market it or launch it to the public. Sometimes I'll write, I'll start writing about the business model and I'll say, hang on, this isn't quite as clear in my head as it was when I was sitting in that meeting, or hang on, I guess I don't maybe have as clear a perspective on The competitive landscape as I thought I did when we were, uh, in that conference room talking about the product of the market. And so it, it, it tends to vary. It's rarely about the people. It tends to be about some nuance of the market or some nuance of the strategy that, Upon reflection isn't as clear as it was when we were together.

AI assessment note: “oftentimes it ends up being the connection between the product that they're building”

Q I spoke to another solo GP the other day, and he said that it's important to be very rigid on your check size. So he always went for a hundred K every single time, regardless of the company. Do you agree with that? Uh, and how do you approach this theme? Because you can't always do exactly a hundred. That might only be 75. Or how do you approach that?

A I generally agree with that strategy. I, I think having a pretty consistently sized check Makes life easy. A, it makes life easy for your co-investors, because they always know how much money they should pencil you in for. Two, it also takes away this question of, like, Let's say you write a 500 K check and a million dollar check. You don't have to ask yourself, do I like this 500 K or do I like it a million? There shouldn't be that kind of conversation. Like you either think it's a great company and you should invest in line with what you typically do, or you don't think it's a great company and you shouldn't invest at all. So I'm a big fan of having a pretty narrow check size range or having a pretty narrow, if you're ownership driven, Ownership target range. I think it helps keep you having your own set of checks and balances and not falling in love with something that you think is amazing and writing a gargantuan check.

AI assessment note: “I generally agree with that strategy. I, I think having a pretty consistently sized check”

Q And I have to ask that, going back to the operational days that you had at Google and at the gaming companies, what were the biggest takeaways for you from those days?

A I think the biggest takeaway, and I encourage a lot of my friends who are in venture who haven't had as much operating experience to try it, because I think as a VC, it's easy to sit in the boardroom and see strategically that there's something off with the business and to kind of dictate, Hey, we should fix sales or, Hey, we've got to fix marketing. We've got to fix product. But until you've actually been in an organization and seen what it actually takes to To change the way that a company or a group of people behaves, it gives you a much better sense of just how hard it is to tell a founder that like, hey, we need to fix marketing, and fixing marketing is probably a two-quarter project. Or hey, we've got to, we've got to revamp the product. Revamping the product probably is going to take an entire year. I think it gives you a much better nuanced sense of the interdependencies that happen inside of companies, because most venture, most venture funds are small. You've got three or four people, so there, you don't have a, Maybe a sense for the coordination costs or the internal machinations that have to happen in order to make change happen.

AI assessment note: “gives you a much better nuanced sense of the interdependencies that happen inside of companies”

Q And I'm really intrigued. You said about tying the dots together there. And how often does it happen that you do have a failure or a chink in the dots? And where does that often occur? Is it with the technology, the team, the go to market strategy? Where's often the problems that you see in the time together?

A It, oftentimes it ends up being the connection between the product that they're building and the way that they want to market it or launch it to the public. Sometimes I'll write, I'll start writing about the business model and I'll say, hang on, this isn't quite as clear in my head as it was when I was sitting in that meeting, or hang on, I guess I don't maybe have as clear a perspective on The competitive landscape as I thought I did when we were, uh, in that conference room talking about the product of the market. And so it, it, it tends to vary. It's rarely about the people. It tends to be about some nuance of the market or some nuance of the strategy that, Upon reflection isn't as clear as it was when we were together.

AI assessment note: “oftentimes it ends up being the connection between the product that they're building and the way”

Q So was the change in consumer behavior the inflection point there?

A Yes, it was. In other cases, it's a technology platform. In some cases, it's a hardware platform. The ones I like the most, though, Here are the ones where I feel like a bunch of different trends come together at the same time, like computer vision, robotics, GPS, low cost manufacturing of hardware. Like to me, those are kind of powerful mega trends that when they come together, you get kind of these unique sets of circumstances where you can build really, really interesting companies. And so I think with market, I always try to figure out like, well, what is it that I believe? What's my point of view about why this market will exist? And will it achieve, and will it produce a company that has decent gross margins at scale?

AI assessment note: “Yes, it was. In other cases, it's a technology platform.”

Q And I'm really intrigued then to hear how the fundraising process for you was with precursor as a solo GP. How did you find it?

A The thing I will say is the questions that you've asked are very much in line with the questions that LPs ask. And the thing, the thing I would say is that I think when you're a solo GP fund, there's a set of, there's a set of investors who they just don't like the single key man risk of a solo GP fund. It just doesn't fit their model. It's not how they like to invest that disqualifies a certain set of people. There's a set of people out there who have a lot of exposure to micro VC already. They were early on the trend and they've, they've got a fair number of relationships and, you know, to add another one means that someone else needs to be displaced. And third, there's some people who have, you know, different preferences for generalist versus, you know, vertically oriented theme specific funds. So what I would say is my experience is the fundraising for a venture fund. It's kind of like the fundraising for a tech startup. But a little bit slower.

AI assessment note: “my experience is the fundraising for a venture fund. It's kind of like”

Q Absolutely. And kind of going back to the venture landscape as a whole and the ecosystem, as we said, there's now a plethora of solo GP VC funds. So how do you look to differentiate in this sea of, uh, emerging VCs?

A Sure. You know, I think there's a couple of different ways one can differentiate. I'll tell you the things that I think about. One, I know this sounds maybe a little too touchy feely, but I think Not every entrepreneur is for every VC and vice versa. I think there are sort of personality types, market spaces, worldviews that tend to cause people to gravitate towards people who have shared views. And so I think, I think that can be hard for LPs to understand sometimes, but people are looking for that human connection. Two, you know, I think the other question is, you know, what's the value prop to the companies that you back? You know, there are some people who say, I do a very small number of investments. You will get deep engagement from me, but I'm super picky. And if you get chosen, you'll get this kind of bespoke white glove service. I think there's sort of the other end of the spectrum, which is We're fast. We don't have a complicated diligence process, and we can make decisions quickly, and we can signal to the market that we're interested, and we can tag along and create value that way by adding capital to help you close out around. Like, I think, like, 500 startups or SV Angel, there's a lot of different strategies that can work. I think the question is, like, what strategy do you believe in? And what I've, what I've told folks is my goal is to have a portfolio that's l…

AI assessment note: “my goal is to have a portfolio that's large enough that allows me to take risk”

Q So was the change in consumer behavior the inflection point there?

A Yes, it was. In other cases, it's a technology platform. In some cases, it's a hardware platform. The ones I like the most, though, Here are the ones where I feel like a bunch of different trends come together at the same time, like computer vision, robotics, GPS, low cost manufacturing of hardware. Like to me, those are kind of powerful mega trends that when they come together, you get kind of these unique sets of circumstances where you can build really, really interesting companies. And so I think with market, I always try to figure out like, well, what is it that I believe? What's my point of view about why this market will exist? And will it achieve, and will it produce a company that has decent gross margins at scale?

AI assessment note: “Yes, it was. In other cases, it's a technology platform.”

Q And I'm really intrigued then to hear how the fundraising process for you was with precursor as a solo GP. How did you find it?

A The thing I will say is the questions that you've asked are very much in line with the questions that LPs ask. And the thing, the thing I would say is that I think when you're a solo GP fund, there's a set of, there's a set of investors who they just don't like the single key man risk of a solo GP fund. It just doesn't fit their model. It's not how they like to invest that disqualifies a certain set of people. There's a set of people out there who have a lot of exposure to micro VC already. They were early on the trend and they've, they've got a fair number of relationships and, you know, to add another one means that someone else needs to be displaced. And third, there's some people who have, you know, different preferences for generalist versus, you know, vertically oriented theme specific funds. So what I would say is my experience is the fundraising for a venture fund. It's kind of like the fundraising for a tech startup. But a little bit slower.

AI assessment note: “my experience is the fundraising for a venture fund. It's kind of like”