The Exchanges

Q And when you look at LHV now, it's immensely successful in terms of its branding in the New York ecosystem, and its investments to date have been, you know, Spectacular. So, what do you think the determinant of LHV's success has been?

A Well, I think, uh, in good part, it's been because we've had a very consistent, uh, and very simple strategy, and our, our, and we've maintained that strategy, uh, over the five years that we, uh, we've been in operations. Uh, we have not deviated from it, and do not intend to, um, and that strategy is Very, very basic. We are seed investors first, and we're New York investors first. So we've, our first investment is always at the seed level. We keep, uh, money in reserve so that we can follow on, and that's a very important, um, component of our portfolio construction. Uh, and then we're New York investors first. So, uh, about 70%, um, of our companies are in, uh, in New York itself. So we want to invest in our own backyard.

AI assessment note: “it's been because we've had a very consistent, uh, and very simple strategy”

Q Now, I have to say a quick thank you to Eric Paley for the intro, which allowed this interview to happen, so Eric, thank you so much for that, and I'd love to start off, though, now with you today by hearing a little background, and can you give us a quick snapshot of how you got into venture and technology?

A Okay, sure. So, not to go too far back, uh, in the 19 nineties, I was the Uh, CEO of a company called Zip Davis, and we published all the big computer magazines. Um, it's, um, amazing how, um, some of the younger entrepreneurs who I, uh, I finance today don't remember, uh, PC Magazine, or Computer Shopper, or PC Week. Anyway, all these, uh, were Zip Davis publications. We also had all the big trade shows like Comdex, um, and then a variety of different other services that, uh, Exclusively, exclusively serve the, uh, the technology industry. So we saw ourselves as being in the tech business, uh, not, not being in the media business. We sold that business to, uh, well, we sold it to a private equity firm, and then we, the private equity firm sold it to SoftBank of Japan. When SoftBank bought Ziv Davis, uh, we at Ziv Davis were about to make an investment in Yahoo. Uh, just kind of, uh, as the second institutional investor, um, you know, I have to say courier, but before the IPO. And, um, uh, SoftBank, Masayoshi Son of SoftBank liked the idea so much that, uh, he, uh, SoftBank then ended up owning, as you'll recall, uh, a third of Yahoo at the IPO.

AI assessment note: “in the 19 nineties, I was the Uh, CEO of a company called Zip Davis”

Q And when you look at LHV now, it's immensely successful in terms of its branding in the New York ecosystem, and its investments to date have been, you know, Spectacular. So, what do you think the determinant of LHV's success has been?

A Well, I think, uh, in good part, it's been because we've had a very consistent, uh, and very simple strategy, and our, our, and we've maintained that strategy, uh, over the five years that we, uh, we've been in operations. Uh, we have not deviated from it, and do not intend to, um, and that strategy is Very, very basic. We are seed investors first, and we're New York investors first. So we've, our first investment is always at the seed level. We keep, uh, money in reserve so that we can follow on, and that's a very important, um, component of our portfolio construction. Uh, and then we're New York investors first. So, uh, about 70%, um, of our companies are in, uh, in New York itself. So we want to invest in our own backyard.

AI assessment note: “it's been because we've had a very consistent, uh, and very simple strategy”

Q And what do you think the biggest help is that you can provide seed investors then? What's the big value add, uh, of LHV? Is it, and that seed, um, investors can provide in general? Is it the promise of further funding? Is it connections to partnerships? What is it for you?

A Well, there's, we have two layers or two levels of support. The first one is a, we have a product, we have a technology platform, and one of our team members is a full-time engineer. Uh, so we have a technology platform that we plug our companies into, and on that platform exists a number of services, um, that, um, are common to everybody. So, uh, recruiting database, marketing database, best work. Best vendors, best practices, a, um, a database of, um, with current information about series A and series B investors and what they're looking for. So we can't work continuously building a new products on that particular platform. And there's also a communications layer that's private to our portfolio companies so that our founders and CEOs can talk to each other, hopefully support each other directly. That's, that's one level. The second level, Is that each, each company is assigned to one partner and one of our associates, so we have a, a, a, um, bespoke plan, uh, for every company, um, with a to-do list, uh, that we, um, that the company would like us to help them with, and it could be anywhere from, you know, what, you know, introductions, um, uh, help with branding, help with pricing, help with, um, Uh, organizational, uh, structure. You know, so anything that, um, an inflection point, uh, in the life, in the early life of a company, uh, we are here to help them and, uh, and ha…

AI assessment note: “we have two layers or two levels of support. The first one is”

Q And what, what are the biggest and most common problems then that your companies face, would you say?

A It really depends on, on, on the sector. So, uh, if, if you're a SaaS business, um, you know, being able to correctly size your market opportunities so that you go after the very largest customers, um, In that particular market segment is invariably an exercise that every SaaS company has to go through. Um, so that in, in a SaaS market, uh, the company that, uh, captures the, the largest customers or the most important customers, um, gets a major premium on its valuation. So, um, it's not obvious for a startup SaaS business that that'd be the case because it's the most difficult step, you know, to sell to A fortune 100 as a startup is way more difficult than to go start, you know, sell to a small business around the corner. But, but, but that needs to be done. So we, you know, we, we have seen that before. We give them a roadmap in how to do that. So that would be just one example of having to do with SaaS.

AI assessment note: “to sell to A fortune 100 as a startup is way more difficult”

Q And as a board member of BuzzFeed, we've seen the explosion of, of BuzzFeed as a news platform over the last few years. What, why do you think that is over the plethora of other platforms that have emerged also?

A We have to remember, you know, that BuzzFeed has been around for maybe eight years now, or maybe next year will be, I'm not quite sure, seven or eight years. So this is not, it's not a flash in the pan phenomenon. Uh, Jonah Peretti, the, the, the founder of And the CEO of BuzzFeed, uh, has been a student of, uh, how content goes viral, how people share content, and why it goes viral, why it's shared, you know, way before it was fashionable, and way before, um, it was even technologically, uh, you know, capable. Uh, we, we had some, uh, early experiments of that at Huffington Post, and then he decided, uh, that he wanted to, uh, form his own company and, and, and, and do this, uh, in a more dedicated fashion. Um, so he has benefited from the fact that he's built an enormous amount of technology that allows him, uh, to then develop the kind of content, uh, that becomes the most popular. And it's all high quality content. It's all original. And he does this on scale. And he does this, um, both with kind of own and operated, you know, his own website and his own destination, as well as, uh, on major, uh, There are social platforms such as YouTube and Facebook and Snapchat. So, um, this is not something that was built overnight. It was built over the years.

AI assessment note: “he has benefited from the fact that he's built an enormous amount of technology”

Q And what do you think the biggest help is that you can provide seed investors then? What's the big value add, uh, of LHV? Is it, and that seed, um, investors can provide in general? Is it the promise of further funding? Is it connections to partnerships? What is it for you?

A Well, there's, we have two layers or two levels of support. The first one is a, we have a product, we have a technology platform, and one of our team members is a full-time engineer. Uh, so we have a technology platform that we plug our companies into, and on that platform exists a number of services, um, that, um, are common to everybody. So, uh, recruiting database, marketing database, best work. Best vendors, best practices, a, um, a database of, um, with current information about series A and series B investors and what they're looking for. So we can't work continuously building a new products on that particular platform. And there's also a communications layer that's private to our portfolio companies so that our founders and CEOs can talk to each other, hopefully support each other directly. That's, that's one level. The second level, Is that each, each company is assigned to one partner and one of our associates, so we have a, a, a, um, bespoke plan, uh, for every company, um, with a to-do list, uh, that we, um, that the company would like us to help them with, and it could be anywhere from, you know, what, you know, introductions, um, uh, help with branding, help with pricing, help with, um, Uh, organizational, uh, structure. You know, so anything that, um, an inflection point, uh, in the life, in the early life of a company, uh, we are here to help them and, uh, and ha…

AI assessment note: “we have two layers or two levels of support. The first one is a, we have a product”

Q And what, what are the biggest and most common problems then that your companies face, would you say?

A It really depends on, on, on the sector. So, uh, if, if you're a SaaS business, um, you know, being able to correctly size your market opportunities so that you go after the very largest customers, um, In that particular market segment is invariably an exercise that every SaaS company has to go through. Um, so that in, in a SaaS market, uh, the company that, uh, captures the, the largest customers or the most important customers, um, gets a major premium on its valuation. So, um, it's not obvious for a startup SaaS business that that'd be the case because it's the most difficult step, you know, to sell to A fortune 100 as a startup is way more difficult than to go start, you know, sell to a small business around the corner. But, but, but that needs to be done. So we, you know, we, we have seen that before. We give them a roadmap in how to do that. So that would be just one example of having to do with SaaS.

AI assessment note: “being able to correctly size your market opportunities so that you go after the very largest”

Q And as a board member of BuzzFeed, we've seen the explosion of, of BuzzFeed as a news platform over the last few years. What, why do you think that is over the plethora of other platforms that have emerged also?

A We have to remember, you know, that BuzzFeed has been around for maybe eight years now, or maybe next year will be, I'm not quite sure, seven or eight years. So this is not, it's not a flash in the pan phenomenon. Uh, Jonah Peretti, the, the, the founder of And the CEO of BuzzFeed, uh, has been a student of, uh, how content goes viral, how people share content, and why it goes viral, why it's shared, you know, way before it was fashionable, and way before, um, it was even technologically, uh, you know, capable. Uh, we, we had some, uh, early experiments of that at Huffington Post, and then he decided, uh, that he wanted to, uh, form his own company and, and, and, and do this, uh, in a more dedicated fashion. Um, so he has benefited from the fact that he's built an enormous amount of technology that allows him, uh, to then develop the kind of content, uh, that becomes the most popular. And it's all high quality content. It's all original. And he does this on scale. And he does this, um, both with kind of own and operated, you know, his own website and his own destination, as well as, uh, on major, uh, There are social platforms such as YouTube and Facebook and Snapchat. So, um, this is not something that was built overnight. It was built over the years.

AI assessment note: “he has benefited from the fact that he's built an enormous amount of technology”

Q Do you, do you view LHV as a, as a startup in itself, really?

A Well, we actually run it as a startup. Yes, very much so. Uh, and our first fund was very, very small. It was eight and a half million dollars. We really didn't have any, any, you know, eight and a half million dollars doesn't give you much in management fees. I don't even know that we had a full, first full-time employee in the first fund. I think we obviously had some in the second fund. Um, and then we built, uh, we built our team, uh, over time, you know, uh, making sure that, um, you know, what we were doing first was working, uh, Adding to the team in terms of culture, building the right kind of culture that we wanted, um, and so building on it in, you know, kind of careful ways. Yeah, we treat it very much like a startup, and we, we, here, everyone does everything, you know, like a good startup should do.

AI assessment note: “Well, we actually run it as a startup. Yes, very much so.”

Q And I'd love to take a step back now and discuss the New York seed environment as a whole. And we've, we've had quite a few, um, Seed investors from New York on the show with, uh, Brooklyn Bridge and FF and, uh, Ed Sim at Bold Start. Uh, so how do you view the overall New York seed environment?

A So, you know, seed is, is pretty broad. You know, for, for instance, we, our first check, um, in, is, is typically these days with our new fund is typically seven hundred and fifty two million dollars. Um, so, but you also have seed investors who will write a 100,000 dollar check or 250,000 dollar check. So it's, it kind of, it's, um, you know, it's, it's a pretty broad, um, uh, segment. But, but generally speaking, uh, you know, um, I, I would, I would characterize The ecosystem here in New York has been very collaborative. Everyone knows everybody. Um, we, uh, we co-invest. We, we've co-invested with everybody. Everyone's co-invested with us. Uh, we, you know, we don't get too, um, worked up if somebody else wants to take the lead, as long as the terms are acceptable. Um, you know, we, we don't put our ego, uh, in front of, uh, you know, of our desire to invest in the very best companies.

AI assessment note: “I would characterize The ecosystem here in New York has been very collaborative.”

Q Now, I have to say a quick thank you to Eric Paley for the intro, which allowed this interview to happen, so Eric, thank you so much for that, and I'd love to start off, though, now with you today by hearing a little background, and can you give us a quick snapshot of how you got into venture and technology?

A Okay, sure. So, not to go too far back, uh, in the 19 nineties, I was the Uh, CEO of a company called Zip Davis, and we published all the big computer magazines. Um, it's, um, amazing how, um, some of the younger entrepreneurs who I, uh, I finance today don't remember, uh, PC Magazine, or Computer Shopper, or PC Week. Anyway, all these, uh, were Zip Davis publications. We also had all the big trade shows like Comdex, um, and then a variety of different other services that, uh, Exclusively, exclusively serve the, uh, the technology industry. So we saw ourselves as being in the tech business, uh, not, not being in the media business. We sold that business to, uh, well, we sold it to a private equity firm, and then we, the private equity firm sold it to SoftBank of Japan. When SoftBank bought Ziv Davis, uh, we at Ziv Davis were about to make an investment in Yahoo. Uh, just kind of, uh, as the second institutional investor, um, you know, I have to say courier, but before the IPO. And, um, uh, SoftBank, Masayoshi Son of SoftBank liked the idea so much that, uh, he, uh, SoftBank then ended up owning, as you'll recall, uh, a third of Yahoo at the IPO.

AI assessment note: “we at Ziv Davis were about to make an investment in Yahoo.”

Q partner at SoftBank Capital, President at SoftBank International Ventures, but you've also been CEO at Huffington Post, and, and founding partner, obviously, Lira Hippo Ventures. So let's discuss the VC to operator to VC dilemma, uh, in, in the career, and a question from actually Eric Paley, who asked, how do you compare the two VC to operator, and do you think each draws on the same skills and strengths?

A Well, let's, let's, you know, talk about what's, what's common or, you know, what, obviously what's common is that when you, uh, back a company, you're backing a business that's in formation and having a business experience and having, um, you know, the, the, the experience of, of growing a business and hiring people and, um, and strategizing on the business, uh, and all of these kind of skills, uh, Are really, really important, you know, when you invest. Obviously you learn those skills, uh, as an operator. Um, so going back and forth, which is not something that you would do too often, but going back and forth, uh, really hones in on those skills and, and, and helps out. And here at Lara Hippo Ventures, all of us have an operating background, and we find that to be, uh, you know, pretty important, uh, in terms of, uh, the support and the advice and the help that we can give our companies. Uh, what's, obviously what's different, uh, Is, um, is, um, probably the biggest difference is the time horizon. As a, as a, as a venture capitalist, you have to take the really, really long view. Um, because it takes time to invest a fund, uh, it takes, um, time to, uh, start reaping the, um, the, the, the benefits, let alone the profits of a fund, and then typically you want to return money first to your Limited partners. So, you know, it'll be a good number of years, uh, before you start …

AI assessment note: “what's common is that when you, uh, back a company... what's different is the time horizon.”

Q Do you, do you view LHV as a, as a startup in itself, really?

A Well, we actually run it as a startup. Yes, very much so. Uh, and our first fund was very, very small. It was eight and a half million dollars. We really didn't have any, any, you know, eight and a half million dollars doesn't give you much in management fees. I don't even know that we had a full, first full-time employee in the first fund. I think we obviously had some in the second fund. Um, and then we built, uh, we built our team, uh, over time, you know, uh, making sure that, um, you know, what we were doing first was working, uh, Adding to the team in terms of culture, building the right kind of culture that we wanted, um, and so building on it in, you know, kind of careful ways. Yeah, we treat it very much like a startup, and we, we, here, everyone does everything, you know, like a good startup should do.

AI assessment note: “Well, we actually run it as a startup. Yes, very much so.”

Q partner at SoftBank Capital, President at SoftBank International Ventures, but you've also been CEO at Huffington Post, and, and founding partner, obviously, Lira Hippo Ventures. So let's discuss the VC to operator to VC dilemma, uh, in, in the career, and a question from actually Eric Paley, who asked, how do you compare the two VC to operator, and do you think each draws on the same skills and strengths?

A Well, let's, let's, you know, talk about what's, what's common or, you know, what, obviously what's common is that when you, uh, back a company, you're backing a business that's in formation and having a business experience and having, um, you know, the, the, the experience of, of growing a business and hiring people and, um, and strategizing on the business, uh, and all of these kind of skills, uh, Are really, really important, you know, when you invest. Obviously you learn those skills, uh, as an operator. Um, so going back and forth, which is not something that you would do too often, but going back and forth, uh, really hones in on those skills and, and, and helps out. And here at Lara Hippo Ventures, all of us have an operating background, and we find that to be, uh, you know, pretty important, uh, in terms of, uh, the support and the advice and the help that we can give our companies. Uh, what's, obviously what's different, uh, Is, um, is, um, probably the biggest difference is the time horizon. As a, as a, as a venture capitalist, you have to take the really, really long view. Um, because it takes time to invest a fund, uh, it takes, um, time to, uh, start reaping the, um, the, the, the benefits, let alone the profits of a fund, and then typically you want to return money first to your Limited partners. So, you know, it'll be a good number of years, uh, before you start …

AI assessment note: “what's common is that when you, uh, back a company... what's, obviously what's different”

Q And I'd love to take a step back now and discuss the New York seed environment as a whole. And we've, we've had quite a few, um, Seed investors from New York on the show with, uh, Brooklyn Bridge and FF and, uh, Ed Sim at Bold Start. Uh, so how do you view the overall New York seed environment?

A So, you know, seed is, is pretty broad. You know, for, for instance, we, our first check, um, in, is, is typically these days with our new fund is typically seven hundred and fifty two million dollars. Um, so, but you also have seed investors who will write a 100,000 dollar check or 250,000 dollar check. So it's, it kind of, it's, um, you know, it's, it's a pretty broad, um, uh, segment. But, but generally speaking, uh, you know, um, I, I would, I would characterize The ecosystem here in New York has been very collaborative. Everyone knows everybody. Um, we, uh, we co-invest. We, we've co-invested with everybody. Everyone's co-invested with us. Uh, we, you know, we don't get too, um, worked up if somebody else wants to take the lead, as long as the terms are acceptable. Um, you know, we, we don't put our ego, uh, in front of, uh, you know, of our desire to invest in the very best companies.

AI assessment note: “I would characterize The ecosystem here in New York has been very collaborative.”

Q And I have to ask now about the pitches that you've seen. With your years in VC, I'm sure you've seen many pitches, so what was the best pitch that you've seen, and why was that?

A Oh boy, I mean, I've seen a ton of really, really great pitches. I mean, you know, a great pitch, I'm not sure that I want a single Any of them out? Because I think that would be somewhat unfair. Here's what we're looking for, and, and, and he, and obviously a pitch should be kind of, um, adapted to that. I mean, uh, what we, what we look for first is the idea. Is it a big idea? Does it address a very large market? Uh, does it have a, you know, uh, is it very original? Is it something that you can only do today because the technology has now allowed you to do that? You know, so, so it's all about the idea. Then I would say that the second thing that we look for is Timing. You know, is it, is it the right time for this, uh, company to be launched? Um, because if you invest too early, um, it's not gonna, the market's not gonna develop, and you, you'll lose all your money, and if you invest too late, you're gonna be investing in some sort of a me-too company. So, we're looking for, uh, that right timing. You know, there's no methodology for that. It's, it's all about experience, and, uh, just being, being in the flow, being in the marketplace. And so, once, uh, Once that is, that is established, then we really want to know who you are, who is the entrepreneur, and why, uh, why do they believe that they can do this? What's in their background? What's in their DNA, uh, that will con…

AI assessment note: “I'm not sure that I want a single Any of them out... Here's what we're looking for”

Q And I have to ask now about the pitches that you've seen. With your years in VC, I'm sure you've seen many pitches, so what was the best pitch that you've seen, and why was that?

A Oh boy, I mean, I've seen a ton of really, really great pitches. I mean, you know, a great pitch, I'm not sure that I want a single Any of them out? Because I think that would be somewhat unfair. Here's what we're looking for, and, and, and he, and obviously a pitch should be kind of, um, adapted to that. I mean, uh, what we, what we look for first is the idea. Is it a big idea? Does it address a very large market? Uh, does it have a, you know, uh, is it very original? Is it something that you can only do today because the technology has now allowed you to do that? You know, so, so it's all about the idea. Then I would say that the second thing that we look for is Timing. You know, is it, is it the right time for this, uh, company to be launched? Um, because if you invest too early, um, it's not gonna, the market's not gonna develop, and you, you'll lose all your money, and if you invest too late, you're gonna be investing in some sort of a me-too company. So, we're looking for, uh, that right timing. You know, there's no methodology for that. It's, it's all about experience, and, uh, just being, being in the flow, being in the marketplace. And so, once, uh, Once that is, that is established, then we really want to know who you are, who is the entrepreneur, and why, uh, why do they believe that they can do this? What's in their background? What's in their DNA, uh, that will con…

AI assessment note: “I'm not sure that I want a single Any of them out?”