The Exchanges

Q Company pitch meetings, how many, and do we batch them to be efficient or kind of dispersed throughout the week?

A So here, this is the converse of what I just talked about. So I would see maybe five to 10 pitches per week, whereas my partners are probably more in the range of 10 to 15 per week. And again, that's because I'm spending my time with the portfolio, and so I'm not as available to meet new companies. And obviously, these are actual meetings. I'm not counting reviewing pitches Via email and so forth. Then the volume gets much greater. Typically they get dispersed around the week. I think it's hard to bunch them up because now you're prioritizing your own convenience over that of the entrepreneurs. So they typically get set when the entrepreneurs are available and when we're available.

AI assessment note: “I would see maybe five to 10 pitches per week... Typically they get dispersed around the week.”

Q though, by discussing an article that I love by Elad Gill on the end of Cycles, and he stated that we're all entering a period where everyone's looking for the next truly deep vein to explore. So with Snapchat, one of your portfolio companies, being the last of the truly maybe needle-moving consumer axis, would you agree with the pessimism surrounding consumer investing, or do you maybe take another stance?

A Well, I would say that Snapchat was a terrific exit, but there have been other good exits since then as well. You know, Musical.ly was sold for a And so there, there have been more exists than Snapchat, uh, on the consumer world in the past. But I think the question you're really asking about is not about exits, but about breakthroughs, because, you know, those exits obviously follow a period after which, uh, you know, a lot of value has been created. And I actually say that the evidence suggests that there's actually a lot of breakthroughs happening on the consumer side. You know, HQ Trivia is having a moment right now. TBH, Saraja, Marco Polo, Musical.ly, as we mentioned, Cheddar, Prisma, Pokemon Go, all on the app side. They've all had a chance to break through and sit at the top of the app store and break into popular culture for some period of time. There's a question between getting to that scale and then having the engagement and retention to stay at that scale, but it suggests that it's possible to break through, which is sort of the primary pessimism around whether or not it's the end of apps. And then even on the compass side, you know, you see companies like Allbirds, Rothy's, Away, growing to 1000 of millions of dollars In scale in a period of 12, 1824 months, and so I feel like that pessimism is a little bit unwarranted.

AI assessment note: “and so I feel like that pessimism is a little bit unwarranted.”

Q I love that question. It's one of my favorites, and then the final one, Jeremy, and it's like, what's your favorite story from working with Snap over these years, and what's the one that really sticks out in your memory?

A I just have this memory of when the company was very small. It was maybe like seven to 10 employees, and they were working out of a little beach house in Venice. It was right on the boardwalk, all glass windows, and this was, I think, Probably late summer, early fall of 20 12. You know, things were humming along. You know, we'd help them hire their first couple of engineers who had been Lightspeed Fellows with us over the summer working on a different startup. They picked up a couple of other employees, and I remember coming to visit the team after they'd all just completed a group workout on the beach, and they had a trainer out there who had them flipping tires and Running through the sand and so forth. And when I came in to meet with them and catch up, I just remember feeling so grateful that I had showed up directly after the workout and not directly before, because it looked like they were working themselves very, very hard before coming back in and like hitting the, um, writing more code. So, uh, that was just something that I always remember as, uh, something that brings a smile on my face.

AI assessment note: “I remember coming to visit the team after they'd all just completed a group workout”

Q very excited by the resurgence that we've seen over the last 18 months, but for those building in the space, I think there's a lot of confusion, question marks over what is good, and what's great, and what's maybe average or not good. When you think about, like, simple benchmarking for Great, good, and average. What would that look like ballpark to you? And I know that's unfair to ask.

A I think it really does depend on the specifics, but you know, if you looked at something that was comparable to Snapchat, so messaging and social media, and social networking in particular, and I draw the distinction between social media and social networking as to whether or not a response is required. So messaging and social networks, if you leave someone a message or post something You know, there is a social obligation to respond. To not reply would be rude. Whereas with social media, you can enjoy someone's post without having any obligation to respond. And because of that, that creates different levels of engagement and retention, and therefore the benchmarks are different. But I would say as a rule of thumb, in messaging and social networks, you would want to see at least a DAU to MAU ratio of north of 50%, and you would want to see at least a D-thirty of, say, 30 to 40%. For, you know, for something to, to really be working, to be sort of at that outlier level. And Snapchat exceeded both of those metrics. It was part of what gave us, you know, a lot of excitement around it. And I think it's one of those things where you may not necessarily have a thesis that there's time for a new messenger, but when you have kind of familiarity with kind of what benchmarks are and you see something breaking out, it's that distinction between kind of being purely thesis driven and havin…

AI assessment note: “want to see at least a DAU to MAU ratio of north of 50%”

Q Unsung hero from the Snap team. And what did they do behind the scenes? We've mentioned Evan and Bobby. In terms of, like, an unsung hero that you always thought was stellar, what did they do, and who are they?

A I think that, you know, Bobby doesn't get enough Credit. From the very beginning, from, I think, maybe a couple of months in, was thinking about the, you know, the breakthroughs that had been happening in computer vision and the implications for what that could build, and he had been working on, you know, a lot of that computer vision stuff well, well, well in advance of the products eventually showing up in the app, whether it be the lenses, both the inward-facing camera lenses where you can do all the fun stuff with your face, Yeah, outward facing lenses where you could identify other things, either for AR purposes or to be able to kind of interact with things. From back in 2012 and 20 13, he had started to lay out a roadmap for that, and he had just been steadily building technology and team towards that. And so that has obviously become so much of the power of Snap today. So that's one that I think, one person that I think has been definitely an unsung hero. The second one I would probably say is Imran Khan. So Imran joined as Chief Strategy Officer From Credit Suisse, I think it was probably around, and, you know, he really helped take a lot of the load off of Evan. He allowed Evan to focus on product engineering. He took over sales and monetization, ops. He did a lot of the financing work in the time when Snapchat raised a lot of capital, and really, I think, kind of allo…

AI assessment note: “The second one I would probably say is Imran Khan.”

Q you. Obviously, the team was another part that really excited you. You mentioned Evan being a student at Stanford at the time, and it was maybe less common, so to speak, in terms of backing a student team, especially in 2012. And so Barry Eggers asked this one, and it's like, How did Evan being a student at Stanford at the time, how did you factor that into your thinking?

A So to be fair, I think that there's been a history of social networks and social media largely being founded by people who were relatively earlier in their career. You know, if you look at Snap, if you look at Vine, if you look at Facebook, if you look at Instagram, if you look at Tumblr, they were all started by people who were, you know, in their early twenties. Some of them had graduated, some of them had not. But what's Far more important than their age is, is the fourth thing that we look for in a consumer investment, which is, does the founder have a unique insight that explains the success that explains what's going on? And in this case, that was the thing that really kind of drew us with a lot of conviction, which was in that very first meeting, you know, we were trying to understand what was going on and, you know, why people were so drawn to Snapchat. He said something that I think we all now know, but at the time it was a real revelation. And he talked about how social media, Facebook, and Instagram were creating a lot of performance anxiety in people because they were the highlight reels of your life. You know, they were capturing the time, you know, the best points of your life. And that was creating a lot of performance anxiety because if you weren't having dinner at some super fancy restaurant, or if your soccer team wasn't winning, you know, you weren't at like …

AI assessment note: “what's Far more important than their age is, is the fourth thing that we look for”

Q Now, I totally understand it. It's a question of kind of time and efficiency. When you think about your sourcing ability, though, and you've worked with some, some of the great people in venture, who do you think was the most naturally talented hunter and sourcer, and what do you think made them so good?

A I think that my partner, Nicole Quinn, and this is one of those tricky things when you only have visibility to the people in your own partnership. I'm sure there are tons of people who are amazing at other firms, but I don't see the benefit of their sourcing or see the evidence of their sourcing firsthand. So it's hard for me to comment about people that are other firms, and I'm sure there are plenty who are extraordinary. But, uh, Nicole Quinn has been amazing here at Lightspeed since she joined. At the end of the day, this comes down to work ethic. It comes down to likability, and it comes down to being part of connected networks that are likely to have a higher propensity to have entrepreneurs coming out of them. And on all of those dimensions, she really rates extremely highly. There's not a night of the week when she's not either organizing an event for entrepreneurs or attending a networking event. And these are not just about grip and grin and meeting people. It's about adding value to the, to these ecosystems. So, you know, whether it be she's highly active, In the, in the UK entrepreneur system here in San Francisco, you know, she's constantly organizing round table dinner panels for people who, you know, let's say all coming out of marketplaces business or kind of all coming out of the e-commerce business, you know, CEOs who have an interest in, let's say building cul…

AI assessment note: “Nicole Quinn has been amazing here at Lightspeed since she joined.”

Q then there's also a huge amount of downsides and weaknesses that I have, be it cap table formulations, be it process driven work, the backend, so to speak. My question internally for me is, do I become good at what I'm really not good at, that process driven element, the backend work of venture, or do I double down on what I am good at? What would you advise me?

A I would advise you to double down on what you're good at. Entrepreneurs who choose to work with you will choose to work with you because you're the best at something, not because you're not terrible at something else. Yeah. And I would say that for, for everybody, you have to double down on what you're good at, because again, the reason you're going to get picked in a competitive situation is because you stand out from the others on a particular dimension. And that's especially true for things that matter to the entrepreneur. Like no one cares about cap table mathematics. Like that's not a dimension on which people choose their venture capitalists. What they care about is going to depend on the entrepreneur and the company, but oftentimes it is around domain expertise. It is around the ability to Act as a catalyst for attention for the company, whether it be for hiring or for future capital fundraising. It's the ability to be a thought partner. It's, you know, it's all of those things. And those things will be different for the company, for the entrepreneur, and for each individual. But you've got to figure out what your sprites are and play to them.

AI assessment note: “I would advise you to double down on what you're good at.”

Q Uh, so this one's from Nicole Quinn herself. She says, your schedule is back to back. What are your favorite and least favorite activities?

A My favorite activities are spending time with my current portfolio in board meetings and helping them in other calls and so forth. It's just a wonderful thing to be able to be close to these great companies and these great entrepreneurs that are the reason that we're in this business. And so that's my favorite thing, without a doubt. In terms of least favorite as a category, I think that the least favorite thing is I aspire to a one business day response time to all emails that I get. And so, yeah, I think it is working down towards that zero inbox. Oftentimes that comes after I put the kids to bed at nine o'clock and putting it at two or three hours to try to get the inbox, maybe not to zero, but to single digits. That's not something I look forward to, but it's a, it is an obligation that I think we have to entrepreneurs to respond to each of them, even if we're not interested. And I know that that's, I'm more in the Adam Grant camp on this. I know that that's not a perspective that's shared for by everybody, but I think that we have an obligation to respond to every aspiring entrepreneur, even if, you know, their, their ideas are not well thought through or their ask is unreasonable. We have an obligation to respond.

AI assessment note: “In terms of least favorite as a category, I think that the least favorite thing”

Q my complete lack of driving experience or learning in any way I've I love this analogy. So I do want to kind of dig a little deeper and just ask, having seen so many companies go through that scaling process and having had so many founder interactions, what are the biggest mistakes startups make when they hit initial traction and start to scale? Have there been patterns that you've seen?

A Specifically around starting to scale, I think perhaps the most common mistake that people can make is not recognizing when the channel on which they're scaling is going to start to reach saturation. And this is more of a consumer problem than an enterprise problem, but oftentimes a new growth channel for a company looks like an S curve. And as you start to hit the bottom of that S curve and it starts to accelerate, things can look fantastic. And you want to then, you really kind of double down and take advantage of that. When you start to hit the top of that S curve, being able to tell that there truly is a ceiling to it versus thinking, well, if we just put on a different team or more money, More effort against it, and we can get back to the growth that we used to see. That is an area of distinction where I think it's possible to make the wrong decisions, and if you over-invest in a channel where you're actually seeing it top out, then you can get a little bit upside down on the economics, and that can lead to a bad outcome.

AI assessment note: “most common mistake that people can make is not recognizing when the channel”

Q to the core sourcing function. In terms of, like, advice for people entering the industry, or even advice for me, Jeremy, would you advise them and me to meet as many as possible? I'm really trying to hone our benchmarks, so to Well, would you recommend kind of the meet highly selected companies, be brave, diligent, and informed on each opportunity, and go from there? Which one would you suggest?

A I think that your strategy is going to change depending on where you are in your career. The job of venture is to spot that one in a thousand company. Not one in a hundred, not one in 10, but one in a thousand. And the challenge is you don't know what a one in a thousand company looks like until you've seen at least a thousand companies. So early in your career, it is about running the miles. And Meeting a lot of companies and starting to get some sense for what one in a thousand company might look like. So there is no substitute for just taking a lot of meetings and building a lot of companies. On the other hand, as you build a portfolio and more and more of your time is being spent working with that portfolio, then you have less time to meet companies, and so you do need to be a little bit more selective at that point.

AI assessment note: “your strategy is going to change depending on where you are in your career.”

Q then there's also a huge amount of downsides and weaknesses that I have, be it cap table formulations, be it process driven work, the backend, so to speak. My question internally for me is, do I become good at what I'm really not good at, that process driven element, the backend work of venture, or do I double down on what I am good at? What would you advise me?

A I would advise you to double down on what you're good at. Entrepreneurs who choose to work with you will choose to work with you because you're the best at something, not because you're not terrible at something else. Yeah. And I would say that for, for everybody, you have to double down on what you're good at, because again, the reason you're going to get picked in a competitive situation is because you stand out from the others on a particular dimension. And that's especially true for things that matter to the entrepreneur. Like no one cares about cap table mathematics. Like that's not a dimension on which people choose their venture capitalists. What they care about is going to depend on the entrepreneur and the company, but oftentimes it is around domain expertise. It is around the ability to Act as a catalyst for attention for the company, whether it be for hiring or for future capital fundraising. It's the ability to be a thought partner. It's, you know, it's all of those things. And those things will be different for the company, for the entrepreneur, and for each individual. But you've got to figure out what your sprites are and play to them.

AI assessment note: “I would advise you to double down on what you're good at.”

Q though, by discussing an article that I love by Elad Gill on the end of Cycles, and he stated that we're all entering a period where everyone's looking for the next truly deep vein to explore. So with Snapchat, one of your portfolio companies, being the last of the truly maybe needle-moving consumer axis, would you agree with the pessimism surrounding consumer investing, or do you maybe take another stance?

A Well, I would say that Snapchat was a terrific exit, but there have been other good exits since then as well. You know, Musical.ly was sold for a And so there, there have been more exists than Snapchat, uh, on the consumer world in the past. But I think the question you're really asking about is not about exits, but about breakthroughs, because, you know, those exits obviously follow a period after which, uh, you know, a lot of value has been created. And I actually say that the evidence suggests that there's actually a lot of breakthroughs happening on the consumer side. You know, HQ Trivia is having a moment right now. TBH, Saraja, Marco Polo, Musical.ly, as we mentioned, Cheddar, Prisma, Pokemon Go, all on the app side. They've all had a chance to break through and sit at the top of the app store and break into popular culture for some period of time. There's a question between getting to that scale and then having the engagement and retention to stay at that scale, but it suggests that it's possible to break through, which is sort of the primary pessimism around whether or not it's the end of apps. And then even on the compass side, you know, you see companies like Allbirds, Rothy's, Away, growing to 1000 of millions of dollars In scale in a period of 12, 1824 months, and so I feel like that pessimism is a little bit unwarranted.

AI assessment note: “and so I feel like that pessimism is a little bit unwarranted.”

Q Got it. On the flip side, what were some of the core reasons this wouldn't work on the post-mortem?

A So, you know, bear in mind back in 2012, you know, there weren't a lot of unicorns. Companies didn't raise as much money as they do now. The norms were very different. And one of the biggest challenges of social media companies is that they succeed, they scale users, and therefore costs far, far, far in excess of them scaling revenue. And so Burn, within a year from our investment, Burn was in excess of a million dollars a month, and that felt like a very large number back in 2012. And so there were questions about, you know, financing, capital efficiency, business model, and so forth. But, um, Historically, what we've found is that if a social network can get to a hundred million monthly active users, it typically finds a way to monetize. And so that was the upside opportunity. And then we just needed to make sure that the company was adequately financed until some of that revenue started to kick in.

AI assessment note: “there were questions about, you know, financing, capital efficiency, business model”

Q Can I ask, when you look at the persistence that you put in there, just to get in that first meeting, is there any lessons or advice that you give to, like, young, hungry associates, hunting, hunting, hunting, day in, day out? Is there any takeaways that you give to them from, like, what you went through there?

A When there's a meeting that you particularly want to have, it's often the case that a lot of people want to have that same meeting. And so I do think you've got to try to find, you know, some ways to differentiate and to stand out and to keep trying, because for sure, if you give up, the answer's going to be no. But this was a particular instance where, you know, it wasn't clear to me what was going to work. And frankly, I think the thing that probably changed the most was that they finally had a need for financing. You know, at that first meeting, they ran us through some of the metrics of the business, and it looks tremendous. And we said, well, is there anything we could do to help? And he said, well, listen, you know, My server bills are getting too much from my credit card. So yeah, I think we need, we're going to need to figure out something to help us figure out how we can pay our server bills. And I said, I think we might be able to help you with that.

AI assessment note: “you've got to try to find, you know, some ways to differentiate”

Q if they unlock this It could be X. But actually, it's such a large swathe being, you know, young people under 25 or 30, that it could be a huge company and social network in its own right. In your mind, did it need to unlock the broader swathe to be the massive outcome, or could it have been its own standalone and super exciting company just with the core?

A Obviously, you want to see the biggest possible market. And so, you know, I think it's fair to say that back in April of twenty-twelve, When the app was six months, you know, after it had started, you know, it's hard for us to predict with any degree of accuracy what it could become, but certainly the fact that we had seen by August of 20 12 that at least in one country it had spread beyond young people and, you know, encompassed the entire population was, was really, really positive. And part of the reason for that is that you do have to think about business model at some level, not immediately, but, you know, thinking about what could be possible and then In that instance, the bigger the population, the broader the population, you know, the bigger the opportunities are for advertising.

AI assessment note: “the broader the population, you know, the bigger the opportunities are for advertising.”

Q Got it. On the flip side, what were some of the core reasons this wouldn't work on the post-mortem?

A So, you know, bear in mind back in 2012, you know, there weren't a lot of unicorns. Companies didn't raise as much money as they do now. The norms were very different. And one of the biggest challenges of social media companies is that they succeed, they scale users, and therefore costs far, far, far in excess of them scaling revenue. And so Burn, within a year from our investment, Burn was in excess of a million dollars a month, and that felt like a very large number back in 2012. And so there were questions about, you know, financing, capital efficiency, business model, and so forth. But, um, Historically, what we've found is that if a social network can get to a hundred million monthly active users, it typically finds a way to monetize. And so that was the upside opportunity. And then we just needed to make sure that the company was adequately financed until some of that revenue started to kick in.

AI assessment note: “questions about, you know, financing, capital efficiency, business model, and so forth”

Q Yeah, absolutely. Can I ask, how do you approach the selectivity question? Do you kind of pre-filter meetings with Subsequent questions that you asked before kind of spending the time in person. How do you really approach that kind of set activity to ensure the time's well spent?

A Yeah, that is something I've, I've been doing more as I've sort of started to build some mental filters for what is going to be interesting. And obviously these are going to be different from industry to industry and from stage to stage and can be quite difficult at, for instance, the pre-seed or seed stage. But at the series A and series B, yeah, I will definitely be asking a lot more questions via email and oftentimes looking for some, Threshold level of engagement or retention or growth or usage before I'll take a meeting. That's not always the case, and none of these are hard and fast rules because there will be times when you feel like there's something else that's extraordinary, but oftentimes I do like to see a certain level of scale before I get to take a meeting.

AI assessment note: “at the series A and series B, yeah, I will definitely be asking a lot more questions via email”

Q my complete lack of driving experience or learning in any way I've I love this analogy. So I do want to kind of dig a little deeper and just ask, having seen so many companies go through that scaling process and having had so many founder interactions, what are the biggest mistakes startups make when they hit initial traction and start to scale? Have there been patterns that you've seen?

A Specifically around starting to scale, I think perhaps the most common mistake that people can make is not recognizing when the channel on which they're scaling is going to start to reach saturation. And this is more of a consumer problem than an enterprise problem, but oftentimes a new growth channel for a company looks like an S curve. And as you start to hit the bottom of that S curve and it starts to accelerate, things can look fantastic. And you want to then, you really kind of double down and take advantage of that. When you start to hit the top of that S curve, being able to tell that there truly is a ceiling to it versus thinking, well, if we just put on a different team or more money, More effort against it, and we can get back to the growth that we used to see. That is an area of distinction where I think it's possible to make the wrong decisions, and if you over-invest in a channel where you're actually seeing it top out, then you can get a little bit upside down on the economics, and that can lead to a bad outcome.

AI assessment note: “most common mistake that people can make is not recognizing when the channel”

Q advantage and kind of proving your domain expertise. I'm seeing such round compression at the moment that often VCs are Don't really have enough time to fully do that DD and fully build that founder relationship. Would you agree with me and what I'm seeing? And how do you think about kind of overcoming this insane round compression timeframe, which just means that everything has to be so much faster?

A Yeah, I think that especially in better known companies, I think that's absolutely true. This is frankly where having seen a lot of companies helps. It doesn't help you figure out the distinction between good versus great. More quickly if you've seen more companies, and so that can help you in that sort of blink reaction if you've got a time-compressed decision-making process. I think being able to really understand what are the crux of the issues for the company, rather than, like, needing to understand everything about a company, oftentimes there's, you know, two or three, you know, if you have a very clear investment thesis, and, like, there's two or three things that you would need to believe to believe that this company can be extraordinary, and one or two things that you would need to verify to make sure that it's not going to be a disaster, then you can focus your time on those Three to five things versus having a comprehensive checklist of 25 items that you, quote unquote, need to do to check the box to be able to make an investment. So I think that comes with domain expertise and with experience. And then finally, having already spent some time building a relationship with that entrepreneur before the financing is another major factor. And that's a large part of the prospecting that we all do as venture capitalists is ideally getting to meet people well ahead of the fi…

AI assessment note: “Yeah, I think that especially in better known companies, I think that's absolutely true.”

Q Yeah, absolutely. Can I ask, how do you approach the selectivity question? Do you kind of pre-filter meetings with Subsequent questions that you asked before kind of spending the time in person. How do you really approach that kind of set activity to ensure the time's well spent?

A Yeah, that is something I've, I've been doing more as I've sort of started to build some mental filters for what is going to be interesting. And obviously these are going to be different from industry to industry and from stage to stage and can be quite difficult at, for instance, the pre-seed or seed stage. But at the series A and series B, yeah, I will definitely be asking a lot more questions via email and oftentimes looking for some, Threshold level of engagement or retention or growth or usage before I'll take a meeting. That's not always the case, and none of these are hard and fast rules because there will be times when you feel like there's something else that's extraordinary, but oftentimes I do like to see a certain level of scale before I get to take a meeting.

AI assessment note: “I will definitely be asking a lot more questions via email”

Q her brilliance. So now we have the pipe of opportunities from that sourcing work. We need to start the evaluation process now. So when it comes to sorting, I think there's this idolized VC image who can pick the Facebook or the Snapchat of the future when looking at companies, but how do you view the actual determination process of good from great in that sourced funnel, so to speak?

A This is one of those things where I'm not sure that there's a recipe. I think if you're a reasonably intelligent, reasonably quantitative person who has some domain expertise, and I would probably put, like, most aspiring venture capitalists into this category, it's not hard to tell bad from good. That's actually a pretty easy filter. Good from great is tricky because it does require the ability to distinguish between a one in a hundred company and a one in a thousand company, and that really does come from miles. You know, from having seen enough companies that you can get that sense for what might be extraordinary and look past the many flaws that every startup has to focus on the things that could really make it special. If there were six bullet points, it would mean that the success rate for venture capitalists would be much greater because it's this secret knowledge that could be passed on from once to another. But at the end of the day, it really does come from being able to build your own kind of intuition, and that comes from having met enough companies, and that's why in many instances, Venture capitalists tend to improve their picking over time. First few years tends to be harder, and then as they get that corpus of company experience behind them, they start to recognize good from great more regularly.

AI assessment note: “Good from great is tricky because it does require... that really does come from miles.”

Q wrong, and you can see around the corner, how and kind of with what tone do you inform the founder that actually an alternative path might be better? And is this done at the board meeting? Is this done one-to-one over a coffee in a much more informal setting? How do you think about the right way to kind of relay that insight about what you've seen that could come?

A Well, let's go back to this metaphor of learning how to drive a car. You know, if someone is like straying out of their lane a little bit, but there's no one in the lane next to you, You may choose to say nothing, right? Because it's actually not that big a deal. Like, yeah, you know that it's not good to stray outside the lane, but in this particular instance, there's no damage. The driver will figure it out, and they'll eventually come back on their own. So, like, you could choose to be silent. Let's say they're, like, actually trying to stray not just off the lane, but onto the soft shoulder of the road. Well, that's a little bit worse, right? Because it's going to lead to a little bit of an uncomfortable ride. But again, like, there's going to be immediately feedback. The driver's going to realize that they're off the road, onto the shoulder, and they'll pull the car back. You may not need to say anything again. Now, if they're signed to stray towards a cliff, then you better speak up, right? And so the first question is, how catastrophic is the danger that is being averted? And if the answer is, it's not that big a deal, they'll probably figure it out on their own. Like, you got to pick your shots. You can't be crying wolf all the time. If it's catastrophic, by all means, you need to raise the red flag, and you need to do it in whichever way is the most appropriate. And of…

AI assessment note: “It could be in a board meeting. It could be one-to-one.”

Q before we dive into the quickfire, discuss one aspect of your role where you spend a lot of time, according to the research, over 1500 hours. I don't mean to scare you with that, but being on a board and being a board member. So I'd love to start with your perspective, and having been on so many incredible boards, of what makes that truly special board member to you?

A You know, a good board member, I think needs to be a thought partner to the founders and help them think through, you know, the most important strategic and tactical questions for the company. And a good board member should provide peripheral vision because, you know, a good founder, a good exec needs to be so focused and have their blinkers on because they can only really drive perhaps three initiatives at the company at a time. If you've got your head down working, you lose some of that peripheral vision. And that is something that a board member can help provide. And the other thing that a good broad member provides is, you know, this entrepreneurial path in a lot of instances, first time entrepreneurs haven't walked that path before. And a good board member who has seen the path many times can help a founder kind of see around the next corner before they get there and help them say, listen, right now we're in great shape, but I think in about a year from now, we're probably going to need to have a heavy duty CFO and it's going to take us nine months to recruit that right person. So even though things are great right now, we should think about starting to look For a CFO today, so that we're ready for when we need it a year from now. And that those, those sorts of like looking around the corner of things, that's something that a good board member can help a founder with.

AI assessment note: “a good board member, I think needs to be a thought partner to the founders”

Q the initial decision, there's always kind of the case of the best investors being able to pick twice on initial and follow on. So I'd love to hear how you think about kind of driving reserves effectively. Is it a one-to-one in your mind? Is it a stat ranked quarterly and kind of competition of capital within the portfolio? How do you look to evaluate kind of effective resource use?

A You know, when we think about reserves, again, I think you have to do it on a, uh, company by company basis. Your entry point is a series A. You can think about, well, what is the B going to look like? Is this going to be a fifteen million dollar B? And then perhaps 18 months later, it'll be a fifteen million dollar C. You know, what's our prorotter? You know, if the company's doing well, would we be looking to do our prorotter or more or less? And you can construct on a round by round basis what you would anticipate the reserves would be needed for that company. But when we back company, look, we make a Look, it's not a blind commitment, but it is a commitment, and we reserve to support that company. You know, this idea of stack rank quarterly and so forth. I mean, sometimes when you make an investment in a company, it may not always be the highest and best use of that incremental dollar. There have definitely been instances when we've bridged a company to a sale that hasn't been going that well, and we might know that we might only just get our money back on that bridge if the sale is successful, and we may not get anything back at all if the sale is But in the end, it's the right thing to do for the company. It's the right thing to do for the employees. It's the right thing to do to the founders. And when we make that commitment, you know, we take it seriously.

AI assessment note: “I think you have to do it on a, uh, company by company basis.”

Q Not at all, but I do want to go back, and I want to unpack the original Snap memo that you wrote back in 2012, and I always love a good story, so I want to start with that and some history. So, how did you meet the team? Where was the meeting? Paint that picture and contextualize it for me, if that's okay.

A Sure, yeah, it's actually kind of, um, A roundabout story. We first heard about Snapchat because one of my partners, Barry Eggers, is a very involved dad, and he noticed that his daughter had started taking weird selfies of herself. So rather than selfies where she was trying to look pretty as possible and in beautiful settings, she was making weird faces and looking strange. And he asked her, like, what's going on? And she said, oh, dad, you know, there's this new app that everyone's using at school. It's called Snapchat. You know, there's three apps that everybody at school has. Instagram, Angry Birds, and Snapchat. He thought to himself, hmm, I've heard of those first two, but I haven't heard of that third one. So he mentioned it to me, and I thought I would look into it. And the strange thing is, if you start using Snapchat without having other friends who use Snapchat, you lose all context. You don't sort of understand what it's for. So I initially didn't get it. Nevertheless, sort of persisted and tried to get a meeting with the company to find out more about it. And the Only had an info at Snapchat, the only contact info available, so I emailed them, and I never heard back, and so, you know, later on, Barry asked me if I ever found out, you know, what was going on with the Snapchat company, and I said, yeah, I'm working on that. I then looked up Snapchat on LinkedIn, and…

AI assessment note: “We first heard about Snapchat because one of my partners, Barry Eggers”

Q show is when you have an all-star founder who absolutely ticks It's that good from great box, so to speak, but the company doesn't. Or in other cases, you may have a SaaS company where it's more easy to discern whether it's good from great, but the founder isn't so much. How do you think about acceptable versus unacceptable risks, so to speak, that you're willing to take with opportunities?

A I think this is where there is room for different people to weigh risks versus opportunities differently, and this is not an absolute. This is where I think the mesh between an opportunity and A company, a founder, and an investor becomes more important. So let's take one of the examples you laid out, you know, extraordinary founder, but, ah, you know, the company, not so exciting. There will be some investors who will lean into that and say, you know what, I think that over time, a quality founder will find a great opportunity, and, like, given enough time and enough resources and runway, they will pivot this into something that is going to be extraordinary, and that's the investment I want to make, and I think that's a perfectly reasonable perspective. And on the other hand, there might be other investors who are like, ah, you know what? The one thing that you can't change about a company is the market. And so if they're pushing rock uphill, it's going to be uphill all the way. And so it doesn't actually matter how extraordinary the founder is. If they pick the wrong market, then it's going to be a tough slog forever. I think those are both perfectly reasonable perspectives. I think you'll find investors who take both positions. One of those will be a better fit for that opportunity than another. So, you know, this is one of those areas where there are many ways to be success…

AI assessment note: “there is room for different people to weigh risks versus opportunities differently”

Q Not at all, but I do want to go back, and I want to unpack the original Snap memo that you wrote back in 2012, and I always love a good story, so I want to start with that and some history. So, how did you meet the team? Where was the meeting? Paint that picture and contextualize it for me, if that's okay.

A Sure, yeah, it's actually kind of, um, A roundabout story. We first heard about Snapchat because one of my partners, Barry Eggers, is a very involved dad, and he noticed that his daughter had started taking weird selfies of herself. So rather than selfies where she was trying to look pretty as possible and in beautiful settings, she was making weird faces and looking strange. And he asked her, like, what's going on? And she said, oh, dad, you know, there's this new app that everyone's using at school. It's called Snapchat. You know, there's three apps that everybody at school has. Instagram, Angry Birds, and Snapchat. He thought to himself, hmm, I've heard of those first two, but I haven't heard of that third one. So he mentioned it to me, and I thought I would look into it. And the strange thing is, if you start using Snapchat without having other friends who use Snapchat, you lose all context. You don't sort of understand what it's for. So I initially didn't get it. Nevertheless, sort of persisted and tried to get a meeting with the company to find out more about it. And the Only had an info at Snapchat, the only contact info available, so I emailed them, and I never heard back, and so, you know, later on, Barry asked me if I ever found out, you know, what was going on with the Snapchat company, and I said, yeah, I'm working on that. I then looked up Snapchat on LinkedIn, and…

AI assessment note: “We first heard about Snapchat because one of my partners”

Q Can I ask, when you look at the persistence that you put in there, just to get in that first meeting, is there any lessons or advice that you give to, like, young, hungry associates, hunting, hunting, hunting, day in, day out? Is there any takeaways that you give to them from, like, what you went through there?

A When there's a meeting that you particularly want to have, it's often the case that a lot of people want to have that same meeting. And so I do think you've got to try to find, you know, some ways to differentiate and to stand out and to keep trying, because for sure, if you give up, the answer's going to be no. But this was a particular instance where, you know, it wasn't clear to me what was going to work. And frankly, I think the thing that probably changed the most was that they finally had a need for financing. You know, at that first meeting, they ran us through some of the metrics of the business, and it looks tremendous. And we said, well, is there anything we could do to help? And he said, well, listen, you know, My server bills are getting too much from my credit card. So yeah, I think we need, we're going to need to figure out something to help us figure out how we can pay our server bills. And I said, I think we might be able to help you with that.

AI assessment note: “try to find, you know, some ways to differentiate and to stand out”

Q you. Obviously, the team was another part that really excited you. You mentioned Evan being a student at Stanford at the time, and it was maybe less common, so to speak, in terms of backing a student team, especially in 2012. And so Barry Eggers asked this one, and it's like, How did Evan being a student at Stanford at the time, how did you factor that into your thinking?

A So to be fair, I think that there's been a history of social networks and social media largely being founded by people who were relatively earlier in their career. You know, if you look at Snap, if you look at Vine, if you look at Facebook, if you look at Instagram, if you look at Tumblr, they were all started by people who were, you know, in their early twenties. Some of them had graduated, some of them had not. But what's Far more important than their age is, is the fourth thing that we look for in a consumer investment, which is, does the founder have a unique insight that explains the success that explains what's going on? And in this case, that was the thing that really kind of drew us with a lot of conviction, which was in that very first meeting, you know, we were trying to understand what was going on and, you know, why people were so drawn to Snapchat. He said something that I think we all now know, but at the time it was a real revelation. And he talked about how social media, Facebook, and Instagram were creating a lot of performance anxiety in people because they were the highlight reels of your life. You know, they were capturing the time, you know, the best points of your life. And that was creating a lot of performance anxiety because if you weren't having dinner at some super fancy restaurant, or if your soccer team wasn't winning, you know, you weren't at like …

AI assessment note: “what's Far more important than their age is, is the fourth thing that we look for”