The Exchanges

Q touch on something that Peter Fenton told me the other day, and he said that great enterprise investors require the same skills as consumer investors. Because you've said to me before that the levers required to be successful as a consumer or an enterprise startup are the same or similar with regards to go to market. What are those levers, and what's the thesis leading to this kind of summarization?

A Completely. It's funny, you know, at the early stage, people will really focus, you know, because, as I mentioned earlier, having some, like, technical or deep market expertise can help differentiate when there's not a lot of data about a company, and at the late stage, we kind of get to be more generalists, and it's funny to be a generalist The best enterprise companies and the best consumer companies, they really look quite similar underneath the covers. And, you know, I think one is this idea of like product market fit. There is a phenomenal product that's positioned and priced properly that consumers of that product, whether they are a company or a person love. And the second lever that I think is really important are the ability to develop organic channels. And, you know, I think that whether you're selling like a beauty product or whether you're selling enterprise software, having way to Get your product into the hands of consumers that you own, that's proprietary to you, and that's relatively inexpensive to kind of the market rate is how you can actually scale unfairly against your competitors. And I think about that, you know, in a lot of different ways. So I think for enterprise companies, I think a lot about Looker. I think Looker is a company that has great product market fit, and they've really built this incredible word of mouth channel. I don't know a venture-back…

AI assessment note: “one is this idea of like product market fit... And the second lever”

Q No, I do completely agree, and I'm so pleased that you mentioned kind of the transition there from kind of earlier to later stage now with IVP, because one of your former colleagues, as you mentioned, Maha from Canaan, asked, how's the transition been from early to late And what have been the fundamental differences for you in their style?

A For sure. So I would say the biggest kind of fundamental difference between early and late is the pace of companies. So I remember when I first joined IBP, Jules Maltz said to me, he's like, if I see five companies in a week, like five quality companies a week, I've had a great week. Not like five companies in a week. At the early stage, like if you saw five companies a week, like you're never going to make it, right? You're seeing eight companies a day. Because the only way to really understand what's happening is to be meeting with CEOs. Whereas at the late stage, there's fewer companies kind of that get to our stage. And there's a lot more data in the market around how those companies are doing and what the trends are. And, and so you want to kind of spend more of your time understanding the broader market and less of your time just trying to chase down every single meeting. So the pace is really different. Also, you know, the way that early stage and late stage investors kind of think about their companies, early stage investors are really getting sold on the vision. Right. On this idea of this is what can build. And generally there's some early traction that points, you know, that, that this vision is real and it's tenable. And late stage investors, frankly, are, are kind of bad at giving entrepreneurs credit for what could be. They see that as upside, but really they're v…

AI assessment note: “biggest kind of fundamental difference between early and late is the pace of companies”

Q touch on something that Peter Fenton told me the other day, and he said that great enterprise investors require the same skills as consumer investors. Because you've said to me before that the levers required to be successful as a consumer or an enterprise startup are the same or similar with regards to go to market. What are those levers, and what's the thesis leading to this kind of summarization?

A Completely. It's funny, you know, at the early stage, people will really focus, you know, because, as I mentioned earlier, having some, like, technical or deep market expertise can help differentiate when there's not a lot of data about a company, and at the late stage, we kind of get to be more generalists, and it's funny to be a generalist The best enterprise companies and the best consumer companies, they really look quite similar underneath the covers. And, you know, I think one is this idea of like product market fit. There is a phenomenal product that's positioned and priced properly that consumers of that product, whether they are a company or a person love. And the second lever that I think is really important are the ability to develop organic channels. And, you know, I think that whether you're selling like a beauty product or whether you're selling enterprise software, having way to Get your product into the hands of consumers that you own, that's proprietary to you, and that's relatively inexpensive to kind of the market rate is how you can actually scale unfairly against your competitors. And I think about that, you know, in a lot of different ways. So I think for enterprise companies, I think a lot about Looker. I think Looker is a company that has great product market fit, and they've really built this incredible word of mouth channel. I don't know a venture-back…

AI assessment note: “one is this idea of like product market fit... second lever... develop organic channels”

Q No, I do completely agree, and I'm so pleased that you mentioned kind of the transition there from kind of earlier to later stage now with IVP, because one of your former colleagues, as you mentioned, Maha from Canaan, asked, how's the transition been from early to late And what have been the fundamental differences for you in their style?

A For sure. So I would say the biggest kind of fundamental difference between early and late is the pace of companies. So I remember when I first joined IBP, Jules Maltz said to me, he's like, if I see five companies in a week, like five quality companies a week, I've had a great week. Not like five companies in a week. At the early stage, like if you saw five companies a week, like you're never going to make it, right? You're seeing eight companies a day. Because the only way to really understand what's happening is to be meeting with CEOs. Whereas at the late stage, there's fewer companies kind of that get to our stage. And there's a lot more data in the market around how those companies are doing and what the trends are. And, and so you want to kind of spend more of your time understanding the broader market and less of your time just trying to chase down every single meeting. So the pace is really different. Also, you know, the way that early stage and late stage investors kind of think about their companies, early stage investors are really getting sold on the vision. Right. On this idea of this is what can build. And generally there's some early traction that points, you know, that, that this vision is real and it's tenable. And late stage investors, frankly, are, are kind of bad at giving entrepreneurs credit for what could be. They see that as upside, but really they're v…

AI assessment note: “the biggest kind of fundamental difference between early and late is the pace of companies.”

Q said with regards to kind of consumer go to market, he was an increasingly concerned and kind of viewed consumer less attractively from a VC perspective due to the distribution incumbency advantage with the likes of Apple's App Store, Google Play, Amazon, controlling so much of this. What are your thoughts on the incumbency advantage with regards to the distribution channels? And kind of how that affects the go-to-market strategies.

A I mean, I completely agree. I think that the incumbents are so, so powerful, A, and B, so good, that it's really difficult to break out. I mean, if you think about mobile, you think about the app store, it's really this, you know, wall guard enclosed ecosystem, and the app store itself is basically Yahoo, right? It's a directory. It's not even certain, right? There isn't even Google yet for, for mobile, which is kind of crazy. And then if you think about that, like, Facebook really capitalized on that opportunity and created this mobile app install ecosystem due to deficiencies and, and what Apple sent out to the market. They built a giant business through that, but it's really expensive to get through either of those channels today. However, I think that this is also like a tale as old as time. You know, I mentioned like I had a made stocky Facebook apps back in the day and then Facebook shut us down because they own the channel. That, you know, young companies can find a marketing channel that's dependent on a platform. That platform changes the rules. I mean, I remember, like, Google and their, what was that, the Panda update probably, what, 1012 years ago that killed everybody's SEO, right? But young companies will do this, go to market, they'll find a platform that works really well, and then that platform changes the rules, and they can't get through anymore. And I think …

AI assessment note: “I completely agree. I think that the incumbents are so, so powerful”

Q Can I ask, as a growth investor, what does product market fit look like to you? I, I know the likes of Jason Lampkin, obviously much earlier stage, says it's the first 10 unaffiliated customers. What makes you go, ah, this is IVP ready?

A I think for us, or for me at least, it's when you see, when the metrics are, when you see that the metrics have been repeatable, and that they're starting to improve, and kind of, and that sounds really Generic. But kind of what I mean by that is that we see things like in a consumer company, you see that smile of retention, or you see those first kind of inklings that new customers first purchase is higher than the new customer first purchase a year ago. I think that it's seeing things like magic number increasing. Like a lot of times what we all see is kind of this saw pattern almost in, in magic number over quarters is that you can see, you know, a company investing in new sales reps. So magic number will go down. And then we see the, those Perform, and so it goes up, and then they'll invest again, and we'll see it go down, and it goes up, and just that seeing that they're able to repeatably invest in hiring new sales reps to sell the product. So I think it's the metrics, that there's some cadence to the metrics, and we see that there are things, you know, they started out good, and they've gotten better.

AI assessment note: “it's when you see that the metrics have been repeatable, and that they're starting”

Q said with regards to kind of consumer go to market, he was an increasingly concerned and kind of viewed consumer less attractively from a VC perspective due to the distribution incumbency advantage with the likes of Apple's App Store, Google Play, Amazon, controlling so much of this. What are your thoughts on the incumbency advantage with regards to the distribution channels? And kind of how that affects the go-to-market strategies.

A I mean, I completely agree. I think that the incumbents are so, so powerful, A, and B, so good, that it's really difficult to break out. I mean, if you think about mobile, you think about the app store, it's really this, you know, wall guard enclosed ecosystem, and the app store itself is basically Yahoo, right? It's a directory. It's not even certain, right? There isn't even Google yet for, for mobile, which is kind of crazy. And then if you think about that, like, Facebook really capitalized on that opportunity and created this mobile app install ecosystem due to deficiencies and, and what Apple sent out to the market. They built a giant business through that, but it's really expensive to get through either of those channels today. However, I think that this is also like a tale as old as time. You know, I mentioned like I had a made stocky Facebook apps back in the day and then Facebook shut us down because they own the channel. That, you know, young companies can find a marketing channel that's dependent on a platform. That platform changes the rules. I mean, I remember, like, Google and their, what was that, the Panda update probably, what, 1012 years ago that killed everybody's SEO, right? But young companies will do this, go to market, they'll find a platform that works really well, and then that platform changes the rules, and they can't get through anymore. And I think …

AI assessment note: “I completely agree. I think that the incumbents are so, so powerful”

Q Can I ask, as a growth investor, what does product market fit look like to you? I, I know the likes of Jason Lampkin, obviously much earlier stage, says it's the first 10 unaffiliated customers. What makes you go, ah, this is IVP ready?

A I think for us, or for me at least, it's when you see, when the metrics are, when you see that the metrics have been repeatable, and that they're starting to improve, and kind of, and that sounds really Generic. But kind of what I mean by that is that we see things like in a consumer company, you see that smile of retention, or you see those first kind of inklings that new customers first purchase is higher than the new customer first purchase a year ago. I think that it's seeing things like magic number increasing. Like a lot of times what we all see is kind of this saw pattern almost in, in magic number over quarters is that you can see, you know, a company investing in new sales reps. So magic number will go down. And then we see the, those Perform, and so it goes up, and then they'll invest again, and we'll see it go down, and it goes up, and just that seeing that they're able to repeatably invest in hiring new sales reps to sell the product. So I think it's the metrics, that there's some cadence to the metrics, and we see that there are things, you know, they started out good, and they've gotten better.

AI assessment note: “when you see that the metrics have been repeatable, and that they're starting to improve”

Q After that kind question, Jenny drops a bombshell. Um, what type of innovation, though, this is from Layla Sturdy, what type of innovation and capabilities do next-generation BI companies bring to the market?

A Oh, I mean, I think what's so exciting about being a BI company today is just the fact of how Good and fast and standardized. The infrastructure is underneath, right, with these cloud services that really have these, like, amazing, fast analytic databases, and that you can put kind of interesting things on top. I think that just this idea that you can be infinitely scalable is incredible, and I, I love that you get that push from the bottom, and then I think the pull from the top that you get is that, A, consumers kind of expect and demand a really personalized experience, and B, data analysts at any company can really get this Deep view, a deep kind of longitudinal view of their, of their user, their consumer, because we have such great, you know, everybody's like using everything through a phone. And so that's, you can really track one user and everything about them over a very long period of time. So I think we're just kind of at this amazing intersection of really high quality performance infrastructure underneath you and so much data being generated and so much kind of consumer pull and expectation for data informed experiences from the top. I just think

AI assessment note: “what's so exciting about being a BI company today is just the fact”

Q Can I ask, how does the increased competition, as you said there, from the likes of lifecycle firms like NEA, and then also the likes of LP co-investments, which we've seen more and more, how does that impact your role as a late stage firm like IVP?

A I mean, I think that The market is more competitive for everyone. I think a long time ago in the eighties and nineties, the, you know, venture was a, it was a buyer's market, right? There were more companies than there were capital. And today I think we have more capital than there are good companies. It's easier than ever to start a company, which is really exciting, but there's more money than ever to invest in them. So I think that it's definitely more competitive. Our jobs are definitely harder, but on the other hand, it's, it's just like, it's such an exciting time because there's so much early stage money that there are so many companies that get to our level. Right. There are so many companies to look at. It's really exciting, but yeah, you're totally right. It's completely competitive.

AI assessment note: “Our jobs are definitely harder, but on the other hand, it's, it's just like, it's such an exciting time”

Q After that kind question, Jenny drops a bombshell. Um, what type of innovation, though, this is from Layla Sturdy, what type of innovation and capabilities do next-generation BI companies bring to the market?

A Oh, I mean, I think what's so exciting about being a BI company today is just the fact of how Good and fast and standardized. The infrastructure is underneath, right, with these cloud services that really have these, like, amazing, fast analytic databases, and that you can put kind of interesting things on top. I think that just this idea that you can be infinitely scalable is incredible, and I, I love that you get that push from the bottom, and then I think the pull from the top that you get is that, A, consumers kind of expect and demand a really personalized experience, and B, data analysts at any company can really get this Deep view, a deep kind of longitudinal view of their, of their user, their consumer, because we have such great, you know, everybody's like using everything through a phone. And so that's, you can really track one user and everything about them over a very long period of time. So I think we're just kind of at this amazing intersection of really high quality performance infrastructure underneath you and so much data being generated and so much kind of consumer pull and expectation for data informed experiences from the top. I just think

AI assessment note: “amazing intersection of really high quality performance infrastructure underneath you and so much data”

Q Can I ask, how does the increased competition, as you said there, from the likes of lifecycle firms like NEA, and then also the likes of LP co-investments, which we've seen more and more, how does that impact your role as a late stage firm like IVP?

A I mean, I think that The market is more competitive for everyone. I think a long time ago in the eighties and nineties, the, you know, venture was a, it was a buyer's market, right? There were more companies than there were capital. And today I think we have more capital than there are good companies. It's easier than ever to start a company, which is really exciting, but there's more money than ever to invest in them. So I think that it's definitely more competitive. Our jobs are definitely harder, but on the other hand, it's, it's just like, it's such an exciting time because there's so much early stage money that there are so many companies that get to our level. Right. There are so many companies to look at. It's really exciting, but yeah, you're totally right. It's completely competitive.

AI assessment note: “there's so much early stage money that there are so many companies that get”