Homebrew

“Well, of course many of the companies we invest in have, you know, founder teams of two or three people already together. We've also made investments where it's a single founder who is then going to build what they call a founding team around them, and is sett…”

“We're going to keep our firm together. We're going to make the same number of investments each year, 10 to 12. But instead of having an ownership target that forces a certain check size, so, and so forth, we're going to write most checks between a hundred K an…”

“You know, we've made 28 investments or so. I think we're just closing on a 29th a hundred percent, you know, a hundred percent win rate, you know, for whatever that's worth type of thing.”

“We've always given anybody who works for homebrew carry in the fund. So our head of ops, you know, executive assistant, our head of talent in addition to getting salaries and bonuses, they are, they get unbounded upside. In our success.”

“When we write a check into a company as homebrew four we hope to have the opportunity to continue to support or, you know, put more capital in if it makes sense, but we make it, we write that check, assuming It'll be the only check we write and that the juice …”

“Like, even if that fund didn't return another dollar, we'd be like a top one percent fund, and fortunately, it's gonna return more dollars.”

“Your thesis is your portfolio page. It's not your tweets. It's not your blog post. It's not your market maps. The saddest thing in the world is to be an investor who, like, gets all of those right, but then doesn't invest in the best companies. ... Then you're…”

“Our first two funds, I think are all maybe are a hundred north of a 120% recycling. So we really double triple down recycling as people, you know, I was using the example before of you draw down fees, right. But you have to invest the whole amount recycling is…”

“Anyone who's on the Midas list no matter what their firm says, they've turned over, you know, information to a third party about their portfolio. And they've decided internally that somebody gets to claim credit for that deal. Whether it's the person who deser…”

“We went from four LPs in our first one that made up, like, 90% to eight in the second one that made up about, like, 97%”

“And, you know, we, we've never had any of those kinds of issues because we don't do deal attribution. Every decision is made by consensus and we both work with every company in, in some, you know, type of way.”

“If there were three or more of us, consensus would be You know, a foolish goal wouldn't serve us or the founders well.”

“We look back And we've struggled over 10 years to find an occasion where lack of, you know, if there was lack of consensus, it meant we didn't do the deal. And I don't think we have any, you know, quote unquote outliers that were, you know, false negatives bec…”

“The LPs we ended up with were all LPs who were excited about equal partnerships. The ones who passed on us were ones that wanted a single key mat, like this notion of, well, it's great to have multiple GPs, but at funds under a hundred million dollars, we real…”

“We do three, six used to do every other year, like an externally led, 360 degree feedback real process with our founders and some of our co-investors. Not, you know, like a survey, you know, or an NPS score, but like, Talking 30 minutes to each of our founders…”

“We also started with the idea of no succession plan, no growth.”

“We do a quarterly offsite with just the two of us every quarter, and a part of that conversation is, how happy are you? Right, like along a bunch of different dimensions.”

“I think, like, not that this is, you know, sort of unspoken, because I think we've both talked about this, but, like, we also started this later in our careers, right? Like, we were both in our, you know, mid-late thirties, and I think it's, like, we both We w…”

“In today's market at the seed stage in particular a hundred million dollar fund is a bit of a tweener. You've either got to be larger to be able to write large checks and get the ownership that you need in order to win the best opportunities and deliver the ty…”

“In 10 of the 11 investments that we made last year, we were offered more allocation than we took, because what we care about is really sort of working with great founders and great co-investors.”

“The flexibility that we have in not having a fund now is that we don't have to think of every investment as having the potential to return the fund, right? Every investment just has to be a good return.”

“We used to not care who the other investors were. We're like, we're going to help you and we'll get other people great around us. Now we actually care about quality, you know, of the lead investor.”

“Raising 203 hundred million dollars, you know, like some of our peers and going to market in a model where we brought on another GP, we expanded our team, we brought on another platform person. Like, I actually think we could, you know, Hit exceed our benchmar…”

“Even in the market over the last decade where everyone was putting their funds to work in 18 to 24 months, Our funds were being put to work it in three to three and a half years.”

“One of the experiments we're running here is kind of the testing the thinking around can capital and counsel be separated over the course of time, right? And so one of the things we're trying to evaluate is in some cases when we do a smaller check, can we stil…”

“As an example, I think we've done a handful of SBVs now, but we did two last year, which led the Series E and Series D rounds for two of our later stage companies by virtue of having built that relationship and taking advantage of the market dislocation, where…”

“We've always tried to evaluate, like, as an example with a fund and a follow-on investment, do we believe we can earn at least five to 10 X from here? And if we believe that, then we're more likely to be a buyer. And if we don't, then, you know, we're more lik…”

“You know, we have a few that I think could have been public, you know, already, but have decided, you know, for various reasons to hold off, and I think when they become public, they'll be even stronger companies.”

“And so in some ways, I think part of our portfolio that's really going to benefit from the slowdown Are the early product market fit, you know, companies that now have some capital in the bank, but don't have to, aren't getting the crossover investors, pitchin…”

“What we really liked about it is that this was not concessionary capital, that when they came to us with this idea, it was really around creating more opportunity for people, but really around people that can and will deliver great results, and they just need …”

“We believed then still believe it's true that there are very few investors at the seed stage who are willing to be the investor of record, so to speak, or the accountable party.”

“And so a little naively and a little strategically, we decided we wanted to focus on institutional capital. And we were fortunate having worked in the Valley for a long time and having a lot of relationships that we knew we'd be able to raise some amount of ca…”

“And we're big believers that your fund size needs to reflect your strategy. If you Set your fund size and then try to create a strategy around it. We think that's a recipe for failure.”

“So what we really like to hear articulated is a product vision that starts with a very narrow near-term focus. One problem solved really well for one type of customer, but a broad long-term vision, a path for how you move from that wedge to something that take…”

“There was no knowledge of craft beer, and homebrew was you know, not necessarily viewed in a positive light, and, you know, based sort of on what most people had tasted, if they ever tasted homebrew, it was highly alcoholic acidic, and it looked murky, and whi…”

“I think Homebrew did an incredible job. I mean, they raised their first fund in 2013 in less than a hundred days, and they raised it from some very, very high profile and very reputable LPs.”

“And what I'll say, at least through first fund and, you know, starting to get halfway through our second fund, is when we and our founders agree on those milestones and they hit those milestones, none of them have had problems raising an A round.”

“That's how we got involved in a company like Managed by Q, which is doing wonderfully. They were already at a revenue run rate and a growth rate that probably could have gotten them in a round, but they hadn't yet thought about what expansion at the time out o…”

“I think if Satya and I had to make a decision about any one quality that was present or not present in terms of impacting a investment decision, it would probably be something around founder market Or the why, why are they building this company?”

“So long as we're making a set of six, seven, eight, nine investments each year that will ultimately turn into some number of meaningful, viable, transformative businesses.”

“We Are going to be in that period coming into fund three in 2018, where we want to start being able to raise our funds off of how homebrew is doing and not just our reputation or what we were able to do before homebrew.”

“We want to stay focused on early stage companies that we can put not just capital, but time behind. So it means a relatively concentrated investment philosophy. And, you know, we want our legacy to be the companies that we worked with over five or six funds, n…”

“At that time there were many, many sources of capital, even more sources of capital now But there were very few investors at the seed stage in particular who were willing to raise their hand and say that I'm the investor of record.”

“Our first investment for homebrew was a company called Clementine, and it was kind of a joint effort between us and the founders in terms of spending time in a particular problem area and then coming up with a product idea. So it was almost an incubation of so…”

“Probably the number one change that we've made in terms of our investment criteria, we originally started with the idea that we needed to have a specific ownership percentage. In order to drive meaningful returns, and that's become more flexible where we think…”

“And I think the key to successful fundraising at the seed stage is really establishing that emotional resonance with an investor. And there's really only two means by which to do that. One is the personal story of the founders, right? Why it is they're focused…”

“We spend a lot of our initial interactions with companies, obviously talking about the product and the market, but we spent a lot of time understanding the founders and what drives them, what motivates them, why they're doing what they're doing.”

“Follow on decisions are only problematic if you have misalignment of expectation.”

“We had 18 companies in our first fund. We will have a similar number and maybe slightly more in our second fund because it's a slightly larger fund, and we only make about eight new investments a year.”

“We have formal time with every company just about every week or every other week, and then we're usually on Slack and text and email with them every single day.”

“I think it boils down to probably one of three primary problems. One is that, and this is more common than people might suspect is that the founders disagree. And they decide they don't want to be co-founders anymore. So that happens quite often. Number two is…”

“So we like to see as I referenced earlier, kind of a very narrow near-term focus, but in the founder's mind, a path to a broad long-term vision. So start with something small, start with something meaningful, start with something that people will love. And the…”

“We don't invest in pure consumer social businesses.”

“We will probably make more investments this year than we did last year.”