Transcript
WEBVTT
1
00:00:12.439 --> 00:00:17.039
Hello and welcome to the consumer VC. I am your host, Michael but
2
00:00:17.120 --> 00:00:20.719
and. On this show we talked
about the world of venture capital and innovation
3
00:00:20.879 --> 00:00:25.280
in both consumer technology and consumer products. If you're enjoying this content, you
4
00:00:25.280 --> 00:00:30.079
could subscribe to my news letter,
the consumer VC DOT sub stackcom, to
5
00:00:30.079 --> 00:00:34.079
get each new episode and more consumer
news delivered straight to your inbox. Our
6
00:00:34.159 --> 00:00:38.759
guest today is Subidas, who is
a partner at capital G. Capitology is
7
00:00:38.840 --> 00:00:43.359
Alphabets, independent growth fun. Some
of their investments include air BMB lift and
8
00:00:43.439 --> 00:00:47.920
dual lingo. We discuss capitalogies,
relationship to google, Google ventures and the
9
00:00:47.960 --> 00:00:52.399
advantages of a single LP. Sue
Me also spends a lot of time not
10
00:00:52.479 --> 00:00:56.799
only thinking about consumer opportunities North America, but also merging markets. So we
11
00:00:56.880 --> 00:01:00.600
focus on some of the differences between
billing a consumer technology company and a valuate
12
00:01:00.600 --> 00:01:07.799
opportunities in different regions around the world
and what makes technology transferable to other markets
13
00:01:07.799 --> 00:01:17.599
and also not transferable without further ado
here, sum Zumi, thank you so
14
00:01:17.719 --> 00:01:21.200
much for joining me today. How
are you? I am good, very
15
00:01:21.200 --> 00:01:23.359
excited to be with you, Mike. Thank you for having me on is
16
00:01:23.359 --> 00:01:26.760
it absolute pleasure. I really appreciate
you taking a time, so let's start
17
00:01:26.799 --> 00:01:30.799
the very beginning. To me,
what was your initial at action to technology?
18
00:01:30.879 --> 00:01:36.799
I'm probably an obvious VC and that
I wasn't sort of attracted a technology
19
00:01:36.879 --> 00:01:38.400
naturally when I when I was young, you know, I was sort of
20
00:01:38.400 --> 00:01:42.000
more of a in high school,
more of an arts person, really big
21
00:01:42.040 --> 00:01:47.319
theater Geek, and then when I
went to college studied book economics and theater.
22
00:01:47.480 --> 00:01:52.239
So not necessarily sort of a technologist
at heart. I was a somewhat
23
00:01:52.239 --> 00:01:56.599
of a Gamer and and took a
couple of coding classes in school. So
24
00:01:56.879 --> 00:02:00.439
tangentially involved, but not not super
kind of it wasn't sort of friends center
25
00:02:00.480 --> 00:02:04.680
in my life. What started to
get me attracted to the space was actually
26
00:02:04.760 --> 00:02:08.000
a few career experiences right out the
gate when I started my career. And
27
00:02:08.080 --> 00:02:14.879
so I I graduated in and around
the financial crisis and became an investment banker
28
00:02:14.879 --> 00:02:17.680
in two thousand and ten and then
worked in private equity for several years and
29
00:02:17.719 --> 00:02:22.639
I was kind of in the in
the media and telecom space, which was
30
00:02:22.680 --> 00:02:25.080
exciting to me because I sort of
had this theater background and wanted to be
31
00:02:25.120 --> 00:02:29.199
an involved sort of in the media
industry and at the time. I spent
32
00:02:29.280 --> 00:02:34.439
a lot of time with with companies
that will basically content companies and telecoms infrastructure
33
00:02:34.439 --> 00:02:40.400
companies, so things like, you
know, data centers and spectrum companies were
34
00:02:40.439 --> 00:02:44.159
sort of buying and selling spectrum for
a lot of the big tailcos and as
35
00:02:44.159 --> 00:02:46.719
we were digging into that whole space, what was sort of became clear to
36
00:02:46.759 --> 00:02:52.240
me was that all the value and
growth of these companies was being driven by
37
00:02:52.240 --> 00:02:57.080
consumption of content and data on the
web, which was sort of obvious at
38
00:02:57.080 --> 00:03:00.719
the time, but really on mobile, which was kind of the new back
39
00:03:00.719 --> 00:03:04.400
then, and so I got it
early sense of like a bottoms up signal
40
00:03:04.479 --> 00:03:07.199
of like where the world was going
and kind of the the impact that technology
41
00:03:07.199 --> 00:03:10.039
could have. And going back to
my theater background, I sort of know
42
00:03:10.080 --> 00:03:14.000
how to tell a good story and
so I was like here's a story that
43
00:03:14.120 --> 00:03:16.599
is interesting to me, and so
that's really what started, would piqued my
44
00:03:16.639 --> 00:03:20.439
interest in technology, and I started
to paying a lot more attention to the
45
00:03:20.439 --> 00:03:23.479
world of the Internet and was happening
out here in the valley. Why?
46
00:03:23.479 --> 00:03:25.560
I like better capital, private equity, and how did you end up at
47
00:03:25.599 --> 00:03:30.319
capital g? So I was at
this private equity firm and sort of a
48
00:03:30.439 --> 00:03:36.479
had this you know, Aha moment
of the future is mobile and that's that's
49
00:03:36.479 --> 00:03:39.599
going to determine a lot of sort
of our behavior patterns. But at the
50
00:03:39.639 --> 00:03:45.400
same time it was clear to me
that this sort of private equity business model
51
00:03:45.439 --> 00:03:49.240
was not well built to invest in
companies that we're going to sort of drive
52
00:03:49.360 --> 00:03:54.120
these innovations. You know, we
were looking for cash positive businesses with leverage,
53
00:03:54.159 --> 00:04:00.319
etc. And we just didn't understand
sort of hyperscale companies that were,
54
00:04:00.360 --> 00:04:02.879
you know, burning money and that
was that was something that we struggled with
55
00:04:03.120 --> 00:04:09.439
and so as I became increasingly convinced
about about the future, I started to
56
00:04:09.599 --> 00:04:15.560
think about where could I go to
to start to learn about this space and
57
00:04:15.639 --> 00:04:18.439
kind of be more of a proactive
participant. And frankly, Mike, I
58
00:04:18.439 --> 00:04:23.160
had no connection to the west coast
or the valley. I didn't really even
59
00:04:23.199 --> 00:04:28.519
know much about the venture capital industry
at all, and so it's funny to
60
00:04:28.519 --> 00:04:30.839
admit this, but I basically looked
all the big technology companies and I was
61
00:04:30.879 --> 00:04:33.879
like, I'm going to go get
a job at one of these places and
62
00:04:34.000 --> 00:04:40.040
I'll sort of figure it out,
and sarendipitously Google at the time had just
63
00:04:40.120 --> 00:04:45.079
started a growth investment fund back in
two thousand and thirteen and through a bunch
64
00:04:45.079 --> 00:04:48.560
of different connections, got connected to
Jesse weather, one of my partners now
65
00:04:48.560 --> 00:04:54.680
at the fund. Started having a
bunch of conversations and eventually did two interviews.
66
00:04:54.720 --> 00:04:58.199
Is a funny story. I interviewed
as square back in two thousand and
67
00:04:58.240 --> 00:05:00.879
thirteen and I interviewed with capital G. Didn't get the job at square and
68
00:05:00.879 --> 00:05:04.519
so ended up at an ended up
at capital g and really my thinking at
69
00:05:04.519 --> 00:05:09.000
the time was was not very sophisticated. I was like it don't really know
70
00:05:09.079 --> 00:05:13.360
what this is, but worst case
I'll tell people I worked at Google for
71
00:05:13.399 --> 00:05:15.519
a couple of years, was close
to kind of folks that are driving the
72
00:05:15.560 --> 00:05:19.279
space and and learn a bunch of
stuff and then figure it out from there.
73
00:05:19.360 --> 00:05:23.279
So, you know, moved out
to moved out to the West Coast
74
00:05:23.279 --> 00:05:26.040
back in two thousand and fifteen and
then have been with with capital G.
75
00:05:26.199 --> 00:05:30.759
Sin's amazing. Would love to hear
a little bit to about the origin of
76
00:05:30.759 --> 00:05:34.160
capital G as well and the relationship
with Google, because I know that the
77
00:05:34.279 --> 00:05:39.639
Google it's a single LP structure of
a firm and also kind of understand as
78
00:05:39.680 --> 00:05:45.399
well, because Google ventures obviously very
wellknown early stagepenture capital fund. Why it
79
00:05:45.480 --> 00:05:48.920
also just kind of understand if there's
a relationship or kind of how with with
80
00:05:49.040 --> 00:05:53.439
Google ventures and kind of just were
you kind of see yourselves in the market.
81
00:05:53.480 --> 00:05:58.680
So first on capital G so we're
alphabets independent growth fund and our mission
82
00:05:58.759 --> 00:06:01.920
is to invest in sort of of
the leading technology companies in markets where we
83
00:06:01.959 --> 00:06:06.759
see significant opportunities for innovation. So
we've invested in companies the likes of lift,
84
00:06:06.800 --> 00:06:11.160
Arapy and be Robin Hood, snap, credit, Carma and I atic.
85
00:06:11.319 --> 00:06:14.920
And then our strategy is is not
only to support our portfolio companies with
86
00:06:14.920 --> 00:06:18.519
our own resources in network, but
also to leverage Google and alphabets resources to
87
00:06:18.519 --> 00:06:23.639
help our companies scale and grow.
And we're typically investing in companies sort of
88
00:06:23.680 --> 00:06:27.920
at the growth stage, which we
define as post product market fit. Series
89
00:06:27.959 --> 00:06:30.480
Bethrough D is kind of the typical
stage. As I mentioned, we got
90
00:06:30.560 --> 00:06:33.879
started in two thousand and thirteen and, you know, now invested in fifty
91
00:06:33.920 --> 00:06:38.839
plus portfolio companies. So that that's
a little bit about us. And then,
92
00:06:38.920 --> 00:06:43.720
as far as the GV question is
concerned, we are both independent funds
93
00:06:44.199 --> 00:06:48.480
backed by alphabet. They focus more
on the early stage and we focus more
94
00:06:48.519 --> 00:06:53.920
on the growth stage and really we
operate very, very independently. You know,
95
00:06:54.199 --> 00:06:57.240
folks off and ask if there's a
relationship where they fund companies and then
96
00:06:57.279 --> 00:07:00.319
we back them. That's not the
case. We're sort of very independent and
97
00:07:00.319 --> 00:07:05.839
operate kind of with our own mandates. What's your definition of growth past,
98
00:07:05.839 --> 00:07:09.360
you know, beenture Coppel? Where's
that kind of line? I think that
99
00:07:09.399 --> 00:07:13.560
would be helpful for for listeners.
So typically at the early stage of a
100
00:07:13.639 --> 00:07:18.160
company is is sort of a vision
and a problem statement, a thesis about
101
00:07:18.199 --> 00:07:21.920
how to solve that problem and a
team that's, you know, working to
102
00:07:21.959 --> 00:07:26.800
do that. And the early days
of a company are really about trying to
103
00:07:26.839 --> 00:07:30.720
find product market fit, I.
Find a way to deliver a solution to
104
00:07:30.879 --> 00:07:35.959
customers and provide value. In our
view, the growth stage really begins after
105
00:07:36.000 --> 00:07:41.879
that point in a company's evolution.
Right, you've sort of you've built a
106
00:07:41.879 --> 00:07:46.720
product and you've demonstrated that you're sort
of providing valuable service to a set of
107
00:07:46.759 --> 00:07:51.319
customers, and now you're really in
the second layer of your kind of development,
108
00:07:51.319 --> 00:07:55.279
which you have to sort of scale
the business. And so, as
109
00:07:55.279 --> 00:08:00.519
growth stage investors, we ask very
different questions than sort of early stage investors.
110
00:08:00.600 --> 00:08:03.240
Right so an early stage investor might
ask, is this a big market?
111
00:08:03.279 --> 00:08:05.759
Is this the right team to back? Do I think they can get
112
00:08:05.800 --> 00:08:09.879
to product market fit? At the
growth stage? Principally, the three questions
113
00:08:09.839 --> 00:08:13.360
that we're asking is, well,
how big could this market actually be?
114
00:08:13.519 --> 00:08:18.879
Do I think that this company and
this team can scale to a broader set
115
00:08:18.920 --> 00:08:22.800
of customers within that market opportunity?
And there's a whole subset of questions that
116
00:08:22.839 --> 00:08:26.560
come out of that. And then
the third is, is there a business
117
00:08:26.560 --> 00:08:33.080
model here that can drive value both
to customers but also to the company in
118
00:08:33.200 --> 00:08:37.960
question itself? And so we spend
a lot more time on those three questions
119
00:08:37.000 --> 00:08:41.559
and answering those as part of being
growth stage investors as compared to kind of
120
00:08:41.720 --> 00:08:46.080
the early stage when your focus more
on product market. That makes sense because
121
00:08:46.279 --> 00:08:50.399
I'd imagine when you're doing some a
lot about, you know, market sizing
122
00:08:50.519 --> 00:08:54.960
and some is actually kind of a
debate on the show depended on who you
123
00:08:54.039 --> 00:08:58.759
ask in terms of does it make
sense to market size when you're so early,
124
00:08:58.000 --> 00:09:01.320
because it's pretty tough. Like I'm
thinking, you know fit that came
125
00:09:01.360 --> 00:09:05.399
out the wearables was a super small
market. So it's tough to really know
126
00:09:07.039 --> 00:09:11.080
how large that market could be when
it was, you know, fairly new
127
00:09:11.120 --> 00:09:13.360
at the time and they and they
of course did, you know, very
128
00:09:13.440 --> 00:09:20.000
very well capturing with their technology,
a captrit that market, and I'd imagine
129
00:09:20.159 --> 00:09:24.600
that at the growth stage you can
becoming a lot more accurate since the market,
130
00:09:24.639 --> 00:09:26.519
if it is, you know,
a new market. We've also also
131
00:09:26.519 --> 00:09:30.879
had a debate on the show of
if there are truly new markets. But
132
00:09:30.960 --> 00:09:33.840
if it is a new market,
I'd imagine at the growth stage you can
133
00:09:33.840 --> 00:09:37.639
get a much more clear idea,
like an estimation or statistic in terms of
134
00:09:37.720 --> 00:09:43.240
how how large that mark could be. It's a really good question and one
135
00:09:43.279 --> 00:09:46.480
that we think about a lot.
So I think the answer is that it's
136
00:09:46.519 --> 00:09:52.240
it's not all together obvious even at
the growth stage, and I think there's
137
00:09:52.240 --> 00:09:56.960
sort of two variants of this.
You know, there's companies that are building
138
00:09:56.960 --> 00:10:05.320
in in markets that are pre existing
and kind of replacing a precedent service because
139
00:10:05.360 --> 00:10:07.840
there's some new technology innovation. So
as a result, you know, in
140
00:10:07.840 --> 00:10:11.360
the software world you sort of have
a company that was built on Prem now
141
00:10:11.399 --> 00:10:16.360
the clouds around and you replicate that
service on the cloud. There it's sort
142
00:10:16.399 --> 00:10:20.320
of easier to say, Hey,
there's a specific market size and profit pool
143
00:10:20.399 --> 00:10:24.519
that exists and it's transitioning to to
kind of, you know, this new
144
00:10:24.519 --> 00:10:28.919
form factor. Or there's some vertical
niches where it's easier to tell a market
145
00:10:30.000 --> 00:10:33.279
size. Right. There's there's only
so many restaurants in the US, and
146
00:10:33.279 --> 00:10:35.600
so if you're building restaurant software,
you can kind of Tell Hey, this
147
00:10:35.679 --> 00:10:39.799
is probably going to be the size
of my market. What's challenging specifically about
148
00:10:39.799 --> 00:10:46.200
consumer companies is they're very rarely kind
of fit those two paradigms. Right.
149
00:10:46.240 --> 00:10:52.279
It's sort of it's sort of all
about creating a new behavior pattern with consumers
150
00:10:52.320 --> 00:10:54.639
and sort of expanding the market.
And so, to give you a tangible
151
00:10:54.679 --> 00:10:58.559
example for this in our own portfolio, you know, we invested in Robinhead
152
00:10:58.559 --> 00:11:03.679
at the series d round and it
was very hard, even at that stage,
153
00:11:03.679 --> 00:11:07.679
when it was a fairly sizeable company, to no kind of how many
154
00:11:07.720 --> 00:11:11.759
accounts they would have long term.
And I can say that we were off
155
00:11:11.799 --> 00:11:15.840
in that estimate by a fact,
by a significant factor. And you know
156
00:11:15.919 --> 00:11:18.039
now that all that said and done, all that to say that I think
157
00:11:18.320 --> 00:11:22.960
you know, and this is why
I love the growth stage as an investor,
158
00:11:22.080 --> 00:11:26.120
especially in coming from the private equity
world, where it's got an analytical
159
00:11:26.159 --> 00:11:31.120
component. You do have more information
as a basis to make decisions and make
160
00:11:31.159 --> 00:11:37.120
forecasts, but you still have to
have that sort of mental pliability to say,
161
00:11:37.159 --> 00:11:41.440
Hey, this could be much bigger
or smaller, change in ways that
162
00:11:41.480 --> 00:11:46.639
are hard to predict and you're still
kind of basically making a venture back.
163
00:11:46.080 --> 00:11:50.399
Yeah, those are all, you
know, really good points that I appreciate
164
00:11:50.480 --> 00:11:54.840
you saying. It's still tough,
even though it sounds the companies that you're
165
00:11:54.840 --> 00:12:00.240
looking at our farther along than the
ventures usually early stages. is so really
166
00:12:00.240 --> 00:12:03.320
hard to get a read and I
imagine that in the case of Robin Hood
167
00:12:03.360 --> 00:12:05.159
that you said, it was a
good thing that you were off in terms
168
00:12:05.159 --> 00:12:09.960
of what you're off by. So
that's that's great. And also I know
169
00:12:09.080 --> 00:12:13.720
that you know, obviously we're talking. Before you invest in emerging markets,
170
00:12:13.759 --> 00:12:18.519
you also invest in companies that are
built in the US, like like a
171
00:12:18.639 --> 00:12:22.200
Robin Hood. How do you think
about invest not lumping into emerging markets all
172
00:12:22.200 --> 00:12:26.240
in the same kind of one category? But what are maybe some of the
173
00:12:26.320 --> 00:12:31.519
some of the things that you think
about when looking at a company that's building
174
00:12:31.559 --> 00:12:35.120
maybe in emerging market verse the US
pop what are some of the differences and
175
00:12:35.200 --> 00:12:39.000
some of considerations that you have to
keep in mind? There's a few that
176
00:12:39.039 --> 00:12:43.120
are quite material over the years that
have sort of that have sort of come
177
00:12:43.200 --> 00:12:46.480
up. One thing that folks offen
thing when they're looking at companies in the
178
00:12:46.519 --> 00:12:50.840
emerging markets as they say, Oh, there's these are huge markets because they're
179
00:12:50.879 --> 00:12:54.000
sort of, you know, billions
of users in these markets, and that's
180
00:12:54.039 --> 00:13:00.720
certainly true, but the sort of
gdpeeper capita and and more specifically, the
181
00:13:00.759 --> 00:13:07.120
dispersion of wealth looks very different than
in the US or or other developed markets.
182
00:13:07.159 --> 00:13:11.080
And so as an entrepreneur you have
to think really hard about what customer
183
00:13:11.200 --> 00:13:16.440
segment you're going after kind of in
an emerging market and being really crisp about
184
00:13:16.559 --> 00:13:20.799
that to make sure that there's sort
of, you know, the potential to
185
00:13:20.799 --> 00:13:24.399
actually build a business around that customer
in the long term. In the US,
186
00:13:24.480 --> 00:13:28.840
you know, you can get away
with sort of being less clear about
187
00:13:28.879 --> 00:13:31.240
that at the beginning because, as
you know, there's ways to kind of
188
00:13:31.279 --> 00:13:35.840
build a business model over time.
So so that that's one big difference.
189
00:13:37.000 --> 00:13:39.480
I think that that you know,
that comes up early. The second is,
190
00:13:39.519 --> 00:13:43.519
you know, the canonical advice for
for startups, as you know,
191
00:13:43.600 --> 00:13:48.600
be extremely focused, be the best
one thing, iterate quickly on that thing
192
00:13:48.679 --> 00:13:52.879
and provide a lot of value.
And I find that that advice can be
193
00:13:52.919 --> 00:13:56.480
actually quite counterproductive in the emerging markets. Right there's it's often the case that
194
00:13:56.519 --> 00:14:01.399
you can't necessarily build a big business
off of a single service, and so
195
00:14:01.480 --> 00:14:07.120
early in a company's evolution you have
to start to think about building multiple products
196
00:14:07.159 --> 00:14:11.399
as a way to both hook and
monetize customers, and that's a very different
197
00:14:11.639 --> 00:14:16.399
sort of way of building a business
than sort of we've learned in the US.
198
00:14:16.440 --> 00:14:22.440
I think the the sort of technology
companies in China have been much more
199
00:14:22.759 --> 00:14:26.159
have built in that way much better
than sort of we have in this country,
200
00:14:26.200 --> 00:14:26.879
you know. So those are a
couple of the main ones on the
201
00:14:28.159 --> 00:14:33.159
customer side. The third is more
on the sort of infrastructure side. So
202
00:14:33.759 --> 00:14:37.799
the reality is you're you're starting to
build companies with a lot less sort of
203
00:14:37.799 --> 00:14:43.960
precedent infrastructure in and around you,
and so oftentimes you have to sort of
204
00:14:43.080 --> 00:14:48.039
vertically integrate and build that infrastructure yourself
and I mentioned, I spent a lot
205
00:14:48.080 --> 00:14:50.519
of time in the fintext base as
an example. If you're building a lending
206
00:14:50.559 --> 00:14:56.039
company in the emerging markets, it's
not enough to find customers, underwrite them
207
00:14:56.080 --> 00:15:01.120
and give them money. You also
have to find a way to bring capital
208
00:15:01.159 --> 00:15:05.639
into the market, because security securitization
markets don't exist in the same way that
209
00:15:05.679 --> 00:15:09.840
they do in the US. And
so you're in the very early days of
210
00:15:09.840 --> 00:15:13.639
a company. You're playing this balancing
act of both trying to build a product
211
00:15:13.639 --> 00:15:18.519
for customers but also trying to manage
a very different kind of institutional side of
212
00:15:18.519 --> 00:15:22.399
the business and and that's a different
skill set and is a broad skill set
213
00:15:22.480 --> 00:15:26.240
required to build a company. And
one more which I think is interesting is
214
00:15:26.279 --> 00:15:30.159
the education systems in a lot of
these markets look very different. Tend to
215
00:15:30.159 --> 00:15:33.480
be much more specialized, and so
when you hire folks, you often have
216
00:15:33.519 --> 00:15:39.080
to hire four very specialized skill sets, which means early in a company's journey
217
00:15:39.120 --> 00:15:41.600
you have a much bigger organization than
you do in the US, and so
218
00:15:41.679 --> 00:15:48.840
founders have to transition quickly from being
builders to becoming managers and finding ways to
219
00:15:48.840 --> 00:15:52.440
stay nimble at despite sort of having
a large population. So those are some
220
00:15:52.480 --> 00:15:56.840
of the things that I think about, Mike that are sort of very different.
221
00:15:56.840 --> 00:16:00.559
And you know, all of that
to say, I think it's incredibly
222
00:16:00.600 --> 00:16:04.679
difficult to build businesses in emerging markets
but also, if you can get it
223
00:16:04.759 --> 00:16:12.360
right, extremely rewarding, because it's
you build real competitive advantages over time and
224
00:16:12.399 --> 00:16:15.200
you earn the right to do a
lot, and I think that's why you
225
00:16:15.240 --> 00:16:18.600
see this sort of you know,
over the last decade we've started to see
226
00:16:18.639 --> 00:16:23.320
some really kind of amazing companies be
built all over the world and I'm a
227
00:16:23.360 --> 00:16:26.480
strong believer that, you know,
that's only going to continue over the next
228
00:16:26.480 --> 00:16:32.480
decade. There's another interesting trend actually, just sort of that's changing more recently,
229
00:16:32.519 --> 00:16:33.360
which is, you know, I
think if you looked at the last
230
00:16:33.399 --> 00:16:37.080
decade in emerging markets, it was
sort of, you know, the idea
231
00:16:37.279 --> 00:16:41.200
was copy the models that are worked
in the West and and bring them to
232
00:16:41.240 --> 00:16:47.759
these markets, right, and that
was a successful approach for many entrepreneurs.
233
00:16:47.759 --> 00:16:52.200
But the other really interesting trend,
specially from a consumer standpoint, is that
234
00:16:53.000 --> 00:16:59.559
now you have an explosion of data
and mobile available in these markets in a
235
00:16:59.600 --> 00:17:03.600
way that even it's hard to conceive
of for us who are living in the
236
00:17:03.720 --> 00:17:08.160
US, and so you're starting to
see completely new behavior paradigms and I think
237
00:17:08.200 --> 00:17:15.440
what's going to be really interesting over
the next decade is actually the net migration
238
00:17:15.640 --> 00:17:22.400
back of learnings and business models from
the emerging markets back to the develop markets,
239
00:17:22.440 --> 00:17:23.759
and I think that's going to be
a really fascinating thing to watch.
240
00:17:23.839 --> 00:17:27.559
You you sort of saw that in
China. Initially, would sort of the
241
00:17:27.640 --> 00:17:33.319
rise of social commerce, which was
really a had no precedent kind of in
242
00:17:33.359 --> 00:17:37.000
the US, and now you're starting
to see companies in the US that are
243
00:17:37.000 --> 00:17:41.720
starting to build live stream and social
experiences and I think you're going to see
244
00:17:41.759 --> 00:17:47.039
a lot more of that and a
much more sort of globalized technology world than
245
00:17:47.160 --> 00:17:51.440
we've experienced thus far. I also
kind of wanted to know to when you
246
00:17:51.480 --> 00:17:56.039
started your career you understood how powerful
blobile was. That was when the mobile
247
00:17:56.039 --> 00:17:57.599
revolution was happening. You know,
two thousand and ten, two thousand and
248
00:17:57.640 --> 00:18:03.000
eleven. What do you think is
the next cycle going to be? Is
249
00:18:03.039 --> 00:18:07.079
it a web three in Crypto?
Is it the Meta verse? Is it
250
00:18:07.279 --> 00:18:10.880
something else? I mean, how
do you, as an investment you think
251
00:18:10.880 --> 00:18:17.160
about these large macro becauseummer try like
the mart large macro consumer platform which might
252
00:18:17.200 --> 00:18:19.400
come out, you know, once
ten or fifteen years or so, and
253
00:18:19.440 --> 00:18:25.079
we're almost at that kind of spot. Well, we certainly aren't that spot.
254
00:18:25.119 --> 00:18:27.160
What do you think about what's next
and like a macro level for the
255
00:18:27.200 --> 00:18:30.599
consumer? It's a great question and
when that we're all thinking about all the
256
00:18:30.599 --> 00:18:37.960
time. You know, I certainly
am a big believer web three, in
257
00:18:38.079 --> 00:18:44.519
crypto. I do think, and
I think that the potential there to dwarf
258
00:18:44.839 --> 00:18:49.200
what we've seen with mobile is extremely, extremely large, because I think it's
259
00:18:49.240 --> 00:18:55.160
sort of has properties that are are
very interesting and unique in that sort of
260
00:18:55.519 --> 00:19:02.240
enables creators, enables creativity, enables
engagement in a whole different paradigm and it's
261
00:19:02.240 --> 00:19:04.599
sort of, you know, I
think Christison's uses were it skew morphic.
262
00:19:04.680 --> 00:19:07.799
It's sort of it's hard to predict
even kind of all the things that could
263
00:19:07.920 --> 00:19:11.400
come out of this. I'm bullish
on that, but I think, to
264
00:19:11.440 --> 00:19:17.319
be fair, what's holding that ecosystem
back is sort of the underlying infrastructure has
265
00:19:17.359 --> 00:19:21.279
not been figured out yet. And
then and the costs are extremely high and
266
00:19:22.519 --> 00:19:26.440
scalability is an issue. But but
I'm certainly very bullish on on that trend
267
00:19:26.599 --> 00:19:32.680
overall. The other one that I
think we're not talking about as much but
268
00:19:32.960 --> 00:19:38.279
I think is going to be huge
is digital health. I think the potential
269
00:19:38.319 --> 00:19:45.880
to track data, capture data,
make recommendations based on that data, change
270
00:19:45.920 --> 00:19:51.039
the value chain of how medicine happens
is a huge opportunity kind of in the
271
00:19:51.079 --> 00:19:53.920
next decade and a lot of that
innovation right now, you know, sits
272
00:19:55.000 --> 00:19:59.920
in kind of the farmer world,
but you're starting to see the first innings
273
00:19:59.960 --> 00:20:03.400
of that getting, you know,
sort of becoming real consumer technologies and again
274
00:20:03.440 --> 00:20:07.319
I think that's sort of that's sort
of, you know, a ten x
275
00:20:07.400 --> 00:20:10.119
sort of impact, but a hundred
ex sort of impact on how we live
276
00:20:10.200 --> 00:20:12.119
our lives. And I spend some
time in healthcare and when you're on the
277
00:20:12.160 --> 00:20:18.400
inside you're like there's so many barriers
to this stuff working just from a reimbursement
278
00:20:18.440 --> 00:20:22.880
standpoint and kind of getting out to
market. But the underlying technologies are evolving
279
00:20:22.920 --> 00:20:25.400
in a very rapid rde and I
think there's there's a lot that's going to
280
00:20:25.440 --> 00:20:27.720
happen in that in that space.
So those are the two that I you
281
00:20:27.759 --> 00:20:33.440
know, that I think about a
lot and I get very excited about but
282
00:20:33.519 --> 00:20:36.880
you know, I think there's there's
a bunch of things also that are subtrends
283
00:20:36.960 --> 00:20:40.279
right. I think if you if
you think about just drones and that that
284
00:20:40.640 --> 00:20:45.079
potential to change the supply chain.
What could that do the consumer experiences vre?
285
00:20:45.200 --> 00:20:49.440
Obviously we haven't talked about that sort
of part of the metaverse and are
286
00:20:49.440 --> 00:20:56.400
and so I think there's a number
of potential platform shifts, but the ones
287
00:20:56.440 --> 00:21:00.279
I get excited about are definitely the
crypto and digital health trends. That are
288
00:21:00.279 --> 00:21:03.799
possible. We say time and time
again on the show and maybe to throw
289
00:21:03.799 --> 00:21:06.240
away that that we should be saying. But you know, once you have
290
00:21:06.359 --> 00:21:08.720
product market fit, then you really
is the beginning of the growth stage and
291
00:21:08.759 --> 00:21:15.160
you know all the scale and growth
happens. How do you think about the
292
00:21:15.319 --> 00:21:21.000
term product market fit? When you're
evaluating companies, for consumer companies in particular,
293
00:21:21.200 --> 00:21:26.720
we think a lot about the frequency
of connection and the level of engagement
294
00:21:26.759 --> 00:21:30.519
of each interaction and I think if
you're building, if you have aspirations to
295
00:21:30.519 --> 00:21:34.839
build sort of a, you know, very large scale consumer company, we're
296
00:21:34.920 --> 00:21:41.440
folks are reorganizing their lives to interact
with you, typically you tend to have
297
00:21:41.519 --> 00:21:45.319
one or both of those things in
spads, and so we think a lot
298
00:21:45.319 --> 00:21:47.640
about it, about that. And
then, you know, the other thing
299
00:21:47.680 --> 00:21:52.240
that we look at to evaluate product
market fit is does that intensity of connection
300
00:21:52.319 --> 00:21:57.359
drive, you know, referring behavior
or sort of new customer acquisition and advantage
301
00:21:57.359 --> 00:22:00.839
and new sort of customer acquisition.
So those are some of the we were
302
00:22:00.839 --> 00:22:06.319
talking earlier about how the growth stage
things become more quantitative. That is definitely
303
00:22:06.400 --> 00:22:11.240
one thing. Testing product market fit
can become a lot more quantitative at the
304
00:22:11.240 --> 00:22:15.119
growth stage because you can look at
the behavior of the existing customers of a
305
00:22:15.160 --> 00:22:21.039
company and say, I can tell
how how much these customers love this product
306
00:22:21.160 --> 00:22:23.079
or don't. So that's typically,
you know, the way at the growth
307
00:22:23.079 --> 00:22:26.720
stage that we sort of evaluate that. That that kind of piece. What
308
00:22:26.759 --> 00:22:33.680
are some of the more unique customer
activisition strategy you've seen from companies that they're
309
00:22:33.680 --> 00:22:38.440
actually able to scale with? I've
been surprised by how little attention this gets.
310
00:22:38.519 --> 00:22:44.000
is as sort of companies scale.
The prototypical company that consumer investors always
311
00:22:44.079 --> 00:22:47.160
when I invest in is, like
you often heard here, the term poll
312
00:22:47.359 --> 00:22:51.279
versus push, right, so it's
sort of we want to invest in pull
313
00:22:51.359 --> 00:22:53.960
companies where, yeah, there's a
lot of organic momentum. There's a virality
314
00:22:55.440 --> 00:22:59.279
and what you were saying sort of
the virality continues forever and we have huge
315
00:22:59.279 --> 00:23:03.160
companies and those companies are great and
very rare and special. But I do
316
00:23:03.319 --> 00:23:11.319
think that the competencies around scaling marketing
are critical for all companies, including those
317
00:23:11.359 --> 00:23:14.680
that sort of have that kind of
level of virality. And you know,
318
00:23:14.720 --> 00:23:19.160
typically what I see there is that
early on companies find product market fit,
319
00:23:19.240 --> 00:23:25.599
they find a channel that's working.
You know, most part of your an
320
00:23:25.599 --> 00:23:29.640
APP based product. It's going to
be it's going to be facebook, and
321
00:23:29.880 --> 00:23:33.599
you know there's there's a sense that
you can kind of scale, but there's
322
00:23:33.640 --> 00:23:37.079
nothing Christmas around kind of how you
build out a paid marketing organization over time.
323
00:23:37.319 --> 00:23:41.000
And some of the things that you
know over the years that I've sort
324
00:23:41.000 --> 00:23:44.039
of started to think about is,
you know, three or four factors that
325
00:23:44.079 --> 00:23:48.440
are pretty critical for paid marketing.
So one is to really understand like in
326
00:23:48.480 --> 00:23:52.039
what context is your product really kind
of sell? So are you best position
327
00:23:52.200 --> 00:23:56.720
to market on contextual channels like instagram
or or kind of query based channels like
328
00:23:56.799 --> 00:24:00.880
Google, and to really think about
what is the messaging and kind of what
329
00:24:02.119 --> 00:24:04.960
channel best suits your sort of growth
needs. The second is sort of the
330
00:24:04.960 --> 00:24:08.839
depth of the channel. So I
think companies, especially the early stage,
331
00:24:08.839 --> 00:24:14.519
often way over estimate how deep the
channels are in any one given channel and
332
00:24:14.799 --> 00:24:18.240
don't diversify quickly enough. And then, you know, there's there's a lot
333
00:24:18.279 --> 00:24:22.319
around the quality of marketing executions.
As an example, just a number of
334
00:24:22.359 --> 00:24:27.079
creative tests that you're running on facebook
with different creatives and messaging can have a
335
00:24:27.160 --> 00:24:32.559
huge impact on your end state cost
of acquisition and you know, we often
336
00:24:32.559 --> 00:24:37.039
see that folks don't invest enough in
that kind of in those capabilities. And
337
00:24:37.079 --> 00:24:38.960
then the final is conversion funnel,
right, and kind of playing around at
338
00:24:38.960 --> 00:24:44.279
that over time. So I know
I'm just kind of roundabout way of answering
339
00:24:44.279 --> 00:24:47.200
your question, Mike, but sort
of the way I sort of think about
340
00:24:47.200 --> 00:24:52.440
it is our companies building those core
building blocks that allow them to scale across
341
00:24:52.440 --> 00:24:57.599
many channels and are they continuously testing
new channels? Right? So I think
342
00:24:59.359 --> 00:25:03.880
that sort of core big platform pay
channels are interesting, but now there's a
343
00:25:03.920 --> 00:25:10.720
ton of stuff you can do around
influencers, affiliates, testing Ott and Youtube.
344
00:25:10.839 --> 00:25:15.319
It's not sort of that one magical
thing sometimes, but it's sort of
345
00:25:15.720 --> 00:25:19.960
you know, the aggregation of all
these tiny marginal gains across many different channels
346
00:25:21.000 --> 00:25:25.920
that can actually lead to like differential
scaling versus your competitors, and I think
347
00:25:25.960 --> 00:25:29.720
those are those are skill sets that
you know, they're sort of not at
348
00:25:30.000 --> 00:25:32.119
it. You talk about them less
than a board meeting, because it's not
349
00:25:32.119 --> 00:25:34.759
the product and not the the you
know, the core things that are interesting
350
00:25:34.799 --> 00:25:40.319
for to talk about as a company
better critical to scaling and and something that,
351
00:25:40.519 --> 00:25:42.759
like you know, I I think
the founder should be investing in early.
352
00:25:44.440 --> 00:25:47.640
I love the fact that you really
pay a lot of attention in terms
353
00:25:47.640 --> 00:25:49.960
of the actual custom requisition and how
they're able to actually acquire customers. What
354
00:25:51.119 --> 00:25:53.519
I think about this whole notion of
like pulvers, push company, I think
355
00:25:53.559 --> 00:25:56.839
when I think a poll, I
think about search, just primarily because there's
356
00:25:56.839 --> 00:26:00.720
that there's that customer intent. They're
already thinking about how they can solve whatever
357
00:26:00.799 --> 00:26:04.160
problem that the company is solving,
which that's great, because all, there's
358
00:26:04.160 --> 00:26:08.599
only be so many people that actually
have that intent. And so as well,
359
00:26:08.599 --> 00:26:11.160
how can you actually convince people that
maybe not be, you know,
360
00:26:11.319 --> 00:26:17.880
searching for the searching or thinking about
that problem consciously? Right and, of
361
00:26:17.920 --> 00:26:22.960
course, obviously testing creative and you
never really losing that as part of what
362
00:26:22.000 --> 00:26:26.519
you need to do in order to
scale and make slight of sense in terms
363
00:26:26.519 --> 00:26:30.960
of how you actually think about about
scale. And so what's one thing that
364
00:26:30.000 --> 00:26:37.640
you would change about venture capital?
We still have a huge lack of representation
365
00:26:37.680 --> 00:26:44.359
in venture capital and I'm so bullish, post my experience in the industry about
366
00:26:44.440 --> 00:26:48.640
like the potential of technology to like
frankly change the world and also be a
367
00:26:48.680 --> 00:26:53.039
positive force for sort of wealth creation
for folks. But I'm also kind of
368
00:26:53.119 --> 00:26:56.599
stunned, you know, now,
having been in it for six years,
369
00:26:56.640 --> 00:27:00.400
about how concentrated that is within this
relatively small community. I think we as
370
00:27:00.400 --> 00:27:07.079
an industry have strides to make to
start to expand the opportunity set and you
371
00:27:07.079 --> 00:27:08.599
know, we talked a lot about
some of the work we're doing in emerging
372
00:27:08.640 --> 00:27:11.680
markets, which I see is,
as you know, part of that effort,
373
00:27:11.720 --> 00:27:15.519
but also we have a lot of
work to do kind of across demographic
374
00:27:15.559 --> 00:27:19.680
groups in the US itself, and
so there's positive trends there, but the
375
00:27:21.000 --> 00:27:25.359
baselines were so low that we've got
a long way to go to kind of
376
00:27:25.359 --> 00:27:29.880
expand that that opportunity set. What
is what book the ASPARATY personally, one
377
00:27:29.880 --> 00:27:33.880
book that aspired you professionally. So
the professional one is easy because I was
378
00:27:33.920 --> 00:27:37.240
given the one that I'm reading right
now. I'm reading the the Sam Walton
379
00:27:37.319 --> 00:27:41.440
biography. It is just an incredible
story, you know, sort of just
380
00:27:41.559 --> 00:27:47.039
like his love affair with with the
business of retailing and the passion with which
381
00:27:47.039 --> 00:27:51.359
he built the company. It's very
intoxicating and sort of like reaffirms, you
382
00:27:51.400 --> 00:27:55.039
know, kind of the business were
in, of trying to build, trying
383
00:27:55.039 --> 00:27:59.559
to find founders, were building iconic
company and you know, on the personal
384
00:27:59.599 --> 00:28:02.519
front, I'll say one for the
home team. I I love the the
385
00:28:02.559 --> 00:28:07.440
Bagwad Gita, which is which is
an Indian religious text but really kind of
386
00:28:07.480 --> 00:28:12.440
more of like a conversation between two
people about like about the meaning of life
387
00:28:12.519 --> 00:28:18.720
and and very powerful and so I
find myself going back and reading that often,
388
00:28:18.720 --> 00:28:21.440
never the full thing at one time, but just like passages of it,
389
00:28:21.519 --> 00:28:23.880
and I and it's very life affirming
and coming. So that's probably the
390
00:28:23.880 --> 00:28:27.839
personal one. But I thought a
question to use. What's the best piece
391
00:28:27.880 --> 00:28:32.480
of advice that you've sived? Back
in my private equity days, I had
392
00:28:32.519 --> 00:28:36.519
a chance to interact with Richard Persons, who is actually the former chairman of
393
00:28:36.559 --> 00:28:38.799
city group in Time Warner. He
was an advisor to the the fund that
394
00:28:38.839 --> 00:28:41.480
I worked for. We had lunch
a couple of times and he said something
395
00:28:41.559 --> 00:28:45.079
that really stuck with me, which
was, you know, in your career
396
00:28:45.160 --> 00:28:48.720
you want to be the person that
other people root for, and I think
397
00:28:48.720 --> 00:28:53.480
about that like all the time,
almost every week, and so we're trying
398
00:28:53.480 --> 00:28:57.839
to bring that ethos too. Two
interactions that I have with pretty much everyone.
399
00:28:57.920 --> 00:29:02.799
That's some Sillian piece of advice that
I've one of the more sailing piece
400
00:29:02.839 --> 00:29:04.519
of advices that I'm that I've gotten. So I love that. I love
401
00:29:04.559 --> 00:29:07.680
that. That's so true, so
true. Soue me, thank you so
402
00:29:07.799 --> 00:29:11.640
much again for your time. This
is so much fun, so much fun
403
00:29:11.680 --> 00:29:14.480
as well. Thank you for having
me on. Big Fan of the podcast.
404
00:29:14.519 --> 00:29:17.160
And there you have it. It
was terrific chatting with Suemy. I
405
00:29:17.160 --> 00:29:19.200
hope you all enjoyed it. If
you enjoyed this episode, I love it
406
00:29:19.200 --> 00:29:22.440
if you'd write a review on the
apple podcast. You're also welcome to follow
407
00:29:22.480 --> 00:29:26.720
me your host, Mike, on
twitter at Mike Guelb, and also follow
408
00:29:26.799 --> 00:29:41.119
for episode announcements at Consumer VC.
Thanks for listening. Everyone