April 26, 2022

Sumi Das (CapitalG) - How to invest in consumer tech in both U.S. and emerging markets, when does the growth stage start, and the advantages of having a single LP structure

Sumi Das (CapitalG) - How to invest in consumer tech in both U.S. and emerging markets, when does the growth stage start, and the advantages of having a single LP structure

My guest today is Sumi Das, who is a Partner at CapitalG. CapitalG is Alphabet’s independent growth fund. Some of their investments include Airbnb, Lyft, and Duolingo. We discuss CapitalG’s relationship to Google, Google Ventures, and the advantages of a single LP, Sumi spends alot of time not only thinking about consumer opportunities in North America,, but also in emerging markets so we focus on some of the differences building consumer technology and evaluating opportunities in different regions and what makes technology transferable to other markets and not transferable. Without further ado, here’s Sumi.

Here are some of the questions I ask Sumi:

  1. What was your interest in technology?
  2. How did you end up at CapitalG, and also, can you tell us a little about what CapitalG is and your relationship to Alphabet and Google?
    1. The future is mobile - what’s the future today?
  3. What’s your definition of growth-stage investing?
    1. How big can this market be?
    2. Can they scale to adjacent markets?
  4. How do you think about the differences when investing and building companies in emerging markets vs. the U.S.?
    1. What makes a piece of technology transferable into other markets?
    2. What type of market do you have to start by building everything at the same time vs. focusing on one specific use case?
    3. How does this translate into your theory of when it makes sense to bundle vs. unbundle?
    4. How does scale look different?
  5. When you’re investing in emerging markets, what consumer characteristics are you looking for or are appealing?
  6. How do you think about engineering talent abroad and recruiting for your companies?
  7. How do you think about valuations at the growth stage in this current market?
  8. They say that growth stage happens when you have product-market fit. How do you analyze on a deeper level if a company does have product-market fit and the depth of that connection?
  9. What’s one thing you would change about VC?l
  10. What’s one book that inspired you personally and one book that inspired you professionally?
    1. Professionally - Sam Walton biography
  11. What’s the best piece of advice you’ve received?
  12. What’s one piece of advice you have for founders?
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