2 years ago today, on July 10th, 2013, I typed a Facebook post and made it official: I was leaving Facebook to go start a new Venture Capital firm, White Star Capital.
Facebook’s “On This Day” notification reminded of that fact today and it made me think about all that has happened in the last 2 years. I figured it was a good opportunity to reflect on what I have learnt, what I have yet to learn and what motivates me every day in this new guise as a VC.
While I have previously stated that choosing to start a new VC fund has incredibly high barriers to entry, I don’t regret the choice of leaving the comforts of a stable and amazing job to take on this new project for a second. I love the independence it affords, the ability to create something new, and hopefully to establish a brand and a platform that continues to exist long after Eric, JF and I are no longer at the helm.
When friends ask me what I like the most about being a VC the answer is always the intellectual stimulation it provides. I can think of no other job in the world that would challenge me to be constantly learning (and continue doing so for the next 30 years of my life). While I will never be the expert in a subject - like the entrepreneurs we back are - I have to quickly learn enough to develop conviction for an investment or to probe an entrepreneur’s pitch. In the past two years I have had to learn about banking regulation, blockchains and side chains, the major technological drivers in the step-change in machine learning, the policy impediments to drone adoption, advances in democratization of 3D printing, NRE costs for hardware, neural nets (and why “fixing” them is more than just a change in a line of code), diminishing payload costs for shipping objects to space and a few dozen other subjects I knew nothing about previously.
Each meeting with an entrepreneur, each due diligence process, each Board meeting is a mini-master class in a new subject and it’s that constant drip feed of knowledge that excites me every day, makes me proud to do what I do and gets me even more enthused about what is to come. As I told my 7-year old son recently when he asked what exactly I did at work (since apparently I make it sounds like “work” is quite fun) “my job is to find the best inventors in the world and to help them to make their invention something you will use someday.”
A seasoned and successful VC Partner, and someone I consider a mentor, gave me some sound advice as we were starting White Star: “Whatever your motivation to become an investor might be, it should not be about money” and that has proven to be so true. This is a long game… You develop a thesis of where the hockey puck might be going, you develop conviction on an area and on a team, but you do not see how the hand plays out until 7–8 years later. If your bets are successful, it can financially rewarding but that should be a by-product not the motivation. This profession has a unique dual speed in which deals happen at “Tinder Speed” but the outcome of the relationship outlasts many marriages. Given my impatient nature this has certainly been an area of learning.
When I told the CEO of a successful tech company about the plans for White Star, he told me of the challenge he had seen many of his operator-turned-investor friends face: “You will soon realize that you are no longer the operator and some simply need to be in control and come back to their roots.” While at Facebook, Google or my startup days I could have identified an issue and either taken it on myself or rallied my team to take it on, I am now a minority investor and must trust the management team to address the issues we identify. This is sometimes frustrating. 2 years ago I suggested to the CEO of one of our portfolio companies that he needed to look at the data, but that I felt that he should pivot to mobile as the primary access point as engagement was likely higher. It became a running joke that I would bring this up every single Board meeting. There was always a reason why they had not: Data tracking not yet in place, not enough iOS developers to hire, team still focusing on latest web release. It turns out that, yes mobile users are twice as engaged as web users… but all I could do was ask the question, highlight the opportunity and try and influence with soft force. The only hard stick we may have as investors is to change leadership, but that’s not a threat or an option I would want to exercise often.
Something that has really surprised me (in a good way) has been the amazing warm reception we received from fellow VCs. It is an interesting dynamic, as clearly we compete to get into the best deals, but at the same time we collaborate as we often co-invest, or we or they will invest after us into some of our portfolio companies. Kevin Comolli and the Accel team in London was gracious enough to host us at their offices as we incubated White Star [Thank You!]. A number of partners at leading firms in London received calls from LPs asking for feedback about this fast-talking-former-facebook guy (and given the outcome I assume they said something good). Many of them gave good feedback from how to push for recycling to how to think about reserves for follow-on investments.
Fred Wilson once said that VC is an apprenticeship business where many of the tips and tricks are passed from senior partners to the new crop and they then pass it on themselves. While the industry is certainly morphing with the upward pressure of platforms like Angellist and the downward pressure of hedge funds and mutual funds investing at the growth stage, the mechanics and tools are very different from what Prof. Sammut taught me in the VC class at business school many moons ago.
For me, a lot of the apprenticeship has been internal. Eric, my co-founder is my extreme opposite in terms of career experience. He comes from an M&A background and is masterful at deal structuring and dynamics, and seems to thrive on the challenges of regulatory processes we’ve had to go through. I learn from him every day. At the same time, he will openly admit that discussing the pros and cons of PHP and Cassandra NoSQL databases for scalability or deep dives into K-factors is not his forte. JF, our third partner, is the perfect blend of the two of us, having run the M&A group of a large Canadian media group and then having founded (and successfully) exited a gaming business which he grew from 2 to 300 employees. The partners, along with the great team we have assembled, accept the blend of skills and experiences and work jointly across deals and managing our portfolio. I have also been lucky enough to have had the friendship and advice of a number of experienced Partners who not only make time for me, but have even served as references, opened up their LP rolodex to us and helped me brainstorm through deals and challenges at portfolio companies.
And yet, there is so much still to learn and improve upon for myself and for our firm. As I quantified in a recent post, my inbox and my calendar are not scaleable. For an industry that exists to invest in disruptive innovation, the structure and processes of VC are not always scaleable and efficient. We all have our own set of tools, CRM databases, Salesforce hacks, APIs into Mattermark or CBInsights but at the end of the day this is still a human game of evaluating and betting on a team, of guts and conviction in which we still say “no” to 99% of the opportunities presented to us.
Which leads me to another Facebook post from 2013, from a piece of art I saw at Art Basel in Miami, and which continues to be engrained in my mind as the visual representation of what my selected career path implies. Being a VC, I am discovering, requires bills to invest, but more importantly balls to pull the trigger.
Thank you to everyone who has supported us, prodded us, backed us, hosted us, partnered with us over the last 2 years… and here’s to the next 20!