Lost time is never found again – Benjamin Franklin
“A Venture Capitalist? What exactly is that?” If you’re in the technology industry you can probably answer but as I discovered this holiday season, most of my extended family and childhood friends were a bit fuzzier on the concept. Turns out the best way to explain was to share how I spend my days at Homebrew, the seed fund Satya and I founded in 2013.
Why is my calendar the window into my soul? Because it’s the balance sheet for the most important resource I have: my time. As an investor you’d think I’d be obsessed about capital, and certainly without investable dollars there is no Homebrew. But as I build our business, it’s time that I’m thinking about. How do I spend it? Managing short-term tactical outcomes with longer term relationship cultivation. Doing what excites me and gives energy. Meeting new founders while collaborating, recruiting, analyzing, doing whatever it takes, to help our current founders build strong companies.
So when someone asks me “what exactly do you do all day?” here’s what I tell them: As a VC there’s really only four buckets of activity.
1) Evaluate New Opportunities. At any given time Homebrew usually has about 20-35 deals we’d consider “active.” That means the founders are currently fundraising and we are at some stage of mutually getting to know each other. Satya and I use a simple three stage system.
Stage 1: Either Satya or I are meeting the founders, usually solo, giving them an overview of Homebrew and learning about their startup through direct conversations, using the product (whatever stage it’s at) and doing some background on their industry (if it’s an area new to us).
Stage 2: Here both of us are engaged. The Stage 1 partner escalates an opportunity to Stage 2 when we’ve been able to create a hypothesis as to why this might be a good investment. That partner also generates a set of questions for the other partner to push on in their discussions and data requests. We prefer this approach to having the company go through the same pitch again because (a) we want each interaction to build on the last one, (b) we want to make good use of founder time and (c) we want the founders to experience what it’s like to work with us collaboratively, not just pitch us, since that’s what the longterm relationship will feel like, not one multiyear Keynote session.
Stage 3: Let’s make a deal! At this point we’re doing reference checks and providing names of other founders to the entrepreneurs so they can diligence us (in reality we’ve likely all been asking about each other along the way too). We’re also being more specific about what our term sheet would look like from a size and valuation perspective, potentially even proactively generating something to show the entrepreneur we’re serious. Although we definitely don’t expect all Stage 3 discussions to turn into investments, we’re actively trying to get something done. Homebrew doesn’t wait to see if other investors are also interested. If we have conviction, we’ll be first in the boat with you.
The time it takes to move through all three stages is quite variable – mostly influenced by how well we know the founders, their industry and their own deal cadence. When we didn’t know the founders already, fastest we’ve gotten from Stage 1 -> 3 is 10 days (remember, we look to lead/co-lead rounds), and probably < 1 day when we’ve known the team for a while (boom!).
2) Work With Existing Investments. Once Homebrew invests we don’t sit back and wait for the occasional “hey can you intro us to the head of Android” email. Satya and I really dig in to understand at any given time, what are the highest priority items where our help would be useful and what are some things we can do to clear the path ahead of you. Sometimes these come from spending time with the founders/team via 1:1s, Board meetings, whiteboard sessions, lunches, etc but often it’s operating independently and bringing back what they need. Oh, your top priority right now is a marketing hire? Let me go get five great candidates for you! We want our operating background to give us insight and empathy into the founder journey but what Homebrew does is in support of the entrepreneurs building the company which matches THEIR vision, not ours.
3) General Relationship Building. I think networking is a terrible word. To me it means “time with people you don’t like because you think there might be a way to get value from them later.” I try to spend zero percent of my life networking. But I love getting excited and passionate about people. I love learning and challenging new ideas. I love if a 15 minute chat can help you solve a problem you’re wrestling with for days. And I love talking about Homebrew’s values and investments. So I’m always trying to stay current with the people in our industry that I care about and find new voices – via social media, via our founders, via friends – to engage. Note that I’d also put “brand building” here – attending/speaking at conferences, press stuff etc. I’ve found that in Homebrew Year One, a large part of this for me was starting to tell our story and why I decided to leave Google/YouTube. Hey, want to grab a coffee?
4) Fund Operations. raising capital, building LP relationships, infrastructure and platform investments, recruiting for firm, budget/audit, evaluating overall firm strategy and performance. Some investors roll their eyes on #4, but for me it’s actually fun. Maybe because Homebrew is our startup, just one which writes checks instead of code. Satya, Kristen and I get to be intentional about all these decisions and build the type of firm we imagine: one that we would have wanted to take money from if starting a company ourselves.
So brass tacks – how is my time allocated between these four categories. Like you dear reader, I wish I had many more hours in a day:
50% Evaluate New Opportunities
35% Work With Existing Investments
10% General Relationship Building
5% Fund Operations
That allocation. It’s fluid. Likely to change. Why? First, there’s a fund lifecycle. As we do more investments, time shifts from New to Existing. And when we go to raise our next fund, Fund Operations time will increase for a while. Second, I’m still developing my VC muscle memory. I know what it feels like to build a great team, build a big time product, build an enduring startup. I know what it feels like to write a $25k check, to see a company succeed and exit, to see one struggle and close its doors. Now I get to experience these moments not as an entrepreneur, technology executive or angel, but as a professional investor. That’s new and so I’m pretty interested in tuning how I, and Homebrew, spends its time to maximize results and joy by serving founders more effectively.
As William Penn said, “Time is what we want most, but what we use worst.”