This was one of the most candid interviews by an incoming CEO in a turnaround situation that I’ve ever seen!
Lots of analysts have said that everyone who wants a Peloton already bought one. How big is the TAM, or the total addressable market?
You can’t possibly know what the TAM is. You’re in the middle of inventing the TAM.
On founders and vision, and the challenges of reality
What have you learned from the other founders you’ve worked with?
They see things the rest of us don’t see, which is why they get to be founders.
What went wrong here?
They got caught up in the vision thing at the expense of getting real and dealing with the world as it is. I mean, really, who thought that Covid was going to be the forever thing?
On his relationship with John Foley [Peloton cofounder, Board member and original CEO
How hard will it be leading the company when John and other insiders still have a controlling stake and veto right? You still work for him.
The question is: What best serves his economic interest? At the end of the day, he’s very much an economic animal. And so, if we’re winning in the marketplace with my leadership, I think this is a nonissue. He’s a happy camper. He’s doing what he likes doing. Which is not everything else that I’m doing — and he gets to be the product visionary, right?
And if the company isn’t doing well, I’m getting replaced anyway. So it’s pretty cut and dry. And if I don’t do well — and there’s a change — maybe at that point the business gets sold.
Sometimes I feel as if we’re increasingly uncomfortable with the idea that there’s always going to be some risk in our lives, and especially some degree of unknown risks in the earliest waves of innovation. I understand that part of this ‘risk backlash’ is that in many historical cases the risks have been disproportionately born by those with the least power in America.
Johnson’s post introduced me to a concept created by a Stanford engineering professor in the 1980s: the micromort. A micromort represents a one-in-a-million chance of death. And here’s an example of how it’s applied in context [via Wikipedia]:
The rational quant side of me does love turning perceived risk into clear comparisons of mortality. It’s a blunt instrument and I’m sure not without its own skeptics, but was a read I recommend.
There’s a Specific Strategy For Getting Capital When Sentiment Turns Sour
“There’s only one thing that entrepreneurs have complete control over, and that’s picking the market they want to operate in.” I’m paraphrasing wisdom shared by entrepreneur/investor Jeff Kearl at a conference. Jeff was pointing out there are a host of attributes tied to the market you’re deciding to operate in and you should be thoughtful about that selection. “Attractiveness to VCs” might be one consideration that you consider, but what happens if after you get started building, the market turns and all of a sudden, you’re in a category that investors view skeptically? Founder pain! But don’t worry, there are some tactics you can deploy to try and navigate through.
Before we launch into that playbook though, let me give some examples of how this ‘category chill’ plays out. You can think of it most broadly as an area of innovation which is trendy, new or thought to have high potential. However some high profile failures and/or sub-VC scale outcomes start investors questioning whether it’s worth continuing to fund the problem space right now or is there some fundamental limit on value creation. For example, consumer hardware startups post-Juicero or 3D printing a decade ago. More recently podcasting ventures seem to have only reached exit values which have been solid for founders and angel investors, but well below “fund returning” for multibillion AUM firms.
When faced with this ‘new information’ you, as an early stage founder working in the industry, have a choice to make: have you learned something about this market which suggests you need to pivot away from where you were focused (or ween yourself off venture capital to other forms of funding); or, are you more convicted than ever, having learned from the other startups and using their outcomes to inform your path forward? If it’s the former, well, this post would end right here, so let’s assume it’s the latter: you’re still a believer. Raising capital just got much harder, but here’s how to play it in your fundraising conversations:
A. Don’t Ignore The Elephant In The Room
Leaving the issue undiscussed with potential investors doesn’t mean “whew, we got out of there without hard questions” but instead you missed an opportunity to counter the narrative. Either they’re now thinking you’re naive about your market, or it comes up in their diligence/conversations with their colleagues who express skepticism. You gotta address it — the recent failures or perceived ceiling on exits. Take it head on at the 50,000 foot level and drop one or two insight gems regarding why your company is better positioned. Maybe you’ve spoken with the previous companies customers or investors or employees and learned from that — maybe you’re even now taking their customers, hiring their best team members, whatever.
B. Stop Pitching FOMO Investors, They Won’t Convert
Don’t hug trees because they don’t hug back. Just a weird sales saying I recall someone telling me years ago. Basic meaning is that you more often find success convincing folks who are likely buyers than objection handling for those who are never going to convert.
When your sector goes cold the FOMO momentum investors are never going to get there and I think it’s a waste of time to try and persuade them. What are some signals for these types of investors? A lot of asking who else is involved in the round or inability to tell you what their investment thesis would be for a company like yours — ie they don’t know what specifically they’re trying to figure out.
Instead spend your time on these types of investors:
Senior Folks at Their Firms: These individuals will have the conviction to make their own decisions and will be less impacted by the groupthink of their partnership or industry. Note, the junior investment professionals working for the senior Partner can be good conduits — don’t ignore them — just a newer, junior General Partner is less likely to make a contrarian first investment at many firms (exceptions exist of course).
Industry Execs, Former Industry Founders as Angels: Many will want to see *someone* crack the problem they were trying to solve, even if it wasn’t (or only partially) was them. Sometimes they’ll be competitively conflicted if they’re still working in the space, but no harm asking.
Relevant Corporate Strategics: Often these folks are investing with dual purposes. Yes they need an economic return but they’re also trying to strengthen their ecosystem, whether it’s startups who can be customers, compete against their competition directly or indirectly, and so on.
C. Just Survive
Stop worrying about venture fundraising and just get into survival mode. Bring your burn rate down, crowdfund from your community of users, do whatever you can to make it to the other side of the disillusionment trough. Because if you do, you’ll likely be alone and advantaged when the wind starts blowing at your back instead of in your face.
As Our Colleague Kate Stern Departs Homebrew To Go Back to Company Building, Here’s Her Advice
At Homebrew we’ve stayed a very small group by design, believing at the earliest stages of a company, continuity of relationship between the investor and founders is essential to preserve trust and context. But sometimes growing the team isn’t just about adding another set of hands, but a different set of experiences, interests and capabilities. And that’s what we had the chance to do in early 2019 when Kate Stern joined Homebrew. We mutually anticipated it would be a three year role, after which Kate could decide if she liked investing or wasn’t ready to leave the world of operating (she joined us from 5+ years at Uber). During this period we, and the Homebrew founders, have benefited tremendously from Kate’s work. So it felt appropriate as she gets ready to leave the firm to celebrate her and share her reflections with us.
Homebrew: Looking back at our “Welcome Kate” blog post three years ago, what were you thinking at the time. What was the process of joining us like from your end?
Kate Stern: First of all, it’s hard to believe that was three whole years ago — time has really flown! Thinking back…
Normal first day nerves! I’d been at Uber for almost five years and it was so comfortable — any new role would have felt like a big change for me, but moving into the venture world felt particularly intimidating. VC is a relatively opaque industry, and it was hard to know what to expect. I’m so grateful to have gotten the chance to really apprentice alongside the two of you! In those first few weeks, I had absolutely no idea what I was doing, so I just shadowed you two in everything to try to figure out what I was supposed to be doing.
Once I gained a little more confidence, I was blown away by the pace of learning. There’s so much context required to really understand portfolio companies, and there’s no real way to learn it without diving in head first. This is even harder when it comes to evaluating new companies and learning what great investments look like. In one day, you’ll have to develop a strong opinion about a dozen different industries. In this job, I really learned how to learn… and learn quickly.
The hardest thing though was honing my own point of view on good companies. At the seed stage, no matter how much you know about an industry or a founder, you’re still taking a real bet. Developing my own convictions independent of how hot a deal was or even how excited you two were about a company was challenging, but also the most rewarding part of the job. It didn’t happen overnight, but it’s fun to compare where I am now versus where I was three years ago.
On top of all this, I was settling into San Francisco. I’d moved out for Homebrew after nearly ten years in New York, and the east coast / west coast culture shock is real!
Homebrew: Venture capital is no longer as opaque as it was 10 years ago, but a lot of what gets shared is pro-VC content marketing more than the real day-to-day reality. Once you started actually doing the work, how did reality compare to #VCTwitter?
KS: So much of what is shared about venture, especially on Twitter, is an endless string of wins. Of course I knew that wasn’t the whole picture, but there were definitely some things I needed to adjust to.
The best parts of venture capital are pretty well advertised, and I can say now that they really do live up to the hype. When it comes down to it, much of my time at Homebrew has been spent talking to incredibly smart founders tackling really hard problems and building their lives’ work. That passion and energy is so fun to be around — I’m thankful to all the founders who let us come along for the ride. Most of the tech world only gets to know founders once they’ve made it; seeing them when they just have an idea and how they make it come to life is as inspiring as it gets.
On the flip side, though, one of the hardest and least talked about aspects of venture capital is how many disappointments there are. We all spend more time talking about our wins than our losses, but the reality of early stage investing is that many of our portfolio companies don’t become runaway successes. It’s difficult to see teams I’ve built close relationships with not get that massive outcome they’d hoped for — it’s definitely one of the worst parts of the job.
The other thing that can be a bit of a surprise is that venture capital can be pretty lonely, especially compared to working at a startup or company. As an operator, you’re always working with a team, and most of your success is a function of your contribution to that team. At Uber, I had projects where I worked alongside the same group day in, day out, for months or longer. It’s very different in venture. Of course we’re all on the same team, and we discuss companies and learn from each other, but it’s certainly more individual work than on the operating side. It’s just the nature of the job. I was super grateful that our dynamic at Homebrew was so collaborative and supportive, but it doesn’t always look like that. And I was so happy to get involved with organizations like All Raise that specifically aim to build community and make venture feel a little less lonely.
Homebrew: You had both finance (Goldman) and operating (Uber) experience prior to joining Homebrew. For someone earlier in their career path and trying to decide whether to jump into venture right now versus getting some additional experience prior, would you recommend one path over the other?
KS: When I was first thinking about going into venture, I used to ask this question all the time, hoping there was some ‘magic path’ that would make it easy to break into venture capital. Of course, the secret is that there’s no one perfect route into a job in venture. I know great investors from all kinds of backgrounds, from finance to operating or even something totally different.
For me, my time at Uber was crucial to building the network and skills I needed for venture. Since we invest at the earliest stage of a startup’s life, the product sense I learned on the operating side has proven much more useful than being able to build out a detailed financial model. Of course, if I was a growth-stage venture investor, the reverse might be true.
For folks early in their careers considering their next step, I’ll pass along the best career advice I have ever received: don’t overthink your ten year plan — just go where you think you’ll learn and have fun. Early in my career, I might have thought this advice was silly. But looking back, the work I’m most proud of (and the work that’s advanced my career the most) has happened when I followed my interests and optimized for learning, not a long-term plan. We spend a huge percentage of our lives at work; spend your time doing something you like, and you’ll end up in a place you’re happy with.
Homebrew: You’re still a VC until 5pm Friday the 11th, so let’s make sure we’re using this opportunity to promote a portfolio company. Pick one and tell us why it’s the next decamegacorn!!!!
KS: This is a tough one — it’s so hard to pick just one story, and even harder to pick just one company! Some of the most rewarding work I’ve done in these past three years has been the time spent learning from our founders. Their passion for whatever they’re building is contagious, and it’s so fun to see the world through their eyes.
One standout among many is how much I’ve enjoyed spending time with the Noyo team. This may surprise you, but before Noyo, I hadn’t thought too much about what needed to happen on the back end when I enrolled in health insurance. When I first joined Homebrew, Shannon and Dennis really took the time to ensure that we all understood the scope and urgency of the problem they were solving — the status quo for benefits enrollment not only is slow and wastes significant resources, but also leads to costly and complicated errors where people aren’t actually enrolled. Building a universal API for benefits is a true game changer, and there’s nothing like it on the market. Only in venture can you meet people who see this sort of problem, recognize the massive positive impact from solving it, and then go do it! They’re one of many such stories in our portfolio, and I’m so excited to see them grow into a huge business.
Homebrew: When you joined Homebrew you were upfront about wanting to use the experience to figure out whether venture was right for you at this point or whether the pull of operating — really building a company with a great team — was still strong for you. Now that the three years are done, tell the world what you decided! [drumroll sound effect]
KS: I’m heading back to building! I’ve loved my time on the investing side, but after a few years of working alongside founders in a more hands-off role, I’ve found myself wanting to get back in the weeds tackling tough problems alongside a team.
I’m excited to say that I’ll be joining Fuzzy as VP of Strategy and Operations to help Zubin, Eric, and the rest of the team build the go-to resource for pet parents. On a personal level, I’m excited to build the kind of product that I’ve always wanted as a dog parent (and if you know me, you know how much I love my dog!).
It’s also a business I’m really bullish on (now that I’ve been able to hone my investing POV!). Two trends I’ve been really interested in are the consumerization of health and wellness and the digitization of primary care. I think these trends apply to pet health too.
Fuzzy aims to be a go-to resource for pet parents that is engaging, accessible 24/7, and built on the advice of veterinarians. There are 183 million pets in the US and only 118,000 vets to serve them. Scaling quality care is good for pets, pet parents, and veterinarians. I think a huge business that capitalizes on these trends is inevitable, and I think Fuzzy is going to be that company.
Thanks for everything you brought to Homebrew, Kate!
Tech Companies Who Strike Deals With Specific Creators Cease Being Neutral Platforms And Are Accountable To Repercussions Beyond Their Own Terms of Service
“Neil Young should stay in his lane and just play music” says the person who has never listened to Ohio or Southern Man and who thinks Rockin’ In The Free World is a politician’s campaign song. Next you’ll tell me Rage Against The Machine isn’t just a party band.
I can’t tell whether the ‘free speech’ pundits yelling at Neil Young actually believe what they’re accusing him of, or just found their next tribal rhetoric culture war issue [that’s a rhetorical question], but besides free speech literally *not* being an issue that’s possible between two private non-governmental parties, what Neil is doing is exerting the ultimate aspect of free market control: deciding who he does business with.
When Spotify signed Joe Rogan to a very large exclusive contract they took him out of the category of content that they “just host and make available to subscribers” and into the realm of strategic business partner. I’m a generally happy Spotify customer but I’m not a fan of Joe Rogan. I wish they didn’t pay him all this money, but it is what it is, and Spotify probably doesn’t care anyway, assuming that he brings them more subscribers than he loses them.
Neil Young — and a handful of other musicians — have made the decision that they don’t want to be in business with Spotify right now based on their beliefs being in conflict with some of Rogan’s beliefs (or guests’ beliefs). Specifically COVID and vaccine efficacy. They are punching up, not down. When they remove their music from the Spotify service they are losing out. If they can catalyze other artists to do the same, or Spotify employees to question their employer’s business decisions, well that’s activism, not censorship.
Given my own personal bias for Young and against Rogan, I tried to play this out in my head with different POVs using another Spotify scenario. Let’s say that Kanye West thought Bill Simmons (Spotify first party content) was publishing content that was at odds with his own health/science beliefs and decided said “hey, pull that episode where you have Derek Thompson (or whomever) talking about vaccine efficacy.” If Kanye pulled his music, I’d be bummed, but I’d hardly call it censorship or think he was brigading Spotify.
But but but it’s a slippery slope! No, not really. If an artist wants to hurt themselves financially by removing their content from a service because being in business with that service somehow is at odds with their own conscience, that’s fine. Doing so publicly is fine and loudly and via an implied ultimatum is fine when the service is specifically in business with the ‘offending’ party in the manner that Spotify and Rogan are partnered.
Where would *I* draw the line? I wouldn’t want to see Neil Young seek to deny hosting platforms the ability to host and serve Rogan content just because Young disagrees. If Rogan is compliant with, say, Apple podcast’s terms of service, and Apple is merely serving and a host and/or distribution vector, but is not operating under a specifically negotiated contract with Rogan, then we shouldn’t seek to deny people access to audience. (FWIW, and this is shades of gray, I don’t consider a creator merely monetizing via a platform’s standard self-service agreements to be a ‘special relationship.’)
I have no idea why I decided to write about this because typically I’ll stay out of outrage-of-the-day cycles, but I guess it’s:
Tech companies can’t claim to “just be neutral platforms” when they’re also working with specific creators in separate lucrative arrangements, often exclusively, and always for business motivations. This doesn’t solely apply to Spotify but also my former home YouTube, Substack, etc etc etc
Economic agency, the ability to decide who you want to be in business with, is a really powerful aspect of free markets. We all have that power. What you do with your time and your dollars are the two truest channels for showing what you value.
(I’m also always interested in well-thought out opposing views — alert me to links via @hunterwalk or hunterwalk at gmail)
Why Being Thankful For Good Fortune Doesn’t Have to Ignore Impact of Effort & Skill
“There’s no free lunches,” was the mantra my father repeated to me most often as a kid. I was taught that effort matters (alongside ethics) and, ahead of the ‘growth mindset’ being academically coined, believed that with enough focus on a goal, I could probably get closer to achieving it. And now as a parent myself, we work to instill similar values in our daughter. Given this, why do I also now ascribe ‘luck’ (and not just my own attributes) as such a significant factor in my own success? Not because I’m less secure in my abilities, but because I’m more expansive in defining what luck actually means.
In my understanding now, luck isn’t about removing the notion of self-determination, or suggesting that everything which happens to us is just a random number generator. Instead my luck is a set of circumstances that I was gifted and which created the platform upon which I built my life. This includes: Where and when I was born; my health; the cultural, ethnic, socioeconomic benefits; and so on. Sometimes it’s not about what you have (I wasn’t a silverspoon kid) but what you didn’t have to deal with (I also wasn’t born into poverty).
Looking at luck through this lens also shapes a notion of ‘paying ones luck forward.’ Can you find ways to help replicate your luck for others? Looking at someone who is beginning their career without some of the benefits we had and helping to give them a break. Believing that effort is required but sometimes not sufficient for an individual who needs some mentorship or help in where to direct their energy. Or that helping someone early on in their career with a ‘lucky break’ (an introduction, a part-time job, etc) will compound for them, versus just leaving them to their own devices and assuming Darwin will sort it out.
“According to the Pew Research Center, people in higher income brackets are much more likely than those with lower incomes to say that individuals get rich primarily because they work hard. Other surveys bear this out: Wealthy people overwhelmingly attribute their own success to hard work rather than to factors like luck or being in the right place at the right time.”
Ok, but why does this matter? Because it impacts the decisions we make about how we help (or don’t help) others:
“That’s troubling, because a growing body of evidence suggests that seeing ourselves as self-made — rather than as talented, hardworking, and lucky — leads us to be less generous and public-spirited. It may even make the lucky less likely to support the conditions (such as high-quality public infrastructure and education) that made their own success possible.
Happily, though, when people are prompted to reflect on their good fortune, they become much more willing to contribute to the common good.”
So my hope is that those of us who are successful, can also realize we’ve benefitted from *some* degree of luck, and work on extending that luck to the greatest number of people possible, since that perpetuates the dynamism in society we’ve come to appreciate. Best of luck…..
And Why He Abandoned a Career in Web Ads for Leading Crypto Investing at The Chernin Group
Even before my Jarrod Dicker starting tweeting in his “web2 vs web3” style, I gave him shit about his thought leadership which seemed to be 80% “that’s smart” and 20% “what did you just smoke because I have no idea what this means?” Sometimes I’d just DM him the latter with “20” written alongside. But outside of this social media sparring, is a foundational friendship where I hold him in high admiration, not just professionally but as a human. He’s an expressive, passionate, principled person who cares deeply about his family and his community. So I used this Five Questions to get a bit more on his own background and push on web3 developments now that he’s slinging million dollar investment checks as part of The Chernin Group. Thanks JD for always being a good sport!
Hunter Walk: So you recently moved over to the investing side leading Crypto at The Chernin Group, but before we dive into your annoying web3 tweeting habits, let’s go backwards a bit. You did a lot of work in online advertising but also seem to really care about people and user experience. Reconcile that for me!
Jarrod Dicker: I started my career as a music journalist and the plan was to do that forever. I love music but am pretty shitty at playing instruments (though I collect guitars!). So the closest thing to becoming a rock star for me was writing about them. I had a blog and did a bunch of freelance work while bartending at night in Jersey, and in 2010ish accidentally fell into the media world by applying for a job on Craigslist at a blog called the Huffington Post. I wanted a writer role but the only thing they had was a business role aimed at trying to think of creative ways for the Huffington Post to make money outside of traditional means. That’s where I realized that if you like to be creative, the business side is actually way more liberating than the editorial side because you effectively could experiment and do whatever you want as long as you made money. It was permissionless as long as you delivered.
At the time it wasn’t as obvious as it is now that the bar for monetizing media and publishing was insanely low. So I carved out an ethos that whichever way the wind was blowing on the business side of media (programmatic ads, etc.), I would argue, develop and build an opposite approach. That worked out for me over the past decade. We created the Native Advertising model at HuffPost, developed new ways to build media businesses in the social era at RebelMouse and created two SaaS businesses at The Washington Post. The story is often as important (if not more) than the product itself, and in the media business taking the approach to build better experiences for consumers and new profit streams that support the core value of the projects wasn’t necessarily revolutionary, but it was an opposite approach that the industry could get behind. I like to try and enforce a beginner’s mindset in everything I do.
HW: I also associate you with a love of music, especially songwriters, jam bands and live performance. Is this an escape for you from tech stuff, or do you see parallels between Software Jarrod and Phish Jarrod?
JD:Maybe so, maybe not. But seriously… Music is definitely the best representation of me. My identity is directly connected to it. I was fortunate growing up in a family that believed in the importance of having music around 24/7. My mom was a dance choreographer and owned three studios in central Jersey. In those days, you would get your music at record stores and I remember her making it a weekly thing for us to go to Jacks in Red Bank or Coconuts in Sayreville and just buy everything off the wall. Because she owned studios, CDs were a business expense so I had a full go on everything.
It’s wild to think about the 90s because you would hear a song on the radio and try to find it or would go to the record store and buy a CD for a single song and discover the rest of the band through the album. Anyway I’m ranting but it was a very fucking cool way to discover something new. Everything felt new and hard to find, and when you found something special it was always an incredible feeling.
The parallels of music head and tech head are that when you’re constantly in a chase for something new, you have a different chase on things that often others can’t feel or see. Unless you know the feeling of the chase, you don’t know what you’re hunting for. I think it’s important in tech to try to constantly think and find something new. To understand that many people feel or see different things, and the importance of being open to a bunch of different flavors and sounds. Maybe the word I’m looking for is openness. Or maybe it’s like being in a dark room and feeling for the light switch and that moment when the lights turn on and you see everything in front of you. Anyway, go see Phish live. You’ll understand.
HW: Were you a well-behaved kid or pain in the ass kid?
JD: What do you think? 😉 I would say I was a loud kid. And when you’re loud, you are often unfairly characterized by your teachers as a pain in the ass. School was interesting for me. I loved it, but more so because I love people. I wasn’t a great student, but I wasn’t a bad student. I liked the things I liked and spent most of my time there. I am not a loner and definitely, if you met me, not an introvert. I’m all about being on the move and want to constantly be surrounded by people. I’d say the things that used to get me in trouble back then (social, loud, on the move) are the things that make me successful today. So I’m happy I didn’t listen to those teachers.
HW: Ok, now we can do two questions on the web3 stuff. Knowing what you know now, was Po.et (where you were CEO several years ago) just too early or would you have approached the project differently?
JD: I think it’s definitely a little bit of both. We were definitely too early. It’s crazy because if you think of the pitch back then (“we want to put all digital content on chain”) it sounds like a billion dollar idea today. But back then it just wasn’t as clear to creators and consumers. The emphasis was really anchored in the notion of provenance; in an era of fake news, deep fakes and attributing quantifiable value to quality content, having a supply chain of information could provide a base layer to build products that solve for that. But the market and our approach wasn’t yet ready. We also aimed to do it on bitcoin which in hindsight would have eventually shifted to ethereum or another L1 quickly.
We also aimed to get big publishers on board. New York Media was incredible and took a bet on us, integrating the protocol into their CMS. But again, others weren’t yet ready. Looking back, I would have leaned heavier on attributing value and ownership to assets over having a supply chain of creative process. I also would have focused more on the long tail than the short tail. We had a highly active community of developers that were building the function of Po.et in their creative flow. There are projects today that have executed a part of that vision and have taken it a lot further that I’m insanely excited about. But in the end, Po.et got me technically very deep in the crypto space and much of the relationships, learnings and lessons are the reason I’m doing what I’m doing today.
HW: One criticism hurled at web3 devotees is that it’s a bunch of pronouncements about decentralized, liberated futures that are just disguising a greed to make money. How do you feel about those opinions, given that you’re specifically in the business now of making money off of web3?
JD: There are some parts of web3 that I believe are hard to argue. One of the biggest, and most important, is that the emergence of NFTs has brought provable digital ownership to the internet. This evolution can’t be overstated. We’ve spent decades building products on the internet with the presumption that most digital content and IP can’t be proven scarce, or valuable, or 1:1. Now we can. So not only are we seeing an emergence of new platforms and products driving this, but also seeing many existing companies starting to think about what that now means for their business and experiences on the internet.
It’s actually funny because in the 2010s social world, the challenge was the there were all of these users but no way to monetize them. Now we have all of this monetization, and are looking for users. Matt Huang has a great tweet here .
It’s so new, and we’re taking a different approach to getting to a new space. What the term web3 has shown us is we’re now seeing crypto or blockchain in every pocket of the web. Every industry. Every interest group. So it is going to take time and experimentation to see how that fits in to both existing paradigms and newfound ones.
A part of it being focused on the creator space makes sense. There are many creative businesses that don’t have a strong online economic foundation (digital art, photography, dance) and face little headwinds. If the opportunity is in web3, then we’re starting to see how this comes to life organically. I also think it’s not binary. Arguments are also “why do you need web3 for this?” and maybe the question to ask is “why are we using web3 for this?”. Having a new option to own and distribute IP is amazing for both creators and consumers on the web. If they choose to use it, and prove it’s opportunity, then we all win.
Get More Time and More Energy By Being Thoughtful About Your Calendar
I’m a believer that one’s calendar is a very true representation of your priorities. If you feel like you’re not getting done the work you’re intending to accomplish, or are drained of energy by what (and who) you’re spending time with, perhaps looking at your schedule is one way to solve. I’m pretty fortunate that I’ve got more control of my day than many people on a more traditional company org chart, but I also believe that creating boundaries, saying ‘no’ more often, and so on, is a good way to reclaim your space. Here are a bunch of replies I used in December to say ‘no’ to requests for coffees, ‘picking my brain,’ sales calls, and so on. Copy and paste if you’d like. And share your favorite ‘kind declines’ with me on Twitter 🙂
Know that if you’ve received one of these from me, I’m not minimizing the credibility of your ask, or otherwise trying to suggest my time is more valuable than yours. But rather, time and energy is so scarce, that I’m very deliberate about where I’ve committed it, and Homebrew, Screendoor, and my family, are where it goes.
“I’m sorry I just can’t prioritize that right now but best of luck.”
“I know you’re not asking for a lot of my time, but I need to concentrate on getting some projects done and can’t let myself be distracted right now. Best of luck.”
“If you can provide some specific examples or questions you think I can be helpful on, perhaps I’ll be able to answer them here and we don’t need to worry about chatting live.”
“Can you provide a little more detail over email so I can make sure I’m a good use of your time.”
“I’m holding all my scheduled time back right now for our portfolio founders (and my family) but if you reply with some specific questions, I’ll do my best to answer via email or a Loom video if I think I can be helpful.”
“Thanks and appreciated meeting you as well. Don’t feel like we need to chat live right now but feel free to stay in touch.”
“I know this sounds weird but I’m only doing these sorts of conversations in 15 minute phone calls between X-Ypm on [days of the week]. I’d be happy to chat then if you still think it’s worth your time. Here’s my next availability…”
Shepherd’s CEO Justin Levine answers Five Questions on how his $6.2m fundraise came about & why it didn’t include me (yet)
I love working with great people and as a venture capitalist, am fortunate the number of founders I’m impressed by far exceeds our investment capacity. Here’s an example of a founder that I’ve known for a while who recently raised a seed round with different firms than ours. In industry terms, I’d call this a “miss/loss,” which VCs tend to not write about for obvious reasons (I’ve got a whole other rant on the fake performative anti-portfolio lists — Bessemer’s aside). But Satya and I post-mortem our miss/losses so I figured, why not do a version of it in public? My friend Alex at TechCrunch covered Shepherd’s seed round last September and here’s some more detail on how it all came about via my Five Questions with their cofounder/CEO Justin Levine.
Hunter Walk: Justin, thanks for agreeing to do this. I really enjoy our conversations and am especially glad you’re up for some candor, because it’ll help provide some insight into the state of the startup and funding market. Ok, first, let’s provide some backstory. You want to tell people how we originally met?
Justin Levine: Sure! Homebrew was on the board of a construction tech startup called BuildingConnected, having led their seed financing. BuildingConnected’s first and only acquisition was a company I founded called TradeTapp. Our team joined BC in 2018, and less than 6 months after that BC was acquired by Autodesk, where I continued on for about a year. As I started to explore new ideas, Dustin (DeVan, CEO of BuildingConnected) made sure Hunter was one of the first investors we spoke with.
HW: So then you ‘did your time’ at Autodesk post-BuildingConnected acquisition. What did you learn from the two acquisition experiences, and the whiplash of going from small startup -> bigger startup -> big public company that quickly?
JL: In short, a lot. I was pretty naive going into my first startup, having worked in more “traditional” roles within the construction industry prior to founding TradeTapp. I certainly didn’t know a ton about venture capital or the tech industry at large. I think BuildingConnected was eye opening because of how truly BIG the idea was — much bigger than what we had been chasing at TradeTapp. At BC, our products were SaaS tools, but they were just a wedge into something bigger. What we were really building was the first professional network for all of the $10T construction industry. If done right, the opportunity was enormous. Pretty cool! BC taught me to dream bigger, and to experience startup at scale.
Post-BuildingConnected things definitely changed. This will sound like a shot at Autodesk (it’s not meant to be), but what I learned from my time there is that acquisitions are incredibly hard and come with many unavoidable challenges. It takes a tremendous amount of effort to remain customer focused — something we often struggled with. This article from Noam Bardin (fmr CEO of Waze, acquired by Google) articulates some of the impossible choices large corporations have to make when integrating acquired startups, and a lot of his perspective certainly resonates with my experience.
HW: You and I had lightly stayed in touch, but reconnected when you started work on a NewCo. The original idea was novel but not one that we had great conviction around, so we held off investing but wished you luck, Then you returned to a problem space you knew well and started Shepherd (commercial insurance for construction). In March 2021 I reach back out based on a LinkedIn bio change you made (my CRM is mostly in my head) to learn more. We chat in April, find out that you’ve already raised a pre-seed round and are building towards a seed. Where did I f*** up? aka how come you didn’t come back to us for the pre-seed knowing that (a) we all got along and (b) we have some relevant fintech/insurtech experience ourselves?
JL: Ha! I wish I had a better answer for this one. The truth is that we were preempted by Susa about a month after starting YC W21. YC specifically tells you not to engage with VCs mid-batch, but given the long(er) road of setting up a neo-insurance carrier, we felt like we had extenuating circumstances and ultimately they were supportive. Susa has a strong track record in fintech / insurance (Newfront, Robinhood, etc.) and we also had a great relationship with the partner. Courtney pitched us as much as we pitched her. In retrospect, I think we were a bit fatigued from the unsuccessful fundraise attempt with the previous idea (it wasn’t just Homebrew that said no) and perhaps we lacked the appetite to shop the deal around even though we may have had the opportunity to do so. Susa was pretty aggressive in getting a deal done quickly, and the whole thing was over in a few days. I can’t say we have major regrets here though — Susa has been a great partner.
HW: Ok, we’re really going inside baseball now. The seed round gets done with a surplus of demand — I mean you’re a second time founder working in an area of expertise that is a huge market. We’re talking with you about the round but it’s growing beyond Homebrew’s comfort zone given our own fund size and strategy. Share how you thought about this round — doesn’t have to be specific to me/Homebrew — which ultimately shaped the decision you made about composition? Is it driven by size of round you want to raise? The needs of the lead investor for ownership? A round that is most accommodating for the existing investors while allowing you to get new people involved? You’re trying to balance a bunch of trade-offs and needs of different parties.
JL: There are definitely a number of considerations for us when taking on any outside capital, and some of them are round specific while others are just our philosophical approach to fundraising. Of course, the current state of the financing market dictates a lot of behavior as well. As you said, we’ve been operating in a pretty founder-friendly environment if you meet a few criteria such as operating in an area of expertise, and having a successful exit under your belt.
At seed, we cared deeply about the partner leading the deal: what’s their background, what’s their standing within the fund, how are their references coming back, and finally: are they on the ascent in their career (i.e. how much will Shepherd’s success mean to them beyond financial outcome). Next would be the fund itself: reputation, expertise (early stage vs. multi), and market experience (fintech/insurtech). This framework helped narrow the field for us a lot, and from there deal terms were probably the next most important thing.
We were pretty open minded regarding round structure, but the dynamics of raising at a higher valuation, which we pushed for, meant that the lead was going to need a pretty large percentage of the round in order to maintain their ownership target. With that in mind, we wanted to make sure we had room for at least one strategic partner that we felt would create an advantage for the business (in our case it ended up being two: Procore & Greenlight Re) with the remainder allocated to angels. Everyone got squeezed down, and there were definitely more than a few tough phone calls. All of this added up to a bit of a larger seed than we expected ($5M), but we were still really happy with the outcome. Natalie at Spark Capital, who led the round, has been everything we were looking for and more.
Despite all this, it’s really tough to turn away the potential to work with amazing people like you and Satya. I think these things tend to work out in time, though. My takeaway on financing is that you have to make the best decision based on what’s best for the company and team long term — and sticking to a concise plan around timing and evaluation framework was extremely helpful in ensuring it came together successfully.
HW: A nice peek behind the curtain for folks on what these rounds can be like when it becomes a “consensus” deal. Returning back to what really matters — actually building a company — what are one or two things you’ve done differently the second time around when it comes to the first 12–18 months of Shepherd?
JL: Applying my first learning from BuildingConnected, Shepherd is a much more ambitious idea than anything I’ve ever done. Our mission is to make construction, one of the most hazardous industries in the world, safer and more financially sustainable — that’s why we come to work everyday. The “how” is by creating innovative insurance products which incentivize contractors to adopt new technologies. We’re positioning Shepherd to have potential for enormous long-term impact across commercial insurance, and I think the BIG dream this time around is attracting some of the best talent across underwriting, product, and engineering to join us. It helps to have two extremely accomplished two co-founders that people immediately gravitate towards as well, and I absolutely love the team we’re building around the 3 of us.
On a more personal level, I’ve matured a lot as a leader since the first days of TradeTapp. I try not to ride the emotional wave of startup life like I sometimes did before and rather be a consistent source of calm for our team, co-founders, and investors. I view a huge component of my job as making sure every employee is in the best position to succeed in their roles. I pay a lot more attention to what everyone is optimizing for individually, and aligning their personal goals with the company goals. From TradeTapp, I learned it’s easy to take these things for granted only to realize later that not everyone is pulling in the same direction.
Finally, there’s been a pretty significant change at home…I’m also a recent Dad! My son was born just about 2 months after we founded the company. The days of the company being the one singular focus in my life are over. But there’s a silver lining to that: I think having a baby at home forces a different level of focus and decisiveness around the way I operate. Being a second time founder, you’re able to peak around a few more corners and avoid some of the dumb mistakes you made the first time. It’s not always perfect but I can say confidently that the lessons from building something a first time are invaluable to the next.
Well there you go, the story behind the story on how rounds get done for companies which have heat on them. I’ve found that seed these days really is two different worlds: founders who have no trouble getting multiple termsheets within days of fundraising at valuations we used to assign to A rounds, and of course more commonly, those who find that it’s a constant struggle to get investors to believe in their vision and take a risk on them. What’s interesting here to me is our involvement in Building Connected was the latter (cold email from two founders), and one of their alumnus turned into the former! Thanks Justin for sharing a bit with me here and best of luck.
Multiplayer games “really gave me the feeling of being socially connected when I was otherwise on my own at home”
My sense is that many people in our industry are fundamentally shaped by what tech meant for them as kids. Projecting from my own personal history? Sure. But it does lead me to ask peers about how they first encountered, and committed to, software. As a longtime Facebook engineering leader and now Meta’s new CTO, Andrew Bosworth has been at the center of many decisions Facebook/Meta made in the last decade, so I decided to ask him Five Questions.
Hunter Walk: For me, two formative moments with technology occurred pre-adulthood: Print Shop on the Mac and Alt.Net newsgroups. The combo convinced me that software was for creativity and community — 100% impacted the rest of my life. Do you have any “AHA!” memories of your own with regards to tech?
Andrew Bosworth: In two words: video games.
My parents got an Apple IIe when I was around 5 and a game called Rocky’s Boots which entailed chaining together logic gates to solve puzzles. The discovery of logic gates really changed the way I thought beyond just the game which is pretty profound for a five year old. I also liked Sticky Bears and Lode Runner.
In middle school we got a DOS PC and a friend from 4-H came over and introduced me to QBasic programming and we built a basic program where you could use the arrow keys to change the color of the cursor. It felt like magic. From there I could see how all the games I liked (Sim City in particular) were really engineering problems at different levels of scale.
Then in high school I started playing multiplayer games with my friends (Descent 2, mostly) which initially meant dragging them around and physically wiring them together and then eventually dialing in to each other’s modems directly. Combined with occasional prodigy usenet experience (I recall a few Star Trek MUDs) it really gave me the feeling of being socially connected when I was otherwise on my own at home. I was a very social kid (constantly on email/AIM or corded phone) who lived on ranch without many friends in walking distance so this was meaningful.
I do feel lucky to have been raised in Silicon Valley where it was clear to everyone that this was a very valid and potentially lucrative career choice. Within computer science, the thing I set out to study was artificial intelligence and the main reason for that was playing Metal Gear Solid at my friends house (I never had a console, just the PC and a gameboy), the first game I played where the “AI” (quite simple in retrospect) was a major factor of the gameplay. We spent more time making the guards follow us around by leaving clues than we did on the game sometimes.
HW: Did you collect anything as a child? I went through overlapping phases of baseball cards, comic books, old wrestling magazines, role playing games, paraphernalia and old books. You as big a nerd as me, or nah?
AB: Not seriously. While I enjoyed video games at home and did some RPGs with my cousins at holidays, I was an active kid and spent most of my time outdoors playing sports or just hiking around (I grew up in a rural area of the Bay). I had a half-assed Magic card collection and an even more limited baseball card collection. I lived in a rich area (my family was comfortable but nowhere near the same level) so the kids who were into those things had incredible collections I knew I could never match so it never seemed worth investing much. In fact I didn’t really collect anything seriously until my mid-30s when I started collecting camera lenses and I suppose now a little bit of art.
HW: You grew up out here but went east for college. Had you traveled much prior to that change? Did Boston work for you right away or was there an adjustment period? Is there an alternate future where Boz didn’t return to California?
AB: With only one exception (visiting my aunt and uncle in Hawaii) every vacation we took as a family was to pile into the car and get to the great outdoors. Every Easter break and summer we were camping or backpacking somewhere here in the American West, from Baja to Oregon and as far east as New Mexico. We did go up to Tahoe in the winter sometimes so I was plenty comfortable in the snow. I expected to go to a UC like everyone else in my family had but a few schools encouraged me to apply, hinting they might tag me as a football recruit. In the end, none of them did but I had already applied and then managed to actually get into Harvard (but not Yale or Stanford). I still almost went to UC San Diego but figured (correctly) I would probably spend the rest of my life in California so it would be good to branch out for a few years.
Boston was great and is an easy city to like with great public transit and good institutions. I really enjoyed my time there and it helped that my sister was already living there coaching rowing at Harvard. Still, there was never any chance I would stay on the east coast. I admit I also enjoyed the year and a half I lived in Seattle after I graduated but at some point I knew I would be back in the bay. My family has been here for five generations on each side, my loyalty runs deep.
HW: You proposed to your wife on the peak of Shasta after summiting the mountain together. My man, can you not make it hard on all of us who got engaged at sea level! How did you two originally meet?
AB: I was playing a pickup rugby game as an undergrad and injured my shoulder. University healthcare is awful so once they confirmed I wasn’t pregnant they proceeded to misdiagnose the injury for several years. It would dislocate quite often in my sleep which is an alarming experience to say the least. When I finally got a job with decent healthcare at Microsoft the first thing I did was go to a specialist who confirmed I needed surgery to repair a tear to my Superior Labrum.
After surgery I did my physical therapy at The Pro Club where I was randomly assigned as the patient of my future wife. I rolled in wearing all Harvard themed athletic gear (I didn’t own anything else!) and she rightly made fun of me for it. We ran into each other socially a few times at bars in Seattle but I feel compelled to note we didn’t date at all until after I had completed my treatments. Neither of us agrees on who initiated the relationship but it was her.
HW: One of my favorite episodes of This American Life is about superpowers, and one of the segments is John Hodgman asking folks whether they’d prefer the power of flight or the power of invisibility. So, Boz, I ask you: flight or invisibility?
AB: Flight. Invisibility can basically only be used for subterfuge as far as I can tell? That’s not my style. I’m comfortable not hearing conversations not intended for me. But I’m very impatient and travel consumes a huge amount of time so flight is a big win.
Ellen DaSilva’s Journey, from Banking to Twitter to Hims and Now, Her Own NewCo!
Like many relationships these days, mine and Ellen’s began online. But we successfully converted it to an NYC IRL coffee this past summer. I really enjoyed that chat so wanted to learn a bit more about my new friend, as well as share her story with you all. Thanks Ellen for answering Five Questions.
Hunter Walk: During my childhood I went through phases where I thought I’d be a writer, or a lawyer. Were there professions you recall thinking about when you were a kid? How connected are they to what you’ve ended up doing in this first phase of your career?
Ellen DaSilva: When I was 5, we had career day in my first grade class. Each student had to say what they wanted to be when they grew up — a pretty cliche exercise given I didn’t really know much about the professional world. I thought about it, and announced to my class that I wanted to be the CEO of Coca Cola. Not a soda drinker myself, but when my teacher asked why, I said I knew I’d be the leader of an iconic American company.
In reality, I had limited visibility into the world of tech and entrepreneurship until after college. It seemed to me that the way to achieve success was to work in the financial services or in a blue-chip business. It was sheer luck that I got placed on the tech desk at Barclays and met my (now husband) at the same time. Both showed me that there was life beyond large financial services institutions, and it clicked instantly.
All of this is to say that young aspiration, while it had nothing to do with my current job, gave me the footing to be open-minded, ambitious, and strive until I reached what I wanted. It’s that kind of attitude that helps no matter what the industry.
HW: Over the last decade you worked in banking, then Twitter and Hims (which you recently left). Is there a framework you’ve used to decide when it’s time to leave a company, and how to decide what to do next? I think many new grads would be happy to mirror your early path!
EDS: My mom always told me “don’t leave a job, run toward a new opportunity.” There is a lot of truth to this. Every 3–6 months, I run a mental exercise in which I ask myself the following questions:
Am I happy with how I’m spending my time?
Am I still learning and growing?
Am I being given increasing responsibility?
If the answer is no to any of these questions, it’s a valuable moment to assess whether any of these vectors can change. If they can’t, or if something is misaligned, then it’s time to more seriously consider other jobs.
For me, it has always boiled down to honesty with my manager specifically each time I was ready for a transition. For example, I got lucky when I was an analyst at Barclays — truly a junior-level employee. My manager and I were very different, but I felt comfortable having frank conversations with him that it wasn’t the right career for me. He was supportive when I needed to take interviews at tech companies, and offered his rolodex, recommendation, and anything else I would require. That level of mutual respect when you are looking to leave a job is critical.
The world is small and we cross professional paths with people we’d least expect. So the most important thing is to leave with dignity and integrity. I try to do that every time, even if the job is no longer the right fit. I emulated that experience when I left Twitter for HBS, and when I left Hims to start my new venture. I feel grateful to have the support and blessings of my former colleagues.
HW: Both Twitter (IPO) and Hims (SPAC) went public during your tenures. Were there similarities in how it felt to live through those moments? Was there anything either company did to try and maintain focus on building & executing vs “where is the stock price today?”
EDS: It’s funny — I started my career in investment banking working on the Equity Syndicate desk taking companies public. I used to work on multiple IPOs every week, so it didn’t seem like such a big deal. It was only when I worked at Twitter that I realized how momentous a public offering was when you’re at an operating company. I had been at the company for about 2 years when we went public in November 2013, and the feeling of euphoria was palpable at 5am when we got to the office to watch the management team ring the bell on the exchange.
The differences between the two IPO experiences were fairly stark. To state the obvious, Hims went public in January 2021, before most of us had vaccines. Watching the stock exchange open with your colleagues on Zoom is a very different kind of celebration. Joyous, but more muted. We never had a proper celebration until we could all be together again.
There were plenty of similarities in these milestones: the feeling of extremely hard grind, followed by a brief moment of pause to celebrate, followed immediately by the feeling of “back to work.” These are two businesses that have an ingrained culture of working hard, so we had the sense that the IPO was the beginning of the next chapter rather than the end.
Maintaining focus became a quick post-IPO shift for both businesses: at both Twitter and Hims, we immediately prioritized ROI, cost-cutting and laser focus on the pre-approved roadmap. Inevitably, there is less room for experimentation when public scrutiny from investors increases. So we saw a bit of that happening as well.
HW: What’s one effort to support ‘women in tech’ that you think is ineffective and what’s one effort we should collectively 10x?
EDS: This is an area that’s extremely near and dear to my heart, and I’ve been passionate about spending time throughout my career working to combat gender inequality. I’ll caveat everything I say here by expressing that when I’m talking about women, I’m referring to broader women/womxn/non-binary/those who identify as female.
There are so many aspects of the system to help women that are broken. If I had to pick one, I’d say that mentorship programs are the biggest fallacy in making any real change.
For starters, mentorship has to be organic. To artificially pair individuals with someone their senior leads to a pretty mediocre experience. Both sides are looking for a spark but may lack some fundamental connection (Shared job function! Shared experience! Shared outlook and desires!). Mentorship is also a two-way street. There are plenty of people who would consider me to be their mentor, and vice versa. I also have peers who are also my mentors.
Second, women’s mentorship programs almost exclusively feature women-to-women pairings. Why is that? If anything, I’d like for a senior male to show me insight into how they got where they are. I’d like to mentor more men in their careers so that they can have a female aspirational role model to show them how to get things done. It’s not the responsibility of the minority to demonstrate their value to the majority. We shouldn’t gate it.
Finally, the whole concept of mentorship is rather blunt unless it happens naturally. What I really encourage young women to find is a sponsor. Pick someone who will say “I’m going up, and you’re coming along with me.” That’s how real mobility happens.
HW: You and I are both relatively outspoken about our personal political beliefs (even if we’re happy to work with people who disagree with us). Have you always been engaged in this area or was there a particular moment that pulled you into the conversation?
EDS: This is an area of my life in which I have been deeply consistent. Emphatically yes, I have always brought some of my politics to bear. I’ve been an active and avid Democrat my whole life. My parents instilled in me from a young age that integrity and fighting for what you believe is the best way to spend time on this earth, so I always interpreted that as supporting worthy political causes.
When I entered college in the fall of 2006, I worked for Hillary Clinton’s 2008 presidential campaign, at a time when it wasn’t exactly so popular to do so. I was very outspoken on campus campaigning for her, and it felt good to be honest about what I stood for and the belief system I possessed.
I have a distinct memory of interviewing a candidate for my team when I was at Twitter. At the time, I had my Hillary Clinton work on my LinkedIn. When he asked me about it, he started with “you’re never supposed to talk about politics or religion in an interview, but here goes…” and it was one of the best candidate conversations we’ve had. It turns out we aligned politically, but I’m all about finding discourse even among disagreement. It’s fine to disagree, as long as we keep things civil.
During the presidential election of 2020, I couldn’t hold my tongue. With thanks in large part to friends like you, Hunter, we hosted a series of fireside chat campaign events via Zoom. I was surprised to see a number of my work colleagues attending those events, and received support from all walks of life along the way. I’ll keep doing this as long as I have a perch to do so.