Dan Martell - Investing in 250+ SaaS Startups with Marvin Liao, Partner @ 500 Startups - Escape Velocity Show #43

00:00:00.000 I think that if you raise a Series A or a Series B,

00:00:02.800 you absolutely need a very good executive coach,

00:00:05.520 or else you are at a massive disadvantage.

00:00:07.240 And all my best companies and best friends,

00:00:09.640 they all have executive coaches.

00:00:11.120 Admission sequence start.

00:00:13.240 Three, two, one.

00:00:24.480 Marvin, how's it going, man?

00:00:25.600 Good to see you.

00:00:26.280 Appreciate you coming on.

00:00:28.560 So 500 startups.

00:00:30.320 I mean, way past 500 startups at this point.

00:00:32.320 2,300.

00:00:33.300 Holy moly.

00:00:34.400 I knew it was 1,000 plus.

00:00:36.060 2,300.

00:00:36.800 That's just crazy.

00:00:37.680 It's insane.

00:00:38.880 And how many years now have you been doing this for?

00:00:40.940 So I've been doing this, it'll be six years in February.

00:00:43.440 And prior to that, you were at Yahoo?

00:00:44.760 I was at Yahoo for 10 and 1⁄2 years.

00:00:46.380 And yeah, 500, 500 startups have been around for 10 years?

00:00:50.580 Yeah, I think 2009, yeah, 10 years.

00:00:53.320 No, nine years, nine years.

00:00:54.300 Not 10 years, 2010, middle of 2010.

00:00:58.060 And I joined beginning of 2014.

00:01:00.800 And portfolio-wise, who are some of the notable ones

00:01:04.560 you like to point to?

00:01:06.040 TalkDesk.

00:01:06.760 Yeah.

00:01:07.660 Ones I have invested in Aircall, who's 0.72

00:01:10.960 ironically both in the same space.

00:01:12.840 Yeah, yeah, I was like, they look familiar when I saw Aircall.

00:01:16.000 I did not know Tiago when I made the investment.

00:01:19.120 Both have turned out to be very good.

00:01:21.520 Aircall, ManyChat.

00:01:22.740 Do you know ManyChat?

00:01:23.560 I use ManyChat.

00:01:24.760 I was the first investor in 2016.

00:01:26.860 Yeah, so they went through batch 16.

00:01:29.620 Pipify, also on stage.

00:01:31.300 So I invested in them back in 2015.

00:01:34.780 And so those are the ones at Shippo, crushing it.

00:01:39.280 So those are probably some of the, at least within my portfolio,

00:01:42.160 are sort of better known ones.

00:01:43.240 And so what did you do at Yahoo prior?

00:01:46.040 So I had five different roles at Yahoo.

00:01:48.280 So I was a brand manager in the international marketing group.

00:01:52.600 I spent two years running global sales operations.

00:01:55.060 I spent two years running global ad strategy, sales

00:01:58.360 strategy, and sort of ad products.

00:02:00.340 And then I spent two years in the Merging Markets Group.

00:02:02.360 I ran Middle East, Africa, Eastern Europe.

00:02:04.660 And then my last two years, I was a commercial director

00:02:07.480 and managing director of the EMEA expansion market.

00:02:10.820 So everything in Europe, Middle East, Africa,

00:02:13.440 except for UK, Germany, France, Italy, Spain,

00:02:15.460 like everything else.

00:02:16.240 Yeah.

00:02:16.740 And who was it at 500 that you knew of or that?

00:02:20.400 You know how I got in.

00:02:21.820 So it was actually a good friend of mine from Yahoo

00:02:25.300 joined as a managing partner, George Kellerman, who is now

00:02:28.420 at Yamaha Motors Ventures.

00:02:29.500 I don't know if I'm George.

00:02:30.880 And he was like, hey, dude, you're not doing anything.

00:02:33.880 Come hang out.

00:02:34.540 Come mentor.

00:02:35.940 And then I happened to meet him in Singapore

00:02:38.420 with the famous, now infamous, Dave McClure,

00:02:41.580 and got to know Dave and team really well.

00:02:43.860 Was that on the geeks on a plane?

00:02:45.320 This was in Singapore.

00:02:46.160 So it just happened to be at a conference.

00:02:47.780 So in between 500 and Yahoo, I spent two years.

00:02:51.300 I just took two years off goofing around.

00:02:53.800 I'd done OK.

00:02:54.960 And I just goofed around for two years.

00:02:56.640 And then I got to know them.

00:02:58.740 I got to know the 500 team, like Christine.

00:03:01.380 So it was Dave and Christine, the co-founders.

00:03:03.160 I got to know them over almost a two-year period

00:03:06.420 and was a very active mentor at the Startup Accelerator

00:03:09.960 because I was bored and just wanted to goof around.

00:03:12.240 Wanted to add value and help.

00:03:14.020 What was the impact post the Dave McClure situation to 500?

00:03:18.420 Because I know Canadian, I believe the fund up there

00:03:21.600 ended up winding down.

00:03:23.180 And I'm assuming in the Valley, it was fairly challenging.

00:03:27.200 Yeah, it was hard, right?

00:03:28.840 And it was one of those things where

00:03:31.560 I'm really, really in debt today for bringing me in.

00:03:36.560 I generally think he cares a lot about startup founders.

00:03:39.680 And he made some bad mistakes of judgment.

00:03:43.380 And we had to.

00:03:45.060 And what was ironic about, I mean, ironic.

00:03:47.820 which was tragic about the whole thing.

00:03:49.440 Just like, you know, even back then,

00:03:50.780 like Dave, as well as Christine, like we are one of the biggest

00:03:55.060 investors, actually like female founders. 1.00

00:03:57.420 I think it's like 30% to 40% of our portfolio

00:03:59.760 is just like female founders. 1.00

00:04:00.700 So we have been, we put our money where our mouth was.

00:04:03.960 And then to have this happen, it's tragic.

00:04:07.340 So we took a hit from that.

00:04:09.700 But we've come back.

00:04:10.800 So it's been two years now.

00:04:12.620 We're investing as much as we've done before.

00:04:16.500 Was there a thought to maybe rebrand, rechange the name?

00:04:20.580 And who's still, is Christine still there?

00:04:22.620 Christine is the CEO.

00:04:23.380 OK, cool.

00:04:24.220 Yeah, so it was always Dave and Christine, the co-founders.

00:04:27.660 Did she come from Yahoo?

00:04:28.880 No, she was Google. 0.98

00:04:29.760 Google.

00:04:30.260 Yeah, she was Google, OK.

00:04:31.740 And so that was just, we've taken sort of our punches.

00:04:36.140 But the way I thought about this, all this stuff

00:04:38.560 was a huge surprise to me.

00:04:40.260 And we took our punches.

00:04:42.080 But the way I thought about this was, look, we do good work,

00:04:44.940 right?

00:04:45.360 We think we do a lot of good for the ecosystem

00:04:47.360 across the globe.

00:04:48.420 We've invested in a lot of really, really great companies.

00:04:50.600 And I think most of us don't behave badly, right?

00:04:55.360 So I think the good adventure comes out.

00:04:57.080 So I focus my team on site.

00:04:58.600 Let's just continue to focus on our mission,

00:05:00.360 the mission of helping founders, right?

00:05:02.580 So this idea that talent is everywhere,

00:05:04.800 but opportunity is not.

00:05:06.220 Let's continue to do what we're doing,

00:05:07.920 find great founders across the globe, invest in them,

00:05:11.580 and help them.

00:05:12.200 And that's what has kind of kept us alive.

00:05:14.600 And that's what you guys have done.

00:05:15.560 And the program today, and again, just keep it close.

00:05:17.920 The program that you guys offer today,

00:05:19.960 is it still the, I don't know, everybody

00:05:22.340 calls it different things.

00:05:23.120 Is it still the accelerator plus?

00:05:25.000 Yeah, still the accelerator.

00:05:26.420 We call it the seed accelerator program.

00:05:29.500 And it's the same, more or less the same program.

00:05:31.280 I mean, it's evolved, obviously.

00:05:32.420 How many cohorts?

00:05:32.960 How many locations?

00:05:33.780 Two cohorts a year in San Francisco.

00:05:35.760 OK, in San Fran, no Mountain View anymore?

00:05:37.780 We shut down the Mountain View office about two years ago.

00:05:41.860 And the main reason for that was just

00:05:43.160 we saw a massive shift of the startup ecosystem

00:05:46.140 towards San Francisco.

00:05:47.440 So 500 was actually very far ahead.

00:05:49.880 So if you look back five years ago,

00:05:51.340 and you visited our office years ago,

00:05:53.240 it was people like, why are you going to do San Francisco?

00:05:55.000 Why do you have two offices, right?

00:05:56.480 The two offices I definitely asked.

00:05:58.100 Yeah, and I think we did too.

00:06:00.380 And what we found was just like the ecosystem,

00:06:03.220 most people don't want to live down in the South Bay

00:06:05.700 if you're a startup founder.

00:06:06.780 And so we've seen massive migration.

00:06:08.600 Well, I mean, even the companies,

00:06:09.900 Like, I think it was like Zynga, Airbnb, like Dropbox.

00:06:14.520 Salesforce, Pinterest, Twitter, SlideShare.

00:06:17.460 Like, they're all in San Francisco.

00:06:19.080 Yeah, but back in the day, it used to be the Valley,

00:06:21.300 and people didn't really build the companies.

00:06:23.040 And so what you're seeing now is actually

00:06:24.660 it's all the big companies have their campuses down

00:06:27.600 in the South Bay, and a lot of the new startups

00:06:30.240 are in the city.

00:06:30.780 So what we've seen, even particularly

00:06:32.820 last two or three years, there are very few Sand Hill Road

00:06:35.280 VCs that do not have an office in San Francisco now.

00:06:37.380 100%.

00:06:37.920 Even the law firms and stuff.

00:06:39.180 Yeah, yeah, they're all in SF.

00:06:40.680 And even Google, Facebook, what was Yahoo, now Verizon Media,

00:06:45.400 like they all have huge presences in the city.

00:06:47.520 Yeah, hence why the real estate is gone through the roof.

00:06:51.160 Well, Square, Square, that's another example, right?

00:06:52.940 Square, Twitter, I mean, Uber, those buildings are huge.

00:06:56.820 In regards to the investing side, I think I read somewhere,

00:07:00.200 I don't know if somebody quoted you,

00:07:01.540 but you said that at the early stage,

00:07:03.100 like you really just invest in teams.

00:07:04.660 Absolutely.

00:07:05.560 And what makes a great team?

00:07:07.980 And I know you've been on Suddude, probably.

00:07:09.900 What makes a great investment?

00:07:11.220 I'm happy to answer your question.

00:07:12.640 But I do and I don't.

00:07:14.520 What would be the unique aspects of team that is less known?

00:07:18.960 So I think diverse teams.

00:07:20.760 And I mean diverse, just sort of functional diversity, right?

00:07:23.640 Like roles.

00:07:24.260 So someone who's really good on the business side,

00:07:26.380 somebody who's really good on the technical side.

00:07:28.200 And these days, probably somebody who's really

00:07:29.500 good on the design side and UX side.

00:07:31.260 Really critical, right?

00:07:32.760 And you and I are both in the SaaS space,

00:07:36.040 and playing in SaaS space.

00:07:37.320 That's actually, look at the difference of concur

00:07:40.040 versus Expensify.

00:07:41.860 That's a huge, huge difference.

00:07:44.140 Yeah, from an experience point of view.

00:07:45.580 Yeah, from an experience perspective.

00:07:46.720 And if you even think about the fact

00:07:49.040 there's this trend that everyone talks about,

00:07:50.740 it's like the consumerization of IT.

00:07:52.900 That hasn't really happened, right?

00:07:55.540 Like, not really.

00:07:56.040 There's still some really bad products out there.

00:07:57.280 And so there's still a lot of head space for this.

00:08:00.980 And so I'm still very personally excited.

00:08:02.860 So I think on the design side, absolutely mission critical.

00:08:04.860 So you meet a team, and they've got a designer, a salesperson,

00:08:08.100 and an engineer.

00:08:10.020 You're like, well, OK, let's talk.

00:08:11.760 Yeah, a team that actually is coherent,

00:08:14.800 a team focusing on a market that actually makes sense.

00:08:17.400 Absolutely.

00:08:18.120 And at what level of traction are you looking at?

00:08:21.600 I mean, generally speaking, because I know you've probably

00:08:23.420 written checks to just incredibly,

00:08:25.760 they've got the it factor to folks that come to you

00:08:27.960 with real MRR growth.

00:08:30.220 I would say it varies.

00:08:31.200 So for example, ManyChat, right?

00:08:32.700 They didn't have anything.

00:08:33.600 They had no revenue.

00:08:34.600 Nothing.

00:08:35.100 Yeah, nothing.

00:08:35.980 But it's just like, wow, this is a super smart founder.

00:08:38.920 He really, really has a great perspective and view

00:08:41.720 on sort of like where the bot world is going,

00:08:44.260 where marketing is going, Messenger,

00:08:46.340 in particular, their Messenger marketing platform.

00:08:48.400 You're like, that kind of makes sense.

00:08:50.900 And his perspective, he had done some projects,

00:08:53.440 for example, with like Telegram, like for chat on Telegram.

00:08:56.320 You're like, OK, he's got to figure this thing out, right?

00:09:00.100 And that has worked out really well.

00:09:02.680 In the case of Aircall, I think they were like 20,000 or 30,000

00:09:06.460 in MRR when they came to our program.

00:09:09.020 But just amazing team.

00:09:11.060 That team was very diverse, and it was coherent.

00:09:14.620 They just really all talked about the business

00:09:17.140 and the vision in the same way.

00:09:20.040 You know, I had to think about like 10.

00:09:21.500 And where'd they come from?

00:09:22.340 Paris?

00:09:22.720 Paris.

00:09:23.220 Yeah, I remember that.

00:09:24.120 Amazing, amazing team.

00:09:25.420 Cool.

00:09:25.920 And so did you see, is 500, for the most part,

00:09:28.780 almost like a gateway into the valley somehow?

00:09:31.800 In many ways, yeah, so about 30.

00:09:33.420 Because that's the one thing I've always,

00:09:34.840 I know Dave geeks on the plane.

00:09:36.920 He was very much about the international proxy,

00:09:41.300 essentially, the disconnect between valuations

00:09:44.800 and capital and human, like talent.

00:09:46.920 Yeah, and what we see in general is,

00:09:50.200 if you think about the world, how much the world has changed

00:09:52.680 just even the last five years, right?

00:09:54.280 So even five years ago, I hate this term unicorn,

00:09:56.740 but if you look at the unicorn count,

00:09:58.040 it was probably like 70%, 80% US, and maybe like 20%

00:10:01.800 and international, mainly China.

00:10:03.640 Now it's probably 50-50.

00:10:05.300 Really?

00:10:05.800 Yeah, so you take a look at a lot of it's China.

00:10:07.840 But also the growth has been a bunch of unicorns out of Africa, 0.95

00:10:10.080 a bunch of unicorns actually out of Latin America.

00:10:12.040 What are some examples that are kind of notable

00:10:14.260 that I might not realize are?

00:10:15.600 So Rappi, one of the fastest food delivery companies.

00:10:18.000 Like crazy, growing like crazy out of YC company.

00:10:22.380 And then they went back to Colombia, 0.84

00:10:23.720 and they're growing all over Latin America.

00:10:25.180 Really?

00:10:25.680 Crushing it. 0.85

00:10:25.840 Yeah, crushing it. 0.79

00:10:27.040 Or another one, UiPath.

00:10:28.800 Like let's talk about SAS, right?

00:10:30.400 Like, UiPath, like, this is a company that's been around

00:10:33.160 for, I think, 10, 11 years.

00:10:34.480 Like, InDesign competitor, or like, InVision app competitor?

00:10:38.260 Or what's the UiPath?

00:10:39.140 Oh, UiPath, they do this thing called, like, robotic process.

00:10:43.640 Like, schematics?

00:10:44.540 Yeah, so it's just like, any process

00:10:46.920 that you're doing that humans are doing, like, super manual,

00:10:49.680 they kind of, like, automate it.

00:10:51.760 So it's like robotic process automation.

00:10:54.720 Oh, that makes sense.

00:10:55.520 Yeah, and it's one of the fastest growing companies.

00:10:57.620 For sure.

00:10:58.000 It's one of the fastest growing SaaS companies.

00:11:00.160 Wow.

00:11:00.760 And they don't do hardware?

00:11:02.560 No, software, yeah.

00:11:04.180 Auto Romania, but headquarters in New York now.

00:11:06.460 What's the thesis looked like so far in the 500,

00:11:10.480 essentially, smaller bets spread across?

00:11:13.900 Is the thesis still the same from 10 years ago?

00:11:17.320 And if so, what do the numbers look like

00:11:19.100 from the fun point of view that you guys can share?

00:11:20.920 Yeah, so the thesis is the same as it was before.

00:11:24.640 A lot of little bets follow on on the winners,

00:11:28.180 active in all different sort of types of spaces.

00:11:32.900 And for me personally, I've just found

00:11:35.020 like all my best 80%, 90% of my best performing companies

00:11:39.260 in the portfolio have actually been SaaS,

00:11:41.740 have actually been either immigrant founders

00:11:43.460 or foreign founders coming to the US generalizing.

00:11:47.080 And so the performance has been good.

00:11:48.320 We have out of 2,300 companies, we have like 14 unicorns.

00:11:52.120 Wow.

00:11:52.620 And the portfolio returns for fund one

00:11:54.460 are easily over 20% IRR, which is not bad, right?

00:11:58.640 Like, it's actually pretty, I think

00:11:59.960 it's a little bit higher now.

00:12:00.960 There's people that were probably

00:12:01.840 betting against it in the early days.

00:12:03.220 I remember it was pretty controversial.

00:12:04.700 Yeah, definitely.

00:12:05.560 Because the investors think that they have some secret,

00:12:07.720 like this magic touch, right?

00:12:09.400 Like, I know how to pick them, but it's like.

00:12:11.380 I think that having done VC now for six years,

00:12:14.640 having been in Silicon Valley now for 20,

00:12:16.960 I think there is a much bigger element of luck

00:12:19.420 than people choose to sort of believe.

00:12:22.980 But having said that, there are some,

00:12:24.680 there's guys like Mike Maples, who is like,

00:12:26.680 he is a consistently good investor, right?

00:12:29.420 Or Chris Saka, he's a consistently like,

00:12:31.740 you do one unicorn, you're lucky, right?

00:12:36.040 You do two or three, you're like, OK,

00:12:37.680 there's something going on here.

00:12:40.040 And so you do see a lot of these consistent pickers.

00:12:43.080 And so you're like, those are good investors.

00:12:45.380 What's the challenges at 500 now,

00:12:47.860 as you guys come up through rebuilding the business?

00:12:51.080 What are some of the things you guys are working on that?

00:12:53.740 I think scaling the business now.

00:12:55.440 What does that look like?

00:12:56.340 So for example, a lot of it is about providing

00:12:59.460 sort of better support for your portfolio.

00:13:01.040 So when you have like, nobody's ever done this, right?

00:13:03.160 Like 2,300 portfolio companies, like how

00:13:05.320 do you do a proper job supporting and communicating?

00:13:08.700 And we still have a lot of work to do on that, Aaron.

00:13:10.740 That's been a big focus over the last night.

00:13:12.160 So do you guys take board seats on any of them?

00:13:13.880 No, we have board observer rights,

00:13:15.560 but we very rarely are able to exercise.

00:13:17.200 And then in regards to the fund, is the follow-on capital

00:13:22.240 part of the fund structure?

00:13:23.320 Yes, correct.

00:13:23.900 OK, it's not a separate?

00:13:24.700 Because I know YC has a growth fund.

00:13:26.200 Yeah, they have this continuity fund.

00:13:27.700 We have, it's all the same fund.

00:13:29.240 OK, and then how do you avoid signaling issues

00:13:32.020 if you don't follow?

00:13:33.120 Yeah, that's tough.

00:13:34.100 And so at least what we have done,

00:13:36.460 and we're still figuring this out,

00:13:37.900 and we discuss this all the time.

00:13:39.160 Just quick, because some people might be listening,

00:13:40.900 what the hell are they talking about?

00:13:42.960 Essentially, if you have an investor

00:13:44.360 and you raise future rounds of capital,

00:13:45.880 Ideally, your existing investors follow along,

00:13:48.460 because they know you really well.

00:13:50.320 And some early investors don't.

00:13:52.780 It's easy for me, because I just don't.

00:13:54.500 So then I don't have to decide.

00:13:55.960 But if you choose not to and you could,

00:13:58.420 how does that impact the founders?

00:14:00.120 So how do you guys deal with that?

00:14:01.300 Yeah, so the signaling risk is actually a real thing.

00:14:03.040 So for example, we used to do a lot of follow-on investing.

00:14:05.920 It's like, first couple batches I was involved.

00:14:08.180 And we realized, I was just like, wait a minute,

00:14:09.760 this kind of screws the rest of the accelerator companies. 0.95

00:14:12.160 And so what we decided to do is like, all right,

00:14:14.120 you know what, we just don't do follow-on.

00:14:15.820 at least for the first round, like the initial seed round

00:14:18.160 that they raise afterwards.

00:14:19.520 They're raising, say, one and a half, $2 million round.

00:14:22.760 And do you try to keep pro rata then?

00:14:24.360 Yeah, we keep pro rata.

00:14:25.620 We have follow on rights for all the future rounds.

00:14:28.340 Do you have to exercise pro rata then to keep the next one?

00:14:31.160 No.

00:14:31.660 Well, you can actually get pro rata

00:14:33.060 and keep it even for like the next.

00:14:35.200 Correct.

00:14:35.500 I didn't know that.

00:14:36.100 Yeah, so our in the accelerated terms

00:14:38.240 is we can invest up to 20% the next round or $500,000,

00:14:41.600 whatever is lower.

00:14:42.540 OK.

00:14:43.220 And so we keep those.

00:14:44.500 And so what we do.

00:14:45.100 Every subsequent round, though?

00:14:46.340 At least for the next couple rounds.

00:14:48.220 OK, cool.

00:14:48.980 But not forever, because that's not super founder friendly.

00:14:51.480 And we also want to be thoughtful as well, too.

00:14:53.560 Just like we don't want to screw the founder.

00:14:55.840 And so the biggest thing for us is really this initial round,

00:14:59.920 we won't do follow on.

00:15:01.700 That's a good way to do it.

00:15:03.200 Because you just don't want to like.

00:15:05.060 And I mean, technically, you got more information

00:15:06.840 to look at at that point anyway, so it might be a better way

00:15:09.640 to make the decision.

00:15:11.180 And so this is the main reason we just

00:15:13.300 It's like, we'll follow on maybe at the A,

00:15:15.060 but we probably won't follow on at the seat.

00:15:17.380 At least we haven't in the last four years

00:15:20.580 that I've been running the program.

00:15:21.800 And I've been running the program now for almost six years,

00:15:23.340 but at least in the last four years I've been running it,

00:15:25.740 we just haven't done follow on.

00:15:26.900 What's the craziest hustle story that you've seen either?

00:15:30.680 Yeah, I mean, in your own batches,

00:15:32.140 like just the will to succeed.

00:15:34.540 What are some founders that you're just like, man,

00:15:37.360 I can't believe they did that.

00:15:39.140 I mean, I have founders who are literally driving

00:15:42.460 like Ubers, just to keep the company alive, right?

00:15:45.220 Like, I have a lot of admiration.

00:15:47.520 I have a lot of admiration for founders in general.

00:15:49.960 No investor would be pissed off if they shut it down.

00:15:52.360 Like, we know the risk.

00:15:53.340 Yeah, yeah, yeah.

00:15:54.220 But they're saying, no, I'm going to make this work.

00:15:55.960 No, we're going to go all out.

00:15:57.460 It's just tough.

00:15:58.280 And so sometimes just time.

00:16:00.200 Yeah, and I have to say, this is ironic as an investor.

00:16:02.900 Like, sometimes I have conversations.

00:16:04.100 I'm like, OK, dude, you just need to do it or do that.

00:16:06.520 It's just like, you just need to shut this thing down, right?

00:16:08.960 Or if you're trying to sell this, it's like,

00:16:10.660 Give yourself like three months, maybe four months

00:16:12.760 to run the process if it doesn't work.

00:16:14.140 Shut it down.

00:16:14.900 Don't worry about it.

00:16:15.820 I'm not going to be mad at you.

00:16:17.500 Save your time.

00:16:19.040 And your health.

00:16:19.960 I was talking to a founder the other day,

00:16:21.480 and he didn't look good, man.

00:16:23.680 Pale, put on like 30 pounds.

00:16:26.900 I was like, man, you got to go A, go see a doctor,

00:16:29.100 and then B, don't kill yourself.

00:16:31.120 And he's like, I want to make it right for all of you guys.

00:16:33.000 I feel horrible.

00:16:33.900 I'm like, we're big boys here.

00:16:35.380 Exactly.

00:16:36.520 We actually have a portfolio.

00:16:38.100 You don't.

00:16:39.400 I get it, but it's almost like, in my perspective,

00:16:42.940 if they do everything right with what they had,

00:16:45.760 then there's never, I'm not going to be upset.

00:16:48.400 If anything, I'm going to back them if they.

00:16:50.500 Exactly.

00:16:51.280 There are a lot of founders where their company's failed.

00:16:53.080 I'm like, hey, man, you died honorably, right?

00:16:56.800 Like, you went out and you tried to do the right thing.

00:16:58.580 It didn't work out.

00:16:59.540 Awesome.

00:17:00.340 You let me know.

00:17:01.480 Your next company, I'm in, right?

00:17:04.000 Because I know you're going to try to do the right thing.

00:17:05.960 That's all that matters.

00:17:06.660 What about founders that came into the batch

00:17:08.580 from other countries.

00:17:09.520 Did you see people, like, one-way tickets,

00:17:12.860 like, sleep in her car?

00:17:14.680 Yeah, hardcore.

00:17:15.280 I mean, I have, I mean, we had one founder from Canada,

00:17:18.960 and he literally, I don't know if I would recommend this

00:17:21.480 to folks, but, I mean, he was literally

00:17:22.900 couch surfing for the first, like, two months,

00:17:25.140 and he would steal food at the office.

00:17:29.340 But I'm like, you know, A for effort and hustle.

00:17:32.000 He kept his cost structure, like, I was just like,

00:17:34.460 how much are you spending a month? 0.89

00:17:35.960 And it was like, it was some ridiculous, like, 0.52

00:17:37.860 I think it's like $2,000. 0.77

00:17:40.320 In San Francisco a month, that's crazy, crazy good.

00:17:45.740 I don't know if there's any places in San Francisco

00:17:47.420 you can get for $2,000 a month.

00:17:50.240 So I just give a lot of credit to this.

00:17:52.560 I appreciate the hustle.

00:17:53.680 So how many people go through the batches then now?

00:17:56.100 So it ranges.

00:17:56.900 So we'll do between 30 to 35 companies a batch.

00:17:59.940 And when they show up, I mean, I can just

00:18:02.000 put myself in the seat of a founder and maybe never

00:18:05.040 been to the Valley before, and I got into 500.

00:18:08.700 What's the process?

00:18:10.620 Like, what's day one look like, week one, month?

00:18:13.500 And then how long is it?

00:18:14.540 It's a four-month program, three and a half

00:18:16.080 to four-month program.

00:18:17.080 So what do you guys do to indoctrinate, connect?

00:18:20.600 So first two months is really just sort of more community

00:18:23.580 building, or just them getting to know their batchmates,

00:18:25.380 because I think that's really critical.

00:18:26.920 And then I step up the pressure afterwards.

00:18:29.020 So I'm very honest with the companies,

00:18:30.500 where I'm like, and you've seen my style, right?

00:18:32.400 I just like, I beat on the companies,

00:18:34.280 But it's out of love.

00:18:35.400 It's not sadism, right?

00:18:38.780 And so for me, it's just like, we're here to push you.

00:18:41.460 And everything you should be doing

00:18:42.500 is focusing on metrics, focusing on growth.

00:18:44.780 How do you find the sales channels or marketing channels

00:18:46.680 that work?

00:18:47.560 And it's just like, what's the one metric that matters?

00:18:50.120 And we're tracking you every week to see,

00:18:52.280 are you making this grow or not?

00:18:54.240 If you're not, let's sit down and figure out

00:18:56.120 what's going right or what's going wrong.

00:18:57.840 And so it's a boiler room.

00:19:00.080 And you've seen the show, I'm assuming, Silicon Valley.

00:19:03.380 How is when people ask you, like, is it really like that?

00:19:06.500 Yeah, it's pretty.

00:19:07.100 I love the show.

00:19:08.840 And I laugh and cry at the same time

00:19:10.440 because you recognize the characters.

00:19:12.380 You know who they're modeling.

00:19:13.700 You know exactly who they're modeling.

00:19:15.220 And a lot of it is ridiculously true.

00:19:17.060 By the way, a lot of the writers are actually

00:19:18.520 Silicon Valley people.

00:19:19.400 So one of the most well-known writers

00:19:22.160 was Dick Costello, who used to be CEO of Twitter.

00:19:26.020 And actually prior to that was a comedian.

00:19:29.720 Oh, you're right.

00:19:30.220 He actually was a, like, he did plays and stuff.

00:19:32.780 So I don't know him personally, but that's one of the reasons 0.77

00:19:35.120 I think a lot of the consultants.

00:19:36.320 And he would have seen some of that crazy.

00:19:38.420 A lot of the consultants, a lot of people,

00:19:40.700 they get great, great writers, and they get great consultants

00:19:43.200 to tell them what's how.

00:19:44.100 So you watch a show, and you're like, oh my god.

00:19:45.960 Like, that's really how it is.

00:19:47.060 Well, the incubator at the house, I spoke at one.

00:19:49.680 I remember being in the valley, and some guy is running

00:19:52.380 this accelerator incubator, and he's like,

00:19:54.480 come speak of my thing.

00:19:55.280 And it was at a house.

00:19:56.680 And there's like 14 companies.

00:19:59.140 And I'm like, where do you guys live?

00:20:00.280 And they're like, here.

00:20:01.540 And I'm like, isn't that this guy's house?

00:20:03.660 I was like, people are like, oh, that sounds so crazy.

00:20:05.900 I'm like, no, this is very normal.

00:20:07.560 It's, yeah, it's wacky land.

00:20:09.200 It's not even exaggerated.

00:20:10.200 Yeah, it's wacky land.

00:20:11.300 It's not exaggerated.

00:20:12.420 Like, you think about Wahooly, Hooly's Google, right?

00:20:15.400 Like, it's just.

00:20:15.900 Yeah, if you haven't figured that out, it's so funny.

00:20:18.640 So you, I mean, you've obviously see this craziness,

00:20:22.500 the reality of it all.

00:20:23.640 But I mean, you know, lightning in a bottle does happen.

00:20:26.780 It does.

00:20:27.200 You've seen these companies grow.

00:20:30.520 What is your, if somebody's on to something,

00:20:33.640 how do you support them to make sure that they don't mess it

00:20:36.740 up?

00:20:37.240 What are your thoughts?

00:20:38.740 I mean, this is what has been challenging, I think,

00:20:42.280 for me, as well as a lot of other sort of ex-operators.

00:20:45.500 I'm not an entrepreneur like yourself,

00:20:47.800 but I worked at a lot of companies

00:20:49.780 and ran a lot of businesses.

00:20:51.420 And I think this is one of the challenges

00:20:52.920 of an operator turned VC.

00:20:54.760 Just a lot of times, and I think this

00:20:56.060 is where I made a lot of mistakes in the early days

00:20:57.680 when I was doing investments.

00:20:58.760 And you go, wow, if I was running that business,

00:21:01.260 I could help them do all this stuff.

00:21:02.800 And actually, what you realize as an investor,

00:21:05.260 you're just an advisor, right?

00:21:06.980 You're like, I think you should do this,

00:21:08.260 but it's actually your company.

00:21:09.880 So you can choose to do, you know your customers better.

00:21:13.600 All this advice might actually not even make sense at all.

00:21:16.060 So it's your job to kind of decipher this stuff,

00:21:18.320 take it in, and make the best decision

00:21:20.800 that you think is right.

00:21:22.680 And so to sort of step back and know

00:21:24.700 that you really don't have a lot of the context

00:21:28.100 of making those decisions for data.

00:21:29.640 Yeah, there's that part.

00:21:30.560 And also, you don't necessarily even

00:21:32.540 like they can choose to take the advice or not.

00:21:34.400 So you help them at the edges, right?

00:21:36.720 And so, for example, like health-related stuff

00:21:39.400 or like getting executive coach, especially

00:21:41.420 as they are scaling an organization of going from,

00:21:43.520 say, 5 to 10 or going to like 50 or 80,

00:21:46.920 like there's very specific hiring advice.

00:21:48.920 I'm just like, OK, if you think about scaling,

00:21:50.540 here's some things to consider.

00:21:52.220 I've seen a lot of companies.

00:21:53.920 I've worked in a lot of companies.

00:21:55.220 So this is how I would do hiring in your situation.

00:21:58.920 Or, for example, even just like being,

00:22:01.600 almost being the therapist.

00:22:03.900 So for me, even though I'm tough on my companies,

00:22:06.920 I need to be the first person you call when something goes wrong.

00:22:10.040 Because I'm not going to yell at you, right?

00:22:11.820 I know this is a game, but I'm here really just

00:22:14.700 to be helpful for you.

00:22:16.220 So sometimes it's just a matter of talking something through.

00:22:18.740 It was like, I have this situation.

00:22:20.080 What do you think?

00:22:20.700 And I'm like, OK.

00:22:21.780 Yeah, use some optionality.

00:22:22.940 Or maybe it's like, well, maybe I don't know anything,

00:22:24.660 but you should talk to this person.

00:22:26.220 And so my job is to be helpful in any way I possibly can be.

00:22:29.340 You mentioned exec coaching.

00:22:30.500 I mean, I think it was Tony Robbins

00:22:32.860 on the cover of Forbes.

00:22:33.980 Or Benioff, somewhere there was Benioff and Tony Robbins.

00:22:37.180 And it was like Benioff saying, if it wasn't for Tony Robbins,

00:22:39.920 Salesforce wouldn't exist.

00:22:41.400 Which I feel at that point, which is maybe three years ago,

00:22:43.940 really brought coaching into the mainstream entrepreneurial.

00:22:48.100 However, recently, a trillion dollar coach with Campbell.

00:22:51.900 And I've always had a business coach,

00:22:54.580 because I want that context.

00:22:55.880 I want somebody to watch me execute.

00:22:58.260 And you mentioned it.

00:22:59.020 So is this something that you see more acceptable?

00:23:02.120 Yes, for sure.

00:23:03.160 I think that if you raise a Series A or a Series B,

00:23:06.040 you absolutely need a very good executive coach,

00:23:08.760 or else you are at a massive disadvantage.

00:23:10.480 And all my best companies and best friends,

00:23:12.900 they all have executive coaches.

00:23:14.760 And that tends to be more US companies, less European companies.

00:23:17.280 It's changing, but that tends to be much more acceptable

00:23:19.740 in the US now.

00:23:21.000 It's almost become standard.

00:23:22.200 It's almost like, yeah, it's part of the playbook.

00:23:25.000 And in regards to the way you want to support the companies,

00:23:27.900 is it while they're in batch or afterwards as they grow?

00:23:31.000 Because like, I mean, and I'll ask you that.

00:23:33.600 Yeah, so how do you guys, when you say scaling support

00:23:36.020 is one of the things 500 is trying to do,

00:23:37.740 where is that, where do you want to add that support?

00:23:40.140 I think we are exceptionally helpful during the batch.

00:23:44.300 I would give myself, and that's probably

00:23:46.000 like a B plus or A minus in batch.

00:23:48.800 We can always do better.

00:23:50.280 I think post-batch, I give ourselves probably like a C,

00:23:54.960 maybe C plus, even that high.

00:23:57.520 And so it is a challenge having a large portfolio like we do.

00:24:00.960 And I also think that our structure

00:24:03.840 has always been about acquisition

00:24:05.540 versus sort of retention piece.

00:24:07.740 And so that is something we've been working on

00:24:09.240 for the last year and a half of really building

00:24:10.980 on a portfolio services team, helping

00:24:13.140 sort of like a lot of the basic things.

00:24:14.580 So it is, we're way more helpful during the batch.

00:24:16.980 We are focusing and putting a lot of resources against now.

00:24:19.800 How do we be helpful to them after the batch?

00:24:22.380 It's interesting, because I think

00:24:23.640 it was Naval that told me a while ago,

00:24:26.720 as an angel investor, you end up spending most of your time

00:24:29.500 with the companies doing worse.

00:24:30.760 Yeah, for sure.

00:24:31.420 Which is kind of a bummer, because I invested in Intercom,

00:24:34.180 and I love Owen and Des, and I would love to spend more time.

00:24:36.460 But they're doing well.

00:24:37.680 Yeah, and you're like, we don't really need my help.

00:24:39.680 Yeah, and they raise a Series A, and they've

00:24:41.460 got this stacked advisory board.

00:24:43.380 So how do you keep your sanity when

00:24:48.800 you are essentially triaging, I'm assuming,

00:24:51.800 you know, in your inbox, if they're reaching out for help.

00:24:54.340 Yeah, I would say most of the time when a company pings,

00:24:57.040 you're like, hey, can we chat?

00:24:58.160 You're like, OK, this is usually not good news.

00:25:00.440 I would say 80% of the time it's not good news.

00:25:01.640 You're not going to tell me you just close your next round.

00:25:02.860 And you know what?

00:25:03.560 That's the job, right?

00:25:04.860 And so I think you have to like puzzles,

00:25:06.640 and you have to really believe in the mission.

00:25:08.360 And you have to, like, for me, like, yeah, there's some days

00:25:10.780 when, especially when you haven't gotten a lot of sleep,

00:25:12.700 like today, right?

00:25:14.000 And you're like, oh, I just got to go do this thing.

00:25:16.460 It's sometimes hard.

00:25:17.280 But most of the time, that's the job.

00:25:18.780 And it's your mission.

00:25:21.400 It's your firm's mission.

00:25:22.280 It's my mission is to be helpful to them.

00:25:24.120 And most of the time, it's to be there when nobody else will

00:25:26.280 be there for them.

00:25:27.120 What was your feedback loop?

00:25:28.860 Because as an investor, some people

00:25:31.220 say it could take you 10 years to figure out if you're any good.

00:25:34.000 How did you kind of give yourself

00:25:39.080 a feedback loop in the early days of investing

00:25:42.040 to know if you're making the right moves?

00:25:46.040 I was very lucky or unlucky, I think,

00:25:48.120 to be an angel investor before I joined 500.

00:25:50.660 And I wasn't a good one.

00:25:51.800 So I had to say, I did a bunch of deals where I just,

00:25:54.140 I don't regret.

00:25:54.840 It's just like, I knew the game.

00:25:57.080 I learned a lot.

00:25:58.660 Yeah, I learned a lot.

00:25:59.500 I was just like, oh, OK, this is how you think about these things.

00:26:02.840 And so that was helpful.

00:26:04.040 I think my first year of investing,

00:26:05.540 I was learning the business.

00:26:06.900 I was very, very lucky to run the bachelor.

00:26:10.520 The entrepreneurial business of an investor.

00:26:12.380 People don't realize, you guys are entrepreneurs.

00:26:15.540 You have to raise capital for the funds.

00:26:17.220 You've got an acquisition for the batches.

00:26:20.220 OK, so that.

00:26:21.080 So I was lucky to have both great mentors at Five Un.

00:26:24.720 So Dave is an exceptional investor,

00:26:26.320 another guy I worked very closely with for almost two

00:26:28.720 years, a guy named Parker Thompson, who's now AngelList.

00:26:30.720 Oh, Parker's awesome.

00:26:31.220 He's a great investor, like an exceptional investor.

00:26:33.900 So watching the thought process.

00:26:35.780 And then I was also very lucky to have also really, really

00:26:38.480 good investor friends outside, like very, very accomplished

00:26:42.000 investors.

00:26:43.140 There's like two of them are on the Midas

00:26:44.980 like every year.

00:26:46.060 And so they were very generous at their time

00:26:48.880 to sort of help me think through.

00:26:50.360 And I just also read a lot, talked to a lot of people,

00:26:52.140 and I just did a lot of deals the first one or two years.

00:26:54.140 And I can't say my first year of investing

00:26:56.560 was like super successful, because you don't know

00:26:58.440 what you're doing.

00:26:59.260 And I was like,

00:26:59.860 You almost got to take a few swings.

00:27:01.180 You got to take a lot of swings.

00:27:02.900 And then after sort of, if I look

00:27:05.160 at a lot of my best performing companies,

00:27:07.020 best performing portfolio, so for example, Fund 3,

00:27:10.840 which is when I started, and it was batch 14.

00:27:13.860 In batch 14, I had Aircall, Pipify, Havenly.

00:27:18.900 I had another one that exited for like 7x money recently.

00:27:22.440 So Baker is another one.

00:27:23.820 They exited.

00:27:24.480 That turned into, I think we put like a total of like 300

00:27:27.840 to 400,000 into that one.

00:27:30.620 And that turned into like a $12 or $15 million

00:27:33.580 sort of like stake in publicly traded now.

00:27:35.980 So there's a bunch of companies where I'm like, OK,

00:27:39.520 I think I know what I'm doing, right?

00:27:41.340 So when you start to see stuff like that.

00:27:43.800 Interesting.

00:27:44.820 And what gets you excited about investing?

00:27:50.580 Like, what is it?

00:27:51.660 I think a lot of, for me, it's actually, yeah,

00:27:54.780 I mean, if you do a good job, it's about the money, right?

00:27:56.560 But that's long term.

00:27:57.620 Actually, what I love about investing,

00:27:59.620 where I think a lot of investors get this wrong,

00:28:01.740 why a lot of people don't stick with the business,

00:28:04.280 we're in the human potential business, right?

00:28:06.700 Investing is a human potential business in the early stage.

00:28:09.240 Unpack that.

00:28:09.780 And so it's about impact.

00:28:11.460 And so for me, that's what I've optimized for.

00:28:14.280 I'm learning all the time.

00:28:15.600 But it's ultimately, how can I change

00:28:17.640 the trajectory of this company in a positive way?

00:28:21.880 Even small, if you help them change your trajectory,

00:28:24.240 even like 1% or 2% difference, that's huge.

00:28:28.140 So it's really about the aggregation of marginal gains.

00:28:32.100 And what are you doing to help create that?

00:28:34.480 So is human potential in the founders you're investing in,

00:28:38.380 in regards to teaching them how to be better?

00:28:41.960 Yeah.

00:28:42.460 And in what ways do you feel like you're,

00:28:45.940 out of all the ways they can become better,

00:28:47.640 what's the Marvin's version?

00:28:49.340 Like, what do you focus on?

00:28:50.560 So the two things I focus a lot on with my startups

00:28:54.400 is, number one, it's the customer acquisition and growth

00:28:57.220 piece.

00:28:57.760 How are you measuring your metrics?

00:28:59.140 How are you experimenting?

00:29:00.060 You're going to, like, optimize the growth metrics.

00:29:02.240 Like, how do you, you know, the thought process

00:29:03.880 around that, right?

00:29:04.680 And how do you try different channels or sales channels

00:29:06.800 and just help you get better in that area?

00:29:08.260 build out a sales process.

00:29:10.020 The second thing is really fundraising.

00:29:11.680 And so we think a lot about fundraising strategy.

00:29:13.680 Should you fundraise?

00:29:14.960 Like I was leading a panel on bootstrapping versus VC.

00:29:19.340 And the reality is that actually a lot of companies,

00:29:21.440 particularly in SaaS, probably should bootstrap.

00:29:24.220 Are you guys cool batch companies not

00:29:26.220 raising after you guys?

00:29:27.500 I'm OK with that if it makes sense.

00:29:29.280 So I have one company, batch 16 Mentimeter, Swedish company.

00:29:33.440 The only money they raised was from us from a bunch of angels.

00:29:36.040 They're crushing it.

00:29:37.300 So I'm like, that's a great outcome.

00:29:38.600 So they could maybe do some debt, some mezzanine, some RBS.

00:29:40.720 They don't need to raise.

00:29:41.880 They're crushing it.

00:29:43.180 Crushing it.

00:29:44.380 And so for me, I'm like, do what makes sense for you.

00:29:47.140 And I also want them to be honest.

00:29:50.320 When they came in, they weren't sure of the direction,

00:29:52.280 even though, like, great team, interesting business.

00:29:55.400 I'll take the bet, right?

00:29:56.440 Like, it's a worthwhile investment.

00:29:58.080 And they've been fantastic in regards

00:30:00.620 to even just sort of speaking for 500 in Sweden.

00:30:03.280 And their business is amazing.

00:30:04.680 And so I'm like, something will come out of that, right?

00:30:06.500 There's going to be something that's going to come out of that.

00:30:08.520 Yeah.

00:30:09.740 And then on the acquisition side, are people moving more towards kind of like a sales?

00:30:16.620 Like a sales used to be back in the day, 2009, like sales was bad.

00:30:19.800 Like it was product, product, product.

00:30:21.700 Now it seems like there's so much content out there.

00:30:24.500 And Lemkin, I think, brought a spotlight to that.

00:30:27.240 And other authors, Predictable Revenue, Aaron Ross, Steli Efti.

00:30:31.520 I mean, so selling is not a bad word.

00:30:33.940 Is that something that you guys help the batch companies?

00:30:37.040 Yeah, we do spend a lot of time.

00:30:39.480 My time at Yahoo, I built probably 40 plus enterprise

00:30:43.180 sales teams across the globe.

00:30:45.940 And I built a bunch of telesales teams as well, too.

00:30:48.700 So it is something we spend a lot of a lot of,

00:30:51.640 so I have like 14 full-time, part-time staff, right?

00:30:54.520 Full-time, part-time, OK, 14 people

00:30:57.100 that essentially report to you that you, and what do they do?

00:31:00.340 So half of them are EIRs, we call it entrepreneurs

00:31:02.800 and residents, and half of them are growth people.

00:31:04.720 Yeah.

00:31:05.380 And then do you guys have a lot of companies that end up

00:31:07.420 joining forces?

00:31:08.920 Like, merge inside the batch?

00:31:11.320 Yeah, less so.

00:31:12.980 I always thought that would be a thing.

00:31:14.740 And what happens is companies that die,

00:31:16.480 and then they end up being hired several years later on

00:31:18.880 by a batch company, right?

00:31:19.960 Like, that happens.

00:31:20.740 Yeah.

00:31:21.480 And then how do you guys see yourselves adding value

00:31:23.780 at the network level within the batches?

00:31:27.740 Yeah, that's a great question.

00:31:28.960 I mean, it's always-

00:31:30.400 So do you guys even do a big event every year

00:31:32.780 other than the demo days?

00:31:35.060 Just two demo days, yeah.

00:31:36.520 So that's it, yeah, that's it.

00:31:37.580 OK, and then what about like meetups or?

00:31:40.000 Less so.

00:31:40.680 Less so.

00:31:41.020 So what we try to do through the Accelerator,

00:31:42.980 we have like the welcome nights.

00:31:44.440 So we bring, we ask all the previous site portfolio

00:31:46.400 companies to come.

00:31:47.020 OK, cool.

00:31:47.600 And so a lot of the mentor network

00:31:49.360 to come as well too.

00:31:50.320 So that usually happens the first week of the batch.

00:31:52.100 So it's a great way to sort of try

00:31:53.580 to mix the old and the new.

00:31:56.040 And we're working on that.

00:31:56.940 I think we would love to have more turnout.

00:31:59.540 But as you know, the startup world is just like,

00:32:01.040 everyone's just super busy, right?

00:32:02.780 So a lot of our best alumni are just like, we're heads down.

00:32:06.160 Like, I've just raised my B, and my investors are

00:32:09.120 like breathing down my neck.

00:32:10.380 So like, I don't have time to step up.

00:32:11.920 And you're like, I can't really ask them to do that.

00:32:13.620 And I'm like, yeah, all right, fair enough, right?

00:32:15.500 And so the great thing is a lot of our alumni do come,

00:32:18.380 and they're like, if you want us to come and talk,

00:32:20.520 like, just let me know ahead of time.

00:32:23.000 We will come, right?

00:32:24.200 And so that's been fantastic.

00:32:25.700 So we do have a lot of alumni who, like batch 8, 10, 12,

00:32:28.880 will come and do talks.

00:32:29.880 And do you have internal Facebook groups for everybody?

00:32:32.880 So the way that we have communications,

00:32:35.420 there's obviously a Slack channel for the batches

00:32:37.820 as well as alumni.

00:32:39.120 We also have this thing called uni.vc.

00:32:41.780 So all portfolio companies and portfolio founders

00:32:43.780 have access to this thing.

00:32:44.720 It's kind of like what Dashboard used to be.

00:32:46.660 So we have that.

00:32:48.380 One of the things we're thinking about doing

00:32:49.800 is actually doing more like founder events,

00:32:51.720 or just like, hey, like alumni founder events.

00:32:54.020 So trying to do sort of maybe like a big conference

00:32:57.140 of just like founders.

00:32:57.980 Like a CEO summit.

00:32:58.820 Yeah, like a CEO summit.

00:32:59.980 And so it's something we're thinking about doing

00:33:01.520 just as a lot of things to sort of like,

00:33:05.840 we want to do more of that in the future.

00:33:07.340 How big is the team at 500?

00:33:09.260 Worldwide, because as you know, we have like many funds.

00:33:13.080 It's probably about 140 people.

00:33:14.540 Wow.

00:33:15.500 But we have a lot of people, right?

00:33:16.880 And we're in different countries and different operations.

00:33:19.260 So we have a Southeast Asia fund.

00:33:21.320 That's a pretty big team.

00:33:22.860 We have a Korea fund, just a decent sized team.

00:33:25.340 We have a Middle East team.

00:33:26.780 We have a Latin American team out of Mexico.

00:33:29.080 So we have teams all over.

00:33:31.100 So that explains it.

00:33:32.280 That's cool.

00:33:33.020 And then, Marvin, as you look back over the last,

00:33:36.920 is it six years now you've been investing?

00:33:39.020 Yeah, it'll be six years in February.

00:33:41.000 So as an investor, I mean, if I ask you the question,

00:33:43.880 who have you need to become to be the caliber investor

00:33:48.440 that you've become today?

00:33:49.340 What mind shift changes, beliefs have kind of morphed

00:33:53.720 over the years?

00:33:55.040 I've always thought that this was a service business.

00:33:57.260 At the end of the day, money is a commodity.

00:33:59.060 And so I've taken an approach of being

00:34:02.920 sort of very brutal and very direct, which is much more

00:34:05.240 New Yorker and not Californian.

00:34:07.340 Because I thought, at the end of the day,

00:34:08.960 if you are in service to founders,

00:34:10.820 you sometimes have to say stuff that they don't want

00:34:12.740 to necessarily hear.

00:34:13.760 Even founders that you don't invest in,

00:34:15.540 I do have a reputation in that area of just being super direct.

00:34:19.300 And they don't always take it well.

00:34:22.020 But I'm like, look, at the end of the day,

00:34:23.300 It's actually not about them taking a while.

00:34:25.060 It's like, am I helpful?

00:34:26.520 Because I think.

00:34:27.320 Am I being honest?

00:34:28.060 Yeah, am I being honest?

00:34:28.940 Am I being helpful, or it's like, at least you take something?

00:34:30.920 So I've done this now for six years.

00:34:33.020 And I was very wary about doing this first couple of years.

00:34:35.540 I think a management team at 5.0 was also like,

00:34:38.000 I don't know if I'm comfortable with sort of your brutality

00:34:41.300 of bluntness, of directness, still a little bit uncomfortable.

00:34:44.780 But actually, it's gotten results.

00:34:45.980 And I think a lot of my, I would say,

00:34:48.040 definitely my top founders do appreciate it,

00:34:50.060 where it's like, nobody's honest to us, right?

00:34:51.800 And I've had a lot of founders, even if I haven't invested

00:34:54.500 in them, come over to me.

00:34:56.000 This happens almost every conference.

00:34:57.220 They're like, hey, do you remember me?

00:34:58.800 And I'm like, I meet a lot of people.

00:35:01.280 They're like, I met you about a year and a half ago.

00:35:04.180 And you gave me this feedback. 1.00

00:35:05.720 And you were a total asshole. 1.00

00:35:06.800 And I hated you. 1.00

00:35:07.700 But then I look back now.

00:35:09.380 You gave me real feedback.

00:35:10.760 And I took some of that.

00:35:11.620 And nobody else is honest to me.

00:35:13.160 And now my business is where it's at because you told me.

00:35:15.380 And I'm like, OK, that means I'm of value,

00:35:17.480 even though I'm hated for a short period of time.

00:35:19.340 Those are the best.

00:35:21.260 Those are the best, where the founder is like,

00:35:22.760 you said this to me, and I walked around, 0.98

00:35:24.420 and I said, F you, F you. 0.91

00:35:26.240 And then that could be the fuel that drives them forward, 0.57

00:35:28.480 right?

00:35:29.060 Yeah, so it's about being a service money.

00:35:31.720 Think about VC service money.

00:35:33.220 And somewhere along the line, I think a lot of people,

00:35:35.540 I'm very uncomfortable with VC as the cult of personality,

00:35:40.720 bow to the VC.

00:35:41.660 I'm very uncomfortable with that.

00:35:43.480 And I think it's partly because the guys I was trained with,

00:35:46.580 the mentors I have, they're very in the background.

00:35:49.900 I think I believe in VC as a stagehand.

00:35:52.200 It's not about me.

00:35:53.140 It's actually about my companies.

00:35:55.260 I don't want to be on stage.

00:35:56.460 If you go to Demo Day, I'm not on stage.

00:35:58.080 I'm nowhere.

00:35:58.580 I'm just in the back of making sure everything works.

00:36:00.860 Because it's actually their show.

00:36:02.700 And so I firmly believe that, which

00:36:04.660 is ironic being at 500, which is very out there.

00:36:10.740 That's really neat.

00:36:11.940 Where do people find you online, Marvin?

00:36:13.800 I'm on Twitter, at Marvin Liao.

00:36:17.020 And obviously, you don't want people just pounding

00:36:19.020 your email with pitches.

00:36:19.980 What's the best way for somebody to pitch you?

00:36:23.160 Find a founder that I invested in who will vouch for you,

00:36:25.980 or find an investor that I'm really good friends with.

00:36:28.440 I'm friends with a lot of investors who will vouch for you.

00:36:31.420 And I'm more than happy to talk with you.

00:36:32.900 Investors don't want to meet you.

00:36:35.320 They want to be introduced to you.

00:36:37.360 Yeah, they want to be introduced, and it's a filter.

00:36:39.220 And especially as a B2B founder, as you know,

00:36:42.420 it's actually a great test.

00:36:43.800 and figure out, hey, can you find a way

00:36:46.120 to get to me in an intelligent way?

00:36:48.120 And worst case scenario, send me a really well thought

00:36:51.420 through, a really, really, really thoughtful cold email.

00:36:55.980 Because most of them are just kind of like,

00:36:58.260 I'm just like, do you even know who I am?

00:37:02.260 Or like, I'm raising my Series B. And I'm like,

00:37:04.980 we're a seed investor.

00:37:06.420 And that's like on the website, that's all I talk about.

00:37:09.740 And so it's like, do your homework, man.

00:37:11.740 Do your homework.

00:37:13.380 Awesome conversation, man.

00:37:14.360 I really appreciate you.

00:37:14.840 Thank you so much for having me.

00:37:15.660 Thank you, man.

00:37:16.620 Thanks for watching this episode of Escape Velocity.

00:37:19.860 Be sure to like and subscribe and leave a comment with your biggest insight from our conversation.

00:37:25.340 Be sure to check out the next episode.

Dan Martell - December 17, 2020

Investing in 250+ SaaS Startups with Marvin Liao, Partner @ 500 Startups - Escape Velocity Show #43

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