This Week in Startups - E39: “Angel” Podcast: Sarah Guo, General Partner at Greylock Partners shares insights on Greylock’s “Zero to One” investment thesis, sharpening her decision-making skills, ranking team, market & product as investment criteria & the changing landscape of VC

Episode Date: March 25, 2020

0:52 Jason intros Greylock's Sarah Guo 3:37 How did Sarah wind up at Greylock? 5:45 Sarah explains Greylock's "Zero to One" thesis & typical term commitment of a VC 11:53 How does Sarah measure her personal performance and her portfolio's performance? What are her biggest strengths as an investor? 16:12 How does she sharpen her decision-making skills? 17:53 Ranking her investment criteria: People, Markets & Product 20:26 Balancing intensity & life outside of work, the commitment of early-stage startups 27:26 Work-life balance & how the venture landscape changed over time 35:36 Greylock's structured & what was Sarah's first investment & how did it play into her investment thesis? 43:38 Sarah's investments in work-enabling software 48:00 Sarah recommends Dylan Field of Figma join the show - episode dropping Friday! 49:22 Identifying subtle flashes of brilliance in early products 58:28 Female founders being held to a higher standard 1:02:35 Anti-portfolio: Zoom 1:10:06 Sarah turns off her virtual background and reveals her location

Season 4 of Angel is brought to you by NetSuite by Oracle, the business management software that handles every aspect of your business in an easy-to-use cloud platform. Schedule a free product tour and receive your free guide, six ways to run a more profitable business at net suite.com slash angel. LinkedIn. You already know LinkedIn as the world's largest professional network. It's also a better way to find great talent. Go to LinkedIn.com slash angel and get a $50 credit towards your first job post. And Assure is the leading provider of special purpose vehicles and fund administration. With over 5,000 completed transactions and $2.5 billion under administration, Angel listeners can get 20% off their first SPV at assure.com slash angel. Hey everybody, it's Jason Calcanus and we're here on another episode of the Angel podcast.

We're having an amazing season. So many great guests have been on the pod. And today will be no different. Except we're doing a remote. And you should not know that. I know a lot of podcasters do only remote. But you never know that they're not in the same room as the person. In fact, I think the person who's best at this is Sam Harris.

He's like, hey, it's great to see you. And I think he basically must tell people pretend you're in the room. Don't say that we're on the phone. because, and he says it's great to meet you. And sometimes people are like, yeah, it's great to virtually meet you. It's great to meet you over the phone. And we're getting a really major lesson because of the coronavirus, or as the president likes to call it, the Wuhan virus, trolling the Chinese who today declared that the U.S. created it, the U.S. military created the coronavirus.

Really crazy. It's crazy times. But the show must go on, as they say. And we're going to talk today a little bit about the coronavirus, of course. We'll talk about the impact it's having on tech. And in a more broad way, we're going to talk about what you can do as a founder when you're in a situation like this and how to handle it. And we've got a great guest.

Greylock partners, Sarah Gore, Sarah Goa, which is spelled G-U-O. But if you want to learn how to say it, if you say like Al Gore, if you were in Boston, you said, Goa, that would be how you would say it. Is it perfect? Is it perfect? Is it perfect? I love the way you teach people to say your name. I have to come up with that for Cala, Canis.

There's no really easy way to do that. But I see, for those of you watching the video, you are using the Zoom and you have a virtual background. Welcome everyone to Greylock's San Francisco Library. Thanks, Zoom. It's a really beautiful room with that exposed wood beams. And that is the San Francisco office of Greylock. a beautiful lounge living room.

But your home now as well because San Francisco is on lockdown. And thanks for doing the pod. How long you've been home for? What day is this for you of self-quarantine? This is week two of work for home for our team. Wow. So you guys got on it early. I'll offer you the virtual elbow.

The virtual elbow. I have stopped shaking hands a long time ago because I do conferences and everybody wants to shake your hand. In fact, they tell you that. Hey, I just want to shake your hand. And I'm like, you actually probably don't because that's a petri dish. But here's my pro tip for everybody. Phone in one hand, a cup of coffee in another.

And then you say, oh, my God, I'm sorry, I can't shake your hand. Give me an elbow. So how long have you been at Greylock? About seven years now. Almost seven. And how did you wind up in venture capital? So, let's see, where to start? we were just talking about my parents are engineers by training and entrepreneurs so i think some people

they have to discover their passion for technology and um and i was one of those kids where uh you know my dad was i was maybe nine when my dad was like great let's build a Linux box together right and my my first job was i was probably 13 um my parents started a company together uh eventually and my first job was building a crappy website for that company. So I sort of knew very early on just in terms of upbringing and what I thought was exciting and interesting around me, that building tech companies was a great way to put what you wanted into the world and build some value.

But I thought I was going to be an entrepreneur. And when I had a company that didn't work out, and I came out to the valley from the East Coast ecosystem, thinking that's where the big game is, obviously. I worked for Goldman for a year. And then when I could afford to live in San Francisco, which is kind of a, you know, still a high bar, I started thinking about what was next

in terms of a new startup or a, either some company that I would found or join if the people were clearly more talented. But I'd gotten to know Anil Bustery, who's the co-founder of Workday, and one of my partners at Greylock, who suggested I come hanging out at Greylock for a while. He originally wanted to get me to work at work day,

but I really wanted to do zero to one. And so the original path, which was quite winding, was I got sort of swept into Greylock to hang out for a year or two. My plan was to collect a few engineer and designer friends and $5 million in Pasco, but a year turned into seven and it's a very unique place. So explain to the audience. You said that you wanted to do zero to,

one. Explain to the audience who doesn't know what that means, what that means. And do you still think about doing that? Yeah, absolutely. Now I, as a GP, you have a very long-term commitment to Greylock and I feel very committed to sort of my companies and my partners. So that's probably not in the cards for me. But zero to one is the magic of how Greylock likes to invest is to believe in like people and markets and a unique thesis, right? And so we are trying to hit companies either before they have product market fit or just at that magic moment when they found it. And so being early stage in Mester is that early struggle to figure it out that messy middle phase is something that I just, I wanted to do. And the alternative of going to work at a larger tech company wasn't interesting to me.

And so the amazing thing about venture is you get to participate in zero to one repeatedly. And explain to people what the commitment is when you decide to be a general partner at a venture firm. You said before it's a long commitment. What are you signing up for when you join a venture fund for those people? And a lot of young people seem to really want to get into venture capital early. And venture capital seems to be accepting a lot of younger and younger individuals into the

ranks, which wasn't always the case, at least when I started in the business. Sure. And it wasn't even always the case for Greylock. But I think now of just the handful of great, very established venture firms, I think my partner Somm would be actually the youngest GP across any of them. I'm not sure about that. We should check. So we certainly bring on younger people. When you become a GP at Greylock, I think the way it works for us, like it works for many other places, is it's considered a 10-year commitment. And there's like structural economics around that, right? Similar to like a,

a vest, you know, a lot of startup companies have a four-year vesting period on stock. Yeah. So there's something analogous that is how venture-for. But it's even longer, right? Seven-year vest, typically, 10-year-a-vest? Yes, yes. And it's back-loaded, so you get very little in the beginning and the majority of it towards the end? There are many different ways to do it.

But I think the sort of rationale behind it for us and likely for others that are focused on early-stage investing is it, it takes. it takes, you know, on, it takes on average six or seven years for franchise companies that are really working to show that, right, to get to being a public company or to even get to an acquisition. And so it just takes a really long time to see if the things you're, you're part of are working and if partners are successful. And here's an interesting question. What happens to, so I think a lot of people want to understand the economics of what it's like to be a partner at these firms. If a partner were to leave, what happens to, and they give back their portion of the carry, their portion of the profits, where does it go? Does it go to the other partners, the founders?

Generally speaking, we can leave out Greylock, but generally speaking. This is a very, it's a relatively uncommon occurrence, right? But I think the principle you can think of is it would go back into the general partnership, which has spread across all of the people that are investing at Greylock and our team broadly. And, and, and, like, the alignment is really sort of like, you should get economics related to the work that you have done for Greylock. Right. But it's, it tends not to actually be a very contentious thing for us and in terms of economics. Yeah. I mean, it's, and it's one of the great things if you found a firm, like I found in my own firm, you really can feel very secure in hiring people and giving them

carry because if they don't earn it, you get it back and you can give it to somebody else. You can hire somebody else to manage those investments. When we get back from this quick break, I want to know how you know if it takes seven to ten years to know what a winner is or six, seven, eight. How do you know if you're doing a good job and you're new to the job and you're in year seven? So I want to know, are you doing a good job when we get back on Angel the podcast? What do companies like Ring, Hint, and Tukovus have in common? Well, they all use NetSuite to accelerate their growth. Successful companies know that in order to grow faster, you must have the right tool.

If you want to take your company from 2 million to 10 million to 10 million, net suite by Oracle gives you the tools to turbocharge your growth with NetSuite, you get a full picture of your business, finance, inventory, HR, that's human resources, obviously, customers, and more. It's everything you need to grow in just one place right from your phone or your computer. NetSuite gives you the visibility and control you need to make the right decisions and grow with confidence. that's why their customers grow faster than the S&P 500. NetSuite is the world's number one cloud-based system,

trusted by more than 19,000 companies. It's also the last system you'll ever need. NetSuite, business grows here. So here is your call-to-action. Schedule a free product tour right now and receive your free guide, the six ways to run a more profitable business at netsuite.com slash angel.

That's right. Go to netsuite.com slash angel. NetSuite.com slash angel. again to NetSuite for supporting independent media like this podcast. All right, welcome back to Angel of the podcast. Our guest today is Sarah Gour. Goa. Gaw. You got it. Gha. What's the origin of the name, G-U-O? I'm Chinese. So it's a Chinese word. And I think it translates to something like protector of the wall. Protector of the wall. Yeah, I'm sure that was a family practice a few thousand years ago.

Interestingly, Calacanis means to have done well, and we were great generals and warriors. At least that's what my dad says. It's probably not true. I think we probably just made great Saginaaki or something, but to have done well is what my last name means. So you're now in the business for seven years. He said before you find out if you're a good venture capitalist after six or seven years.

Are you a good venture capitalist? How are you feeling about your performance now that you're in year seven? and do you feel pressure now that when you get to that because this industry is so random. How many investments have you made? And then how do you benchmark yourself and the job you're doing? Yeah, absolutely. So I became a GP, I want to say about two years ago. So that's really when I start the clock in terms of beginning to invest.

But I actually meant I think there are many different ways you can measure performance. I can talk about the ways that we do it. But when I was talking about six or seven years, I meant an individual company. Yes. Sure. You're not going to know if an individual company is this amazing franchise company for six or seven years or possibly even longer, right? I think like looking back on, you know, Facebook as an investment for us, for example, like that is more important today than it was six or seven years after the investment. Yeah.

And that's one of the few ones where you got that sense in year three or four like, oh boy, this is this a rocket ship. That comes along very rarely. It is rare. Going to your question on just like thinking about performance in venture, you know, we look at sort of the dimensions of the you can think of any job as a workflow, right, a pipeline. And so we think of it as finding investments, making decisions, winning investments, and then company building. And the last thing is just being a good partner, which is a very sort of fundamental thing at Greylock. in terms of a partner to people internally and to your entrepreneurs. And so, like, you know, there's that set of performance metrics,

and then there's dollars on the board. And it's a very long-term game. So I think a lot of it is just trying to understand if you feel like you're in companies that have a chance to be extraordinary. And I have a lot of faith in my companies right now, but we will see. When you look at those four stages, which one do you feel is your speciality at this point? You said finding the companies, evaluating the companies, closing the deal, being a closer, and then being a great partner.

Do you feel like there's something you're particularly good at in that, or are you just trying to get better every day at each one of them? So, like, growth mentality means there's room to improve on every dimension, right? A lot of room. I'd say a lot of people when they join venture firms, they think about sourcing, right, seeing investments. And I think the privilege of being at a firm like Greylock is we see most things that matter and we see them early. And so if a younger person joins a venture firm, sourcing is actually relatively easy mechanically, right? You just see, you meet a bunch of companies and you're trying to meet people and companies of the highest quality.

but I actually think that's not where the magic is. So I invest, you know, besides keeping up with my network and thinking about like how to meet people of the highest quality, that is not where I focus my time. And you're at a company that has a brand name. So you're saying people email you all the time and submit business plans and submit their companies all the time. So you're you're in the sorting business, not the actual going and finding the companies. Whereas a new firm might have to go out and hit the pavement and try to say, hey, we exist. Absolutely. And I do think a part of the job is still very individual, right? So you need to build your own personal network and invest in that. So it's the firm and the individual, but I don't focus on sort of sourcing as the area to constantly improve, right? I think it's it's decisioning. It's always just like how can you, how can you better understand like market dynamics and people and like the winning play in markets you think matter. So that's a constant piece. And, and of course, company building in terms of how you can attract the highest quality people to your companies

and be a good partner to those entrepreneurs. When you look at the decision making, I think that's one where I think we all as investors try to think about thinking and how we make decisions. How do you think about your own thinking and your own decision making? And how do you try to sharpen that knife? Yeah. So I'm kind of an obsessive note taker. And I don't almost do it in meetings,

but the reason this relates to what you're saying is you brought up, it's a really long feedback cycle, right? And I think like many young people, taking on a job with a long feedback cycle, I've no interest in doing something for 30 years if I don't think I'm going to be great at it. So how do we actually make sure we're like progressing in that direction? So one of the things that I did,

early on in my time at Greylock before I was a GP was actually just try to understand how my partners were making decisions at every step, right? So I owe a lot to a mentor of mine at the firm, Ashim Chana, who has been an amazing investor over the years. And so I sat in meetings with him for a year and I just asked him how he thought about every investment. And then when you, if you keep track of the companies and your own thinking and then how that thinking played out right or wrong at every stage, then actually, you know, the feedback cycle gets quite a bit shorter, right? Because you're like, I thought that wasn't going to work. Or I thought those people could do it. Or I thought that was the right entry point into this market.

And like those are questions you can actually answer a year later or two years later and learn from. So I think a lot of it is just looking for those intermediate data points on your own decisioning. And when you do look at a company, obviously people talk about it's a people-based business, but putting aside like this is a very impressive, self-possessed individual, when you're looking at a business, and I think you do a lot of enterprise, what are you looking for in the actual company itself? Forget about the market, forget about the individual. But when you're just looking at and isolating the company, the product, the customers,

What are you looking at there in terms of signs that maybe this could be, as you call it, a franchise business? Yeah, I actually think that in the stack rank of people, markets, and sort of product thesis, I rank the product thesis piece last, right? And a part of it is the stage at which we invest. Because if you're investing very early, we're often investing pre-product, right? So I've done a bunch of seeds, a bunch of series A's. And I think Raylock as a firm and me personally were willing to do A's quite a bit earlier than other firms might. And so like the technology proof or the product proof isn't actually there yet.

And the reason I put that third in the stack rank of things you're looking for is like you can't change the market that easily. Right. It has to be, there has to actually be demand and value there. And people can figure out the product thesis. Right? So I'd say actually number one for me, I think many markets are actually large enough to build really important software companies today. I'm an optimist about that. But number one for me is people talk about being customer-centric technologists a lot. And I think it's actually very rare that you find that because, you know, customers and users, they don't care about what startups are doing, right? They're going about their own lives and they're searching for. convenience and joy and business value and efficiency and whatever. And so what young companies are doing is just fighting the fight for attention and clarity of value. And I think like what I'm looking for primarily is people who sort of operate at a certain pace of

intensity because I think like you're trying to do something impossible, like get a startup off the ground that shouldn't work, right? And it won't unless you're of a certain personality type and certain talent level. And then the second piece is just like, do you actually really think about like why a customer or user will come to you and have a really clear perspective on like, you know, how to how to get there and how to iterate there? And you mentioned there the intensity of the founder. There's a meme going on that you can have balance and that being a workaholic is not cool and not woke, whatever. You seem to think the opposite. that you think this takes a commitment and an intensity that is extremely high, at least to be the

founder, leaving out the frontline soldiers and people doing the work at the company. For the founder, you need them to be a workaholic and to be intense, yes? To be successful? I think those are two different things, right? What's two different things? I think being a workaholic and being intense are two different things. Because to me, being a workaholic suggests that you cannot compartmentalize. And like you're very bad at making certain tradeoffs.

And being intense, like I think just wanting it badly, being willing to push through walls, being able to take risk and sort of draw other people to your intensity and magnetism. That's more of a, I think that that's a trait that has more balance, right? And I'd say like, I work a lot. I have two kids. How many hours a week? All in. I probably work 90 hours a week, but like I say that without pride, right? I think that the investors that I most hope to be like five or 10 years from now have my level of productivity and work less.

So but for now, that is something that is actually under my control in terms of like not losing based on effort. So you want to win and you want to put the hours in that it takes to become elite? Yes, absolutely. Yeah, see, this is the crazy thing. In like in your, I think you're a millennial, correct? Yeah. It's almost as if millennials, if you were to say that, and it's refreshing to hear you say it because I do see it in a large percentage of millennials, just not the majority,

there seems to be in your generation, people would look down on you for saying you work 90 hours a week and you want to win and you want to have a great career. Do you find that or am I just reading into it? So I guess I don't encounter that a lot. Maybe because of the people I choose to interact with. The way I think of it is I am a student of economics, right? And it should not be easy to build a world-changing company or to compete with very well-resourced competitors. Or to, if you're a fund, return five or 10x on a very large fund every cycle.

Like all of those things are very hard. And so I don't think everybody needs to work 90 hours a week. I actually think like I wish to work less and be just as productive. But I guess the way I put it is I think signing up for startups, and this may be an unpopular point of view, but it does require like a special level of commitment because you're trying to do something that is different than many other careers. Right. And it's like that's that's a voluntary trade that people make.

And I would say most of the founders that I personally work with where I sit on the board, like, they have families. Like they, you know, they're doing work life management as well. So it doesn't mean you have to be sort of the single track Elon Musk. But I think like requiring a certain level of intensity, that's not something I would back off of. Yeah. I mean, and if you want to run SpaceX and Tesla and on your side, do some other side. side projects like the boring company, you might need to put the hours in if you want to change the world. And I think it's a really unfair thing they did to your generation, which is making hard work and entrepreneurship and the desire to have elite results a negative. It's just very weird to me, but thankfully, I think there are people who are inoculated to this mind disease of balance,

you know, as the goal. Intensity and achieving what you want to achieve in life should be your goal, not balance. I don't understand why balance all of a sudden became the goal. I think balance is the goal of losers. I'll be totally honest. I think if you want to be a winner, you're going to have to be intense. And you set it right there. You're looking for intensity in your founders. Yeah. I don't, I don't know if I'm all the way where you are, Jason. I'd say like, I believe it's possible to, it's possible to make decisions that are conscious about how you spend your time and still be a very intense winning oriented person. And I would say I interact with like founders that are 20 and founders that are 65. And maybe it's, I hope it's just because

of the people, I'm doing a good job of filtering my meetings or my network or something. But I don't encounter people who see hard work and winning as a as a negative thing to strive for. I think I'm spending too much time on Twitter. I'm spending too much time on the Twitter. Right. Where it's really, you get a lot of points for saying don't work hard. It really does appeal to people. When we get back from this quick break, I want to know what you've invested in and how you made those decisions and how those decisions are going for you when we get back on Angelopakist. Hey, everybody.

Instead of me reading you copy in an ad about LinkedIn Talent Solutions, I thought, you know what would be a great idea? Who made LinkedIn Talent Solutions? Who's the product manager? Give me the head of product. And let's talk about why this product is so awesome. We've had so many great hires with me today. Blake Barnes, the head of product for LinkedIn Talent Solutions. Welcome to the pod.

Thanks for having me. Big fan. All right. Thanks for that. When you are a growing business, SMB, a quick startup, whatever it is, you really want to focus on growing your business, right? That's where your energy and your focus needs to be. And so you don't really have much time to think about your end-to-end recruiting needs,

like to build an sense of strategy, these sorts of things. You need solutions that do that for you, that bring it to you. And we have a whole range of tools that do that. You're mentioning one of them, but there are plenty of others. So let's talk about screening tools. We have a whole suite of screening tools that help you to understand more about the candidate as soon as they arrive in your inbox. There are specific questions you can ask your candidates.

So every candidate gets that question. I love that part. It's really cool, right? And, you know, it's interesting. You know, with screening questions, we find that 80% of jobs that have this one or more screening questions get a qualified applicant in just 24 hours. And so these screening questions, questions are really effective and useful for our hires. It's been pretty amazing so far.

Find the right person for your business today with LinkedIn jobs. You can pay what you want. And you get the first 50-5-0 for free from my man, Blake. Just visit LinkedIn.com slash Angel, A-N-G-E-L. Again, LinkedIn.com slash Angel. And you get Fitty. 50 right now, terms and conditions apply because they're giving you 50. Thanks again, Blake, for coming on the pot. And thanks for this big stack of 50s for me to give out to all the Twist fans and the intro fans. Happy to be here. And of course, anytime. Or welcome back. Sauga is here. I'm going to to just lean into the gah. Get that Boston accent.

Get that Boston accent. You grew up in Boston? Wisconsin and then Boston, yeah. You don't have any Boston accent. Give me a little bit. The Wisconsin, very neutral Midwest. Got it. All right.

Yeah, people are always like, you're from Brooklyn? Where's your Brooklyn accent? I'm like, eh, don't be around me when I get upset. It comes right out real quick. You just, as we were going into the break and we're talking about snowflakes and the lack of work ethic and the mind virus that is balanced. and you can just put in like a minimum amount of work and get an extraordinary result. You just ask me if I really believe that as we went into the dugout.

I do, actually. I think there's a virus going around that people, and I think it's particularly acute in America where people think they stop believing that extraordinary effort results and extraordinary results. They think the system is rigged. They think that only rich people or only connected people can get in the game. and that you might as well not work hard because you'll never win because the system is fixed and you can't move up.

And this flies in the face of what I see every day because I meet founders who come from very humble beginnings and who make it. And so I just feel it's necessary for people who have the inside information to share it with people on the outside, which is you can be a nobody, come to Silicon Valley, and change the goddamn world. And the only reason I can say this with 100%

clarities because I meet very few trust fund kids or kids from Harvard who come into my office and who join our accelerator and then who go on to change the world. But I do meet a lot of them whose parents are immigrants. I do meet a lot of them who come from humble beginnings and went to school at night or quit school and didn't go to college. So anyway, that's the, the, the, the, it's a very popular stance and you score a lot of points for saying don't work hard. You just have balance in your life. You don't need to, you don't need to sacrifice to get great results. and every dimension of life that we see, whether it's an investor, professional sports, art, science, effort correlates with outcome.

Effort correlates with outcome. I mean, it's just, it's undeniable. Yep. I absolutely believe effort correlates with outcome, but I think it's also not, it's not perfect, right? Clearly, Silicon Valley is not a perfect meritocracy, right? It's much harder for women and minorities and people without a network to succeed. Wait, wait, but you say that as a millennial general partner at one of the top firms in the world who's female.

Yes, and I'm very grateful to be in that position, but I also don't feel entitled to be in this position, you know? No, I know, but I mean, you're saying, do you feel the industry is really biased? And if it is, how did you get your spot? Was it given to you? Was it gifted to you, or did you earn it? I think you can both earn things. And also owe people for their sponsorship. Yeah.

Right. And so, like, I owe my partners a lot for believing me and trusting me and my founder is for working with me. Right. And a million people have helped me get to this point. And, like, let's hope the future brings more success in great companies. But I would say, like, this is, this has been my only experience in venture, right? So I owe, I believe I owe a lot in terms of what the experience is like as a woman to people

who, like I lean. and Ellen and many others who have dealt with a, you know, a previous generation that was more challenging at the old boys club. And so I'd say like, is it, do I invest my time in all raise and making sure I meet female and minority entrepreneurs? Absolutely. Because it is, it is not an equal playing field? But is it among, is it the thing that will keep me from being successful? Absolutely not, right? Like, the thing that will keep me or any other venture capitalist from being successful is like they make bad decisions or they don't help their companies build. So I just think like you can, I certainly don't believe it's an equal playing

field. I feel very close is it to being. Yeah, I mean, certainly it hasn't historically been an equal playing field, but it does feel like the arc of history has changed massively in the last couple of years. I mean, just the nature of the fact that I think this season, five of the 10 guests on Angel's season are female. Four, we have one drop out. choice to do that, right? We couldn't do it if there weren't great female investors out there. So it's not like we said it has to be 50-50. It happens to be that a lot of the great investors out there are female now and who are doing

great work. So it has changed radically. A total agreement. I would say, I agree, the arc of history has changed dramatically of the last year or two. I think we're very early on that road still toward equity. Yeah. What's left do you think? When you look at the venture space specifically, let's talk about that side because it does seem like we see many more female-led venture firms. It seems that every firm is said, all the major firms have said, we're not hiring another partner unless they're female. And we had Biden come out and say, there's no way I'm picking a running mate who's not female. I mean, it does seem like this is the moment where it's changed. I think that what is acceptable in the public eye has changed, which is really important, right? Because five years ago, you could be a top-tier venture capital firm with no female checkwriters

and it wouldn't necessarily stop you from doing business. And today I think it does. But there's a difference between that and having a representation in your investor base of what the world looks like. Right. And so like that's just a, that's a number. game and there's effort towards moving those numbers that still needs to happen. But yeah, it's interesting. I mean, we, it's a very, I think, important point. Five years ago, you could be an all-mail firm and do business and it was business as usual. And now if you

didn't, you literally would have people not want to come pitch your firm. Like this next generation of entrepreneurs would say, I'm not going to work with a firm. That's all males. You believe that? Yeah. Yeah. And I think that's a huge step forward. Yeah, it's major progress. Let's go through your portfolio. What have you, you've been writing checks for two years? I think that was also an interesting point. You kind of made very subtly.

I always try to listen deeply to the answers. You said, you mentioned check writing ability. Is your implication there that many firms have added and female founders or people of color or underrepresented, I think is the most appropriate way to say it, underrepresented individuals, executives, venture capitalists, but they didn't actually have check writing ability. So it was in a way,

I guess the worst, most cynical way to look at it was it was like window dressing, like a facade. I actually wasn't implying that. I was just thinking for myself, like my own progression at Greylock has been, for several years, I thought I was going to start a company, right? So I wasn't writing checks or even focused on that.

I was working on a few incubations internally. Got it. And then as, I made one investment as a principal. And I do think your learning cycle resets when you are fully responsible for a company on your own. Or at least that's been my, that's been my personal experience. So that was it. But, you know, now I, now I have a small portfolio. Yeah. It was interesting to me when this whole sort of sea change happened that I saw a number of firms be like, yeah, we've added a partner. And it was like, this is our PR partner. And I was like,

I'm sorry, PR, but it's public relations, but you're calling them a partner. Do they actually make investments? Like, no, no, we just call them a partner so that we don't have people criticizing us for not having a female partner. It's like, wow, that is super cynical. Take me through when you were a principal and a principal, maybe you could define that for the audience who's new to venture capital, what a principle is. And then tell us about that first check you wrote and how you sourced the company and made

the decision. Yeah, absolutely. So I was actually a principal for a relatively brief period of time at Greylock, I think maybe a year. Because it was, so we, we're a very flat team. We have seven GPs. We have three non-GP investors and that's it. So there's no like pyramid structure. And, you know, the way we have structured the firm is basically you're an investor, you're learning to be investor, you're a GP and you're still learning to be an investor.

And so we really operate as equals, besides the responsibility for a company that sits on a GP, right? And the first investment I made at Greylock, it was referred by Nicole, who is an investor at forerunner, which is a quality seed stage fund. And there's a company called Clio, which is a benefit for people, who are working parents, right? So it's sold through employees to enable them to be more productive at work by supporting them as through pregnancy

and early childhood. And it was part of a broader thesis that my partner James and I had had about what was happening in healthcare and the fracturing of health care and the ability to deliver healthcare digitally and through networks of people. So Cleo has guides globally

that understand, lots of different issues around fertility, pregnancy, parenting, childhood, and makes them much more accessible to people so that they can be their best selves at work. And it was a series A investment for us. The companies progressed quite a bit since then. And in terms of the decision making process, it helped that we already had a sort of shared secular thesis in this area. and that's something we try to pursue across a bunch of different domains at Greylock. Talk about that thesis-based investing. What does that mean?

And how do you wake up one day and say, I have a thesis. I'm going to present it to my partners and try to get some consensus around this thesis and then work towards investing in that thesis. Or how does that go down? Yeah. So first I'd say there are many different. ways to do venture investing, even within Greylock, right? So people, some people incubate more companies, some people make investments more in companies that they run into in market. And for

all of us, I think one huge advantage of being at Greylock and having, like, why be in a partnership at all? Because you're going to try to build some tribal knowledge, right? Because you value the intellectual debate and the understanding of the people around you. And we all have different. data. And so I think like we try to have some loose structure around it. So an example would be like I categorize the the things that I am interested in into like three basic buckets, right? And this is going to sound sort of like, I don't know, to tech absolutus perhaps, but like I believe a lot more companies are going to win based on the quality of their software. I believe that we're going to need to, if there's a lot more software in the world, we're going to need things to knit that

experience together to integrate it, the security around it. And the other way that companies are going to win besides their digital experiences is their ability to attract and enable their people, which basically translates to like HR software benefits and collaboration and productivity tools of different kinds, like workflow software and businesses. And so I think if you, I think at that broad level, like I have a lot of partners. to agree with me, right? But then when you get down to it, there are, like, if you believe that to be true in the long term,

then what are the types of opportunities that open up, right? So if you believe people are going to build a lot more software and somebody who was a bank last, you know, five years ago, now needs to build digital mortgage onboarding software, or somebody who was just a pharmaceutical company doing lab experimentation and clinical trials five years ago, is basically a genomic data mining or a multi-oomic data mining company today. Like, what do you need to support that transition?

And so then it turns into sort of more specific theses for any individual investor. And so we will, because they're shared these, we'll all see different companies and have different perspectives on and go try to talk to the smartest people in an area. And sometimes the result of that is to invest in a company that somebody's seen. And sometimes it's, man, it's a green field. We're not seeing what we want to invest in. Let's find some great people and incubate a company. So there's a lot of, there's a lot of, it's a team effort, right?

There's a lot of group debate on sort of what the entry point is, how real an opportunity is, how something will play out. When we get back from this final break, I want to know what your advice is. And I don't think, did you, did you work through the, were you in the workforce in the 2008 crash? Or are you still in school? I was coming out of school. Right. So you probably remember it. But I want to talk about what Greylock's advice is and how you're dealing with,

essentially what could be a three to a three or to 12 month business, shut down, slow down, and perhaps even a recession when we get back on this final segment of Angel the podcast. If you are an accredited investor, you need to understand what a special purpose vehicle is an SPV. An SPV is something I use all the time at the syndicate.com in order to syndicate an angel investment. That means I'm sharing an angel investment with up to 250 other accredited investors. And we can put up to $10 million in that SPV and it's one line item on the cap table of the startup. And if you're an angel investor with a bunch of rich friends, you could start your own syndicate and you can power this through an SPV.

So, just like I have Jason's syndicate, you could have Susan or Joe's syndicate, and you can do what I'm doing, which is getting a group of people together to invest together and to hopefully make amazing returns together. That is the goal. And to support founders and innovation. Here at launch, we could not be more pleased with our partnership with the team at Ashore. That's ASS-U-R-E. And they power my syndicate, which is the largest one in the world, in fact, with over 4,000 members.

sure is the leading provider of special purpose vehicles. Those are SPVs and fund administration with over 2.5 billion in AUA. That's assets under administration. And over 5,000 completed transactions. We're like 130 of them. So they're doing this for a lot of people. They're doing it at scale. They're doing it professionally. And they're doing it with great customer service. They've developed an innovative software system called Glass Board to automate the entire investment experience from entity formation to IPO. It's slick and it's beautiful and Ashley who manages my syndicate loves the interface. Not only do investors love it, but founders love it as well as it keeps their cap tables nice and clean and nice and simple. You can get 20% off your first

special purpose vehicle, SPV, by visiting ashore.co slash angel. A-S-S-S-U-R-E-D-C-O-S-A-Langel. Let's get back to this amazing episode. All right, welcome back. Sarah's with us from the office at Greylock, perhaps. She's maybe in the last. the library at Greylock or we could be using Zoom. Zoom is an amazing piece of software, isn't it? I mean, it goes to one of your central thesis that, hey, how do you enable people in this, how do you enable talent to do their best work? You said that was one of your theses or this eye. Have you made investments in that space of enabling people at work? Yeah, yeah, absolutely. So a couple quick examples. So companies that were involved with that

are around this. Like we talked about Cleo. sort of there's departmental workflow software. So we were in this company called Figma, right? Oh, that's the design software? Yeah, exactly. And if you have a bunch of designers either together remotely working with software engineers and product people and marketing, like having an amazing web-based real-time collaborative experience makes all the difference in the world.

And I think this is a really interesting moment in time for, for software that enables people to work remotely, of course, because if you and I, you know, we do a video conference once every month or so, then the quality of the software we use doesn't necessarily change our behavior, right? We're like, it didn't work. That's annoying.

But if Jason is now sitting in his studio or sitting in his bedroom closet doing Zoom calls eight in a row for the next three months, every little thing, every nuance, connection issue, that becomes a lot more important. And so you have a, I think, a massive drift toward the best experiences. And that's interesting because you said earlier, quality is what you look for. That's a little bit of a towel in product that you think the quality of the product actually matters because if you're using it and it's so core to your work experience,

in fact, it is your work experience. We think about Slack and Zoom, Figma, these products, superhuman. It actually is your work. So the nuance of the product actually really matters. 100%. And so I mean, I'm an investment in a company called Clubhouse. And they're in the issue tracking project management space. Like there's a there's a big elephant in that space at Lassian, right, serving software developers. And I could tell you about all the ways the software is like the right thing for modern software teams. Right. It's like blazing fast. It's simple, but it scales. but I think one of the things that makes the team and the company really special is exactly what you said,

which is like, man, if you build software, you are in an issue tracker, a bug tracker, a project management tool all the time, right? And so the team actually really focuses on like,

how can we bring, you're going to think this is kooky, but a little bit of joy to that experience. Oh, not kooky at all. I mean, we're investors in superhuman and their entire thesis is to make this very bespoke elegant, beautiful software. And the pitch we invested before the product was even launched

because we had invested in Reportive previously was just how beautiful and elegant it was going to feel to use it. And every time we email something to Raul, he screenshots it and puts it in his deck. I'm talking about users with feedback. And they really think about very subtle pieces of the software. And if you obsess over it, it's sort of like being in a great car

or going to a great restaurant, you're like, wow, it was totally unnecessary for you to put this tiny little thing on this dish. But boy, did those breadcrumbs that have been crisp on top of the vongolet linguine with clam sauce, it kind of makes the dish. I was explaining this. We were making vongolet, and I found it one of these recipes, like rip apart a loaf of bread and put it in the oven and make these little crisp like fresh croutons, but almost like microscopic. And that's what they put on the vongolay now to make this great mouth texture. It really is like that's what it is with software now. Is it can you do that little tiny thing that people notice?

And Figma is, correct me if I'm wrong, but that was like kind of the side hustle software. Like people who used Figma was like for their side project. They were doing it like a solo version of it. And that really became this bottom up software movement, correct? Yeah. So you should have Dylan on the show when you go back to having founders. Yeah. We did the series A in Figma, and I would say it had a long road to get to like the feature parity you would need with existing design tools for it to become, for the experience to become mainstream enough that everybody began to see the power.

So, you know, the early beta phase, they're in beta for a while. It required people to believe in the power of like the web and what you could do if you design things together. And I think the team did a really good job of balancing, you know, in the roadmap, like feature parity of being a complete design tool and magical flourishes of like things you can only do in Figma and things that are much better experiences in Figma. But you're totally right that for a while, not everybody replaced Adobe or a sketch with it. Right. But I feel good about that path now. Yeah. It was interesting too because when you, again, back to like really active listening, something I'm trying to do in my life, I haven't been trying to do for the last five or 10 years since I spent the first 15 years just talking incessantly.

It's a, I mean, it really is a helpful skill because you learn a lot when you're not talking. And one of the things you said earlier was like you, you don't really worry about like the product in the early days when you make the investment. You're just worrying the founder. And I just thought to myself, I thought the same way. But then I reversed my thinking. And maybe there's something very subtle here. Because when I saw a thumbtack, Robin Hood, Uber, andcom.com in the early days, all of those, even though the products were very simple and janky on the margins, like Uber was called Uber taxi. It's not a taxi.

There were subtle moments of brilliance in the product. So now what I look for, and maybe we're not that far off, because I do believe that a great founder will figure it all out on a product basis. But I'm always looking for subtle flashes of brilliance. millions or just considered natures. In other words, those little tiny crisp pieces of bread on the Vongolet, I'm looking for that actively now when I look at companies and I just squint and I'm like, okay, the whole product looks not perfect. It's a six out of ten.

But these three little nuances, oh, man, somebody thought about that, right? Yeah, absolutely. I'm looking for both the crispy crouton if it exists. That just means somebody cared enough to, to, to, to, to, to, to, to, to, uh, I'm looking for both. roast the bread, right? And, but also, I think even if a team hasn't built what they want to build yet, they should understand something about the market and their customer very, very deeply. Right. And I do think when people have a, have a point of view, occasionally you're just like, you see it and then you know that's the way the world should work and you can't unsee it. And so

obviously it's going to happen if they can execute. So as an example to me would be like, were investors in this company utmost. And it's three ex-portfolio executives. So, you know, amazing engineering and product leaders and entrepreneurs from workday and Groupon. So that made me interested to begin with. But when they started talking about sort of what they understood about how work is organized today, the way people have, they have contractors, they have remote workers, they have McKinsey working for them, they have staffing firms.

Like, you don't own all of your people. And therefore, the way you hire and on board and interact and pay all of those people, like it can't just be a single employee database. And like that actually is, I think that's a very real insight that very few people have to the degree that they do about what that means for your communication patterns and your workflow and the technology underneath it. So, you know, that software, like we're just in early customers now. but once you see that, you're like, of course, that is the way the world actually works,

and our software should reflect it and enable it. So I agree with you that very early on, you can look for the insight or the crouton. Yeah. Or both. It's super fascinating to me with young entrepreneurs, how when an investor, just because they write a check, you know, and we're glorified gamblers in this business, where ATMs with a brain who are trying to make a decision who to spit this money out to. And I actually don't overthink it all that much.

But founders get a young founder sometimes, you'll ask them a question as an investor. I don't know if you've had this experience where you're like, oh, you know, have you thought about this? And they're like, should we do that? Oh, okay. Well, will you invest in the company if we change that? And I'm like, oh, no, no, no, no, no, no.

Like, this is your company. You have to have this perspective. I'm just asking a probing question, which I think goes to. what founder traits have you found in your last couple years as an investor? What for you, because it is a personal thing, do you see in people that shines for you? And just gives you that little twinkle that you go, you know what, I need to be in business with this person. I need to spend the next 10 years and I need to tie my success and you're working 90s hours a week to try to be successful at this.

So every time you fire that bullet, every time you, you make. make that decision to be in business with a founder for a decade, it's one of 10 or 20 times you're going to get to fire that bullet. What is that sparkle you see in the founder? What are the traits? Have you given that thought? Yeah, yeah. I think about it every day. So I'll give you an example. Like, I'm very privileged to be in business with all my entrepreneurs, but the example I was going to was a guy named Pierre, who's the founder and CEO, the co-founder and CEO of a company called Screen. Right. And, and, And he was an engineering leader at Apple.

He ran their offensive security group. So it's a security company. But when I think about what makes Pierre very special as an entrepreneur and as a leader, I think like there are very few people who have like the technical vision he does. Like like we were talking about like the way the world should work is we should bake security into every application in production. And it should work with modern distributed applications. And then you shouldn't have to worry about it. You shouldn't have to be always tuning the knobs to make it work.

And there's not enough people like Pierre out there. So we have to make it like an extraordinary experience to deploy and maintain. And so he has a very strong point of view on product. But the thing that is really impressed me over the last year and a half we've been working together is how he thinks about building culture within his company. Right. And that's something that I think is like very, it is often very overlooked as venture capitalists are looking for the entrepreneurs they want to work with. But it has really changed my perspective in terms of what the type of people I want to work with.

Partly because it makes you a good person to care about how you are creating an experience for your employees. But also because I think it makes it much more successful, right? like screens brand as an employer is like this is like an amazing ambitious super fun place to work and I don't mean in some sort of like entitled way like you were talking about like people do work very hard they're trying to do something extraordinary but but they know that the priority of the company is the success of employees and the well-being of employees alongside like all of their ambition yeah and like he expresses it in terms of like very authentically like culture is one of top priorities all the time. He's always thinking about it. And even through this crisis,

like, I think it's a very challenging time for companies to navigate. And so if that's helping employees that are in trouble or communicating in a way that reassures people and explains where we're trying to go and how to thread the needle through the next couple months, like I think that the people who invest in that are going to succeed much more than the people who don't. And so like now I think much more about the type of cultural leaders that I want to be in business with. But it's funny that's taken me, taken me seven years and some on-the-job learning to be so strongly in that camp because it's a, it's a very ingrained belief at Greylock, right? That culture builds. Yeah. I think the problem is the word culture. You know, the word culture just is such a

wishy-washy, soft, like touchy-feely word that who are like, oh, culture, yeah, like, it doesn't feel like, I think, especially for people who are 90-hour work people or intense people, you value intensity. Well, culture feels like the opposite of intensity, you know, on some level when you first hear the word. Then when you actually unpack the word and you have the experience, it's how aligned and everybody is in their belief system to go tackle this. So if everybody's aligned that the culture of the company, the core belief of the company

is that hard work pays off or that product matters, or that the new one. and the little croutons and, you know, matter and details matter. That's culture. So it's just a common set of beliefs. And it's a belief system not like, I don't know, the color scheme of the and the beanbags or, you know, this beautiful living room. The living room might not be the culture. It might be where culture exists at Greylock.

And it might be that the culture is to sit and talk. And a living room is a great place to sit and talk and debate ideas. Right. So you have to think it through, right? Absolutely, right? And it's like the thing at like one of the core tenants that screen is transparency. Right. And that's definitely not all like touchy,

feely hugs all the time. Sometimes it's like we're we are having an issue in the company and we need to be comfortable being intellectually honest about what that is. Yeah. And not ever feels awesome about it all the time, right? It's definitely not like if I think about their office in San Francisco like it's crowded and not the best office. that any of our companies has.

So it's not the perks. It's sort of that core set of beliefs and how you continually communicate and live them. Hey, there was an interesting article. I wonder if you have feelings on it by Jessica Lesson recently about the absolute skewering of female founders and them being held to a higher standard

in terms of culture. You know, somebody like Mark Pinkis or Elon Musk or myself, not that I'm in their league, but, you know, maybe are intense people who demand greatness and who want people to work hard. And then the away founder wants people to work hard and she's candid and transparent. And Vox writes like a 5,000-word article with a bunch of anonymous people dunking on her. Feels completely unfair.

Feels completely sexist. And the punchline is, according to Jessica Lassen and the information, this is female journalist doing it to female founders. I'm assuming you read the article. I have seen the article. You've seen the article. and you know about this general theme. Are female founders being held to a standard that is ridiculous and that they can't be intense or they're just, and what's the vibe? What's the back channel amongst female investors and founders right now about this issue, the double standard for women as founders?

I fundamentally do believe it's a real issue. I think that consciously or unconsciously, people are uncomfortable with women expressing some of the qualities that we glorify in our male startup leaders and male executives. Which qualities? So, I mean, there's, I don't know the details of, I don't remember the details of the situation. Well, we're just talking general. like if you, women cannot express certain characteristics. What do you feel?

And do you feel that yourself as well? There is plenty of research that shows in business context that women, and there's many books written about it, right? That women who express as direct and aggressive that is seen as much less positively than when men express the exact same attributes. Because it doesn't match many people's profile of how women should act.

Which is just completely ridiculous. And you just said earlier, like it takes a level of intensity, and that's what your, when we go back to an hour ago in this conversation, you're saying you're looking for that intensity. Maybe not the workaholic like I am, and maybe that's a charged word, but you're looking for that intensity. And then women are not allowed to be intense or else they're criticized for it. It's absolutely ridiculous. I think we need to be holding people to the same standard. And it's like, who knows to Jessica to point it out if she sees that the standard is unequal, right? And I think it has been because people are uncomfortable with that.

If a person talks sternly, intensely to their troops, a man doing that would be inspirational and holding the line and a fighter and a great leader. If a woman speaks intensely to their team and says, hey, get your act together. we're better than this. You can't just phone it in like this and I expect you all to bring it tomorrow or else you're not going to have a job here. And I've spoken like that to people. If you want to work for me, you've got to bring it.

And if you don't want to bring it, then get out and let somebody else have your seat. If I say that, people are like, wow, Jason's got a high standard. You better bring it. If a woman says it, they're going to call her words they call women to dismiss them.

It's ridiculous. It is surprising, right? And we just have these ingrained expectations and biases, and I think it's going to take some time to work through them. But identifying them, as you said, is progress. I guess it is. Yeah, I mean, I just thought it was a great moment. I'm not afraid of working with extraordinary women leaders.

So if you're that, please call me. Let's write a check. Okay, we always like to wrap up with the anti-portfolio. Tell us a company you met with. you didn't invest with and that you go, oh my God, what a mistake. What a mistake. Oh, how did I not make that? I got to avoid that in the future.

I got to write that check next time. Take us through that anti-portfolio. Oh, this list is long for anybody who's been doing venture for even a few years. It's longer than your win list if you have good access, right? Absolutely. When people talk about venture as an arrogant profession, I just, I can't conceive of that because it requires, you know, it requires some weird intellectual confidence because you're like putting a stake

in the ground of what you believe in. But then you're wrong so often. Like how could you grow that arrogance, right? I don't know. What is a good and timely one just because the list is long? The most painful from a financial basis would be, I think, the way to do it. Zoom. We could have invested.

We possibly could have invested. Really? Oh my God, you had the ability to invest in Zoom. I don't know that we did, right? You had access. Okay. Yeah. We met Eric.

Wow. We knew the company. And like we clearly should have made that investment. But others did and good for them. That's a particularly hard one. When people started talking about Zoom, Zoom, Zoom the last couple of years, I was like, I used GoToMeeting. It's fabulous.

I love it. I know how to use the interface. And I think I was kind of like a hip chat to Slack. like I was really loyal to hip chat. I was just ingrained. And I was like, I don't get Slack. I use HipChat. It's got everything I need.

Why would I switch? And then you switch and you start going down the Slack ecosystem and boy, do they have things. And Zoom, I think, is the same kind of thing. Like just the fact that you can change your background and you have a different background right now, which was our big review. Yeah. I'll show you guys where I actually am in a second. This looks like the Greylock San Francisco Library, but wait. Wait for it.

Yeah. Yeah, I think, you know, I think Zoom, we just, we just whiffed on the opportunity. And like, I consider Eric a friend. He's an extraordinary entrepreneur. I'm so sad to not be in business with him yet. He's coming on the pod. He's coming on the pod. I just traded emails with him. Awesome. And we book Dylan, by the way, from Figma. He's coming on the pot too. So we're checking everybody off. I think the lesson there. To go back to the point you were making earlier, like if you, if you meet Eric and you think about the story of Zoom, like, certainly like right time in terms of when video was more possible to become such a dominant

way of working together. Yeah. But like this is one of those things where I think a lot of the time investors ourselves included, they, they are intellectualizing and getting too cute about something where the story is so simple, right? And so the thing that Zoom did, to me, not being part of the company, was like many other things, very simple, not easy, right? And simple, not easy was deliver video conferencing that just works. And it's amazing that it didn't exist before. But lo and behold, that's a franchise business. It's really hard to understand that the 11th search engine, the 100th video sharing website, you know, the fifth, 50th Slack, you know, IRC chat room for business.

Like, it's really just hard as a mental model, you know, to believe that the 50th person to walk up to a door and try to open it is actually going to open it. It's actually, I have to write a blog post about this, but it's like King Arthur. It's like everybody tries to pull the sword from the stone. And then everybody does it for like 100 years and nobody can pull the sword out. and then one person walks up and the sword comes right out. Be like, oh, well, there's the king,

there's the queen, we're done. And it's just, if I could figure that one out, I think I could be the greatest investor of all time. If any of us could figure that out of when the 20th person up at bat hits the home run.

It's just, you have any insights on that one? We're constantly looking for it, right? So at Greylock, we invest in companies that are creating new markets, right? Like if all of a sudden, like, you know, there's a permanent change in behavior and remote work becomes more of a thing because people have been exposed to it, you know, that could create new opportunities, new markets that didn't exist before. That's a point in time thing. Most markets, they already exist, right? There are products. There's software out there. There's budget being spent. People have individual tools. And then I think like I was actually just a couple weeks back having this debate. There's really more of a history lesson from my partner, Asheem, about what happened with the network firewall wars and how Palo Alto really emerged and

became a winner there because they were they were not even close to first right and and so I don't think there is a simple answer as to the reinvention of a category that matters yeah such that they'll be the they'll be the winner but but you know I think the the simple rule for us is is it like is it 10x better is it binary better. And I think it's a really hard thing to figure out when we go to talking about like design quality and croutons on top, right? But like I think you can actually quantify it in in some areas, right? And if Zoom works 98% of the time when you try it and most video conferencing, like you

futs around with it 60% of the time, like that's a qualitative change in the experience. Absolutely. to do video, right? And so, like, we're looking for that, like, step function change and experience. And most things aren't that. So there's not a complete answer there. But if you find it. No, actually, I think we might be triangulating on it because it goes back to this very subtle

discussion of, like, hey, you're looking for the intense person and they'll figure out the product later. But then there are these flashes of brilliance and moments where you do see the product is there. And so it might be that the person who conquers. A flooded market where everybody's tried before is just somebody who's got, what is it, preternatural ability to refine the product. You know, a product refinement that is just preternatural. I mean, frozen yogurt existed for a long time.

And then, you know, Red Bean and then what was the other big yogurt? We had these big yogurt wars a decade ago in Los Angeles. Red Bean was the original Korean one. And then what was the other Froyo that came out that everybody went crazy for? Pinkberry, thank you. They knocked off them. And then we're having the ramen wars here in red mango. Yeah.

Then we're having the, we're having the ramen wars in the peninsula now in Tyshokin and then the other one in Palo Alto, I forgot the name of. And it's like ramen and frozen yogurt existed for like 50 years. And now people have just refined them to a level that is superhuman. That's another example, superhuman on. email. All right. I think we figured it out. We have the answer. We have the answer, everybody. If you want to be a great venture capital, just find somebody who can build a product so transcendent that it makes everything that looks before it like garbage. Okay, give us the reveal.

Where is Sarah? All right. Here we go. Okay, you're in the LinkedIn. I'm sorry, LinkedIn. You're in the Greylock Library with the beautiful exposed wood beams. And that woman has been reading that book for an hour. She has not moved. I've got to find out what book she's reading. What? You're literally in your closet. I'm in my closet because we have a counter that's standing desk height and work from home, guys. It's a new era. That's it. Well, it is. I'm literally like just locking yourself away from your kids and having quiet is the key here. And look, you have just a great collection of running shoes. You're a runner, apparently. That is, that's my husband's. Oh, okay. Your husband's running. You're out here working and he's

out there running. It's it. I think he's working somewhere else, hold up. I mean, this is becoming a little bit of an issue because I think anybody who's married right now is starting to realize like going to work every day is a critical piece of the success of marriage. Like those 10 hours where you separate and then come back is literally, he's because I don't know if you've had this conversation. You're not taking this seriously enough, this coronavirus thing. Or you're taking this too serious. It's not that bad.

Literally my wife and I have flip-flopped in this discussion of who's taking it too seriously and who's not taking it seriously enough. like, you know what, I need a shotgun. She's like, I don't think we need a shotgun. I'm like, I don't think we need a shotgun. I'm like, no, but I need an oxygen machine. I think we need more gasoline for the generator. I'm like, we don't need more gasoline for the generator. Gasoline is not going to be a problem here. There's 30 bucks a gallon, 30 bucks a barrel. We're going to get plenty of gasoline. Well, hopefully this is all over. Yeah, it's a, it's a really, I mean, so sadly, my dear husband is also a venture capitalist. So we are both in the business of constantly assessing and debating intellectually about risk. So I think we're actually well prepared to talk about if we're over or underreacting. But, you know, it's really hard to say right now because the U.S. just doesn't have the data, right? We don't have, we don't have mass health surveillance. We don't have testing. We don't even have self-reporting.

So who can say? Might as well be prepared. I mean, that's the disaster of this. It's like literally we're in an airplane at 30,000 feet. And somebody just put a big piece of cardboard over the dashboard. And we can't see any of the avionics. And it's like, you're really going to have a hard time landing. this plane if we don't know the altitude and the speed. Let's get some basic readings on where

we're at. And the fact that we haven't done mass testing yet is bonkers. The good news is, having studied this and talking to a lot of people, a lot smarter than me, and going through this intellectual thing, is it looks like the data out of Wuhan was completely off. The data out of Korea is better. And the data out of Italy is also warped because they have one of the oldest populations in one of the highest per capita smoking. And it's a lung disease. So Italy didn't prepare, has old people who smoke, and a lot of people have died. And they didn't take it seriously. South Korea took it completely seriously. And they got right through it. And they did a ton of testing. And then now they're reanalyzing all the data in Wuhan. And it turns out the

denominator was completely off. So the original reports was the Wuhan virus, the coronavirus, was killing 5.8% of people. Five point eight percent of people. That, that, That seems like a really serious plague, and it actually now is 1.4. And maybe that number will go down to 0.4. And we're going to keep seeing that number go down because it turns out everybody's got this. So it may not be as deadly as we think it is. And overreacting, this is one of the weird things. You get, if you overreact, you're looked at as hysterical.

Speaking of things they call women, like, and it's like, women are like immediately hysterical if they're concerned. you look hysterical as a politician if you take dramatic measures. If you take dramatic measures and it works, you get zero credit because you were hysterical and you overreacted and killed the economy. If you don't take action like the UK didn't for seven weeks and now they're finally taking action, you're going to be responsible for killing people. I mean, talk about a really bad decision-making situation to be in. Yeah.

I think like the epidemiologists would say that it is, you will be successful if you have overreacted. Obviously, there's also a cost economically and personally into people to that reaction. Right. And you will always look like you're overreacting until it's too late because of the nature of trying to contain something like this. Yeah. So those are the principles that we're operating under right now. So I think we're somewhere between, you know, bad and worse. in terms of what is coming.

Though I'm pretty heartened by it. The shutdown in the Bay Area was a stronger move than I expected from local government. So maybe we're going to see the tide turn now. But that's also the approach that we're taking within the portfolio, which is like, you know, it will be bad if you do not at least overreact in terms of your scenario planning right now as a CEO. What is the scenario planning and how are you, advising people as we wrap up here.

How do you advise founders as a firm? Yeah, so it's idiosyncratic, right? It depends on like what sector the company is in. Travel, tougher, real world businesses, tougher. Online software sales with an inside clothes easier, right? Yeah. So it's just, there's a huge variance and people don't have a lot of data right now. We're telling people, you know,

the, I'll actually tell a really quick story as we wrap up. So I was catching up with a friend of mine who is the founder, CEO of a public tech company. And he was saying only a little bit jokingly to me that nobody had told him of all the venture capitalists and all the executives and advisors that he had while growing his business, that his job was to create a cash generating machine, right? It was to build this amazing product and get it out to people, but the business needed to generate cash. And his view was like all of these people had been entirely growth oriented. And if you are entirely growth oriented, you build into place often these bad habits of spending inefficiently to get to that growth.

And then it's incredibly difficult to unwind them, right? If you go to market, motion just doesn't have a certain level of efficiency. And so he's on this like mission as an entrepreneur giving back to other entrepreneurs going out and telling them like, you need to learn to generate cash sooner rather than later. And this was before any of the of the COVID stuff came to light. Right. And I thought I was reflecting on that earlier today. And I'm like the best thing that we can as board members and as CEOs do is think about like our path to generating cash. and and what's the phrase, right? Like constraints enable creativity.

And I'd add one to that, which is like getting fat enables, it often brings on other bad habits with it, right? Right. And so we're in the correction phase of that now. So we are telling people to like think through very carefully, like a base and a bare scenario for your company. And like the eventual path is to be cash generating. So like what is your path to get there?

And what signals, what leading indicators? We just talked about how we're lacking a lot of the data you actually need to make these decisions in terms of the trajectory of our health system and our economy. But what are the leading indicators you'd look for in your own business to pull the trigger on a more austere plan or to add more capital or to just think through how you're going to thread the needle if there's a bad year ahead? And I think the, the, the, the, the, the, the, the sooner you do that planning, the better positioned you will be.

Yeah. I mean, it's really, I think, a great thing. Sorry to be a bummer, but better be prepared. Well, when the market gets hot and we're in whatever year 10, 11, 12 of a bull market, people forget that the point of business is to make profits, right? And like, they are playing the game of video. They're playing the video game of founder, but they're not actually making a money printing machine.

And at some point, the free money ends and the money will go to the companies that are on the path to becoming a money printing machine. And if you're not printing money and you don't have profits, you're going to have to get there at some point as businesses like Uber, Lyft, Postmates, DoorDash, and Airbnb especially are learning right now. Like those businesses all need to show Wall Street that they can make money and profits. All right, listen, this has been amazing. Thanks for coming on the pod, Sarah.

I know it's like a little bit of a stressful time for everybody, and I appreciate you're not canceling on us. And we've got to keep the trains moving for everybody who's in the economy. obviously people's health is paramount, but the second order effect here is going to be the economy and we have to keep businesses running. So do not give up, do not be paralyzed, keep doing business. That's what you can do as a citizen, social distancing, and keep running your businesses. So people keep getting paychecks, they can keep making their rent and we don't go into, you know, an extended recession. Great job on the pod.

100%. We're still in business and I'm happy to meet anybody by Zoom in my closet. Absolutely. And there you have it. This is what it's come to. We'll see you all next time. I'll enjoy the podcast. Great job, Tara.