The Full Ratchet: Venture Capital Demystified

Shawn Carolan of Menlo Ventures joins Nick on a special Crisis Coverage installment to discuss the Four Fundamentals of Investing; the Future of Micro Mobility; and Hunting Consumer Unicorns. In this episode, we cover:

  • Tell us about your background and path to venture.
  • What's the thesis at Menlo Ventures?
  • Can you explain the "Four Fundamentals" framework for investing and give us a brief description of each?
  • What are you looking for in terms of unit economics?
  • You like to invest in technologies that change everyday life for the better.  Do you have a sense for the needed technologies and then find founders in those areas, or do you identify compelling entrepreneurs that then guide you to emerging technologies that will shape the future?
  • Have you been in the situation where you identified the right consumer trend and technology required to deliver but you picked the wrong startup?
  • Is there a priority of importance amongst the four?
  • Which do you think investors most often get wrong? 
  • Let's talk about consumer a bit...Many VCs think that consumers and consumer behaviors evolve quickly in unpredictable ways.  And b/c of that many VCs avoid consumer.  What's your response?
  • We’ve seen an explosion in Cloud and SaaS recently, and some question whether there’s room for another big consumer company, what is your response to this and which areas do you see the biggest opportunities in?
  • Before the pandemic, the future of scooter companies was murky with challenging unit economics and fleet maintenance... while governments were, in some cases, were imposing regulations and putting a halt to deployment.  What does the future hold for the scooter companies?
  • How do you view these situations, like scooters, where there’s low differentiation and a number of players trying to scale and grab share quickly?
  • Any other micro-mobility trends that you’re watching closely, aside from scooters?
  • Changing gears away from micro mobility and into AI for a bit, why do you think we haven't seen many unicorns in consumer AI?
  • Where (sectors, categories) do you think the initial consumer AI unicorns will come from?
  • Let's say that you have a micro mobility company that is currently operating in 3 cities within one region, grossing $500K monthly and growing 30% month to month.
    • Which 3 data points do you ask for and why?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Patrick Gallagher
  • Sarah Tavel
  • Byron Deeter
  • Jim Kim

Each investor discusses sectors, drivers and/or trends that may have significant impact in the future and are potentially positioned for outsized-returns.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 146_Investor_Stories_146__Whats_Next_Gallagher_Tavel_Deeter_Kim.mp3
Category:general -- posted at: 12:00pm EDT

Tamara Steffens of M12 joins Nick on a special Crisis Coverage installment to discuss Why Corporate VC Gets a Bad Wrap; Microsoft's Fresh Approach to CVC; and Key Insights to Acquire Mass Users. In this episode, we cover:

  • Background and path to venture.
  • Overview of the thesis at M12.
  • Investments since COVID? Changes in strategy, markets of interest.
  • CVC has the reputation of being very slow, not leading deals, imposing restrictive terms, and thinking only about broader success of their parent company— what's different about M12?
  • What's your approach to sourcing?
  • You are known as a user acquisition expert in the valley... having generated millions of app downloads for Path, Color and Acompli. One of your main suggestions is to "Dismantle the silos" ... what do you mean by that?
  • You've cited the top three things you need to make your app part of the zeitgeist -- can you walk us through each and why they're critical?
  • Talk about the 'Leaky Bucket' of new user acquisition and how to avoid it?
  • What's a good level of user retention (%) after 6 weeks?
  • What are the biggest differences in approach when acquiring consumers vs. enterprise customers?
  • What are the main KPIs/OKRs you track when optimizing a sales funnel / team?
  • I'd like to talk a bit more about the startups you work with...What are the key factors you're looking for in investments?
  • How do you work with your portfolio companies?
  • Why should every startup be thinking about culture as they build their companies?
  • How are founders today different from founders 20 years ago?
  • What tips do you have for founders pitching investors remotely?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Brian Hollins of BLCK VC joins Nick on a special Crisis Coverage installment to discuss Breaking into VC; Excelling at Goldman Sachs; and the Origin of BLCK VC. In this episode, we cover:

  • Background and path to venture?
  • What was the most surprising thing about venture that you only realized after working in it for awhile?
  • So you've got this great job in venture...  Why'd you decide to go back to HBS?
  • Tell us about the origin story of BLCK VC?
  • What are some of the specific activities and programs that BLCK VC is running?
  • On June 4th, BLCK VC held an event, “We Won’t Wait”, for people in venture to take action. What were the primary goals and outcomes of the event?
  • I want to talk a bit about your experience at Goldman... did you have an opportunity to invest in black and/or underrepresented founders?
  • What, if anything, did Goldman do to support black investors and founders?
  • It's so hard breaking into this industry and orders-of-magnitude harder when you're black --  how have diversity issues and racial profiling affected your professional journey?
  • Can you give us your take on the current social unrest and what path you want to see going forward?
  • Do you think we'll see the systemic changes required this time or do you think progress will be limited?
  • Who are some investors, founders or people in the space you see paving the way and driving change?
  • What can white VCs do, specifically, to contribute to more better balance and stronger representation for black founders and investors?  What organizations do you care about?
  • What are sites or resources that our audience can visit to get more involved?
  • Aspen Fellowship... At New Stack we're rolling out a fellowship program to train young, college students in VC... you're back on a college campus... what are some ways that we can get our job description in front of more black, latin and underrepresented minority students?
    • Are there any national organizations or communities for college-aged, black students that are interested in tech?
  • 3 Data Points...
    • Let's say you are approached to invest in an enterprise SaaS business. The startup has $10M ARR, Growing 10% MoM and LTV:CAC is 4:1. Catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 questions do you ask?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Minnie Ingersoll
  • Adeyemi Ajao
  • Richard Kerby
  • David Horowitz

Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 145_Investor_Stories_145__Why_I_Passed_Ingersoll_Ajao_Kerby_Horowitz.mp3
Category:general -- posted at: 12:00pm EDT

Kane Hsieh of Root Ventures joins Nick on a special Crisis Coverage installment to discuss Investment Decision in < 3 weeks; the Challenges and Opportunities with 3D Printing; and the Future for Industrial Automation. In this episode, we cover:

  • Backstory/Path to Venture
  • Tell us about the the thesis at Root and your focus areas.
  • Any unique outcomes or behaviors you are observing as a result of the pandemic?
  • What's your investment position on 3D printing... bullish or bearish?
  • I used to work in the industrial automation area... developed two different products there and saw limitless opportunities but also many challenges.  From your standpoint, what have been the biggest challenges to progress in industrial automation?
  • What excites you most about industrial automation going forward?
  • How will jobs in the industrial space, or any space for that matter, change with the immersion of automation and robotics? Is this a net job eliminator?
  • Startups w/ hardware as a part of their solution (whether off the shelf or developed internally) are often are more capital intensive than their pure software counterparts.  How do you balance progress and capital efficiency for  these businesses?
  • Do you think the expectations of progress/traction, at different stages, is different for hardware as a service vs. software as a service?
  • One piece of advice for founders of industrial automation startups... what would it be?
  • What are some of the deep tech or capital intensive investment areas that you're avoiding?
  • Heard a rumor that you're starting podcast?
  • I came across a side project, "Transformer Poetry,” a book of famous poetry reimagined by OpenAI’s GPT-2 language model. I don't even know what to ask here but would love to hear what the inspiration for it was.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


James Currier of NFX joins Nick on a special Crisis Coverage installment to discuss Network Effects; 9 Days Until a Funding Decision; Software as the Foundation for the Modern VC firm; and the Future of Social Media. In this episode, we cover:

  • Background and path to venture
  • Thesis: Overview of the thesis and your specific focus at the firm
  • Pandemic: Unique outcomes or behaviors you are observing as a result of the pandemic?
  • Overview of Software: You're a huge inspiration to me...  I love that you're bringing innovation to venture -- building software and tools that help founders and allow them to access more investors. For those in the audience that don't know, can you give a brief over of the major software and tolls that you've built.
  • FAST Program: You launched the FAST Seed Financing Program ($1M, $1.5M or $2M for 15% of their company) which ran April 16-May 22.... were you allowed startups to apply for funding and you committed to responding in 9 days. Why'd you launch the program?
  • What did you learn that was surprising?
  • Will you do it again and, if so, what will you change?
  • All this software focus could run the risk of investing in startups that look great on paper but could underestimate or not fully assess the founding team's mindset.  How do you consider the qualitative?
  • Creators vs. Opportunists: How do you insure that the founder's you are backing on true creators with the right motivation instead of just opportunists with great skill addressing large markets?
  • Unusual vs. Conventional thinking: You have said that exceptional outcomes are the result of unusual thinking and that conventional thinking is the death of many companies -- explain what you mean by these types of thinking?
  • 1st time vs. 2nd time founders: What's the biggest challenge to working with second time founders?
  • Social: One of your key observations was that social media is becoming less social and more media. What are some of the consequences of this shift?
  • It seems that social media is moving away from broadcasting towards intimacy and sharing. Does the pandemic accelerate any trends/behavior/psychology within in social?
  • Do you think business models and advertising as a primary revenue stream with have to change w/ it?
  • 3 Data Points...
    • Let's say you are approached to invest in a consumer social business that has a network effect. Their user base is 20k DAUs and is growing 30% MoM and they have not yet monetized. Catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 questions do you ask? 

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Leah Solivan
  • Oren Klaff
  • Jason Whitney
  • Darren Bechtel

Each investor discusses a portfolio company that did not survive and why it was that they failed.

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 144_Investor_Stories_144__Post_Mortems_Solivan_Klaff_Whitney_Bechtel.mp3
Category:general -- posted at: 12:00pm EDT

Ramy Adeeb of 1984 Ventures joins Nick on a special Crisis Coverage installment to discuss Why Facebook Should be Broken Up; SV Hype vs Returns; Amara's Law; and VC's Track Record Predicting Trends. In this episode, we cover:

  • Backstory/Path to Venture
  • Tell us more about what was it like working with Vinod. Is there anything he taught you in specific that was most influential? And how about Pierre?
  • How has the crisis impacted the way you invest as well as your thesis?
  • Have you seen an adjustment, a correction or a slow down amongst the Series B, C and growth stage investors? Any predictions on how long this period will last? 
  • What are some tips for founders when pitching to VC's over zoom? 
  • Quick highlights of your thesis (stage, sectors, geos, check sizes, etc.)
  • You've said that one should "Avoid the hype - whatever is en vogue you should run away from" why should the hot trends be avoided?
  • What's Amara's Law and how does that inform your thesis?
  • Any stats or data on VCs ability to predict the future?
  • Let's say someone describes one of your investments as feeling more like a product and not a company... how do you respond?
  • You've mentioned your focus on passing quickly... What are your tips and tricks to get to a quick pass?
  • You've said that Facebook is a monopoly and should be broken up... why?
  • In your estimation, what's the most significant adverse effect from WeWork and The Vision Fund that no one's talking about?
  • Tech is often credited for creating significant value but some also argue that it destroys jobs and widens the wealth gap. What's your take on this and how, someone like Bernie Sanders, in office could affect venture?
  • When it comes to the economy and the effect of tech on the economy, we've seen unemployment fall to an all-time low while the # of people 'not working' is at an all time high... Are we measuring the right economic indicators when it comes to unemployment and also inflation?
  • I also came across something you tweeted about Tech Pessimism. You quoted: "We too often focus on the drawbacks of a new tech while taking its benefits for granted." Meanwhile "To be Alive in the tech obsessed 2020 is to be among the luckiest people who have ever lived.” Can you give us some examples of Tech Pessimism and your take on it? Do you think there's a resolution?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


David Rabie of Tovala joins Nick on a special Crisis Coverage installment to discuss Finding PMF, Raising Series B, & Navigating a Startup Amidst the Pandemic. In this episode, we cover:

  • I was just checking and we had you on the show back in March of 2016... that was over 4 years ago, pre-launch, during your Kickstarter campaign.  So crazy how much time has passed.  Can you refresh us on the origin story of Tovala...
  • We've invested in the pre-seed, seed, Series A and now Series B round... and we're fortunate to have a front row seat while  you and the team built an amazing company but bring the audience up-to-speed on the last few years... what have been the key milestones/inflection points?
  • Your revenue was strong, hovering near mid seven figures ARR, until Q3 2019 when it took off at a growth rate like I've never seen... accelerating past $10M ARR and continue a rapid growth rate, even during the crisis.  What changed that caused the ramp?
  • How do you define PMF and when did you know you reached it?
  • What tech companies do you compare yourself to and how do you measure up?
  • North Star Metrics?  LTV, Payback, Yearly Spend, Retention?
    Overall, how has the crisis affected your business?
  • What are the major levers/measures you've taken to reduce cost?
  • Talk to us about raising the B round -- and How it was trying to raise as the pandemic hit?
  • Let's talk about what's next for Tovala...  On the oven side of the business... currently consumers have to purchase your smart steam oven -- a countertop device similar to a toaster oven.  What does the future look like on the hardware side and is the Tovala countertop steam oven always going to be necessary to enjoy Tovala food?
  • And the food itself... what are some options available to expand meal kits available beyond just Tovala's kitchen? Any other strategic partnerships or growth channels that are high priority opportunities for you after closing the B round?
  • Greek chicken and vegetable pita... Any plans for breakfast or lunch?
  • From my family members... When are you going to have a pizza or a hamburger?
  • How would you describe your leadership style and the culture you've established at Tovala?
  • What advice would you have for founders building a D2C tech company?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


On this special segment of The Full Ratchet, the following Investors are featured:

  • Grace Isford
  • Somesh Dash
  • Steve Blank
  • Mark Suster

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Direct download: 143_Investor_Stories_143__Strange__Unusual_Isford_Dash_Blank_Suster.mp3
Category:general -- posted at: 12:00pm EDT

Taranvir Johal & Salman Elmi of Tavolo and Top Figure join Nick to discuss Racism in Venture -- A White, Male VC Threatens Black & Brown Founders. In this episode, we cover:

  • Quick personal backstory and origin story for Tavolo -- Taranvir.
  • Quick personal backstory and origin story for Top Figure -- Salman.
  • So, there was an incident last week in Minneapolis where venture capitalist, Tom Austin (who has since been fired by F2 Group), confronted you in your building's exercise room.  You guys captured a video of the incident and it begins with w/ Mr. Austin pointing his mobile phone camera back and forth at the three members of your team -- as he confronted you. Walk us through what happened before and after the video recording.
  • Very, very reminiscent of the Amy Cooper video from NYC's Central Park -- shocking similarities between your situation and the Cooper situation.  It's nothing short of tragic.  What were you feeling as this was happening to you?
  • What has it been like growing up in a society that is not structured to promote your success?
  • Tell us about your experience as black and brown founders in the startup world?
  • How does what happened change the way you go about business in the future?
  • Thoughts on the murder of George Floyd and impact on the black community?
  • What are some of the changes you’d like to see most from a systemic point of view?
  • What do you think are some actionable steps investors and founders can take to respond to what’s been going on?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


Jim Douglass of Fulcrum Equity Partners joins Nick on a special Crisis Coverage installment to discuss Pandemic Effects on B2B SaaS and Healthcare -- Total $ Invested, Multiples, and the Exit Environment. In this episode, we cover:

  • Background/path to venture.
  • The thesis at Fulcrum.
  • Investments since COVID -- Anything additional you need to see or changes to process to get to investment?
    B2B SaaS -- impacts to existing contracts and funnel opportunities thus far?
  • Recently, we had Byron Deeter at Bessemer on the show talking about why this is the seminal moment for Cloud and b2b SaaS companies, do you share that excitement with Byron or where do you stand?
  • Previous downturns have had a deeper and longer term effect on growth stage (volume and dollars) then the earliest stages -  what are your predictions for the near term and mid term on growth stage investing?
  • How do you and your partners think that investment multiples will be affected?
  • What about the exit environment...What have you been seeing in the current exit environment and how do you think it will be impacted over the next 12 months or so?
  • I believe the entire team at Fulcrum has experience as an operator -- How does this impact the way you work w/ portfolio companies?
  • Substantive changes to operating plans?
  • Healthcare Services framework and approach to investing?
  • What actions are you seeing CEOs take and/or what are you encouraging they take in order to maintain operating culture in this distributed work environment?
  • "3 data points"
    • Independent of the COVID situation, let’s say that you are approached by a B2B SaaS company that is currently doing $5M ARR, has a 5:1 LTV/CAC Ratio and MoM growth is trending at 10%
    • Catch is you can only ask for 3 data points to make your decision.
    • What 3 questions and data points do you ask for (can not ask for P&L, Operating Plan, Cohorts, etc... need to be specific data points)?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.


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