Episode #196: Minnie Ingersoll, TenOneTen, “I Do Believe That Innovation In Our Country Is The Huge Bright Spot”
Guest: Minnie Ingersoll is a long-time Silicon Valley product leader and operations executive with experience building and scaling impact through elegant technical solutions and great teams. She recently moved back to LA after 20+ years in the Bay Area and is excited to be a part of the growing tech ecosystem of Southern California.
Date Recorded: 1/7/20 | Run-Time: 1:18:41
Summary: Minnie and Meb start the conversation by getting into venture capital investing and the nature of investing in early startup companies focused on software and data. They get into Minnie’s firm, TenOneTen Ventures and some of what goes into the process of evaluating potential investments.
Minnie covers some companies she and her team are particularly excited about. The conversation then shifts to discussing the VC presence and growth in LA.
Minnie then moves on to discussing more about the investing process, covering some of the criteria the TenOneTen team think is important to see in founders they are working with, including, the entrepreneur being aligned with the belief that there’s a billion-dollar outcome.
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Links from the Episode:
- 0:40 – Welcome to our guest, Minnie Ingersoll
- 2:22 – Her work in VC
- 4:34 – Types of companies TenOneTen invests in
- 5:38 – Deal flow
- 9:58 – Global valuation resources
- 13:48 – Investments TenOneTen is currently interested in
- 19:00 – Fixing online marketplaces
- 21:10 – The Meb Faber Show – Episode #48: “The Rare Coin Market Can Go Up Dramatically, Quickly”
- 21:34 – Challenge of VC
- 22:52 – Other companies that are exciting
- 27:30 – Follow on investments
- 28:36 – Another investment Minnie is excited about
- 31:00 – The Meb Faber Show Episode #177: Alex Rubalcava, “We Want To Help Build Companies That Are Solving Hard Problems That Matter”
- 32:27 – The rise of LA and her podcast
- 34:19 – Accelerators
- 42:24 – Syndicates
- 43:06 – The Meb Faber Show Episode #173: Tom Williams, “I Want To Be That First Call In The Darkest Of Days”
- 44:54 – Power law outcomes and unicorns
- 50:43 – The Meb Faber Show Episode #165: Chris Mayer, “I Do Think The Biggest Challenge…Is Keeping It, Holding On To It”
- 50:46 – 100 Baggers: Stocks That Return 100-to-1 and How To Find Them (Mayer)
- 50:51 – Demystifying Illiquid Assets: Expected Returns for Private Equity (Ilmanen, Chandra, McQuinn)
- 52:46 – Minnie’s thoughts on the VC landscape
- 51:48 – Minnie’s time at Google
- 59:00 – Minnie’s time with Shift and being part of the fundraising rounds
- 1:02:10 –Code for America
- 1:05:02 – Impetus for joining TenOneTen
- 1:06:06 – Experience as a woman and mother in this space
- 1:08:50 – Excitement on the horizon
- 1:11:09 – Most memorable investment
- 1:11:37 – Coffee Can Investing:: The Low Risk Road to Stupendous Wealth (Mukherjea)
- 1:12:39 – Favorite resources
- 1:13:04 – Twenty Minute VC Podcast
- 1:13:05 – The Full Ratchet: VC
- 1:13:07 – Tech News Podcast
- 1:13:07 – Ride Home Podcast
- 1:13:09 – Pivot Podcast
- 1:17:55 – How do people connect with Minnie: LA Venture Podcast, firstname.lastname@example.org
Transcript of Episode 196:
Welcome Message: Welcome to the “Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambia’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Meb: Hey, podcast listeners, it’s 2020, dawn of a new decade. Man, that’s hard to say. Today, we’ve got a great show for you. Our guest is a partner at venture capital firm TenOneTen, is also co-host of the great “L.A. Venture” podcast. She is a longtime Silicon Valley product leader and operations exec. She started her career as an early product manager at Google where she cofounded the access team, a cross-functional product, policy, and engineering team that spun off Google Fiber. After 11 years at Google, she left the beginner own entrepreneurial journey as a co-founder and CEO of Shift, an online marketplace for used cars.
In today’s episode, we discuss TenOneTen and venture capital investing. We touch on the firm’s focus on software and data and the growing VC presence in Lala Land. We cover some of the criteria they emphasize when making investments, and we even get into some companies the firm is excited about, including one that leverages AI to assist doctors. Please enjoy this episode with Minnie Ingersoll. Welcome, Minnie Ingersoll.
Minnie: Thanks, Meb. Glad to be here.
Meb: Live and in person, a local L.A. native?
Meb: Oh wow. Well, I’m originally a Colorado, North Carolina guy, but I see you also did a stop for a while in the Bay area before transplanting down here.
Meb: When was the move?
Minnie: After high school.
Meb: No, no, no, back to L.A.
Minnie: Back, oh, a year ago.
Meb: Okay, so relatively recent. It seems to be kind of a one-way street recently. A lot of San Fran…I feel like there used to be a little bit of a San Fran-L.A. rivalry many years ago. Not so much anymore, but it seems to be a lot of immigration coming in. We’ll get to all this. But you’ve had a lot of stops along the way, we’ll get to that. But fellow podcast host, how’s it going? Listen to a lot of the episodes. You guys are doing a good job.
Minnie: I love podcasting. It’s great. It’s a good way for me to learn too.
Meb: Your day job as a venture capitalist. Tell me a little bit about y’all’s shop. What are you guys doing?
Minnie: Sure. So I am at TenOneTen, we are based here in L.A. and we’re early stage, sort of seed stage investors into mostly, sort of, the nerdier side of companies. So software and data is our focus and, you know, it’s a great position to be in. We’re often giving someone their first couple million dollars. So someone who’s been, you know, raising money from friends and family for a year, getting, you know, a product just in market but really needs a million or two to build it to the next level and we get to be that first institutional money.
Meb: So traditionally, that would be what people would call Series A, sort of?
Minnie: We’re pre-Series A.
Meb: Pre-Series A. Because it’s funny because I’ve been investing in privates for about five years and I wish almost there was a common definition because what used to be seed, now there’s pre-seed and extensions and Series A, B, C, D, E, F, G. Anyway, so you guys are kinda pre-Series A.
Minnie: You know, it’s really someone’s raising $1.5 million or $2 million, should just be what we talk about is how much money are they raising and that should get them to the next step where they’re gonna raise $8 million.
Meb: So y’all are taking down the whole chunk? Are you a part of a group? How’s it usually work?
Minnie: Yeah, either way. So, you know, one of the things I care about is listening to the market and listening to entrepreneurs and what do they need. And a lot of entrepreneurs we talk to need someone to lead their rounds. So we like to lead rounds but we don’t have to lead rounds. So that might be that we are writing a $750K check into a $1.5 million round. So even, and that could be a lead for us, but we’re not taking that whole round. So it’s a pulling together the rest of the round with the entrepreneur and making it so they’re in a good position to get to the next stage.
Meb: Okay. So you say you guys focus a little bit on data in tech. It’s funny because I smile because I remember when some of the crowd funding startup portals, going back many years, I mean AngelList, AngelList says they only do tech. And then I see literally the stuff that comes across my desk. It’s like bra companies, you know, soap companies. Like, it’s like you could probably say anything is tech at this point. Tell me a little bit more about what you guys are actually, you know, looking for or investing in.
Minnie: Yeah, no, it’s super interesting. So on my podcast, I was just interviewing somebody. I said, “What do you really invest in?” He said, “I want to invest in a company that I think I could run,” which is an interesting…So if you are a bra company, I don’t think I could run that. I don’t really know how to launch a direct-to-consumer brand. It’s not my strength. So we tend to invest in companies that resemble companies that we have built before. So my fund, we’re all founders of companies that have been in software and data. So we like to fund things that we feel like we understand. Not that I could run, not that I want to run, but that I can be some value-add to that entrepreneurs. So my background’s in computer science. I’ve been a product manager for many years. I like to get involved where there’s a real piece of like product-market fit to figure out.
Meb: That’s kind of a nice place to be in. I mean, for me, like the really early stage seed stuff where it’s just like a dream and an idea seems so hard, you know, once you start to see a little bit of a product and traction. All right. Talk to me, how do you guys go about sourcing and finding these deals? Is it people just listening to the “Meb Faber Show” gonna send you an email and that’s that? Do you guys do it through traditional VCs where it’s just your network? How do you go about finding these?
Minnie: Yeah, no, I think the former. I really think that everyone who listens to shows should just send me great companies. Perfect.
Meb: All right. Deal. We’ll put your contact info in there.
Minnie: Yep. Great. No, please do. I mean there is a lot of…it is a deluge of companies constantly. I’ve actually gotten really good. You can throw my email up there, no problem because it is a constant deluge of things. You know, the first screen is just, is this approximately right? Which is I get a ton of people who are raising $10 million for a direct-to-consumer bra company, which is like pretty clearly not what we do. So I mean a lot of it is our backgrounds and, sort of, people know us and know us for certain things.
And so my partner Gil Elbaz, he started the company, Applied Semantics, that built AdSense and then he ran Google’s L.A. office for many years. So, many of the product managers, engineers who used to work for Gil, let’s say, they then think, I’m gonna start a company. They think, who do I know in VC? They think, I remember the Gill is a VC at TenOneTen. So that’s kind of a common thing. But that sort of implies that someone knows us and was an engineer at Google. And certainly, we get tons of interesting companies that we fund that are actually much further afield and we like that.
So one of the things we like is actually big industries that are ripe for disruption because they haven’t had tech before. And so I’m looking at a trucking company out of Nebraska right now, or it’s not really a trucking company, but it’s tech for a trucking company. And so those come to us in different manners. That one I actually met, I guess sort of through an accelerator.
Meb: My grandfather on my dad’s side was actually a truck driver out of Nebraska. My old man grew up on a farm. When they moved into town, it was like 100 people. So if you ever come across Holstein, Nebraska, it’s a tiny town that most people in Nebraska have never even heard of outside of Hastings. If you do your due diligence, you see a sign for it, you’ll know that’s where a part of my family comes from. So, okay, where do you guys stand in the whole allocation process? Because I know, so you guys have been around the VC shop, been around for like five, six years. You, you joined about a year ago. Y’all have invested in 30, 40 companies?
Minnie: A little bit more than that, but yes, order of magnitude, totally right. Which is, so we had a fund one that was started in 2013, Vintage, 2013, ’14 and then we raised a fund two. And I was in the lucky position, which is a nice position to be in, which is I got to come in when fund two was just being deployed. And so we’re now about 50% deployed from fund two and we’re gonna kick off fundraising for fund three soon.
Meb: Did you guys get upset or do you just kind of smile because didn’t Travis…
Minnie: Oh yeah.
Meb: …come up with a name that’s pretty close to y’all’s name? What’s the name of his new fund?
Minnie: I think it’s 10-100 or something. We’re TenOneTen. Totally fair.
Meb: I was laughing because I was like wait, I don’t think that’s the same company.
Minnie: No, we’re totally like very different from Travis, I think, in many different ways.
Meb: Okay. Let’s stay on kind of themes on what you guys are looking for, industries. Maybe get a little more specific as you can. You mentioned trucking. How do you sort of funnel down what comes across your desk as data and tech has such a wide funnel or filter? Are there any areas that you think in particular are y’alls focus or is it something that you’re just pretty open to just about anything?
Minnie: It depends which axis to go on to some degrees. So one axis is like, I know that one of my partners, if there’s an interesting proprietary data set involved, something that’s built up over time let’s say, or aggregated from multiple sources, he gets excited. This is Gil, he’s spent a lot of time with data sets and proprietary data. He will get excited about anything like that. So if anything comes across the transom like that, I know to send it to him because I know it’s just got a higher likelihood of getting him excited.
Meb: How does he even come across those? I mean it’s funny because, you know, we’re a public investor and my pin tweet for the longest time because I get this question every single day, it was people would email me and say, “Meb, where do I go to find global valuation historical for stock markets around the world?” And there’s about a dozen sources. Listeners, we’ll add it to the show notes. But every single day someone would ask me. And so there’s all sorts of different sources, different-looking, you know, cousins of each other. But people are certainly always on the lookout for unique. And to me, that’s not even a unique one. That’s one that just, you gotta kind of dig for. How rare is it these days? How hard is it? And then how often is it that it’s not public, that it’s totally proprietary? Like, it seems like it’d be that’s kind of the goal to the end of the rainbow almost.
Minnie: How public is it, like, that Gil is the person to reach out to?
Meb: Or just like how does he even find these? Like do the people just, like, say, “Okay Gil’s the man and I got…?”
Minnie: Well, I think they’re…okay, so there’s kind of two different sorts of VCs, I think. Like, I think people are sort of more inbound or more outbound, right? And there are some shops that have a particular thesis and they think that, you know, the agriculture business is ripe for disruption and therefore, they’re gonna figure out who’s solving that problem. And then there’s, I think, a majority of VCs who are much more open to entrepreneurs coming to us and telling us, “I’ve spent 18 years in the trucking business, there’s an opportunity here,” and help educate us about the opportunity.
We’re much more of that ladder sort, which is someone comes to us. But, you know, one thing that would be common, and I did this when I was running my company, which is I was running an online marketplace. And so I wanted to know who has thought about online marketplaces, which investors have done a lot of investing in online marketplaces? This is 2013, so the VC wasn’t quite as exploded as it is now. But so someone might say who has invested in satellite data companies or, you know, who has invested in location data companies? And so then they’ll look at, you know, Descartes Labs is in our portfolio and they have satellite data for agriculture. So then you’re building something sort of similar. You’ve got drones and you’re using drones to predict traffic patterns. Well, you can kind of see, oh, an investor who liked Descartes might also like my drones for traffic patterns.
Meb: You know, it’s funny. So building off what I was talking about earlier with my dad’s side is we come from a farming family. And so we still do, we actually just had Milo harvest recently, manage some farmland in Western Kansas, which is really an incredible asset class. It’s almost impossible to allocate to. It’s almost like 95% private and not private being institutions but sort of individuals and families. But despite that being one of the largest asset classes in the world that is kind of uncorrelated…anyway. But it’s funny because it’s still very…I mean it’s getting a lot more tech focused, the tractors, you know, and everything. But still, I look at it and I’ll go out to Kansas, I’ll say, how are people even involved in this at all? It’s like all rows, it’s all just like a huge grid. Like, you can see in probably 5, 10 years, this is just gonna be like almost completely automated, right. Anyway, so it’s an area that I’m sure AgTech, there’s a ton of disruption going on. But also with prices so low, it hasn’t been a great investment for the past three or four years, five years.
Minnie: Yeah. And I don’t know about exactly as an investment in the agriculture as an asset class, but you can easily imagine that increasing crop yield by 15% can have a huge impact. And I’m a believer in sort of space is the next frontier. But not like space travel, although that’s interesting as well. But more like using drones, using satellites, all of what we can do with that information can really affect the decisions traditional industries are making.
Meb: Oh, sure. Like, I mean, even just like the plot of a quarter of land, there’s like some hot spots that have satellite or you could see from above that historically you just say, well, are just not gonna get as much yield there. Anyway, so talk to us a little bit about, I mean maybe feel free to use any examples, the past year, you cannonballed into the pool, full into VC. Any particular companies you guys have invested in over the past year? Anything that you’re particularly excited about?
Minnie: Sure. I mean I can tell you about a couple that I’ve sort of led the investment on because those are always exciting. So I did one recently, I hope I’m gonna do it justice. It’s called Stratic and this is building…it’s static pages for your WordPress website. So over a third of the internet is hosted on WordPress and growing. So everyone is using WordPress, but it’s bloated. It’s got all these plugins. It’s increasingly insecure, so open to hacking and slow. And I’m not talking about just your personal blog. I mean, you know, “USA Today,” Google uses WordPress. So there’s this other trend, which is to have static pages.
Meb: For the listeners, what does that mean?
Minnie: Just a page of text essentially. And so that can load really quickly. You can’t hack a static page that’s just hosted on a content delivery network. So she’s got this great…she and her two cofounders, they’re building this tool that allows you to convert your WordPress site into a static page but still use the WordPress frontend so that if you’ve got a large marketing department, you don’t have to give up what you know. Whereas now we have the TenOneTen webpage is a static page, but you have to have a developer or someone who can program in order to make those changes.
So she’s kind of got the best of both things there. But then her CTO is the person who invented PHP, which is the programming language that WordPress is written in. And so he spent his whole career working on making the web faster. So I think it sounds sort of like a small thing to be able to sort of compile your WordPress site, but it’s actually an interesting technical challenge and I think they are the perfect team. So what I’m looking for is not just do I believe in the trends, but also do I believe that this is the right team to solve that problem?
Meb: How do you determine that? Like, you know, I’m a quant, right? So a lot of this stuff for me is a little squishy and I find it harder, often more obvious in retrospect. But what are you looking for when you say the right team? Like is it that they have a background, they’re just passionate? What?
Minnie: Yeah, well I mean my previous lessons of what I have done the past couple of decades is just scale companies. And when you’re scaling companies, what you’re doing is just interviewing people all day. So I think my title, I know my title was COO at both my previous roles, but actually I was just HR, just recruiting. And so I think it’s a similar sort of challenge to hiring people. Like there isn’t enough traction at the stage that I’m investing in. It’s not really a spreadsheet thing. It is really the people need to be able to sell me on their vision, like explain the trends to me, the macro trends that are coming together. So they need to sell me, but they’re gonna need to sell future rounds of funding. They’re gonna need to sell all their future hires because I want this team to go from 7 people to 200 people. So they need to be able to bring on people and they’re gonna need to sell customers. So that ability to explain the vision, which the CEO, Miriam, is fantastic at selling that vision is one of the big things I’m looking for.
Meb: Sticking on this company for a second, how does this monetize? Is it something that they sell? Like it’s just like a SaaS model where they’re selling to the end-user or is it only enterprise? Like how does it end up working?
Minnie: Some of it’s early enough that some of the thing that we will be working on together is just what are the best channels? And so they have lots of customers who are on their waitlist and eager for this, but making sure that those are the right customers, right? And so generally this is replacing your hosting provider. So people are used to paying for their website to be hosted and this would replace that subscription. So you could say just price it exactly the same and go through similar channels or there are different creative things you can do. She could be selling into agencies who maintain and produce these websites on behalf of. But thinking through those different channels and testing those and deciding which to test and how much resources to put behind them is still some of the art.
Meb: That’s interesting. We’ve got a WordPress blog. A couple of my favourites, we’ve got a couple of buddies who still have…listeners will know these guys, but Jake at Econompic and Aswath Damodaran, NYU professor, both still have the old-school, like, Blogspot, you know, but it’s like the original theme from 2006 or whatever it is and they refuse to change and it’s such a great relic. We’re on version, I don’t know, 10.0.
Minnie: I still have my Blogspot…I keep all my t-shirt…I mean I don’t keep all of them but I remember because I was at Google when we acquired Blogger and that was…so I have those t-shirts proudly still in rotation.
Meb: I could probably find some on eBay somewhere. By the way, eBay’s…I’m listing a cooler on eBay right now. This is totally unrelated to anything, but it is the god-awful worst experience. There’s a couple of these legacy old-school, multibillion-dollar companies that are just ripe for…and I’m sure there is some. Unrelated. I just had to throw that in. Okay, so what other companies in the last year, any others that come to mind that you’re particularly excited about or good examples of kind of how y’all think?
Minnie: Yeah, although I could have picked up on a thing about eBay. But you look at all the things that have been picked off of eBay and Craigslist and so the company that I’ve been running for the past number of years is an online marketplace for used cars. And the whole idea being we spent a lot of time think through how centralized versus decentralized a marketplace do you wanna build. And you get to eBay, which is very decentralized, and there’s no guarantees of anything in terms of your experience or the shipping or anything else, right? And so, and yet building a very centralized marketplace where we’re doing the pricing and we’re doing the customer support, you know, is a much harder proposition. But I think it’s an interesting change in our whole economy, essentially, having marketplaces and peer-to-peer marketplaces. And I haven’t formalized my thoughts enough to know exactly what are all the implications for society by things have changed into these peer-to-peer marketplaces.
Meb: Well, here’s a good example, and this is something that listeners will probably start sighing hearing me talk about, but there’s been this trend of, you know, essentially securitizing, you know, or standardizing items. So you mentioned there’s a lot of sites now where you’re like, look, I wanna sell my iPhone X. I can go on to Gazelle or any of these and there’s like a very specific price, which is great, you know, and then vice versa if you’re buying or selling something. But then there’s the 95% of products that, you know, it’s still a mess. Why doesn’t there exist a site, you know, that’s almost like a consignment clearinghouse where you’re like, look…I was trying to do this in my closet the other day. I was like, I have all these old clothes. I’m not gonna list them on, I don’t even know, this is gonna be embarrassing, Poshmark.
Meb: ThreadUP or whatever. And I was like, I just wanna mail them all in to someone. I’ll give them, I don’t know, half the value, just you sell them or donate them or whatever. And for men, I know there is for ThreadUP for women. For men, there’s nothing like that at least I could find. But it’d be cool if there was…and there’s some areas of the world where this has happened. We had on the podcast and long time ago, Van Simmons, one of my favourites, who helped to invent the grading for baseball cards and comics. So, you know, if you’re gonna buy a Superman One, here’s the rating. And so you know exactly what you’re getting. And in so many other areas of the world, it doesn’t seem like anyone solved this. There was a company I saw recently that’s kind of doing it called Remove based out of San Francisco.
Minnie: Meb, if you wanna be an entrepreneur in San Francisco…
Meb: No, it’s a nightmare. To be an entrepreneur is…and the problem with the VC is you’re like…
Minnie: Being an entrepreneur is a nightmare.
Meb: It’s a nightmare. It’s the worst. I’m starting to get some grey hairs now, losing my hair, bags under my eyes, been doing this 10 years. But being a VC is kind of like being an…I mean people think it’s an easy job in many standpoints because you hold the keys, but it’s still, you’re running an entrepreneurial company.
Minnie: Absolutely. I mean, the fun thing is that there’s really five of us. As I said, I have two partners, but we’re a small team and we’re in L.A. L.A. is big, so I’ll go and I’ll sit in the corner of one of our portfolio companies because our portfolio companies, some of them have, you know, 300 people and they have a couple of floors and some space. So I’ll go and kind of sit in the corner and ask to like use their coffee machine from time to time because like, as a startup, I mean we’re a startup VC fund, we’re still squatting around town. So it definitely still has all that entrepreneurial hustle, which I like.
Meb: So yeah, it’s funny because the back in the day, 10 years ago, I used to be like, yeah, I wanna start that idea. And then having been through this a few times I was like, no, I just wanna find someone else to do it. So if you find anyone working on anything like that, keep us in mind because I think that’s a problem to solve.
Minnie: I could tell you about another…you started that…it was a little tangent on the eBay side of things, but…
Meb: Yeah, let’s hear it.
Minnie: I could tell you about other companies that are really exciting. We invested in a pretty early company called Probably Genetic that it’s really direct to consumer, which is not our user…it’s a direct-to-consumer genetic test for targeting parents with autistic children. And the founders are these incredibly…knowledgeable about bioinformatics and have a passion around rare genetic diseases. And it takes, and I’m gonna forget the number, but it takes on average like seven years for someone to find out that they’ve actually got one of these rare genetic diseases. And yet nowadays with what we can do with genetic testing, it’s possible to find that out much sooner and avoid a lot of pain and frustration.
Meb: Is there enough, sort of, information and markers available today, and this is from someone who just doesn’t know, in 2020 to, kind of, give you insight into that information?
Minnie: Yeah, I mean it depends which part you’re asking. So one, can you diagnose it with a genetic test? Yes. And you actually don’t need a full genome sequence. You can do the exome sequencing, which is what they’re doing. And two, you can start with saying we’re gonna do some number of the most common rare genetic diseases. Two then, the other part of the question, which I think is another interesting question, which is, and then let’s say you’re diagnosed, does that help, kind of? Like, so great, now you know you’ve got something, and the answer is it does. And so the reason they’re starting with autistic children recently diagnosed is because you will spend years as a parent trying to help your child learn to speak. When if you knew that the chances are one in a million that your child is going to develop proper speech, you might avoid some of the pain of going through years of that sort of therapy. So, or you might change your protocol. I’m not sure that’s the best example, but there’s a variety of times your treatment protocol changes.
Meb: And so how does the company set up? Is it pure genetic tests? Do they then connect to providers? What’s the model for the company? Where are they?
Minnie: Yeah, so they’re live, if anyone would like to check out Probably Genetic, I think it’s probablygenetic.com and it is a variety of partnerships. So they’re not doing the sequencing themselves, which is increasingly becoming a commodity. And even the bioinformatics piece, once the sequencing has happened, they’re actually outsourcing that for now. But I think they might bring that in-house. But, you know, again, early days startup style. So it’s really around helping…it’s almost more around helping parents navigate this because there isn’t a process right now where if you went to your physician, you have the best physician, you’ve got some top, you know, university physician, it’s not easy to know how to then order a genetic…the right test and get that back.
And right now, it usually still costs thousands and thousands of dollars. Whereas actually if you have an autistic diagnosis, your insurance will likely cover it 80% of the time. So there’s a variety of things. They’ve just made it much easier and it’s some about that, but it’s really about the passion of these individuals where I truly believe that Lucas, who’s the CEO, if he weren’t doing this, he would still be doing this. Like, something like that. Like, he has a passion around solving rare genetic diseases.
Meb: Well, there’s so much going on in that space. I mean, I studied genetics back in college probably before my career path diverged, but it’s been super interesting to see it develop. I mean a lot of the companies nowadays, the Ancestry and the 23andMe. And I’ve always wondered why, if I was a competitor to 23andMe, if I was a billionaire, I would say, why wouldn’t we just do this but have the test be completely free because aren’t they like 100 bucks or something? And then just try to build the world’s largest database of medical information. Anyway.
But you’re starting to have all this information, but it’s sort of this critical juncture where it’s still a lot of it…some of it’s useful, but some of it’s unclear. So I saw a startup the other day that’s doing really well. It’s targeting like the microbiome and they sequence it and then they prescribe some probiotics. But it was weird because it’s unclear if it seems like the science is there for…you get the diagnosis right, but the prescription.
Minnie: Well, this kind of goes to my point about you were saying it’s kind of squishy. It is kind of squishy. So what I wanna do is back someone who has a PhD in bioinformatics who knows actually what is state of the art. And so, you’re right, a lot of what, you know, at the stage that we’re investing in, it is still the squishy stuff, which is this person, the person who knows exactly what is possible and is going to be able to understand the state of the industry and execute. So that’s the other piece, right? Some people are great at selling. You also need to couple that with the ability to execute.
Meb: And is y’all’s shop set up as one where, all right, so let’s say this company or another one starts growing, does well, do you guys then lead following rounds? Do you hand it off, are you on the board, are you involved? How’s it work?
Minnie: It depends. A lot of times we’re kind of agnostic about taking a board seat because one of our main goals is to help them get to their next milestones and, at some point, they’ve outgrown our need. And also, we’ll then have other portfolio companies who are back needing our help. And so, you know, at this point, if a company is…if it’s coming to a vote of the board, that is a very bad sign. Like, we shouldn’t be at the point…like these are small companies and I might be having weekly meetings with my companies when they’re really going through like busy, you know, product launches, that sort of thing. And so, you know, my influence should not be determined by whether or not I have a board seat at this. So it’s not super important. What’s important to me is that I have a good relationship and feel like we’re actually able to add value. And yeah, the board seat, sometimes we take them, sometimes we don’t. So I am on the board of Stratic, I’m not on Probably Genetic.
Meb: All right, cool. I’ll give you one more spot. Any more companies that cross your brain?
Minnie: Another local L.A. one is HealthTensor. So HealthTensor is like an AI assistant for doctors. Helping them pull out diagnoses and write their notes essentially, which doctors find this tool, the team that’s built it really smart, AI/ML engineers who’ve built this tool for doctors. Doctors love it. That’s great. But then you get into the go-to-market and you’d say, well, you know, doctors can love it but you’re selling it to hospitals. This is a huge long sales cycle. I’ve seen that. I don’t necessarily wanna always play in that space. It’s a tough space.
But what they’re actually doing is talking to the hospital CFO or the people in charge of looking at insurance reimbursement and they can run historic data. So they can say, look, we’re gonna parse through all the doctor’s notes from the past six months, year worth of data and we’re gonna pull out what you could have billed but didn’t bill. So a doctor might be…I might be treating you for one thing and knows you’re obese, but we didn’t necessarily bill out the recommendations for the full treatment there. And so they can run through and do a much better job of classifying. And doctors love it because it makes the doctor’s job much easier because doctors are spending way too much of their time sort of classifying their notes. But then it’s a good go-to-market strategy to actually be able to work with the doctors, which is where their passion is.
Meb: You know, it seems like such a messy, archaic world still. I mean we talk a lot about this with sports where, and analytics being a quant, you know, that there’s a lot of evidence in the NFL, for example, we’re in the playoffs right now, where the coaches just make decisions that go in direct conflict of what all of the historical odds would say. And there’s some very clear biases with like going forward on fourth down. But it would be similar to me in a doctor setting where so much of it is not yet computer-assisted. You know, I mean there’s very obvious examples through history of like the radiologist and stuff where, you know, computer’s just much better at coming up the diagnosis than maybe the doctor on his own is. And so it’s still surprising to me that you haven’t seen, and I’m sure it’ll happen and this sounds like kind of what this company is thinking about, much more of an AI…maybe it’s AI-assisted sort of world.
Minnie: And maybe it was on your show with Alex Rubalcava where he talks about radiology. And I think he makes a good example, which is and then you think radiologists all go away because AI can do radiology better. But actually, the radiologists become the really intelligent value-add thing and we just have way more radiology and all of a sudden we’re doing…we have radiology for your pet. And I think so the interesting implications of where that’s going. And then I think you also always have to look at the incentives. So you follow the money. And I think one of the big things that’s interesting in healthcare right now is this move to value-based care where it used to be that the CFO of the hospital or the hospital was doing the best when all the beds were full. And that was always the incentive was, you know, if you get shoulder surgery and then you get another shoulder surgery, they bill twice. And there’s no real downside to that. And in fact, your incentives are to have the beds full and now we’re moving to value-based care, which is where the incentives and the payments are around fixing the shoulder, keeping people healthy. But I think that opens up a whole lot of interesting investment opportunities too.
Meb: Yeah, well you’re seeing what One Medical is getting ready to go public, I think here soon. So IPO news.
Minnie: I’ve seen a lot of like One Medical for therapists or One Medical for…
Meb: Well, the therapy space, you know, I mean given kind of where our world is, seems like a lot of opportunity there as well. And with a lot of the trends we’ve seen, it seems like an area that’s pretty ripe for disruption being the wrong word, but advances. So anyway. All right. Before we move on, anything else? Last chance. We could talk about this all day. Any more companies that are on your brain, anything you’re excited about that you like to fund that you haven’t seen? Any other thoughts?
Minnie: You know, I think it’s interesting being in L.A., that’s a big trend that’s been exciting is just the rise of L.A. I mean I moved here only a year ago after a couple of decades in the Bay Area in the Sand Hill Road scene. And I think half of our portfolio is L.A.-based and hopefully growing.
Meb: So you guys have done what, 20, 30 podcasts?
Minnie: Oh my gosh, I love the podcast.
Meb: You’re a vet now. A lot of those L.A.-based shops?
Minnie: So it’s called “L.A. Venture” and I’m only doing L.A. VCs. And I keep being tempted to…because I have a lot of friends from Sand Hill Toad who come down here and they say, “Let me be on your podcast.” And I was like, should I do it if they’re on like a few boards down here? And the answer is no, I’m only doing L.A. VCs.
Meb: Do you guys end up crossing over with some of these firms, co-investing?
Minnie: All the time.
Meb: All the time?
Minnie: All the time. So a lot of…as I said, like $700K might be a typical check, but it might be a $2 million round. So Stratic, the company I talked about, was a $3 million round, but we led it with a $750K check. So we’re always trying to figure out who’s the right co-investor for this company.
Meb: You mentioned…before we started recording, we were talking about kinda, you know, L.A. and the state of investing and everything else. And L.A. is funny because, despite all of the money here, I mean it’s still in many ways a media town and even in our world, the public investing, it’s like old school. It’s like bonds, you know, capital group, PIMCO, now DoubleLine, real estate, and still a lot of media. But you have seen the percolation of venture money coming in, which is great. But you mentioned some ideas about accelerators. Talk to the audience a little bit about what accelerators are. Are there any in L.A., I know there are a few, and anything going on in that world?
Minnie: Yeah, I mean there’s a few interesting things. So, yes, historically you might think that L.A. venture investing, I think 5, 10 years ago people thought of it as media e-commerce, but L.A. graduates more engineers than any other city in the country. So it’s not that L.A. is not…
Meb: Where are they all from?
Minnie: UCLA, USC, Caltech, Harvey Mudd, UC Irvine, is that L.A.? You know, Southern California, there’s…
Meb: You’re a Caltech girl, right? You have some ties.
Minnie: I am. I am close with the Caltech crowd for sure. So I grew up across the street. I went to a high school called Polytechnic. And so I was across the street, so my number one criteria was not to go to Caltech. So I did not go to Caltech, but I do have close ties there. But just wanted to clarify that L.A. graduates a lot of engineers. And it used to be, a decade ago, if you wanted to be entrepreneurial and be an engineer, you would then move up to Silicon Valley. And that’s just changed. That has entirely changed. And I think that it’s changed mostly because L.A. has…the flywheel has started going, but it’s also changed in large part because San Francisco has become more complicated if you will.
Meb: Yeah. I was gonna say like there’s these weird fractures. I mean, so I used to live in San Francisco before moving here, and then Lake Tahoe, moved here in like ’05, ’06 to start Cambria. I love the city. Amazing, and particularly Tahoe. L.A. also for many different ways. I mean they both have a great quality of life. But as you said, in the media, in particular, a lot of commentary over San Fran last handful of years, complicated. But L.A., we got the beach. I mean I was gonna ask you about your secret surfing society.
Minnie: Yeah. I don’t right now. Right now, I’ve just been surfing closeouts in Venice pretty much, so there’s no secret surfing there.
Meb: I call myself like a wave storm surfer. For the listeners who don’t surf, that’s like the $200 board you can get at Costco. It’s a big foam board. I grew up on skis, but I actually just took my two-year-old out skiing. Anyway, we’ll have to go surf sometime.
Minnie: I’ve been taking my four-year-old and six-year-old out surfing.
Meb: Wow. You just go right in Venice?
Minnie: Yeah. There’s no secret. We’re really like right under the Venice pier.
Meb: Yeah. Good. Well, all right, so accelerators.
Minnie: Accelerators, right. So you asked about accelerators. So I think it’s interesting. So on the podcast, I’m interviewing the L.A. VCs and I did a fairly recent episode with Paul Berko at Amplify, one of the most sort of traditional accelerators. And he said, “You know, we’re not an accelerator anymore. We’re now a pre-seed with benefits,” which I really liked. Yeah. So, and then Laurent Grill from Luma Launch, which used to be one of the other accelerators in town, and maybe I had another. I had a third person who I thought was at an accelerator and they’re like, “Oh no, I’m not an accelerator anymore.” Mucker Labs, which used to be, and it hasn’t changed as much. They’re not running batches though, very few people are running sort of a traditional accelerator has like a batch of companies.
But I think what’s interesting there are a variety of different things. One is that entrepreneurs, people, students are getting more educated, everyone is getting more educated about entrepreneurship. And there’s this huge wave of entrepreneurship where everyone wants to be an entrepreneur, understands what entrepreneurship is, wants to join a startup, you know, wants to change careers every few years. There’s none of this, like, I’m at my job, my steady job for 40 years. And so what accelerators used to offer was some of that education that is now, I think, available at every USC class, you know, anyone who wants to be in entrepreneurship can take the entrepreneurship class and get some of those basics.
And furthermore, funds are going upstream and downstream a lot more and are much more sort of traditionally we used to call it…like Andreessen was the first to really get into, we’re providing all these ancillary services. But now like a fund like mine, even though we’re small, we roll up our sleeves and get quite involved. And to some degree, that’s some of what the accelerators used to provide. So I used to be a mentor for accelerator XYZ, and I like doing that, but essentially, I’m now a mentor for my portfolio.
Meb: I wonder how much…you know, so you make a couple of good points almost that, you know, there’s a lot more templates for the basics of an entrepreneur. I mean, again, 10 years ago, if someone’s like, “Hey, I wanna start a company, but oh my God, I have no idea what to do. Do I get a lawyer, do I…?” And now you can just go on to, I don’t know, YCombinator or whoever has the forms and the classes, a lot more education. And it’s funny because my opinion on this is somewhat flipped. Like maybe, I don’t know if it was five, seven years ago, in my head, there’s a lot of this kind of money flowing into super early stage and I was like…we spent a lot of time thinking about sentiment and public markets, which can drive them, particularly at extremes.
I was like, I wonder if this is just too much money flowing in? But then on the flip side, I said, you know what, it’s actually…particularly with the entrepreneurs you get to meet, and the ideas, it’s actually like really incredible positive benefit, I think. You know, where all of a sudden everyone’s like, “Oh, well, we now understand how this works, we can focus on just growing great companies.” And I think you’re seeing the effects of that where a lot of these companies, whether it’s Facebook, maybe not as much Snapchat here, but these companies that mint all these millionaires…
Minnie: Honey. Honey is our big win. Honey is our big $4 billion win for L.A.
Meb: That was recent, right?
Minnie: Yeah. It was just a couple months ago, end of, yeah, Q4 of 2019, $4 billion exit, hadn’t raised that much money and only from L.A. investors. Whereas Snapchat had raised from the Silicon Valley…I mean one of the big things to get an ecosystem going is having angel investors who have some money. And so, you know, Silicon Valley benefited a huge amount when Google went public and people who were there early made money could become angels. So yeah, I hear you on money flowing into venture. But I actually think what really dwarfs that is the number of people flowing into entrepreneurship. And so, you know, certainly everyone says, well there’s a lot more seed funds. Do we really need another seed fund? I’ve heard that. Well, we’re inundated with entrepreneurs and they’re inspiring entrepreneurs. I don’t feel like I’m having to just sort of go beg my brother to start a company or something.
Meb: You know, it’s funny. So I’ve been very vocal about my journey on the private side for the last five years. And for a public guy, you know, it’s funny because if you watch and you spend all day in public markets, geopolitical news, you turn into like the most depressed person on the planet. All you wanna do is expect the market to crash and go down. And that’s part of just the media, news in general. If you’re a private market investor and you focus on early-stage entrepreneurs, you’re like the most optimistic person on the planet. All day long, you see these incredible, passionate people that are focusing on amazing problems.
And it’s almost every day, certainly every week where I’m like, holy crap, that’s an amazing idea. I never thought about that. What a cool approach. Great success. And all you wanna do is save money and put it into these investments. So it’s a very odd barbell, mentally at least. So listeners, I encourage you to get very involved. You don’t even have to invest, but at least starting to follow, you know, what some of these companies are doing. What are some good resources? So you mentioned accelerators. Who are still the big couple, YCombinator, Techstars? Are there any more in L.A., really big ones?
Minnie: Big ones. I mean, like I mentioned Mucker or Amplify, well, so Mucker just hired someone from Sequoia just to show what the trends are happening. Mucker, which used to be like our local accelerator, who just had a $4 billion…they incubated Honey. And now they just hired a partner out of Sequoia to join their team. But, you know, so there’s that aspect. But also, I think getting involved as an angel investor, one, it makes you a happier person, in my opinion. I’m biased but…
Meb: Yeah. I 100% agree.
Minnie: Just reading the investment memos. So you don’t even have to invest, but sitting…I sit on syndicates. I used to sit on more syndicates than I sit on now, but just, there’s a lot of…you know, I listen to “The Full Ratchet.” I like listening to podcasts because I live in Pasadena and none of my work is in Pasadena. So like, I listen to Nick Moran on “The Full Ratchet” and, you know, he runs a syndicate that anyone can…you have to be a credited investor but you can join his syndicate, read his deal memos. I sit on my ex-Googler syndicate mailing list and you see these deals go through. And the great thing about syndicates as an angel investor is you can write a couple thousand dollars checks. So you actually can build a portfolio. Because with venture investing, we’re betting for the home run and we’re okay if a lot of our investments go to zero. And so you’d wanna make sure…you don’t do angel investing where you end up writing 3 checks for $25K, $50K and then realize that’s all the money you have to invest.
Meb: I wanna talk about that. But first, that’s funny because we had Tom Williams on the podcast who has done a lot of syndicates and we’re talking to him and he’s like, “Well Meb, how many syndicates do you follow?” And I said, “Well, all of them.” And he’s like, “What are you talking about?” I was like, “Well, I sign up to follow all of them because I just like seeing all of the deal flow and reading the memos and downloading the decks. And, you know, don’t invest in many of them, but I’m just love seeing what’s going on.” And I said, “You can do that for free.” And listeners, I’m not gonna tell you, but it’s self-accreditation. You could sign up on AngelList and We Fund, [inaudible 00:43:41] Republic, Seed Invest, all these other sites and at least follow along. And you can do it where you don’t even have to put real money to work. But eventually, yeah, a lot of them have like $1,000…
My biggest gripe is the company, at least…you guys are different because they’re in the VCC. But the companies that do syndicates and will have these very large, wealthy, by definition, because you have to be accredited in many cases directly relevant investors. But I’d say it’s…I’m trying to think of the percentage that don’t do updates. Maybe it’s half that don’t update or do any ask because there’s so many times where we’ll talk to these companies, say, “Hey we’re looking for this. Do you know anyone who would be a good head of sales or yada, yada?” And we also did a crowdfunding round. So from someone who’s been updating it, like it’s a very massive resource. And it’s crazy, to me, the ones that don’t do it. So companies, you should do it, at least use that resource of impassioned and involved investors.
And not to mention one of the biggest benefits from a private investors side is a lot of the tax benefits. We talked about this, we’re not gonna get into it now, but the QSBS rules and benefits of investing in these companies. You can also do it in IRAs, room for another episode. What I wanted to ask you about is something I struggle with, which is…and this is true also in public markets, but it’s particularly obvious in private markets because in public markets, you buy the U.S. stock market, you get 1,000 securities. You buy a venture portfolio and you maybe have 30 names, 50 names, etc. And these power law outcomes like Honey where for a fund to return 3X, 5X, 6X, 7X, 8X, 9X, 10X, you know, it’s often dominated by these few massive winners. Can you talk a little bit about that, how you think about that? I’ll have some follow-on questions, but it’s something I struggle a little bit with.
Minnie: Yeah, I’m not sure I can solve your struggles. But yes, you’ve summarized it well, which is when we’re looking for these, you know, I think the typical venture investor would say they look for people, product, market as the three criteria. And market, we have to believe that there’s a billion-dollar outcome here, give or take, give or take a billion here, a billion there. And so we have to also believe that the entrepreneur is aligned with that and that’s what they want. And so, you know, you have to at some point think about like what are your different exits here? Not every PayPal can just…not everyone has $4 billion sitting in their back pocket.
But I think one of the interesting things that…I don’t have the numbers on it on the top of my head, but seeing a lot more sort of nontraditional acquirers, in a sense, which is the traditional old-school industry needs and wants tech and innovation. And so there’s now acquirers that are Target or Albertson’s, Greycroft here who’s $1.2 billion under management, a venture down the street, they have like a new tracker fund with Albertson’s because they’re seeing interesting opportunity there.
So I think just thinking about the large exit that’s possible, but it also means Reid Hoffman talks a lot about blitz scaling. Like we are pushing our entrepreneurs to there is no supply line left. Like, they’re going for it. But that leads to…back to the mental health part. I mean that leads to, you have to be ready to sign up for that journey. And some people don’t. And I think if I start another endeavour, you know, it’s probably like a podcast. I’m doing not doing this for the billion-dollar exit.
Meb: Well, here’s kind of what I’m getting at is, so you know, the VCs have a little bit different mandate because they have investors. But if you’re an individual and let’s say you have this good problem, which is you invest in 100 companies, how many ever go bankrupt? Some of them return your money and some of them do two, three, five times. But let’s say you start to have a few of those unicorns or 100-bagger investment, you know, just the company that hit that product-market fit, is crushing it whether they did any follow-on rounds or not. But let’s say your investment is now seeing in the multiples, but let’s say it’s at, say, 100X, 50X, whatever it is, but the future looks incredibly bright.
How does one start to think about selling? Because it could be a situation like an Uber or many other companies that could go up 10X from there and all of a sudden now you have 1,000-bagger, which would return the…make all the other 99 positions irrelevant. But also, you have the very real risk that it could…this is a bad example because it’s not really VC-funded, but WeWork where all of a sudden, you know, you get to this point and then it goes down 80%. But there’s a million examples of this. Is it something where people think about selling a little along the way? Is it something where…Do you have any hard and fast rules or it’s a case by case basis?
Minnie: Different thoughts on it. So one is from a…if I’m like the employee point of view because that’s where I’ve sat is I saw Google go public and have a lot of people holding onto a lot of Google, right, and not knowing…I mean it was a great outcome for people to make $1 million, but maybe you could sit on that and make a lot more or, you know, fill in the blank. And then, you know, my friends at Twitter, my friends at Uber, all of these companies going public. And I tend to tell my friends when they’re going public, like figuring out about how much you wanna sell and sell half of that and then sell another half a little while. And that way, you know, every six months you’re happy if in six months it goes up or down because you’re just selling half. But I mean you’re more the investor on that side of things.
And then from the investor point of view, the way I think about it is sort of a couple-fold. So one is we are reserving half of our investment as in 100% of our investment. You know, we put $1 million into a company, we’re reserving another million that we could put back into that company as our prorata into a next round. And we like to be as data-driven…not surprisingly being sort of a data-focused fund, we like to be as data-driven as we can be around milestones that we want to see that would make us believe. And so, but that’s having very insider knowledge, right? I mean we are sitting on the board of a company, we know what is realistic to expect, but we like to try to be as disciplined as we can about knowing the milestones and then saying if those milestones are hit, then we will reinvest and put more money back in.
Meb: I think it’s smart to do that ahead of time to avoid the problem of the goalpost being moved. You know, I mean so many investors love to play kinda their whole portfolio and decisions just shoot from the hip and at least establishing the benchmarks gives you an anchor from which to work with. Can’t tell you how many times in the public markets people just say, you know, just buy it and they’re gonna play it by ear. But I think you gave us some good examples about a way to think about it. Look, listeners, you get a 50, 100-bagger. By the way, reference, we’ll put in the show note links, the old podcast we did with Chris Meyer with one of my favourite books, “100-Baggers in the Public Markets.”
The beauty of private equity, and Cliff Asness actually wrote a piece about this recently because for the longest time people said private equity should return more because of an illiquidity premium. But he kind of had this thought experiment where you flipped on your head and said, look, we know how poorly people behave in public markets. Every single day, you can open up the “Wall Street Journal,” turn on CNBC and see “how smart or dumb you are” all day long. He said part of the beauty of private markets is you can’t sell something even if you wanted to.
Now, at least there’s now some secondaries and things for employees, liquidity and everything else. But it also removes that daily Mr. Market psychosis of the temptation to sell things. And for many of these 100-baggers, which this book examined in public markets, it took them 10 years. You know, it’s not people in their head, they think I’m going to buy something and devil’s, they’re like, “Oh my God, amazing. I’m out. I just doubled my money.” But in private markets and in public, listeners, it’s often the top five…all the returns in the public stock market’s determined by the 5% of the massive winners.
So being a private market investor can help you get around that problem at least because you have no more ability to sell at all. I don’t know. But any last thoughts on VC? I wanna chat about a few more topics. Anything else on your brain about as we look into the future decade, any changes in VC, any thoughts on things you wish would change, be different, excited about, depressed about?
Minnie: I mean generally, obviously I…well, maybe not obviously. I’m sort of depressed about the state of our country, say, on many different things. And I think innovation is the big bright spot in that. So, you know, where I’m not a heavy public market investor, but like I don’t really want my money in this, I don’t really want it in that. But, you know, as a GP, I’m putting a lot of my own personal money into my fund because I do believe that innovation in our country is the huge bright spot. I think there’s lots of interesting then interplay, intersection between private enterprise and government. You know, sitting at Google for many years, you saw that a lot of things that you’d like…our government should decide what freedom of expression is, what should be allowed, what shouldn’t be allowed. But actually, Google and Facebook are making those decisions.
You know, we were talking about genetic sequencing. Well, you know, if you’re worried about your data and Google having your data about like what websites you went to, well it’s a whole different thing when you’re peeing in a toilet and the toilet knows…you know, it was analyzing your pee, and your shower knows your moles and your…you know. So figuring all that out is going to be in, you know, a lot of times private tech companies. And so making sure that there’s good interplay between how we want the rest of our institutions to run, I think is a lot of opportunity and a lot of responsibility, I guess.
Meb: Yeah. 2020 finally feels like we’re living in the future now. I laugh about that because some of the things you’re talking about, you’re starting to see come to reality and it’s wonderful to see, scary a little bit, like your former company. When did you join Google?
Meb: You have kind of like the hits background. I love talking about this for a little bit. We got Stanford, Harvard, Google, Shift, which we’ll talk about. I was in San Francisco same time, so I have a lot of early Google friends. There’s not too many Mebanes in the world, but that’s why I had the original mebane@gmail because I had some Google friends pass me along that email address. I used to crash the Google parties in Tahoe before they went public. So you probably attended some of those.
Minnie: I did the Google and Burning man. Yeah, same thing. Same thing.
Meb: I used to joke, I said, “Man, this company must be making so much money because they threw the best parties.” So at Google, what were you doing to Google?
Minnie: Well, I mean, as I was saying earlier, like a lot of what we were all doing was hiring because I joined when it was 500 people. I left when it was 60,000 people.
Meb: My Lord.
Minnie: Yeah. So we doubled in size every six months or something for a long time when I was there.
Meb: And then so, wait, so what was the order? It was Google then business school?
Minnie: No, business school then Google. So yes, like what did you say, the hits…my mom always says that…
Meb: I was halfway expecting you to show up with the San Fran puffy vest.
Minnie: Yeah. Yeah. No. No, my mom says I look good on paper, it’s once you get to know me. Yeah. So, you know, I’m from Southern California, I went to Stanford. I’m kind of a flip-flop-wearing person. I like to surf the beach break, you know. And then I went to business school and I’m not really a…you know, I’m not really a spreadsheet…I mean whatever, I studied math and computer science, like I can handle a spreadsheet, but like wasn’t of interest really. So when I graduated, I had no job. All my friends had jobs like months in advance and I really didn’t…like, I did not know what I wanted to do. So I went…
Meb: So this is ’02?
Minnie: ’02. Yeah.
Meb: Well, that was like the internet armageddon. So I graduated college in 2000. All my buddies had started moving out there in the late ’90s to San Francisco and they’re like, “Meb, you got to get out here, there’s jobs everywhere.” So they’re like, this is the best time. It was the best bubble ever. I loved it, but I caught the end of it. So I was there like in the aftermath.
Minnie: Well, the first time I was at LivePerson, we IPOed in March of 2000, so this is why I went to business school. And hits still around, still a public company, but at the time, not a profitable public company. And so it was gonna have a lot of layoffs. So anyways, that was 2000.
Minnie: LivePerson, it’s like chat for e-commerce. And at the time, it was this notion that people were scared to put their credit cards in. This is ’99 maybe or so. And so people were scared to put their…you know, abandoned shopping carts. It’s still a thing when you see like the pop-up, LivePerson powered a lot of that, which made a ton of sense to me in…you know, it still makes sense actually. Anyways, so we IPOed then.
But the point was that startups weren’t recruiting out of business school. No one wanted an MBA. I don’t, like, highlight…still, I don’t, like, highlight that I have an MBA. But yeah, so I joined Google and like, the first thing we all needed to do was just hire more people because there was so much money that, you know, Amit [SP] used to stand on a literal sandbag and be like, you know, “I’m gonna discuss the numbers, but you can’t discuss this outside of Google because we’re doing so well, we don’t want people to know,” but we couldn’t go public.
So the first thing I worked on was actually our ability to go public. So I worked on our billing system, which at the time, we were still already multiple billions of dollars in revenue, but in 20-cent increments. And so we had to close the books every month. We needed Oracle to produce an invoice, but we were collecting logs from a server that’s based in Hong Kong for Chinese internet search or with a Japanese advertiser. And, you know, the server would go down and all the logs wouldn’t be available and yet we needed to close the books.
Meb: So basically, you’re the one responsible for that guy who just sent $100 million in Google invoices?
Minnie: An accidenental…yeah, yeah.
Meb: Listeners, there was some guys, it is a couple of years ago, I think, wasn’t it, who had sent, it was like $100 million to Facebook and Google and someone else in just invoices that got paid. And, you know, he’s in jail somewhere now, but it was like a whole operation. Anyway.
Minnie: Well, but there was a lot of that to sort out, which was…I hope Google doesn’t mind me saying this, but to some degree, if we didn’t know…this was a pre-public company, but like if we didn’t know how much an advertiser owed us, we just wouldn’t bill them because we didn’t know. And so we just figured they won’t complain if we underbill always because, like, the billing system was hard and there was a lot of…you know, I mean, it’s way more complicated now, but a lot of people who wanted only clicks on the weekdays, but on the weekends and, you know, you had to make sure everything was coordinating all you’re doing.
Meb: I mean, look, it happens at smaller companies too. I personally have known four companies, either friends or that we’ve known that have had, five actually, money embezzled, a nontrivial amount of money where like employees are just writing checks or whatever happening. A recent one was 4 million bucks, but just because it’s…you know, there’s money moving around. You know, it’s still happening. I don’t know how you get away with it in 2020, but people think you do. All right, so then Google then, then you had the…what was the inspiration to start Shift?
Minnie: Well, so I’d been at Google a long time there and I said things like, “I’m being really entrepreneurial.” Like, Google’s starting a lot of things. I had a lot of latitude. I was working with Chris Sacca very closely. We shared an office for many years at Google starting projects and I was like, “I’m being entrepreneurial. That’s why I’m staying.” I had been here, you know, almost a third of my life when I left. And then I went on maternity leave, actually. And one of my friends…I angel-invested in Shift when it was just a PowerPoint. I mean, pre-seed, it was just a friend of mine, so my angel investment. Then I went on maternity leave and he said, you know, “Maybe you could help me get it going.” And then I really became an entrepreneur and realized how ridiculous it is to say you’re being entrepreneurial when someone, you know, serves you quail lunch every day.
And so that sort of began my entrepreneurial journey. And I think for me the biggest hook was probably just that speed of entrepreneurship and being at a startup really suits me. Like I really like the…we’re not all buttoned up and we’re not like…I don’t know what I’m saying until it comes out of my mouth. And we were moving at a million miles an hour and building something that people really liked and were thanking us for building it. And so I just got hooked on that. I was waking up, going to sleep thinking about my startup and it was exciting.
Meb: Chaos is a better way to describe it. Hopefully, controlled chaos. And so you are also involved in a number of fundraising rounds too?
Minnie: Oh yeah.
Meb: What was that experience like?
Minnie: Oh yeah, it was just like we spent five years on Sand Hill Road, kind of. So we did a $3 million seed, a $20 million Series A, a $50 million Series B, a $30 million…I don’t know, we raised like $200 million.
Meb: Any fun stories from that time?
Minnie: You know, it’s just like looking back on it, it’s remarkable how little I knew. Because now all the entrepreneurs I see are way better informed. I don’t know how I managed to miss all this, but like our rule of thumb there was, we didn’t know who was the right investors and we weren’t as smart about it as the investor, as the entrepreneurs I see nowadays. But we used to say, “Okay, take the fun size, divide by 50, ask them for that much money, multiply by 5, and that’s what we think our valuation should be.” But like, we had…really, like clever, but that was like kind of our rule of thumb.
Lessons learned on mostly around like we got two great board members. We had DFJ and Highland Capital invest in us. They split our Series A and we ended up with two great board members. And I really learned how to…the chaos that you talked about, the pants on fire. I’m an operational person. Like I’ll go, go, go, go, go. And I really learned how to schedule my board meetings for three months in advance to talk about something strategic that we needed to discuss or else we would never….it would be so busy just like we were selling cars and we had pigeons that were shitting on the cars. I need to figure out how to like…you know, it was that sort of stuff. If I didn’t schedule the strategic discussion, I wouldn’t necessarily like have the time. So, you know, just figuring out your board members are so important. And so raising money was important, but intimidating for me, it was very intimidating to march into Sequoia and say like, “You should write me a check for $20 million.”
Meb: Well, they gave it to you.
Minnie: Yeah, right, right. But yeah, exactly. But I think, and you know, so figuring out how to navigate all of that, I guess.
Meb: And so there was also a pit stop at Code for America, right?
Meb: What was the kind of impetus for that?
Minnie: Yeah, I still really feel like I should be doing more in all facets of life. Let me just finish that sentence. I feel like I, like, should we be doing more all across the board. But Code for America is about bringing tech and government together and looking at how government and tech can really learn from each other. It’s not like let’s be the tech people who come and tell government what to do. But a lot of our experience of government is in digital services nowadays, so the digital interfaces. And so helping government kind of get into the 21st century around…at Code for America, we had three areas of focus: food, jobs, and justice. But like if you’re applying for food stamps in California, there is an application that takes 45 minutes, doesn’t save state, and doesn’t work on mobile.
So you wanna apply for food stamps? The answer is, “I’m sorry, you can’t use your phone to do that. Oh, it doesn’t save state, so if you get part way through, you’re gonna have to start back at the beginning.” And so you wonder why people are frustrated with government is because they’re used to having everything on demand. And like I live next to a woman who lives on the street, a homeless person who orders her Amazon to a fake address, but the Amazon delivery person knows to deliver it to her tent. But like you can’t apply for food stamps, it doesn’t work on your phone. So we need to find a way of better serving people. So anyways, as I was saying, some bright spots about our country and less bright spots.
Meb: Well, it goes back to that old kind of the entrepreneur ideas of frustration arbitrage, finding the areas that are just like total garbage. And government, obviously, is notorious for this. I mean, my God, I went to go get the new…California, you gotta get these Real IDs and even with an appointment…
Minnie: I did too.
Meb: Have you done it yet?
Minnie: Yeah. I went like five times.
Meb: All right. It took me like two hours. I had to go to like five different stations within the DMV and it literally could have taken five minutes, but just the most God awful experience on the planet.
Minnie: And yet, you know, there’s amazing when you get to work with government, the amazing people working in government and yet there’s not a lot of, there’s a lot of fluidity between my friends who worked at Airbnb and worked at Dropbox and worked at Google. And so if there’s a best practice around like designing a mobile app, like you better believe that everyone’s doing standup daily check-ins the same way if there’s some best practices because it’s carried. But there isn’t a fluidity where you were a city manager for Pasadena and now you’re the city manager for El Segundo. Like there isn’t…or you know, you’re at Airbnb one day and then I turn around and look you up the next day and you’ve moved over to the city manager’s office. And so figuring out how to make that actually work, I think it’s crucial because you don’t want Google making your decisions about how your data is used. You want som…you know, you want government, you want some intelligent entity. So yeah. So I did that for a little while.
Meb: And then what was the impetus for finally deciding to join TenOneTen?
Minnie: Well, so for me, it was moving to L.A. because L.A. is awesome.
Meb: Yeah, well that’s…you know, it’s funny. L.A., I moved here to try it for a year and fully expected to hate it. Being a mountain guy for a long time, I’m like, this is gonna be terrible. I’m gonna give it the beach a year. And then I was like, wait a minute, this is kind of the land of milk and honey, I love it.
Minnie: It’s really nice.
Meb: It sucks you in. And that was 12 years ago.
Minnie: Well, I get friends asked me a lot like, should I join this company? Should I join that company? Should I do this startup? And I always say like…like some people say like, “Join a startup with a person with a person you wanna become the CEO.” And I’m like, “No, join a startup that’s printing cash and growing like a rocket ship and like, there will be a land of opportunity.” And I feel like L.A. is going now from…I’ve always been in tech, so like, you know, I didn’t wanna be in Hollywood, but it really feels like a growing startup, which is exciting to be a part of.
Meb: It’s like the movie business but with much better odds, you know?
Minnie: Oh, much. Oh yeah. I mean being a woman in computer science is a good…it’s a nice place to be right now.
Meb: And by the way, talk to me a little bit about that. I mean, and also I’d love to hear a little bit about how you seem to manage so much. I have one child and it’s fucking exhausting. You’ve done that thrice over I believe, three you said, and also seem to manage a career. Talk to me a little bit about your experience over the years.
Minnie: Well, I mean it’s all mixed. It depends what day you ask me is really the true answer. But yeah, so we did manage to have three kids under the age of four and then like it was pretty clear we weren’t having a fourth because that was…I sort of like pushing myself as hard as I can until I hit a breaking point, and like the three kids under four, like, we had our breaking point. But to some degree…I’ve read “Lean In,” I participate in all the female mentorship groups. It really does feel like women, like the tenor of being a woman in business, a woman in tech has really changed the past three, four years or something.
It’s changed dramatically in terms of how many people are actively noticing that you’re a woman, reaching out hands to help. Like, I get offers to sit on boards beyond panels, whatever, because they’re actively trying to have more diversity of thought and gender and everything else. So that’s been exciting. I also have a stay-at-home husband so I have to kind of like qualify everything, which is my husband does all the work, which is fantastic. And by Monday, I am like, “Woo, I get to go to work. I’m so stoked to be at work today because I am exhausted.”
Meb: Do you see why I have a couch in my office?
Minnie: Yeah, this stupid standing desk thing, I just want a lying down desk.
Meb: Like the old “Mad Men” days, you know, except the martini part. I do my best work horizontal probably.
Minnie: But my startup journey at Shift, and like you said, like everything looks good from the outside but like it’s total roller coaster, like, shit shows what I was gonna say like up and to the right like upside down at times. And like it was useful for me to have something that I cared about more than I cared about work because I would have been just 110%, whatever, 100% all about work all the time and that’s all I would have done. And to have kids who are gonna drown themselves in the bathtub, you’re like, Oh, got to pay attention. That’s why I like surfing too because you might drown, and so you don’t worry about your PowerPoint not being done or something.
Meb: Well, you can come down to Manhattan Beach. We have the finest closeouts of anywhere. I was actually up in…drove up to Santa Barbara this past weekend. And it’s funny because you have these beautiful point breaks, but there’s 100 people on them like Rincon or Malibu. So need to get out at five…we’ve got a couple of other folks in the office that are in the same category of surfing. So you organize a trip, let me know, we’ll come join you in Venice.
As you look forward to the future in the next decade, you can answer this in a few different ways as you see fit., anything you’re particularly excited about, whether it’s in venture, whether it’s personal, any fun goals? The new year just rolled around, so any resolutions? Mainly, I’m fishing because I need one. I don’t have one yet this year. Listeners, send me a good resolution if you have one for me. And by the way, listeners, do not send me just “talk less” because I know there’s gonna be five of you a-holes that are going to say, “Meb, stop talking so much on the podcast.” That one’s already there.
Minnie: Oh, my God. That’s what I love going on your podcast, I get to talk a lot. I have the same problem when I host. I like to…I just wanna talk. I know I haven’t fully formulated my goal, but something about being optimistic. No, I just wanna keep doing a lot of what I’m doing right now. Like, I love it. I mean I’m so in my honeymoon phase of loving what I’m doing. I wanna keep listening to what entrepreneurs’ needs are, but I still see so many great entrepreneurs that I…I would fund a hundred times the number of entrepreneurs if I could. But you know, obviously, you have to be disciplined and make big bets, but nope, I’d just keep doing what I’m doing.
Meb: You know, I think it’s spot on. I mean, one of the reasons that the AngelList and all these other angel networks that I think is so interesting is that even if you wanted to put in a small amount, like say $1,000 just to follow along so that if, by the way, they then ended up doing a Series A or whatever, you can participate in the further rounds is an interesting to way to think about it. In the public markets, we used to call this…like Warren Buffet or someone would buy one share just so they’d get the annual report so they keep current. Otherwise, you forget about it and it disappears. But like you mentioned, it’s such a reviving experience to get to see all these wonderful entrepreneurs. And from someone who’s been on sides, it’s way easier doing what we do than being on the entrepreneur’s side.
Minnie: You can also be a mentor. So the other thing, like I did Techstars mentor.
Meb: Too much work. Too much work. You can be the mentor.
Minnie: But there’s an aspect of you can see then…like, so I did Techstars mentor program where I did female founder office hours. You can be a mentor and see…I think they have 12 companies in their batch. And you get to see 12 companies pretty quickly. You don’t have to like dig in and be like a permanent, you know, mentor. So different ways of getting involved.
Meb: What’s been your most memorable investment?
Minnie: Oh, I mean probably Google is, you know, Google…
Meb: Are you still a shareholder or you cleaned house?
Minnie: I’m still a shareholder, but my best investment was joining Google in ’02 and my worst was, you know, selling as much as I sold in like, whatever, ’05 or something.
Meb: Well, that’s the hard part. It’s the old Bitcoin pizza thing, you know, and you can apply that to almost any stock you own. In the public markets, there was a book a couple of decades ago where you guy’s talking about the coffee can portfolio, meaning you buy something, you put it in there and then just forget about it forever. Now, most people have a hard time doing that because life intervenes and often you have one stock that ends up becoming 25%, 50%, 70%, 80%, 90% of your portfolio. And that’s, for other reasons, probably unrealistic.
But there’s so many examples throughout history where it may have been a janitor or a plumber that saved over the years and just put money in the stocks and then just never touched them again. I think you mentioned DFJ and one of the guys from there I had heard on a podcast, he says his goal is to never sell, which again, would be nice if you have that position. But in the real world, it’s a little harder to do, but giving it time to compound forever. But you always end up having one way or the other, which I loved your advice about going halvsies because then you eliminated that hindsight regret because that’s the hardest thing is looking back and saying, “Man, I wish I had done XYZ.”
Talk to me a little bit, as we wind this down, what are some resources? You know, you mentioned accelerators, obviously, your podcast. Listeners, check out, it’s wonderful. I’ll add it to the show notes. Anything else either from a founder or early-stage investor that comes to mind that you think is particularly helpful?
Minnie: Yeah, I mean I’m mostly…I’m a podcast listener, so you know, I’ll subscribe to the strictly VC newsletters and things, but you know, I listen to “20-Minute VC,” “Full Ratchet.” “[inaudible 01:13:07.141] Ride Home,” “Pivot.” Oh my God, Kara Swisher. I love her.
Meb: The funny thing about Kara Swisher, years ago I used to just in my head, I was like, she seems so grumpy all the time, but I love her podcasts.
Minnie: Well, “Pivot” is way…I think “Pivot” is a step up. “Pivot” is her with Scott Galloway. I think it’s a step up from even just Kara on her own because he’s such a pissy big dog, a big dog.
Meb: Since you’re the VC, I can request this for…can you explain…So I subscribe to 75 podcasts. We have hired someone and pay him a not insubstantial amount of money, shout out Colby, and he curates those podcasts and sends us the top, say, five each week, which I think, by the way, is a fantastic use of resources. But all of this comes from the fact that not a single podcast app allows for ratings. And you’ve probably heard me drone on about this and it drives me absolutely nuts that if I was a podcast app and, I don’t know, 4 through 20 that are all undifferentiated, why not add up ratings and build a database to where they all think the discovery is about other shows? When in reality, at this point in 2020, most people have their shows, but not all the shows are good. So if you find one, let me know. I will invest because it drives me absolutely…
Minnie: So it’s not show-based. It is episode ratings.
Minnie: Dude, I could rate my own episodes and tell you which ones to listen to.
Meb: Right. So you’ve done, say, 30. We’ve done probably around 200. And again, like sometimes it’s not necessarily the fault of the host or the guest. Sometimes you just haven’t had a Snickers in a while or just whatever, the vibe just isn’t great. It’s not a great show. Sometimes you’re expecting it to be terrible, and then sometimes I think it’s a terrible show and the guests are like, “It’s amazing,” and vice versa. But almost universally, similar to Rotten Tomatoes, if it’s rated at 98, it’s probably good. If it’s rated a 10, it’s probably terrible. But we don’t have that.
Minnie: Well, also, could Colby do that and just make a new podcast that is “The Colby’s Curated Podcast” and I’ll subscribe to that?
Meb: It’s possible.
Minnie: Maybe I’m not interested in the same things as you.
Meb: So what we do is we just send out a once a week…yeah, I know. That’s the thing is like, I think there’s a big trend left for human curation. You know, we’ve been doing it with the Idea Farm for six, seven years now and it’s been a successful business but very niche to what we do. You’re seeing it some with other areas where it’s being successful and maybe AI will help out here, but still, it’s this curation that just isn’t…there’s areas where it’s just not effective. And so on the podcast, the problem as a business model is that Apple wakes up tonight, turns this feature on and then, you know, it’s done.
But the point is I just…and believe me, I harass these poor podcast founders all the time about it. Anyway, so listeners, you guys find one, let me know. Breaker is the best so far, it at least lets you like them, and the signal is extremely high. You can go sort Tim Ferriss or Joe Rogan or Kara Swisher by the most liked, and universally they’re great episodes. Now, just turning this into a hour-long Meb rant.
Minnie: There’s gonna be so much innovation in the audio space. And audio as an interface, whether it’s for podcasts or, you know, how we interact with all the content we consume.
Meb: Yeah, and voice too. You know, as far as the live, I was watching…as everyone massively complains about like the announcers during a sports game, it’d be wonderful just to turn them off and turn on someone else. Anyway. All right, so resources, podcasts, do you attend any of the like demo days or anything anymore?
Minnie: Yeah, I mean the best resources for me have been that I’m actually just good at asking for help about stuff and I encourage everyone…I see entrepreneurs all day long and it’s interesting how, I could tell you, I can sort them in terms of whether I gave him good feedback based on their like openness to it. There are people who like don’t…like, it’s very hard to pass. Mostly what I do is meet with entrepreneurs and don’t fund them, right? Like that is 99% of what I do. And so having them actually get useful feedback from the people that they’re interacting with is probably…I think a lot of people already out there in those mixes, but they’re not taking as good advantage of them as they could. But yeah, I go to the demo day type stuff, but I go sort of to see all my other co-investors as much. I mean, sometimes. Sometimes I’ll go ahead of time and meet all the portfolio companies and visit them before demo day usually.
Meb: All right. Where do people find more, what you’re up to? What’s all the best spots?
Minnie: You know, “L.A. Venture” podcast and then like, I’ll respond to emails all day long. Like, email@example.com. It is .net. You know, I’m an inbox 10,000. I don’t stress if I don’t reply to everyone, but like send them my way.
Meb: That’s my nightmare. I’m a zero guy. I can’t help it.
Minnie: Get over it.
Meb: I can’t help it. Minnie, thanks so much for joining us today.
Minnie: Thanks so much for having me.
Meb: Listeners, we’ll add all these to the show notes, mebfaber.com/podcast. Subscribe the show anywhere it’s found. My favourite currently is Breaker. Leave us a review. We love to read them, I promise. Thanks for listening, friends, and good investing.