The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Jonathan Hsu of Tribe Capital joins Nick to discuss how to Acquire Data, Build Abstractions and Do Research. In this episode, we cover: Walk us through your background and path to VC What's the thesis at Tribe Capital? How do you define PMF? Could you explain what the 8 Ball diligence framework is? When is a deal too early -- how much data (or over what time continuum do you need data) in order for the model to assess appropriately? Just for evaluation or also sourcing? Can you apply this tool to a range of business types (ie. SaaS vs. Maretkplaces vs. User-Growth, etc.)? How to avoid false positives? Data looks great for early phase -- early market… How do you know that it isn't luck and the company didn't stumble onto something with early signals of PMF but they don't have the insight or flexibility to evolve the business through growth and scale phases? What aspect of early stage investing don't you use data for? Why is this not appropriate to measure with data? Loss ratio goes down -- do you think it increases potential outcome size? On the evaluating side of things, it seems like Tribe has a big emphasis on using data to understand early product market fit. What is your definition of product market fit? Does Tribe conduct portfolio support in a similar way? What happens when data and intuition clash? Do you always lean one way or another? Examples of either? How do you account for exogenous factors? Ever been a scenario w/ a company misrepresenting data (fake data)? How long did it take to build this out -- what is the current team structure of investors, developers, and data scientists? Where do you and the team at Tribe need to improve most? 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: Courtney Reum Mark Suster Sarah Tavel Jason Calacanis Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach. 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.

Check Warner of Ada Ventures joins Nick to discuss Structural Disadvantages in Venture, Investing in the "Overlooked," and Open-Sourcing the VC Fund Raise and Investment Playbook. In this episode, we cover: Background / Path to Venture The thesis at Ada Ventures Is it tough getting the up-rounds from Tier 1 VCs when the profile of the founders doesn't look like the standard, obvious profile that's been funded for the past couple of decades? You look for founders and markets that have been mis-priced… what are the three that you believe to be underpriced? Novel scout program -- how many scouts and who are they? How did you recruit them and how are they incentivized? Talk about your recent fundraise… How did you determine how much to raise? Walk us through the timeline of the fundraise. What resonated most w/ LPs? What was the biggest surprise? How did you create urgency and get LPs to move from a maybe to a yes? What will you do differently next time? You and I have discussed your seed investing framework -- how you make decisions on investments. Can you give us the broad strokes? You have an incredibly transparent approach… from your fundraising to your sourcing to your evaluation. Are there any concerns about revealing too much about your strategy? You publicized your investment process and shared some of your funnel data. Have you noticed any differences or changes (relationships with founders, LPs, brand, PR) from when you shared the inner workings? Many issues w/ racial and gender diversity in the news… what message would you like to share re. Diversity? "3 Data Points" Let's say you are approached to invest in a consumer user-growth company with 30k DAUs, and has a 10% WoW growth rate for the last 4 months. Catch is you can only ask for 3 data points to make your decision. What 3 questions do you ask for? 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: Ramy Adeeb Somesh Dash Jeremy Neilson Minnie Ingersoll 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.

Niki Pezeshki of Felicis Ventures joins Nick to discuss Finding Markets with Long-Term Tailwinds; Macro Impacts on Venture; and Robust vs. Fragile Data. In this episode, we cover: Background and path to venture. Thesis at Felicis and your focus there? How has the pandemic affected your approach to investment? You've mentioned that you look for market tailwinds, especially tailwinds that will be lasting. Right now, we're seeing a number of shifts that will have lasting effects -- which are you watching most closely? Why do you think the public markets have, largely, stayed high during a very large health and economic crisis? Can you give us an overview on your three-part investing framework for making investment decisions? Where do you look for these large shifts, creating opportunity -- aside from Mary Meeker's report? How do you make sure you are current on-trend instead of getting anchored on data that's old or fragile? What are you looking for in the business model that indicates to you that it is not only the correct approach but can lead to transformational changes in the industry? In which types of businesses do you like to see product-focused founders versus marketing-focused founders, is there a heuristic or systematic way that you think about this? You mentioned that business is a formula and that it's clear early on whether it's going to work or not -- can you give us an example of the formula? What's your approach to coaching and advising founders? There's this fine line between being overbearing w/ advice and not providing enough insight in an area that could derail a company. How do you strike the balance? What keeps you up at night... the ones you invested in that you shouldn't have or the ones you didn't invest in that you wished you had? 3 Data points: Let's say that you have a consumer SaaS company that is doing 300K in ARR, growing 20% MoM and that's all you currently know about the company. 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: M.G. Siegler Grace Isford John Vrionis Ash Rust 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.

Henrique Dubugras of Brex joins Nick to discuss the Blazing Fast Path to $B+; Binary Outcomes; The Fintech Revolution; and A New Approach to Employee Comp. In this episode, we cover: Background -- path that led to Brex? Origin story for Brex Tag-line / One sentence overview What's so different about Brex? Why is more than just a credit card? How has the pandemic affected the business thus far? What do you offer that no one else does? Who do you consider to be competition? What is the moat here - why can't another well funded startup replicate your offering? A criticism I've heard is that, when businesses need credit most, when bank balance/working capital is low, is when Brex cuts off access to credit. What's your response? How would you describe your leadership philosophy? Are you recruiting/hiring? Is the approach different while 100% remote? What's the compensation structure at Brex? One of the fastest companies to multi-billion+ valuation -- more pressure w/ all that capital? With the raise and expectations some suggest that the outcome is binary -- is it? What advice do you have for early-stage, pre-A, founders trying to build a venture scale business? 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: Ryan Gembala Scott Dorsey Elizabeth Yin Jeff Fluhr 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.

Gigi Levy-Weiss of NFX joins Nick on a special Crisis Coverage installment to discuss What's Next in Gaming; The True Essence of Product-Market-Fit; & Investing with an Emphasis on Retention and Engagement. In this episode, we cover: Background and path to venture. The thesis and your focus at NFX? Did you invest in Houseparty when it was Meerkat? You've written about your thoughts on PMF... How do you assess whether a company has real product market fit? What advice would you have for those still trying to find it? With this focus on product and retention... What's your response to investors that say distribution is more important than product? Why do you think VC interest has been declining in the gaming space? What has been the history/evolution in the gaming sector? What's next for gaming -- Is there a step beyond the platform? Are there any niches or segments within gaming or esports where you see the most potential? 3 Data points: Let's say a gaming startup comes to you... they have 50k DAUs, K value of 1, 20 % MoM growth... What 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: Scott Kupor Melody Koh Tom Tunguz Jim Douglass Each investor describes the most unusual situation or pitch that they've encountered as an investor. 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.