#136 Precursor Ventures' Managing Partner Charles Hudson

Always take the most interesting path available to you. I think when you do that, you just put yourself in like interesting situations. And I've always just sort of tried to do what I think is the most interesting job on the table and go to the places where I think interesting people are going to congregate. And it's worked out for me. And I don't know that I've had much of a better plan than that than to show up and try to work hard.

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Hi Charles, thank you so much for coming on the show. Finally.

I'm so glad we can make this happen. I've been really looking forward to it.

I have been such a huge fan and I listened to like just a ton of your past podcasts before I saw that you went out like Jason Calacanis and then you also went on his pitch panel like some of like the most interesting comments or like interviews you've done and I just felt like I'm such a big fan. I noticed that you were originally from like Detroit, Michigan and then later on you went to Stanford and then you work at Excite Home. I have another guest who used to work at Excite Home, Charles Model. He used to work at Inside Home. And then so like I saw on your resume, I was like, oh, connecting the dots. And then you work at Int Q Tel, which is like, the CIA venture capital arm, which is, like, super legendary. Definitely want to chat about that. And then you work with Jeff Clavier, like, Encore. And then he also went on the show before. And basically, I feel like you have the most interesting life experience. And then now you're like, the board chair of, like, mvca, and then you're teaching a course at Stanford. You have your own fun. You're definitely someone like, I just really, really look up to. And to start the show, I would love for you to tell us a little bit more about what would be, like, one experience in your life that you felt like, kind of like, change your life trajectory and kind of like, make the big impact in your life.

Oh, I think that's easy. There are two things that happened that are related. One was I took what was then a random internship at a company called Excite before we'd even merged with that home when I was in college, mostly because I was really curious about the Internet and I wanted to work it. I literally just wanted to work at an Internet company and figure out, like, how does this stuff all work on the inside? And I really, really enjoyed my time at Excitement. It was really fun. And while I was there, I met this woman, Amy Chan. And Amy sort of took me under her wing and was like, hey, my husband is starting. He's running this venture capital fund for the CIA. He could use some help. I think you should go interview with him.

I didn't even know what venture capital was, but I trusted Amy, and I ended up working for Gilman at Ink U Tel. And so I think if I hadn't ended up at Excitement, I probably wouldn't have met Amy. If I hadn't met Amy, I probably wouldn't have met Gilman. If I hadn't met Gilman, I wouldn't have ended up in Q Tel. And I'd probably be doing something very different than what I'm doing today. So I think sometimes in life you really never know where serendipity is going to come from or what are the little micro decisions that you're going to make that are going to have a huge impact on your life.

You kind of, like, say it, it's luck, or like, kind of like, you know, serendipity. But I also feel like you must have some characteristic that kind of make you really special for her to be like, oh, okay, I'm gonna refer you to my husband. Like, you know, getting on this career journey what would you say are your unfair advantage or kind of like characteristics that you feel like you have that make you more successful than like your peers?

I really have always struggled to answer this question. Here's what I can tell you is like my philosophy for these things and it's worked well for me. One is like, always take the most interesting path available to you. So when, when it came time to take a job when I was graduating from Stanford, my options were Goldman Sachs, some of the big consulting firms in Q Tel. And I had one other. I had some other offers from like very in the moment, late 90s tech companies. And I remember thinking to myself, like, Goldman is a really high prestige job. Like, it's, it's a really high prestige. My parents will be very proud of me if I tell them I work at Goldman Sachs in New York City, no less. But I was like, this in Q Tel thing is probably never going to come around again for me. If I don't do this now, I'm never going to get a shot at the chance to work for the CIA's venture capital fund. And I think these other jobs I'm looking at will kind of be available to me later in my career. So I'm going to take the kind of risky, interesting thing. And I think when you do that, you just put yourself in interesting situations. So that's 1, 2. I've always been really curious about how every place that I work, how does it function? Like, how does work get done? And at Excite, I was very curious. So I just kind of like floated around and like got to know people and was like, what do you do? I'm like, I'm 21. What do you do? Oh, you're in marketing. What do you do all day as a marketer? Oh, you're in biz Dev. What do you do all day? And I just tried to meet really awesome people when I was at Excite. Like, that was a big part of what I wanted to do. And I ended up meeting some, like, amazing people who went on to be venture capitalists and executives, like Jeff Donaker, who was at Yelp and is now at first Raj Kapoor, who was at Mayfield and is now at Climactic. Brett Bullington, like all these Joe Krause, who I later ended up crossing paths with again at Google. Like, there were just all these amazing people that I met there. And I've always just sort of tried to do the, what I think is the most interesting job on the table and go to the places where I think interesting people are going to congregate and it's worked out for me. And I don't know that I've had much of a better plan than that than to show up and try to work hard.

I definitely love that. I feel like picking something or like some people that are like, interesting to work with. It's like, definitely like leading you to like, a really unique path. And I'm curious, like, speaking of meeting people like you just mentioned about, like Amy or like some other people from like, you know, maybe Jeff from Encore. So, like, you met a lot of really smart people. I'm curious, who is on your personal board of advisors when it comes to career development in Venture?

It's a really great question. It's evolved a lot over time. I think. When I was first getting started with the fund, there's a lot of people who gave me good advice. I'd say that advice was mostly about starting a fund. So Jeff, obviously Clavy was super helpful. Brad Feld was really helpful. Roger Ehrenberg was really helpful. Nahal and Eniac was really helpful. There are a lot of people who are really helpful in the getting started phase now. I have actually, like, all of those people are still really helpful to me. Plus, I have this new set of people who are helping me think about, well, what do you do when you're no longer an emerging manager and you start thinking about the future of your firm? That's like a different set of people who've been helpful to me. That's like Teresa at A crew and Kirsten Green and Maha at Canaan and Scott Sandel. There's a bunch of who've been like, very helpful to me on this new set of challenges I have because, you know, for the first couple of funds, the whole thing is like, how do I just not go out of business?

Yeah, totally survive.

And now I'm like, okay, well, we're, we've solved for surviving. What do we do now to turn precursor into the kind of place I want it to be? And I've sort of had to expand the circle of people that I talk to. Hunter and Satya at Homebrew also have been insanely helpful to me in thinking these things through. And I think everybody has to, like, find their own path.

Totally. I'm curious, like, how do you kind of like, keep this really high caliber network and like, what do you feel like make you, like, so, like, you know, succeed so fast than a lot of other people? Because I look at your career track like you are, you know, right now the board Chair of mvca. And then you're teaching at Stanford. A lot of these things are like, people even other VCs are really aspiring to do. How do you kind of, like, build a network? Also, like, maintain this level of, like, network?

So I have, like, a habit of saying, you know, there's all these books, just say no to everything. The year of.

No, like, there's the year of.

I think if you really want to protect your time and you have other things in your life that are really important to you, you have to, like, do that. I am a chronic say yes person, maybe to a fault. So the thing, the nice thing, the bad thing about saying yes is you're always busy and some days you look up, you're like, oh, no, I committed to be on the board of this thing or to help this person thing. And you wonder, like, when I'm going to have time for myself. But so many of the really great things in my life have happened from just like, saying yes to opportunities that were offered to me. And even sometimes I'm like, I'm not really sure how I have time to do this thing, but I'm gonna make time to do it. Like, that's how I started teaching at Stanford. Fern Mandelbaum from Emerson and I had met, and I really admired her just as a person. And she invited me to come down and spend some time learning about this class she was teaching. And she was like, you should join my teaching team. And I was like, I don't have any time to teach a class at Stanford. I have no time. I'm trying to build my firm from scratch. I don't need time to do this. But I was like, this is a really cool opportunity. I think something good will come from this. So instead of saying, I don't have time to teach at Stanford, I'm like, I'm going to find time to fit teaching into Stanford into the rest of my life and schedule. It's not easy, but it's been such a good learning and, like, growth experience for me. I can't imagine where I'd be if I hadn't done it. So I was like, sometimes you just have to make the decision that this is really important and I'm going to find a way to fit this thing into my life.

Totally. I mean, like, although you're mentioning, like, it's hard to find time to do this thing, but I feel like the thing you mentioned are also super exciting opportunities. Yeah, I'm curious, like, you know, you have done startups on your own and Then you have raised funding for your fund. Like, what would you say is like, one skill that you're constantly trying to get better at? It could be like, maybe soft skill, like sales or like technical skill, like coding. What would you say is like, one thing that you are trying to constantly getting better?

Honestly, the thing I'm always trying to get better at is communication. I think all sales is about communication. And when I say communication, it's not just what I say. It's my ability to interpret what other people are feeling and what they. What they secretly or not so secretly need, want, or expect from me. And it turns out, if you think about, like most of my job is communication. Like talking to limited partners about why our fund is amazing and why they should trust venture capital. It's convincing founders that we haven't invested in, that they should give us a shot at being on their cap table. It's convincing founders that we've already worked with, that if I have a point of view about a key decision they're going to make that they should listen to and value my opinion and input, all of that's community. People who work here at Precursor who I want to help them grow in their career, most of my job is communication. I actually don't do much other than communicate with other people all day long. And I feel like there's no end. Like, I'm not as good at that as I want to be. At least once a day I have a conversation I replay in my head. I'm like, I could have done a much better job with that conversation. And I wish I could have it back. But you can't. It's probably the thing I spend the most time thinking about.

Wow, I feel like that's so on point because being an investor, you have to constantly selling yourself to your LPs and then to the best founders. And then just every day, you have to also basically communicate or convincing your employees this is the best place to work. And I feel like all of these takes a lot of communicating and then just overall mind reading or just everything along the line with like, human interaction. And although I feel like you're already really good, I don't really know if you still need to practice or anything. So you started Precursor seven years ago or maybe almost eight years ago until maybe next April. And then you've worked in Venture eight years ago, before that in Unquirk. And I'm curious, what are some things that you took from working in Ankor that you took to starting your own firm?

A lot of things. So one thing I learned really quickly just from working with Jeff is if you want to be the managing partner of your own firm, you're kind of going to work like a dog. It's a lot of work because when I joined him, he was a solo GP before that was like really a cool thing to do. And like, it's just a lot of work when you are the one person ir finance, investing, portfolio, company. Like, it's just a lot of work to get one of these things to start it and started. And it's still a lot of work to kind of keep it airborne, to use the flight analogy. Second. So that's a big one, is it takes a lot of work. Another big one I took away from my time at Uncork is I think there's a lot of founders who don't get a lot of honest, direct feedback from people in their lives, whether it's their management teams or their investors or even their co founder. And finding a way to deliver honest feedback to people in a way that they can hear it can literally change the trajectory of a company.

And this is why I think I've been so focused on communication is the ability to see something that a founder doesn't see. But in order to get them to see it, you have to be able to help them see it. You can't just tell them, look over here. They're like, I don't. I don't see what you're. And just that skill of the ability to like have influence with founders is something that like I really learned. The other thing I learned, Grace, is it takes a very long time to start to see the fruits of your labor in this business. And as much as people talk about it being a long game, it's even longer than most long games.

Really.

I feel you.

I feel you precede and seed investing, you're really you. You won't conceive there's a world in which you won't see the returns from your best early investments for 10 to 12 years.

Totally. I think like one thing I want to zoom in is like you mentioned, like, you know, see things the founder don't see and then kind of like helping them realize like a vision that you saw in the company. Can you give us an example of like, you know, what were something that like maybe Jeff or maybe you said to a founder and then that kind of change the company trajectory.

We. I won't name the specific company, but I remember this very clearly. We had a marketplace company that was growing revenue and they had sent Them like an email update. And Jeff wrote back and kind of was like, hey, I think you guys have like a leaky bucket problem in your marketplace. Because we contracted with somebody on the marketplace and they, we kind of like just as a tri balloon tried to see if they'd go off platform and they were like instantly said yes. So I worry that like this is an anecdotal experience, but I think this is worth us digging into.

And it literally changed the way we price the service. We realized that upon closure inspection, many of the best participants of this marketplace on the supply side would like disappear over time. And what we realized is that the take rate we were asking for for the first visit or the first interaction probably made sense. But at some point those people started to think of that customer as their customer. Like, well, why am I paying you the same transaction take rate for the fifth or sixth interaction with this person? That doesn't feel fair. And so we went in, we, the company went in and ended up revamping its pricing such that the more interactions you had with somebody, the less the platform took. And it really impacted the trajectory of that business. And I'm not sure when we would have gotten to that conclusion or when we would have gotten to the exploratory work to find the answer to that question if Jeff hadn't sort of like prompted that founder to look into that and ended up being a very consequential change to the business model and the company trajectory.

I love that story. I feel like doing due diligence and then also like helping a company grow is not just like, you know, helping people recruit or like doing something on the surface level to help them, but like also, just like also dig deeper or like actually I guess like monitoring like how they're growing. It's also really important. I'm curious, like, you know, when you're raising your first fund, I remember you were saying this in another interview that you maybe talk to like 200 investors and, and that like after that, like, you know, when you were raising the second fund, you thought it's going to be easier but also like really hard. And then luckily you met someone in the elevator and then they gave half of the second fund, which I thought was really cool and legendary. And I'm curious, like when you're raising your own fund, how do you kind of like mentally set up this schedule in your head? Like, you know, you quit a really good job from this well known firm and then like you left to do your own thing? Like what were the two year, look like, for you to, you know, even meeting these people, getting them to invest in you, it's probably really tough conversations at the beginning, especially, how do you kind of, like, do it? And then, like, if you're doing it today, like, how would you do it again?

One thing I realized is in order to fundraise for a fund, you have to actually have done it. You have to do it. And, you know, I was in the room for a lot of fundraising meetings at Encore, but I wasn't leading them. I wasn't giving the pitch. Jeff gave the pitch. So, like, I was in the room, and I got to, like, hear it, but I didn't have to do it. And doing and observing and raising money for a venture fund are two very different things. Very different things. Because when you're the person pitching, you've got to build the narrative in your head. You've got to have all the counters ready to go when it's time to think about, well, when they say this, what about that? You've got to have the whole thing kind of mapped out in your head. And I think the hardest thing, and I. I tell a lot of the emerging managers that I try to help. I think everybody thinks their story sounds really differentiated when they say it in their own words. When you hear it from the point of view of an lp, like, oh, let me guess, you're like another smart person, a good network we should give money to because you're smart and you're like, you know what? That's actually not that differentiated. And like, what I didn't realize when I started fundraising.

Is the sort of, like, why does the world need another venture fund? Answer for Precursor was not well articulated. Like, I knew the answer. I didn't know how to spit it out in a very short, to the point, memorable way. And I think it took me about well over a hundred pitches before I figured out something's not working. And sometimes when you're a solo gp, what you miss out on in a pitch is you miss out on the ability of somebody else who's on your side to be an observer and say, hey, here's where you lost that person, or, hey, I noticed when you went down this road, you kind of. It didn't go. Because you're pitching. You can't both, like, pitch and be in the moment of pitching and be fully observant of what's going on around you. At least I can't. Maybe other people can. I can't.

I feel like you are such an articulate person and that I Actually really like your firm's thesis and which is like, you know, investing in, I wouldn't call it like the underdog, but like, I feel like you, you don't really care about like their pedigree or like, you know, have they worked at Google or like went to Stanford or Harvard. And then you are selecting them based on like, you know, not based on their past, but based on like what you can predict in their future. And then do this person have like CEO quality? Like, can they be a good CEO when they're in the spot? Instead of like, have they been a good CEO in the past? So I really like those thesis but like I feel like pitching them to an investor, like for people to give you money, it's like a really different story, right? Let's say like after you pitch so many LPs, you probably assuming you're investing in your friend's fund or something too. So curious, like when you're looking at your own pitch, like, what are, let's say, three things that you would highlight to attract someone. Also, I think when you start it like this stage, having small tracks to write for to back somewhat when they're in very earlier stages, like probably don't exist, but like now it's like really popular solo GP everywhere on Twitter. How do you kind of like navigate the entire like building a fun situation nowadays compared to like when you first started?

There's so much I could cover. I do think it's wild. When I first started, everyone's like, pre seed is the adverse selection backwater of seed. There's like no good companies here. Like, nobody should raise the precede fund. Now when I talk to LPs, there's like, they're so many pre seed funds, why should we pick you? So a lot short period of time. But one thing I will say is, and this is, I think sales 101 that I failed at when I started fundraising. It's very important if you're going to ask somebody for money, you have to understand the context that they're bringing to the table. And what I didn't fully grasp at Precursor was how much orthodoxy there is among the LP community about what works. And I'm not saying that they're wrong. I'm just saying there are some widely held beliefs that had I really understood how widely and deeply held they were, I would have had a greater appreciation for how hard my fundraiser is going to be. If you ask most LPs, what works in early stage, a couple of partners, because decision making with a group is Better. I don't have that. A concentrated portfolio with high ownership. I don't have that. Some amount of support and services don't have that either. And I underestimated how radical the idea of a single GP doing 80 to 100 companies per fund, buying relatively modest ownership stakes was for most LPs. But the funny thing is I was like, well, this is what we were doing at Uncork before we grew up. This is what SV angel. Like, there were. This is what Aydin did at Felicia's. Like, there were all of these, like, examples of people who had done it before. But a lot of LPs were like, the thing you're telling me you're building is the literal opposite of what I think works. And if it's. Someone had told me, you should go ahead and do this. Just be aware that you're literally telling people that, like, the earth is flat. Effectively, like, and I, it took me a long time to. I was like, why? Why am I getting so much resistance to the idea of precursors? Like, what am I doing wrong? And finally I was like, oh, what I'm doing wrong is the core hypotheses and beliefs I have at this for this fund are at odds with what most VCs, most V. Most LPs who back VCs think works. And it's very, very, very hard to get people to buy into something that is literally at odds with what they think success looks like. And once I realized, like, this is sort of the, this is the kind of like crazy.

Dynamic situation that I'm up against, I have to have a much, much, much better pitch because I don't, I don't tick any of the boxes strategy wise. That LPs and it really grace forced me to like, level up the storytelling and precursor. And I said, if you're going to go ask people to believe something that's basically at odds with what they think works, it has to be a really good story. It can't be an okay story. It can't be a good story. It has to be an exceptional story. And you have to find people who are willing to, to at least explore something that they're not sure they believe.

Kai, ask you, like, what is your, like, let's say a 30s that can pitch today?

Yeah, I've given this literally thousands of times and I came up with this basically after a terrible pitch. So what I tell people when I'm pitching precursor is like, listen, there's thousands of seed stage venture capital firms. If you are a repeat founder or if you're a founder who's socially or professionally connected to VCs, you went to Stanford or Harvard, you worked at Google, you're actually pretty well served in terms of capital. You can raise money on an idea. You don't need traction. Now, let's say you don't know a lot of VCs, but you've got traction. There's some set of people who will take a meeting because they could get their arms around the product. What do you do if you don't know anybody and you don't have traction? So I just started asking LPs, who do you know who routinely funds people that are outside of their immediate network and aren't warm introed in who don't have traction? I was like, I'm just like, you can take away one of those things and you can name a bunch of firms. I'm asking you to take away both. A lot of LPs would be like, you know, really? Maybe a couple angels I know, but like, there aren't really any firms I know who do it that way. And I was like, well, I think we're missing out on a huge untapped pool of entrepreneurial talent. And what I tell them is that I'm not trying to second guess the decisions of true and first round and uncork and freestyle. I'm not trying to say, oh, these founders that you passed on, I have a different view of them. I'm meeting all these people that are never going to get in those rooms because those people are competing with the highly referenced, highly connected, highly referred in. And the gravity for most venture capital firms is to to follow the rationally, to follow the highly referred, warm intro, close connection people. And I'm like, those people are going to get funded. There's a lot of competition to fund those people. Nobody's looking over here. So all you have to believe is that there's some value over here. There's some value over here. Let me tell you why I think we're the right firm to go find it.

And most LPs were just like, I don't know anybody else who's doing this. I'm like, okay, now that I have my own lane, we can talk about whether this is a good lane to be in. But before Grace, the problem I have is everyone's like, well, there's like a thousand generalist seed firms, like, why? Why should I fund another? And then like whenever you have that problem, no matter what you're selling, you have a real problem. I was like, oh, you guys think these are all. These funds are basically commodities. They're all. And I get it if every committee meeting is like, I met this person, they're great, they're super smart and they know everyone. You'd be like, every week I get pitched one of these, just a different face on the screen. Why should I do any of them? What, what makes this one different from the one last week or the one we're going to get next week?

I love the pitch and I'm curious, like, what are some setback that you would face when you're pitching the story? I think I love the inventing your own lane. I do believe in that lane. How do you kind of like, go to that lane? Like, how do you kind of like, create your own benchmark to meet these people? Beside, like, I know that you're investing heavily on female founders, and there are a lot of people who are, you know, for example, your associate, they. They're also like diverse people coming from like, different background. So basically I do feel like I understand, like from, like observing from outside of your firm. I can see that. But I'm curious, like, how do you kind of like find really differentiated companies to start with?

So it's funny, a lot of LPs like, well, how do you source? I'm like, it's actually easy to be top of mind for people if there's not many firms like yours. And what I tell people is like, because I'm willing to meet people before they have traction and before they have evidence. A lot of people send me deals because they're like, this thing is too early for me. And it's easy to stay top of mind when you're one of the only people that they think of to do that. And so the other thing I will say about venture firms is most of the things that I've learned about Precursor and why it works were not obvious to me before I started. They only became obvious once I started. Like any startup, I was like, oh, here's a perfect example, Grace. A lot of LPs would be like, well, it's so many companies. And I'm like, oh, you think that's a bug? I think it's a feature.

So many companies, I'm like, yeah, you know what that means? Almost any question that a founder has, I can find them a peer who's gone through it recently and can give them probably a better tactical in the weeds answer than I can. And the more founders we have, the more coverage we have for any problem that any founder is going to ever encounter. So how is that not a good thing? Oh, well, it's so many people to get to know. I'm like, but if you can get to know them, that's so many more people out in the community meeting other founders and sending you great deals. So I'm like, every. But I realize like everything that like LP's thought was a bug. I was like, it's probably a feature. And I would tell them, I was like, don't you think Book Face for YC is a feature? YC has so many founders.

That like they know across thousands of companies. What's it like to deal with precursor? You. I've never seen it. There's a page that'll tell you like, and because YC has so many founders, founders can sell to each other. Like the network becomes guys. Networks become valuable with density and size.

And so like what I thought was like, we're trying to build a very intentional founder community that has where these sort of entrance attributes are different. But it were we funded 7 or 800 founders at this point. It's very rare that something comes up where I can. Where I say, I've never had anybody encounter this before. Almost everything. Like, I had somebody who's like, hey, my co founder's going through a divorce and he's really distracted. I'm like, I got a couple of companies where that happened. I'm gonna let you talk to the person. I can have you talk to someone who's going through the divorce, who went through a divorce, tell you what they wish their co founder had done. I can introduce this other person whose co founder went through a divorce and how they met. I'm like, I got like five people for you. So no matter what the situation is, we almost always have somebody in the community. And you know what, Grace? There's so many things we're hearing. The answer from another founder is like a hundred times more valuable than me saying, well, 15 years ago when I built companies, here's how we did things in the stone Ages. That's just not as useful. It's just like not as useful. It's not what they want.

Totally. Okay, so I have one more question, the font side and then we can talk about the company side. So basically, like you said, like, raising a fund is very different than observing someone else raising a fund. When you first started, would you ask for help? And how do you kind of line up these LPs to talk to in the first place? Especially when solo GP wasn't really a thing. I've seen People like, you know, DMing everybody on Twitter these days and then raising that way. But I'm curious, like, when you are doing it, how do you, like, tactically, how do you do it?

In the beginning, I was afraid to ask people for help. I was like, I'm supposed to figure this out on my own. Then I realized, like, you're not. You're actually supposed to ask for help. So I started asking.

A few people. Like, Mark Suster gave me some really good advice. Mike Maples. I started just going to the other people who I knew had started or taken over or were running firms. And I was like, here's what I'm pitching. What do you think? Some of them are like, this sounds like a terrible idea, but I'll help you anyway.

And then I started asking people, like, what kind of lps do you think would be right for a fund like mine?

And I got really good feedback. Some people were like, well, this is the kind of LP that we think would be awesome for your fund. Other people were like, I don't know, just go meet people. And what I realized very quickly on was that we weren't a great fit for big institutions. Our first fund was only $15 million. It was too small for them. And what I realized in the end, though was, like, the more people I pitched, the more LPs found me. Like, one of our longest standing LPs was introduced to me by somebody who passed on my fund but thought it was a pretty good idea. Just wasn't right for them. And they introduced me to one of my most important LP relationships and they didn't tell me. It took me a long time to figure out because the intro from the email came in cold. Wow, this is interesting. Cold. And it took me a while to figure out, oh, I met these people through this person who'd passed on our fun.

I really like what you said about, like, asking for help. Like, what kind of help do you ask? Do you ask them to hear your pitch or do you just directly ask, hey, person A, can you introduce your LP to me? Like, what is the art of asking?

It's interesting. Some people.

If you ask them for LP introductions, they get a little like, I don't know, you know, they're my lp. So it's. It's sort of a. For some people, it's a big uncomfortable ask. So what I, what I tell people is like, I'm not going to ask you for introductions. I don't want to put you in that position. All I want is names of people you Think I should find a way to get in front of. I will do all of the work of getting in front of them. And I find that if I just tell people I just need top of funnel names to go research and figure out if they're a fit for us, you get more names because then the person's not like, oh, I'm going to get 10 emails from Charles.

My 10 best LPs. And then at some point people will just offer to intro you. Like you'll just. But I think right now one of the hardest things about starting a fund.

Is I'd say most LPs are not really that into cold intro. Most VCs aren't. But the tide adventure is shifting. I feel like. I think most LPs are just uninterested in cold, cold intro. Now I've seen some people like.

Eric at Contrary Tarzinski actually did really well with cold intro. Most people, it doesn't work like it doesn't work for them. And so the people who can make the best interest for you are generally other GPs. So if you're a new manager from outside the ecosystem, it can be tough to break in because you just don't have the relationships with the GPs that have the relationships with the LPS.

Another thing is you have to also align their interests with yours in a way. How do you kind of align that? I feel like it's kind of impossible unless you pay a really mega advisory fee or some sort. But you can't really do that with 200 people, right? So how do you kind of make it efficient or make other people's time valuable when they're helping you?

You know, one thing I learned, it's probably less true today. When I started Precursor, there weren't that many gps that were doing precede and there were all of these LPs who were kind of curious about is this precede thing a real thing? And I realized, oh, I actually have something of value to offer them. If they're willing to meet with me, I can tell them how I think pre seed works or I can give them my take on the landscape in the industry. And I'm probably one of a very small number of people who can actually do that. So for a while I was like, well, this is my calling card to get these meetings is not just a pitch but an offer to share some of my insights and learnings about precede with these LPs. And some of them were like honestly genuinely interested in what I had to say. Now, it's not that hard there's lots of people can tell you about precede. I will say, like, every time you start a fund, there's always something about that moment in time and situation that gives you an advantage if you look hard enough. And for me, I was like, our advantage is that, like, precede is, like, not well understood and it's, like, not popular. So my opportunity is to, like, be the voice of precede by being kind of, like, more open and willing to talk than anybody else.

Totally. I like that you kind of, like, started a movement or, like, started like, your own category of, like, advocating the market off precede. What is an opportunity today that's kind of like the equivalent of like a pre C. Wow.

I think about this a lot. I think.

I would say, like, there's always opportunity in doing, like, the really hard things that other people don't want to do. I'm like, I'll tell you an experiment that I'm really interested in. I'm actually really interested in what the South Park Commons team is doing. They're doing some really interesting work because, like, you know, at Precursor, we're. We don't do a great job right now, candidly, with people who don't have an idea, but they know they want to start something and they need some time to figure it out. My. My pitch to them is like, you don't need traction. You need to build anything. But I need to know what I'm signing up to support you on. And if you need time to explore and figure out what that thing is, we're probably not the best. Like, I need to do that work before you show up here. You know, we have limited capacity to do EIR programs, but I think what South Park Commons is trying to do with that sort of like, pre idea founder program is really interesting and really disruptive. If you can get it right, kind of is like, structured exploration. I think the best thing about a good EIR program, it should do two things. It should give you enough structure that you don't feel like you're all alone in the world.

And, like, if you think about it, if you were going to start a company and you were just working in your bedroom, you're not really accountable to anybody other than yourself. We've had EIRs and it's been a great program, but part of, I think why it works is once a week or once every the week, they have to come tell me, here's what I've been working on and here's what I got done. Nobody wants to come to that meeting. And say, I just played Xbox all day and I didn't do it anymore.

And so I think the ideation process oftentimes for a lot of people it needs some structure. And some of that structure is programming and some of that structure is accountability. And so I often think like, I wish we could figure out, given our resources and scale, how we could be a better partner for these sort of really talented pre idea people that we meet. But I think it's a different skill set than like what it takes to be good at precede.

Totally. I like, I like the direction that you're thinking. So basically essentially building other supporting system to kind of like expand your network as well as like, kind of like figuring out the founder's ability before you kind of commit capital into whatever they're building. So I think that's definitely a really interesting direction to think about. Like, so I know that like I just talk about like the fundraising part but like also about like building a fund. So essentially like you mentioned this couple of times on other shows. Like essentially there are three jobs, right? Like you have to raising the capital, you have to investing and do the investing job. And then there's like running a small business firm and like essentially like now, like we just talk about the sort of program. So like basically that's like the future of the fund, right? Like, so when you're getting bigger, like, you know, when you're expanding your team, you have like a couple of people on your team that are doing, you know, financial, a controller or like CFO as well as like there's you know, a couple people on the investing team. When you're thinking about like making your firm more, you know, basically expanding your firm, you know, not everybody can just go on to be a citizen C tomorrow. Curious, like, what are your step to step thinking process when you're thinking about like the next 10 years for your firm?

I think this is where it's funny. There's so many medium and blog posts about the investing side of the job and even the fundraising job. Nobody writes about the firm building management side because it's messy.

And because there's no blueprint, it ends up being very personal, driven largely by like what kind of firm do you want to build? Do you want to be like Elad and have like a solo capitalist fund that's like huge or do you want to be like a 16Z? Like what? Like because what you want to. There's no right answer for what you want to build. It's really just like deciding on what you want to build puts a set of constraints around what you can do. And this is the area where I've probably been the most aggressive in seeking out mentorship is in these new. Like for example, right now I do all the investor relations at Precursor. I've been talking to a bunch of my friends at bigger firms. I'm like, hey, you don't do your own ir. How do you handle ir? Not the sexiest topic in the world. Incredibly top of mind as you scale your fund and the number of LPs and funds you have to report on grows. I'll tell you another one. Promote when promotions and thinking about, particularly on the investment team, how do you think about promoting people and what are the quantitative and qualitative standards? That's an area where I've gone really deep with a lot of people at much bigger firms have been doing this for a much longer period of time to understand how do they think about it and like, how have they gotten to a place where they have a plan and a program and what are the pros and cons of that program? And most importantly, how much if any of that do I want to import into Precursor. The range is like all of it to none of it.

And I think the firm building stuff gets hard because at some point you have to choose what you want to build. And once you choose, like for example, if you're like, I want to make a multi partner firm that's multi generational, that creates a whole set of activities that you have to do. If you're just like, I want to be a solo capitalist and I'm going to shut this thing down as soon as I'm done with it, there's a bunch of things you don't have to do.

And I think the hardest thing is like you spend so much time in the early days just trying to survive.

You wake up one day and you're like, well, I've survived and now I have to actually build.

And like, you know, I've spent a lot of time in this last few years being just introspective and honest about like, what do I want? And your LPs will have an opinion about what they think you should do. Your friends will have an opinion about what they think you should do. The people on your team will have an idea and ultimately like, you as the founder and leader have to decide what kind of firm you want to build. Then you have to live with the consequences. Like I tell my friends all the time, there are definitely days where I'm like, oh, if I had Four other partners. There's like a bunch of work I do I wouldn't have to do, but also have five other people I'd have to talk to about every decision I make. It's just a trade off.

One of the things that I found about your past experience is like you did like BD in couple different roles. Do you feel like Venture is like essentially like a BD job? And I also saw that you created like a gaming summit before and then now you create Equity Summit with Mar, who is also a guest on our show recently. So I'm curious, like you created these like conferences and how do you leverage these like outside activity to like basically expand your network or like your business?

I think part of the thing I get from a lot of these like say yes outside activities is I learn new skills that I don't learn in my day job at Precursor and they end up being really, really valuable. Like the Equity Summit, something I spent a lot of time on with, with Mar and Katie and like the logistical decisions we make around the Equity Summit, the content and trying to build a con, trying to build a conference experience for people that feels special. It's a lot of work and thankfully we've got a great team. But it's not something I think about and work on at Precursor every day. But it also has made me acutely aware of when you get it right. It's pretty special. And I've taken that back to me at Precursor. I'm like, well, if we're going to do events for our portfolio companies, like this is the bar we should try to hit. We should try to make these experiences that feel kind of magical for people.

And like if we can't do that, I question whether we should be doing it at all.

Do you feel like you would? Like, so like it forces you to kind of like get out of your comfort zone to meet a lot of people that are like helping your business or do you feel like it's more of in general? Like it's like a really just like maintaining the relationship with people.

How does it like translate into like a business experience for you? And I feel like those are all things that kind of making you unique. And then back to the NVCA thing, like, you know, I don't really know how to be the board chair of mvca. What does that entail? But like, I feel like it, you know, it's not like everybody job, right? Like, you know, you don't really see that on everybody's resume, I guess. Like how do you quickly accelerate Your venture career to be ahead of a lot of people.

I think the other thing I'll say is like, the other thing about saying yes to stuff that's, like, kind of scary that you haven't done before is you just get used to learning how to do things you haven't done before, which I think, like, learning how to do new things. And maybe that's why I'm a generalist investor. Learning, I think, generally as a life skill, the ability to quickly pick up a new task or set of responsibilities is incredibly valuable. Like, I'm on the board of the Opera. I've been on the board of San Francisco Opera for a long time. I didn't know very much about the Opera, but I joined.

No way. Really? Like, my bad for not researching that part.

No, no, no, it's fine. I was like, I have to learn how the San Francisco Opera association works. I don't know.

To be frank, you are on a lot of board. I literally saw your resume. There was, like, 15 pages, board member loan.

But I think for all of these things, like, I didn't know anything about the Equity Summit. I mean, I'd been to the event, but I didn't know what it would take to make it be a special, awesome event until I joined the planning team. And then I was like, oh, this is what it takes. This level of effort required to produce an awesome event. Got it.

What are some of your learnings there, like, to hosting these events and then, like, doing these extra curricular activity? What is like being on the Oprah board look like? Do you have a single.

Thank God I don't have to sing. They'd kick me off if I had to sing.

Oh, my God.

You know, the biggest lesson I've taken away, and this definitely does impact the way I run precursor is like, the impact of having the people who are in charge of something really care about the quality of the end product has it in as a disproportionately large outcome on the quality of the end product. And, you know, Jeff really cared about uncork. I really care about precursor. I really care about the equity summit. I really care about screen door. And I think what I've learned is that, like, attention to detail, a commitment to quality, and, like, a vision for what a good product looks like.

It's actually a useful life skill because it means you, like, don't end up tolerating a lot of mediocrity in any domain of your life. And when you get involved with things, you come to them with the mindset that, like, I can make this thing better or I can build something that other people like. The conference business I started, I'd never produced a conference in my whole life. I'd never been involved in event production. And we got that thing to about a couple thousand people a year. And so at some point, you're just like, I can learn new things. I can learn new things and I can get good at them. But it all starts from the same place, which is like, what would an amazing outcome for this experience look like? And, like, what do I have to learn how to do in order to produce that outcome?

Totally. When you're talking about producing the outcome, one thing I was thinking was, how do you produce the best outcome for your fund? I know that one year you invest in over 70 deals, and, like, how do you engineer a successful fund?

It's really hard. I think you have to really know what you're looking for. In terms of founders, I think you have to be humble enough to know that, like, you don't know everything and that, like, some. If you continue to pick great founders working on good problems, what I tell my investors is we're going to pick 100 companies per fund. If I don't have a couple in there that work, you should question my ability. 100 is enough companies. It's probably not ownership. It's probably selection at that point. And thus far, I'm pleased with our track record. But I also tell myself, like, I can't will these companies to be bigger than they are. So if I back somebody and it turns out the market opportunity is small, that's my fault. I made a mistake. I can't, like, browbeat that company into becoming a bigger company just because I want to be bigger. It doesn't work that way.

Overall, I feel like you have just, like, accomplished so much. I have, like, 400 other questions for you, but I definitely don't want to, like, overwhelm you with, like, a bunch of stuff. And maybe, like, in the end, I'm like, I guess, like, one last real question is, like, you know, you have a really successful career. Who do you look up to as, like, let's say, like, someone you aspire to be? Would you aspire to be, like, a Mark Andreessen or, like, what are some of your ideal, like, icons that you kind of like?

I really respect what Kirsten's built at Forerunner. I think it's really impressive. I really respect the brand that Josh Koppelman's built at first round. I think he, like, redefined in many Ways like what seed could be and kind of like forced the whole category to really level up. I don't have any aspirations to build like a big enterprise. I have total respect for the people who can run, you know, 6 and 700, like what Mark and Ben do and what Roloff does. I have total respect for them. Like that's sort of not my aspiration. And I look up to the homebrew guys like they're my friends. And like most people I admire are people who built brand new franchises fairly quickly and who I think like, are really smart people pursuing like great opportunities and who I think are building firms that really reflect their values.

I'm also curious, like because of you have hired people for your own farm, like when you're expanding your team, what are some things that you would look forward to for people on your team?

Some of these sound cheesy. A positive attitude is really, really, really important. That's like really important. Intellectual curiosity, very, very important. And I have to get some sense on the investment side that the person has good judgment.

It's kind of hard. Like good judgment is a little.

Ephemeral. But like.

At the end of the day, precede is basically a judgment based job for sure. Excellent judgment. It doesn't work without that.

How, like, how do you define excellent judgment?

Decisions they've made in their life.

Where they work, where they went to school, if they're married, how they chose their partner. I'm trying to get a sense of like how does this person make important decisions?

Okay, where are the last like one minute fire round for you? So like one question is like, what's your favorite book?

Founders at Work by Jessica Livingston. Probably my favorite book.

Oh, I love that book. Who made the biggest impact in your career?

Probably Stephen Mandel, who was like my day to day manager at Ink Util.

Who would you invite to your dinner party?

Oh man, definitely Barack Obama. That would be fun.

What would you do outside of work?

I cook a lot.

Oh really? Like what do you cook?

Everything.

Everything.

I cook a lot.

What's your like favorite dish to cook?

I do a lot of meats on the smoker. That's a big, that's a big focus for me.

Oh, wow.

I like cooking is very relaxing to me. I really enjoy it.

Yeah, I love cooking and food in general. Well, thank you so much Charles for coming on.

Thank you for having me.

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