Google Ventures with Erik Nordlander

GV, or Google Ventures, is an independent venture capital firm backed by Alphabet. Erik Nordlander is a general partner at GV and invests across enterprise software and frontier technology, focusing on developer tools, cloud infrastructure, and machine learning. He's backed companies like Cockroach, Warp, and Neo4j. Prior to joining GV in 2010 and opening up the firm's New York City office, Erik was at Google and led development of the company's next-gen display and serving system. And built statistical and machine learning models for Google's ad businesses. Erik joins the podcast to talk about his work. Gregor Wand is a security-focused technologist and is the founder and CTO of MailPass. Previously, Gregor was a CTO across cybersecurity, cyber insurance, and general software engineering companies. He has been based in Asia Pacific for almost a decade and can be found via his profile at wand.hk.

Hi Erik, welcome to Software Engineering Daily.

Hi Gregor, thanks for having me today.

So Erik, it is great to have you here. You are at Google Ventures, so this is a pretty exciting one for us. We don't often get to have venture capital people on the podcast and get to hear from sort of that side of the industry. So thanks so much for making the time today. We'd love to, I think, just sort of kick off with, you know, what was actually your path? You know, Google Ventures, very well known, I think, probably to a lot of our listeners, but I'm sure there's a lot that happened before that. So what was your path to sort of becoming a VC? You know, I don't think a lot of people maybe sort of think actually VCs had a life before VC. So yeah, I'd love to hear your story.

Yeah, absolutely. I think very few people kind of grow up thinking, oh, I'm going to be a VC one day. And that was definitely not my path. I was always more technical. I loved math. I kind of taught myself to program when I was relatively young. And then I ended up going to school to study CS. So I did an undergrad in CS and was really excited about becoming a software engineer. I ended up sticking around for grad school. And out of grad school, I heard the call of the startup. And in this case, the startup was Google. People forget that Google was a startup once upon a time. I'm showing my age. So I left Boston and moved out to the West Coast to join, you know, kind of late in Google's evolution as a startup, but worked on what was there at the time, which was really kind of deeper infrastructure projects. And that was first in Search and Gmail, and then lower-level stuff that touched a bunch of different systems and products. And so after a little while in California, I had the opportunity to move to Google's New York office, where I still am today. I'm still based in New York and just kind of continue expanding my career. And this was, this was a really exciting time for Google, kind of the early 2000s. The company was growing really quickly. So I was leading, you know, kind of larger teams of engineers and having a ton of fun kind of building and shipping. And Google was also growing by acquisitions. So At that point, they were buying lots of companies, some of which are still core parts of the Google experience today, things like YouTube and Android and others. And then they were also just buying smaller companies just to ingest talent and technology as quickly as possible. And so, I was kind of in this interesting position where there's a corp dev team that obviously was going through all these transactions, but I was also helping kind of look at companies in terms of tech and talent. While still working as an engineer. And that was in some ways kind of a VC 101 because I was, you know, meeting all these startups and kind of seeing, you know, chapters 10, 11, 12, and the epilogue. And I was really excited about working with entrepreneurs and really pretty curious about what did chapters, you know, 1, 2, and 3 look like and even before that. So as luck would have it, there was a group of people thinking about, you know, what is a venture fund inside of Google look like? And, you know, starting to put that together and super, super early in the fund's life, I just got connected with some of the early partners and started spending time there. And then at the end of 2010, I made the leap. And I would say we had a few people on that early team that had worked in some sort of investing capacity before, but many of us were coming in as operators, you know, builders, founders, you know, just different sorts of experience, whether it was building stuff inside or outside of Google. And so we really kind of had to figure out, you know, how to be a VC and how to be a VC with Google as our backer. So it was an exciting time. And what I would say is, after making that leap, I've still remained an engineer. I'm still a working engineer today, and that's probably what brings me to this podcast.

Yeah, that's super interesting. I think maybe a lot of people don't kind of think about VC being able to sort of work hand in hand with a company that actually still build software. VC maybe sometimes feels or looks a bit disconnected in that way. So, I think Google Ventures specifically is a super interesting one where, as you say, you are still very much a working engineer, but also part of Google Ventures. So, if I was to say there's probably some myths and stories about sort of VC culture or just VCs in general, what's maybe something you'd sort of want to debunk from the outset? If someone's listening to this and thinking, oh, I think I know VC is about? Like, is there anything you could say that sort of maybe changes someone's mind?

Yeah, I mean, what I would say about VCs is just it's one of the few jobs where there's not a single path to getting into it or being successful inside of it. I mean, if you want to be a doctor, there's kind of one way that you can become a doctor, and maybe that's a good thing. Like, we don't want people kind of figuring that out on their own. But even if I look at the GV team or like other really successful VCs, I mean, there are people who have been founders, journalists, you know, software software engineers, you name it, people who have been investing their whole career, right? That's all they've ever done. And there's no, you know, one background or one set of experiences that predicts whether you're going to be great at it or terrible or somewhere in between. And so I think that, you know, maybe if you're looking at the industry from the outside, it can feel very homogenous. But I would say, you know, it's a really interesting group of individuals. And so especially for founders, as you're thinking about, hey, who do I want to partner with? You know, it's worth learning a bit more about how people got to where they were. And that may be a really good signal in terms of whether that's someone that is going to work well with you or work against you and what that means. And I think especially as the industry has expanded, we're seeing even more backgrounds. And I think that's great because, you know, those types of backgrounds that we're great at discovering companies today may or may not be the right people to back the best and the brightest of the kind of next class of exciting startups.

Yeah, I think you kind of hit the nail on the head there. Not of any relation to the date we were recording, I happened to have finished the book The Power Law, which goes into the whole history of the VC industry. Highly recommend it to anybody who just wants to maybe learn about kind of the, I know, the history of, I would say, the Valley, or just how a lot of ventures have taken off. But I think one of the big things that came out of reading that was just every VC outfit has a very different personality, very different way of looking at things, and that's fantastic. Like, you should If you're a software engineer or a company looking for any kind of venture backing, as you said, Erik, go and meet people and get to understand them. It's very much a two-way street, which is maybe not reported as much. So, yeah, so given this is Software Engineering Daily, most of our listeners are software developers. And I think a lot of listeners out there, they're either in the thick of creating their startup or maybe just thinking about making the leap. To doing their own thing. So, you know, you've seen it from kind of both sides, as being an engineer, and then very much also looking from the other side and saying, what are we going to back as Google Ventures as well? So, what would you say are maybe some of the most common sort of mistakes or pitfalls you maybe see sort of the very early stage software startups make? And I think software is maybe the key here where we could talk about all kinds of ventures, but maybe let's talk about software.

Yeah, it's a really good question. By the way, Power Law is a wonderful book. So two thumbs up on that recommendation. You know, a lot of times I'm working with founders, they're often very technical. You know, there's maybe multiple technical founders and, you know, sometimes I think people believe that if they just build the right kind of software and put it out into the world, like people will come, right? And that this is independent of whether it's for consumers or enterprises or something in between. And so the mistake that I see a lot of these companies make very early on is not thinking at all about any of the kind of marketing or sales aspect or like how that's going to fit in. And certainly as you're kind of designing, you know, you're kind of writing a design doc or you're putting pen to paper on the early sort of builds, that's not going to be top of mind. But there's just a lot of, you know, it's a very crowded space for software, right? There's all kinds of opportunities. And there's all kinds of competition. And so understanding from a fairly early stage how you're going to promote it, how you're going to distribute it, how you're going to get people excited about it, it matters because it's going to influence your design, it's going to influence the team that you build around it. And so all of these things can obviously be added on later on, and many times that's the journey that we go on is that we build the product and then we, we kind of along the way figure out what's the best way to distribute it. But the earlier that you can think about that and you can get feedback in terms of you know, who the right customer is or who the right set of initial users are going to be, it's just going to make your life that much easier because then you can start building that flywheel of feedback early in the company's life. And that's, I feel like for most software companies, at least in that kind of like seed stage, that is really the most valuable thing is making sure that you're building the right product, you have the right technology, you're solving the right problems. If you do that too much in isolation, it's You know, one of the pitfalls is going off the wrong path and losing track of where you need to be.

Yeah, very much. And can you just confirm again, in terms of Google Ventures, what kind of stages does Google Ventures tend to kind of come in at and what kind of opportunities do you tend to evaluate? Like what kind of stage?

Yeah, so GV is definitely a multi-stage firm. So we can write a seed check, you know, we can lead a traditional, you know, venture round like a Series A and B., and we can even write a growth check. I would say the bread and butter is kind of seed to B. So these are checks that are start at a, at a few million dollars up to maybe 25 or 30, but we have a lot of capital to deploy. And so we'll often double down on portfolio companies. I mean, we've, I have a company I invested in almost 10 years ago and we've been in every single round since their, you know, first financing. And sometimes we'll miss something, you know, we'll miss the A or B and we'll just jump in a little bit later. So there's a lot of flexibility. I mean, I think that's one of the great things about having this single LP being Alphabet is they give us a lot of trust and flexibility in terms of how we get the capital out there. I'd just say for myself personally, I mean, my joke is I'll go as early as they'll let me. So that can often be at inception, but typically like a bigger seed round where people are raising, you know, several million dollars. Like if it's under a million, the math doesn't make sense for our fund given its size these days.

Yeah. And Especially again to kind of the listener base we have, probably one of the, I would say, most underreported parts of maybe this sort of evaluation is actually the technical kind of due diligence, or DD as might be said. So how do you evaluate the strength of an opportunity? Or maybe let's just back up for a second. At what point would you actually get to the point of saying, okay, actually we're going to do some technical DD on this company? And then maybe just talk through what might be some differences between, say, stage— like if you're looking at a seed versus, say, a Series A, are there kind of differences in terms of the level of detail that you'd go into in those, and what would you actually be doing?

That's a good point because it does change as things move along. So normally, you know, we're going to start our engagement with the company probably like everyone else. You know, we're going to hear the pitch, we're going to go through the materials, we'll ask a bunch of questions, And then kind of step 2 will be us double-clicking on, you know, all the different areas. And obviously tech is definitely going to be one of them. You know, I feel super comfortable personally, just sitting down with the CTO or technical co-founder, whoever it might be, and just getting into it. I mean, part of it is just evaluating that individual, right, and their ability to grow and lead a team, and how they think about the technology and the roadmap. You know, one of the nice things about being at those early days of Google is I was a person that had to do lots of interviews. I mean, I've probably interviewed hundreds, if not thousands of software engineers at this point. And so certainly I don't make anybody code on a whiteboard. You know, that's not part of it, but just understanding how they think about building technology, it's a really important part of the process. What I would say is, you know, early on in my time at GV, I maybe was a little bit too concerned in terms of like what the stack was and like how the individual technology choices would impact what they were able to do. But you quickly learn that a startup is about solving problems and sometimes the tools are just a means to an end and things can change very quickly. And I'll just give you one fun example here in New York. We backed a company in the e-commerce space and I went to start the kind of tech DD and this thing was like a complete .NET shop, right? They were using all Microsoft all day long. And I was kind of like, "Hey, you're a startup. Do you really want to be paying all this money to Microsoft? This seems really—" Here's all this stuff going on in open source. He's like, "Oh yeah." Yeah, no, no, no, I get that. I'm aware of all that stuff. We're just, we're going with Microsoft. I was a little surprised because I'll be honest, it's not something you see a lot in early stage company. And very quickly I learned it was actually a recruiting hack. So he was here in New York pulling people out of the kind of financial service industry who, you know, there are a ton of people who had just grown up with Microsoft. That's all they'd done. They would love to go to a startup, but nobody wanted their skill set. So he kind of had full rein over pulling in all these people. He'd go to all the sort of like .NET meetups. Would be the only startup there and everyone was like, please give me a job, get me out of this corporate hierarchy or whatever they were in. And so, yeah, sometimes the actual stack can be valuable in ways that have nothing to do with product building or anything else. It was just a great way for him to recruit. And so, I'm very open-minded about the individual technology choices. It just has to make sense. And I think that as long as you have a founder or CTO or whoever that can communicate it, in a great way, and we don't think like they're putting on like crazy amounts of tech debt or doing stuff that, that's going to bite them down the road. You know, that's generally how we get to a point of it being excited about the tech. And obviously the vision there matters a lot in terms of us being aligned that this is technology that it's going to be exciting in several years. Because when we're investing in these companies, especially at seed or A, that could be a 10-year relationship, you know, and we're totally fine being patient investors continuing to invest into technology as long as the promise is there. And often if you're building something really complicated, it can take several years before you even get a dollar of revenue or have lots of users or anything else. So yeah, we need to be pretty confident that the technology and product is going to be valuable once you kind of finish the build.

That was a great anecdote about why .NET for that specific company. Certainly, as you know, in a past life as a CTO at a larger outfit than I am now and having to sort of defend why we were picking certain stacks and actually saying, this is a hiring thing. Yeah, like we're not going to be able to find the engineers or we're going to have to pay outsized amounts to find engineers who know the latest and greatest when actually if we pick something that's just a bit safer, so to speak. So yeah, I think it's a great call out. I mean, just a little sort of sidebar. I mean, I'm curious what you've seen. Have you seen there being quite a lot more startups coming with these, I guess, slightly more evangelized languages now, Go and Rust, basically come to mind where everyone's kind of saying, oh, this is where we should be going, especially if we've got a greenfield right here, we can just start from anything. Is that something you're seeing? Do you think there's any merit to kind of running with them just as languages because you can start from scratch? Or yeah, I'm just curious what your thoughts are on that.

It's funny, two of my portfolio companies are pure Go shops and one is a pure Rust shop. So Cockroach Labs, which is the company behind CockroachDB, they've been Go from the start and Go is a great choice for them. They are building a really complex distributed system and that's the whole point of Go. It's kind of the perfect fit for that. And so yeah, they'll do things around the edges in different languages. But again, in terms of the recruiting thing, which is really at the earliest stages, that's probably the hardest part for technical teams is getting the right talent in there. Go is great for distributed systems people. I think there are a lot of folks coming in from C++ and other areas that were delighted to switch to Go, and that was a real asset to be someone new. And by the way, they started with this back in, like, 2015. So, it's been a while. And at that point, you know, Go was really the new shiny object. So, I'm also involved with Warp, which is this modern command line terminal. And they tried out a bunch of different technologies. I mean, they actually got kind of built prototypes in the earliest days on different stacks, and for performance reasons ended up in Rust. And again, Rust was definitely new. I would almost say it was maybe too new right when they get started, but they've been a huge beneficiary of the ecosystem kind of exploding. And again, maybe it's the opposite of my .NET story, but in this case, folks are really excited about the language. They're excited about learning something new. I don't think most of the people coming in there have a lot of Rust experience,, but it's actually pretty easy to pick up. And if you're an application developer, there's so many just nice properties about it that I think if you're pulling someone out of, I don't know, a Java place or something else, and you say, hey, by the way, you get to write 100% Rust, that's actually, like, a really good carrot to bring in, you know, smart young engineers.

Yeah, that's also a great point. Yeah, so exactly. There just, there really are so many factors to language choice, and yeah, what what might attract engineers to your startup for one language might be a completely different reason for another. So it's, yeah, it's a great, great thing to consider.

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So kind of going back to some other things that, you know, you would kind of be doing diligence on or asking questions about. What kind of, I think again, maybe a myth or just something that's never clear to people kind of when they're pitching or, you know, just generally talking to VCs is sort of which metrics or sort of milestones, you know, everyone says, oh, you have to have revenue. And then the other one say, no, it's ridiculous. You don't have to have revenue. 'If you do, how much revenue?' And I think so many numbers and things get bandied around. Like, if you go on Reddit, you can find all sorts of nonsense, basically. So, you know, great to hear from you. You know, what do you look at in terms of metrics or milestones? Yeah, how do you look at that?

Yeah, great question. I think the revenue one is always interesting, right? Because, you know, if you have lots of revenue, people can invest in your company without knowing anything about your business, right? They can sort of plug whatever you're doing into some spreadsheet and pop out a number and write a check and maybe understand nothing about what you're doing. And, you know, as companies get much later in their life, that's kind of how it works, right? I mean, you think about the public markets and things like that. You look at what they do in the quarter and then the stock goes up or down. I mean, I think to me, the whole point of venture is investing before these things are super obvious. So, you know, when we're getting involved again, we are thinking about what happens if this goes right? What is this going to look like 5 years from now, 10 years from now? Even further into the future. And so, you know, obviously we want to invest in something where we think the opportunity is big enough, right? I mean, that's a big part of venture. It's like the prize has to be worth it. Like if we're going to work on this thing for 10 years and put in lots of capital, yeah, it's got to be really big at the end of it. But that doesn't mean that in year 1 or year 2, you have to have X amount of revenue, otherwise it's not going to work. In fact, I think many of our best bets, it took many years of zero or it's called marginal revenue before things really pick off. And that's because you're building this technology moat. I'll go back to Cockroach. I mean, I think they did several rounds of venture funding, you know, before they had any kind of serious customers. And that's because building a big global distributed database that people are going to trust with all their data, that doesn't happen overnight. It takes many years. And of course, look, along the way, you're going to hit all these milestones that are measured both internally and externally in terms of the technology, in terms of its reliability and performance and all these other things. All of that matters, right? I mean, again, once you have revenue, maybe some of those things are slightly less important, but early on, that's what we pay attention to. And I think because many of us at GV can speak that language, we can go in and build a lot of conviction, maybe before others or before people who would just prefer to see the revenue. So I feel like You know, hey, revenue is great. Like, obviously that means that you're on to something and customers are excited and it's not something to be ignored. But at the same time, you know, if you build something and, you know, you turn on revenue 2 days later, what does that mean? It probably means someone else can do that and you're gonna have a lot of competition too. So striking that balance is really important in terms of building, you know, both a big business and one that's going to remain defensible for a while.

Yeah, that's a great point in terms of just what you said at the end there, that, you know, there is very much a Potential trade-off between getting revenue in early, but exactly your moat, if you want to call it that, is pretty small if that's the case. Whereas if actually you're building up a product and in theory building up that moat on the product side effectively, and then are then able to kind of turn on revenue. Slight sidebar again, Cockroach Labs, we've had a couple episodes with them on. Curious what kind of attracted GV to Cockroach Labs.

We knew the founding team really well, so Spencer, Peter, and Ben were all early Google employees. They'd done lots of great work there. I actually personally worked closely with Spencer right when I started. And on top of that, they were building something that was a little bit inspired by a Google technology, which was Spanner. Spanner was an internal database that was distributed, transactional, all these other great things. Unfortunately for Google, fortunately for Cockroach, it was only running on the Google Cloud, right? And one of the big things that Cockroach was going after was companies that wanted to be multi-cloud. They wanted to build on top of open source. These guys were famous for kind of creating GIMP and GTK. They'd sort of been open source from the beginning. And we were really excited about that. And it was very clear that that type of database was going to have a huge market opportunity, but also was something that was, to our earlier discussion, it was going to take a while to build, right? This is not something that's done overnight. I mean, it took Google, obviously, many, many engineers over a while to get Spanner. And so, we knew that doing it on the outside would probably be even more difficult, right? Because he didn't have the other supporting infrastructure. And so yeah, we were very excited to back that team. I remember reading the first white paper for it in early 2014. So like 10 years ago now, and being very excited about it, but also understanding that this was a big technical build. And those are great projects for GV, you know, we see an enormous opportunity. But it requires building lots of, you know, complex, meaty technology in order to get there.

Yeah, that sort of maybe segues into, given GV seems to like backing these companies that, as you say, are kind of potentially quite meaty builds, how hands-on would you say GV is with companies, whether it's technical specifically or product strategy? And do you ever kind of bring in anyone in-house? I mean, yourself, you're a practicing engineer, so is that you engineering effectively on GV portfolio companies? Or, you know, how does that kind of look? Because again, I'm aware that VCs can have very different approaches here in terms of the hands-onness and why they have that approach. Totally.

And so we're very lucky at GV that we have a whole team that we call the ops team that is really world-class people that we've pulled in from startups, Google, other places who work hand in hand with our startups. And they're working across a bunch of different areas, you know, that could be finding great talent, you know, thinking about press and marketing, thinking about UX and design. We have some amazing designers and UX researchers on the team. And really it's about different inflection points in the business. I mean, again, these are almost like consultants that you would tap into when you're hitting, you know, hey, I really need to get into the press or I need to get out of the press. I need to launch this new product. Can you help us kind of test it out and see if this is the right moment or right strategy? And then, you know, beyond that, there's obviously lots of people at Google with, you know, they don't work directly for GV, but they can be really helpful to us in terms of just checking in on different areas. So yeah, there's a ton of resources we can bring to bear. I mean, our goal is certainly not to like, you know, build your company for you. I mean, we're backing founders for a reason and we know that they have incredible talents and we want to really just, just kind of supercharge that at the right moment. You know, for me, again, you probably don't want me at this point writing any code for your company. But I'm always happy to be a sounding board and resource as you think about, again, different technology, different strategies, things like that, and other people that I've worked with, other CTOs. And so, kind of just plugging into that community can also be very, very valuable from our end.

To me, that just sounds hugely valuable to have, especially sort of a technical sounding board, someone effectively that you can trust and kind of just lay out all the code and be like, what do you think? Am I going in the right direction here? I think a lot of engineers struggle to probably have someone that they can call upon to do that with. So yeah, that sounds super valuable.

I mean, again, it can be super lonely as a founder in the earliest stages, you know, again, especially if you're coming from a bigger place where you're working with, you know, many other engineers and you just had that support system. So yeah, bridging that sort of gap can be really valuable in the earlier stages.

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And you touched upon, obviously, founders. You need founders for companies. I think a lot of people have kind of, you know, YC, for example, is, is quite well known in terms of some of the info they put out in terms of what we tend to back, XYZ kinds of companies. And I think that kind of filters through to most— a lot of people's thinking is this is just how it is. One of those is, you know, they talk pretty strongly about co-founder companies. You know, it's not that they don't back solo founder companies, but co-founder companies, you know, they laid out all their data to say why, etc. You know, Google Ventures, GV, is coming in sometimes Well, it sounds like slightly later stage. So how do you, I guess, look at that? Does it matter at all at that stage whether it's been co-founded or solo-founded, or how do you look at that?

Yeah, it's a great point. I mean, I think we try not to have too many hard and fast rules about what we'll invest in other than like things that are, you know, ethically not aligned with us. I've backed many companies with, you know, multiple co-founders and I've backed many solo founders as well. I think again, you're really just evaluating what that person or group of people can do. You know, it's clearly a lot more work as a solo founder, but often then they're making hires, you know, to kind of fill the gaps early on. I mean, I've backed solo technical founders and then they're hiring people who help with, you know, product and UX, like maybe much earlier than they would, you know, if they had someone else on the co-founding team who was really great at that. So I think as long as the founding team has the ability to recruit to fill in the gaps in terms of their skill set, I'm totally fine with it. I think there's maybe just a little bit of safety with investing in more people like, "Oh, well, if so-and-so leaves, then we still have a company," and things like that, which I get in the earliest stages. That's probably more of a risk once things are Series A, Series B. There's just more company there. But really, to me, no number of co-founders other than, I don't know, we have 10 co-founders or something crazy, is a flag as far as I'm concerned.

Yeah, great point on just the risk piece there is maybe what some founders aren't sort of thinking about in terms of, well, if you look at it from the other side, you know, what it was, it's not that someone's saying we don't think that you specifically are not capable of building this up. But at the same time, we've got to look at it, you know, we're putting money into you and the company and like, what's the risk profile on that if that's kind of a just a you company and not maybe two of you? Yeah.

And I think again, if you're a solo founder, it's just important to build that support network. Again, talking about it's lonely early on, make sure, you know, I mean, something I've done is help connect founders, these like other pods of founders, they can chat with each other, get feedback, you know, talk about different strategies and things like that, which again, if you have a co-founder, those are all the conversations you're going to be having internally. But a lot of that, again, if you just have a good support network, you know, through investors, other founders, just other people in the industry, you can get a lot of that. It's more work, obviously, but then, you know, you're the sole founder, you have more ownership of the company. So it all kind of balances out.

Yeah, absolutely. And, you know, getting to the kind of sort of the end of the looking at how, let's say, GV would evaluate companies, you know, the— I guess sometimes the beginning and the end, it's the valuation, which is always the bit that kind of the real numbers. And what's kind of your opinion at the moment, or like how valuations are kind of looking? Are they— we definitely went through a very frothy period 2, 3 years ago, and then there's quite a lot of noise, or depending, I would say geographically it's quite dependent on people say, "Oh, there's no funding anywhere," et cetera. I sit in Singapore and actually I don't see that, if I'm being honest. I see there's quite a lot of opportunity, certainly in this part of the world, at least at the moment. So, you're sitting in New York and I'm not sure geographically if you have any leaning in terms of GB and where you tend to invest. But yeah, how are you seeing valuations and just the kind of environment at the moment?

Yeah, I mean, it's really easy to talk about valuations in the past. I mean, as you pointed out, there was this kind of COVID bubble where really all asset prices shot up just because of all the money that was flowing into the system, and startups weren't immune to that. And I think a lot of these things matter a lot in the short term, right? So if you were someone that was about to sell your company, let's say, 2021 would have been an amazing time to do it because the prices were super high and almost, you know, anything that you'd been doing in the past may or may not have mattered because, you know, the market was approaching a peak and you could have had a great exit sort of regardless, right? There are lots of SPACs and all these other things that happened. I think when we're investing, again, when you're coming in at the earliest stages, seed, Series A, you're planning for a journey that could be 5, 10 years, maybe more. And so, you know, whatever those conditions are in that moment are probably going to look a lot less, less relevant, you know, when you're looking backwards. Will you maybe pay a little bit more, pay a little bit less? Of course, right? There's always going to be those perturbations. But really, to me, what's kind of always been true, if you look at venture, you know, going back to the earliest days, if you're in the kind of best companies, right, the top 10%, the top 25% of companies, there's always going to be great returns for them, kind of regardless of whether, you know, things are at a peak or you're in a recession or whatever it might be. And so that's really how we think about it. You know, we're thinking like, is this going to be transformative in the future? And if so, you know, we can't really control what the macro situation is going to be then when that company is having an IPO or whatever the sort of outcome is going to be. So we have to pay attention to it. I mean, one of the other things I do at GV is I kind of run something we call the macro group, where we actually have a bunch of speakers that come in and talk to us about different things that are going on in macro. And I think it— what I've realized over the last, you know, 5 or 6 years is like macro is starting to affect venture more and more, but it's still not, you know, we could care less what's happening quarter to quarter in terms of most of our companies. So really it's, it's about can we be in the best companies and like what, what is, what's their full potential, and then we'll let the macro sort of fall where it may.

Yeah, I think that's a great sort of point there. Yeah, just that people might get a bit lost thinking that the macro does affect kind of the venture side maybe a bit more than is true.

But, you know, it changes the amount of venture, right? So, so again, if people are raising lots of money for venture funds, there's just going to be more money out there. Probably means more startups gets funded. In leaner times, there'll be less of it. But again, I think my point is that that if you're building one of the best companies, there's always going to be venture money for it. We've never been in a point where venture goes to zero. And again, we're very lucky to have Alphabet as our partner. They have lots of capital and they're super, super patient. So that's the approach we take. And again, I think that that means that when things are hot in the market, we're not doubling and tripling our fund size. And when things are a bit leaner, we're also not cutting it in half. We have more of this steady approach, which I think if you're doing long-term investing, that's That's, that's what you have to do. And I wanted to touch on the piece about geography. I mean, I do think geography does affect it a bit, although obviously post-pandemic entrepreneurship is everywhere. You know, you can start companies in almost any place on the planet and it's going to work. But New York is where I sit and I feel really great about the ecosystem here, especially post-pandemic. I mean, it's, it's becoming a great place for young, smart people to move to— founders, engineers, things like that. I mean, there's a great ecosystem. Of both universities, big tech companies, startups. So we feel pretty bullish about what's possible in New York just because of all of the work that's been put into the ecosystem over the last 10+ years.

I was back in New York. I say back, I lived there a while ago and have tended to go most years for various reasons. Yeah, I was back there in January and I couldn't agree more that just the way things kind of look in the tech kind of ecosystem there at the moment, look pretty awesome. And a lot of my friends, I lived in Hong Kong for a long time, and actually a lot of friends have moved from there to New York. And a lot of people kind of are congregating, I would say, in New York now, which is super interesting to see. And just a bunch of really interesting companies in New York. So yeah, that's exciting.

That's cool to hear. I mean, one of the things New York has that I think San Francisco has in spades, and maybe some of the other cities are not quite there yet is just this convergence of talent and ability to sort of switch jobs. The joke in Silicon Valley is always like, "Hey, you can change where you work without changing where you park." And New York has big engineering offices from Google, Microsoft, Meta, Amazon. I mean, the list goes on. They're all here, sometimes hiring thousands, if not more, of engineers. And so, If you leave one of those places, or you come to New York and you start a company, and it doesn't work out, you know, you might be able to just go and, you know, work at one of those areas and not have to, like, uproot your family or, you know, move cross-country or things like that. And I think that kind of safety net, that was really important for Silicon Valley. And I think New York is one of the few places that really has that too. You know, some other cities, if you went there and you started a startup and, like, you know, the startup had to be there, and it didn't work out, okay, you might then have to make a shift. And also, you know, there's tons of great universities. There's just this kind of influx of talent. And as you said, people are excited to move there, you know, from other big cities and different places. So I think that that is always the cornerstone of a good tech ecosystem. And I feel really positive about where things are today and where things are headed for the city.

I think that the real human network should never, can never be sort of understated. There was probably a phase where Especially during pandemic, people kind of thought, "Oh, it doesn't actually matter. We can be wherever and we're still connected, et cetera." But yeah, I've always been someone that has deliberately lived in bigger cities for that reason. I think it just pays off so much. Yes, they're expensive places to live, especially if you're maybe a younger engineer trying to get your startup off the ground, but the value you get back in who you meet and like you've just said, Erik, being able to almost have a fallback if actually doesn't work out. You probably have already met someone that's ready to employ you more than just if you're sitting, you know, off in a different country somewhere trying to ping with your LinkedIn somewhere. So that's great advice.

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Looking at kind of how Google Ventures— well, I want to kind of just touch on this. It's Google Ventures even though, you know, so the mothership, I guess, is now called Alphabet. I'm curious, was there any chance it was going to become Alphabet Ventures, or is Google a specific kind of name now in terms of Google Ventures?

Yeah, I think we go by two names now, both GV and Google Ventures. And look, we were started in 2009, so we technically predate the alphabet, even though we are always set up independently. Our structure is one where we're measured on financial return ultimately. I mean, we want to have great impact, but it's about generating real returns. And that keeps us really aligned with the companies we're backing. We can back people that are good for Google, bad for Google, something in between. I mean, almost half of our dollars go to life science companies. Very little overlap with what's going on at kind of the core Google business. We've backed competitors to Google products, things like Slack. I've had big exits to Facebook, I guess now Meta. That's great. Their money's green. We're happy to take it. And in terms of how we work, I mean, we work like any other VC, which means we're paid carry or like a portion of the profits when our funds return. We don't get any Google stock. I don't have any Google stock from GV, as nice as that might have been over the last couple of years. But it keeps us really, really aligned with the founders we're backing. And I think that's the most important thing. You know, I'd feel awful if I, you know, go and write somebody a check and then, "Hey, you have to use these Google products or else," right? But nope, you want to use AWS, you want to use whatever, that's totally fine. And obviously, if they do want to do things with Google, we're happy to make those connections. But that's not a— it's a non-factor in terms of how we think about who to back.

That's a, yeah, I think a great clarification point. You know, just I think naturally people see the name Google there and probably think there is more connection actually than as you've just described. So that's, I don't know, it makes complete sense. And it's sort of, as a fund, you want to have that independence to, you have to be able to make those decisions. If we look at, you know, which areas you just said, I think life sciences actually is about 50%, but you know, Any other areas that kind of are outsized as well?

The area that I spend most of my time in, which is what you call enterprise, that's everything around infrastructure, developer tools, classic SaaS. That's probably the other really big one. We also do lots of consumer investing. We do frontier stuff, which involves hardware, climate, semiconductors, things like that. So it is really broad and really diverse. But I mean, at the core of it, unsurprisingly, is different types of software.

Yeah. So, let's talk just about any of the kind of Portco's, that's the sort of short name, portfolio companies. And what would you say, we've touched on a couple, you mentioned Warp and we've talked a bit about Cockroach Labs, but yeah, I'd love to hear about sort of what are some others that kind of come to mind in terms of just some really impressive transformative products and companies that that GV's invested in, especially with yourself being involved specifically? Yeah, I'd love to hear about those.

Sure. I mean, I'd love to just touch on Warp because you only mentioned it for a second. I mean, it's a really fun one. So, most of us, whenever we got started with programming, we had to use a CLI, right? I mean, I'm old enough that my first exposure to computing was around using a CLI, whether I wanted to play a game or do something productive or anything else. And now it's been relegated to the world of the programmer, but honestly, it's not something that's changed in 40 years, maybe more. It's the same thing. I mean, I remember getting my first Mac laptop. I think Terminal.app is pretty much exactly the same as it is on a 2023 MacBook Pro. And so Zach came to me pretty early on and was like, "Hey, what if we completely rebuilt this from the ground up?" And at first I wasn't, I sort of didn't get it. I was like, "Oh, that's Is this not that interesting? And then I started realizing this is probably the most widely used developer tool and it hasn't been improved. It has no UX improvements. There's no kind of like AI, like all these other things that are showing up in every other aspect of the development workflow. We kind of have this least common denominator in terms of the terminal and the CLI. They have completely rebuilt it. I mean, if you're a programmer out there, you have to download it and give it a shot. It's on Mac and Linux. Right now, and they're expanding to different platforms throughout this year. But it's really a total rebuild. It's just a joy in terms of what they can do. And if you've ever been frustrated in terms of knowing I need to expand this and tar -whatever, like if you haven't committed all of that to memory, this is the perfect tool for you because there's so many more ways that even, you know, it's almost called relatively simple technology in terms of sharing commands and using AI. To infer what you do, it just makes you so much more productive. And so, I love that because this is a, it's a company built by developers for developers, and hopefully making a lot of people's just, you know, regular day-to-day experience that much more productive by improving this tool that we all have to use, but doesn't have to be so painful.

Yeah, we should, I really want to try and get them on Software Engineering Daily.

You should, absolutely. Zach, who's the founder, is incredible. And yeah, I think you'd be, I'll put in a plug for making him a future guest for sure.

Yeah, fantastic. Fantastic. I need to download it. Admittedly, I kind of caught on to it fairly recently, but yeah, I'm going to download it. And because, as you see, I'm in terminal every single day, and yeah, it hasn't changed, and I still have to use the same shortcuts that still aren't that great, and etc., etc. And I'm sure, like, yeah, Warp just sounds awesome. Any others that kind of come to mind?

Yeah, another one, more recent addition, is this company FlutterFlow. And so FlutterFlow is an app creation platform It's based on the Flutter language, which if you don't know it, it's really cool. It allows for cross-platform development. So if you want to build something that works on iOS, Android, you know, mobile web, you can write the code once and deploy to all of those areas. The thing about Flutter that I think people forget is like, there are so many businesses and even people that are just building apps themselves that kind of have these parallel code bases between iOS and Android. And it's really a waste, right? Like you'd really love to just write something once and, you know, deploy to the widest set of users possible. And you also want to be able to use kind of platform-specific stuff. And again, that's, that's pretty easy to do here. But so FlutterFlow is yet a layer on top of that, which makes designing and building these apps super, super easy for someone who's, who's technical and wants to jump in and out of the code, or for someone who's just comfortable building, you know, UIs. But doesn't necessarily want to get into all the code. So what's really happening with them is they are democratizing the ability to build software and also allowing, you know, people who are really technical and people who are, you can call it medium or less technical, to collaborate in the same app, right? So I think that that's really a model for how software is going to continue being built into the future where, you know, AI has a bigger influence and there's just other people who understand how to build software, but maybe haven't been trained as a computer scientist. And so, we need platforms that allows everyone to contribute because frankly, we just need to build a lot more software and we need to kind of break down as many barriers. So, the mission of this company is really to go from ideation to ship production code as quickly as possible, focusing on mobile, obviously. And I think they've done a great job. In terms of what you can do, you know, whether you're starting or just like a simple UI design and then turning it into a working app. I mean, what's really, really cool about this company is, you know, I was at a board meeting there and we have paying users in almost every country you can imagine. I mean, it's really, really cool for a young Series A company. This thing has global impact. I think it's because, you know, the desire to build and ship code, you know, is universal. And it's not like we've done a bunch of internationalization work. There's more to do there. They've really struck a chord with a bunch of people who are interested in building apps. And I really love working with that team and seeing just where it goes, because I do think the future of building software is just about bringing more people into it. You know, we're, despite all the kind of, oh, AI is going to replace everyone, I still think we have way too few software engineers. Really, it's about making more people, giving more people the ability to create software.

Yeah, no, I couldn't agree more. Always kind of hear effectively non-technical people also saying, "Oh, AI is going to come and take your job." I'm like, "It's not exactly how I think it's going to work." It's just that AI, and as you say, kind of platforms that democratize the level at which someone can come in at to build things, is always changing. I think every software developer needs to be always aware of of that, just never sit still. One company that did that, I think, really well, there's a ton of reasons you might not want to use this product, but I still think Webflow did a great job of actually changing that bar where you suddenly didn't need a developer for a lot of things. You actually design it. People that called themselves designers effectively became web designers were, and I love that. I used to employ someone who came in as a pure UX, person, and then now he runs his own shop purely through Webflow. So it sounds like FlutterFlow is the same kind of approach in that way of changing that bar, which I think is such a huge thing to be able to do. Totally.

And I think if you just look at how software engineers have moved up the stack, so to speak, over the last several years, I actually feel that this is in some ways more of the same. I mean, I remember when I was a young programmer and I was writing little games and I would have to go in it and mess with assembly, right? And learn about registers and and all this other stuff. I haven't thought about that in years. Other than someone who's doing very low-level or systems programs, very few of us do. And that's a good thing, right? Think about how many parts of building software are unpleasant. Writing lots of unit tests, fixing API deprecations, or migrating off old software. I mean, I think about how much of the global financial system is still being run on mainframes with COBOL and things like that. There's no one who— there's no software engineer out there who thinks transitioning that code or rewriting it is a fun thing to do. And so I'm really excited about AI getting rid of all of the not fun parts of software engineering and letting us just kind of focus on really the joy of building software, which is the creation piece. And I think that all these other LLM-based tools will just kind of accelerate that. And that's obviously a space that we're spending a lot of time looking at as well.

Yeah, I'd love to just touch on AI, but we have to effectively. It's a rule now. Exactly. However, not turning the whole episode into another AI episode, but yeah, we have to touch on it for good reason. How are you and GV looking at AI from an, I guess, opportunities and investment point of view? There's a lot of noise. There's an AI for something product popping up every day, and Gemini for X or GPT for X, et cetera, again, popping up virtually every day. How are you cutting through this noise and how are you evaluating AI opportunities just as GV? Yeah, absolutely.

I mean, I think the good news is we've been looking at things that you could call AI for years. I mean, probably almost since the inception of GV. You know, even before this sort of new LLM-based craze has kind of taken over the industry. And so I think that's been, that's been really helpful. We kind of think about things in two buckets. So whether it's for AI, so this could be infrastructure, like I'm involved in a company called Lightmatter, they do optical semiconductor stuff. Turns out this is actually super helpful in terms of increasing bandwidth between chips, which is really useful in doing, you know, large training or inference workloads. And then sometimes we also have companies that are like, you know, with AI, so using AI. This could be something like Typeface or Synthesia. And there, you know, obviously the LLMs and other kinds of models are being used to drive, you know, some consumer enterprise-facing application. So, we're looking up and down the stack. And I think we have, again, the experience of not being new to it, of having seen these things for a while, and just understanding like where the leverage points are. And so again, for me, someone who's really excited about. Infrastructure and developers, there's a lot of exciting things going on in that space. And so, we're spending time with those founders and those companies and figuring out, you know, where, where we want to place our bets. But again, I would say, even though the last 2 years or so have been really, really exciting, it still, to me, feels quite early. And I think that it's going to take time, you know, for a lot of these applications to really kind of percolate through in terms of different consumer experiences, different things on the enterprise. And certainly then for developers, just been talking about, you know, how your day-to-day flow will change. I mean, lots of people are using Copilot and similar tools, but as we know, you know, just typing out the code is just one part of being a software engineer. And there's so many other aspects to it in terms of, you know, production, design, Testing, integration, all of these things will get touched by AI at some point. And we're really excited to sit down with the people that are kind of reimagining all of that and hopefully make more bets into young founders thinking about it.

Yeah, that's super exciting. I love that GV is kind of really looking at a lot of these developer-focused areas. I think that's super exciting. So just to kind of round out, again, we've got probably a lot of people listening, they're in the midst of their startup right now, or thinking about kind of making that leap. Any kind of just a couple of anecdotes of maybe successes and even failures maybe that have come up in the last couple years that might just sort of help give some takeaways to some listeners?

Yeah, I mean, I think in terms of successes, I think it's never a straight line. Even with some of the companies I've been involved with that are clearly leaders in their respective fields today, I mean, I just mentioned Lightmatter that's in the semiconductor space, they're what I would call like a 6 or 7-year overnight success. They had to do a lot of really hard technical work, and then they've gotten to this place where now the demand for AI workloads is obviously going parabolic, and they have a solution that is really well suited to building out the data centers of the future that will be doing all of our inference workloads going forward. And again, when the company was founded, I was lucky enough to be there sort of as they launched, in an entrepreneurship competition, none of that stuff was clear, right? It was, it was very uncertain, you know, when and how the market would come to them. And so sometimes, you know, if you have a vision of the future, you have to stay super, super focused on that. And, you know, control what you can control and not worry so much about— obviously not ignore, but sometimes the market will just take a little bit longer to come to you. And so if you feel like you have something that's really going to serve a wide set of users or people, it's okay to be heads down until that comes to you. In terms of things that don't work, I'll go back to like one of the first things we talked about here, which was not paying attention to feedback early on. If you're building really interesting technology, but you're doing it without talking to anyone who might use it, that's generally how you go down the wrong path. Especially early on. So I always, you know, if you're building something for other developers, like talk to as many of them as you can early on, you know, go talk to different size companies, startups, big companies, medium-sized companies, different verticals. That feedback is really the lifeblood of an early stage startup. And so it's, again, I think for more technical people, it's very easy to kind of put on the blinders and ignore it in the earliest days. So, I feel like the sooner you can get to that feedback flywheel, the better things will go.

Yeah, I think both of those are great advice. Yeah, I can sort of turn the first one into a soundbite, I guess, of stay on the bus. I don't know if you've heard of the Helsinki bus station sort of story. Listeners, Google it and you'll sort of get the gist. But the idea is just stay on the bus. If you have a vision for something, all startups kind of start from the same place. And it will look quite samey to, you know, you might be comparing yourself to some other outfits and say, oh well, they're there today and I'm not. But that's not the point. It depends on your journey and actually, yeah, stay on the bus. And feedback, yeah, couldn't agree more there as well. As a technical founder, yeah, it is difficult. It is difficult sometimes to get your head in that space of one minute you're coding, the next minute you have to line up calls or meetings. And yeah, you don't always want to actually hear what people are saying in the sense of, ugh, that thing. But But I couldn't agree more. You just be humble and be able to take people's opinions and sort of then apply that back to what you're building. And that's great advice.

It's not a natural thing, right? Like, if you're just coming from a pure software background, you know, you might be doing like design reviews and things like that, but often you're not the one catalyzing it. And I think that's what happens when you shift to being a founder. Like, you have to catalyze all these things, and it may not be the most natural or comfortable thing, but the more you do it,, the better you're going to get at building tech and products.

Absolutely. Well, we are out of time today, unfortunately, but I really appreciate you coming on today, Erik, and giving lots of little nuggets of wisdom there in terms of building companies and just some really fun stories there from what GV has been, been doing and investing in. So Erik, where can listeners sort of find you?

Yeah, so I'm on X, formerly Twitter, as @ejn. So find me there and I'm usually sharing stuff about technology in our portfolio companies. Awesome.

Well, again, thank you so much for coming on and hope we get a chance to catch up again in the future. All right.

Thanks for having me, Gregor. This is fun.