Workshop Wednesday: 4 Business Model Changes to Adopt with Notion Capital

Hello everyone. Welcome to this week's Workshop Wednesday with Notion VC. We're gonna just give everyone a few moments to get in here and get settled. Hello. Hello everyone. Welcome back to this week's Workshop Wednesday, our first one after annual. So excited to see so many names and familiar faces in here. As always, we appreciate you joining us here for Workshop Wednesday. Just letting a few more folks in. Stephanie, we've got a great crowd so far.

Yes, looking very active. Great to see everyone.

Yeah, well, thank you guys all so much for joining. We're thrilled to have you at Workshop Wednesday, whether this is your first Workshop Wednesday or your 30th or 40th. We're really excited that you're here. As a reminder, these happen every single Wednesday at 10 AM Pacific time, and we are here to share some great interactive hands-on workshops and conversations. Stephanie from Notion VC is here with us today to walk us through some amazing content, and we will have plenty of time for questions with her as well. Um, Stephanie is a very experienced investor joining us from London, so has some great tidbits to share, of course, about the European ecosystem, but overall, um, worldwide as well. So you will have the opportunity to ask for your questions, so please make sure, um, that you are dropping those questions in the Q&A. I'll be coordinating with you throughout the session to see if you're able to ask those questions live and direct and interact directly with Stephanie, or if you'd prefer for me to read those out for you. So please keep an eye on the chat if you have asked a question. Also, we would love to hear where everyone is tuning in from. Again, Stephanie is coming to us from London, so we appreciate her joining us in the evening. Would love to hear where all of you guys are coming from as well. And also would love for everyone to turn on their cameras so Stephanie knows who she's talking to as well. It's always easier to see some friendly faces, so encourage you guys to join. and have your cameras on. So without further ado, I'm gonna go ahead and introduce Stephanie, principal at Notion Capital, and we are gonna, just dive straight in with a couple of questions just to get us warmed up before Stephanie dives into her content. So welcome, Stephanie. Thanks so much for joining us at Workshop Wednesday.

Thank you for having me. Very excited to be here today, and hear all your questions afterwards.

Yeah, absolutely. Well, as always with our VC speakers, we always love to hear about some of your trends and favorites from the year so far. So Stephanie, what has been one of your favorite investments that you've made over the past year?

That's a good question. And I'm quite lucky here actually, because I've done personally one investment on behalf of Notion, which is into a company called DataOps.life. Which I funded in around March, April timeframe. That's been the only investment for me over the past 12 months. So easy to pick my favorite on that one. And what they're doing is they develop data products or offer an environment to develop data products at speed, mostly used by people who operate on the Snowflake ecosystem and have a lot of internal requests for data products as well as externally monetized modules. And it allows developers to be much more kind of hands-on, bring global teams together. Was particularly impressed by the growth they have shown over the last year or so. And the team is really fantastic. So one really close to my heart. I'm closely involved with them. They're also at Big Data London next week. So might even see you there, right, if you're in the ecosystem.

Love it. Sounds like a great investment and definitely helpful. I know we always have a lot of folks from engine development teams on these workshops. So thanks so much, Stephanie, for highlighting that one. And we'd also love to hear what surprised you the most about venture capital this year. I know it's been a little bit of a wild one, so we'd love to hear your perspective.

Yeah, yeah, I will be diving into some of these topics actually today, as in particularly the changes that we have seen over the last kind of 2 years actually coming out of COVID and seeing the big pickup in tech and then a little bit of a correction in the market, a more maturing environment as we like to call it. So we will get to that, but I think I think one thing that strikes me right now when speaking to, uh, to founders, uh, is actually how tough they are to get in touch with. Um, and, and I'm still figuring out in my head, like, hey, is this because the VCs need to do a much better job at, um, at showing their interest and real interest into companies? Because you get— might get bombarded with, with interest. Or is this just not the time that you're raising right now? There are still companies that we've seen picking up over summer specifically, um, uh, that seems to indicate that the market is improving. But when you look at across our team, it seems that more than ever it's harder to get in touch with the right founders. So I'd love to hear that a little bit more from you afterwards. But that's the one thing that really struck out to me over the past years, which, which, which, which might be a fundamental change in, um, in VC, uh, or it might be something that is rebuilding that trust relationship around, hey, it's now a good time to raise, or should I just ignore all VCs altogether because this might not be a good moment to raise in the market?

Wow, great tidbit, Stephanie. And founders in Workshop Wednesday, if you are looking for investors, make sure it's easy that they can find you and get in touch with you because that's definitely a barrier we want to try to break down. Well, Stephanie, thanks so much for getting us kicked off. Excited to hear what you have in store for us in the next 20 minutes or so before we open up for questions. So I will pass it over to you to take the mic.

Very good. No, and then eager to talk to you a little bit more today about— hold on, let me get my slides going. There you go. About some, some of the changes that we've seen, right? And particularly, we've seen kind of a couple of business model, fundamental business model changes that were once ingrained in the SaaS playbook, but are now kind of changing in the light of maybe a tougher economic environment, but also a very much maturing market. And so was hoping to cover some of these topics with you today, because I think they're just ever so valuable. And we believe that those companies who will adapt and optimize those will have the resilience and staying power over time. So yeah, kind of diving into a little bit what kind of happened to just get everyone on the same page. When we look at the data, and especially on, let's say, the left-hand side of the screen here, you can clearly see that there was a big valuation increase in and around, you know, that COVID onset. There was lots of kind of LP money available going into the VC funds to foster kind of investments in the likes of Zoom, etc. But so in general, an abundance of capital. But because of the big tech uptick, we also saw just much more rounds happening. And then there was this correction that happened, right, which was, you know, fostered by fears of a recession, rising interest rates, which made it much less attractive for limited partners, but also for public markets to to invest in tech companies potentially being overvalued, right, as it was. And then you saw that we're kind of hitting, hitting lows which are kind of stabilizing at around the levels that we saw back in 2016. Now, we have no indication to assume that those levels kind of will worsen. We think that this is the bottom and that we over time will slowly go up from here. But we do believe that this will stay low for a little bit longer. If you look at the right-hand side graph, you see that, that deal count has clearly fallen, that overall investment has fallen. However, I do like to caution that we don't know the exact data here because a lot of convertible loan note rounds have been happening over the last 2 years and all that data isn't captured in any of those numbers on the right-hand side. And so the actual numbers might not be as bad. But what you will see is that given that valuations have come down a lot. Companies that will need to go out, raise from external investors again within the next 12 months, most likely those will need to grow much faster to kind of counter the effect of a multiple decline. And so for that, we have laid out a couple of strategies and are observing a couple of strategies that could be helpful to you and kind of are based on what your peers are doing in the market. Now, this is a really handy graph to highlight to you because it really shows that at the moment there's quite a clear division in the market. On the one hand, you might be growing very fast and relatively efficient, in which case you're nicely sitting on the right-hand side of the graph, which is a great place to be. Now, it's also perfectly acceptable to say like, hey, you know, I dial back a little bit. I'm waiting for better times. I'm not growing fast enough to play on the right-hand side, so I'll steer myself to the left-hand side. And that gives longevity as well. That's perfectly acceptable. What's not acceptable is to just sit in the middle, which is where the valley of death is. And there you see kind of traditional kind of SaaS methods like subscription pricing, just only doing subscription pricing. Or driving growth through headcount only, or doing a pure sales go-to-market strategy. Those strategies are no longer working. And so you need to— if you want to play on the right-hand side of the graph, you need to make some adaptations. Now, as I alluded to, we have some data on this. What I used for this presentation is based on all the conversations that I've been having over the last months. And I've been keeping a close, close eye out for it. But also annually we select the top 100 of early-stage seed companies that we believe will kind of define tech in years to come. And we closely track their behavior over time. And that's a really nice set of data to kind of see what kind of different strategies are they adopting. And then there's a little bit on kind of public sources that I've been using here. And so one of these things, one of the fourth changes that we're seeing is a very clear uptake in what you call product-led growth strategy. And so if you look at our cloud challengers, the 100 companies, there's about 35% are currently purely working on a product-led growth strategy. If you look at Notion having funded in the last 2, 3 years, 30 or so investments out of those 14, so half of them virtually have been PLG. And if you look at the public markets, then you see from 2019 onwards, companies that have a PLG strategy on average have been outperforming the general SaaS benchmark or SaaS comparables. And so this is really interesting to see because really what PLG is all about is instead of saying like, hey, you know, I invest more in sales and marketing, you kind of bring it back to, no, I invest in product and data. And, and what it does here is it not only brings to you that you kind of try to optimize the onboarding for customers, but also really look at what customers are actually using within your product and then optimize for that. It gives a really low entry point. So where traditional sales-based strategies would be much more around building sales collateral hiring sales teams, which take a long time to ramp up, you know, doing lead qualification, doing demos, and then spending some time to generate a day one value. If you kind of spend more time on thinking about how you can adopt a product-led growth strategy, that, that, that you could save all of those costs. And the idea is really to drive that virality wheel worth of mouth virality through the product because you have an exceptional superior product and is obvious when you look at it online to then kind of decrease the customer acquisition cost to something near zero, right? If you do it well. And so, so if you kind of look at the wider data available, then it shows that companies are 70% more likely, 7-0, to break even within 2 years to reach profitability. But also that they're kind of 2.2 times more likely to reduce their customer acquisition costs. So it's definitely something that you might want to take some kind of aspects of for your company. Now the other thing that we're seeing kind of since the start of 2020 is that companies are much more focused right now, not just on kind of like headcount or like revenue per head, but also on profitability per head. Now, this is a little bit harder to measure, granted, for companies that don't have profitability, i.e., I would just assume most of you. But if you, if you look at it, we see a very clear trend where again, our cloud challengers will be growing this year their headcount in the range of 0 to 33%, which is astonishingly low, right? If you think about it for a tech startup. Especially at the, at the seed and early stages. But then we started digging further into the data and we saw that really what they're optimizing for is that any person they bring into the organization should be able to generate revenue in the next 6 to 12 months, whether it is a kind of more commercial-facing person or whether this is a product person. Right. And so this is what you also seem to clearly see from, from public markets. I mean, the likes of Microsoft, Salesforce, AWS, Meta have all done major layoffs in the last year, whereas Apple, who has not necessarily the highest revenue per kind of head, but certainly the very strong or maybe highest profitability per head, hasn't done any layoffs. Right. They can just sell hardware products at an incredible margin. And so kind of bringing that to the earlier stages, we kind of came up with a little bit of a benchmark for you to look at. Like, so somewhere below the $20 million in ARR, you're kind of trying to strive for $150K of revenue per FTE. And then above that, a little bit more. But this is really to just align, like your largest cost base within your organization is people, right? And this is just to align yourself with, hey, are, are the number of FTEs I have, is that directionally correct or should I make some, some adjustments in that? And who am I hiring for the next position? And is that person able to, to contribute to this number in a meaningful way in the next 6 to 12 months right after their ramp-up period? Now then, kind of looking at pricing as another tool to use now, pricing the SaaS kind of subscription model has, has been treated as the sacred cow for quite long, and for the right reasons, right? It kind of nicely doubles up if you have, you know, assuming that all customers renew and then you sign up new ones, that you kind of create a nice exponential effect, and it's very sticky and it works great, right? Um, but then we saw that usage-based pricing is, is really taking off. Um, so it's like something like, uh, 22% of, of our cloud challengers are doing purely the usage-based pricing model whereby you just charge on the basis how much you use the product, right? Now, OpenView found that actually currently 61% of companies use solely usage-based pricing, going up to 81% in the next 2 years. Now, that is something that might be seen in the States, less seen in Europe at this point. And I'm kind of obviously basing most of my data on the European ecosystem because that's where we focus on software. But then if you look at it, is that really— it's all about thinking about how can you implement some of these aspects of usage-based pricing. And I think in this environment, it would be, in my personal eyes, would be wrong to say, hey, you know, let's go for pure usage-based pricing model because what you get is maybe too much fluctuation, right? Your best users will, will love you and use a lot, and it creates a nice low entry point. But you also want a bit of stability for the business. And so if we look at our most successful portfolio companies today, they have what you call the SaaS+ model. And the SaaS+ model really means, hey, I have a fixed subscription base, might not be the highest ACV, but, you know, good ACVs. Obviously higher, always better if you can. But then on top of that, I charge per API call or some meaningful part of the business, right? The finance revenue overlay is always quite interesting, right? If you have that for your business. So that's one of our portfolio companies, Muse Systems, is doing that very successfully. They started off selling hotel management software, the whole system that a hotel operates on. Staff schedules, book taking and bookings, etc. And then on top of that, every booking flows through their platform. And every time you eat in the restaurant, that flows through your platform, and then they take a tiny clip of those revenues as well. And that, that was sort of an exponential, exponential effect, if you will, has been highly, highly attractive. So if you look at the cloud challengers, again, 17% of those are currently adopting a a SaaS plus model, if you will. So again, worth kind of letting go of that belief of like, hey, you know, subscription pricing is the only thing. Maybe also don't go the extreme on usage-based pricing, but trying to find something in the middle could be incredibly valuable here. Now, and then the last thing which I found very striking to see and something that we have been focusing on as a SaaS investor for quite some time, But I didn't know until I saw part of this data. I spoke to a couple of companies that it became really meaningful to me. So as Notion, we've always kind of held this kind of rule of thumb that companies shouldn't kind of spend more than, let's say, 10% of revenues coming from professional services, professional services being implementation, maybe a little bit of customer support depending on whether you charge for it. And then the other big, big part of the gross or the cost of goods sold or cost of sales is the, the cloud spend, right? So Gartner found something like 41% of the total IT budget is spent on cloud cost. Now, if you can optimize either one or both, but especially I think the, the cloud cost part, because I think most of you have optimized for the kind of keep professional services low and at high margin, then what you will see is that if you only got a 10% increase and kind of like remove the top, the bottom, sorry, the left-hand side below 60%, because I don't believe these numbers to be true. Why? Because I think they're more talking about different business models than SaaS. And I've actually messaged the researchers on this and I didn't get an answer. So it's a bit frustrating. But leaving that aside, the below 60%, if you go above 60%, 60%, and you look at, you look at, um, what a 10% increase in your gross profit margin can do, you see that the multiple that you get on your company is, is a multiple increase you get on your company is quite astonishing, right? Um, and so this is a very quick and easy way, in my opinion, right? It requires some effort on the back end, but a really quick and easy way to say like, hey, you know, I'm a really attractive SaaS company, I demand, you know, 20— then not, not now at the moment, it's just 21, but like between 14 and 20x multiple on my business because I'm so efficient, right? I have such high gross margins. And so how are you going about reducing your cloud spend a bit? Well, there's a couple of ways, right? Most of the cloud providers currently offer some sort of free spend view tool combined with the usage of reserved instances. But you can also think about, you know, rather than paying in bulk for your cloud cost, you can think about like entering with brokers into a pay-as-you-go agreement, or even there's underutilization insurance. I think there's might be Altimeter that's providing that, but I'm sure there's multiple providers of this that can kind of guarantee you that if you underutilize your instances, you can kind of get a cash payback or so. So those are kind of really interesting things to look into. So that was kind of most of the points I wanted to get across, really kind of those 4 changes that we have seen, kind of sales-led turning to product-led growth, headcount-driven growth going to more efficiency. Pricing is turning to something like a SaaS+ model with a bit of usage-based pricing. And a real focus on can you increase your quality of your revenue? And if you can, and if you can make these adaptations and optimizations, then not only do you create kind of more longevity because you optimize the biggest part of your cost, but also drive a little bit more of your revenue or have a bit of focus on what you can do about your revenue increase, especially for example, around things like pricing where You know, as a VC, kind of myself included, you sometimes spend too much focusing with companies on how many customers have you signed up this month, how many are you signing up next month, whereas the revenue equation is something like, you know, number of customers times the price, right? And if you can make small variations and optimize for that, where your highest users, you highest heaviest users be able to pay more, and then your new customers are able to enter at a lower level, then I think you can make some really nice wins there. So on the back of that, I think that was it. And I'm happy to answer a few questions that might be related, might be less related to this presentation.

Yeah, thank you so much, Stephanie. I was going to say, we can have you stop sharing your slides and you can see some of the faces of some people you've been talking to for the last 20 minutes. Minutes or so. We've gotten some great comments on here. People especially loved that not all revenue created equal slide. So great slide. I know that was super beneficial. We have a question from Pete about one of your earlier slides. So Pete, if you'd like to go off mute, feel free. And if anyone else has questions, you can drop them in the chat or raise your hand and we can get you unmuted too. But Pete, we'll pass it over to you first.

Thank you. So I'm Pete. I'm founder and CEO of Experiential, and we are an AI-first platform for generating everything that you need to build a software from A to Z. So, um, my question was, we're also in the B2B space, and one of the things that, as a former buyer of enterprise software and also seller, most companies like predictable revenue, and they need to understand what their costs are going to be. And in terms of buying, they want to have a flat, predictable price from all their vendors. So I'm curious, what are you seeing as far as the conversations go to get over the hump of usage-based pricing in B2B enterprise SaaS to get over that hump?

Yeah, no, I certainly acknowledge it depends a little bit of the space you're playing in. So there's a couple of variables here, right? A, it depends on the size of company that you are as, as Periental. You know, I wouldn't encourage you to move away from SaaS pricing before you properly hit Series A. A, maybe even towards the Series B to kind of offer kind of a foundational stage for your company. Now, if you're talking about your clients, then, um, then it depends a bit on who your target market is. What I can imagine is that, um, uh, for a lot of users that enter into your product, that might be, you know, perfectly acceptable to say, hey, you know, you come in at this fixed SaaS pricing, that's fine. The moment you go for an enterprise package, and that's what you obviously see on most websites, right? The enterprise package includes extra things, but you also charge for extra things that you use on top of that. So if you want to make some API calls, most, most, most people only need one API integration, for example, depending on the software. Fine, that's included. Now, the moment you want to make API calls for multiple kind of different tools, then, then we charge you per, per call, right? So something like that. So at that point, if it's an enterprise customer, they probably wouldn't care because you know, they're already bought into your product, their spend is enormous anyway with you. And so, you know, if there is a variable component, that's fine. Slightly less, I mean, like, I should note financial institutions are not that keen on variable spend. So it depends a little bit on how traditional the industry is that you're selling to, for sure.

Yes, Stephanie, thank you so much for the response. And Pete, so that was very insightful, Stephanie. Pete, to just add to that same thread, I also posted a comment on your thread on the Zoom chat. I think your question is also like how to get to the predictable. I mean, it's a little more about like the way you track the pricing is usage-based, but then customers can still do something like a commit to consume, right? So they're kind of buying upfront, you know, blocks of usage and saying that I'm going to pay so much for this much blocks because that's what I'm predicting. And then you pair it up with something like pay-as-you-go model for things like overages. So, and I hate to use the word overages just to be very clear, but, but yeah, there's that flexibility that people get with that predictability and you still get that benefits of usage-based pricing.

Very good, Adel.

Thanks so much, Raji. Stephanie, I have a question for you about some of your headcount recommendations. For someone that's focused more on that PLG-driven team, what are some of the first hires that you would prioritize then if you're kind of shifting that focus from the SDR sales team? Like, what are the next that you'd want the executive team to be focusing on?

Yeah, so kind of, I mean, you stay a little bit more with the product, but you always start with that, right? Like engineer, front end. And then, and then what probably what you want to do, and this is, this is a big tick up as well. And we made an investment in a space called Outverse, community, a head of community, community marketeer, something like that, that really captures where are your usage originating, Product Hunt, Reddit, you know, those, those hubs where people come together to discuss what is the new hot software out there and what should I use to drive that virality element. And so a community hire is certainly something that I would look into. Head of community is massively on the rise in terms of title and is very demanded right now. And then, and then probably pair it with a, with a platform to get people, you know, talking about your product. So that could be a Discord channel, it could be Slack channel, slightly less preferential. Could be, could be any other provider.

Great, great answer and one that we don't hear so often. So thanks so much, Stephanie. Mohammed, you had a question up next. Would you like to come off mute and ask?

Yep, absolutely. Hi everyone. I'm Shahrukh, the founder and CEO of Remote Bridge. We help early-stage startup companies in North America get to hire best-in-class talent overseas to improve unit economics. Stephanie, my question to you is specifically around headcount. You mentioned optimization. What have you seen work for potentially companies in your portfolio where they have started moving from headcount-led growth to efficient hiring practices? Any advice on that?

That would be great.

Oh, very, very broad question. I think remote is certainly— and this works in your favor— but it's certainly a big thing, right? Being able to source talent more widely. Keep— what we do see very clearly happening is the tech teams usually stay together, strangely enough, because to me it was strange because I was always thinking like devs can work from anywhere, but actually it's the devs that might need to spend a lot of time together and the rest of the team can be more remote. But in terms of efficient hiring, it's any, Any trends that I've seen here? Not specifically. The biggest thing that I have seen is moving away from thinking that you need the top 1% in the market. Because I think that top 1%, and we all know what it looks like, really good education, have a couple of years of experience, it's like that, that, that picture-perfect person. And now that person does add— and this is the past research, right? That person does outstrip performance on that average. If you have, you know, the right hire, we all know that, uh, that person is 10 times more productive than, uh, than maybe not the— or less good hire. I'm not sure how to phrase that. Um, but I think, I think what would be really important is, is starting to look at, hey, actually what we see with a lot of our portfolio companies happening is they set up something like a BDR Academy where you have a very senior salesperson, top in class, overpaid, but then pair it with a lot of graduates that are incredibly kind of hustling straight out of school, want to get trained up into, into becoming a great salesperson, and then pairing those together and build an academy around it. Now, that is an optimization that is quite, quite helpful because you are still having the skills that you need on the, on the, on the senior level. But then you build a whole kind of, well, quite frankly, cheaper org below that, but all people that are incredibly hardworking, motivated, and pick up things very quickly on the fly. And so that requires a little bit more work in tapping into the right networks, but it's certainly something that we also encourage our portfolio companies to do where possible, right? It doesn't work for every company, especially if you sell deep tech to large enterprises, then you need a Rolodex. But otherwise, this could be a really nice academy strategy where you kind of like build them from the ground up.

Yep. Got it.

Thank you for sharing. Do have a couple more questions, but I'll keep it reserved and give other people some chance as well.

Thanks, Mohammed. We may have a few minutes after the next round, but Alex, I think you're up next. You had a question for Stephanie.

Yeah.

Thank you.

Thank you. Hey, Stephanie, my name is Alex. We do price optimization software for retailers. It's like Excel on steroids. And as we also in AI space, we need to do some work, prepare data ready for those optimizations and integrate with their old school backend systems. And I know that Notion Capital did very long time in those metrics. How hard I should fight for this implementation fees? Of course, I want to charge on license, right? But still implementation sometimes takes like a lot, like it could be like half of the budget. License fee for the year. Should I be like protective for those revenue, or I can give up this almost with zero margin or 10% margin on my professional services? What is your opinion about that? You will not— investors kill me, show like my professional service is like 10% margin because I just need to complete the job. I don't want really to make money on implementations, I want to make money on license. What is your opinion about that?

Well, yeah, typically, I mean, if you look at your chart, like 20% margins on professional services is the going standard. You could do it as low as zero. I find that a little bit maybe too much. I would say 20%, but then it shouldn't be more than 10% of the overall. Otherwise, it depends a little bit at the earlier stage. If you're very early and you're trying to do a particular implementation, but that has benefit for all the 20 clients that come up next, yes, you can incur a loss. That's fine. It can take longer. That's fine. But you need to be very, very, very honest with yourself. Is this going to be my next 20 customers? Because what you see with a lot of integrations like ERP systems, CRM systems, there's just such a scala of them that there's no such thing as, you know, the top 3 makes up 80%, 80%. And if that's not the case, then you really have to rethink what you're doing. And if there's a way around it, right, it can work with less data. Do you really, really need those integrations? And so that's when I start to ask a lot of questions. So I need to be able to clearly see, hey, I'm doing this integration with these 3 customers, they all want a different system, and it all becomes replicable after that. And that those 3 ERP systems cover 80% of the market, else it will be a really difficult difficult story. And then maybe slightly less venture-focused for us.

Okay, thank you. But you say there's a 20% is fine margin on the services, right?

On the professional services, yeah, absolutely. As long as they're not more than 10% of the overall revenue, right? So you can have—

10% from overall revenue.

Yeah.

Thank you. Thank you.

Thanks, Alex. Tanuj, I think you're up next with a question.

Absolutely. Thank you, Taylor. Thanks, Stephanie, for your time and really love the clarity and the kind of details you're going into, you know, every single question. My question for you today is, you know, we have a B2C-focused startup specifically on mental health, which is focused on teenagers and young adults. Wanted to seek your, you know, thoughts on how is the VC sentiment for SaaS startups which are focused on B2C sector and that too in healthcare and specifically mental healthcare. You know, my gut feeling so far based on the reactions I've seen, and most of the startups, if they're B2B or enterprise focused, they probably get a lot more love and attention than anything which is B2C. And specifically if you're healthcare focused, then, you know, they don't touch you even with a 20-foot pole.

I wouldn't quite call it that. I can see where you're coming from. It's a little bit hard to navigate. I think it would first of all, require getting a generic fund, right, that does both B2C and B2B, because then it doesn't matter where you end up. Although even there, it sometimes is literally looking for the right person, because within that generic fund, there will be a person focused on B2B software, there will be a focus on marketplaces, and you're kind of like left in the middle trying to find your B2C software person. So it's a little bit asking around. Now, the interest in kind of mental health and healthcare, I mean, the budgets are enormous, the interest is high. However, the competition is high as well, right? And so it really kind of— and that is hard, hard for me to look at face value right now— is how much are you differentiated? And also with the likes of, you know, ChatGPT, LLMs coming into play, if you're, if you're focused on, on kind of productizing the patient and psychologist relationship or advisor relationship, that will be incredibly tough in a crowded field. And that is more currently the way I look at it from the outside. But granted, I'm not sure, I'm not sitting in the B2C segment, is where there's currently a little bit of a pullback from VCs because they just want to see how this is playing out, given the many providers, given the generic tech behind it, and because most of it is still play budget, i.e., we can't trust that this is going to work fully. And given the nature of, you know, people with mental health problems, very diverse pool of people, as well as the sensitive nature of you can't do it wrong with these type of people, it becomes a little bit of a ho, hold off, there's easier investments to do. But this is kind of looking at like a very, very generic overview. So I can imagine that there is a little bit of hesitation among the VCs if they have to choose between do a straightforward B2B software play that is growing nicely, shows the numbers, no risk attached on any other base, it makes more sense to do that versus taking a whole bunch of risk with potentially lag. So if you can address some of these things that I'm mentioning, then I think, hey, you, then you open up the conversation straight away with VCs, right? Because again, the problem is huge. The market is huge. There's just a little bit of risk involved as well and a lot of competition.

Thank you, Stephanie. Really appreciate it.

Thank you, Stephanie. I think we have time for one more question. Mohammed, I know you had a couple of other questions, so if you want to go off mute, we can let you close with a final one before we let Stephanie go to dinner time.

Yeah, absolutely. Stephanie, taking you back to right at where we started, where you mentioned it is hard to get in touch with the right founders, right? Because of, you know, we got a lot of comments in there as well, people explaining their 7-day-a-week shift. In your opinion, finding the right founders, how do we connect these both worlds that are wanting to operate at the same intersection? What would be your advice for all of us, people who are leading companies and perhaps have a network of exceptional founders who are looking to raise? How we can connect this intersection, you know, based on your experience and what would you advise?

Yeah, it's a very good question because indeed both parties want to work together and then somehow we both miss each other sometimes. Right. And so the way I view my ideal world is potentially founders having thought a little bit like, well, what kind of investor do I really want in this next stage? What are the 3 things I'm looking for? Is this a B2B software expert? Maybe like not at all, right? Is this— I really do need help on scaling international sales teams. That is my next step in my journey. There is a couple of points that you can jot down, at which point then it becomes like, hey, you sent any— I reach out to you, you sent a message back, hey, these are the 3 topics that that I'm currently focused on. I'm actually not taking VC calls at the moment, but if you have some valuable insights on those topics, then I'm happy to spend some time on a call. Now, what you get then is that I need to do my homework, which is nice, uh, because, uh, then I, uh, I curate a little bit more the conversation. Um, but then equally you get some value out of that first conversation as well. Um, that's the idea behind it. So, um, so I come up with some resources, um, and so at that moment we're talking, we're building a relationship. VCs still invest in lines, not in dots, right? So we still want to kind of come across companies early, kind of follow them on over time. And what you get now more often is frankly founders saying like, you know, yes, I'm raising a fundraising round right now, but we haven't built up a relationship. So, you know, I'm sorry, but I want to focus on the people I did build up a relationship with. And that's— and that, and that perfectly fine to say. But then maybe the other thing that in the ideal world would happen is, is that founders do a lot of references with looking at portfolio companies and quickly sending them a message and say, hey, how do you rate Notion? Is this, is this really a VC I should work with? Now we're, we're lucky our NPS score is incredibly high. If you do that, then what you will get most of the time is Notion is the most preferred VC on our cap table. So yeah, definitely recommend them. And that weeds out kind of the real value-add funds quickly from, from those that are slightly less value-add. And then obviously founders having done a little bit of homework on, on, or at least looking at the website, right? Hey, is this potentially a fit for me? And so I hope that rather than getting bombarded by 100 messages and deleting them all, it becomes more of an exercise of like, hey, actually this person spent a little bit more time on me, or here I can get some value out of if I send back, this is what my concerns are. If you can address them, I'm happy to step on a call. And that quickly kind of sorts out the VCs you should be working with and gives credit to the ones that are actually putting, putting a bit of effort in.

100%. I absolutely love the specificity in your answer and then super, super helpful. So thank you for this golden nugget.

Thank you. Thank you for raising the question.

Yeah, thank you guys so much. Stephanie, we do have one really quick question for you before we close. Are you investing in any US companies right now?

We're not as a fund. We're not restricted to invest in US companies. Should we do it? It's a little bit of a different focus. It really depends if a company is, is wanting to expand European operations, that's where our strength is. Most often we bring companies from Europe to the US, right, into next round. So we're coming in at a nice Series A/B stage where upon which next round we kind of bring them in with the very best VCs. So yeah, if you have a great company, certainly feel free to shoot me a message on LinkedIn. I think that's the easiest because I'm quite active on there and I'm very happy to look at it. As I said, we're not restricted. But the bar is frankly a lot higher just because does it make sense for us to quite frankly compete with a lot of good local funds that are out there as well? And what can we bring to the table at that point? Right. And if there is a strategic angle we can bring to the table, then that's something we should look at with the company.

Great. Well, thank you so much. And everyone, please do connect with Stephanie. That's what these events are for and what this— what these opportunities are for. So So thank you all for joining and thanks everyone for your great questions. Stephanie, thank you for taking the time to join us on your evening in London. So we'll let you get back to it. And everyone, we are back next week as always, every Wednesday at 10:00 AM. And next week we have Christina Shen, General Partner at Andreessen, joining us. So we'll have a lot more to talk about with the ecosystem for the rest of this year and into 2024. So we'll see everyone next week. Thanks again, everyone. Thanks, Stephanie.

Thank you so much. Cheers all. Bye.