Reid Hoffman & Sarah Guo | From Seed to Series A: What VCs look for in early stage investments

Hey everyone. Welcome to Gray Matter. I'm Heather Mack. Today I'm joined by Greylock general partners Reid Hoffman and Sarah Goa. We're going to be discussing the all important topic of raising Early Stage capital Seed and Series A. Reid and Sarah recently talked about this in a fireside chat at TechCrunch's early stage event. That talk was moderated by Danny Crichton, the managing editor of TechCrunch. So thank you Dani and everyone at TechCrunch for putting that together and getting the conversation going. And thank you Reid and Sarah for joining me today to talk more about this. Thanks for joining me today to talk about this very important topic. As we've heard in other Grey Matter episodes and elsewhere, Greylock's actively making investments. Reid, you and fellow Greylock partner Sam Adam just discussed some of the finer details about remote investing and both you and Sarah have given a lot of great advice for entrepreneurship in today's market. But let's do a quick recap like where are things right now that we're six months into the pandemic?

Obviously this kind of asteroid has hit the global economy and the US Economy and so it's like oh my gosh, like everything seems to be different. But actually in fact from a technology investing perspective, there's a lot of things that are the same. Which is what we look at Greylock is how do you invest in companies that in a 10 plus year timeframe are transformative industries have a lot to do with what Satya Nadella calls digital transformation, or many people call digital transformation. And so a lot of our patterns in investing are still the same. And that's part of the reason why we're still very actively doing seeds and series A's and kind of what is the core of our investing in terms of looking forward now so broadly, to some surprise, a lot is still the same. Now what is different though, of course is that that acceleration of transformation and the fact that a lot of markets and everywhere else are all constrained by we're now interacting in online, we're now experimenting with things we didn't experiment before. Like just about all professionals have had some in depth experience with video conferencing, whereas many people didn't have experience with video conferencing before. And then of course that plays into telehealth or that plays into changes in education as people are trying to figure out what's going on with their children and and plays into changes in services. Like people now. There's now a category where you actually zoom or teams or meet trained in terms of how training or physical therapy works. And these kind of market transformations by the conditioning of the market, by the experience of the market, are going to broadly kind of make a lot of things possible in investing now that we might have not been quite right for this cycle. And one of the areas that I know Sarah has been paying a lot of attention to and I have been paying some attention to myself, has been the whole transformation of work, right where, you know, you essentially kind of go, okay, we now have to work in different ways because a lot of these companies saying, well, how much of our work can we do in a distributed fashion? How much can we do remotely? What are the new patterns of work that get there and which of those new patterns will be actually, in fact persistent once we get to the other side of the pandemic, Whether the other side is a vaccine, therapeutics, a set of different things. But once you're the other side, which of those things now become more part of the new norm?

I think it's really what Reid said in that we actually have this amazing opportunity as mostly early stage investors, or for our listeners, early stage entrepreneurs, in that a lot of very smart people, Elad Gill and such, were talking about how maybe we were at end of cycle in terms of like platform shifts or the opportunity for really, really different large companies in the last couple years. And I actually, I don't believe that's true. But whether or not that's right, like we got a reset, right, we got this dump truck of problem statements and alongside the public health tragedy that's happening and this set of problem statements in the future of work, in how we get our healthcare, how we educate our kids, how we interact with each other, that supports a, like a Cambrian explosion of new software to go meet those needs. And so it's really, it's very common to be talking about the future of work today, but I guess to take a stronger opinion about what that actually looks like and things that we're really excited about. I think the future of work is remote, flexible, global and digital first. And that's a set of four characteristics that's quite different than the past. I'm not saying every company becomes GitLab, but I think that's quite extreme. But every company, I believe, is going to get more distributed, more flexible, more global, more digital first. And if we're seeing this much change, then Greylock, at least, and Reid and I are investing as actively, if not more actively than before because we see a lot more opportunity.

Part of what Sarah's also kind of alluding to is we were actually on the reinvented world of work years ago. Right. So we've done this investment in Figma, which our partner John Lilly is on the board of, which people say, well, that's a design thing. It's like, well, but actually, in fact, design of lots of things and creativity is one of the essential parts of work. And as that gets much more distributed in terms of teams, a new kind of team or group focus on software. Sarah and I were serving on the board together on Coda, which is Shir Mehracha's company, which is basically a kind of like, how do you design your own work process? Like thinking about how meetings and other kinds of things are core, core to your work process. How do you work yourself? Because like, for example, one of the problems like applicant tracking systems or bug tracking systems or anything else is you have to work the way that that system designs to work versus the way that you want to work, that your competitive advantage. And so Coda says, well, here you can design it and build it yourself and it has all the application packs to integrate into the other software you're doing. And these are all things that we were part of what makes our kind of future world of work. And now of course, that's accelerated, so we're doubling down and looking at even more of these companies.

Yeah, if I could add to what Reid just said, a lot of people, they describe, you know, an interest in this amazing new set of productivity tools and SaaS tools that we're seeing like Coda and Figma and Clubhouse and such. And one of the things that we believe is that these collaboration and these productivity tools, they are, they're not just sort of SaaS for getting things done. It's sort of this broader theme that all software, departmental software, individual productivity software originally, it's all collaboration software now. And it's very related to these themes of being like browser first and web native in what you're building. Because you can't have collaboration software that like sits on prem in a silo at the extreme. So if you think about how that expresses in the products that we're actually interested in, these products they have notifications and commenting, real time collaboration all built in. And I think that's, you know, that's existed for a while in sort of, you know, we did quip several years back and that was a sort of a early new attempt at making productivity more collaborative. But I think when you look at other categories of software beyond the quip and the Figmas of the world. Like, I actually think that that software has a long way to go to become more collaborative. So when you ask me, like, what is most exciting now, the openness of end users and business leaders to actually say, like, we believe that this stuff needs to be more collaborative because we can't just talk to each other in the office about it or look over Reid's shoulder or Heather's shoulder. That's pretty exciting.

And talking about how everything's accelerating and fortunately you guys were really early on some of these things already, like Coda and Figma. But are you seeing a lot of companies maybe like accelerate to reach out to investors? Like they want to get a seat or they want a partner, but they have great ideas and there's such a demand for innovation right now, but it might just be like too early or are people more willing to work with people at earlier stages?

So I would say I've never lived through specifically this type of Black Swan event. And we're all operating on new ground here, but we do have companies in our portfolio and friends starting companies that think about the next nine month to two year period as a special time period for execution. Right. And I'll let Reid really speak to like how blitzscaling might apply here. But if you feel like you have a special environment that creates more openness from consumers or businesses to use your new product, then like there are reasons to actually operate more aggressively or with more speed than you might in another environment. Right. So I think that there are real reasons for entrepreneurs to just try to engage with the level of demand that is out there today.

Yeah. So one of the key things, I mean, there's a couple of things where, you know, blitzscaling is called into question. Cause the typical pattern people expect is what Airbnb was doing, you know, up until the pandemic asteroid, Uber back in the day, Facebook, Google, Microsoft, et cetera. And to go. Well, we're not seeing that kind of fully depress both accelerators and go as absolutely fast as possible. Where I personally started experiencing it was PayPal. And what they don't realize is actually blitzscaling is always relative. Right. Like part of the whole thing of Blitzscaling is saying the speed to scale is essentially what matters. Because actually what matters is first to scale, product, market, fit, and it's a Glengarry. What we describe in the book is a Glengarry Glen Ross market, which is first prize, Cadillac, second prize, steak knives, third prize, you're fired. So when you're looking at the current Environment, you say, well, it's blitzscaling over and you go, no, no, no. Actually it's still relative speed to scale. Now the relative speeds on the overall market may be pulled back some because it's harder to hire as fast, harder to get certain kind of go to market motions moving as fast. You want to be a little bit more conservative around the expenditure of capital because you don't necessarily know that blitz capital is available and you do need capital to expend in order to do blitzscaling and so you're going to be more careful about it. So all of those things may still go well, actually. In fact, we're not as throttled up as we were in 2019 as we were in 2020. But the principles of blitzscaling, which is still you want to outpace your both extant competition and prospective competition relative to the first being scale product market fit is still very much there. And as we wrote in blitzscaling, actually, in fact it's a kind of a dynamic set of principles. And part of what we're seeing now is, okay, what does blitzscaling work like now? What does blitzscaling work like? When you say, well, we have to interview and hire people where we've never met them other than, you know, by video conference, we actually in fact have to make that work. What are the principles to making that work? How do you onboard people, how do you integrate them with the culture of your company, with the flow of your team? And of course that comes back to one of the reasons why, you know, we think that the acceleration of the transformation of work is here. And one of the reasons it becomes a very interesting, you know, kind of a venture investment category and talking stage.

Specific in terms of like raising a seed, seed round today versus a few years ago or even a few months ago. Like what's different now? And same for series A.

It's always worth paying attention to what's still the same. What's still the same is like an interesting market, an amazing idea, a great kind of founders and founding team, a go to market plan that is robust and kind of well thought through doesn't mean necessarily mean proven. And all of those things are still the case. And one of the things that all of us do at Greylock is that while we have a very prepared and active mind about areas that we're investing in, Sarah and I overlap on some things and some things I go off and do which is kind of like more like payments or certain kinds of marketplaces, networks and something Sarah goes off and does because she's much more versatile and in depth knowledge in the general categories of enterprise, you know, we kind of go, okay, so what are the. We have prepared minds, but what are the things that surprise us? What are the things that like, we hadn't thought of and that these founders, you know, have thought about some stuff that's different than the things we've thought about in terms of how to make these work. So that's all the same. Now. What's different, of course, is, all right, so do you have a plan to get speed and cohesion and the tools to do it while you are actually doing the seed stage, the series, a stage that you're executing against as well, you now need to add those into your capabilities. Is there a new market opportunity not just because of cloud and AI and mobile and other things, but a new maybe market opportunity because of the way the market has changed because of the pandemic? And then what does it take in terms of talking to us like, we may not have a chance to meet you this year, right. But we still wanna have that in depth relationship where we work together to help you realize this amazing company. And so we need to make sure that you have a good knowledge of us, we have a good knowledge of you, and that we're comfortable going into, you know, to use the war metaphor, going to battle together, going on the journey together, going down the river together. Whichever metaphor, you know, works, it's an intense experience and it must be done together.

I'll probably answer that from the perspective of like the entrepreneur thinking about the short term impact of, of the asteroid and then the long term impact, the short term impact is really answering in the next nine month to two year period, hopefully not longer. Like, does my company feed into the needs that have been introduced by the pandemic or are there headwinds for me? And if there are headwinds, like, how do I navigate around them? And so like, that is going to be a question that we ask every entrepreneur that we're considering working with over this period of time, just because it's such a world changing event and people are just going to need to navigate through like different budget priorities and different attention and different lifestyle during this period of time. On the other hand, going to Reid's point of like, what stays the same? There are a bunch of things that as a firm we've believed in and as the entrepreneurs that we work with have believed in before the pandemic and after the pandemic, right? So if you ask me, are there many hundreds of processes in every enterprise that will be transformed by infusion of AI over the next decade. I'd be like, yes, and the pandemic does not change my point of view that we should invest in technologies that democratize AI for the enterprise. So if you're talking to early stage, long term oriented investors who have some picture of the future, that picture should still exist. We just have to get through this period. If you can use this period as an accelerant, even better. But I'd say there's these new possibilities opened up by the asteroid that we just talked about at the start of this. There's the things that we already believed and then there's just the tactical management of like, should we take advantage of like how people are living differently in this period or do we just need to like, get through it? And I encourage entrepreneurs to be very intellectually honest with themselves about like how relevant they are to the needs during this period and like what headwinds they will face. Because, you know, you don't need to be a company that is relevant to the business or consumer needs of COVID for at least Greylock to be excited about you. Because there's many other needs that are worth serving in the long term. But having a plan to like get to momentum, get to initial interest, be able to fundraise, like every seed entrepreneur is going to have to do that.

There's one thing I would add here, which is usually co founders know each other and so they can both be sitting at home, you know, connect with each other, get the idea, show each other the, the napkins through the, you know, the video chat, right, for doing it. But if you don't, if you happen to be. Because one of the big challenges, usually good to have one or two co founders with you. You know, the solo co founders are am, but you know, you have a higher probability success with founding teams of two or three people who can bring a bunch of stuff together. Another Greylock investment is Entrepreneur first, which has actually been doing a pretty good job with actually, in fact getting deep technical people, coming into virtual camps, meeting co founders and getting companies launched. And so the kind of social cohesion, one of the things that Entrepreneur first has done, which we didn't know before, they actually ran a class doing it. Could they actually create the dynamics by which co founders could find each other, you know, in these kind of virtual dynamics and create companies through doing it. And so that's I think a harder challenge now during the pandemic. And that's at least one route. If not, you know, spending a bunch of time with people in video conference as a way of finding co founders.

And I'm curious if you both have similar or different opinions on how far along a company needs to be with certain metrics before they move on to raising a Series A. It could be where they are in their product, it could be where they are in sales, customers, how big the company is.

So Reid and I have both done companies that have no metrics to speak of as at the Series A. Right. And perhaps it's a characteristic specific to Greylock. Coda is one of these. Aurora is one of these. Obsidian is one of these. Where we knew the entrepreneurs sometimes deeply, we just had a high level of conviction in what they were going to do. And then they actually, they had a pretty clear vision even from the very beginning, often because they've been thinking about this problem for years and years for how they're going to go deploy 8 or 12 million dollars. Right. So I'd say we're not terribly metrics oriented around the Series A. If we can see the network effect, the platform effect, the ecosystem, the defensibility that come to the company, should their vision be true and they have clarity around that vision. We're also happy to meet companies that got to a couple million dollars of SaaS ARR efficiently before the Series A. Please call me about that. But for us, it's not a hard requisite because some of our bets are conviction bets around technology or platforms that they take a little more time to get going, they take a little more capital to build.

As usual, Sarah said it very well. Here's another lens on it, which is what really matters to us are these companies that are industry transformational, that are going to be huge, have huge markets, et cetera. And by the way, sometimes it's not an existing market, sometimes a creative market, sometimes it's a moderately shifted market, sometimes the disruption of a market, any of those things. But the possibility is huge. It's only really worth going on that journey with a huge market. Now, sometimes the best evidence that a huge market is current numbers, where it's like, oh, look at the traction, look at where it's going. You measure by the numbers and you say, look, we're off the races and here we go. But like, for example, even when, you know, I love the investment in Airbnb, the numbers were tiny. I mean, the numbers were kind of in the, in the vector where you said, well, you know, we were still trying to go and like, call people on Craigslist to try to get them to kind of use Airbnb either as a host or as a possible renter. And that's small numbers. And so you're not looking at those numbers, you're looking at like what it could be and what the things are. Now numbers are always helpful. A cohort analysis like for example, most scale founders can only be successful when they are capable of doing the in depth numbers like dashboard analysis, cohort analysis, a bunch of things that in terms of getting there. So you want to get to the point where you're actually using numbers to help drive your business and get to the scale. But it's the scale size that matters. And so great numbers for a small market matter as much. It's the venture shot on goal for the huge market.

I think one significant difference I was just thinking about like what do I like to see at the series A to have that level of conviction? It goes back to what Reid said about us being a very entrepreneur focused investing firm. Like we're choosing people to some degree and then like markets that are hopefully big enough. And at the seed stage we will back very non obvious, non pedigreed entrepreneurs who end up being amazing. But one of the real bets that you are taking with entrepreneurs in the long term when they are taking $8 million plus at a time is that they can actually deploy that capital successfully. And what are you going to go spend your money on as a series A company? You're going to go hire people. And so when I look at a series A before I am thinking about the metrics, there's a pretty strong expectation that you know what kind of team you want to build and like I can believe in your ability to recruit for that company. And of course like me or Reid or any of the other, you know, the talent team at Greylock will help you. But I think that is something that you should have a clear picture of at your series A. At the seed is kind of like you know, the two gals, a dog and the GitHub instance that's been stood up for three weeks. It's a little different.

Exactly.

Can you talk a little bit more about the way you source investments for seed vs series A?

Gridlock is a very collaborative firm. I was just on the phone with a seed stage firm we are intending to do more business with because we really respect the people and the investments they've been making. And what I would say is like we'll lead seed ourselves in entrepreneurs and executives from our companies or great engineers or product people that we've met broadly in the ecosystem. So we do believe in like maintaining a broad network ourselves and then especially at the seed stage because we kind of have multiple shots on goal to get to a level of ownership that is a long term stakeholding for Greylock that matters. We tend to be more collaborative at the seed, which means we also get a lot of referral from Angels, Super Angels seed funds in the ecosystem.

Yeah. One of the things that I think is kind of a not often described superpower that Greylock has is that we are amongst the more collaborative of the firms. Not just obviously the in depth partnership with the entrepreneur where we feel that we never try to overshadow the entrepreneur. Like this is their amazing journey and we try to be facilitators and helpers and you know, not backseat but, but like active and trying to do it. But we understand that this is the entrepreneur's journey but also with other investors. And so, you know, there's a whole wide variety of seed investors that we like working with because we think that they are high quality and talent and sometimes we bring our seed deals to them as well as them bring it to us. Like good partnership is, do you bring things to them as well as they bring things to you? And that's like I think we have the relatively rare category of the top tier VCs that actually goes out and says actually you're great, you should work with us on this.

One other thing that might be unique to investors at Greylock in terms of sourcing is there are a number of our partners that are quite thesis oriented because they tended to be like domain people who understand the products in a particular category. Right. So if you ask Reid about payments or shame about security, like they probably have a point of view on like what is interesting next. And I like the idea of ideation better than incubation because it doesn't give us so much credit for companies that happen to start within the confines of Greylock where we're working in partnership with the entrepreneur. But one way we do source is like we serve broadcast to our networks and now we, you know, we do it online with, with blogging and with podcasts and such. But here are the ideas I'm interested in, right? Like I think that we're going to see a new set of tools around. Remote work is an obvious one. And here's like examples of the things I believe should exist, right. Or I think enterprises should be using their data around customer support in this specific way. And we don't have a company that we've invested in there yet. It's just a very broad product thesis. And because we do this ideation and incubation with entrepreneurs, then we'll get a lot of referral from the ecosystem of people being like, well, I know something about customer success and support or I know something about using metrics data in this particular way. And so a part of it that I think has been very good for us has been the sort of general broadcast of like, these are the ideas that I would back to the builder community.

Well, and one of the things that Greylock historically, and I can say this with some strength because this is true of the folks who do more enterprise than it is consumer, is helping build companies from the very earliest, like literally from the first one or two people and the whole thing build out. And so, you know, it's Palo Alto Networks, it's workday, you know, it's gladly, there's Awake Network, there's all of these companies that have like, literally the entrepreneur came in as an EIR and then build out the entire company from there. And so that's actually one of the things that we also tend to do when we have an area that we have deep domain knowledge and so getting.

A little bit more into performing due diligence on seed and series A companies. And it's both from your point of view as investors and also what founders should be thinking about and which investors they want to choose to partner with. Like, what are the differences in those two stages?

Well, part of the question kind of comes down to is what are the things to do? Diligence. Right. So part of both efficiency in your own time, but also efficiency of the entrepreneur. And also what are the things that you need to know. And it's always something surround the entrepreneurs and so forth. And, and we encourage due diligence in both directions. Like we broadly try to say, look, call everyone that we've worked with. We want you to know as much about us as we know about you. Because this is a partnership. This is something that's really important in terms of being strong both directions. And then it's like, okay, well, how much do you need to understand the market? How much do you need to talk to customers? How much do you need to have a sense of what the technology is, what the level of development is? And so when you go earlier, like seeds, much more often it's the people building the technology, not actually, in fact the technology that's currently there. We may still actually be able to facilitate or help the company in some ways because we may say, well, look, we maintain this whole customer group to help, especially our enterprise companies. But all of our companies, we can come bring customers to you and say, hey, let's validate this area. Let's have that conversation. And that could be something that could help a company. And we've done this with even companies that we've not ended up investing on. It's like, look, let's try to make this as a helpful process to you as possible, because we have this whole network of customers that we can go get to and we can see if this could work for the customers. And it all depends on the specifics about where the company's at and where it's going. But usually the competitive edge for companies, not secrecy, it's the fact you're in full motion. And then so facilitating that motion, even at the earliest stages, is one of the things that a due diligence process should help.

One framework I have for my own due diligence, and one that I'd encourage entrepreneurs to answer is like, what is the core question and the core risk for the company at that stage? Right? And like, we can go through a few examples, but like, there shouldn't be like 18 different questions. There should be like one, or, you know, we think of those like one to one, two, three, four questions that you want to answer. So one version might be, this team has built a product. There's no category for this product yet. Is the problem they're addressing actually important to the customer? Right. That's a core question for a new category. And so the diligence, if that is the core question for the company, could be like, let's go ask a few customers together, right? Or, you know, if you already have customers, it makes it easier. But like, we can introduce you to our network and like, let's pitch them. Let's see if we can find people that like, are believers in this problem or another case might be, and this may be more relevant. Actually, it's relevant for both the enterprise and the frontier side. But is this architecture going to win a particular set of use cases? Is it a big enough advantage? And then that's like a technical or a product call. So to a large degree, we're going to rely on our own opinions as product people. But then we're also probably going to call like our smartest five friends in an area and say, like, does this make sense to you? Can you picture this future? One of the really interesting things that we've discovered about that diligence is the smartest people will disagree, actually. So you may not get a clear answer from the diligence, but like, that's the kind of data we'd like to go collect to go make our decision. Or, you know, one last example for you might be, so for like a, you know, a bottoms up SaaS company or consumer company or another marketplace, how likely is it that they can get a core lo around community, contributing UGC or code or whatever to begin to work? Right? Like, do we believe in that hook or that initial liquidity? And it's not an easy question to diligence. There you're more understanding, like, what is the value you're driving to one side of the marketplace or to your initial contributors? And it can sometimes be ancillary value to the long term value of the product, right? That wedge or that set of hacks. And so hopefully that set of examples gives you a sense of the core question for your company. It's going to be really idiosyncratic, right? And therefore the questions that we're thinking about, the diligence is going to be very specific to your company. But I consider it like a really good sign if the entrepreneur can tell me what he or she thinks is the core question to the company and like what they've done to de risk.

It themselves, moving that back upstream a little bit. So for founders who are looking for VCs to partner with before they're even starting to go through any sort of diligence questions or anything like Reed, you and Sam just talked about this, how everyone has a lot more time, sort of, but they're more likely to take meetings. Their calendar has, you don't have to go anywhere. So you might be more willing to answer that email or take that zoom call. But like, how should founders think about, like even making that list of VCs of potential partners to work with in.

A very good way. VC has become much more transparent today than it was seven or eight years ago when I started investing. There's a lot on the Internet about all of us, like the investments we've made, like what our theses are, what stage we do, what domains we're interested in. You can even learn about people stylistically, right? Go watch a video of Reid or Josh or any one of my partners giving a talk and be like, do I like that guy or gal?

Or listen to a podcast or listen.

To a podcast, right? Like you can get a sense of humans in a much richer way and potential partners in a much richer way than you were able to just several years ago. And so I think that the Entrepreneurial community would do well to like adjust to that and then like do research to find their tribe and their believers. And I, I think the old recommendation of like asking your advisors for like the people they trust or asking the people you most respect in your industry for the people that are great investors in that industry or the people that they would work with, I think that definitely still applies. But there's a lot more opportunity out there to do basic Internet research and then just create the list of your ideal investors and go meet them. And I do think people are very willing to meet entrepreneurs when the friction is reduced.

Sarah's point is excellent and as always and important, which is there's a ton of information to be able to figure out who has expertise, who would be good. Because you should look at your fundamental financing partners as kind of financial later stage co founders who could help you kind of build the company, navigate risks, capture opportunity, get to the scaling aspirations that you have. But it's also, I think very important to, because you know, I think this is both directions, is to do your due diligence in reference checking. So I think it's a good thing to reference check, you know, who your perspective folks are because actually, in fact, just like hiring, you say, oh, I do an interview and the interview seemed great, or hey, look, the CV looked great because this person had the wonderful background from Google or Microsoft or whatever. And you actually, in fact, you want to do some of that network reference checking. Your advisors are helpful in it. But I think it's also helpful to get part of reference checking is to triangulate, right? So for example, I can do a reference and they say, oh, well, they're going to work really well with Reid, but will they also work well with, you know, Susan or will they work well with Bob or they work well with Michelle? You know, these kinds of things are actually in fact really important. And so I think that's the thing to add into what Sarah just said.

Reference checking is a skill, It's a learned skill. Right? And if I could add like one more tactic to what Reid just described, it would be to try to frame for yourself in your minds two things about every reference you're doing on an investor or an exec or whoever. How close is the person that you're referencing to the person you're considering? Do they work for them for 10 years or did they meet them at a cocktail party? Because I think sometimes that is not measured accurately, especially for people who have very broad networks. Then second is how educated and credible is the person that I am referencing with, right? And so an example might be if I am a seed stage entrepreneur and I am thinking about working with Reed and I asked somebody who knows Reed if Reed is a good guy or a great partner to work with. If that person that I'm doing the referencing with is like a three time founder that's had 15 VCs on his board, he has a richer perspective than somebody who has not had the experience of multiple investors, for example. So I would try to frame for yourself as you're triangulating, what does this person know and how well does Bob know? Amy?

Exactly right. And then the other thing by the way, is also to look at bias, right? Because when you're referencing, if the person you're referencing with is much closer to the person you're referencing than to you, they may give you a rosier perspective. And so part of the thing you want to look for is you want to look for the straight scoop, right? And so make sure you work on that as well.

Well, this is great. I think we touched on pretty much everything that I wanted to cover. Do either of you want to cover any other topics or we can wrap it up.

I'll add in one thing. Obviously, World's on Fire, Asteroid has hit the world and everything else. And a lot of things are a lot harder that can create a differential advantage to startups and founding teams today. Because if you can get going, you can get the financing, you can pull it together. There is likely much less competition right now. And that startup competition is usually the impedance factors. It's usually not the competing with Google's or the Facebooks or whatnot. That's the real deep thing. It's competing with other startups. And so that gives you the lens to possibly do something today. And that's part of the reason why, you know, like great investors, which we hope we are and we aim to be and we try to prove ourselves as great partners. Entrepreneurs are so active now because now is a very good time to be starting a company if you can pull those elements together because the competition will be a lot less.

If I could add one more thing about the current environment, which is both good and bad, is the only way we are interacting with one another in much of the world is digital, right? And this means that startups, you know, of course they mostly did digital first acquisition of new users and new customers before. But I kind of think of it as like in the marketing world you have phase shifts of like when new channels come up or when new channels become much more attractive, right? So like the example of the last decade has been Instagram, right? Like all these brands, they figured out Instagram and they created new companies because they figured out how to do Instagram marketing before that channel got saturated, that gave rise to like billion dollar companies. I think another opportunity now for all kinds of companies, not just DTC brands, is there's a huge channel shift, right? And so when I think about just B2B companies, because that's what I spend more time on. If before you had field sales, you had events, you had tours with resellers, you had different ways to reach customers, the channel shift to video, webinars, social events, like online events, online community, and being able to do those things well, the whole shift in how you can do differentiated go to market is pretty transformational. I don't know how long that lasts, but I think that there is an opportunity, not just in like the problem spaces that are available to be addressed and the dynamic that Reid described of like fewer startup competitors, if you can begin to actually get your loops going and get to scale, but also like nobody knows how to effectively do business in this new world. And if you figure it out, like you're actually going to be further ahead than you would be in other environments. Like a year ago when the way to do SaaS marketing was a little bit more mature, for example. So I think, like, I'd encourage people to think about how to like, tell. One of the things I work really deeply with my companies on is like, how do we get distribution in this new world and how do we tell our stories across these new channels? Because I think it's going to be a big advantage. So I'm excited for all the entrepreneurs who figure that out.

Great. Thank you so much for joining me today. It's really interesting.

Always fun, Heather.

Bye.

Okay, that concludes this episode of Gray Matter. You can subscribe to our podcast on soundcloud.com greylock partners or you can find new episodes and blogs on our website, greylock. Com. You can also follow us on Twitter at greylockvc. I'm Heather Mack and thanks for listening.