Building Startup ecosystems, the solo GP life, and lessons from the dotcom bubble with Kirby Winfield of Ascend.Vc

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Welcome to another episode of Tank Talks, your personal think tank for all things startups and venture capital. I'm your host Matt Cohen, founder and Managing Partner at Ripple Ventures. On today's show, we welcome Kirby Winfield, founder and Managing Partner of Ascent vc, to discuss his journey inside the startup and tech world in Seattle during the late 1990s. We discuss some of Kirby's biggest mistakes he made during his time as CEO of a startup and as a founding team member of two IPO companies during the 2000s. We dig into why Kirby finally decided to launch his first venture fund after having success as an angel investor in the Pacific Northwest, and how he was able to raise his first fund as a solo gp. Kirby shares some incredible lessons for other emerging managers to hear on how not to scare away LPs and where he sees himself as a solo GP amongst the hundreds of new managers popping up recently. Finally, Kirby shares the best career advice he ever received from another GP when starting out that all other GPS should know. But before we get started today, as our listeners probably know by now, the team at Ripple is always focused on helping our founders and portfolio companies find the best partners to work with.

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Now let's jump into the tank for this week's episode with Kirby Winfield from Ascent vc. Thanks for joining us in the Tank today, Kirby.

Hey, I'm stoked to be here. It's A huge honor and I've been looking forward to it. So thanks for having me, Matt.

You know, first off, Kirby, I noticed that you're wearing your daughter's headphones. So this is going to be a very relaxing, dad joke filled exercise for us both. But I've been talking with you for a while, but I'm really excited to have you on the show. You know, Kirby, your background goes back quite a way, you know, even before the dot com bust. So for our audience who doesn't know you very well like I do, can you give us a little bit of a background on how you got started in startups and technology in the first place?

Yeah, sure. I always say I was graduating college in the best time in history.

To.

Leave school with an English major because Basically it was 1996 and startups were happening all over the place. I actually moved to Manhattan right after school. Thought I was going to have a career in advertising, sort of the madman type of career in advertising. And then a friend of mine actually called me and said, hey, I'm starting an Internet company back in Seattle where I grew up. Would you like to come back and join me? And I said yes. And little did I know that I would be in advertising, but just a very different type of advertising than it existed before. So we actually, I was lucky enough to be on the founding team at a company called Gotonet, which really innovated in the digital media space. Very early digital publishing. We had a portal, we had a metasearch engine. We actually had two metasearch engines. We had the largest free web hosting platform on the Internet, number of other properties, and it was my job to roll that all up under one brand and, and advertise and market it. And my qualification for that was apparently that I did a summer internship at an ad agency once. So just, you know, it was an amazing time to be having, you know, my first job along, really, and, and to be totally swept up in what we thought was. And what turned out to be, you know, actually correctly, we thought was a huge shift in the paradigm for really the global culture, let alone, you know, the way that people consumed media or communicated. So it was a magical time. I got a lot of. I got a lot of rope and hung myself multiple times. I had a lot of leeway. I was, you know, sort of 24 years old running a marketing. Marketing group that, you know, eventually we took the company public and hit a $4 billion valuation and then sold in 2000 right before the bust. So, um, it's better to Be lucky than good was my lesson there.

Oh, unbelievable.

Yeah. And, and, and then fortunate enough to get back with the same team and start another company in 2003 and we took that public in 2004 and, and then I much less successfully ran two venture backed companies which we, we sold. But you know, along that 20 year journey of startups, learned a lot, painfully so. And, and got again got lucky a couple times and, and figured I'd sort of take, take all that experience and try to, try to leverage it as an investor for sort of what's developed into really a second career for me, which I'm doing now with this end.

Well, I mean it's an unbelievable story to see that you were, you know, one an intern in an advertising agency. Got you into the entire tech world so quickly. You know, a lot of people when they jump into a new industry, you know, they have to work their way through a couple layers above them before they get into a real management position. But you were thrown right into the gauntlet quite early. And then to see a company just go public and then have a huge run up to a $4 billion valuation and eventually have an exit, you know, you did that twice, right, with Marchex and Gnet. And then you were also the CEO and co founder of two other companies that had some, you know, M and A and corporate development exposure as well. So, you know, I got to ask, how did you recover personally and professionally from the dot com bus and, and what were some of the biggest mistakes and lessons you made during your time as, you know, CEO and part of a founding team with two IPO companies that you still rely on today that other operators should be aware of?

Yeah, boy, we probably don't have time to talk about all the mistakes, but I'll tell you, the way I recovered from the dot com bust, it was actually really good timing because in 2001 I left GoToNet, which at the time then became merged with Infospace. So I left early that year, basically spent the next nine months watching the Seattle Mariners win 116 games and set the, set the, set the all time record for most games one in a season. I, that was a great way to unwind from what was pretty much a seven days a week, 14 hours a day job. And I did that. And then, you know, my wife was in business school at the time and she got a little sick and tired of me just gallivanting around and, and so I actually, nobody probably would ever recommend going to law school as a recovery move, but I did go to law school for about, for about nine months. Fortunately got a call from the co founders at GoToMet. They said, hey, we're starting another one. Why don't you come on board and help us start it? And so I remember I left my law books in my locker at Seattle University and never picked them up again and went right back to startups. It was an incurable disease, this kind of desire to be at the earliest stage and, and try to create something new. And so I was fortunate to have that shot again.

I bet those law books are still there.

They may be, they may be. It's hopefully they've been passed along to someone more worthy. That, that, that stint in law school reminded me that I'm not, you know, what motivates me is not necessarily school in the traditional sense. I love learning and experience, but I think I love learning by experience. And law school is definitely not that. But you know, and then in terms of what, you know, what did I learn running a couple companies and raising money and you know, sort of finding exits. Although, you know, I'd say the first time we had to lay a bunch of people off, we had to recapitalize the company with some pretty nasty terms. And the second time, you know, I feel like I failed my team. We couldn't get our Series A and luckily we, you know, had been developing relationships with buyers and one of them came in and bought us. But I guess a couple things I could have certainly done a better job of. I think the biggest thing was that because the first two companies I was with, we scaled so quickly and we sort of financially engineered them and we had a lot of money right out of the gate to invest. I got in these habits of sort of being a later stage operator without necessarily having the experience of 0 to 1 visionary product market fit discovery. And both of the first two that we took public, they were essentially roll ups. And so the work that I did was around integration and positioning and marketing and branding. And so I think that some of the habits that folks bring to the table from like bigger company experiences when they come to startups are really, can be poisonous. And I certainly had some of those where I wanted to get all the BI tooling in place and the reporting and you know, hire up higher up, like a sort of stratified team to be able to go and run after the opportunity when, you know, maybe what needed to happen was just like three people, you know, spending all their time selling and building. So I think that's, that's certainly a lesson I Mean, on the plus side, you know, what I learned in the two exits that we got for these companies that, you know, weren't going to make the journey on their own, Boy, it really pays to develop relationships with public market analysts that cover stocks of companies that could potentially be acquirers, and then alongside that, developing relationships with product leadership and executive leadership in those potential acquiring companies. Because what'll happen is you never know you need to get bought until you find out that you're not going to make the journey yourself. And by that time it's too late to develop relationships and to sort of plant seeds. But if you spend time doing that, if you don't, you know, the worst thing that happens is nothing. The best thing that happens is, you know, you don't need it and you're going to go public on your own. And if you end up needing it, you know, in both cases, when we got bought by comscore and when we got bought by homeaway Expedia, you know, I'd spent a ton of time watching their quarterly reports, understanding on their earnings calls. Where were the analysts beating them up? What, where could we fit into their picture to answer questions that they had and solve problems that they had. And then in some cases, in both cases actually we struck, you know, business development partnerships with the companies years before we got bought that maybe weren't even super impactful strategically near term for our startup, but which opened the door for folks to get excited about our team and what we were working on and eventually come knocking to acquire us. I think that's something that I talk a lot with founders about, is it may not seem like something that's worth doing at the very early stages when you're just all hands on deck trying to get your product to market. But it pays to think longer term about these relationships.

Very interesting perspectives. I mean, I definitely agree with the manager versus maker dilemma dilemma that we see a lot of the time where people hire these, you know, managers who come from later stage startups or even corporate jobs and try to turn them into makers to get all the stuff set up properly when you're trying to figure out product market fit. And they often fail because they need to hire five to ten people underneath them. So that's something we definitely want to advise our startups and operator founders on. The talking to sell side analysts was an interesting one. I mean, I come from the sell side working, you know, at RBC for over a decade and other, you know, financial institutions know, talking to sell side analysts who cover, you know, Twilio or larger, you know, public tech companies like Snowflake. You know, I'm curious, like, why do you think going after the sell side analysts versus just the investment bankers or someone, someone else closer to like the actual corporate development side of the, you know, public tech company is a better approach? Or is it because they're always talking about the companies publicly so you have access to read them? Is that what you're saying?

Well, I think, I think there are three reasons. One, they're very hungry for information from the front lines and so, you know, they can't know what we know as startup operators working in a sector. Right. So that you're always going to get the meeting. I think the second is that they tend to be looking for cracks in the armor of the companies they're covering, which lends itself to, you know, you being a solution provider that potentially fits into the picture for those companies. And the third is, is it, it sort of results in a whisper campaign. If you talk to enough analysts, they're going to start asking nasty questions about you when they meet with the companies and the company's going to either know about you already or if they don't, they're going to be asking, you know, the CEO or the CFO is going to ask their teams, hey, who is this company we keep hearing about that's doing this thing that we're not doing? So that's, that's the, that's, that's the, the strategy. If there is one behind that, it.

Makes a lot of sense. I'm sure a lot of the, you know, Series A, Series B investors in Figma were name dropping the name in front of Adobe for quite some time before they couldn't threw their hands up and say, all right, enough already. We'll have to pay 50 times revenue before they took too much pounding. So that makes a lot of sense. So thank you for sharing that. You know, I want to transfer over to your angel investing career. After you said you started a second act, how did you get started thinking about angel investments and eventually going out to launch your first fund with Ascend Ventures in 2019?

My first angel investment was in 1999 and it was in a company that installed remote cameras in bars so that you could check out the scene before you invested in coming down to the bar. Remember this was 1999, so that's, you know, that sounded like a great idea at the time. You know, there was definitely like investor market fit from my perspective and you know, I thought it was a slam dunk and you know, invested $10,000 and you know, promptly lost all of that money. But, you know, I got this paper share of the company and that kind of meant something to me. I was, I was able to put a little juice behind someone else's effort and try to be helpful there too. So I kind of got the bug even though it didn't work out that time. And along the way through, some friends ended up investing in a company called Sharper Agent, which was a real estate CRM. And I ended up joining the board because everyone involved in the company was from the title and traditional commercial real estate world and they didn't really have anyone who could think about online marketing or digital customer acquisition. And that was kind of in my wheelhouse. So that was my first larger angel investment and that actually got. Got bought by market leader, which you may remember as house values, which then became Trulia, which then became Zillow. And so even though that was a Denver company, they. They became a Seattle company. And I think the technology still exists within Zillow. And so something that I learned there was just having a unique insight from the inside out about an industry is really good and it can get you started. To make the journey though, on your own, you really need a startup, a technology startup mindset, which I think they tried to develop, but at the end of the day needed to join a bigger team to really execute against.

And what was the sort of big first successful exit before Ad Expose, which obviously exited on its own as your CEO. But what were some of the angel investments you saw have meaningful exits and eventually what made you want to go out and do this professionally as a send ventures later on?

So, you know, I mean, I'd say Sharper Agent was, was a pretty big, big exit. So that probably turned me on to the idea that, hey, this isn't just, you know, this isn't just me flushing my money down the toilet. Like maybe I've got, you know, some knack for this. Yeah. Some edge, some. Something where, you know, I'm able to, you know, have a little bit better than. Better odds than 50 50. Right. Well, 5050 would be great in our business, but you get what I'm saying? And so, you know, honestly, I kind of laid low on the angel investing front after that until I sold. Until we sold Dwellable, which was my last startup. And at that point started deploying really actively in 2016. And so while none of those companies that I angel invested in 2016 have exited, the vast majority of them are still operating and some of them, you know, at a really high level. So Crowd Cow was an angel investment for me which we moved into the fund Beanbox, another direct consumer, you know, specialty food and beverage business we did in 2015 I think. And that's, that's in the fund keep contractor services marketplace that just took another infusion of cash and is doing really well. That was an angel investment. Trying to think of what. Oh, wrench, wrench. Is, is. It was a small angel investment for us in the pre seed but that's a series D company now and is, is, you know that's going to go so no liquidity out of the kind of my true first full time angel investing forays, but I think gave us a real nice foundation to go out and raise that first fund.

Yeah, absolutely. I mean what was the sort of tipping point for you to be pushed into launching this first fund and what was it like raising that first fund and where did you find success with the LPs as a first time fund manager, even though you had a pretty good successful angel track record to go on?

So I, I actually decided to start a fund because I had a number of friends who I had put into our IPOs back in the day with GoToNet and March X and who I would occasionally, you know, steer into angel investments alongside me. And at a certain point when I kept on doing these angel deals, they said look, we're kind of tired of just, you know, trying to evaluate all these deals on a one off basis and you know, why don't you just do a fund and we'll anchor it. And so there were two folks in particular out of Denver who were good friends who really kind of catalyzed what, what, you know, what, what I had considered as a potential route but certainly wasn't chasing. And you know, kind of one of the reasons I think I ended up raising successfully was because I didn't need to, to do it. And what I mean by that is I was so happy just working with founders and startups that I knew and I knew I could do that as an angel or as an advisor or in some way in perpetuity. Right. And so because I was just chasing what I love doing and not necessarily setting out to raise a fund and create, I hadn't thrown out this audacious idea for myself. I was just trying to do the work and I think that put me in a position where A, I was able to do the work pretty well and build a good reputation with founders in the market around that and B, you know, show, show the potential LPs that who were, you know, who were sometimes investing alongside of me, that I really was a true believer that I, you know, that I was doing the work for the work's sake and because I love working with founders and I think that that led to, you know, it's just like any, any, any investment or, or M and A activity, right? You always want it to be inbound. And so I think for, for me, like having having the concept of a fund be an inbound concept versus me kind of going out and selling it just gave me the, gave me a real, I think it gave me a real psychological advantage when I went out to actually raise the rest of the fund. Does that make sense?

Absolutely. I mean it makes perfect sense. It's the exact same situation I had, I had those two asshole friends who said I could do it as well. Going to be my first anchor check until I realized I was signing up for a 25 year commitment. But yeah, you know, it's very funny. I had those two friends who supported me. I had a good amount of friends whose families were fortunate to support me. So, you know, right away I was able to raise half the fund and same as you was able to put my first two large angel investments into the fund at cost to give family offices and LP something to chew on in addition to a pretty successful angel track record. So again, I think setting the bar at a reasonable level and then just keeping your eye on the prize towards supporting founders and working with what you have without setting too audacious goals too high is something that I think we both align on. So that makes a ton of sense to me. I mean what, what would you say the success resonated with or what kind of success did you see what the LPs you resonated with the most when you came forward as a first time fund manager? Was it the founder relationships? Was it the, you know, the, the angel track record? Was it just your relationships from, you know, friendly intros? Like what was it that you were seeing success with as a first time fund manager?

You know, I would say my biggest advantage is just that I'm old. So I, I went out to, I went out to raise, you know, unlike a lot of emerging managers, you know, yourself included, I went out to raise at my first fund at age 45.

Oh, you're the Charlie Munger of emerging manager of VCs, right?

Maybe just if you're measuring by years and hopefully down the road, maybe in dollars. But no, but I had operated really since almost the beginning of the commercial Internet, in the Internet digital media startup space and spent a lot of time in a lot of different markets. I mean New York to London to SF to obviously Seattle. And so I think the number one, you know, the number one advantage I had was just really strong relationships with people who understood who I was and you know, some of the experience and approach that I brought to relationships and to startups. And then I think the second thing was just the, you know, we had a lot of founders, successful sort of ex founders, current founders as LPs and I pitched those folks and I think a lot of those folks just believed in the mission. And so you know, we're primarily focused on the Seattle and Pacific Northwest area. And you know, the reason for that is I've, I've lived here my whole life, I've operated here my whole life. And you know, I truly believe that this market now has what it lacked historically that really made it, you know, hey, it's an interesting place with a lot of great technology talent and we create, you know, an interesting public company outcome every couple, three, five years. But it wasn't the kind of place like New York or like the Bay Area where you could reliably count on multi billion dollar outcomes happening multiple times a year. And, and my thesis was that's because we didn't have the off ramp for startup talent to come from Amazon or come from Microsoft. We didn't have, we didn't have 30, 40, 50 companies that were, you know, pre IPO, but, but growth stage that people could join coming out of one of the big tech codes and learn how to do that level startup. And then we didn't have that next layer of series B, series C startups that they could then join and learn about that stage of growth. We really had a lot of founders just kind of jumping from the top four of these big companies and then breaking their legs on the, on, on the, on the ground trying to do zero to one startups. And, and I just truly believe that that's changed. I mean you don't have to take my word for it. We 2015 there were zero unicorns in the Pacific Northwest. We now have 35 unicorns. You could count the multibillion dollar outcomes in 2015 and before on kind of one hand now, you know, from I think Tableau went out for $17 billion and DocuSign with $32 billion, author was 6 billion and you're multiple companies going out for 3 to 5. You just have this really, really rich, we have 35 unicorns. I think I mentioned. So we have this really rich sort of depth and breadth of not only technical talent, but most importantly entrepreneurial and business talent. I remember trying to hire, being a series a startup in 2011, trying to hire a growth marketer and there were like two growth marketers in Seattle. I mean you just couldn't, you couldn't find, you couldn't find people who'd done it. Now the beautiful thing is that not only can you find people who've done it, so we see our companies when they raise their seed or A being able to hire people who've actually gone from seed to series C and they want to do it again. You also have this amazing machine where, look, Convoy is a great example, very successful company worth $3.5 billion started here and you now have folks who were there from the A and they took it through the sea and they grew teams and they managed and they learned and they say, look, I think I'm ready to do my own thing now. And they've got the chops to be able to go do that. And that's something that most ecosystems just don't have. So I think that story really resonated with folks clearly who are founders from this ecosystem. It's kind of a, a tailor made story that has the advantage of being true, I think.

Yeah, it's interesting. I mean I visually thought about like literally founders jumping off the towers of Microsoft and Amazon and landing and breaking their legs as a great metaphor for how hard it was to go from those ivory towers back into the startup, you know, early stage grind. It's just a skill set that not a lot of people have and not a lot of ecosystems have people like you coaching them along the way. And would it be because that those people would typically, if they didn't find early stage supporters like you in the Pacific Northwest, they would just take a plane ride down to the Bay Area and try to figure out if someone would back them there. Was that what was happening before you showed up essentially for the good ones?

I don't think so. I think, I think there's, there's always been and there always will be a huge amount of capital in this, in this market and really any sort of non Bay Area market coming from the Bay Area, I mean, I think the difference and it's not up to me, you know, hopefully I'm adding value up here in my own way. And I always say like it's not so much that there wasn't. If you think about, you know, VCs as flavors of ice cream, it's not so much that there wasn't any ice cream up here, it's just that there was like chocolate and vanilla and, and hopefully maybe I'm, you know, cotton candy, cookies and cream. I don't know, you know, pick your flavor. But, but just trying to do what I think one firm in town, Founders Co Op has done a really good job of and they've since raised bigger funds but are still doing it, which is just being very founder focused. Founder first ex operators with value added sort of experiential consultative advice for folks that zero to one phase. What we did have in this market for a long time is really terrific seed and Series A investors, a handful of them. But if you're used to funding Series A, your advice is probably going to be bad for a founder at the idea stage sometimes. That was the gap I was trying to fill in this market. I think the biggest change that I've seen just operating and investing here in the last decade is yeah, those founders used to have to fly down to the Bay Area, but now the Bay Area flies up here. And if I could tell you the number of VCs who've moved to Seattle from big firms in the Bay Area, if I could tell you the number of times I've had Series A firms reach out to me and say, hey, we'd love to do an event in Seattle, just let me know when you're ready for us to come up. The outcomes that we're creating here are resonating. The big, the big private companies that are being built here are resonating, you know, Tiger and Softbank, you know, say what you will, but have been very active up here and so that resonates. And so I think, I think the, the paradigm has shifted to where you know this market and I would imagine to an extent where you operate Toronto. I, I hear amazing things about the Toronto startup ecosystem right now. No, no small part to your work. And, and I think, and I think there's something similar happening in a number of markets that you know, in North America as you see sort of the, the, the realization on the, on the behalf of, you know, Valley money that talents distributed, entrepreneurial talents distributed more so than ever. Teams are distributed geographically. And you know, I think it's, I think it's great news for those of us who've, you know, been on the ground doing the work in these markets because that capital is increasingly coming in from out of town. And I think if you were to say one thing about just going back to that metaphor of Folks kind of breaking their legs on the jump down. It was less about raising money and it's really more about. It's very hard to go from an Amazon where you have all the distribution in the world or a Microsoft where you're really rewarded for planning. You're not rewarded for outside success, you're rewarded for sort of defending against failure. And so I think a lot of those teams just end up coming out and if they don't have DNA that they've picked up along the way down, around moving quickly and failing fast and just not falling in love with your product, I think a lot of those teams really struggle to sort of get out of their own way and they move slowly. And we have a reputation in this market for being sort of slow burn startups like meaning slow cookers if you will. And I think that's changing but certainly that was earned I think by a lot of that big co DNA.

Absolutely.

I mean Toronto first of all is very similar. Your experience seeing the gap in the pre seed seed stage market versus the series A investor, same thing I saw in Toronto and surrounding areas during my time launching our first fund. It's interesting to hear about the defensibility mindset that a lot of, you know, corporate, you know, golden handcuff operators have versus this sort of like kill or be killed mentality that founders and early stage operators need to have. You know, that increase in decision velocity and competition and not worrying about failure but you know, versus the defense mindset that a lot of later stage operators have is a hard thing to switch on. If you've been groomed inside, you know, the Microsoft Amazons of the world for quite some time, but kind of talking about deploying capital as a emerging manager, you know, how did you guys start sourcing, you know, investment opportunities? You know, what was your original investment thesis and how has that changed over time? And you know, walk us through some of those, you know, first checks that you were starting to write from the fund and how those have proven out over the last few years as you've evolved the fund.

Yeah, sure. I think you know, initially we really were coming at it from a, you know, it's a bet on Seattle and the environs. Right. And we've expanded our scope a little bit outside of market now as we've had some success investing in particular categories and that's brought some great inbound to us. But initially it was just like, hey, think of me like a Silicon Valley generalist. Right. And we're just doing precede, we're trying to find the best founders doing the most interesting things, where they have a unique insight that no one else has an unfair advantage to go execute against it in a market that could be huge. Right. And certainly we had to set out with an idea of what types of companies we felt we were most advantaged in or most interested in. And that was kind of an overlay of what we're good at as an ecosystem here and what I had experience doing as an operator, specifically ML, AI and data, which I was fortunate enough to work with the great Oren Etzioni, who's I think got like 4, 49 to 10 figure exits under his belt as a technologist and is also the CEO of the Allen Institute for Artificial Intelligence. It's also been an investor in my startups. He's an LP in the fund and he lives up the street and he asked me to come hang out when they started their incubator. So I got to do that while I was angel investing. That informed a lot of the initial go to market investing thesis. Then straight ahead sort of vertical SaaS and marketplace and direct to consumer E commerce were the main kind of areas of focus for the first fund and sourcing. It's evolved. I think we really started just with friends from the ecosystem and folks I'd worked with or folks that I'd let crash in our offices. That's the crowd cow story. As Joe was actually working on a different startup when I was doing Dwellable and we had some space and we let him just camp, camp there. And then when he, when he was ready to raise, I kind of said okay, you owe me, you owe me one, pull me on the cap table and just stuff like that got us out, got us off the ground.

It's always the couch crashers that are your biggest exits, huh?

That's right. Yeah, that's right. That's right. I hope that's right. But I think it evolved pretty quickly to being, you know, deal flow and sourcing sort of being augmented by three, three areas. So we think about it from in terms of, first of all, you want to do the best work you can for founders. You know, our founder NPS somehow went from 94 to 100 year, year over year, which just I think means some people didn't answer their surveys, but we'll take it. But you know, we typically get really high marks, you know, whether it's on YC's book face or other otherwise from our founders. So that's a great source of deal flow for us. And we invested in a Number of deals where founders that are currently on our books have brought us their friends and we have a lot of downstream capital partners now. So as you probably have discovered right when you start out you're not necessarily getting great deal flow from investors. You're probably getting the deal flow that they need help with the falling knife deal flow. But over time you send a couple wins or good looking companies to some of these folks and they end up leading and marking up your rounds. Now they're calling you and saying hey, why don't you join this cap table? Because they know you'll do the work. And so you start to be able to rely a little bit more on deal flow from friends in the venture ecosystem. I'll say if I look at fund one which I know you're you know, pretty aware of as well, we got, we just, I mean shoot. We just had had company today announce a $15 million Series A from Norwest. That one the seed got done by Lightspeed and we, we did the precede is it's an AI play. You know two E commerce plays are probably the standouts in fund one right now. Fabric is last, last round was at a billion and a half and we did that pre seed and Cap Hill brands just raised 100 million and we did that pre seed as well. Fabric was, fabric was a deal we sourced during my time at AI too and they did not go through the program there but that my sitting there really helped me get the edge on that deal. And and Cap Hill was a reference from my good friend and former investor actually in my last startup, Jason Stauffer at Maveron and Zebly Pete was a co founder of mine at Marchex. So you know, kind of a small sample size there but that represents all the you know, a kind of nice cross cut of, of the type of referrals we get. Oh and I'll tell you what, one of the ones I'm most excited about and fun one is is called solo and they're basically providing, you know we call it business in a backpack for, for gig workers. They you know, guarantee earnings for drivers and other gig workers. And that was a reference, that was a referral in from the CEO of candidate which we backed. They work together at Convoy. So you know, I guess that's a good cross cut of some of our better deals and you know they've come from all over.

Yeah, I mean you've got a whole slew of different avenues that you pull from but you've laid it out really succinctly. I mean to start off with, you know, you can't get founder intros because you haven't made any investments in the very beginning. So you got to do the work first, support existing portfolio companies and then they'll start to refer you your flavor of the month, which is, you know, something that comes after. But you know, you're one of the most well connected guys in the Pacific Northwest. I know you probably won't admit that, but you definitely are. And so to hear even you having struggle to get some of that early stage deal flow given back to you without catching the fallen knife from some of the leftover garbage from a series a fund being passed down to you just shows how much work it really takes and time to give back to the ecosystem first before you can take anything from it. And you're a testament to all of that, given the LP relationships you have, the founder relationships, the other VC investors, and yes, being a part of your fund one and seeing the success you've had is an amazing accomplishment to watch. But you're a solo gp, right Kirby? So you know, explain to us as a solo gp, like there are a lot of us out there, you know, how you kind of manage all of it, your due diligence process, your networking, your LP updates and all that stuff. How do you suggest others think about managing it as a solo GP like.

Yourself, my North Star, the thing that I just always try to be evaluating and try to kind of float outside of myself and look down and say, okay, what are the most impactful things that you can be doing to return 10x funds to your LPs? And that's working with founders. That's kind of number one through 100 is working with founders. So you know, and working with co investors to an extent. Right. So I guess probably maybe number one through eight is working with founders and then like the last two are work with co investors and LPs. But look, if I'm doing great work for our portfolio founders and helping them win, that's all that matters. Because guess what, that's going to help me find the next great group of portfolio founders. So doing the work for our founders, it's actually a sourcing play. It's a picking play because if the harder I work with every founder, whether they're successful or not, the more I learn about how to judge founders and how to select founders. So it's actually the best kind of first party research that you can do is working with your own portfolio in every company, not just the ones that are hot. And by the Way, if you're doing that work, that implies that you're doing the work of working with downstream investors. I mean, I'm hosting a dinner in San Francisco next week where we're constantly talking with, with Series A and with seed investors. So you absolutely have to do that. I would just say that's kind of almost encapsulated within the concept of doing the best for your founders. So that's a long winded way of saying anything that's not that.

You need.

To learn how to do it and then you immediately need to outsource it. And so from almost day one, I outsource back office. We use Aduro and really, really happy. I think we have a great team there.

Shout out to Adora. We use them as well. Huge, huge leveling up moment for me as a fund manager, as it was for you too. So big shout out to them for sure.

Big shouts to Aduro, Braum and Jackie and the team over there that we work with. I mean, it's just, I often tell them like, look, I'm so grateful I wouldn't be able to do the job without them. And so kind of out of the gate, had, had, had that. You know, I take, I, I take, I do take it pretty seriously in terms of being buttoned up on, you know, our statement, our schedule, investments, our quarterly reporting to LPs, you know, making sure that we write a letter that encapsulates what we've been up to. And you know, we do a decent amount of LP engagement with regards to connecting with founders. So we have these, we call them the LP Roundtables, which I know you know about. We will bring together maybe some of our brightest AI founders and have a, have a sort of fireside chat where LPs can engage and ask questions and the founders can talk about their business. We do AMAs for our founders, we bring in experts. We've had the head of sales at Attentive, which is multicorn, and he's gone from seed to having 500 people under him. And he had amazing gems for our SaaS founders about how to hire and when to hire and who to hire. And we do those every month. We just did one on venture debt, which is something I had no clue about when I was a founder. So everything's kind of through the lens of making sure that we're just communicating and making sure that my time is spent with founders or with investors or with LPs. Whoever it is, it's not spent doing a ton of work product. So to the extent that that's the case, I hired a chief of staff last January when I knew we were doing fun too. And her name's Jen Holler and she's incredible. She actually helps facilitate a lot of that platform work and frees me up to do the kind of work that I think is high leverage. But yeah, I mean I'm still a marketer at heart so I do a ton of social. We've actually gotten LPs that we've met on Twitter. We've got investments we've made that have been cold inbound off Twitter. We just did one for fun too. You know, LinkedIn's incredibly powerful. You know, we built a startup toolkit on our website that has all the stuff that I wish I had when I was a founder and like that gets a huge reception in market here and just even beyond, you know, diligence. I experimented with the haiku form for diligence. I say jokingly, but I did, I did try to boil it down to be pretty succinct because again as a founder I remember a lot of the diligence that I got put through it. You know, kind of the seed or pre, certainly the pre seed stage was just make work and I'm interested in focusing on the things that matter. So we've got like a two page diligence list that we actually publish on our website. You know, it's, it's certainly checking the boxes on legal and incorporation. You know, we do, we do a ton of off book reference checking. That's probably the most important thing because these are founder team bets. Right. Competitive, we definitely do competitive research, market sizing. I'm less interested in like tam, I'm more interested in problem space and sort of thinking about. Because so many of the companies that we invest in, as I'm sure you do as well, are they're category creators. And the biggest misses I've had have been when I've shrugged off the market size of the initial opportunity and not seen behind it, like what's really going to open up when they're successful with the initial opportunity.

You said it best like yes, your LPs are your clients and you have a fiduciary duty to them. But your founders are really your clients in the short term and if they're successful then the fund's successful and then your LPs will be successful, successful. Right. It's a 10 year commitment. On the, on the fun side, your LPs will, will be there but your founders are the ones who will really make the difference on that sort of 80, 20 time split. So I love how you explain that really well. You know, you are prolific on Twitter and I'm, I'm definitely supportive of the way you've been including, you know, me and other emerging managers in the ecosystem. That's been a huge advantage, I'm sure, you know, but there's also probably some things along the way that you've learned some mistakes and some, you know, just red flags that you have learned on your own or learned from others that you got to share with some of the other emerging managers out there. What should people be aware of from all the things that you've seen out there or experience yourself that other emerging managers should, should not do to not scare off LPs, you know, and I.

Don'T have data, so I don't know if this is true, but certainly you may recall there was a lot of noise around the concept of rolling funds and people who had full time day jobs running venture backed startups were raising money on the side to go get into angel deals. You don't hear a lot about those anymore. I've got some horror stories from some LPs who have invested in those types of funds. One of them made 100k commit and then ended up paying 20k of that in fees. It was because the GP hadn't raised enough money to cover fees.

He was the only LP in the rolling fund.

Yeah, right. And so, you know, I think in an environment where everything's getting marked up, you know, in three to six months everyone looks really smart and people, and, and people with, you know, access can raise money to deploy over time, which, what, It's a red flag if someone's not full time on it. I'll just say it like I don't think you can do this job and build you, you might be able to make some good investments if you're not full time on it. But to build a platform, to build a brand, to build something that's durable, to become an investor that's sought after by founders in bad markets, not just frothy up markets, that's not something you can do from 7pm to 9pm and so I think that's one thing that's probably a pretty big red flag these days.

Yeah, you've seen a lot of the rolling funds and Twitter VC people go a little quiet recently. And I've had even personal experience making a small LP commitment to a rolling fund. And when I looked at my statement a couple weeks ago, I did see that over 20% of my capital commitment went to fees, which I was totally shocked by. And I had to have a long conversation with the VC folk at AngelList to recoup half those fees. But it is an important thing to stay focused.

Yeah, that's literally the same story I heard. I mean it was an angel of steel and I'm sure they are buried in issues around that. And look, it was like, I don't know how you felt back then, but I saw what was happening. I go, God, maybe the whole point is I just like move to the Valley and make friends with a bunch of hot startup founders and just hang around the hoop. And even if that would have worked, which in some markets that does, that's not why we're doing this. And again, if you want to build durable, you want to build a durable business and you want to become a trustworthy, you know, sought after investor. Think about the investors that you look up to in venture. You know, most of them aren't even on Twitter. Those that are, you know, they're thoughtful. I think many of them are ex operators. Not that that's, you know, that that's any, any.

No, but it's a very, it's a very good filter. I mean like the, the two investors I sit on the board with at Voice Flow are Tony Conrad at TRU and Aiden from Felicis and two incredible operators investors. Very quiet online, but they don't hang around the hoop, that's for sure. And they, you know the saying, do the least amount of effort for the most amount of gain. It's the opposite. It's like doing the most amount of effort for the most unknown upside gain is what they're thinking about, you know, and so that's sort of where I want to make sure I'm playing just like you are. Because if you got to wait for an investment to stand in line to get it, you got to get the hell out of line.

Yeah, that's a great phrasing. I really like how you put that. We're aligned on that.

So how are you navigating the seed in the early stage markets these days? Obviously valuations have come back a little bit. Not as much as some of the later stage growth rounds. And sort of what kind of returns are you underwriting for? And tell us about sort of with your second fund, the portfolio construction model, if it's changed at all since the first one for sure.

Like deals that were 8 to 10 million dollars post money caps are done at like 5 now. You know, I would say that's kind of out of like non non valley. First time founder gets 5 million post. Which is great for my model because I want to own 5 to 10% in this fund. Something that I did shift from fund one to fund two is, is the reserve strategy. So we're writing a bigger check up front, not only because the fund's bigger, but because we decided to deploy 70, 30 versus 50. 50. You know what that, what that essentially means is I would think, fun one. The posture was like, look, we're going to invest in a bunch of stuff and we're going to see what's popping and we're going to really pile into that. And that seems to be working. But what I realized was stuff was getting marked up so quickly that I would have to back up my investment six months later with basically the same risk profile at twice the cost. So there's stuff where, I mean, you know, I won't name names, but we're in a couple great deals where I'm like, what was the point of not doubling my initial check into that thing? Because now I'm playing defense at like 4x, you know, whereas if I'd double the check, I'd have double the ownership and I could play defense with that ownership with an SPV or, you know, pull it out, other stuff. So I think that was a lesson. You know, again, you know, we got a lot of heaters in fund one, so I'm not concerned. But if I'm optimizing, you know, we looked at fund two, we say, well, that reserve is not going to be for piling in necessarily as much as it's going to be for bridge and defense. And I think that's just a different posture. And we'll see. You know, in terms of underwriting, you know, you kind of have to start with the premise that you're what's going to make you really happy and make your LPs really happy is a 10x fund. I mean, beyond that. Beyond that, absolutely. Great. Right. And I think, you know, the reason that you kind of come into this asset class is because you, you know that there are probably better ways to make 2x your money over 10 years. There aren't many other ways to make, you know, potentially 100x your money over 10 years. But we, but, but we, we kind of try to, we kind of try to look at it and say we need to, we need to own, you know, 5% of a billion dollars in outcome to like 2x gross the fund. So that's kind of the bare minimum.

Yeah. For sure. I mean, you did you talk about it a lot. I've seen it. I talked about it with you offline about sort of how yes, markups are nice, but it's a huge disadvantage when you've only written 20% of your allotted capital in at the pre seed and now you got to be forced to write 80% of your allotted capital at $100 million valuation. You know, it's like buying a stock at a dollar and then being forced to buy the next, you know, allotted stock at $10 and you, you don't get a chance to jump in between it and back up the truck when you know there's something there, but somebody comes in and overprices it. And that was a big problem a lot of early stage funds had and are suffering from now that we were just, I don't know about smart, but maybe a little bit of lucky to write 70% of our fundamentals first check allocation into those first checks so that by the time we got to series a, we averaged 10% ownership and we didn't have to write pro rata if we didn't need to because we could suffer the dilution and be and still have a really good entry point. So yeah, it's, I'm glad you shared that, you know, in terms of, you know, other GPS that you look up to or some advice you've received from other gps. What, what's some of the best career advice you've received from another GP in the space that you can share with us?

The best. The best. The most like applicable tactical advice I got from my friend Lars at Aspenwood, which formerly Hummer Winblad. Lars got me to the finish line with his partnership when I was trying to recap my first CEO job, the startup we had there and you know, existing investors didn't play ball, so that didn't happen. But Lars was kind enough to not hold it against me and we've stayed friends. So when I was raising fund one, I went down to San Francisco and you know, got lunch with Lars and he's like, well, okay, well how much do you have committed? And I'm like, well, you know, I've got 7 million committed, but like, my target's 15 and like, is 7 too, too small. I feel like it's too small for a first close. And he just goes, kirby, your business is to be in business. You close all that capital tomorrow and it's the best advice I ever got. And, and, and like, and to the point now where I'll close, I'll Close one lp, like out, out of cycle, you know, if the check's right. Because. Because it's all it is is admin. And all it is. All it is is, you know, a little maybe, maybe it's a little more. Little more money to the lawyers. But like, you can't leave things sitting around. And so I thought it was really good advice. And otherwise, gosh, I mean, I lean on. Jeff Richards is a good buddy down at ggv. Eric Karlborg, we actually worked together at Gotonet, and he's at Lobby Capital, formerly August. Tim Porter up here at Madrona is a really, really close friend. Jason Stauffer at Maveron, as I mentioned, is a former investor. Boris Wirtz was a former investor. These are folks that I look up to that I check in with from time to time and usually have sage advice. And usually it's. The advice is in the form of what questions I should be asking myself versus, hey, this is what you ought to do. And I think that's actually, even that alone is an interesting heuristic, is when you're faced with a decision around portfolio construction or around follow on, the instinct is to just go for an answer from like a multiple choice. But I think it's more of a, like a, like an essay question. Like, you know, and just kind of, again, I go back to this idea of floating outside yourself and just trying to look down and say, okay, well, what are the, what are the different things you could do here, like, and why would you do them? You know, and what would you have to believe for that to be a good decision 10 years from now? Because that's, that's, that's our, that's our chosen framework. Right. So I don't know, I've been fortunate to, to have a lot of folks who, who I think are pretty, you know, pretty successful investors around the table helped me out.

Yeah, very fortunate. I mean, Boris, one of the best for sure, at least in Canada and also, you know, in the early stage ecosystem, I've got some very close mentors like you do, you know, at Menlo and other great, you know, vintage firms that you can just ask those questions to. But no, you're not going to get the answer, but you're going to get the thought process on how to get to your own answer, which is so vital for us to learn as emerging managers. You know, before we wrap things up, Kurt, we always ask our guests for their fast favorites. So first off, what's your favorite podcast?

My favorite podcast ever is a series where Chuck D from Public Enemy narrates the story of the band the Clash. If you haven't heard this, it's just. I get chills thinking about it. It's incredible. And then for, like, an ongoing, you know, podcast, just probably once a week on a run, I'll dip into Patrick o' Shaughnessy's Invest the Best.

Those are two great ones. What's the one that Chuck D narrates called?

Oh, gosh, it might just be called the Clash.

That's a good name. Nice. What's your favorite. Your favorite newsletter or blog?

You know, right now I'm. I'm digging on Chad Sanderson's substack, which is called Data Products. He is a really, really thoughtful, almost a missionary around fixing the modern data stack. He's currently. Currently a convoy as head. Head of Data Science.

Love that. I got to check that one out.

Next, your favorite tech gadget.

My Garmin.

Which version?

You know what? I'm not. I'm a bad geek, so I don't even know what version iPhone I have. All I know is that my Garmin, I run. I try to run, you know, six times a week, six miles a day. And the Garmin keeps me honest and keeps me focused and. And was a huge upgrade from my Fitbit. So my wife finally got disgusted with me for just kind of, like, screwing around. She's like, well, you're spending so much time exercising, you should have a real watch. So she got me one for Christmas a couple years ago.

Nice. I agree with her on that one. Next, your favorite new trend, Lower valuation caps. That's the best one I've ever heard. What's the biggest discount you've seen from where somebody started a conversation to where you ended up. End up closing the round? And I'll tell you, ours.

We just had. We just had one where we actually committed at 20, and it got done at 12.

Oh, that's pretty good. We had one that started at 25 and closed at 5. Oh, yeah, it was pretty big, spicy spread.

Yeah, it's always nice to. It's like waking up and it's, you know, it's Christmas in July or whatever. You're like, I didn't know I owned this much of this company.

So yours is better because you weren't the one pricing it or leading it. We were actually the ones leading it, so we had to get it down there.

Oh, wow. Well, that's just. Jeez. I'm gonna have you come. I'm gonna have you come lead our next deal.

Yeah, I'LL teach you our tricks next. Your favorite book.

That's really hard because I'm an, I'm a recovering English major and like a huge reader. I'm staring at my bookcase right now. One of those people with like a book, bookshelves full of books and then the garage is full of books.

Favorite book you've read recently then?

Okay, recently, I, I gotta tell you, I read the, I read the Led Zeppelin biography and it was, you know, it was just what you would expect.

Who, who wrote that one?

Oh, man, he's. I forget his name, but he wrote, he wrote the Beatles biography. He's kind of, you know, just an incredible rock journalist. And like, I feel like we spent so much time like diving into, you know, pitch decks and deal memos and, you know, market research and um, anymore. I'm kind of like, you know, when I, when I'm picking up a book, I'm like, just give me some candy. And that one, that one, that one was pretty wild.

Some Kirby candy. Always. It calms the mind. What's your favorite Led Zeppelin song? I'll tell you mine.

Oh, man.

Just gives you chills.

It, it's probably Black Dog.

Nice. Mine's over the Hills and Far Away for sure.

Oh, yeah. Nice. I mean, every, every, every era, they just really evolved their. I don't know, man. And the beats. I, I'm a big, you know, I'm a dj, you know, amateur DJ and love hip hop and, and break beats and jazz and you know, you know, all sorts of stuff. But like, so to me it was just like the drums bottom with those drums. They're just iconic for Zeppelin.

And.

Yeah, it's funny, we could do a whole other podcast about that probably.

Yeah, exactly.

And last but not least, your favorite life lesson.

Um, yeah, I wish I'd learned it a lot earlier, but running every day solves a lot of problems. You know, I talked about, you know, having the filter be like, okay, always just do what's good for founders. And that'll end up forcing you to, to figure out how to work with other investors. It forces you how to be good with your LPs, like if. But the driver is the founder. It turns out like if you run every day, it solves a lot of other problems. Like because if you say I'm running every day, it means you're probably not going out drinking at night. It means you're probably going to get enough sleep because you're going to be tired. It means you're probably going to eat good food because your body is going to perform better if you eat good food. For me, it means my attitude is going to be a lot better and I'm going to have more energy. And that's just one single thing that generates all that goodness. And I feel like if, man, if I figure that out, I mean, look, you can't go back and change things. And I'm happy with where things are, but I think I made things pretty hard for myself by not figuring that one out a long time ago. But 2016, better late than never.

That's amazing. Good for you. And so you do run all the way through the winter in the Pacific Northwest?

I do. One of my most successful investments has probably been my treadmill that's in the basement. So it's funny, I actually get faster in the winter because I can control my speed, work on the treadmill, and when I'm running outside, I tend to just. I tend not to push quite as hard. Yeah. So I'm looking forward to it and dreading it at the same time.

Yeah, absolutely.

Well, I love that.

And thank you so much for joining us in the Tank today, Kirby, to discuss everything from your startup journey to angel investing, your founder support, and just being an overall great solo gp. Thanks for joining us, Kirby Winfield, Managing Partner at Ascend Ventures.

Hey, thanks a ton for having me. And you know, I'm not surprised. It was a blast because you always have the most incisive questions of any of our LPs, and so I would expect no less talking to you live here.

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