Blackbird Co-founder Niki Scevak on investing in successful Aussie startups | Seed To Harvest Ep58

I think there's no greater joy in the job than seeing someone go from a nobody to a somebody. And startups are this industry where that line is so thin from nobody to somebody. And the time taken for that to happen is like no other industry.

Welcome back to Seed to Harvest, a podcast featuring founders, creators, and investors. My name is Paige Doherty, and today I'm excited to be joined by Nikki Chavac, co-founder of Blackbird, which is a $2.5 billion Australia-based venture firm investing across Australia and New Zealand at the early stage and beyond. Nicky, welcome to the show.

Thank you for having me.

Of course. I had the pleasure of attending your annual summit for Blackbird in Sydney this past November, and it was incredibly inspiring. You and, and the Blackbird team referenced it as a love letter to founders, and I would love to, if you could expand on how that culture permeates throughout Blackbird, the way that you build the team and invest.

Yes. So I would also describe it as Blackbird's values lived in real life. And in particular, we created the Sunrise for founders to retell the early days of their journeys and how they got started, how they overcame the difficulties in the beginning. And really is to say that at Blackbird, the community is the heart. And in particular, I think aside from the sort of every VC saying they add value, Blackbird has always been about founders helping other founders and particularly not famous founders helping founders just starting out. Founders who are at a similar stage of money or one step ahead, that, that really is the sweet spot of where people get a lot of value and a lot of help is from other folks on the journey at the similar stages to the problems that they're facing.

Yeah. And it was really interesting because at the, the founder-only events that you had, I feel like it was, it was just really cool to be in that environment where people are sharing stories about closing their first enterprise sale or, you know, hiring their first team member. And that's something that they're going through as a, as a cohort. And then you have much later stage founders since you all have been around for 10 plus years. So I think that that was really incredible to hear the talks from folks that were later on and then see the cohorts developing within the early stage founders. I'd be curious to share, if you could share more about the inspiration behind the name Blackbird.

Well, there are 2. One is Blackbird from the world's fastest fighter jet, which was produced by Lockheed Martin. And originally they had spent billions of dollars in a big team to try and build the world's fastest fighter jet. That did not work out as, as most things when you spend billions of dollars with a large team to, to do something new tend to do. And then it was a breakaway group, Skunk Works group, that said, screw it, we're just going to do it. And a small amount of people with very little resources, the world's fastest fighter jet. So I think that, that idea of small teams beating big teams and people kind of tie themselves up in a knot over like, oh, they have so many, so much resources. And, but big companies have middle management and big companies have this failure minimization. They're not, they're not there. There's a consequence to failure and there's not a consequence to success versus in startups, there is certainly the fear of death, but there's also this upside of if they do succeed, they will be rewarded greatly. And so, and And they don't have middle management to say no along this gauntlet of approvals. And so the idea that small teams beat big teams, that's Blackbird. And then Paul Graham wrote a great essay many years ago about black swans. You're looking for these very outlier events and startups are— so black swan is a low probability negative financial event and startups are a low probability positive financial event. And the twist there is a black swan is actually from Western Australia. And so there is an Australian angle to, to the black swan. So maybe Blackbird is taking inspiration from that as well. But I think that the original small teams beating big teams.

Yeah, I love that. I went to the, the National Museum in Sydney and they had a black swan. It was the first time I'd ever seen one, I guess, in person. It was pretty crazy. But I love that story behind the, yeah, behind the name of Blackbird. I'm curious, like in those early days when you were thinking back to What Blackbird was like maybe in its like skunkworks era, just getting started. What was that? What was that like?

Well, it was a, it was like a paradox because you had already successful companies. Atlassian already had tens of millions of ARR and several other companies, Campaign Monitor, RetailMeNot, Aconex, Halfbrick Studios, all of these companies that had already succeeded, but there were no investors. focused on them. And in particular, all of those companies raised zero in, in their early days. You had Accel who had invested in about 5 or 6 Australian companies, but it was all towards the later stages of their development. And so you had this cohort of successful startups and you had no investors concentrating on helping and being interested in them in the early stages. So that, that feeling of, wasn't like you were digging for gold. It was like the gold was on the ground already.

Yeah, it was on the surface.

Weird that people weren't weren't going and picking it up. So it felt like one of the greatest opportunities ever. Obviously it was very contrarian. No one was— the other element was there were 2 sort of waves of venture capital in Australia before 2012, and they had largely unsucceeded, not succeeded. And so in 1999, in the dot-com boom, looked good, then wasn't good. And then there was another wave in 2005 that sort of didn't find any great generational companies from there. their efforts. And so there was a skepticism on the LP side that was why, you know, why the hell are you doing a venture capital firm in Australia? You know, the good companies can get sort of the cream can rise and then the cream can get skimmed by growth stage Silicon Valley investors. And why would you need something different to that? And so the other element I would say is, as I said, community is at the heart of Blackbird. And in 2012, The founder community of the successful companies didn't tend to come together to help the next generation. I think that's the magic of Silicon Valley is that when someone creates a company, they help and invest in the next generation. And so the, the, there was the opportunity and then the way we hoped to make a mark was by bringing together this founder community of succeeding or soon to be succeeding startup founders. And they were the LPs of the first fund. And then to, to not only invest their personal capital in the fund, but also to help in a time sense, the next generation of founders, um, who were, who were starting their own company. Then of course, because there were no, there was no venture capital because it was so hard to raise a fund. That was exactly the best time to raise a fund. And then from a global software standpoint, Australia punches well above its weight in hero companies. And in 2012, It was, you know, purple patch combined with fish in a barrel. And we invested in the first rounds of Canva, Culture Amp, Safety Culture, Propeller, you know, the list goes on. So the perfect time to start a firm, but it felt like already the gold was on the surface and it felt like the founders of the prior generation were interested in investing and helping the next generation.

Yeah, it sounds like timing-wise, it was just like that perfect combination of things. I'm curious, like, as, as entrepreneurs—

Didn't feel perfect.

Didn't feel perfect at the time. Perfect in hindsight. I love that. I, I feel like I'd be curious to hear more about, you know, as you've grown as an investor, as a human, like how has the, how has the Australia, New Zealand ecosystem developed since 2012? What have been the biggest shifts that you've seen?

I would say that there are ecosystems now. In, in the beginning it was, it was starting from afresh. And so also I would say building a venture capital firm in Australia and New Zealand needed a creation mindset. We were part of creating an environment for generational companies to be born. And so it's a very different, you know, like the sunrise where, you know, you're seeking to change the culture of cities or countries. It's, it's, it's a very different sort of problem to be solved than say in mature ripened markets like Silicon Valley, where there is already escape velocity and you, and you're, you're sort of figuring out How to, how to position yourself in an already existing market versus in many ways being part of the creation of the market. And so that, that, that broadly is, is how it felt very different. And over the, over the decade, I would say like the, the dream has come true. The ecosystems in Australia and New Zealand, in particular Sydney, Melbourne, and Auckland, you know, on a, on a world stage, those generational companies then go on to spawn additional generational companies. All of the employees of that generational companies can take their experiences to senior positions at the next generation of startups, the founders and others of those generational companies can invest in an angel sense or a family office sense into the next generation. And so this, this, call it the circle of life for the Lion King watchers in the audience. But once you get a few turns of the circle of life, that's how an ecosystem grows.

Yeah. Yeah. And I feel like from my experience, it definitely feels like it's thriving. The energy that I felt at Sunrise was Incredible. Like everyone's just so excited. And I, and I think there still is that, that feeling of like there's so much, like as you're mentioning, like gold on the surface that's still yet to be uncovered. And I feel like it's really interesting because I feel like Australia as a country is, is quite similar to that. There's like an incredible amount of natural resources. And I, and I, I would say, I don't know, I was, I was reading Bill Bryson's book about Australia, so I feel like I learned a lot of, a lot of fun facts through it. Um, but it was, it was interesting to see the parallels in kind of like Australia as a country and then Blackbird as an investment firm investing in Australian and New Zealand companies. Yeah.

I would also say that that's actually been, because Australia is blessed with natural resources, that's actually counterintuitively been a curse rather than a blessing. And then, you know, at the other end of the scale is Israel, which is under constant threat with constant military tension, you know, sand produces the pearls of cybersecurity and so on. So almost if Australia, the Bill Bryson book is The Lucky Country, the lucky is actually not sort of like too lucky. You don't need to be hungry by default. And so Australia has sort of been blessed with that. So that actually perhaps has drained some ambition because ambition isn't required. But I would say, you know, that, so that's negative motivation, but there is a lot of positive motivation of of trying to do something ambitious in Australia now. And I think the other thing with generational companies is if you get an Atlassian, if you get a Canva, if you get a Rocket Lab or a Xero, that, that scale of ambition inspires the people starting out. They're like, well, you know, that, that's the benchmark. And so I want to be better than the benchmark and I want to be more ambitious. And so ambitious is contagious in a lot of respects. And the, and the most successful company sets the baseline of ambition for that, you know, fresh new founder in Australia or New Zealand. Yeah.

Yeah, one of the portfolio companies I would love to talk about is Canva. What was your experience like meeting Melanie like earlier on? And how was that journey watching Canva grow? Because they definitely went through like pivots and changes in the business model. So it's, yeah, I would just love to hear more about it from your perspective.

It was very clear that Mel, Cliff, and Cam and Canva was a superstar company and exactly the kind of company that you would hope to be born from Australia. So Global from day one, customers all around the world and, and this big mission of empowering people to design who previously were, you know, given Microsoft Paint or Microsoft PowerPoint and did a really bad job with those tools.

Yeah.

I think Mel in particular defines the person doing her life's work. She taught graphic design at university. The first company that her and Cliff did was Fusion Books, which was almost like a high school yearbooks version of Canva. It let parents and kids and teachers manage the workflow of creating a high school yearbook. But of course, sort of all of those lessons from a specific use case applied generally, that, that's when Canva came. I think the bizarre thing was, if people probably will think of startups and investing in the context of the last couple of years, this was, this was in 2012, '13 time period. But actually Canva seed round took 18 months to raise. So can you imagine a startup to the, to the beauty of Canva? Having to take 18 months to, to, from start to finish to raise their seed round and that, and through the 18 months, they actually gained Cam as a co-founder. And so it was this very just different time of, of fundraising. And it was, I think it was something like a $1.5 million seed round. And there were the funds at the time, people would invest sort of a maximum of $250K into, into seed startups in that kind of, and so you had to get a lot of people to say yes to put together A $1.5 million seed round. So that, that was the bizarre thing. That was the unique thing. Even though, you know, they're, as you said, they have fine-tuned their business model and so on. It was always driven by this mission of democratizing graphic design and bringing the whole design ecosystem onto a single, beautifully simple application or a way in which to do everything. And you didn't need to be a professional to do it. And so That, that was always the vision that even the product roadmap slide in 2012 is exactly what they did. So on this, on this sort of where they wanted to build and solve that, that, that was strangely sort of 100% accurate. And the beautiful thing about Canva and it's Mel is always saying, you know, they're 1% done, which is, I think, sort of a joke internal meme that are we ever going to be more than 1%? And Canva Create, which I think is today, she begrudgingly accepted that they're a little bit more than 1% now, but it It's just true. You could spend an infinite amount of solving this and getting to the ultimate version of this vision. And I think the infinite sort of timeline scale of vision that, that's, that's, that's, that's present in all of the, all of the great startups.

Yeah, it, I feel like that long-term vision is one of the most challenging things to hold on to as a startup founder, because I feel like so much is happening in the day-to-day, especially like things are going up, things are going down, like All this stuff is happening, like keeping a very strong long-term vision is, I would say, is like, as I've learned over my journey as an investor, is really crucial to the long-term success of companies. I'd be curious, we were talking about it a little bit before the show, but you were talking about the dynamics of investing in Australia and New Zealand in terms of different verticals, and you were talking about investing in outlier founders. So I would love if you could expand a bit on what your investment decision process is and maybe how How it shifted over the years.

So as I said, unified by ambition, I think people sort of think of highly ambitious things as highly unlikely. Like, first of all, succeeding is definitely highly unlikely. So any form of success is highly unlikely, but within the successfulness of things, being more ambitious is actually more likely than if you're less ambitious, you're actually less likely to succeed. I think because ambition is a honeypot or ambition has this network effect of attracting the best people to you. People want to work on an ambitious problem, which means that the solving of that ambitious problem becomes more likely because the best people are joining you. Once the best people join you and you make some progress, some more best people join and then you make some more progress and the best investors want to invest at the best valuation. And then the next set of best people are proof of progress and proof of capital that they won't run out of money, want to, will then join the company. So that version of best people then makes, helps the company make more progress. And so it's this network effect of best people that, that, that are ultimately the reason why the company is successful is the people that, that, and the team that, that, that, that build it. And so I think sort of high ambition is actually more likely to succeed than low ambition and founders and folks sort of think the opposite of like, if you halve your ambition, you'll double your chances of success. So again, it's, it's not like, oh wow, we used to invest in low ambition companies and now we, but it's sort of, as an investor, you're always tuning the dials. You're always calibrating what, what is important and, and certainly that inspiring mission and the culture a company builds around that mission. The weighting of that over the last 11 years has gone way, way up. The sort of other end of the spectrum, you know, we invest right at the beginning. Hopefully you're investing before someone has released a product and before they have revenue. And so not getting too tied up on like, do they have the answers of like, like due diligence is like a joke word. within the Blackbird investment team at, at right at the beginning, like people with a vision and an idea, you don't do any due diligence. You inspect whether, like why that person cares about that problem, what led them to that opinion that they have on the market. And with a set amount of capital, are they asking the right questions to be answered in a, you know, 1 to 2 year period? And so it's much more a sort of evaluation of are they asking the right questions versus like Do they have the answers? The other, again, this will sound weird, but investing generally is in technical things. You can almost like, just if you said that everything has no technical risk. Yeah. If you build a rocket, the rocket will get built. If you're a satellite company, the satellite will be in space. If you're a robotaxi company, the robotaxis will be on public roads. If you are a synthetic biology company or whatever it might be, like just pretend that that's actually a good starting point, that there's zero technical risk. And the reason I say that is In a lot of deeper technical pursuits, people overspend their time on the technology and they never sort of step back and ask, actually, are they creating a good business? And what I mean by good business is, are they good customers? And so do those customers say yes quickly? And do those customers not complain about price? And so people are like, oh, will the rocket get launched? But you have to look at, okay, who are the customers? And is it a good business or not? And so. From a technical point of view, I would say, at least personally, I look for not, again, not if it works or not, I just assume it does work. I look for, does that, does that person have a unique point of view? Are they solving the technical challenge in a unique way? You don't want to solve it like other people are solving it. You want to solve it in a very fresh way. One example might be, we are an investor in a LiDAR company. There's 100 LiDAR companies in the world and it's a It's a, it's a, it's a market with a lot of people doing the same, trying to solve a problem in the same way versus Baraha, which is taking telecom laser world and applying it to a new domain and using sort of the changing color of light to direct the laser versus a lot of the other folks are using sort of vibrating mirrors or they're using, you know, in the beginning spinning lasers physically. And so again, you're not looking whether the LiDAR will work or not, you're looking whether the you know, the changing the color of light is a unique approach or not. And so in the beginning, you just, you want to make sure that they're asking the right questions. You want to make sure that they have a unique point of view and then, you know, go on an exploration. The first yes decision to an investment is not like, yes, I know this is the way the world is headed. And yes, I know this is going to be a success. It's sort of an acknowledgement that it's an exploration and this is an interesting person to go on a journey with and see how it goes and have an open mind. So I think if you think in that way, We tie, at least what I have felt personally and Blackbird has felt as a team, is you get way less sort of tied up in knots in the beginning in making a decision versus I would say the 2012 version of Blackbird, we were tying ourselves up in a lot of knots investing across these technical domains.

Yeah, I think that's like a, I was talking to another fund manager about the difference between confirmatory due diligence versus due diligence where you're looking for reasons to say no. And I feel like the, what you described is more like confirming that they're asking the right questions at the earliest stage to get to where they need to be and not necessarily having all the answers, which I think when we've talked about it before is one of the things I most appreciate about your investing style. And I really resonate with that. I'd be curious as we wrap up our conversation today, what parts of your work fill you with a sense of passion and joy? And is there a specific story that comes to mind?

I think there's no greater joy in the job than seeing someone go from a nobody to a somebody. And startups are the exact industry where that line is so So thin, you know, from nobody to somebody. And the time taken for that to happen is like no other industry. And so just the sense of, as you said, joy, like it really is a sense of joy of seeing someone who started out with an idea, achieve that idea. Um, you know, periods of time catching up with them and then you see them go from a couple of people to 20 people to 50 people. You go to like a town hall or an offsite and you see them presenting in front of 100 people and then it's the greatest joy. So this, the achieving of their goal, but but also this development of a person. Like normally founders are deeply unqualified. Like if you looked to lead a company, and so if you look at like, I want to invest in trillion-dollar companies. Well, okay, let's have a look at Apple and Steve Jobs when he was starting Apple was a, you know, a misfit, you know, or Don Valentine from Sequoia was deeply worried about him being actually able to lead a company. The Google founders had just finished university with no business business experience, Facebook and Microsoft, they didn't even finish university. So you have these unlikely leaders at the beginning of a journey of a company. And so it's the joy is seeing that, that person evolve to become a leader, to achieving their success along the way actually pulls out the leadership from them. And I think just those human stories of success. And so you can pick any number of founders and then in building Blackbird itself, we're now a team of 73 and you get the same joy from seeing people build their careers again from the beginning. of nobodies to now somebodies, the rises of people's careers is another, you know, it's very similar source of joy of the job. So I'd say both of those, why the job is so satisfying and so exciting. And I could do that every day and see that every day. And that would be happiness.

I love that. I feel like that's definitely my favorite part of the work as well. Like just like the excitement when you're like, you take a bet on someone when it's like 1, 2 people and then You see their company grow and it's, it, it's just wild to be a part of that early creation process of a company in a, in a small, in a small way. So Nikki, thank you so much for coming on today. I so appreciate it. Any parting words for our audience? I'll drop your and Blackbird's socials in the show notes as well so folks can follow you.

Yep. Come by to the, the Sunrise. We're running it in Auckland in September. So if people wanna experience in real life what we've talked about today and a little bit of New Zealand in, in, in a day, definitely check out The Sunrise, which is linked from our website, blackbird.nz.

Perfect. Special thank you to producer Riley Jennings and podcast editor Tate Doherty for your help on this episode. If you're listening and you'd like to connect with me, follow me on Twitter or LinkedIn, Paige Finn with 3 N's. Thanks again for listening. I really appreciate it. You can look out for new episodes every Monday at 5 PM PST. And if you'd like to learn more about the strategies and tactics of seasoned institutional investors and rising venture stars, check out our YouTube channel at Seed to Harvest. Also, my TikTok channel is Seed to Harvest, where I post a lot of behind the scenes. Um, and if you like this episode, please rate and review this podcast wherever you get your podcasts, if that's on Apple or Spotify. Anyways, thank you so much for listening. I hope you have an awesome rest of your day.