Katelin Holloway – Human Side of Venture Investing at 776 (EP.490)

23:11Every board that I sat on, every time I showed up. I was looking in the face of investors who were very smart at things that I was not very smart at, which is good. That's what you want at your board table. But there was nobody like me in most of those rooms. When I say like me, I mean people that understand nodes and network. If you break down early stage investing, there's some simple buckets. There is sourcing, which is how do you find the best founders in the world? That is the same as recruiting. We use the same word, sourcing. How do I source the top talent? To understand sourcing, you have to understand community.

23:48You have to understand network. That was something that I'd been doing for over a decade. I knew where all of the top talent in the ecosystem was moving. And I also knew which ones were loose in the saddle that had been at large organizations or small ones that had an idea. Being dialed into that underground system of where and how talent moves, that was my source of finding founders. The second bucket in early stage investing is selecting. You have access to all of these incredible people. How do you make sure you're picking the very best? Well, again, this is a recruiting function. You're recruiting for a particular role, VP of engineering.

24:22How do you make sure that you're picking the best of the opportunities and people in front of you? That's when the behavioral science background comes in. I've hired tens of thousands of humans in my career. And I have fired thousands. Understanding what works and what is needed for a particular time in a company's growth and development was easy to reverse engineer. And what are those archetypes needed to make a successful founder? The third bucket is servicing. There's debates about how much investors and our inflated egos can do to change the results of a company. I've spent my entire career enabling people to fulfill their potential.

25:01Those three buckets, I was an expert in. So if that's what makes a great investor, why couldn't you give an HR lady a checkbook?

25:09Katelin Holloway:I'd love to dive into how you've applied those lessons at 776 to each of those three buckets. The sourcing piece, nodes, networks. How do you go about it now? One of the best bits of this is that my partner and the founder of this firm is Alexis Ohanian. Alexis's network is insane, second to none. He has one of the largest Twitter followings and social media platforms of any other VC. And what a range of people engage with him. Everything from Palmer Luckey and Joe Rogan to Barack Obama and AOC. Because he represents many things to many groups of people. Very successful founder. Game recognized game.

25:56Founders appreciate Alexa's perspective because he is a builder. He has failed publicly and he has succeeded publicly. Being the first graduating class of YC, that network is phenomenal. Becoming a partner at YC, starting Reddit, selling Reddit, coming back to Reddit, turning around Reddit, starting his first venture capital firm, Initialized Capital, that track record, phenomenal. He appeals to so many people because he is so engaged. Being the founder of Reddit, he knows communities better than anybody else. His ability to tap into those different variety of networks, whether that is founder to founder, being recognized as an incredibly strong investor and a partner, to being a human, which a lot of people forget about.

26:43The way he celebrates his family and celebrates being a girl dad and all of these things that make him human makes him accessible. Sourcing, from that perspective, we have a great foundation and a great bedrock.

26:58Katelin Holloway:How do you harness all of those networks and ideas that are either sitting inside of Alexis's head or sitting as numbers on a X account into something actionable for a venture capital firm? Software. This is where Alexis and I have found our incredible partnership and our balance. If you distill 776 to its core ingredients, people and product, and how people and product work together is exactly the foundation for everything that we've built. We've been partners for over a decade now. This is our third rodeo. Him hiring me at Reddit to then eventually supporting my harebrained thesis of giving an HR lady a checkbook.

27:41He hired me on as an investing partner at Initialized. When we split that firm and started up 776, we finally had an opportunity to build a firm the way we wanted to. The starting first principles were we didn't just want a platform to deploy capital. We wanted an operating system. And we wanted to be able to scale the things that should be scaled appropriately with technology so that we could preserve our energy doing those high leverage things that are people centric. This is the creative, strategic, empathetic work that we believe adds leverage that could impact the most important part of a company's trajectory in those early days.

28:21Every decision that we make at the firm is downstream of one question, which is how does this help founders win? A big part of that is technology. Alexis has had this idea from the dawn of time of leveraging software to access those nodes in his network in spreadsheets and pull those out. He developed an operating system called Cerebro. Today, it's a wildly robust system. Founders can tap in and self-service all of the things that most VCs spend their entire days doing. Whether that is spinning up a campaign to reach out to potential new customers, specifically targeting CMOs within a certain sector, or drafting up tweets and LinkedIn posts on behalf of the partners and other people at the firm to help support with a fundraise.

29:10Going in and strategically saying, hey, these are the folks that I'd like to meet. So our network is fully accessible via software to every single portfolio in the company. They can go in and self-service. the founders that have figured out how to unlock that and use it daily, you can go to our website, 776.com, and the numbers display the work that is done. So there is nothing that our firm does that is not reflected in Cerebro. From phone calls and support calls, everything lives in Cerebro. You can see the receipts of that, the exhaust of that engine that we've built lives on our homepage because founders appreciate it.

29:46How many times have we heard VCs say, how can I help? What their promising is an introduction to someone typically from a large list of categories and making sure that you're talking to the right people at the right time. They have to think about it. Oh, who do I know at Coca-Cola? We got to know someone over there. Oh, your app is blocked at Apple. We have someone. Can someone reach out to them? No. And Cerebro just is done. Go in, set your parameters, put in what you want. And then of course it all gets screened by us. This is not automatic at any point. We leverage AI and all of the awesome things that we have available to us today.

30:19There's always a human component to it. But what it does is it allows our founders to achieve success and unlock doors in ways that we couldn't scale if we had to pick up the phone every time or if we had to sit and go through the mental Rolodex of things. Cerebro really has enabled us to scale super efficiently, both in terms of our team size, but then also our portfolio and the amount of help that we're able to provide on an hourly basis. It has dynamically changed that.

30:45Katelin Holloway:How have you thought about of the flood of potential things that could come in from your network, how to start distilling both the people and then the ideas or the products, the themes? How lucky are we, Ted, to be in this industry today at this moment in time with everything that's happening in the world and everything that is about to unlock and it is the process of unlocking? I just get so jazzed on the opportunity set that's in front of us. How do we distill it? How do we ensure that we are making the very best decisions? A part of that is that we do lead through ensuring that we have more eyes and ears on things.

31:24For example, everyone at the firm is invited to any pitch we take. In the pitch process, because we have Cerebro, we have software, every individual that attends the pitch puts their notes into the system. And because Alexis is the Reddit guy, it's anonymous. You're rating these things. We have our own system of how we break down what we're trying to distill very quickly, these pitches in the grand scheme of things. You're not spending a ton of time with founders before you have to make this decision of, are we going to deploy capital here? Is this a partnership that we want to support for the next decade plus?

31:56We have systems that are built in to where we're analyzing and passing judgment on both the idea. Is this the right idea at the right time? And is the why there? Also, the people. On our partnership team alone, two of the three of us have deep HR backgrounds. Chris Vanzetta is our third partner. We've developed over the last five and a half years since the firm's inception what we believe makes a truly great founder. Once we've taken a pitch, we input everything into Cerebro. It goes into the back end. Before our next deals meeting, it's surfacing, hey, there's high signal here. Our job is to get to truth as fast as possible.

32:35How we do that with software allows us to have better conversations and get to the heart of why we're going to rip our skin off for that particular deal or not.

32:45Katelin Holloway:From all that HR experience, how do you interview people? Part of this is repetition. Alexis has been investing for 20 years. There is an understanding of some of his basic philosophies and principles that he's able to distill quickly to say, is this person open to coaching? How do they take feedback in the moment? How do they articulate themselves? How are they selling? A big part of being a founder is your capacity and your ability to compel people. How are they presenting this? How are they presenting themselves? All of those things matter. We index pretty heavily on founder. That's not to say that we don't look at product or product market fit at all in those early conversations.

33:26You have to have the right idea or what is a thoughtful idea at the right moment. We're all builders. We're all operators. We understand that a product is going to change 16 ways to Sunday before any liquidity event. What you're betting on is a soft part of the idea on that founder. The more I can build in dialogue that isn't status quo, isn't what every other investor on Earth is asking them. I recently seeded a company called StarCloud. The founder is Philip Johnson. When I met Philip, it wasn't in a traditional pitch setting. We were at a conference. Meeting founders at conferences is super rare.

34:04But Philip was one of the most interesting people I had met in a very long time. We got seated next to one another at a dinner. We introduced ourselves. I had never heard of StarCloud. He had never heard of 776, Alexis, or me. We started talking about things that were personal to him, some life milestones that were coming his way. I started asking questions about the time-space continuum and his thoughts on wormholes and weird things like that. And over the course of this dinner, I had a clear understanding of how Philip's brain worked. I had a clear sense of his value set, how he treats people and how he expects others to treat one another.

34:41At the end of that dinner, I was like, what do you do again? And that's where he said, oh, we're building data centers in space. And I said, Philip, I don't know if you're raising, when you're raising, I have no clue what you're up to. I want to be a part of it. And if you're not taking capital or your round is closed out, If I could be of support to you, I think that you're it, man. When you know, you know, which is a terrible answer to how do you know. In that example, I walked out of there and saying, I don't give a rip if Philip is making dry dog food. I want to support Philip. He's going to make something incredible happen.

35:17I brought it back to the team. At this point in time, data centers in space was audacious. I got dragged so hard internally and externally for even asking about it. I was doing my diligence. I started asking people, what do you think about this? I was talking to founders of big, important terrestrial data centers about it. They dismissed it. People were salty and nasty about it. I kept coming back to the table. You've got to hear me out on this. They technically were not raising anything. I kept in touch with Philip. I kept my foot on the gas. I had such high conviction. We were able to get an investment done with him.

35:53before the world exploded with the love and support from Elon to Sam Altman to Jeff Bezos, anyone who's anyone, within a month of that check that I was able to finally deploy into Philip and his merry band of space guys, they are now on such an incredible trajectory. That's a wild example. That was not, you sent me an inbound and now I'm going to meet you and then here's the team and then this is what we think. Now we're going to move forward. I won't give it to serendipity and luck, But my favorite way of getting to know founders is having conversations sometimes that have nothing to do at all with what it is they're building and then eventually getting in.

36:33Katelin Holloway:We're going to take a quick break in the action to tell you about Ridgeline. Imagine starting your day with reconciliation already done. No spreadsheets, no breaks to chase, no duct tape holding systems together. Ridgeline is the first front to back system of record built for investment managers. One platform, one real-time dataset. Embedded AI. Investment firms are replacing a patchwork of isolated and data order management systems, accounting systems, reporting add-ons, and client tools with this fundamentally new operating model. Automating complex workflows, scaling personalized client experiences, and unlocking the full value of AI.

37:13Katelin Holloway:If this is the year your firm is ready to modernize operations and harness AI, you can learn more at Ridgeline.ai. And now, back to the interview. How do you balance this deep focus on the person, the entrepreneur, with what it is they're doing? Is it a good market to be involved with? Do you have conviction on the theme that they're pursuing? If someone is showing up, they've got all of the right signals or signs that we believe is destined to be a great founder. But they show up with an idea that is so wildly off the mark. From our perspective, our limited worldview, it's a do not pass go. There are plenty of people that I've met that I like.

37:58You've got the goods, but I'm not going to write a check because they were not barking up the right tree at the right time. You have to be within spitting distance of solving a problem that collectively makes sense to the firm. Something else that I really appreciate about how we designed 776 is that we are generalists. Back when we started this up, there were questions from LPs, sometimes even founders. Why aren't you focused? Why aren't you going to be specialists? This is where I really lean on Alexis's experience. when he was building initialized with those partners. They were generalists because it was a less formal working group in those early days.

38:37They were still a part of YC. They were cutting checks into people that were hanging out at the same watering hole. As a result, you have such a unique variety of companies that move the needle, ranging from Coinbase to Instacart, a handful of others. It was a smaller fund. that shaped and crystallized Alexis's philosophy and belief that he would always want to be a generalist investor. That is something that we knew we needed at 776 when we started. The spread of company type is awesome. You've got an incubation with a company called Aflos that is a track and field league right now focused on women.

39:16That was Alexis's brainchild. We have almost complete ownership of and was brought to life from an idea to now being a full-fledged league, changing the culture of track and field, hitting and making milestones like the largest purse prize in history for some of these athletes to a company that I invested in recently called Lamb Division. They're manufacturing artificial retinas in zero gravity that could feasibly cure all retinal disease. That is a wild spread. And the context shifting that we get to do every single day, Athlose to Lamb Division and everything in between. That is the exciting part where I feel so lucky to be in this industry at this time.

39:58While Alexis and I both have our own interests and proclivities, as says Chris and other members on the team, our thesis lies more in the founder. We want to meet the very best founders exactly where they are, solving the problems that they think are most critical and most urgent for humanity. That's what we're seeking. At the end of the day, I can look back at Fund 3 and say, oh, here were some trend lines or things that it was obvious we were more attracted to in that moment. But the reality is we're still looking for the very best founders.

40:28Katelin Holloway:What are the frameworks you might use to screen out things in a very, very wide remit as a generalist? I don't think that we have any hard passes on any particular industry. Every single check that we write, we underwrite it to return the fund, full stop. We lead deals. We have ownership targets. Those things are non-negotiable. There's a rare event where we meet somebody maybe later or the stars didn't align and we might meet them later in their process. And it doesn't exactly fit into our model or the ownership is simply not left. But we still want to be able to participate at that particular moment.

41:05We will write a check that doesn't meet our ownership thresholds, but that's pretty rare. We do that with the explicit conversation with the founder of we're doing this now so that we can earn the right to underwrite your next round. So it's never a little one off itty bitty check. It's not spray and pray. It's very high concentration, very high conviction. Sometimes that negates us from deals entirely. Some companies are good ideas with great founders that are not venture-backable businesses. Our core principles of being great fiduciaries, honoring our commitments to our LPs, is important to us.

41:40There's a ton of thought that goes into it. That's the first filter. After that, there's no industry filter or business-type filter.

41:47Katelin Holloway:Once you have made an investment in a company, that third leg of how you help them, we'd love to hear some of the challenges that the founders you work with typically face as they begin to grow their businesses. This is my favorite part of the job. I love the thrill of the hunt. I love meeting new people. The best part is that now I get to work with Philip and his whole team who I've grown to deeply respect and get excited about every day. I am lucky to be a part of their journey. This is a relatively new investment. I don't have a ton of hours clocked, boots on the ground with this particular team yet.

42:26We've been around for five and a half years. I've been an institutional investor now for seven. The relationships that I built with people through the hardest parts of their jobs, their lives, their work have been absolutely life-changing. I've seen success. I've seen a lot of failure personally and through our portfolio. That's the power law at play. I view one of my primary roles as a partner to any founder is to not tell founders what to do. I am never directive, suggestive, always. A big part of my job is to help them ask better questions. The more I can help a founder stay in a place of curiosity and growth, the better their product is going to be, the better they're able to connect with the people that are doing their work and bringing their vision to life.

43:12I default to my operational skill set a lot. It's unusual to have someone like me on a cap table. I'm the one who fields the 2 a.m. phone call from the back of a Waymo when someone says, we're wrapping up a company event. And I think that my fill in the blank executive maybe just stepped out of line with an employee and I don't know what to do. A lot of VCs don't get those calls because VCs are designed to maximize for upside. They don't have the experience to help manage real risk. Financially, yes, but human work, no. It's my sincere belief that human capital work is risk management disguised as empathy.

43:54This idea somehow along the way, life, business, society has decoupled business outcomes or even capitalism from humanity in a way that is incredibly destructive. When I reframe this idea that doing that human work is actually risk management disguised as empathy, dynamically changes not just my relationship with individuals, but our collective relationship with the business.

44:22Katelin Holloway:What are some of the answers to sticky situations like that? This is why I'm not scared of AI creating mass unemployment in that I think that our work as humans is being reshaped. The answer to your question is it's different every single time. Details matter. Nuance matters. Context matters. The players in the game that are involved matter. All of that impacts how you might guide someone through something. In my career, in 20 plus years of supporting humans in an organizational way, my partner was just diagnosed with something terrible, which has come up multiple, multiple times. Fill in the blank.

45:05Divorce, death, all of these things that are very human, that handbooks and HR policy doesn't cover effectively. That really matters. Having those conversations, knowing the individual as intimately as I get to know them by design will change how I support them through something outside of work, but deeply impacts their capacity to show up as a great leader. In some cases, the answer is, let's figure out succession. In other cases, it's how do we help bring in support right now to help you be able to focus on your most immediate and most precious need, which is the person you love? How do we keep the business on standby for a moment?

45:45At 776, we have a program that I'm proud of called our Growth and Caregiving Program. It's my belief that the best founders on earth care about their businesses so much. They're always willing to put themselves last, just like a parent and a child. The reality is if you don't put your oxygen mask on first, you cannot help and save your child. We've created this financial program where we give grants. It's a separate pool of capital outside of the investment made for your first check-in that we write at pre-seed and seed stage that allows for you to have access to dollars to support you. If it has anything to do with your personal growth and development or anything to do with you supporting or caring for the people that you love most in life, please tap into it because I know that you're not pulling that off your balance sheet.

46:29Those more human scenarios, it's different every time things evolve and develop in ways that we can't predict. On the other side, where something maybe is more of a complex decision around termination, values alignment, these are things that you can't chat GPT your way out of. This is sincerely where I believe our work is evolving.

46:50Katelin Holloway:As a company is growing, you've interviewed so many thousands of people. What have you found or some of the lessons you've taken away that you help your founders with about how they should hire into their businesses? Many successful venture firms have a talent team or a talent department where they're more or less glorified executive recruiters that don't have the autonomy, the context, or the resources to really effective help companies scale and bring in top talent. But it is a solution. I'm not poot-poohing it entirely. I'm standing up for the talent partners within other organizations. From my seat in the house, sitting on the other side of the boardroom, opposite of investors, You look at the data of executive hires placed by a venture firm.

47:36Either an investor says, like, oh, you got to hire this guy. He's going to come in and totally change your go-to market. This guy's going to blow revenue out of the water. Or it's through a talent team that is helping you source and place these senior leaders. The data speaks for itself. The tenure is less than 18 months. Most of these people come in. The body rejects the organ. They're incentivized to get to that first year of vesting that equity because they've been given sizeful grants. It's not worth leaving before that. So they hang on. They sow cultural divide. They're a total mismatch for what the company is doing.

48:09Not because they aren't great at what they do, but because they were not hired by the organization itself. You as a founder should be a part of your hiring process until the day you exit. Full stop. Founders who are disconnected from building the team that is designed to help them fulfill their potential, to realize their dreams, to capitalize on all of their brilliance. If you are disconnected from that, you're not going to make it. That is something that is not said often enough and something that a lot of investors and VCs haven't quite grokked. The best founders I know never stop interviewing.

48:50The great founders, the best organizations are constantly hiring. It doesn't always fit into a particular job spec that was posted. We're actively hiring for role X. The best leaders, they're constantly seeking connection with interesting people. That person that you talked to today might not be or fit any open job you have now. You might even be doing layoffs. I want you talking to people constantly. I want you to understand who's thinking about what. This is not just related to that curiosity piece, because that's what makes you better, stronger. Iron sharpens iron. it helps you understand what is available to you.

49:27When you are limiting yourself to, I just posted a VP of engineering job and then you're in that precise interview cycle. It's like finding an apartment or a home. If you haven't been searching for that apartment or home, preparing for that moment when you know that's going to be time to pull the trigger, you only have what's available to you in that moment. How foolish would it be to not have been thoughtful and fantasize what might be available? Even if it's not that right moment to make that higher or it's not going to be on your roadmap for a significant amount of time, having your finger on the pulse of great humans is only going to make you better.

50:05Whether it's you're taking a piece of advice from a conversation and that is additive to your business or forging a great relationship that will build over time and you can capitalize on it when the moment is there for you. Anyone who thinks that interviewing should be left to A, other people, and then B, only when it involves you or an active need that you had, you are missing out on 90 % of the opportunity.

50:28Katelin Holloway:What are some of the other characteristics you found of great leaders? There are several, and they are different amongst them. Specifically as it relates to building a high-performing organization, something that I tell people a lot is hire when it hurts. Do not hire until you have been doing that job yourself for several months. Because one, now you know how to better hire for it because you've done the job. And I'm speaking specifically about early stage when you're building something. Not only does that build that better understanding and articulation of the role that you need to fill, it also breeds sincere empathy for what that person is walking into.

51:07You can be a better leader to them, a better support them to get their job done. And then the relief that you will feel and the brain space that it opened allows for and lets in dynamic space for innovation and creativity. Hire when it hurts. It's something that I've done for the last 20 years at every company I've built. Every time I've compromised on it, failure exists in meaningful ways. Alexis and I do that at our own firm. It's what we tell our founders to do. It breeds so many more positive things than negative. What can I do instead of airdropping in senior executive bozo number 25? My job is to help you learn how to hire really well.

51:47If I can help our founders and then subsequently their leadership teams learn how to get really good at hiring and then really good at firing, my work is done. That impact is going to be far greater than me bringing in Joe Schmo. He was at Google for 20 years. He must be the best. I'm not saying if you're at Google for 20 years, you aren't going to be the best. There was a pattern recognition thing that VCs were doing. Now they're using hypercharged words around, you're not a 10Xer anymore, you're a 100Xer and blah, blah, blah. This is the idea of teach a person to fish.

52:21Katelin Holloway:What are the lessons that you're teaching someone to make them great at hiring? One of my jobs is helping founders retain that sincere curiosity around everything. But it most certainly applies to hiring a great team. In a lot of these cases, I'm working with a broader leadership team as they grow and scale to help each one of them learn this skill set as well. Having the founder focus on more behavioral questions that are in alignment with their cultural values and norms. What happens is the company has hit that inflection point, maybe series A. We have product market fit. We just got a huge injection of capital.

52:57I'm going to go hire bananas. I'm just going to hire a ton of people because, oh, my God, we have so much work to do. I understand the instinct, but it's wrong. What happens is you have other people at this point that are screening and fielding and bringing talent into the pipeline. By the time a candidate gets to a founder or a CEO, because they typically were great operators, they oftentimes go back into that mode of early day hiring. So technical questions, getting in and saying, can you do the job? Are you really the best person to do the job? We translate the interview questions and the intention from tell me about how you work instead of tell me what you do and tell me why you're qualified to do this.

53:41It changes the nature of that conversation and therefore the results. Some founders are good at analyzing those results. Others need more support around what signals am I looking for or where do red flags stand out or what do they feel like? What are the green flags and how do I move on those quickly? There are some basic systems you put in place and the groundwork that you can do ahead of the interview systems around compensation practices and philosophies and all of those things that help you move faster. then focusing on behavioral science. Getting our founders sharp around that is important to me.

54:14Katelin Holloway:The other side of that is someone not working out. And there's both an assessment piece and then a letting someone go piece. I would love you to share some of what you've learned in both of those, the assessment and then the action. The biggest mistake I see founders make is they don't move fast enough. Never once in my multi-decade career of hiring and firing people and supporting founders and entrepreneurs and builders has anyone ever come to me and said, I regret letting that person go. What they do say 10 out of 10 times is, oh my God, I should have done that sooner. The muscles that I help build within organizations is how to move faster.

55:01It's not because people don't know how to identify it or how to assess it. almost all people know. There is a spidey sense. There is a direct work result. There are failures that line up to that. There are points of friction that don't go away with logic or with clarity. You know when it is not working. How do I help you move through the assessment phase to the action phase? In the early days for a founder who maybe is less experienced, first-time founders, oftentimes younger founders that haven't worked in other industries, they are so careful and cautious, so risk averse because they're worried about optics.

55:40They're worried about the impact of the human. They're worried about compliance. They're worried about so many things that they prolong the pain and compound the failure. The faster I can get you to move and feel comfortable with making the decision, I will write scripts for people who have never fired someone before. I will sit down. I will coach. I will say, OK, how are you going to say this? What do you say if they say that? How do you go through this so that I can help them build confidence to move quickly? It never gets easier as a human. I'm not saying, boom, go in and execute. It's no big deal.

56:13If my founder doesn't have empathy or doesn't have feelings about this termination, they probably shouldn't be a leader anymore. I'm not saying that you remove the emotion from it. I'm just saying reduce the emotion of the impact to your team and to your business and to your business results and your own mental load and the load of the person. Brene Brown, clear as kind, man. They know it's not working too. The kind thing to do is to be as clear as soon as possible and let them go. Every minute they're sitting in your organization compounding those failures for both of you and your business is a day they are not investing equity in a company they love rarely.

56:52When someone exits an organization, do they wind up in a place that is worse than the situation they were in with you? That's a part of the ego desk for founders that is important to understand and learn too. If it's not working for you, it's not working for them. And if it's not working for either of you, it's not working for your business. How do I help you get there faster?

57:10Katelin Holloway:What are some of the experiences you've seen when a founder goes from effectively controlling everything in the business to needing to bring in, say, a leadership team and delegating out different tasks? This is one of the harder initial inflection points from a founder development and growth standpoint. Depending on how the business develops, companies will peak and valley at different times. Sometimes with those peaks and valleys, there comes an expansion and a contraction. The crazy part is that a lot of founders think that once they successfully crossed the chasm the first time of, oh, that was really hard.

57:45But when I finally was able to push that decision-making and that autonomy and that accountability down through the organization, that was hard for me. I made it to the other side. They don't expect to have to do it again. And so they forget that lesson. Oftentimes there is an expression of expansion and contraction. Sometimes that's in headcount. Physically, you actually are pushed back down into the weeds because your team had to contract. Oftentimes it's a business need expression of expansion and contraction. Maybe you are needed on this particular thing because revenue is suffering. Something has shifted, something has changed and what was working before is not gonna work now.

58:21So you have to come back down into the weeds. How do you then gracefully reintegrate yourself into a system that you expressly have said, I should no longer be a part of this? It's not just that first time that you have to coach founders through this beautiful growth moment or milestone in their own careers and in the company's development. But you have to help them do it several times because it also looks different with scale, success and failure being that layer. It is hard. Having built 776 from the ground up, we're five and a half years in. There are 2 a.m. moments. I had one last night where I'm sitting there staring at my screen going, why didn't I delegate this?

59:00What about this did I think was so precious that no one else could do it. I have a stellar team. I built this thing with Alexis in our bare hands. I've hired people who are way smarter than me by design. And I'm sitting here at 2 a.m. cranking on some dumb thing. What's wrong with me? It is a lesson that you have to continue to learn time and time and time again. The reward and how you move through it is when you challenge yourself, when you see yourself falling out of that practice like I did last night, I challenged myself to say, why? Why did I have to white knuckle this stupid thing? Why did I box people out of this process?

59:39And when I could articulate to myself like, well, because I care about this particular outcome, or it's because I'm deeply committed personally to this founder, or because the context is here and sharing it with someone would take longer than it would be for me to just do the thing myself, whatever the thing is, identify it, name it, share it with the people that you should be bringing into the process, own it humbly and take accountability for your being asinine about something. Watch them do it way better than you. Name it for the next time it comes around and say, hold me accountable to that.

1:00:10If you see me doing this, call me on it, man. Chris on the team, he'll knock on my door. He'll say, I saw you were in that document last night, Caitlin, what are you doing? Thank you for saying that. I'm a reward-based individual. When I do challenge myself to let something go or to push it down as I'm supposed to do, to let it go and trust my colleagues, the reward is when they kill it. When Chris comes back and says, I spent a few hours noodling on this thing and this is what I came up with, the reward is saying, oh my God, that's such a better solution than what I was banging my head against last night.

1:00:43Thank you. I want that dopamine hit 10 out of 10 times. It exists. It's pervasive. It doesn't always go away. We can learn to be more aware about it.

1:00:51Katelin Holloway:When you start backing someone at the early stage and you've seen that pattern of those initial stages of growth of a business over and over again, how do you think about continuing on and supporting them in later stages of growth? As an outsider for so long to the world of venture, being on the other side of the table as just an operator, I thought it was interesting. A lot of investors are bad at showing up in the early days in the really hard times when things are super messy and icky. Things maybe aren't going well, or they're going well, but you're just grinding really hard and they pop in and give you a very empty, how can I help?

1:01:32Then when things start to go really well, when you hit that inflection point of success, the rocket ship is starting to take off. Suddenly they all show up. And the irony is, is that's actually when you need them the least. I have a bias against how I think most of this industry moves, mostly because it's ego driven. You have a company that starts to take off and you want to be associated with it. You want to be a part of that good feeling. You're rewarding yourself for picking well and spotting it. And oh, my goodness, the carry check. Let's all get down with DPI. Yes, I'm here. I get it. I get how we get there.

1:02:05Our firm is still young. Our oldest fund is only five and a half years old. One of the first checks that we wrote into a space tech company and one of the first checks we wrote as a firm was into a company called Stokespace. That CEO founder, Andy Lapsa, if I could copy paste that dude, I absolutely would. His co-founders, phenomenal. When we wrote that check, just like my story with StarCloud, people were like, what? Reusable rockets? You're going to take on SpaceX? That's a very interesting decision. They are one of the hardest working teams that I've ever come across. They're not just building and shipping software.

1:02:41These guys are building real rockets that are not designed for their maiden voyage every single time they go out. They're designed to be durable and lasting. It's literal rocket science. We had the privilege of partnering with them early on. We, just in case this isn't clear, are not rocket scientists. How do we show up? I don't even know how we can be helpful. They just closed a massive round. They are literally going to the moon. This is an incredible success story at this stage of the game. I was chatting with Andy. I was like, how lucky are we that we got to meet when we did. What a privilege it is to watch you fulfill your potential and do these things.

1:03:20The opportunity to unlock not just technology, but be the infrastructure, the logistics for an entirely new economy is what a charge, man. You are doing incredible work that I am so deeply proud of. He looked at me and he was like, you forget how hard it was in the beginning. I haven't forgotten that. A big part of our help wasn't just our dollars. It was your conviction in us. You guys believed in us long before anyone else thought that it was viable. We were building a rocket in Tim's front yard. Why are you thanking me? Andy and his team's needs in the beginning were really different. I remember taking calls with him about his parental leave policy, talking about how can they build out an office space that supported better work-life integration, but still helped keep people focused on their mission at hand.

1:04:12I remember driving out to eastern Washington to a freaking dirt lot when they did their first test fire. What they needed from us was to show up. That's the easiest thing that any of us could do. Have the same mystery and wonder and excitement about what it was they were doing and just know that we were there. I'm not going to tell them to tweak this or that or turn that burner down or launch that thing up or just add a little bit of hydrogen here. No, I can't do that. But I can help you navigate what it's like to still be underestimated. Now with all of their successes, Andy can't keep them away.

1:04:44His help now is very different. Because we built that relationship and because we had the closeness in those early days, I have the same reaction when I see his name pop up on my phone or I get a text or a ping in Cerebro. Yeah, what can I do?

1:05:00Katelin Holloway:With your history and beliefs that at some point in time your cup gets filled and it's time to move on. How are you thinking about your trajectory from here after five and a half years at 776? I feel like I've lived 17 different companies within 776 in the last five and a half years. I don't know if it's possible for my cup to be filled here. The beauty of founding this firm with someone like Alexis, we're very different leaders. We have very different strengths that speaks to the strength of our relationship. He has the capacity to see around corners that other people don't even know exist. He understands communities intuitively.

1:05:44He has a wild sense of timing. My strengths are more about reading people's systems, incentives, psychology, empathy, execution under pressure. But we don't try to be the same kind of leader or the same kind of investor. We trust each other to be excellent in very different ways. What makes him a great partner for me specifically is that he does take the things that I value very seriously. The core of that is people. He takes founders, operators, athletes, anyone who comes into his orbit. He treats their work and their ambition with respect. He's willing to back conviction early and stay patient when things take time.

1:06:23Patience is rare in our industry. I think this cup is really big. It can hold a lot of volume. It changes every single day. the amount of shifts and changes and evolutions that we've gone through and what Alexis and I personally have gone through, I know this is my life's work. It's going to take on several iterations that will solve and satisfy that question around, do I leave it when I love it the most?

1:06:48Katelin Holloway:As you talk to Alexis about what's coming around the corner, what are you together hoping to achieve for 776? He and Chris are flying in for our executive offsite, which is something we do every 90 days. We work remotely. Bringing the three of our noggins together as our current leadership team to talk about this on a consistent enough basis is really important. When you're a young company that is as hungry as we are and as driven as we are, our appetite for growth and development is insatiable. The conversations we're having are not around what should we do or what can we do? The conversations are actually, what should we not do to really ensure that we're focused on the long game?

1:07:35In the midterm view, when I look down the next three to five years, it really is to just continue to develop the portfolio, to continue to develop the team, to continue to be at that moment, at the zeitgeist, living on that bleeding edge of what is next. What makes it different for all of us is that we're at such an important moment in time. You've got a generational shift with Gen X and elder millennials coming face to face with a lot of life, a lot of unfulfilled promises and careers built, oftentimes not to the extent that everyone had hoped and dreams. You add to that economic pressures, raising small children and growing adolescent children and now managing parents that are perhaps ill or passing.

1:08:21It is landing at this moment of massive technological shift. This is a platform shift that we are living through. You're watching the tidal wave and it is here. Our biggest charge right now as an early stage VC firm is not to just continue the job that we were entrusted to by our partners and our commitment to ourselves and our commitment to our founders. It is to ensure that we are stewarding this change and this shift in a thoughtful, intentional, values aligned and gracious way. Life as we know it, it is actively changing. Being present, being thoughtful, the readiness to be able to capitalize on these moments and on these opportunities, and not just as investors, but as humans to make sure that we are being thoughtful as this next chapter is being set for generations to come.

1:09:10We have a big charge to help shape that outcome. It's our responsibility. There are firm goals. There are firm wants, dreams, desires, all of which are more audacious than the quarter before. We have to get good at being focused and knowing what to say no to. Then there is the more global galactic challenge of making sure that we're being great stewards of this change.

1:09:34Katelin Holloway:Caitlin, before I let you go, I want to make sure I ask you a couple of fun closing questions. Before we get to the closing questions, I want to tell you about one of our strategic investments. We've made a few, and each are working on a product or service we think will be valuable to our community. One is Oldwell Labs, or OWL. OWL is the very best software I've seen for allocators to find and track managers, and I've seen a lot of them. Trust me, it'll be worth the look. There's a link in the show notes so you can learn more. And here are those closing questions. What is your biggest pet peeve?

1:10:08I have two. One is confusing motion for progress. The duck analogy, I hate it when people are just busy and they are operating at low frequency because they aren't able to distill the critical leverage from critical mass. You're doing too much. You're not doing it well. Knock it off. Nine times out of 10, I'm the one who has to clean it up. Sometimes I'm talking about my children when I say that. That's not just work related. The second one is I hate when people accuse me of not being thoughtful, where they ask questions that insinuates that I have not completely 1000 % overthought in every single Doctor Strange 10 ,000 possible iterations of outcomes and trade-offs and every single detail of every single event that has ever happened or will ever happen.

1:10:54Super insulting.

1:10:55Katelin Holloway:What's a mystery you wonder about? I've talked a lot about space. It's obvious that I'm interested in how things are changing with this evolution and this opportunity for humanity to go off planet. As I become better acquainted with people who have gone to space, the perspective that gives humanity, this is a mystery, that I think about way too much, is this idea that time might not be linear, that it actually folds on itself and potentially exists all at once, that negates the idea that cause and effect are structured in the way that we think about it, that the time-space continuum is cohesive, as opposed to linear.

1:11:35And then you couple this with this new theory that our galaxy is living inside of a black hole and how that might impact the way time is currently moving. I could go very deep on that, but that is a mystery I think about a lot.

1:11:47Katelin Holloway:Caitlin, last one. How has your life turned out differently from how you expected it to? I don't know that I ever had a clear picture of what my life was supposed to look like. I talked about growing up in Alaska and Stockton. Having expectations of life was a luxury I don't think I had. That's not to say that I didn't have incredible parents who didn't help me have hopes, dreams, and desires. Because of my parents, I definitely had a sense I had something important to do. I didn't really know what it was yet. Instead of planning my life, and you can tell by my wild resume, I stayed curious. I followed the work.

1:12:21I followed the people. I followed the problems that pulled at me. None of the things that we talked about today happened because I mapped them out in advance. They happened because I was open to discovering them. I started to notice as I grew and as I aged that the good things around me started to compound. Those things that were once-in-a-lifetime moments, they stopped feeling singular and started to feel repeatable. Not predictable, but available to me. I do wonder if this was written in some way. Destinates in the stars, time folding on itself, we're living in a black hole. The response to expectation of life turning out differently, I feel incredibly lucky.

1:12:56I get to do the work that matters to me with people I admire. I live a life I could not have imagined. So maybe not differently, but certainly not expected.

1:13:07Katelin Holloway:Kaitlin, thanks so much for sharing this very human way of thinking about venture investing. Thank you so much for having me, Ted. Thanks for listening to the show. If you like what you heard, hop on our website at capitalallocators.com where you can access past shows, join our mailing list, and sign up for premium content. Have a good one and see you next time.