EUVC #272: Doreen Huber, Partner at EQT Ventures on why sales is underrated in European VC

0:00Hi, everyone, and welcome to this episode of the EUVC podcast. I'm David and joined by Andreas as usual. Today we have Doreen Huber with us. Doreen is a partner at EQT Ventures, a 1.1 billion euro early stage venture fund with offices all over Europe and the US, backing European and US startups. EQT Ventures are investing out of fund three with a total of 2.3 billion euros in AUM and an established portfolio of more than 100 companies. Notable investments include Handshake, Banking Circle, Einride, InstaB and Verkar. At EQT Ventures, the ring focuses on software in Europe and led the investment into Parloa this year, the AI for customer care automation.

0:38If you're listening in and you love our show, you know what to do, drop us a review, follow the pod and subscribe at eu.vc.

0:59as a model for other regions of the world. The nature of a problem requires a European response. Europe is a story of new beginnings. Let's start acting. This episode is brought to you in partnership with Zero 100 Conferences, which organises networking events connecting LPs and GPs in private equity and venture capital firms across Europe. Their upcoming event, the Zero 100 Conference Dach, will take place on February 28-29, 2024, at the Hotel Savoy in Vienna. Attendees will include major LPs and GPs like Atomico, AXA Venture Partners, Early Bird, Earth Group, Dawn Capital, Unica and many other LPs and GPs.

1:50Save the date, February 28-29, 2024, at Hotel Savoy in Vienna. Join us in Vienna. In a world where podcasts outnumber humans, we try at EUVC to be mildly more interesting. Tune in at EU.VC to watch this episode instead of just listening. EU.VC, where the extraordinary is just another Monday. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. So I was just sitting here thinking, who have we had on from EQT lately? And I realized that we've had Ted and NASA on, NASA on the ACT podcast, the At the Cap Table podcast by our great co-hosts, Chloe, Savz, and Sarah.

2:43Chloe and Savz from Isomer Capital and Savz from Antler. So I was just thinking there, it's great to have our third guest from EQT. So I think this time we will not dive too much into EQT, but instead all the different facets of Doreen Hooper. And of course, the topics that we have at hand here, which is going to be super exciting because we're going to talk a bunch about sales and the importance of sales in the European ecosystem. But with that said, Doreen, let's start this thing off as we always do and ask you to share your story with us. Hey, super cool to be here. Thanks for having me. Hi to everybody out there listening.

3:21Yeah, what's my story? Happy to share it. I think it's not the most typical VC story probably because it was not really planned for me to become a founder or a VC. Started all pretty organically. Actually, I wanted to become a writer when I was at school. So studied also a bit later art history and literature. But then when I was 19, right after school, I had to find myself a job and landed accidentally at the Silicon Valley-based tech startup Verisign, where I spent a couple of years and learned how to do sales. And that was basically my starting point for my whole founder and VC journey. And then after that, you know, started an agency at first, then a SaaS company in the reviews and ratings sector, and then joined Delivery Hero as a COO right from the start and yeah became an angel investor a little bit later around 2011 and then I became a full-time investor in 2021 and here I am focusing on supporting founders now from the other side of the table.

4:22Dorin could I just ask you to share a bit about that journey of like first-time angel investor and then how learning as an angel investor and going from that it's a 10-year journey it's quite a long journey actually to a full-time investor. Yeah I think that was that It was actually very important for me to have this experience as well, to go through almost like those 10 years you could consider it as a full fund life cycle, right? And of course, you know, core learnings probably include, you know, really do your assessment right. Don't only invest only because of the people or only because of the product.

4:56So I think probably my learnings are everything. Every good thing has to come together to make it this magic and then really make the company succeed. And a few learnings probably along the journey, you see very fast as an angel as well. If a company is on the path to be successful or is not making it. So I think probably one third of the portfolio, I could see pretty fast, like probably 12, 24 months. And you could see, OK, those are probably not making it, even though I had all the big beliefs in them in the beginning. and then you can see over the period, really over the years, making the experience what makes the difference.

5:36Why did the other founders make it and what kind of pattern recognition could you have? And for me, I think one super important part was to understand that if I would invest with the belief, oh, this is really cool, this is a great product idea and I could make that happen or if I would apply, I don't know, my sales learnings or something like that, we can make that happen. but the founder would not see it like that, then it would not work out. It's just not an aligned goal. So I realized over the years, rather being on the asking questions side, getting out of my founder and operator shoes and really try to understand, is this also the vision of that founder?

6:15And do I buy into their vision or do I just put my vision on top of that? I think those kind of things I started learning and starting seeing when was it a good thing to invest in this company and when not. What's been the biggest shift for you, Doreen, when considering investing as an angel versus now investing out of EQT? The biggest shift for sure was moving away from only having a strong intuition and investing extremely early. As an angel, you come in way earlier than we do. And having more data. So making more of a, having an educated view on things, having a strategy, having a thesis on the space.

6:56That is all stuff I didn't have as an angel. As an angel, I invested all over the place. I did a helicopter, you know, flying drones. I did food delivery with Delivery Hero. I also did software as a service, like everything where I had an interest or I could like get a passion for the founder or the product, I would invest. at an investor like EQT Ventures. It's way more data-driven, more thesis-driven. And we want to be more strict on we go and approach companies if we like what they're doing and not necessarily being reactive and waiting for them to approach us. Could I ask you, and maybe you don't want to answer this one, and I'm focusing here on the angel investor track record, not the full-time investor.

7:37Biggest kind of fuck-up in terms of a bad investment that has really taught you a lot, and no need to name names, but I'd love to hear the learnings. Well, I can tell you my biggest fuck up because I did not do the investment and it still hurts. I could have invested in the angel round of DoorDash. And I came like really, really bad. I don't know, bad story. It still hurts. Why didn't you? What did you not want to do? Well, stupid, stupid reasons looking. Like now I reflect on it. It's like the most stupid reasons. One reason was I came from the space, obviously, as I had a strong view. At Delivery Hero, we had back in the days was not yet the time where you would do the logistics yourself, right?

8:21It was still the marketplace where you connect restaurants and consumers and the restaurants would do the delivery. And we had a couple of tests. We could never make it profitable. So I came with this belief. Cool team. I really like them, but they will never make that profitable. And it was a different mindset back in the days, right? I mean, it's still like, what is it, like 10, 15 years ago or something like that. And then the second was I just had done a lot of angel investment that month. And I was like, yeah, no, but not another one. But this one, this one would have been the one, all the other ones, you know, compared to that one.

8:55But, well, it is what it is sometimes. But I think for stupid reasons, I didn't do it. And I think the biggest learning for me about this, about the logistics part, and I came with my experience, was if you invest so early as an angel, it's more about what is the product offering to the customer and would the customer love it? Not so much yet thinking about the unit economics and would you be able to make this profitable or not? Because this you can figure out later, but first you need a product market fit and the customers loved it because the delivery by the restaurant was just not working very well and you had to wait an hour for the food and stuff like that.

9:34So I misjudged there. You know, I'm not sure if I should ask or not, but I'm going to ask you to share a pivotal moment in your life and describe how it has shaped you as an investor. I guess DoorDash is one in the list. One, yes. But yeah, well, I mean, thankfully, it's not so much of my personality to look too much back and like be frustrated about it. I tried to look into the future and I had amazing angel investments as well. So I'm a lucky angel investor. When I look back, it's for me usually not that I have this, oh, this one moment or that one moment. It's more like the holistic view on I made all these experiences and they shaped me and made me what I am today.

10:12But probably two or three moments which come to mind is my first company, which was an agency, was a bootstrap company. So I had to be really careful with what I spent the money for. We had to turn every euro, be super cautious about money and making revenue from day one. And then when I joined, like a couple of years later, I joined Delivery Hero. and delivery euro was the absolute opposite, right? We had a lot of capital and we needed to deploy it. So in order to grow extremely fast, internationalize so fast as we did back in the days, you have to deploy hundreds of millions fast. And I think that was a massive shift in my mind, in my view, which really needed me to do a 180.

10:59So those two were probably pivotal moments. And I would not want to miss out on the bootstrapping part because sometimes I miss this in founders when they are, you know, it's great if they're ambitious and so on. But sometimes I feel that they're not working very nicely with other people's monies. I think bringing this to the table is also an important trait. And then the third is probably one thing I still think about. When I joined Verisign, that US tech company, when I was 19 years old, they just had launched their, or I was part of the team launching their first European presence in Berlin and Germany.

11:36And we all got a T-shirt. That company had gone public in 1998. So I think three, four years earlier. They had, you know, suffered from the market correction in 2000 and stuff like that. But we got this T-shirt and that says Verisign is launching Germany. Failure is no option. And that is something which is still, I don't know, like a mantra. It sticks. It doesn't mean that you cannot make any mistakes. But for me, it's a performance mindset. The mindset I learned from them back in the days was really go. Go full speed. Go fast. But do it right. Do not fuck it up. And we're going to get much, much more into that mindset just in a little bit.

12:20But first, let's go to the take a stand section. Take a start.

12:34And for our Take a Stand section, we're going to have you pick two, actually, because you're going to first, how should I put it? You've juxtaposed to one being by Daniel Cabriconor from Speedinvest. He said, if you need luck to become successful, then you might rather restart. Luck is overrated. But then we have Stefan Helgesen from Creandum who says something rather different, which is... And I actually don't think there's any such thing as luck. And I think the prepared mind and the hardworking individual will make sure that luck or chance favors you rather than someone else. So, Doreen, tell us what's your take on this.

13:20I think we truly have a clash of philosophies here, for sure. I'm actually a believer in luck. I kind of want to embrace luck. And I think we all have it, especially thinking about general topics. Like we're all born here in a very wealthy part of the world. We have all the opportunities. This is what we consider luck. And I try to be humble here as well. Of course, I was always hardworking in my life. And it's important that everybody is pushing and nothing will just fall into your lap. And with you sitting there waiting. but I think generally being humble there is always a moment of luck and there's always this little this little unpredictable thing which you not always can influence for example I was born in the eastern part of Germany behind walls and then the wall came down in 1989 and that was luck wasn't it otherwise I would not have had the opportunity to become an entrepreneur and go my path and I think we have also in you know market trends or geopolitical things or unexpected things that are happening I think being there at the right time in the right moment is luck and I yeah I think that is something you have to take into account as well.

14:33I very much share that view actually specifically what you said you know we are we are all somewhat lucky right when you look at you know where you come from and where you started off your life that doesn't mean you can't make your luck right but still

14:50could I ask you a question before we go into the deep dive here I see a picture behind you and you have a very nice background what is that picture about? that's Bob Dylan why do you have a Bob Dylan is that a drawing? no yeah that's a piece of art which I got in Brazil in Rio and you You can see it's all, it's made from zeros and ones. It's amazing. I love it. And I love him. And I think he's an amazing artist. So that's why he's there inspiring me. I have a connected question because we are 100 % going to be doing something with this episode, which we always do. And that is have Dali create a painting that's inspired by the whole episode.

15:40and obviously it's now going to be made out of zeros and ones but it's not going to be at the same time I always tend to also use famous painters for this and I like using Van Gogh and I also see a book on Van Gogh and I see different things behind you that are connected to painting so I'd love to ask you what is this passion with painting? Well I studied art history I studied art history and literature and that is a passion of mine and And as I said, I was not really probably, I did not plan to be the business person I became. So that is still a passion of mine. And I love, yeah, it's all the books from museums I went to or like stuff I had to do in my university times and so on.

16:25Or just artists I admire and inspires me. I actually studied while starting my first company. So for me, that was always amazing. I went early in the morning or late at evening. So I had to squeeze in my business life and my studies. And for me, that was one of the greatest moments when I came from a super stressy day, business, you know, sales and whatever stuff I had to deal with. And then I went there to the university. Then they switched the lights off, then just beautiful art and that kind of stuff. And that is something I miss, actually. So maybe I should go back to university or something like that.

17:01Can I ask you to reflect a bit on this whole intersection point of business and creativity and arts? Because I think it's something that not to, I think we all embrace it as VCs and founders. I think many of us do embrace it, but I don't think many of us actually have dedicated as much of our life as you have to then study arts. So I'd love to get an informed view on this intersection. Yeah, to be honest, you know, there's a couple of funny stories. So when I told a business partner of mine back in the days that I wanted to study art, he asked me if I wanted to become a taxi driver. So he did not take me seriously.

17:47I did not, you know, take this as a career path or whatever as a study seriously. but I still I did it because I felt um and also when people ask me afterwards what did you do something or was it worth it well can you apply your studies somehow and I think yes you can because isn't isn't tech and building products all about making something beautiful making something usable getting the attention of people for example also the writing part when I um In Germany, you have to do two things. That's why art history and literature. I wrote so many things. And I think you just get good at formulating your views, like writing down what you want to say, phrasing your thoughts somehow.

18:32So I think there is actually a big intersection. I love people who come with different backgrounds. When I assess founders, maybe that is also I'm biased because of my background. But I love talking to founders who come from different fields, like biologists, engineers. And I do not mean necessarily only software engineers, but people who do real machines and stuff like that. And just bringing something else to the table than just having a business background. Because business background, we all have to acquire when we're in the business environment anyway. So I think that it's cool. It's great to have this intersection of different subjects.

19:08I don't know if David had a beautiful segue plan for going into our deep dive section. No, I was just going to say that's why I have like my guitar just sitting next to me, right? It's to keep the juices flowing. Go on, Andreas. No, so what I was about to say was today we're going to talk about sales as the deep dive. Because sales is, you're very passionate around sales and you think sales is incredibly important. But if there's any mindset that I would typically say is probably the furthest away from being creative, it's the typical salesperson's mindset. it's not true look this is not true so i'd love to ask you to just reflect on that first and then we go into to talk about sales to build this beautiful bridge right from one topic to another awesome you know this is exactly what i mean when i usually refer to in the in europe is sales is not perceived as the career as it is in the u.s in the u.s the sales people in big let's say software as a service companies are the heroes these are the people bringing in the money and they're really treated like that and my experience when I when I started doing sales here in Europe was basically that people are like oh you are in sales and then it's like rolling their eyes you know so it's not it's not that the coolest department of a firm but I think it should be.

20:36And great sales and having an artful sales department is inspiring people. And this is what people usually misunderstand because they confuse sales and the art of selling with call center. And that's not the same. If you call somewhere and a person reads out a script versus a person selling a seven-digit enterprise contract, because that requires a lot of skills. And I think we will talk about it in a minute when we go a bit deeper, but they're also investors in Europe. They should have more attention on the sales topic. Yeah, and I think let's go directly into going deeper. So tell us exactly what your mindset and your thinking around why sales is crucial to anyone's success as a founder and how you think about that as a VC.

21:25I can share one story with when I, back in the days, was super young, worked for Verisign. And then they had a new European CEO or European leader. He came in, interviewed everybody in the different offices and asked everybody, you write down on a piece of paper what you do here. What is part of your job in this company? And then, of course, like people wrote all fancy stuff, you know, organizing this and that and marketing and whatever. And afterwards, he said, whoever has not sales on that piece of paper can go. You can leave the company because we don't need you here. We need people who are revenue oriented.

22:02We need people who push super hard to bring the company forward and make some money for the firm. You can have a beautiful product, the most amazing product out there. But I bet that the better sales team with maybe a weaker product, not a bad product, but a weaker product would beat the beautiful product. And I think that is something where people have, and especially investors have to understand, It is not only about this one beautiful product, and there's a lot of discussion about product-led growth and stuff like that, but it is about bringing the two together. And my experience in investing is if one piece is missing, this will not be a big hit.

22:39And it's very hard to just hire a great salesperson if this is not part of the DNA of the founding team. Doreen, did I sense a tiny bit of banter there when you talked about product-led growth? tiny only tiny do you want to do you want to expand on on what you mean because i think it's an interesting conversation it obviously depends also what what products you're selling right and when i talk about sales i usually talk about enterprise sales i talk about big contracts big acvs i know that founders sometimes want to believe that product-led growth is the holy grail in this and that they can set it up and then somehow it's i think it basically comes down to the hope and to the belief that if that works, if I can set up a product-led sales, I do not need to deal with real sales and I do not need to hire a sales team and I do not need to focus on that.

23:33But the reality is it usually doesn't work. A product is not selling itself, but you need in a B2B environment, you need people reaching out. You need a great marketing team too to position your brand and stuff like that. But you do need salespeople and a sales team to really navigate through this buying process and making sure that you inspire the other side that they need your product. But the thing with product-led growth specifically is like we all know the examples like Slack, Zoom, Dropbox, HubSpot, Canva. And that just gets poured from a content perspective. And I think that's also why it's mentioned so many times.

24:10Do you have any framework yourself to think around this? Because what you basically said is you can't just copy, paste and assume the same approach works for everything. Of course, right? That's obvious. How do you go through it when you're looking at a specific company? Yeah. Well, I think it probably comes down to if the product has no edge of network effect as exactly the examples you just mentioned, right? Where you need to onboard your friends and other users to make this whole thing work. Let's say it's a typical software as a service CRM. Also, where the buyer sits is super important as well.

24:48Then everything else is sales. And you need sales departments for this. And you need to test the waters as well. And you need to test if you have already product market fit by having a sales team very early in the beginning to having them have the conversation with the buyers and see if you are building the right thing. because otherwise you will build in your little chamber and come out and launch, and then you will realize that you probably built the wrong thing. You said in the beginning, Doreen, that if you're a founding team that don't have sales already in your core team, then it's going to be very, very hard to kind of get it built in afterwards.

25:30And I know, and I don't want to try and force you into saying something not nuanced, But how hard of a rule is this when you meet a founding team and you see that they're not strong in sales? How do you test for that? When do you say, OK, I'm willing to break my rule and actually go with it, even though there's not a strong sales? And I know EQT are doing more and more in deep tech and in the hardware segment. And those teams are very often very weak on sales. So I think the important nuance is you have to have a sales DNA. or like some kind of like the founders do have sales DNA. I have very bad experience with founders and they are out there, right?

26:13If you have, let's say, very, as you said, very tech-heavy founding team. And then they were sometimes even scared to even go in the sales floor, the sales department and say hi and ask how many deals did you close today? And that is just very, very hard for them to acquire the skill if you want to teach them or train them, because this is not coming naturally to them. And it's basically like this avoiding strategy. And my rule is basically around how much do they talk. For example, if you have a great founder who is, let's say, an engineer, but still talks a lot to customers because he wants to understand what am I building?

26:51Am I building for the right person? Is it the right solution to the problem? That is, for me, enough sales DNA. But if we have really people who are only building for the sake of building and not for the sake of solving a problem, it's probably not my type of investment. It's funny that you say sales DNA and it's awfully close to like customer focus, right? That's kind of what you're really hinting to because that's the core underlying concept of design thinking as well, right? So any proper startup as well like that, very interesting. I want to ask a more kind of conceptual question, which is, I think it's quite obvious when listening in that you're passionate and have strong views around sales.

27:35Do you think it's something that's particularly relevant in today's market? And if so, why? Yeah, very much. That's a very good question. And I think that nails it pretty much, especially after valuations have been corrected and investors are also looking at different numbers. You can clearly see that. I mean, the whole public market is asking for profits now, You know, stuff, just different questions. The market turned around from almost one month to another. And yeah, totally for software as a service companies, even more than ever, it's important to have a monetization strategy and show that you can sell this, what you're building, and that you can make money on it.