Michael Sackler, Supernode Global: Betting on the Tools We All Use Every Day

0:00Welcome everyone to the European VC podcast. Today we have Michael Sackler, founder of Superno global with us. And Michael, I invited you to come on the pod to tell everyone about your next fund that's coming up, the next fund generation, which is fund two.

0:31From first time to seasoned investors, the EUVC Syndicate is not just about capital. Get involved. Co-lead deals, share insights, bring in great people, and help shape the pipeline with us. Visit eu.vc forward slash syndicate to learn more. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. And I thought the best form would be to let you just almost pitch the f*** out of it because we all love a good pitch. Sounds good. Thank you for having me, Andreas, and great to see you as always. Let me give a little bit of background from myself and then I'll launch into the fun too.

1:12So I started my career in the film business. I was a film producer for five years. I founded and ran a film production studio here in London called Rooks Mest Entertainment. we did 12 feature films both produced and executive produced over the course of those five years including one that gets a bit of airplay around this time of year called The Witch which was our our best known one if you're a horror movie fan go check it out guarantee it's something different than what you've seen before we ended up selling most of our films in the end towards the to the streamers and this was around 2014 2015 uh they had become over those few years the biggest buyers in the market and it was just very clear that technology businesses were coming into the media landscape and and just dominating it and i had started to angel invest as well so i was seeing a lot of the uh the sort of technological progression that was happening within the media space at that time.

2:19And when I left film, I was thinking about what to do next. And I was continuing to angel invest. And I wanted to formalize that in a fund. So we ended up setting up a fund one, which ended up being a 2020 vintage. And the initial goal of fund one was to invest at the intersection of content and technology. So technology businesses in the content space. And it went well. But we also found along the way that we wanted to broaden out our approach somewhat you know the world was changing the opportunities were changing and we were starting to see some stuff tangential to that that we felt was really interesting so for fun two which we were going out to raise the second half of the moment we already have the first half it's been a bit of an unusual but rewarding journey is that we wanted to to break out from that particular mold and just invest in technologies that impact our daily lives.

3:19So for fun too, what we say is we invest in early stage consumer and B2B technologies that meaningfully enhance our personal professional lives. What that means in practice is really businesses that are user-centric, that large chunks of the population, large markets will use on a daily basis, whether that's at home or at work. As I said, we've already been investing out of fund two. And so far, these have been the six main themes across well-being, which is on the personal side, productivity, which is obviously on the professional side, health and vitality, life optimization, just things like anything that helps you streamline personal challenges, finances, legal, immigration, and so on.

4:08community and social, which I would put entertainment as a part of that. We very much view entertainment as an important part of modern day well-being. And then on the productivity side, intelligent workflows, so AI-powered tools that allow you to operate faster as a team. Creative enablement, that's obviously something that's really been in our lives, but continues to be. And then professional orientation, which is AI powered tools and workflows. And as you'll see there, we have a number of different companies in that. Can I ask you, Michael, when I see fund theses, I always think about what is it that ties this thesis together?

4:49And what does it allow you to do that you're focused on this specifically? So a climate fund, as an example, you have a bunch of efficiencies around the founders all knowing you, you're getting better and better understanding the technologies that are needed, you knowing the customers. So you build up that muscle within one specific space and the flywheel works better. If you look at this thesis of wellbeing productivity, in other words, things that enhance our experience in life, both professionally and personally, what is it that kind of is the threat in this? It all starts with, you know, we're application layer software specialists.

5:32So we're not doing deep tech. We're not doing any sort of infra. If there is some elements of that, because there's some kind of full stack product development that's going on. But that's not where our specialty lies or where our focus lies. Our focus lies on application layer technologies. and specifically within that UI, UX focused businesses. So the best way to think about it, I would say, is when we go back to this side here, consumer and B2B, we're probably, I haven't actually threshed it out, but some 60 % B2B, 40 % consumer, something like that. The consumer part is a really important part of it because even the B2B businesses that we have, whether it's shapes whether it's flow step graswell these have passion fruit these have consumer they're sort of consumer-like in the way that they build the product these are not b2b products that are designed for you know one particularly deep niche these are b2b products that are designed for large teams or maybe even entire companies.

6:44So think about Figma or Canva or Slack or Dropbox. They are, in essence, in terms of their product build, consumer products that are applied to enterprise use cases. And that is something that we really think is very important for us. It doesn't necessarily give us a particular edge over other funds. We can come on to that later. But it does thread the theme together around UI, UX and technologies that you or I use on a daily basis. Riverside is another example, the product that's being used to record this podcast. You know, brilliant UI, UX. Anyone can pick it up really quickly and it's easy to roll out.

7:32I don't need to tell you guys about this. there are obviously major tailwinds that drag in well-being and productivity. This is an interesting side that maybe it's worth coming back to. You said you wanted to talk on the edge. This is a bit of our kind of unusual journey today, which I think provides quite unusual GP alignment with LPs, but I'll come back to that later. Fund 2 already being deployed. You'll see some of the companies there. This is something that is important to us. Half the fund is already deployed. So 13 of the 25 companies, we think that those companies, and again, if we have time, I'd love to dive in deeper into some of them.

8:15They do this sort of talking for us when it comes to what we're really interested in. Track record, as I mentioned, we've already got 13 companies. We have Fund1, which is doing pretty well. We have a decent track record there, 1.9X MOIC, 0.25 DPI, and a good solid exit in there. And I've got my own personal Angel track record. So all in all, combine those two together, and it's probably 60-odd companies that we've invested in at the early stage, which have gone on, I hope, for the most part, to do quite well. really 50 50 inbound versus outbound so we have a specific view on overlooked areas and lived experience but for the founders and in terms of what they've been through and trying to connect with that i would say a big part of that is is our focus on on on female entrepreneurs on female entrepreneurs.

9:18My business partner, Gina, is a very passionate advocate, as am I, of women entrepreneurs and giving them an opportunity to, I mean, frankly speaking, we just view what's in front of us in terms of the business. And we're lucky enough that we have a very gender balanced team that we're able to take a lot of those normal biases out of the equation. And that's not something that is, I mean, yes, we have to work harder to find as many female driven opportunities as we would like, because there's just some industry biases that stop it from being as easy to access as a lot of male founder teams. but beyond that it's really just about evaluating the businesses in front of us and i do think that having a gender balance team has been really helpful in uh investing in women founders and that has created this snowball effect where we're now getting a lot of inbound from women founders who have either connected with gina have heard about us on on the grapevine and want to work with us because we know that we have a track record in that space.

10:33So that's something that's really important to us. But in the end, they're evaluated on their merits as an entrepreneur. In terms of value add and how we win some of the testimonials you'll see here, we work fast we work aggressively when we have conviction and we really focus on winning the team over with speed of execution and the deal we know we're not the biggest fund in the world we know we don't have the most resources but we can gain conviction early because of our our specificity and what we look for and we can gain it quickly and we will go very fast once we have conviction i would also say frankly that being a fund that has at least 50 percent consumer businesses in the portfolio in europe already gives us a little bit of an edge because there's just not that many consumer focused funds here in this geography.

11:46So we really focus on helping founders with their growth and fundraising between seed and series A. Those are the two areas in that timeline that we really, really focus on. So growth, obviously, if you're a consumer company, it's user acquisition. If you're an enterprise company, it's customer acquisition. Those are the two things we really focus on. And you'll see here a bunch of the examples of how we've done that. We are called Supernode for a reason. It's because we're very much more connectors than anything else. So we won't necessarily go and, yes, we'll sit down and try to work through the sort of high level strategy.

12:34But beyond that, we want to be able to connect you with people who really, really have expertise in the areas that you need it. And that has been something of a superpower for us. And I want to give a shout out to Naomi, our head of portfolio operations, who does an amazing job of finding the most unusual people to connect our companies with. And then, of course, there's fundraising. And again, you'll see a bunch of other examples here where we've made introductions to companies that have ended up being a golden investment, a key investment from some of the companies that we've brought to the table.

13:14So you asked about edge. That's really the value add and the sort of sourcing mentality, 50 % outbound, 50 % inbound with a real focus on overlooked entrepreneurs and particularly women founders. Let me ask you, you have a solid GP commit. 34 % of the fund is committed by you and Gina. Can you talk a bit about that and why you've decided to invest as much as that with the fund? Sure. So I'm lucky enough to come from a relatively well-off background, a well-off background, not relatively. And I really have belief in what we're doing. Fund one was done totally in-house. We didn't take any external capital for fund one.

14:01We wanted to build a track record and then go out with fund two. but it's also like i really really believe in what we're doing and how we're doing it i think the numbers are starting to show that out i'm also a big believer it's like it doesn't take a genius to work out well okay you're raising a 45 million dollar fund do a quick google why are you doing this fund all right well gp stakes yes this is well above normal it is well above normal. I do think you have to take into account, though, a percentage of net worth in terms of GPLP alignment. It's still above normal in that regard for me personally.

14:44But I wanted to be able to go to LPs or potential LPs and say, hey, you can go and Google me, whatever. This is a serious, serious commitment for me and for Gina, of course, as well. We believe in what we're doing. We want to be totally aligned, not have any question marks about that. And of course, also it gave us the advantage of being able to go out to market pretty quickly and not have to raise and go and get some companies into the fund and then go and display those companies to LPs that we wanted to work with. That being said, we're not opening this up broadly. So we've gone to people that we know, such as you guys, to other family offices that we think give some strategic benefits.

15:35And we want to be able to bring on board the right partners that will allow us to grow the fund in the right way alongside myself, alongside Gina. But yeah, hopefully this shows, if nothing else, a really serious commitment to what we're doing. And it's something important to us, that's for sure. Yeah, I think it's really cool and super important, as you say. I completely agree on that. Could you talk a bit about just because your sector being consumer focused slash also B2B with a focus on the types of companies that are from a UI experience built almost like a consumer company. could you talk a bit about how to call this the the elephant in the room everyone's talking about AI today maybe it's it's interesting to hear your take on where we're moving specifically when you look at this type of company so you'll see here particularly on the right hand side which is the the professional space spaces that we look at a lot of AI we very much have a mind that AI should be a tool to help humans.

16:47We have seen on the personal side, a little, you know, some companies, some products where it takes it a little bit too far. I think it's almost inevitable. Let's take, for instance, Graswald as an example. You'll see this company down here. Early stage, growing really fast. AI-powered tool for product e-commerce companies. They take over the workflow of shooting photos for your new SKUs, so whether it's a handbag or jeans or whatever it may be. With that tool, they can generate the model. They can generate the backdrops. They can generate every element of the images with the real images of your product.

17:39okay it's still generated but it's it's completely lifelike so it's your jumper your t-shirt whatever it is on a model in the kind of background with exactly the photo you wanted now obviously there are humans being taken out of that that particular loop and i think there's a debate there as to what happens if you're a photographer who's who's whose livelihood depends on that what do you do it's a question that we don't have the answer for if we're being honest i suspect though that when that that a product like graswell is never going to take over from the mario testinos of this world so if you're going to shoot real art real great photography if that's the purpose of what you do then there will still be a space by that and actually it might become even more valuable in a world full of ai generated images people want human connection in this case what they're doing is the menial stuff the stuff where it's like we got to take 50 photos of this handbag in order to put it on our website it's still taking away an aspect of someone's livelihood there's no doubt about that but it's not taking away the it's taking away the the sort of menial machinations of the job not the jobs that are really focused on human connection human empowerment art and so on so i hope that that that gives an idea of how we think about ai in that regards which is we don't want it to take away from the elements where human connection humanity itself the arts if you will are at the core of it but we do want them to provide tools for people to be able to do their jobs more efficiently faster and and frankly for people to be able to build businesses in a much more streamlined way if we have more time we could have a very long conversation and It would be actually very interesting because you have the background that you do with being a filmmaker.

19:53So I imagine that you're very attuned to the importance of art, creativity and the human element. But I have to say, personally, I realized the other day I was listening on Spotify to an AI artist and I did not know. Like, I only realized, wait a second, I've heard these lyrics before. That's an Eminem lyric. That's a 50 Cent lyric. There must be something up here because I don't think there's a soul artist now running around doing that from the ground up. And lo and behold, it turned out to be an AI artist. I mean, look, there will be that. There will be that. The way I view it is, you know, if you're building a hotel and you want to put, you know, you've got 100 rooms that you need to fill.

20:38Previously, you would have gone to go and get prints of art, you know, and it would have just been whatever photos, prints, whatever that you think look good. In that case, I think there's a world where that's all AI generated, but you're not, the AI is not going to take over from a value perspective, from the Picassos of this world, from the Rembrandts of this world, and so on and so forth, because people love the stories behind those works and they want that kind of connection. And there might be an element where sometimes that output is AI generated, but there is still a human behind it. And maybe the story comes through how they've engineered the prompt.

21:19I can totally see that happening. But stories are really powerful, universal human experience. And I think there's going to continue to be human input into those. As soon as you find out something is completely AI generated from idea through to output, I think it loses a lot of value in certain areas. Yeah, that might very well be. Michael, thank you for coming on the pod and talking about your story today and what you're building with Supernote. It was awesome as always. Thank you for having me. Really appreciate it.

21:54Tear down this wall. It's more than just an alliance. This is a union of values. Let's start acting.