Luke Wroblewski (Sutter Hill Ventures): The VC Who Pushes Pixels and Writes Sales Decks

29:34And so what the path forward looked like for Polar at the end there was working with a bunch of publishers and entities like drafting contracts, doing the negotiations, kind of customizing the product for them. And that all fell on me. and so uh again we hit kind of this inflection point where i'm like okay do we continue just basically scaling this business because we knew what it looked like we had repeated it enough times where i could say all right we're going to go to a publisher here's what we're going to offer them these are the metrics we're going to use this is the relationship we're going to have here's the work we're going to do and if we wanted to keep doing that right it would be an awful lot of basically business development work.

30:21And me being CEO, like I was the one negotiating, writing the contracts, reviewing all these things, right? And I don't like doing that. So I like making things. I like making products. That's why I was in the game to begin with, right? And so that was a very, very clear example where my personal, you know, value add and interests were not aligned with where the company had to go now you could say oh you should just go hire a sales team and all that stuff but now i'm managing a sales team and you're like okay well you hire a head of sales now i'm managing a head is right like it just keeps going down that path

31:04Andy Budd:i think what you're describing again is a really common one like if you're if you're an engineer you start a business because you want to do amazing code and architecture if you're designing you want to build an amazing product you end up kind of like for the first maybe six months or a year really leaning into the thing that you love but very quickly as soon as rubber hits the road as soon as you launch actually you have to rely on the rest of the team to do that and you are having meetings with the vcs you are you know hiring marketing people and running a marketing team you are having to go and do sales and pitches and very quickly the thing that you wanted to do more of and you loved stops being your main job and starts being your secondary job and either you you dismiss that lean into the product stuff and then maybe the growth doesn't happen or you end up doing more and more and more of the stuff that you really hate and can quite you know if you don't become an executive and a business person rather than a designer or product person you end up being quite resentful for it so I think this is a challenge that a lot of founders even if the company's been successful they struggle to make that transition so yeah I really hear you there and I'm sure a lot of people listening to this are going through some version of that experience themselves.

32:11Andy Budd:So how did the Google acquisition come about then? Yeah, well, again, we hit this kind of inflection point, right? Where I was like, okay, this is the path forward. Let's see what other paths there are. And so one option would be pivot, try something else. At that point, we had been going pretty hard down this path and iterated a lot to get to something that was working. And we had something that was working. So the appetite to like try again from not zero, but try and find another avenue wasn't as exciting. And then the third option was, okay, well, maybe we find a home for this. And so had a couple conversations, again, with Yahoo at the time.

32:55Funny story about meeting Marissa, and she was CEO at the time, and walking away from that one. But I had, again, folks at Google that I had worked with in the past that knew me, that knew what we did. And they were actually, after the acquisition, I learned, they had an internal project where they were basically building the same thing. So stars kind of aligned with that one. And when we looked at, you know, A, it was the business development path, option one. B was the kind of, you know, try and make something new again path. or the third one was let's go over to Google and work with some old friends and basically like scale what we built in a way where there are all these different supporting roles and we don't have to worry about it.

33:45So we picked that. And at the time, this was again, historically, an era where Google was very, very innovative and very meritocracy focused. So you could pop in, this was the age of like, you know, 10 chat apps at Google. right so you could go in and build whatever you liked how you liked so that was the best option on the table and we went down that path yeah I mean again it's always interesting I wouldn't

34:15Andy Budd:imagine you'd want to sort of speak into the details but a lot of the times you know company acquisitions are because something is sort of stalling and it's a good way to kind of land somewhere new sometimes company acquisitions are because a competitor wants to take a competitor off the table. Sometimes it's around talent acquisition. There are lots of reasons why acquisition is happening and what is on paper isn't always the real story and it can be quite crunchy. And I'm sure as a VC, you've had to navigate some sales. Some of them are going to be positive, some a little bit challenging. So it can be quite an emotional time.

34:47Andy Budd:I'm curious, if you had another stab, like either at BagCheck or Polar, like what would you do differently? well i'm doing it now so basically sutter is a company that builds companies so we internally have any number of projects that we're building with people in residence entrepreneurs in residents designers in residence engineers in residence right and we do way fewer deals than other vcs of our you know they get typical kind of big vcs in 50 or so things a year we're in the single digits so we put a lot of time and effort into each one of them and uh like the amount of things i have learned about what it takes to actually build a company from zero to something that is substantial enough to matter is is an endless list and i keep learning more but the nice thing about the way we operate is we kind of see it across a bunch of different companies.

35:48And so the ability to apply a lesson is just so much faster and easier. I'll give you like a very simple, tangible example. So we have this company called Rev, which builds their own image models and is effectively like a creative suite of tools for folks. And when we did our first launch roughly a year ago, within minutes or hours, there were hundreds of copycat sites where they bought up all the domains around Rev and basically put like a fake website up that still did image generation through who knows what kind of models and had a little pay thing to go up there. And we're like, holy crap, right?

36:33So we really had to scramble to like take some of these down. And so like the very small example, but we were launching another product maybe two or three weeks later. and I basically can go over there like, hey, we should buy up every adjacent domain because it's going to be so much cheaper than what we just had to go through with Rev, right? And so like all of those lessons really start to compound because then different companies learn different things and you can really have a perspective on like, we've got to do all of these things. And sometimes it's still not enough, right? Obviously, it still remains very, very difficult, if not more so these days with the amount of activity happening out there.

37:20But, you know, I still go back to the thing that drew me to startups at the beginning, kind of what I mentioned, taking me out of Yahoo, was just that like learn, rapid learn, launch and learn kind of mentality is your lifeblood within a startup. And when you've got multiple startups, you know, that funnel is even wider. You're learning across multiple things at the same time as opposed to just one that you're focused on.

37:50Andy Budd:Are there other patterns you see? Are there things that when founders come to you that they're regularly getting wrong or putting too much or too little effort in? like what are the kind of the key things that you're having to have conversation with your founders to kind of point them in the direction you know talk them off the the the edge of the windowsill like you know i'd love to hear yeah i don't think it's possible to talk them off anything um the example i always use is you know if you haven't had kids and now you are about to have a kid i'll say oh you know it's really important that you keep them well fed or they're going to be grumpy you're like okay and then later you got a hungry kid they're screaming at two in the morning you're like oh i should really you know like unless you have that learned experience you just don't take advice it doesn't matter how many companies i've started and built or whatever it doesn't matter to you unless it happens to you so the approach that i currently take is like work with people demonstrate what good looks like right demonstrate the kinds of reactions you I'll give you another super tangible example.

38:57Working with one of our companies that's in the AI for coding space, and I find there's like this feedback list from people that have been emailing us feedback for like multiple weeks. And nobody had touched this list. So I'm like, give me the list. I'm going to email every single one of these people personally. And I'm going to, you know, talk to them and understand what they're trying to do and how to do it. Because every single person that takes the time to send you a note about what you're doing and why they like it or they don't like it, and if it goes into a vat, it's like the worst. But if they get a response within hours or they get a response within a day, even if they don't like what you're doing right out the gates, they now like you.

39:45And so, again, it's a small thing, but it's this kind of like cultural piece. And when I say I'm going to show, I could tell them, hey, it's important you respond to feedback. Okay, whatever. Right. But instead, I take it on personally where I'll go through every single one of those things and write them. Right. And then the people that see there are like, oh, maybe we should be doing that. Why is he doing this?

40:13Andy Budd:Well, I was going to say that's really impressive. That's really hands on. I mean, I have a somewhat similar approach, but it's also vaguely different because I'm spread across possibly a lot more portfolio companies. But effectively, when people ask me for advice, I'm happy to tell them about all the things that are likely to go wrong and to happen. It's very rare that the founders will then immediately listen to me and kind of enact my recommendations. But what I'm hoping for is they'll start to kind of feel the pain maybe six months later. And then they'll remember the conversation like, oh, yeah, Andy had a really good point about that.

40:42Andy Budd:and I didn't necessarily listen to him but I'll go back and chat to him now and once I've felt the pain they're much more likely to go oh well let's let's try and implement that advice and so again it's it's almost you know to use your kind of like child rearing analogy like you can tell a child not to touch a hot plate until you're blue in the face it's only at the point where they burn themselves they're like oh I better now listen to you know Andy you know because I don't want to get burnt again and so it's that kind of you know you've got to let people make their own mistakes absolutely yeah i don't and just i don't know if this makes you feel worse but like i don't know if they actually come back and be like oh yeah luke said that it's more um that when they enter that situation like in many cases we've already kind of done some things that prepare them for it that makes sense right and so you mentioned the words hands-on yeah my job is insanely hands-on right like I am literally pushing pixels I am writing marketing copy I'm responding to emails this morning I was providing feedback on a promotional video where I'm like screenshotting things and guiding stuff I went out and had one of our EAs like find specific costumes for a marketing video that we're doing right like so way way way deep in the weeds making slides right for another one of our companies that I just rewrote their sales deck.

42:06And I did that by like combing through all of the customer meetings that they recorded and kind of finding what are the things that are actually salient and then writing them into a deck. And all of this is, again, to like demonstrate and to basically be there in the trenches with them. By being in the trenches and doing things a particular way, right? It's such a stronger signal of like my conviction for it and my belief in that it matters, right? They're like, Luke is writing the sales deck. Why is he doing that, right? And instead I could be like, oh, you really have to start sales decks with the customer problem.

42:50Okay, right? Like I can kind of like spew out these truisms of things that I've learned over the years and I know matter, right? Like that actually is something I would believe in. Like you should start out with what the kind of problem is that you think these people are having and that you solve so that you basically like pre-qualify people before you even get through the rest of the deck. Like, is this a real customer for us or not? So like real thing you should do. And again, I can go and tell people you should do that. You should do that. You should do that. But instead, if I go through the process with them and do it, it's just a whole different ballgame in terms of them internalizing it and embracing it and making it work than advice giving.

43:36Andy Budd:I mean, that's fascinating. Most of the people I know who are operators that have gone into VC who are like design partners, it's more sort of akin to the model that I am also using as well, which is much more advice driven. Like I will have a call with my founders every week or every few days or whatever. They will show me decks. I will give them feedback. Occasionally, I might go in and write some kind of like outbound email scripts. So I might do a little bit of work, but mostly because I'm spreading myself across like, you know, a dozen or two dozen portfolio companies. It's more little snippets of advice.

44:09Andy Budd:I act more like an advisor. And most of the kind of the design partners I meet are the same. but in some of the bigger companies are meeting design partners much like you're saying where they're actually doing design work they're doing product work they're much more hands-on they are they are a resource an unbillable resource that you can kind of utilize and i guess like i i presume that in the early stages you're much more hands-on than as they start scaling you maybe sort of scale back like how many people are you how many like portfolio companies are you supporting at any one time? We're a little under 30, like total in the portfolio, like overall, right?

44:47And then in terms of the ones that we have around the office that are in earlier stages, that number is a little closer to 10. But even our companies that are scaled to thousands of people, like still doing projects with them and still interacting with them in a very similar kind of way. I have a team here that is composed of some designers, AI researchers, engineers, user researcher. And so like we're using those resources and kind of constantly looking at what's happening, what areas of need do specific companies have at a specific time and either like swarming there or, you know, balancing across a bunch of different projects.

45:31Because what you find is again to come back to my conversation about inflection points there's points that really matter for companies where like putting several additional pushes can go really really wrong long way at that specific point in time because of where they're at and you need to have this kind of broader experience to know when that is right so sometimes it's intuition but sometimes you just like smell the same pattern?

46:02Andy Budd:I think that's a fascinating model. I mean, I think at Seacamp, we might have kind of 100, 120 portfolio companies per fund. We might be looking after two or three funds at any one time. So it's a much bigger volume play. I think with you, like if you're looking after 30, maybe there are 10 on site, you have the ability to kind of give much more higher level of service and I love the model of building out a team it's almost it's not a venture studio but there's almost an element to that which like we have design expertise we have marketing expertise we have product expertise and we can assemble a team and we can give that to you for an amount of time that you would not be able to kind of find otherwise and so that is a really kind of high quality high touch offering and I'm sure it's really fun for you as well because you're you're like you say you're rolling your hands up and you're in the weeds it's not just from an advisory position yeah i wouldn't recommend it unless you really want to work right and want to work how it comes from a couple different things right you're either driven through something or frankly you like find it fun and rewarding right you go back to kind of why i left the big company world to go do startups as because i just love the process of making and learning things and so for me this is just like a scaled version of that because i'm doing it across a much wider set of things instead of one company i'm doing you know maybe roughly like 10 ish at a time or six ish at a time at any point um but it is a lot of work and this is why i think most folks on the investment side do it the other way right because uh like getting your hands that deep for that long takes an awful lot of energy and it and it startups are like roller coasters period right so you're like riding 10 roller coasters simultaneously which would make a lot of people throw up to be kind of blind unless you love roller coasters right if you love roller coasters then it's the best thing ever i'm riding 10 of them at the same time i'm curious like are Are you involved in investment decisions?

48:13Andy Budd:Do you come in a little bit later? And if you're not involved, or maybe even if you are involved in investment decisions, what stage are people coming to you? Are they coming to you with an already working product? Are they coming to you with customers? Are they coming to you literally with an idea? Is it more your experience of being in the IR where people just come and spend time in the office and the product emerges? And I'm less kind of interested in how it works, particularly with your fund, but more Or what advice you can give founders at the moment as to the level of product they need to be showing to VCs in order to have a chance of raising funding?

48:49Yeah, the answer is always we focus. So this is what we do and what I believe. I believe that finding the right people is hands down the most important thing. Right. So when we have in residence folks, those are people that we want to build companies with or around. And that is an extremely high bar. Like the amount of people that you could think of that could become a CEO of a large scale business is, you know, infinitesimally small. The amount of people who are doing, you know, next level breakthrough research inside of things like image models, the list is infinitesimally small. And so, you know, I think the right evaluation, at least from my personal belief and also sort of extends to our ethos, is like find those specific people and work with them.

49:52and then a lot of the other stuff right this is where our me knowing about x y and z can help them on that side or you know we can help them with all these other things that we've learned through the years of building companies but like a lot of people over fixate on the idea right oh i got this idea don't steal my idea is that your like i don't whatever a thousand people had the same idea you just had so it that's not really interesting and there's a really good chance that

50:26Andy Budd:the idea will change i mean again like so many companies like they start out in one direction and then it's not the thing that they launched that was the value but there was other value hidden and so the one thing that retains is the team the talent the founders and so i think absolutely investing in amazing founders and giving them support they need the the idea will come and if it does pivot you're there to support them so it sounds like very much you in that talent space it either will come or it won't come you know it's not there's nothing guaranteed and if there was a repeatable formula every single person would be doing it right but uh ultimately you are making a bet on other human beings and those other human beings have a really really hard job, right?

51:12And I, this is, again, we're kind of having the experience building companies from nothing to something helps you a ton, because you know, what you're asking people to get into, right? You know, what the ups and downs and the time commitments and all those things look like. All right. And I think it also gives you just a much better filter on talking to people. And if I'm being candid, honestly, right? Like what happened with COVID and what's happened with kind of big company, I don't want to call it perks, but like comfort levels have really reset people's expectations of what pushing hard and trying to create something new entails, right?

52:01Folks like, okay, well, I'd love to come and work with you guys, but is it okay if I'm, you know, in the office like once or twice a week no we make like the 10 to 20 decisions a day when the very early stages of things right um and so i i just think there's like an expectation gap that's emerged more recently if i go back to when we were doing startups like polar and uh back check it was like yeah we're gonna go hang out in a crappy garage and we're gonna bust our ass for a while because we we love it right to your point you start out because you want to you it's your passion it's what you want to do and so you get in there and start cranking it's not meant to be a comfortable situation and the more comfortable you want it to be the less the rate the less real in terms of what actually you need to do the less reality right check is there and i'm not trying to be a hard ass or anything but like you you can do what you like in life that's totally fine with me um but you can't say hey i want this but i also want this whatever the cake and eat it too thing or whatever you want to analogy you want to use yeah totally makes sense um i'm curious like you come from a design background how important do

53:26Andy Budd:You think design is now to successive startups. And are you finding that the founders that come in and speak to you, are they quite savvy around design now? Is this something you still have to kind of coax them on? Or is it just like not even important to you? You've moved on to other areas. Again, it really matters on the domain and the point at which the company is. Right. I think trying to have a blanket like this thing is always important all the time. In some cases, yes. In some cases, no. And sometimes it's a question of when. There are definitely some cases where it's just hardcore technology.

54:04Can we even make a thing work that does X? We're just down in the guts of a system or some hardware or some software, and it's all engineering and infrastructure work. and then there's also a phase where we really need to envision what we would even want engineering to look at and that's very much a design problem like we're going to riff a whole bunch to find the experience we want and then we're going to back the technology into it and just picking one of those two things and saying this is the way it always is you know kind of again is not the right reality mindset it's not not how the world works right but um and sometimes you you kind of go back and forth between those two modes too which is a very common

54:56Andy Budd:thing i mean i guess the reason i was asking that question partly is i meet a lot of people that come from a design background that have this very unshakable belief in the power of design and often when that belief meets commercial reality, they often push back and they can really struggle to understand that it's not the most important thing in the world. At the same time, I meet a lot of founders that maybe don't have an understanding of the value it can deliver. And so I guess coming from someone that has a unique standpoint, that comes from a design background, is in VC, has run their own startups, like how you make sense of the value or over valuation of design that we're experiencing at the moment.

55:38If I'm being transparent, most of the quote unquote design work being done in these big companies is not actually design work. It's like design for approval or, you know, process management or whatever the heck you want. So a lot of people's brains have been conditioned to that is what design is. And when you apply that, like I could make the argument that's not very valuable. In fact, in many cases, it's pretty damn detrimental. but when I kind of come back to the core of let's envision what this thing could be for who and we're gonna like really put in the time and thought process and think conceptually and right like do like real design work imagine you don't have to meet with anybody right or there's no process or anything there's no design system or all these other things that kind of jump in there right then that's extremely valuable like it's helps define what the company could be for who and how it's like hugely valuable um so you know it depends on what people's perception is of what it can do and sadly many people's uh experience with design is more the former than the latter because the latter is so rare again it comes back to like that expense you know tiny infinitesimal set of people who can make or break a company that could be a designer that could be an engineer right that could be a ceo um but they like really really are so exceptional that they can drive the whole thing i mean i think a lot of design in large companies

57:22Andy Budd:you are shipping incremental improvements from a pre-existing design system from a prd that's been ridden by somebody else and in that environment design is basically a being a Figma operator in a lot of instances, and you're not adding an awful lot of value. And then on the other side, you know, there are many people who come from a design background, but also an engineering or product background or a founder background, who are using a way of thinking of solving problems. And I think that's what you're bringing to the table, you are bringing a problem solving capability that you know, you might or I might call design, because that's where we come from, but somebody else might call it something different.

57:55Andy Budd:But it's really that kind of understanding of user needs, understanding of business needs, understanding of context and the problem you solve might manifest itself in an interaction or interface element it might manifest itself in a hiring solution or a go-to-market strategy or whatever and it's that level and I guess the reason I'm just asking is because I could imagine that sometimes people might box you in from your background but it sounds like your day-to-day is very varied and you're not just being boxed in it's like oh it's Luke W the guy that does forms and did mobile and, you know, now works in venture.

58:31Andy Budd:It sounds like you've got a much broader remit. Thankfully, most people forgot all that. I'm so old that people are like, who are you again? Why are you here? And then every once in a while, someone's like, oh, yeah, didn't you do like some mobile thing? Brilliant. Just last question. Like, I think we're in a really exciting time at the moment. I think AI is changing the way that engineers build. It's changing the way that product managers build. designers build, founders build. Like, how are you starting to see that work its way into your portfolio companies? Like, is the pace accelerating? What advice are you giving people around this space?

59:07Yes, yes, yes to all the things. You know, I have, again, since I just mentioned I'm old, I live through the web, right? I live through Web 2.0. I live through mobile. I live through many of these kinds of transitions. And so like I just see the same patterns, although at an accelerated pace. If you look at the companies that we are building now, like it is AI from the bottom to the top. I often say like AI begets more AI because you make it do this and you do this. And because like dropping in levels of intelligence into products makes a ton of sense in so many different areas. So, yeah, everything is getting reshaped and rethought.

59:53And the best advice I have for people with this is like, you got to jump in. And this is where being in the weeds, as I mentioned earlier, is like so valuable. Because I can like, go and talk to you about, okay, well, when you're doing a context management system inside this thing, you've really got to deal with X, Y, and Z, right? And that's going to manifest itself in the interface in this way. And I'm not just going to tell you that. I actually have like three or four built things where you can feel it and understand the impact and the difference. And in particular, with the transition we're going through, like I say, it's at a scale and a speed unlike all the others.

1:00:37So the chance of it kind of moving faster than you're willing to is accelerated. and the only kind of remedy for that is to like hop in there and learn it's back to my original thing right like get in there and learn as fast as possible

1:00:59Andy Budd:look it's been great catching up it's been fantastic hearing about the journey you've been on the last few years i remember you as a very prolific author writer blogger talking about all of the the latest kind of trends and changes in the industry that feels like that hasn't abated um if people want to hear about your opinions of the direction of travel like where is the best place to kind of follow you yeah i'm a luke w at all the old school places the blog the twitter the linkedin you know no tiktoks but everything else amazing well thank you so much for joining me it's been a pleasure having you on the show thank you thank you likewise really and to everybody else who's listening thank you for tuning into the Design VC.

1:01:45Andy Budd:If you enjoyed this episode, please do like, subscribe, leave a review, share it with someone you know that really cares about the intersection of design, startups and venture. And until next time, I've been Andy Budd. See you soon. Bye.