Jeff Clavier: How To Raise Your First Fund l Trailblazers Podcast Episode 53

0:00Erica Wenger: Today on the show, I am so excited to be joined by Jeff Clavier. Jeff is the founding partner of Uncork Capital, the seed stage venture firm he launched in 2004, back when it was called SoftTech VC, and the idea of a dedicated seed fund was still a novel one. For more than two decades, he's partnered with founders from their very first days. And over that time, the Uncork team has backed more than 280 startups, including Fitbit, SendGrid, Postmates, Mint, Eventbrite, and Poshmark. Today, he supports companies like Drone Deploy, Front, Shippo, Class Dojo, Phil, and Carrot Fertility, and sits on the boards of Locked Orbital, Masari, Inscribe, User Gems, Overflow, Lumina, and Coops.

0:38Erica Wenger: Often, the first big check a founding team takes and the longest relationship they keep. Born, raised, and educated in France, Jeff earned an MS in Computer Science and a degree in Distributed Computing from the University of Paris-Descartes. He began his career as a developer at the fintech startup, FX, rising to CTO before the company was acquired by Routers, which brought him to Silicon Valley as a general partner at Router's Venture Arm and eventually out on his own to build Uncork. Let's welcome Jeff. Thanks for being here. Thank you so much for the very long welcome, Erica. Sorry, I have a long career.

1:09Erica Wenger: I love it. You've been doing this for quite some time. You deserve it. You know, you deserve to like relish in it. All those companies, 280. 300 actually. We haven't announced the most recent ones, but we just clocked 300 just a couple of days ago. Wow. How do you log them internally? Do you say like 300, 301, 302? So we have a running list of all the companies we've invested in. And then each one gets a numeral number. And when we get the companies together at our summits or different sort of meetings we're organized, we give them sort of the ordinal number on their badge. And everyone looks always for the lowest number.

1:50And every now and then we have number one that shows up, which is awesome.

1:54Erica Wenger: Wow. Who's number one? Who's the first deal ever? It's a company called Truvio, T-R-U-V-E-O, which was a video search engine pre-YouTube that I invested in in early 2005. Wow. Pre-YouTube. That's wild. And yes. So at the time you had to sort of search for, you know, the code that was playing the videos, got that, you know, on their website, you could search. and the company was acquired after 10 months and three weeks by AOL after a bidding war with Fox Interactive. Not bad for your IRR. 10 months. 10 months, 17x in less than a year, yes. Wow, pretty epic. Those were the good days. Yeah, I know.

2:37Erica Wenger: Things have changed, which we'll get into. And the company had an incredible valuation of 2.5 million. It was expensive at the time. you know we we are gonna get all into valuations because now it's just painful hearing some of these stories i mean i had i had ann on at floodgate who i'm sure you know yes one of the other you know og silicon valley folks and uh we were talking about her lift investment and it's just like it's just painful like just seeing how much it's grown i mean so happy for her but painful can't really happen again or at least it's harder to yeah um all right so i want to ask you a little bit of an icebreaker question we asked all our guests at the start uh so i obviously read an incredible bio, 26 plus years in venture and even more in tech broadly.

3:15Erica Wenger: What has been the hardest part of your journey so far? When you reflect back on that whole time, what's the part that almost broke you? I think the hardest was when I tried to raise fund three, which was in 2010. I had, you know, the first fund was my own capital. So we call that SoftTech VC1. SoftTech VC2, which was one of the first kind of seed funds in history that I raised in 2007. It was$15 million. And I raised my first fund from institutionals in eight weeks, which never happens, right? You talk to everyone. I was on a call with a new manager this morning, and I told her, be ready for two years of hell to raise your first fund.

4:03And I just did it in eight weeks. And so I was like, well, you know, I'm good at this. And then I tried to sort of raise a much larger fund, 50 million. I mean, now it's nothing, but back then it was something. And it took me almost two years to actually raise it. And I made all the stupid mistakes that an emerging manager sort of typically makes when they raise their first fund, except that it was my third. So basically what happened is I lost my Anchor LP the day we were supposed to do the first close. Like 10 million disappeared. and literally, and it was December 21st, right? So it's like a bad time to sort of lose your Anchor LP.

4:47And thanks to my other remaining amazing LPs, we did actually close on 15 million, as it was 25 for that first close, on December 22nd. So I didn't sleep, or my lawyers at Gondos and Detmer did an amazing job, you know, sort of getting the documents ready. And we closed. And what's interesting is that I had a call option to buy 1 % of Fitbit for$270 ,000 that was expiring on December 31st. So we did emergency, you know, capital call. I actually bought the Fitbit shares on December 30th or something. And many years later, that deal returned the entire fund.

5:31Erica Wenger: That 1 %? That 1 % of Fitbit, yep. Because it got acquired by Google, obviously. It was a quite, well, it went public. It went public? It went public. What happened with Google? In 2015. Google sort of bought them much later. Oh, really? After like many years as a public company. Oh, so funny. I think of them as like having an earn out of Google. I didn't realize that they'd gone public before. No, no, no. They went public. That was my first IPO in 2015. Super epic. Wow, that's awesome. So that almost broke me. But there were many instances where, you know, it's as a VC, you have every nine days, you you know, a good day and you have a good outcome, sell a company, you know, like you mentioned, we actually announced their acquisition by Procore for$845 million just a few weeks ago.

6:18So that was a good day, right? But otherwise, it's just hard. You just are, you know, working with founders who just live the lives of founders and it's really, really hard. and you know sometimes they text you at 10 p.m on a Sunday night saying hey do you have a minute it's never ever to tell you good news ever so you just deal with a bunch of shit on a daily basis and then every now and then you have like a good day yeah it's it's what what's the ratio would

6:47Erica Wenger: you say between like the good days where there's a sale or there's a markup or there's something to the like hard sloggy days because I think this is what people misunderstand about being a founder they think it's like half good half bad it is it is three percent good it's 97 percent bad like yes a markup is kind of a good news like we're happy that the company gets you know like a bit of capital and we get a new mark or whatever but it means nothing right the only time when you can actually sort of crystallize for real like a profit is when either you sell part of the company or you sell the company.

7:24Erica Wenger: Absolutely. Yeah, I mean, selling part of the company has also become more of like a recent thing, right? Secondaries are crazy these days. One thing I've learned talking to GPs on the show and in my own experience as a GP, your back office is a signal. How fast you close deals, how clean the LP experiences, how your K-1s land, investors notice all of it. The more buttoned up you are, the more likely they are to give you more money in the future. That's why I want to talk about Sidecar. Sidecar is the SPV platform built for fund managers who want institutional quality execution without hiring a full back office team.

7:55Erica Wenger: They'll review your deal within hours, handle full secondary transaction support, and give you transparent pricing up front. No platform carry. Also, your LP relationships stay private, which is super important. It is not a marketplace. If you're running a professional fund, your infrastructure should look like it. Sidecar makes that possible without the overhead. Check them out at sidecar.io slash partners slash trailblazers. I want to talk a little bit about that very first fund, which you said was your own capital. Yes. How big was that? and what made you decide to start a fund? I mean, people, it's probably so hard people to comprehend, but like in 2004, that was not a thing.

8:28Erica Wenger: Like venture was so nascent and especially seed. Like there was capital and I would love to hear your thoughts. There was capital later on, but seed capital was so unique. Tell me more about that. So yes, back in 2004 and 2003 is when I started sort of mulling over it. Essentially what happened is we saw the emergence of Web 2.0, Web 2.0, as we called it. And what was interesting is that those companies were actually very capital efficient. The issue why seed wasn't possible in Web 1.0 is that you had to spend a million bucks on Sun hardware, a million bucks on Oracle licenses, a million bucks on whatever other sort of piece of software.

9:10And so you needed like millions of dollars to just get going, right? Next generation starts, you know, leveraging some of the advances in like, okay, well, you can actually rent servers. You don't need to run your own sort of OS or whatever. And so the capital requirements of those companies were much lower. And at the end of the day, what was happening is that I saw entrepreneurs who were looking for like a few hundred thousand dollars and a lot of help. And there was nothing in venture that did that. You had angels that were writing small checks and doing pretty much nothing except, you know, a few like Ron Conway.

9:49And you had VC funds that were writing, you know, Series A checks at the time that were like two to three million dollars. And so if you were just looking for, say, 250K, there was nothing. Right. There was a clear sort of need in the market and there was a hole. And so after four years as a GP at Reuters Greenhouse Fund, I thought this is kind of interesting. i i maybe should do that and i was very grateful to my partners at um at the fund because they basically taught me what being a vc meant because literally i had never met a vc in my life until i decided to become one um and i basically said look no one is ever gonna back me as as a gp because I don't have a track record, and I don't even know whether it works.

10:39And so I went to my number one LP, which was my wife, and I said, hey, how about I stop this job? And so I stopped making money. And I actually tapped into our hard-earned savings. We had made a little bit of cash when we sold FX to Reuters. And I'm gonna take 250K of our savings, and I'm gonna invest us in startups, and we'll see whether it works. And she looked at me and she was like, ugh. Okay, whatever. Just don't bankrupt us. And so the first kind of budget was 250K. We extended that to double that. What was interesting is, I mean, we talked about Truvio. Because of that, you know, conversion from Web 1.0 to Web 2.0, a lot of Web 2.0 companies sort of got acquired very, very quickly.

11:31Like within months, sometimes years.

11:35Erica Wenger: actually it's happening like now it's actually bad yeah yeah yeah and it was kind of interesting people were almost telling us that we're building those companies to flip them right the term built built to flip was used at the time and that allowed me to build a track record incredibly quickly where within within three years i was 5x dpi which means that had returned my original investment overall five times, right? Which never happens. And that's that track record that allowed me then to raise an institutional fund because I could point to not only the strategy working, but the financials actually working, right?

12:19Obviously, I never got to 5x DPI in three years ever again because when you're an investor these days, it takes a long time. But I just thought that this was too good an opportunity to pass on. And, you know, Mike Maples and Josh Koppelman and all the OGs sort of saw the same. And we kind of started around the same time, 2004, 5, 6. And then in 2007, I became sort of an institutional kind of GP raising fund to$15 million.

12:54Erica Wenger: It's incredible. Yeah, it's 5x DPI is unheard of. And I have this theory, I'd love to get your take, that a lot of the best fund managers of this time, like let's point to like a Josh Kushner or like even like Alex Sohanian's doing some cool stuff. Chris Saka is like obviously such a legend. Founders fund early funds. They do well because that first fund has crazy DPI. And I feel like that is something that we don't talk about enough in our business is like, how do you optimize for DPI early and smaller funds early? Because therefore you can get more DPI. What's your take on that? I think so. DPI is something you can wish for, but you can't really engineer.

13:30Obviously, now that you have all this secondary infrastructure that didn't exist at all back then. So the only way to get actual, you know, DPI was to sell the companies. The small funds, as you said, Chris is a legend. And his fund is one of the most, if not the most successful fund ever. Second most. TVPI.

13:52Erica Wenger: Second or third? Blockchain is second and founders funds first. I don't know if you knew that. I didn't know about blockchain. But one of the most successful. Yeah, top three. And I would say I wouldn't call it yet because we don't know how much he's going to return on Stripe. Because he's in Stripe. He's in Stripe? He's in Stripe. So you haven't seen the Stripe X. So that's what I'm going to call maybe the most successful fund ever from a TVPI perspective. But you basically sort of try and show your LPs real gains. And unfortunately, when you see like the ups and downs of SaaS stocks or SaaS companies that we've seen so recently, like you have a lot of markups, which are just fake, right?

14:37And so these days as a GP, you have to sort of trade this sort of situation between, okay, I want to provide like a successful overall outcome to my LPs in terms of how much total DPI I will return. But also you need to think about, okay, how much should I sell early on in order to sort of lock some gains? And obviously trade those gains for future gains, but at least bring like hard cash to LPs who so, so dearly need it.

15:12Erica Wenger: Especially now. What is your take on secondaries? I mean, do you guys have a formula internally that you can share? How do you think about when to sell? And I say this because, to your point, it is complicated as a GP right now. Markups feel fake. but they also, you know, in some ways could be quite significant if you sell. What's your strategy for secondaries these days? So strategy, it's something which, you know, is evolving. Because obviously, we've sold about$1.5 billion worth of companies in the last few weeks. So we're going to return, you know, pretty nice sort of kind of capital distributions to our LPs.

15:51So that's going to sort of lower the pressure a little bit. But that's for the funds because we have many funds, right? We're investing fund eight. So we need to think about DPI in all the funds which are, you know, sort of in market. And I would say if there's an organized secondary, meaning either the company is, you know, buying back some shares during the financing or is working with a secondary player to put something in place, then we'll definitely sort of look at what we should do, right? Whether this is at a good price, because that's the issue. Most secondaries are done at a substantial discount.

16:30And sometimes it just doesn't make any sense to sell at those prices. So yes, we want to return capital to our LPs, but we don't want to do it at like too high sort of discount. And typical discounts would be like in the 25, 35 % sort of range. But we've seen way, way, way sort of more than that. So we think about it. We also have two funds. We have our seed fund that essentially is the one that writes the first check and has this sort of long-term commitment to our companies. But we also have our opportunity funds that come in sort of later in the life of companies. And we're pretty aggressive buyers of secondaries as well, right?

17:15So when we do a round, we're asking ourselves, okay, are we a buyer? Are we a seller? Are we a seller here and a buyer there? And, you know, we sort of try and make the best decisions for the LPs and for ourselves. Very often, we'll feel that the price is just not, you know, good enough and doesn't justify us sort of setting some of the early positions. I would say every time a company sort of hits a billion dollar valuation, we sort of have this active conversation as to what we should do. And obviously, as the company sort of raises more capital at higher valuations, if we feel that this is sort of justified, then we'll think about setting sort of a small position.

17:57To be candid, we've done it sort of pretty rarely. We've actually done a lot of accumulation of larger positions in our growth funds or our opportunity fund. it's not rare that we own almost as much from the growth fund as we own from the seed fund it's hard for us to sort of uh to say okay well now is the time to sort of start you know

18:21Erica Wenger: selling some yeah i mean there's so many factors for that there's like signal in the market there's relationship with the founder there's also like if this is looking like it could be one of your winners you don't want to cut it off at the legs and i think that's so much of it too uh you know it's painful you're like no i believe in this company and i believe in these people yeah and And I think that you believe in the founder and you're there for them all the way, something which is extremely important. DroneDeploy, for example, we participated in every single round that they raised, which is like six or seven.

18:54And it was really important to founders, even though we're just the seed lead that they had worked with for 13 years. they really sort of appreciated that we're there for them all the time. It's not that the 750K check that we put in the last round sort of mattered, but it was the proof that we trusted them and we believed in them.

19:18Erica Wenger: It's continued conviction, and that's what people want to see. And one thing that we'll never do is to sort of try and organize, you know, sort of a secondary with a secondary player that hasn't been sort of vetted by the company and force them to have like a rando on their cap table or whatever. Like we'll never do that. Yeah. Ever. So let's talk about the part of building an audience that nobody teaches you, how you actually get paid. Everyone waits until they have enough subscribers. But on Beehive, you can start earning from day one. Even with just a handful of subscribers, the ad network is already working for you, plugging you into a network of sponsors that fit your content.

19:51Erica Wenger: Then once your foundations are set and you've built something people genuinely value, that's when you layer in a paid tier, giving your audience exclusive access to that extra value and using boosts to grow it. And here's what creators love most, including myself. When you earn on Beehive, you actually keep it. 0 % taken from subscriptions and 0 % taken from digital products. So whether you're just starting out or ready to go add that next layer, go to beehive.com and use code TRAILBLAZERS30 for 30 % off your first three months. That's beehive, B-E-E-H-I-I-V.com, code TRAILBLAZERS30. So I have a confession.

20:23Erica Wenger: I used to be a compulsive note taker. Every single meeting, I'd be half listening and half scribbling and still leaving with gaps on next steps, details that were shared, and more. But Granola completely changed that for me. It's an AI-powered notepad for meetings, and it's connected to every single call on my calendar. Before each call, it shows me a well-researched brief so I know who I'm meeting with and the full context going in. During the call, I jot down whatever stands out, maybe it's a keyword or a decision I make, and Granola handles the rest. It'll transcribe in the background on the call and then turns my rough notes into clean, structured takeaways the second we hang up.

20:57Erica Wenger: There's also no bots joining calls. It just works in the background. I use Granola for several things. If I finish a meeting with a potential investor in my fund, I'll ask Granola, what could I have done better to get my point across? If I'm meeting with a founder I like, I'll ask Granola to point out any major green flags or maybe red flags I may not have already caught. For people with a lot of due meetings and decisions that require endless context, Granola is a game changer. Actually, we're running Granola on today's episode, so you can read the full show notes at granola.ai slash trailblazers.

21:24Erica Wenger: New users get three months completely free. that's granola.ai slash trailblazers. I want to ask you about fundraising. What is your advice for fundraising? You struggled, you said with funds. Well, fund two went well because you had 5x DPI, which is insane. Fund three was harder. So fund one ended up being sort of 12x, but it was 5x in three years. 5x in three years. Wow. Okay, let's get the record straight. 12x on fund one, not bad. And it's, you know, it's good, but my partner Andy will do like double that on his own angel sort of portfolio. So it was pretty good for the time. Like now it's almost like that's all.

22:00And so Fund 2 had also sort of a great, you know, TVPI and DPI. The issue that made me sort of raise the fund in almost two years was that when you go from, let's say, Fund 2 to Fund 3, right? You can change a few things, right? But you don't change everything. So I went from being a solo GP to having a team. I went from, you know, let's just write a bunch of small checks, build a large portfolio and see where it goes to. No, no, I'm going to concentrate my investments. I'm going to have a smaller portfolio. I'm going to start writing lead checks. I'm going to start taking board seats and so on and so forth.

22:45And basically, if you think about it, I change every single element of my investment strategy. and oh, by the way, my two anchor LPs of Fun2 didn't come back because they were never meant to come back. And so I had to rebuild a brand new LP base, which is pretty much still with us today. And so literally, I wouldn't say screwed up because I had to do it. That was a total reset. And therefore, LP sort of looked at me and said, okay, awesome. And Fun1 is incredible. and fund two is also sort of doing super well, but fund three has nothing to do with fund two. So what the hell? And so that's how I sort of paid the price and spent my two years in purgatory to get that fund raised.

23:36Erica Wenger: Yeah, it's sometimes you just have to do it. It's like a necessary evil, but is there any advice you have now for emerging managers that are going out, trying to become more institutional, trying to build a firm that's thoughtful and differentiated? How do you do it now? I mean, it's obviously a different time. We're flashing forward 20 years later. What is your advice for them? I mean, look, you have to answer very crisply. Why the fuck does the world need yet another seed fund? Right? Because there's, what, 2 ,500, 3 ,000? God knows. Right? And, you know, way back when in 2010 or whatever, when there were maybe 50 seed funds, I felt that the market was really well served.

24:16then you know we were like a great community we knew each other we're friends with each other um and and when we went from 50 to 100 to 200 to like a thousand i was like what the hell is going on like why and so at the end of the day you need to sort of figure out what your unique shtick i call that shtick is so what is it that you do differently in terms of sourcing in terms of in terms of what you do for your founders, that will sort of give you a chance to get the deals, run with the deals and make money for your LPs. And I welcome every single sort of wannabe GP. It's just super hard to get the LPs, especially in a world today where LPs are so busy with re-ups, so that they have to invest in the next, you know,$10 billion Sequoia sort of fund, next 15 billion, you know, 16Z fund in the next, you know, whoever massive, you know, fund benchmark raising billions for the first time in ever, right?

25:24And so they can't miss that. And therefore, their attention span, their capital is extremely limited. And so unless you're super crisp in your like, okay, this is what's going to be different about this and this is how i'm going to win the deals and this is why you know it is it is worth you so spend time with me you won't get the attention yeah i think that's good advice for

25:46Erica Wenger: everyone though crisp storytelling is sort of the root of success i mean it's true for us yeah yeah like we have we have the same like for us okay you guys have been here for 22 years and you're one of the you know established firms why are you still relevant right uh and and we're going through a firm transition because i've announced that i was sort of stepping back my My friend and managing partner, Andy, is now running the firm. And, you know, for LPs, it's something that they have to think about, right? Because for a long, long time, they've underwritten me as the head of the firm, and it's no longer the case.

26:22Erica Wenger: Yeah. Andy's pretty great, though. He's awesome. He's awesome. Yeah, you've compiled an amazing team. Talk to me a little about that transition. Like, I really want to get into succession planning. I think this is one thing that we are seeing a lot of folks of your generation that have been building firms for, you know, let's call it 20 plus years. you know, they've done it, they've done really well, but they want it to outlast them. So what has been your thought process around when you were going to step down? Who were you going to hire, you know, 5, 10, 15 years ahead of time? Talk to me a little bit about that and the messaging, because I saw you guys just brought on a head of comms.

26:50Yes.

26:50Erica Wenger: Who's a killer. Yes. Great background. He seems amazing. Talk to me about how you're thinking about this next phase in succession planning. So I think you, as the head of the firm, you have to make one very clear decision at some point, which is are you building a legacy or is the firm sort of done once you decide to sort of walk away and either is fine right just have to be very intentional about it it's gone like you can't switch from one to another like and do it sort of last minute and so um i would say i started thinking about what i wanted to do maybe six seven years ago right um i love what i do and i continue doing it and and you know to be to be very candid i'm now 95 uncork as opposed 100 so i'm still like very much super active and i keep on doing deals i told my team when we raised fund eight hey you guys i'm not sure i'm going to do a ton of deals i will support you we'll source for you whatever whatever and um i think andy and i are the number one producers in the firm and when i you know tell my team so i made a company it's kind of cool and they're like oh not again And so I'm still very much involved, but I had made the decision that we had to sort of think about transition.

28:13I think I wrote an email to my team five, six years ago saying, hey, this is how I think about the future. And I probably have two or three funds in me, but that's basically it. So we have to sort of figure this out. And I am lucky that 11 years ago, my then partner Charles Hudson sort of said hey there's this dude British okay he's British fine you know don't hold eyes to the game's name because French British thing Andy McLaughlin you should really meet him because he's an awesome investor like incredible angel track record already and he would be a great addition to the team because he does DevTools something that we don't really sort of do so i was like okay i'll meet you a brit and and we basically you know sort of met a few times and we really sort of clicked and i broughtnd on board as um as a partner and then he just crushed it right um and within a few funds it was very clear that we had found our next managing partner and just happened uh very organically and i basically sort of uh brought him as a co-managing partner a couple of funds ago i said hey this will never work if i continue being the front man on the um on the fundraising side and so i got him so i raised fund six and he raised fund seven and eight and like literally were super deliberate about the fact that i was i wasn't involved in anything fundraising i barely sort of i think i saw three lps in the last race so they were almost hiding me.

29:59Where is he? Oh, he's gone. He's busy. And that meant that they knew I was there. Obviously, the DPI is mine, right? Obviously, now we're starting to have exits in the portfolios that my partners have sold. But when our big fund drivers in fund four, fund five, you know, sell, that will be sort of an district record. and so you essentially engineer this okay who's who's the front man who is everybody seeing and like even podcasts it just happens that I was in New York and you were very kind to have me on this on this podcast but typically it would be Andy right to tell our story I love that how are you

30:45Erica Wenger: spending your time these days I mean I know you said 95 % still on Cork I have done some my research I see there's a lot of eating good food. There's a lot of using your tonal. There's some wine projects. Talk to me about what you are doing now these days, that you have more time. I don't have more time. So basically - You make the time. I basically have not like stepped back from Uncork yet. So the only thing I've carved out is my Friday afternoon is time I spent at the winery. So we've launched, but we are launching a small project in Wadawada, Washington where we just moved so it's called Clos Clavier Clos Clavier on Instagram so feel free to to photo us we have just bottled our first two wines so the because I'm cheeky the wines are called after named after terms of the VC industry so our red wine is called Series B named after our grandson, Brayden.

31:48And our white wine is called Liquid Pref. And yes, Josh Koppelman a year ago said, you have to actually make a carried interest. And so we have in barrels a carried interest that we'll release either next year or the year after. We'll have to decide.

32:06Erica Wenger: Pretty epic. Pretty epic. Blending of all your passions. Yes. It's always fun when you can do that. You know, I feel like that's not very common. You can take your passion in one area and another and make something really special? Well, I've had, you know, the passion for wine for a long time. I've been... Well, you're French. It's like in your DNA, right? Yes, it's in the... Yes, it's in the DNA. But I've been like, you know, collecting since 1992. Long time passion. Long time passion. And so it's kind of fun to... And it's also, you know, sort of... My wife, Bernadette, was my partner in the very early days of SoftTech until she decided to join Stanford to run the Center for Social Innovation, where she spent 18 years.

32:51And so it's fun to sort of do another startup project with her. And so I'm basically designing the wines with our winemaker, who's incredible. And she's basically busy putting the final touches to the website, the e-commerce infrastructure. She's managing the allocation list, which we need to find. About 200 to 300 people to set off our first production. It's going to be very, very small. 176 cases, this first vintage. And so she's busy doing all that and also being a mummy because we have a two-year-old grandson, which we adore. And it's super fun to see him pretty much every day.

33:34Erica Wenger: Yeah, very special. You've built such an incredible life. And now you can invest in your passion, which is really amazing. I think that's, people don't realize this always, but you know, firm founders, GPs like yourself, it's building. It's starting a company and now you're back to building something yet again. We're founders. We're founders. We're just founders of a different kind. Yeah. Because for people, people don't, as you sort of said, people don't think about a VC firm as a startup. But SoftTech was very much a one-man startup for six years before I decided to, which is one of the other decisions I made, which was, hey, it's kind of lonely to be doing everything and I need help and I want to work with people.

34:18And so after six years of being a solo GP, I brought my first partner, Charles Hudson, and our now head of operations, Ashley, as my first employee and assistant. And 15 years later, she's still with me. It's incredible.

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35:02Erica Wenger: It's a completely new asset class and honestly one of the more interesting ways to have skin in the game on what you're already watching closely. Download the CalSHI app, that's K-A-L-S-H-I, and use code trailblazers to get$10 when you trade$10. Or go to calshi.com slash r slash trailblazers to accept this$20 offer. With CalSHI, you can trade on anything. 18 plus only, restrictions and eligibility requirements apply. Event contract trading involves risk and may not be suitable for all investors. Prices, values, and available markets may differ from those mentioned. For more information, see calshi.com slash regulatory.

35:33Erica Wenger: Okay, so a quick experiment. Think about the last long message you typed. Could be a Slack thread, a prompt into Claude, maybe it's a detailed email. It probably took you 10 minutes, maybe even 20 to get it right. Now imagine you just said it out loud instead. That is the whole pitch for Whisperflow. Whisperflow is voice to text that actually works in every app on every device. You speak naturally and it outputs clean formatted text that's ready to send. No setup, no integrations, no fixing weird transcription errors. And it works across Gmail, Slack, Notion, Claude, iMessage, wherever you type.

36:03Erica Wenger: And unlike the built-in dictation on your phone, Whisperflow removes all filler words, mid-sentence corrections, and jargon. What I personally love about it too is that it perfectly matches my style. So I often type in all lowercase letters, so it'll type like that. I'll also say things like LMK, which means let me know in shorthand, and it'll auto-adjust it from let me know to LMK. Like many of you, I also do a lot of brain dumping into LLMs. So instead of typing it all out, I actually just speak my windy train of thought into whisper flow which is infinitely faster than trying to get my fingers to keep up with the pace of my thoughts if you do any serious writing or just send a lot of messages and emails using whisper flow is a no-brainer get one whole month of whisper flow pro completely free at ref.whisperflow.ai slash trailblazers i want to talk to you a little bit about the types of companies you're excited about these days yep when you do bring in a deal and they roll their eyes it looks like the categories are a lot of hardware and frontier tech yes and when i look at your track record You've got some of that for sure.

37:00Erica Wenger: You know, Grok being a very notable winner there. Why that category? And what are you excited about? What makes you excited to meet a founder these days? So first and foremost, I've invested in pretty much everything under the sun, right? A, I was on my own. So I was doing every single type of deal. So I started pretty much on the consumer side with Web2O. Then I started investing in SaaS. Fitbit was my first hardware company. And the question I had was, well, it's kind of capital efficient to build a software company in 2008. I wonder whether it's capital efficient to build a hardware company.

37:44And I was looking for hardware companies and there was literally no one raising money as a hardware company in 2008. until I met the Fitbit guys and they had this clunky prototype that showed that, you know, it could count steps, which was something that a physical step counter you could buy for 20 bucks at Walgreens was doing really well. And I was like, this is kind of interesting. I like the guys, but I'm not sure there's going to be a ton of demand. And I saw them present at TechCrunch 50 in 2008. And I still remember seeing Ed Williams, seeing Ed Williams and Kevin Rose being super excited.

38:29They were judges for their session. They were super excited. It was like, I want this, I want this. And I was like, okay, those two dudes want it. Maybe it's going to go somewhere. And then I invested.

38:38Erica Wenger: I love it. Weird. But anyway, and so. It's a good signal though because we're all humans. And when you see other humans want something, it is, listen to your intuition. And by the way, the answer of, to the question, is it capital efficient to um to uh build a hardware company hell no it's horrible um and and hardware is you know software companies typically sort of get easier over time hardware companies i feel get harder over time because you always have like issues with your supply chain and as you sort of need to spin up like cms and so forth like it's it's just got awful but it was it was a really good outcome.

39:18And over time like this, I just added new sort of sectors for us to invest in. And this certainly was instrumental in having us become a super active investor in DevTools. And as we brought, you know, awesome partners, or partner Susan, or partner Trip, or partner Amy, they sort of all own a portion of investment strategy. and the one that was left is kind of the weird stuff, frontier tech, deep tech, like things which are markets which are not established yet. And I kind of naturally gravitated towards those because A, it's super interesting from a personal standpoint, like discovering new things, learning new things.

40:07And so what I look for now is incredible founders building wicked things that are kind of new, unheard of, or new ways of doing something that has been tried before and people fail that. And so I would have told people, well, look, besides nuclear fusion and asteroid mining, I couldn't invest in anything. So don't try to sort of figure out what I'm going to do next because you can't, because I don't even know. Just bring me incredible founders and I will sort of do the sorting. in the filtering. And then I was catching up with one of my friends, Jeff Lawson, who had passed on Twilio when he was raising his seed round because like a dumb fuck, I thought that his 5 million pre-valuation was too expensive.

41:02Right?

41:02Erica Wenger: You hear the story a lot. It seems expensive in the moment, not in hindsight. I would have invested at 3 pre and he wanted 5 pre was too expensive. Like what a stupid ass. Anyway, I'm catching up with him and he's basically, you know, telling me about the nuclear fusion startup that he's starting. And I'm like, oh, God. Okay. And I said, okay, tell me more. And I went back to my team and I said, okay, so remember when I said that we never invest in nuclear fusion? Meet Inertia. And so I wrote a very large check for us in the Inertia$250 million round. and I'm super excited to work with Jeff, who's one of my favorite entrepreneurs.

41:45And so I meet sort of incredibly smart people and they tell me a story and every now and then I'm like, okay, they're going to hit me, but this is worth it.

42:00Erica Wenger: Yeah. Well, the beauty too of being in this business for so long is your network compound. So someone like Jeff, there's a lot of founders that start a company at a certain valuation and the other goes well or it doesn't and they want to start another one and then another one and you can be that partner for them through it all as they get more successful, which I think is so gratifying too because you can build those deep partnerships, but also you can get access early to the very best because you've been in it for a while. And we have a lot of people who have just done that, you know, raised from us or we passed, but we were sort of always decent and quick in our decision making and they come back to us, you know, showing us like company number two, company number three.

42:36And so it's very gratifying to build those long-term relationships where we try to, you know, give you a quick note. We try and be helpful. We don't get in the way. Do no harm is the number one, you know, sort of rule. There's always something that we've done for the companies that, you know, probably saved their bacon and without us, they wouldn't be there. So, and it was the case with Fitbit. And, you know, that's how you build sort of this compounding reputation where people will just say, hey, just take his money.

43:07Erica Wenger: Yeah. What's the most painful company that you've passed on? So you mentioned Twilio. I'm sure there's so many that you can run through in your head right now. But which one do you look back on and think, I was really close and I just missed it? Oh, there's literally half a dozen that would qualify. But I would say if I had to, like my number one regret is Uber. Because I got the pitch. So if you have followed the history of Uber, you heard about Travis and Garrett coming up with the idea in Paris during a snowstorm at a really awesome dinner. I was at the dinner. And actually, so what happened is we were at Le Web, right?

43:56That was put together by my dear friend, Louis Clomer. And there's a massive snowstorm. And we're on the outskirts of Paris, like in the north. and there's nothing like there's no there's no there's no taxi there's nothing there's no car because there's like you know uh a foot of snow or something and so i actually sort of dragged all these people like put them in a in a big sort of taxi and i drove them to the to the um subway and i sort of showed them around in the in the paris subway so i could actually drop them on the chance where their hotel was. And we then met at this crazy hotel, particularly in Paris in the 8th, where they had this sort of discussion.

44:43And so I was there. And I've known Travis for a long time, I've known Garrett for a long time. And so when they pitched me in June of 2010, the concept of Uber, Uber cab, by the way, it wasn't Uber yet. I was like, well, this sort of makes sense. And Uber was not what it is now. to be clear, right? It was just like, get a limo held on your phone and then paid directly. But my big problem and the reason why I passed was that Travis wasn't the CEO, right? And he introduced, he mentioned, hey, we just hired that dude and we found him on Twitter. So he's like a ad exec or whatever. I'm like, this isn't like the right background for being CEO.

45:31what would you be CEO? Well, I want to do something else, whatever. And Garrett, I want to do something else. And so at the end of the day, if you don't believe in the execution capability of the team, then you don't invest. And so that's why I passed when I met them. And then Jason Calacanis organized like an angel network pitch day or whatever at a house in Woodside. I was there and Travis pitched. And I was like, the pitch was really good, but I had an issue with the CEO. So I kind of didn't act the second time. Strike two. And then what's crazy is it took the entire summer of 2010 for Uber to raise, right?

46:15That's the thing which is insane, right? And it was like five pre or four pre or whatever. Like it was ridiculously cheap. And there was like 100K left in early September of 2010. and I'm like, okay, I'll take it. So I pinged those guys and said, hey, you know, if it's out there is 100K left, can I get it? And they said, oh, super exciting, whatever, whatever. And then they said, oh, sorry, we decided to serve you to someone from the kind of transportation industry. So thanks, but no thanks. And then many years later, I was telling this story at a dinner, and then someone left his ass off on the other side of the table and said, actually, I got the last 100K.

47:07That was the transportation guy? No, it was another VC.

47:10Erica Wenger: So they lied. You know, whatever. They wanted to give it to someone else. I got my two chances, and I passed, and that would have been transformational for World Rock Record. Yeah, that's hysterical. It is where it is. You came across the person who took your last allocation? Yes. Oh, that's painful. He's actually a really good friend, Bill Trenford, who's now first round. Oh, yeah, of course. First round. Who's now first round, yes. Yeah, everyone loves him. He's wonderful. It's funny. You're talking about Bill. We talked about Jobs. We talked about James, Fitbit, you. These are all lobby guys.

47:41Yep.

47:41Erica Wenger: Like all Hawaii lobby guys. I'm kind of just realizing that right now. Yes. So let's talk about Postmates. You guys led the seed there. Tell me how you first met the team. So, Matt Bastion and Sean, they were pitching like a random whatever thing. It was like a media play. They were in Accelerator Batch. And Bastion was like a really super interesting entrepreneur, but the idea was like super stupid. And so, I was like, not doing that. And then I don't remember how, but I heard that they had sort of done the proverbial pivot into Postmates. And I thought it was just genius, right? This notion of, well, anything that you want comes to you, right?

48:33Delivered on the bike in San Francisco. And I really, really like Bastion as an entrepreneur. I really like Sean as a CTO. So exceptional founders building a crazy idea. And so I led their seed round. I led their second seed round. I sort of wired emergency funds to have them make payroll before they received their Series A check from Founders Fund because it was like a couple of days late and they were literally out of cash.

49:07And then they built like an amazing company and, you know, we had a great outcome. But it was hard to scale that thing.

49:15Erica Wenger: it was hard yeah and lots of competition i mean similar to the uber story like once you really kill it with a consumer marketplace you've got just everyone coming for you it's not easy no absolutely well and doordash to be honest like doordash wouldn't exist if bastion had agreed to essentially launch postmates in in the burps right but he was fixated on hey we have to focus we need to be you know in san francisco i don't care about palo alto whatever whatever and that's why Tony and the boys launched DoorDash in order to get the pizza delivered in their dorm. And what's hilarious is I was a judge of some business plan competition at Stanford.

49:57And here's the DoorDash team pitching me DoorDash saying, oh, Postmate does this and Postmate does that. And I'm like, nope, it doesn't. No, it doesn't do that. And they're like, how do you know? He's like, I'm the investor in the company.

50:09Erica Wenger: You're like, come on, let's look at Crunchbase. Let's see. So here's a problem I hear constantly from operators. The data exists. The answers are somewhere in there. But getting to them, actually pulling a useful insight without bugging the data team or learning SQL takes way too long or just does not happen. Hex solves that. Hex is an AI analytics platform where anyone on your team can ask data questions in plain English and get real answers backed by your actual business context. No SQL required. And the best part is that Hex shows you exactly how its data agents think, so you can see where the logic comes from and trust the output.

50:42Erica Wenger: The more your team uses it, the smarter it gets. From seed stage founders running lean to larger orgs dealing with serious data complexity, Hex is built to scale with you. It's game-changing for people like me who want to understand what's going on under the hood, but we are not the data experts. It's funny, too, because I feel like every time I look over my operator friend's shoulders, whether they're in product or marketing or ops, they often have a Hex dashboard pulled up. It's a great tool. Trailblazers listeners get an exclusive 30-day free trial at hex.ai slash trailblazers. Let's get into our Trailblazer trade-offs.

51:11Erica Wenger: I could keep peppering with questions, but I want to make sure we get to those. Tell me what comes to mind first. Okay. Book in hand or podcast in ears? Podcast in ears. Okay. Any favorites? I'm pretty eclectic, but I was a huge fan of BG2. And I'm really sad that they stopped sort of recording. I like more or less because I know the four and so I kind of enjoy the banner it's cool how they're married you know it's really sweet you can see the behind closed doors but they kick each other it's super fun like everybody gangs against Sam which I really enjoy and so I have several but the one I kind of try and listen to is sort of more or less love that hire slow or fire fast?

51:59oh both

51:59Erica Wenger: If you had to pick, which matters more? Fire fast. 10 small wins or one big moonshot? Oh, moonshot. It's your business. You don't do what I do if you're not like a moonshot, like Hunter. Love it. Being early or being right? Being early. Always. What's the best teacher, a mentor, or a mistake?

52:28at the end of the day mistake okay any reason why a mistake versus a mentor you can't be told and learn you have to experience to learn is the future of ai abundance or chaos

52:48Abundant chaos

52:51Erica Wenger: Is it one than the other? Is it one more than the other? It's more chaotic It's going to be chaotic For sure Killer product or loyal niche audience? Killer product Lower niche I mean You can get You can build something Which works really really well And makes you a bunch of money without ever needing sort of VC capital and building the VC worthy sort of company. And so it's really hard to like killer product is what sort of we all sort of strive for. VC or bootstrapping? Well, I mean, there's nothing wrong with bootstrapping. There's nothing wrong with never raising VC money. But at the end of the day, what I do for a living and what I love is to be able to just lead this thing on fire once they raise the capital they need to do whatever we can unlock.

53:56Right?

53:57Erica Wenger: Yeah. It's very exciting. Even nothing less. VC is very exciting. Never post on social media again or never fundraise another dollar for any of your funds again. Well, I've already done the latter. But I'm not super active. on social media. I mean, I've actually been posting quite a bit on the Cloclavier handle, but these days I tend to sort of repost what my partners are posting because they have a large audience. Yep. The last question for the trade-offs, is AI overhyped or underhyped? I think it goes up and down in terms of cycles.

54:37Overhyped in the short term, underhyped in the long term. Okay.

54:40Erica Wenger: What are you most excited about? Yeah. What's like the one thing that you think no one is talking about that you are very excited about? I don't think I have anything sort of new or special to contribute. It's just the transformational nature of AI and the speed at which we see companies scaling. I have never seen in my 26-year career as a VC. We have one where we invested four or five months ago. There's a team of three. We've invested. They released the product. They went from zero to one to 10 to 50 to$120 million in AR. And they now have seven people. And we're like, what the fuck? And like, we've never seen that.

55:27We have a lot of companies which are scaling really, really fast. But that one is like the vertical. And they're super smart. They're trying to sort of, you know, they're building the rocket as they fly it. And we'll see where that goes. but I've just never seen that. And the impact of AI, I think, is not well understood. People are sort of freaking out about it. I think there's a lot of positives, but there's a lot of guardrails to implement because the whole thing about the model going rogue and then going like, you want me to do that? Okay, I'm just going to hack this thing. That's crazy.

56:08Erica Wenger: Scares a lot of people. Yep. Scares a lot of people who aren't technical and really deeply understand what's happening. Yes. Yeah, absolutely. Jeff, thank you so much for being here. This is really fun. Thanks for having me, Erika. Thanks so much for listening to the Trailblazers podcast. If you found this conversation viable, please follow along on socials, share with a friend, leave a review, all the things. Most of all, please subscribe to our channel. It helps more contrarian builders find us and supports the work we're doing here. To learn more about what we're doing, you can visit trailblazerspod.com or my venture capital firm, parkrangerscap.com or just follow along on socials at Erika underscore winger.

56:40Erica Wenger: Until next time, keep trailblazing.