Nicole Quinn is a partner at Lightspeed, one of the iconic funds of Silicon Valley. Nicole focuses on early stage consumer in Internet and fintech with an amazing portfolio, including Calm, Goop, Lady Gaga House, Rothy's, Zola, Girlboss, and so many more. Before that, Nichole spent nearly a decade at Morgan Stanley covering e-commerce, retail and consumer companies. Nicole, thrilled to have you on the show today.

Thanks so much for having me. Many great.

Well, maybe we start with the basics of light speed. I know earlier this year there was a 4.2 billion dollar announcement. But tell me a little bit more about sweetspot of a company size check, that sort of thing. Sure. So at Lightspeed, we actually started in January the year 2000.

And I think that shapes who we are as a firm because we are all about sticking with founders through the good times as well as the very tough times. So we have 10 billion assets under management. Our last fund was a four billion dollar fund. And the idea there is the sort of old growth capital, 70 percent that actually goes into companies we've already funded. So we'll start to invest in companies at the seed, series A Series B stage and then we'll continue to be that capital partner for their life.

And so our average check size on the early stage is about 15 million. On the growth stage, it's about 30 million. But we're excited to work with founders of all different stages and and sectors. Great.

And will you do preseed or will you do companies that don't have revenue yet? I would say like ninety five plus percent of our investments are post revenue.

Our investments in seeds typically range between one and three million. Three is usually the cap for our seed investments. But I would say that valuations have certainly been creeping up and they probably used to be 10 million posts for seeds and now they're sort of 15 and 20 million.

So we really see lots of different valuations and there's probably a hundred people or so at Lightspeed.

How do people or you can correct me if I'm wrong, but how does someone know who to approach? If I'm an entrepreneur wanting to approach lightspeed, how do I know who to go to there?

Of course. So we have about you are right that we have about 100 hundred people at Lightspeed. We have twenty investment professionals, and then the rest really are on the operating side, which I think is something really special about lightspeed to have teams who help with business development, PR marketing, growth, hacking, hiring. We have two different hiring teams. So most of the people on that side of things. But on your question, with regards to which investment partner to go to, I would say go to LSVP.Com, our website, and you can find all of us.

You can filter it by the different geographies that we're in. We actually have nine offices globally. You can really read our bios and see the areas that we invest in and find out who is the best person for you and what you're building. 

Great.

I just send everything to Alex Tausig and he just forwards it around for me. So or you can do that anyways.

Maybe this is not a fair question, but like, do you compare yourself like who's an equivalent, like his an Andreessen similar to a lightspeed.

Is that a. He requested. Well, that's so interesting, I think, like people compare different voices and it's interesting, I spent 10 years in equity research and I guess is like Bill Gurley at Benchmark who did that and Kristin Green at Forerunner, who did that. So I sometimes look at individual people, but yeah, there's sort of top 10 voices. But you know what? There's a great quote by Bezos, which says, like, yes, you should look at the competitors, but really you should be focused and obsessed with the consumer.

And so that's exactly how we are at Lightspeed. Yes, there are others who are, you know, top five VCs, but being focused on the consumer and the startups. And that's exactly where we want to help. That's where we spend our attention. Yeah, no, I agree with that.

Do you think do you think being an equity researcher, you know, I guess what are multiples right now in the public markets for the sorts of companies that you're investing in?

And do you think do you think about that when you're making an investment, like how are the public markets doing?

Later stages. Certainly, I think that when the market started to crash in March, April this year, you know, that probably was reflected in some growth stage valuations. And then quickly, as the public markets turned up again, you know, the same is true.

And so for me, like I think about like the fact that we did the Facebook Pandora group on IPOs when I was at Morgan Stanley and we'd meet those companies two years before they IPO'd. And we work with them on a story and making sure that they really were in the best possible position to IPO. And so I think about the growth stage companies in a similar way. And yes, we certainly do look at the public valuations because I think private, there was a period where the two were very out of step with one another and now they're definitely coming back.

And in fact, I would say public market valuations have really rallied and private have not done in the same way over the last few months, which is in complete contrast to what we saw over the last few years.

So I don't do consumer investing. And so what are what are sort of your growth stage multiples now in the public and the private areas? I was looking just the other day at some of the Internet stocks, public multiples, and the range is huge.

So if you look like an EV to sales, multiple ranges from like 10 to 50 times.

And, you know, companies like Snapchat, where we invested at the seed round forty times.

So they have certainly really rallied to her, especially over the past few months.

And then on the private side, you know, it really depends on the sector. I would say on the e-commerce side of things, we see everything from I mean, gosh, like one to 10x with the average being about four x four times revenues, marketplaces more towards 10x, but then fintech and SaaS companies can be above that. Absolutely.

OK, great. So let's talk about your investments, because that's kind of the core of this.

So I named a few of your I mean, you have a much wider profile. You have great companies in there of the ones that have really successful where any kind of controversial did you have to, like, bang the table and fight over any of them?

It's such an interesting question because I feel like a lot of people do feel like you got to bang the table. That's not how we that's how we invest Lightspeed.

I would say at Lightspeed we have the benefit of having some really smart, sharp, experienced minds around the table. And so when I come to the whole group with an investment recommendation, I am looking for feedback. And so I do think to some of the most controversial ones are ones where people do not vote as highly.

And so I think Cameo, for example, we had a couple of lower votes, but that gave me more conviction because I think the very best companies are often like the best products where you don't get a load of five and six out of 10. So you get some ones and you get some suntans. 

And the same is true with other voices of the VC said to me, Oh, I can't believe you invested in a cameo, not excited about that company, and then buy the next round. They saw the numbers and they were like, oh, now I'm very excited about this company. Can I invest?

Yeah, yeah. Interesting. So will your the side of the Lightspeed team that does B2B investing, will they vote on a consumer company as well. Do you all vote on all of them. Yeah, exactly.

We do. It's something we've done for twenty years and something we will continue to do.

I think that it's important to have a core group of people who are enterprise infrastructure, health care, consumer, or seeing different things in those investments and bring different perspectives to the table.

So, yeah, we all vote.

Interesting. And does that change for the growth stage companies versus the seed stage company? Like can you do a million dollar check without everyone having to vote on it?

So we have a slightly different process for seed stage, which is that we have to partner process. So two partners need to meet that company and approve it. We still do the investment memo, but then from series A onwards, the all founders come in to present at Lightspeed. We will see it, hear it, discuss it afterwards, and then vote on the company with our excitement level.

Are there any good? So the investment members was at Bessemer who released all their investment memos. I think it's Bessemer. You're right. Are there any good ones from you guys? Where have you put out your investment memo and calm? It would look totally different Rothy's or someone that you like. Oh, yeah. That was a very different one going in that it looked like coming out. That is such an interesting question. I love to actually look at past memos and sometimes, you know, I send them to our founders and they say to me, gosh, you know, this makes me so excited about my own company saying how you see it through your eyes.

Yeah, but I would say if you think about it like Rothy's, Calm, Cameo, oup, they actually all are very similar to how they were, you know, three, four or five years ago.

Great. So those are all very iconic brands. And you tweeted five things to look for in an iconic brand, something like that, and an enduring brand.

Yeah, so I tweeted that because I think the people often think that a brand relates to e-commerce, and I would say a brand does relate to e-commerce, but it relates to so many other sectors.

So if you're a fintech business and you're building an insurance company of today for millennials and you're competing against the Gekko's of the world, you want to build a brand like Geico is a great brand, may have very catchy marketing, and it is a true household brand name.

And so that's why I asked the question, what makes you a true brand, whether you're a marketplace, a fintech company, media business, you really have to think about, like, am I a brand?

And some of those questions help. So it's things like it's consumer.

You know, I said the school, which is often debated about I do think the customer satisfaction of your product is super important and then a referral rate, you know, that really that really depends on the business. But we do want to say that people are offering others. We get excited when there's often, you know, 10, 20, 30 percent of the business of new customers coming from referral. The organic percentage is another one where we also see businesses have over 50 percent of the business come from organic of some kind, whether that be word of mouth or whether that be referral or PR marketing.

And I mean, with Cameo, it's about ninety nine percent organic and with e-commerce companies. Yeah, we get excited where it's over 50 percent or maybe over 30 percent off a series B, so those are some of the numbers that we show. Yeah. How so.

50 percent for e-commerce brand you might be seeing at the early stages. Yeah, you really do.

People when they love a product they really talk about it.

Mm hmm. What are you looking for. Another metrics, like a good early stage month over month growth. I mean I know that varies, but what might stand out?

Month after month, it's so hard because it's you know, we've got to think, hey, has the company been around for three months, has been around for three years?

I've been to YC. Exactly.

So I would say, like, if you look at, like, the yearly numbers at a seed stage company, we want to see between three and five x year over year growth at the series a year, three X by a series B, two to three X.

I mean, some of these the best businesses, either even a series C and D round are still growing over one hundred percent a year. And so those are primarily the numbers that we look look for.

So I'm looking at a company right now that's like SAS for retailers.

What is going to happen with retailers?

And should I just, you know, should I just assume retail is going to be down because everyone is moving online? Or how do you think about the future of retail? Should I still be investing there?

If you think about SAS for retail, historically, retailers have been some of the hardest big corporations to sell into. Now, I wonder whether that is changing because of covid on the negative. You could say that retailers, especially brick and mortar retailers, are really struggling so they won't have the same amount to spend on some of those tools. But on the other hand, and this is side, I believe I think the retailers are now seeing a seismic shift in their e-commerce penetration and some who maybe were left behind are not as invested in e-commerce are realizing, gosh, we have to really quickly move here and we have to start using a lot of tools to do so.

And, hey, I don't need to have a huge engineering team. I can use all these incredible products like Shopify and Redcap to be able to do this. You know, I think the rise of no code is is really only just begun.

What are other places where you're really pushing a lot of brands like how about subscriptions? When does it make sense to move from, you know, I'm buying one of these products to I'm buying a subscription in something.

So subscription really depends on the product, so calm, for example, subscription makes so much sense because if you look at like the engagement of these people, it's incredible. We had to sleep stories and instantly tripled the engagement and retention of the business.

Whoa, whoa, whoa. Say that again. You had. Oh, interesting. So if you think about it, people coming in and they were spending 10 minutes a day meditating, but they were subscribers. And so they were already paying the money and they were very happy when com added on all this extra content for them, they felt they were getting so much more value from the app is already become a super app where you can listen to music, you can meditate, you can do yoga.

And my favorite, you can listen to sleep stories. And so instead of just doing 10 minutes of meditation a day, then people coming in and doing 20, 30 minute sleep stories..

And also the additional cost to the company is so low that you might as well offer a subscription. That's what I think subscription really does make sense, which we see in companies like Peloton's case.

Yeah, great. Do you have does everyone at Lightspeed have RFQs that you're working on and do you in particular have like do you write them all out and, you know, let the world know what your theses are right now?

So some VCs are very focused on these these and some are just purely focused on when they see an inflection point. And moving after that, I would say we try to bridge the two. And so we do have broad theses and yes, we do write them out. 

I probably have, you know, a few different theses at any one time. But the most important thing is. So we have to ears and one mouth and we should be using them in that proportion. And so I always want to be listening to what the customer is telling me. 

When we hear a founder come to us with a really interesting insight around why the world is changing, why it's going to look differently in the future, and why now is the time to do this, because maybe regulation is changing or, you know, the world's looking different ways of covid or another reason, then that's when we got to move quickly. So I tend to be more on that side of things.

Do you have a good thesis right now that you've written down? So one of the areas I'm most excited about is. A lot of different sectors moving to be virtual, so in the past, you and I probably would have done this podcast in person yet. But you know, we've all seen the rise of Zoom. And so it's thinking about like what are the areas that apply to for me that applies to live virtual shopping? That's an area I'm excited about.

It's also live virtual conferences and even live virtual networking. So I just invested in a company called Lunch Club, which is a website is Lunch Club DOT III. And this business started off by matching people through a really smart algorithm where people could meet one another in person. But if you're meeting someone in person, don't you find like there's some difficulties with picking a coffee shop in between you parking? So they switch to be virtual, only removed all that friction and we can just jump on a phone call or jump on a zoom and speak to one another.

And they match people based on status and experience levels and interests. They really pay with some fascinating people. I've met friends through this company and it's it's a really exciting one.

Interesting. I have done it. I did it a while ago when it was still in person.

Oh, you did an in-person lunch club. I love it.

Yeah, but it was it was a little while ago, but I lived in San Francisco again now in L.A.. OK, great. I'm going to check out Lunch Club again. Life shopping is interesting. So I live. Am I shopping with friends or something? You think?

Gosh, there's so many different ways of doing it and there's so many different companies who are trying different approaches. And so, yes, you could shop with friends. Yes, you could do twitch for shopping. Yes. You can do a version where you're going in to see the retailer, but virtually you're literally looking around the store. So there's lots of different versions of it. But there's some super exciting companies emerging. And I feel like this is just the beginning.

You know, people have been looking at live virtual shopping in China for a long time. I think you look different in the US. It will not look the same as in China, but it's a really interesting opportunity.

And you say and so millennials right now are like 20s and 30s broadly, I think I think and GenZE are kind of teens. Now, will you be looking at like what are the GenZE in China doing or how do you how do you try to see the future? This is one of the great benefits of having nine offices globally, you can call up like our amazing China investor, James Ma, and say to him, Hey, I know you invested in Duoduo.

Tell us what some of the interesting trends are that are emerging in China.

Will Lightspeed lead like a series B? Let's say if Sequoia did the A?

I say two things. I say A, you can't be called speed to move slowly. So we always promise you that we will move quickly and not take up too much time. So you've got to be building your business. And secondly, it doesn't matter who else is investing, so it doesn't matter who else is investing in this round.

In a prior round, we will do our own analysis and we'll build our own conviction around that founder and then we will invest in you. And that's it. Like we want to be your biggest believe your biggest fan and be on that board with you and helping you on this journey for the next ten plus years. And so, yeah, we've invested in companies in the next round of the Sequoia. We've also invested in companies in this area and they've invested the Series B and C rounds.

So it goes both ways. How fast will you guys invest? What? I'm sure you track your metrics and say, you know, from first meeting the term sheet, that's, you know, on average, like, how fast are you moving?

It's definitely moving a lot faster now that I can definitely tell you, I would say, like in the last few years, the time has probably doubled from first meeting to timesheet or halved, rather, it's just going a lot faster.

And so if it's a seed company, you know, we can meet a company one day. The next partner made them the next day. And then we can present our investment recommendation to the partnership on the Monday and give them a timesheet that same day. So it can often be like two or three days and we definitely won't over the weekend for series. It's a little bit longer, but honestly, you're still talking days. It's no longer weeks or longer than that.

Yeah. All right.

OK, I have to ask you, just like a couple more random questions, I know we're tight on time.

How about celebrities? You have all these amazing celebrities in your portfolio. If I'm a startup and I'm working on something in the mental health space, like, do you have recommendations?

Like, how can I connect with the celebrity or or how should I think about it? I have a definite recommendation you can use.

Kamir, I actually think if you're an individual or a company cameos the most incredible way to get in front of a celebrity because people think about it.

Yeah, I was going to say you have to clarify what Cameo is, because I think of it as Snoop Dogg giving me, like, happy birthday wishes.

So Cameo started off as a way for you to order a video, shout out often about the message from a celebrity or influencer. Now we have 20000 influences and you can do some calls with them synchronously. You can send messages to them as well as getting these video shout outs, which is still absolutely the cool part of the business. And so if I was building, you know, a tennis app, I would make sure that I would go into Cameo and message, my favorite tennis people and see whether they wanted to be involved in the company.

It's just such a great way of getting in touch with these people at a pretty low cost, especially the dark messages. That's brilliant.

And I don't know why I didn't know that. I'm not sure if that's totally widely known or just not known by me, which is also possible.

Now, you are absolutely right. It is not widely known to get in contact with them that way, but it is definitely starting to give them the growth.

Totally brilliant.

If you could be a movie star or a v.c, which would you be? I would be AVC if I couldn't be a v.C, I would be a journalist, I've always thought that being an anchorwoman or being out doing all the doing all the international work would be really interesting. But I love being ABC. I wouldn't change the world.

You can start a podcast and it kind of scratches the itch. You get to like, you know, choose you go to international, you know, podcast reporting.

That's so true. I love it. Yeah, it's so fun. You have a ton of followers, do you? Who do you follow? Who do you respect in the industry?

I love that question, I often ask companies which companies they respect in the industry. Listen, I mentioned that a couple of those days before, but I really respect Bill Gurley and Kirsten Green. I think that both of them have really thoughtful tweets, and I think you learn a lot from them. I would encourage you guys to also follow Alex Tausig, my partner, who we also mentioned. I think Alex and also Jeremy Lowe just have really interesting insights, so follow them on Twitter.

Great. I do. In fact, you have had all these great success. Would you say that you do you consider yourself like a self-confident person?

Wow. You asking me questions that nobody else has ever asked me? I love it. I actually consider myself to be a lucky person.

And so maybe there's some self-confidence that goes into that. But I think I'm a believer that the harder you work, the luckier you get. So I don't think I've got anything by chance in this life. I think that I've just worked really, really hard and really wanted something. I believe if you put something out into the world and you work hard towards it, then it dramatically increases your chance of getting it.

Yeah, I completely agree. And you were an athlete, weren't you? Yeah, she's a sprinter. And I mean, you got to work hard at that, right? It's a similar. Yeah.

You have to train so hard and then the ultimate decision comes down to 12 seconds. So it's not like you say you spend years doing it and then it comes down to a very short period.

The motto, I love that. Anything else I missed and should be asking you today. 

No, this has been awesome, I love the conversation, your energy's amazing. 

Oh, fantastic. No, it's been great to have you. It's been a delight. Keep funding great companies and especially great L.A. companies. 

Thank you so much, Minnie. I have to say that over half my portfolio is in L.A., so I will not stop. I'm excited about it.