Hello and welcome to the LA venture podcast. This is Minnie Ingersoll host of the podcast and partner at TenOneTen. TenOneTen is a seed-stage fund here in LA. All opinions expressed on this show by me and my guests are solely our own.

Omar Hamoui is a partner at Mucker where he leads Mucker’s early-stage fund. Prior to joining Mucker. Omar was a partner at Sequoia, also on the early-stage team.

And of course, prior to Sequoia, Omar was a founder four times, most notably of AdMob, a very successful mobile advertising company that Google acquired for $750 million.

Omar, thanks for joining me today.

Yeah. Thanks for having me.

Great. Did I get my introduction correct?

Yeah, pretty much.

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Tell me about the Mucker structure. Just let me start there. Uh, I think I said that you're leading the early-stage fund. Is it entirely two separate funds?

Yeah. So Mucker has been, around, I think for nine years, maybe 10. There’s three about three partners there, myself, Eric, and Will. Eric and Will started a seed-stage fund. Um, and I joined about a year and a half ago, or we call our early fund, which is separate from

Um, and ironically later than seed, but the seed funds a $60 million fund writing, you know, zero to $1 million checks. And the early fund is $190 million fund writing. One to $5 million checks in companies that are, that are a little bit further along.

Got it. So your early funding is later than your other fund.

Well, early relative to the rest of the market. Not really relative to Mucker, but yeah, everything's relative, right.

Right, right. Um, and you also do some acceleration, which is separate or part of the same sort of seed structure.

It's part of the seat structure. Yeah. So accelerator is part of the seed structure and that really is just a more involved, more sort of rigorous, uh, program with, with the, with the partners and other companies there, it, you know, prior to, uh, COVID obviously the accelerator would be companies, many cases housed at the office, uh, uh, in Santa Monica.

And now I just think we've, you know, like everybody else pushed most of that virtual.

Yep. Makes sense. Um, well, I have so many questions about why you're doing it mucker, but I'll, I'll kind of reverse back and start with a little bit of how did you get here? And tell me more about your founder journey.

Sure. Um, so I, studied computer science at UCLA. Um, went back when I graduated, I think in 98. Uh, and so back then, There really wasn't much in the way of, uh, of a funding ecosystem in Southern California. And I was intrigued and interested in, in the startups even, even back then. And so I started a company out of college.

Um, it was bootstrapped and I did that four times. Um, two failures, two small exits all bootstrapped companies. And my, path was basically start a company, It doesn't go well or make a little bit of money and then get a real job to save up for the next company and then do that for you and then go back to starting your next company.

And so I, I went through that cycle numerous times on the way. I figured I should go to business school that would help me either in my real job or company building side. Uh, so I went to Wharton, and when I started my fifth company, which was AdMob, and that was my first opportunity to finally.

Raise money. So I had never actually even talked to a venture capitalist along my entrepreneurial journey up until that point. And then with AdMob, once I launched it, VC started reaching out to me, which was amazing. Like I thought this was incredibly cool. I went through two tours, to the Bay area from Philadelphia.

Um, I was my first year of business school and, and, you know, it had to be me AdMob was just me. It was just one person at the time. That was a really intriguing and eyeopening experience, but like, it wasn't, it wasn't getting done. I was just talking to a lot of people and I was learning that like VCs talk a lot.

but it's really hard to get them to give me money. And so I was getting pretty frustrated. And then, towards the end, I actually had a term sheet from, from a VC that I didn't like. And so I was asking a friend of mine and it was Monday. And my term sheet was ending on Friday.

and so I was asking my friend, what should I do? Cause it was, uh, exploding term sheet two days later it was Wednesday introduced me to said, I want to interviews with people at Sequoia. And I'm like, I don't a, is not going to do this. Nobody else did it so far. And I only have til Friday, so I'll talk to them fine.

But, I like, I don't think it's a good idea. So anyways, I did talk to, uh, Jim gets at Sequoia. He said I should come out. I flew out on Thursday and signed a term sheet on Sequoia, uh, on Friday. So it was a 24 hour turnaround cycle and they led the series a and ad mall. And I dropped out of business school and then, uh, was incubated at Sequoia's office and built from there.

And so that that's. That sort of led obviously later to Sequoia itself, but that was, that was, that was the journey. And AdMob was the one that finally worked. So, you know, I was one of those overnight successes that took over a decade, so yeah,

story. I didn't quite know you had an exploding Turkey on Friday. Well, what was it that was different about AdMob than your previous four. And what was it that, that Sequoia saw?

Yeah. You know, it's, it's funny. So I probably tend as an entrepreneur to be more on the fail-fast side. I think some people, you know, and it's not necessarily the right answer. I think there is a like stick through all the ups and downs kind of answered too. I was just not, it wasn't my personality type.

I started AdMob, After the two previous companies, we're also in mobile now, I I've started in 2006. So when people hear mobile, they think iPhone, there was no iPhone. Right? When I started out, it was back in blackberries and razors. And that, that world, and I had built two mobile companies before that.

And both of them were trying to build apps and sites on mobile. And at the time, if you wanted to get distribution, you had to do a deal with a carrier or a handset manufacturer. So you had to go to. Nokia and get them to pre-install you on the 66 20 or whatever it was. And that was how you would get distribution.

And for startups that was obviously like ridiculous, in terms of you couldn't do it. And so ad mums started really as a mechanism. My, my idea that mom was there's gotta be a better way to get for startups to get distribution. I didn't actually know anything about advertising. I had not worked in advertising industry.

This was not like a ad tech person doing something. It was a. Startup person and trying to make mobile startups like actually work. And so I think. In that vein, I built a number of features that were very, very tailored towards startups. Like the ability to target a specific handset, the ability to go by country, the ability to like even target by like device capabilities.

Because if you wanted a color phone versus a black and white phone, like you had to be able to target that stuff. And it just sort of took off on its own. So by the time. I met with Sequoyah. I was doing maybe $20,000 a month in revenue, as a single founder part-time and school. So like, it was pretty clear that there was organic interest and I think, you know, Sequoia and most investors really do value that authenticity and sort of the scar tissue built over the previous two companies that I was working in mobile.

Right. And so that I think made it easier for them and others to get interested. So it took, uh, it took time really experiencing the problem. To get to that answer.

So you're a field fast sort of person. The thing I see a lot with my portfolio companies and maybe it's me, not them, but I sometimes see people who don't have product market fit and are also are not quitting at it. And I think they just don't know the difference between when they have it and when they don't.

Yeah. And it is very tangible and until you've had it, you don't know what that feels like. And I remember because it was my previous two companies. Uh, the best way for me to describe it. And other people have used this analogy, right? But the best way to describe it is when you don't have product market fit, you have to constantly infuse energy for the company to move forward.

So it is the pushing, the Boulder uphill. When you have product market fit, the company's moving and the energy you need to infuse is to keep it on track. And you're exhausted just running after it. Right? So that is the Boulder downhill. So you're like running after the Boulder, Michelle also takes energy and you're making sure like, Oh my God, I don't want to hit this tree.

Oh my God. I don't want it to fall in this rut. Oh my God. I don't want him to go over this cliff. But like, you're you have it. You have to keep up like it's. Cause it's going to go. It has its own. Energy and I'm up, certainly ended up that way. And none of my previous companies had that. And I, and I, I agree until you've experienced it as a founder.

You might not know that's what it's like, but, but if you, you know, if every new dollar requires that you go get it, or every new customer cars that you go do it, then you don't quite have it, have it yet. And, and rather than infusing your energy into getting to the next customer. I think it's worth figuring out what you can do to improve the product or the way you're describing it, to get it, to have its own energy.

Cause, cause that's when things start to go well, um,

it was probably starting to run to Boulder was starting to roll down the mountain when you met Sequoia, is it normal? Can you D and I think things have gotten faster since you were raising, but is it normal that, that Sequoia can move that quickly or that I guess mocker can.

I think any, probably every venture firm has a story like that. Um, I was at Sequoia for six years. We never, we never turned around in term sheet in 24 hours. Uh, so I, that is sort of one of my, my special stories, I think so, no, I wouldn't say it's a normal uncertainly, most investors wouldn't, uh, What would rather have more time rather than less time.

Um, but, but it's possible. I think it's possible really with any firm, frankly, like if you, if you've, uh, if there's a partners who's particularly excited about it and they're able to socialize it with the rest of their partnership and really set it up, then it can get done. Um,

Yes. So just to continue on this story a little bit, because I think I heard this in some other interview that okay. The bowlers rolling down the mountain. You've got this amazing momentum. You've probably, I guess, raise other rounds, but does Steve jobs give you a call at some point?

Oh, yeah, that was at the end though, obviously. So, um, yeah.

you can give me the in-between, but I just, I thought that was too cool.

Yeah, so ad mob,  took about was about a four and a half year journey. lots of stories, with a great team. I'll give you one, one semblance at other tidbits that came from Adam, but like my VP of engineering has a guy named Kevin Scott. uh, AdMob uh, is now the CTO of Microsoft.

So, this is just like a sense of the team that like came together there. Right? Like it was, it was incredible group of people and it's not just him, but like, that's my that's usually my call-out in terms of like, uh, team dynamics. But regardless, I don't know if started pre iPhone, um, w R H R revenue was, distributed across probably hundreds of devices on hundreds of carriers.

Like if Italia, Movil decided they didn't like me, like who cares? Right. It was like 1% of revenue, no big deal. IPhone comes out. We, pay a lot of attention to it, our experimenting with it. And my Blunch is the first SDK of any kind, for iOS, right? So not just advertising STK the first STK period.

We didn't even know if SDK's were okay with Apple's terms of service. And we launched it a week after the app store launched. And so very quickly, almost every iPhone app that had advertising probably 90%. Plus we're not using ad moms advertising. and very quickly the iPhone became 50% of my revenue.

So now I'm a different business, right? Like heavily, heavily reliant on, obviously we're growing fast and it's wonderful, but also have really reliant on the iPhone. And so that is the time when I was in a meeting and then the office administrator came and she said, Steve jobs is on the phone and I was like, what?

And she's like, yep. Steve jobs is on the phone. And so I went to the phone, he said, hi Omar, this is Steve jobs. Um, we really like what you're up to. I'd like to chat with you about it. So, uh, would you like to come by for dinner tonight

Did you call bullshit? Like where are you? Like, no, it's not

No, I could tell it was his voice and I was like, sure, I will be there. funny enough, the, the other funny part of this story is apparently the reason he called. Is he, because he had emailed me twice over the past month and I didn't reply because my spam filter called bullshit. So I just went to spam.

Cause it's like, this is not Steve jobs. So I just ignored him over email for about a month before he, uh, just called directly.

but you ended up selling to Google, but, uh, so it

it did. Yeah, there's, there's a whole story there too. But, uh, ultimately  there was a back and forth, um, just a back and forth on, on, you know, terms around selling the company and price investing and everything else. And he was, he's a tough negotiator and, also part of what's interesting, but also made it tough and just a little.

I don't think Apple is like this anymore, but a little bit of history trivia Apple was a huge company at the time. And this entire conversation over about a six month time period only happened with Steve jobs, no M and a team, no lawyers, no nothing. It was just, I, I literally had a cell phone number, had my cell phone number and we would try and work things out like random times over the course of six months.

So a very, very himself involved in his business entrepreneur. Forever. Right. And I think there's something to be learned from that as well. ultimately it, didn't work out. We weren't able to come to terms and when our lockup, expired, Google had heard about it and sort of jumped in and that one we closed in three days.

So we were exhausted by that point.  and I have lots of lessons from that, but fundamentally the one I'll tell you and we can talk more about it is like, I thought, as an entrepreneur, I could sort of entrepreneurs want to do this.

Right? Like just go see what the price could be. Like, just think about it. You can't just think about it. Like what I realized after the fact is like, as soon as I started, it was basically over. and we can talk about more why that is, but that's, that's the, that's the lesson I learned there.

Interesting. yeah. Why is that? It's just not totally. I would've thought. Yeah, you you'll see whether Apple wants to buy it.

Here's the issue. So what happens is you as an entrepreneur, like, it's kinda like when you're raising capital, you sort of want to test the market and see what's out there. And that's a logical thing to do when it comes to M and a. You don't really get to test the market in that way, especially when you're dealing with a company that's so much bigger than you.

Um, and that there's a lot of excitement around probably in, in the market and your own team. And here's the reason they don't, you don't just walk into them and they say, Oh, we'll give you this much money. what they say is this is very cool. It's very interesting. We'd like you to meet a few other exacts and tell your story to them and you'd do that.

And they're like, that's really cool. we'd love to meet a few of the execs on your team. And hear more about what's going on there. Now, the feeling is starting to spread inside your business. Like maybe we're going to get bought, maybe this is going to happen. And then, they eventually, it's a point where they're like, well, we're thinking about maybe around this price.

but we kind of need to meet some more people on the team and see where people would slot in and how it all fit together and do some strategy planning meetings together. So now you're actually planning to like, Live with them and exist with them. And it starts to sort of like, Get into your head. Like this would be amazing.

Like you could have access to all these resources and by the way, building a startup is really, really hard. It's so hard. And you're so tired. And to think about this giant, like mothership that you could land in, where all of these things are wonderful. And there's so much resources and cafeterias and HR departments and like stuff that you don't have to deal with anymore.

It just gets in your head, you know, like you, you start to dream it and want it and think about the numbers and think about what you do with the money. And it just sort of, incepts this idea in your head that you can't unraveled. So we're at to fall apart. You're going to be devastated. And then if the next person comes along to try and buy you, which Google did, you'd be like, yeah, sure.

We're like, you're already in that mentality. Okay. That's my point. So it's not so easy to just go check.

Yeah. That's great.  Okay. I have, I can, I want to save some time, but I'm going as one more. AdMob question. So you mentioned Kevin Scott.

and you, you actually were kind of known as having like the AdMob mafia, right? Like you have so many of the team that have gone on to do great things. just give us some advice on hiring great people.

Yeah. so to that point, there's Kevin there's like a company called MoPub. That was started by some ad mob. Exactly. Drawbridge was started there's card IO. That was started by AdMob people. There's a company called keep trucking that's up. So there's a lot of startups as well. So I don't want to like isolate on, I mean, Kevin's amazing, but like on any individuals, like the whole team was really spectacular.

Um, so, uh, the person approved directly to Kevin, the director, our director of engineering is now the CTO of Instacart. So like it's not, not one by any, by any stretch. in terms of hiring great people. I think number one, we had it easier. So I don't want to pretend like we had it easier in that we were one of, maybe it was like 20 really, really.

high growth startups at the time in the Bay area, maybe there was 30, but now there's, there's just a hundred. So it's just harder. So I want to acknowledge that for everybody that I'm sure it's harder. Um, a big part of it for me it was really about the, the feel of the person more than the pedigree or background in the fee.

I feel, I mean, sometimes you talk to people. And it just feels like you've known them a long time and they speak the same language and they sort of have a similar viewpoint on how to build a business. What's important. What's not, what's important in the team, what they value in life in general. And that's what I looked for more than anything was that feel.

We were also very fast. So we did, when we were excited about someone, we did our work ahead of time. Meaning if we want to do references or do anything else. Cause if we're pretty sure we did our work ahead of time and frequently, when they would come in the office, we had a very organized interview process and I would frequently give people a job offer on their drive home.

Right. Which made them feel really happy and excited and wanted. And that's another part, like, I don't think you can be super overly. Pensive about these things. Like you just have to move and be aggressive about getting to people like it, it is an aggressive action that need to do and build a team that realizes how important that is and helps you find other people as well.

Like the network we built, remember, I didn't know anybody in the Bay area, but the network I built, the more and more people I hire, they knew people and that led to better people. And each of those, like the better people. And so building. Building a high, very, very high caliber, early team will let you continue to hire very, very high caliber people.

You want people that high caliber people want to work with, right? If you're, if you're head of department, X is just not that great people don't want to learn from that person or work with that person. Um, and, and mint to that point T you, what? I mean, none. I hired zero execs. Uh, in a, in a organized recruiting process, I didn't have recruiters for any exact right there.

Every single exec was organic. Um, and that was just because I didn't feel like we were going to get that. I don't know the serendipity and that feel and that authentic fit in a forced process.

So actually, it's a really interesting segue to my next question, which is obviously Sequoia knew you. Um, and you'd been a great investment and had a fairly quick exit, quick, large exit. Did you have the interview at all at Sequoia?

Yeah. Um, briefly, I mean, it was not, not much of an interview process, but I did, I met with, uh, some of the partners that I had interacted with, uh, as well, that certainly would have been a more involved and lengthy process if they didn't know me. So yeah, I did, but it probably more of a formality than, than, uh, that I, I don't want to pretend like I don't want to pretend like add more, that hadn't happened.

That I would have gotten this acquire job I would not have. So.

Yeah, no, I mean, you know, you probably went to,

Yeah.

but Adam was a great success, so yeah. Well then, so, so then you started Sequoia. What were the parts that, was there a learning curve and what were the parts that, that you really did have to learn going from operator to investor?

Huge learning curve. Um, so I mean, first of all, I never, I had never thought of being an investor, prior to that. So I was just not one of my career path. I wanted to start businesses and I, I wanted to build something big. Right. I also, frankly, you know, people talk about being a, Super passionate about what you're doing.

I agree, but with AdMob for example, I wasn't super passionate about advertising. I think it's like something a little wrong with you if you're super passionate about advertising. But,  I was super passionate about solving that startup distribution problem, and probably most, mostly I wanted to build something bank.

Like I wanted to build a big company that mattered, like as an entrepreneur that I had a, a love for that. Right. Um, but never wanted to be an investor just because it didn't feel like that's what you were doing as an investor. Right. I felt like you were picking and maybe helping, but like, I don't know. I don't know.

And I'd met a lot of investors that I just didn't I guess, think that that's what I wanted to do. Um, So after AdMob I took a couple of years thinking about my next startup and trying to build the next startup. And I just, I couldn't didn't have that fire for the ideas, or maybe I didn't have the fire to build maybe cause I did it.

I didn't want to do it again. I don't know, but I just couldn't get it, like get the fire going like I had before. And so that's when Jim Goetz, who was the partner at Sequoia who invested in a mob and, uh, who I knew really well reached out and suggested that I consider, becoming an investor. And so to your point though, And, and my thought was, well, I've done this entrepreneurship thing for now 15 years.

Um, that's a decent chunk of my career. Maybe I should, you know, I have the luxury of being able to try something else. So maybe I should try something else and see if I like that and, you know, have a different career experience. And so that's what led me to investing. Um, so joined Sequoia and there is an absolutely huge learning curve from being an operator to an investor.

It's maybe not learning the way. We think about it sort of information you have to consume and memorize and stuff, but it is a work style. Uh, and psychology that you have to adjust that takes time and to their credit. Everybody told me that, and it's just true. If you're going from an operator to being an investor, it just takes time to be comfortable in that new job and the best way.

And I, and it's, I think it's unavoidable. So my, my best analogy for that would be, it's probably more like moving to a new country than a new city. So if I move to, you know, Boulder or San Francisco or whatever, like it'll take me a couple months and I'll be okay if I move to France. It's going to take me a couple of years to be okay.

And that's what that transition is like. It takes about two years

And do you think that's moving to Sequoia? Like, I

now. It's just investing. I think it's just investing.

can you characterize the difference between, you know, LA and Paris or whatever? Can you characterize the difference between the investor

yeah. So a couple of things, right? Number one, you. Are not, you don't do anything as an investor. Like you don't do anything. You, you are part of a team that thinks about doing, about making an investment. If that team decides to make an investment, you're part of a team on the entrepreneur's side, helping to guide and give ideas to the entrepreneur, uh, to find a success.

You are not in charge. And you can't be in charge and you shouldn't look for things where you could be tons of help. You should actually look for things that don't need any help that's optimal. And I think many investors make that mistake too, where they're like, Oh my God, I know all this stuff. I could really, really, really help.

I could really, put a ton of energy and thought into this and help this PR help this company because. There there's only so much you can help, right. That, that is going to be taken and translated appropriately because it's not yours.

If it's a success, which you won't know for 10 years, you will have been a, an identifiable portion of that success. It's not you as an a, you like, you've definitely feel that it's you that's step one. It's up to you. You have no idea if you're doing a good job. Like for many years, I actually, probably now still don't exactly know if I'm good at being an investor, right.

It takes so long that you just don't get the feedback that you would want as an operator to tell if this is even going well. And it's, it's exhausting because you just don't know if you're doing a good job or not. Um, I think the, the, uh, uh, The third thing is that as an investor, time waiting is always optimal.

So as an entrepreneur, you're in a row, gosh, and a decision, a less perfect decision, uh, with, I mean, a faster decision with less perfect information is better than a more perfect decision a longer decision with more perfect information as an investor, as the opposite. If I could make the same investment.

At the same price, today or in a week, I should wait a week. And if I can do that in a month, I should wait a month. And if I could do that in a year, I should wait a year. So waiting is actually really good as an investor. all things being equal,

you're like you're opening whole horizons of my brain. I think that's like a big hangup I've been having.

Hmm, but, but it's not a bad thing. Like you learn more, you get more information and you, you shouldn't be forced into that decision. Right. Uh, and then I think, uh, the, the last part that's really difficult is that once you sign up for an investment and you really, you know, it's a Coya and, and at my current I'm sure any other really good investment firm, you really want to be a part of what's going on and you're go, you're signing up for this marriage with an entrepreneur.

You are not in charge. And you can't be in charge and you shouldn't look for things where you could be tons of help. You should actually look for things that don't need any help that's optimal. And I think many investors make that mistake too, where they're like, Oh my God, I know all this stuff. I could really, really, really help.

I could really, you know, put a ton of energy and thought into this and help this PR help this company because. There there's only so much you can help, right. That, that is going to be taken and translated appropriately because it's not yours. And you have to understand that.

Um, anything specific to Sequoyah? Like I would say, tell me if I'm wrong. I would say when I'm introducing companies for their series, a so tells me, tell me when your companies are raising and make the introduction. Whereas, Altos ventures or someone tells me, give me like three months, tell me three months before they're raising so that I start to get to know them.

Um, I don't know. Is there, is that a fair characterization of Sequoia? Like how fast do you guys move? When do you want to meet companies? That sort of thing?

uh, I don't know. It probably depends on the partner you're talking to at Sequoia. I think certainly there's just a lot of, uh, Inbound coming in, coming into the firm. But there is, I mean, I'll tell you as a choir, like there, there's also endless appetite to want to meet more companies. And a lot of our frustration actually.

So most of the frustration at Sequoia would come from having the Sequoia brand, which is fantastic and amazing, but. Makes people kind of scared to talk to you too early or want to wait until everything's perfect. Um, and so we had to push really hard to be like, guys, we invest in, we invested in seed stage companies.

We invest very, very early. We don't want, we're not a late stage fund. I mean, on the early team, we did have a late, late fund, which is part of the problem, but we're not, we don't want to be a late stage fund. We're like, you know, we invested in AdMob when it was one person we invested in Airbnb at the seed stage.

Like we want to keep reminding people of these things, but it's still hard. Given the Sequoia brand and just the throughput going through. And so, um, and I would probably say in terms of the time available, getting to know founders for months and months ahead of time, um, probably not something we always got to do, um, but wanted to, uh, it wasn't, it wasn't for lack of desire, right.

It might've been for lack of time.

Um, so sort of transitioning a little bit with. Well, first did you cover LA? Is that a, is that a true statement at all? And how did sort of Sequoia think about Los Angeles?

Yeah. So I spent a total of six. So after ad mob, well, first of all, I'm from Southern California. Family's in Southern California. I live in orange County. And so I have that. Anchor here. Right? So AdMob was in the Bay area after AdMob. I moved back to Irvine, spent two years here, started at Sequoia, moved back up to the Bay area three years.

Um, I don't know, miss home. I saw a lot of stuff going on in Southern California, frankly, felt like Bay areas certainly well covered. And we should think about another geo. And so I pitched the partnership to allow me to live back here again and cover Southern California for Sequoia. So yes, I did my second three years.

Uh, Of the six, I was living here and covering, Southern California for supply.

so tell me about then why make the move to Mucker? We all know and love Mucker here, but how did that come about? And, yeah, I'd love to hear more about it.

Yeah. So I got to know Mucker obviously through my work with squid, cause they were, you know, deal flow, uh, like many other LA firms here, um, ended up. Only make two LA investments. And both of them were MCO referrals and one was next trucking and one was papaya payments. Um, and so it was pretty clear like of the firms I had interacted with that was where the, thinking overlapped,  most and just certainly like the firm, On a separate thread, six years into my time at Sequoia. Again, I was based here in Southern California by choice. I loved the place and I felt like I had learned what I was going to learn and, you know, I wasn't home on the mothership, so I wasn't really going to be influencing, you know, you're sort of a regional sales rep, but basically it's basically how you think about it.

And, I just felt like there probably would be. More interesting ways to take advantage of what I had learned and what I'd done in my past. That was basically I didn't leave to join Mucker. I hadn't even talked to Mucker about it. I just felt like it'd probably come to a natural conclusion. So it wasn't there wasn't some dramatic.

Event that led to me leaving Sequoia I'm solve a really positive relationship with the firms. Still love them. It was just pretty, it was just kind of clear to me like, and the other thing was, if I stayed there, I didn't stay there. It wouldn't matter. Like Sequoia is still quiet. They're going to do great.

It's going to be fine. And I also wanted to be somewhere where it would matter,

and so you joined Eric and will. And do you invest just to clarify how it works? Will you invest in a company? Will you do like a later round from one that they've already done or are you mostly, is most of your funds set up to be like newly coming to you?

No, we will. We do both. So, um, certainly that's one of the reasons I actually wanted to join mucker. Um, so after leave miss quota, I took again a year or so to think about what was going on. And then I approached Eric and I was like, I feel like there's an opportunity. So I think this is, uh, the way that I think this is my theory on how the market structure, I think LPs have basically decided that you can raise up to a hundred million dollars, maybe one 50 for a seed fund anywhere in the country.

And you can write million dollar checks or below. However, when your companies get anywhere, they all have to go to the Bay area to raise money from one of these set of giant venture capital firms. That's how we like the market to be set up. And I was like, I think there's a chance to build something a little bit in the middle.

I think it's really difficult. And that's our point. I know in many other VCs there, we see a lot of really good companies that are coming from Atlanta or from Chicago or from whatever. They're not in the Bay area and they don't need $10 million and they need four, but we're just not. Really set up to work with those companies.

And so I think it's kind of easy for companies to raise a million. And then I think that series a, or the six, eight, $10 million round is really hard and it's a really tough filter. And I felt like we could build a fund to address that part of the market. So that's what we did. That's what, that's what I approached Eric and well about.

I was like, we need to build kind of a medium-size fund, which is our. Our, our early fund is the $190 million fund. And we need to write three to $5 million checks in these companies that are scaling and ready to go and look outside the Bay area. So that's that's, that was the idea and the approach of it.

And, um, uh, that that's, that's, that's the, the essence of the early fund. I think I lost your question in my

well, let me, let me ask a different question. Um, which is. So Sequoia is not set up. Like I'm a, I'm a doing really well seed stage company looking to raise $5 million. Is that hard for Sequoia? Because it's not quite an, a, not quite big enough for an a and bet, a little too big for the seed, or why is that hard?

so it's, it's an opportunity cost function, right? I think, I think, uh, Entrepreneurs frequently think about what they deserve based on what they see happening in the market. And sort of like I'm building a good company and my, this other one that's like me raise this much. Therefore I deserve this much has nothing to do with what you deserve.

Um, if you flip it over and you look at it from a VC standpoint, every early partner at Sequoia or any fund, probably, but I'll just, I can only speak for us acquire when I was there. We were, we could do maybe two deals a year. Okay. And there's 10 of us, so supposed to be 20 deals a year. those two deals, you are trying to each time returned to fund and the fund's a $500 million fund.

So you are trying to look for companies that are not. And if we, if we end up on 20% of billion dollar outcomes, 200 million, so it's not even the fund. So we're actually looking for like 5 billion, $10 billion outcomes. and when you're that early. and you're not from the Bay area, and we don't know you, and we don't know anybody who knows you.

It's a little hard to pick you over all as to be one of those two compared to every other opportunity. So it's not that you're not a good company or great company, perhaps is that it's early for us to know, and we have. Tons of other opportunities that we need to look at. And so, and we get to pick two per year.

So that's, that's the thing, that's the reason why it's, it's difficult. It's not because companies don't, aren't deserving of the financing and it's not because, um, firms in the Bay area are crazy. Either they're being hyper logical. They're just doing, they're picking the best opportunities for them based on their setup.

Okay. No, I buy into it. I think it's great. I'm glad you, I'm glad you have this. It's 190 million.

Yeah. That's right.

Great. Um, so I, I watched all your videos on the Mucker Capital, YouTube site  and so they're great. So I want to ask you about a lot of the things that you explain there. the first one is almost like an ad model one, but it was, again, this opened my mind.

I'd never heard it so well, I loved it was this notion of having to put your cross-functional team first. Can you just restate it because it was so good.

Yeah. So this was, uh, uh, idea, about the first team and second team. And, and th the issue is in startups and in many organizations, most people are part of two teams. And so it's easiest for me to think about the management team. So thinking about your management team, you've got at the management team, you know, you have a CEO, you have a VP of sales, VP of marketing, VP of engineering, et cetera, et cetera, et cetera, but let's just take.

The VP of sales. For example, the VP of sales is part of two teams. They're part of the management team I just described and the part of the sales team that they lead, same thing for the VP of engineering, right? Part of the management team and part of the engineering team that they lead. So when you are part of two teams, you have to kind of pick which one matters more.

What's your first team. And in most cases, people default to the vertical team. So the head of sales is a really first part of sales. And then second part of the management team. And they will come to the management team to fight on behalf of sales and to argue about things for sales and to primarily optimize outcomes for sales.

And that leads to all kinds of problems as an organization scales because the first team that their team they should really be a part of is the management team. That's their first team. They should be agreeing with their cross-functional peers and the CEO about where the company's headed and they should go back to sales.

And advocate for what the management team needs or what the company needs effectively from sales and same thing for engineering, right? You don't, what happens when you have that flipped is those two organizations, for example, will be fighting with each other, right? Like engineers will hate sales and vice versa.

And that's that both of those leaders actually should be going back to their respective teams, talking about what the organization needs and what the F their first team needs. Um, and that that's not just their right. It goes all the way down the stack. And frankly, up like the CEO CEO's first team should be the board.

Actually not the management team. Right. So it goes, it goes all the way. It keeps going up,

I have seen so many problems where, you know, I need engineering to build for my team. And that's really important to me that I get the solution that I need for my team. And I'm so guilty of that. Uh, so useful. another one that actually here's one that I was kind of curious is this you, is this Mucker, is this Sequoyah.

you talked about destiny control, I think is the concept. can you talk about that? Cause that's not totally intuitive for me.

that's a, I think it's, it's a combination of the three of us, uh, a Mucker, but the term is Will's Will's term to give him credit. And so the, the idea there is that when we make an investment in a company, We do not. And we're making them small, you know, three, four or $5 million investments.

They're not huge, but we are looking for a class of company that is not high burn. And we do not want to talk about the next round. This is not a bridge to the next, to the next to the next week. We really dislike chronically disliked fundraising. and destiny control means if you need to raise another round, we have to believe that is because you choose to not because you have to.

So if, if this company, like, after we make this investment, we have, we have a checklist. Right. And we have to say destiny control, like after this round, will this company have to raise again? Or will they choose to raise again? If they choose to raise again, that's okay. Because we'll be part of that choice, but we can't be forced.

We don't want to be forced to raise again.

Yeah, I don't think I've had that mindset. I think I've thought, you know, I want these companies to have multi-billion dollar exits and that probably will require raising more money. I mean, not that I want a capital intensive business. but I don't know that that's totally intuitive for venture, like does, does the COVID feel the same way that they want their companies to potentially be able to grow up without more capital.

I think probably. it was less explicitly stated at Sequoia. I think that was something we talked about sometimes, but I hear we're very explicit about it. And part of it is, you know, we're not, not at the seed stage. If we're giving company a million bucks, then it's pretty clear. They're probably going to need more capital.

But we, at our early stage, we actually think there are companies that could go all the way. We believe that. And more importantly, Even if they will require more capital, there's a difference between having to and choosing two and having choosing two means if things aren't great right now, if you're not getting the price you want right now, no big deal.

You'll just keep, you'll just keep going along for six more months and then raise and what that implies by the way, when, if you don't have to and applies, you have a working business at your scale and you can run it at your scale as long as you want. Now, if you choose to get 10 times bigger, of course, you're going to need to raise money, but that's the choice.

You don't have to, you can just keep going the way you are. Um, and what, what I think gets lost there. Sometimes people build businesses that aren't working at their scale. They have to, they have to raise money to keep going, but they're really just covering the problem with more money. It's actually not a functional business in the first place.

So that's what we're trying to avoid.

Right. Businesses should need more money because they're expanding, but they shouldn't need more money at this scale. I

Yeah. And you know, I, this is back to an ad mob story. What I used to do every three quarters I'm up, we would stop growing and I would push the company to cashflow positive for a quarter. Just to see, because a $5 million business is different than $10 million business is different than a $40 million business.

I just want to see that the machine is still working. So we grow for three and then cashflow positive for one and then grow for three and then Castro positive for one. I just want to see if it's still working. And so that's what I'm saying. No.

but this goes hand in hand with another thing he said. I told her, I watched all of your videos, which is, Oh my goodness. Some companies don't actually have a handle on their financials.

Not at all most actually at this early stage, do not think about their finances. So I don't know if there's more question, but I'm happy to talk more about it.

No just come on preach. I mean, you're preaching to the choir, but I think more people need to hear it.

I also am an engineer, right? Like I'm not an accountant. I think that, but, but still what I learned was that the financials of your business are, and I use this analogy all the time. This is the instrument panel of the plane you're flying. Right. And so, and as a CEO, this is literally what you are. Not only managing the business with, but delivering results to your board with and planning out the future strategy of the business with and showing how things are improving or not improving.

So this is equivalent, right? Imagine if you're a passenger right on a plane. And the pilot's like, I think we're at like 40,000 feet, but I'm not sure I'll be able to tell you. And like a couple of hours, we might be at 10,000, I'm going to go check with my outsourced, like altitude person. I'll let you know, like, that's basically how, like how ambivalent entrepreneurs can be

And I don't really have the ability to move it up or down, so it

Exactly. So that is, that is the, uh, uh, and I'm not sure if it's like metric or, you know, Imperials that like w w whatever, like no big deal, I'll let you know. So that is basically what most entrepreneurs do. And what they think about it is they think about it in a reactive way. Like, after I'm done with all this great work, I have to look at what the numbers came out at.

And then I have to get some outsource people to do it, and then we'll play with it. And then we'll see what it is. And here's what I think it will be next month, but I'm not sure that's how people think about financials. It's that's not what it is at all, right? Like this should be your live instrument panel and you should have a plan of what you're trying to deliver.

And the plan is, is, is proof that the people you're hiring and the way you're building the business and the products you're building are actually delivering what you thought. And you're able to measure them and getting good at hitting plan is a skill. But you need to have a plan in the first place. But beyond that, like many companies will come with just like cash accounting.

They're not even doing, you know, gap accounting. So they don't, you really, really hard to run a business like that. And what's one of the first things we work with entrepreneurs is just getting that tooling in place and shifting from forecasting to plan. I tell people, you forecast for it to rain. You plan to bring an umbrella.

You can't do anything about forecast, right? Like forecast is, is it is taking the responsibility off yourself. And that's not what I'm interested in. I'm interested in what your plan is.

Oh, that's really good. Oh, that's a good one. I like, I like the financial forecast analogy to the war.

Oh, that's really good. I'd never heard the analogy comparing your financial forecast to the weather forecast. Um, these are fun. Let me ask another one that came up from your Mucker videos. You said to move fast on breaking up with people when they're not right. What about founder breakups? Uh, same principles should still apply.

Apply. W w what about founder? Breakups? Should the same principles still apply or should you be working harder to make it work when it's a co-founder.

I feel if it it's gonna, it's gonna break. So anytime I've never seen it, like work and maybe I'm maybe I, I maybe I'm the fatalist in that regard, but once there starts to be, uh, that kind of friction, it only, it tends to exacerbate. Maybe it's fixable. I just haven't. I haven't seen it get fixed. I think what you should try and do.

Well, things are okay. Is, is figure out what the acceptable. Outcome would be and work that out while you're still talking to each other, you know, what's acceptable for the business and for each of us today, let's pretend this didn't work out. What would we do? How would it, how would it unfold and come to a good agreement so that you can prevent the battles at the end?

Wait, say that again. So pretend that it didn't work out and see, and play

Yeah. I mean, in fact, if you co-founder, you might want to have that really serious conversation with them upfront, like have a, you know, I have a prenuptial agreement with, with yeah, no, seriously. Like what happens if one of us leaves, how has our vesting gonna work? How has, how is, you know, who's going to give it to you have the final say what if, what if, what if we come to a point where we don't want to be working together anymore, what's going to happen?

everybody should agree on that. so that you can avoid the messy breakups.

Yeah.  let's see. One more question on sort of, is this you as, as McCurry or Sequoia, I think you talked some about like, not sweating the details. I think you're sort of talking about valuation here, like, which is like the size of the pie is what matters.

Oh, no valuation matters a lot. Uh, especially in Lucker

That's what I was going to say.

we'll know where we are. We are a pain in the butt when it comes to evaluation. I certainly do think the size of the pie is what is what matters. So ultimately, right. What I fundamentally I'm talking about in terms of details is, there are many firms and other places where they're going to focus on this particular wording in the term sheet or entrepreneurs, even right there.

Here's this particular wording, here's this item in the contract, is it, participating preferred or regular preferred or two X of this, or payback here that like, they want to insert all kinds of fancy details. Like that's not, that's not that's, that's, uh, that's also Sequoia thing, which is one of my partners there said we don't make money on the right-hand side of the decimal point.

Right. Like, we're not trying to like, like, like get the pennies out. It's more like, is this a multi-billion dollar outcome or not? If, so what do, what does the founder getting? What are we getting? What are the big puzzle pieces? And yeah. Is one of the big pieces, not one of the little pieces, that said, I also think founders, uh, and this is something by the way, I think about a lot from my own history. My first round at AdMob was incredibly diluted with Sequoia. Would I do it again? Absolutely. I would do it again. I was one founder, right. And I raised it. I raised a term sheet from Sequoia was hugely diluted.

Did it, was it way better than me keeping a hundred percent of that company? Yeah, it really was way better. And so, I think founders should also think about time in terms of like, if you could raise this money today and work with this firm today, and it's going to be 10% more dilutive to you than some other thing that would take you another month.

Is, are you going to, is it re, is it going to increase the value of this business more than 10% or not? And I think in many cases it really will even, even a month, even, even, you know, even a quarter, like it makes a huge difference in the delivery of value to your business and it more than pays for itself.

And so that's a, that time issue is something I think founders should be paying a lot of attention to. And these are tend to be again, back to the founder point. These tend to be zero. These tend to be binary, right? Like if it's, if it's a giant success, it won't matter. It just won't matter. Like if you own 18 or 19 or 16, like you're never going to be able to spend all the money in the rest of your life.

So it won't matter. Right. Or if it's zero, zero. So not really that, that concern

Um, one thing I didn't ask you about is what are your theses that you're investing into? Because I believe you're not really a thesis driven investor. why aren't you?

we were like the opposite of thesis driven

Yeah. You have a thesis then about not being a

yeah, we do. We have, so the way we like to describe it is we're looking for, and I'm looking this, and this probably just has to do with me being an entrepreneur, right? Like I'm looking for people who have deep expertise in a particular domain that they can tell me about.

And then they had an insight. That I would've never thought of. And then they built something and it's working behind that insight. And I talk about them as almost like cracks in the world. Right? Like they saw a crack in the world that no one else has seen. And they're able to now exploit that and benefit that mind, something from there that nobody that nobody else has and they're proving it, right.

They're like, look, there's, here's this crack that there's this precious metal under here. Look, I'm getting some, I'm able to do it really easily. And so that is what I'm looking for. So that usually actually feels like a surprise. Right. It feels like a time in, in a meeting where I'm like, wait, what, what you, what, what, how does this work?

How, what are you doing? Like, that's what I'm looking for. So that's the opposite of a thesis obviously. Right? Cause we're just like, we're looking for stuff. We even, we don't know what we're looking for. Cause we're looking to be surprised.

I like, I'm going to start using that with LPs. Thank you. Um, uh, how are you different from Eric and will

We're really actually, pretty similar. Like we've had very little, it's been a, but back to my original comment about working with people, you feel like you've known a long time. I feel like I've known them really long time. I don't think I've known them that long actually, but it just, it feels it's pretty, it's pretty organic.

I think in terms of our differences, I think will is, Really fast and able to deal with companies, even in the smallest scales, like on a weekly cadence, helping them think about what to do next, how to, continue, growth. He is more like emergency. Survival mode. He's the EMT of, of our firm probably.

Right. Like he can come in and keep him alive, get in the hospital next, next, next. Right. So that's, that's probably, well, I think I'm in the middle, I like to spend a lot of time thinking about product strategy and worth the positioning of the businesses relative to competitors and other people in the market.

And what are the things we could build to, Help a company get to a really strong position in the market. And I think Eric's probably the longest term thinker of us. So I would say, I guess one way to bifurcate how we're different is sort of short, medium long in terms of like the timeframes we're thinking about.

Right. And our decision making and how we approach company.

I like that. I will put you on a spectrum. I like that. Um, anything else on Bucher or anything else that you guys are doing that I should make sure to cover?

I mean, the only other thing I would say is that, we're pretty clear about what we, what we're looking for and what we are, and also pretty clear about what we're not, um, and what we're not like you, you heard, there are some kinds of companies that do take a ton of capital, right.

Or that are really, really deep. Tech or that you're going to need to be doing R and D for four years. Like, we're just, we're, that's just not our, our DNA, our culture. And we were pretty clear with entrepreneurs about that when we meet them,  is the name, the place, the office. It's a very, very bootstrapped kind of culture

I was wondering what word you were going to use that straps.

if you come by the office, you'll see, like, it is not a fancy, shiny in an office building VC firm. It is not like it is, it is a. Yeah, it's a rough

your culture. You want some gritty hustle.

It's a gritty. Yeah. It's a gritty hustle kind of place. And we really mean it. Right. And so I think that is just something good for entrepreneurs to know about us.

Like we're looking for where we are. We are looking for, for the gritty hustle, part of the company building some of these mantras right about VC firms ended up being very real with Sequoia.

I would say the thing that's really realistic is hunger and ambition. Like Sequoia is a very ambitious place. I remember I'll tell you a story. when I wouldn't remember AMA was funded, it was just me. So I was incubated at Sequoia as office. So I got to see them like go through their business about four.

About maybe four months after ad moms funding. I was at the post office and YouTube got acquired. Uh, and YouTube was acquired for $1.5 billion, which back then was a lot of money. Um, and it was maybe like six months after Sequoia led the series a or something like it was a ridiculous turnaround time.

Right? Like, especially back in those days. So I was like, cool, I'm gonna go to the office. There's going to be champagne and balloons and streamers and whatever. And I got there and they were, they were, they were bummed. Like everybody in the office was, there was nothing, first of all, and they were kind of bummed and they were bummed because they knew it could've been so much more.

and the same thing happened with Emma, by the way, like when I was trying to sell the company, they were supportive as opposed. They didn't want me to sell the company and I would argue they were right on both counts. Like, I can tell you the whole story of like, why I made the decision to sell it too early, different topic, but nonetheless.

That place I would say is infinitely for better or worse, infinitely, ambitious, infinitely, hungry. and, uh, that's your macro point? We re we're not, it's not marketing. We really are like bootstrap hustle. Like that's, that is micros culture. So like it's important to, figure out where, who you're dealing with.

yeah. Bootstrap hustle, but in a really positive way,  I think you guys have built a great brand and just all sorts of great momentum and Mucker right now, especially with you on board. So, I mean, I appreciate you coming on the podcast to tell me.

Yeah, thank you for having me. I really appreciate it as well. This was a lot of fun.