20VC: Multi-Stage Funds Investing At Seed Are Option Value Investing, Why The Biggest Enemy For Venture Firms Is Group Think and How Running Companies Changes Your Investment Mentality with Manu Kumar, Founder @ K9 Ventures

Manu Kumar is the Founder @ K9 Ventures, one of the leading seed firms of the last decade with a portfolio including the likes of Carta, Lyft, Twilio, Auth0 and Lucidchart to name a few incredible companies. Prior to K9, Manu was either the founder or co-founder of 4 companies, 3 of which with successful exits and the 4th being the fantastic Carta. Manu also has an incredible model with K9 where he not only invests in companies but also founds them and is currently the founder and CEO @ HiHello, the company that allows you to network smarter providing digital business cards designed to help you curate and grow your network. In Today’s Episode You Will Learn: 1.) How Manu made his way into the world of venture having founded 4 prior companies and how he came to found K9 and be one of the OG's of pre-seed funding, having coined the term? 2.) What does Manu believe have been the biggest and most significant changes in the early stage market over the last 7 years? How does Manu evaluate the rise of operator and scout funds? Would Manu agree with Semil Shah, "founders are voting with their feet and taking multi-stage money at seed?" What advice does Manu give to founders on taking multi-stage money at seed? How does Manu evaluate their aggressive movement back into the seed stage? Why is it? 3.) Given Manu only makes 3-4 new investments per year, how does Manu think about and assess his own portfolio construction today? How does Manu think about building temporal diversification into the portfolio? What does Manu believe is the biggest mistake early-stage managers make in the first few years? Why does Manu believe that "group think" is so dangerous for funds today? What can they do deliberately to avoid it? 4.) Manu not only invests but also founds companies at the same time, how does Manu split his time and what does his day look like? What are the benefits of investing and operating simultaneously? What are the biggest challenges and drawbacks? What elements did Manu believe as an investor before starting his new company, HiHello, that he has now changed his mind on, post founding the company? Items Mentioned In Today’s Show: Manu’s Fave Book: How to Win Friends and Influence People Manu’s Most Recent Investment: Workona: A Better Way To Work As always you can follow Harry, The Twenty Minute VC and Manu on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  You are listening to the 20 minute VC with me, Harry Stebbings. And with self isolation, there is more to see on Instagram. And so you can see all things behind the scenes there at H Stebbings 1996 with two Bs. And I always love to see you there. But to the show today, and I'm so excited to welcome back to the show, one of the OGs of seed funding, Manu Kumar, founder at K9 Ventures, one of the leading seed firms of the last decade, with a portfolio, including the likes of, check this out, Carter, Lyft, Twilio, All Zero, and Lucid Chart, to name a few incredible companies. And prior to K9, Manu was either the founder or co-founder of four companies, three of which with successful exits, and the fourth being the fantastic Carter. Manu also has an incredible model with K9, where he not only invests in companies, but he also founds them and is currently the founder and CEO at Hi Hello, the company that allows you to network smarter, providing digital business cards designed to help you curate and grow your network.

• 0:48Harry Stebbings?

  I do also have to say a huge thank you to Michael Kim at Sendana and Henry Ward at Carter for providing some fantastic questions, suggestions today. I really do appreciate that.

• 0:57Harry Stebbings?

  Before we move into the show today, though, I wanted to take a moment to mention HelloSign, a great example of a company that found success in building a product focused on user experience. HelloSign is an effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. They raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million. Check out hellosign.com/20vc to join the thousands of companies and founders, including me, who value fast, secure, and simple e-signatures. It really is a must. And speaking of amazing products there with HelloSign, the team over at Pendo, the product cloud company, just launched a free product performance benchmarks microsite, where you can see how your product status up against your peers. And they gave me this incredible sneak preview of it, and my reaction was, bleep me.

• 1:45Harry Stebbings?

  I know so many founders who are desperate to compare their products to competitors. And that's what Pendo has done. They've analyzed more than 1,000 software products and created benchmarks for startups, scale-ups, and enterprises across five different categories. It's all presented with some pretty slick visualizations, and you should check it out today at pendo.io/products-benchmarks. That's pendo.io/products-

• 2:10Harry Stebbings?

  Dash benchmarks and finally creating great products is why you start companies not to track financial statements or make cash flow spreadsheets. However, now we have pilot and pilot for bookkeeping gives you back the freedom to focus on your business and your product. Every month, your dedicated account manager will send you an accurate, detailed financial report and pilot does accrual basis, bookkeeping and quick books online. So you're never locked into a proprietary platform. Plus you'll work with the same person each month. So you can really rely on them to become an expert in your business. And with pilot, you can say goodbye to exporting CSV files and emailing attachments to a bookkeeper you can never get a hold of. Get your company's books in order today and get your time back. Check them out today at pilot.com/20vc. However, that's quite enough from me.

• 2:54Harry Stebbings?

  So as I said earlier, delighted to welcome back one of the OGs of seed financing, Manu Kumar, founder at K9 Ventures.

• 3:06Speaker 01

  You have now arrived at your destination.

• 3:10Harry Stebbings?

  Manu, what can I say? We did this first episode such a long time ago. Hopefully I've got a little bit better at interviewing. Been incredible few years for K9, but thank you so much for joining me once again today.

• 3:19Speaker 02

  It's my pleasure, Harry. And I was just noticing that I'm episode number 2697 and I'm like, my gosh, you're a force of nature.

• 3:27Harry Stebbings?

  You're like, you're basically like, my God, this guy's got so old in the last few years. It has been a few episodes for sure, but I do want to start saying, Manny, as you know, setting a little bit of context and for anyone that maybe didn't listen to our first episode, when it was pretty much just my mother listening, tell me, how did you make your way into the world of venture and come to found K9?

• 3:45Speaker 02

  Sure. So for me, the journey has really been about starting companies more than even venture. I started my first company when I was 20. To date, I've probably started about six or seven companies that I've co-founded and it was in 2007 when I was graduating from Stanford with my PhD and I was thinking about what I want to do next. And I realized the thing that I love most is actually working with companies in their earliest stages, right from zero, from stage zero, when there's the founders and an idea onwards. And I realized that's the stage I enjoy the most. And I also noticed that there was a gap in the venture ecosystem. And that's what got me to actually consider actually starting a new fund in order to both

• 4:26Speaker 02

  address that gap in the ecosystem and essentially create a job for myself that I would love doing.

• 4:32Harry Stebbings?

  Totally, and I mean, you have done such an incredible job with that with K9. And as we said before, you are the OG for pre-seed, having coined it in your AGM deck in 2013. But the landscape, it's honestly, it's moved so much over the last seven years, as you know. So I guess with a front row seat to this and having coined pre-seed, which I think you should definitely get royalties from, by the way. What have been the biggest and most significant changes in the early-stage market over the last seven years, do you think?

• 4:57Speaker 02

  I think the market has changed very radically in the last seven years. It's changed not only at the earliest stages and kind of the pre-seed emerging as a whole new category is one change. But it's also changed very dramatically at the later stages. If you look at the new venture landscape, the value creation has really shifted to private markets. Companies add more value while they are still private than sometimes and they do even after they've gone public. And that has led to just more and more capital coming into the private market ecosystem. It has led to companies staying private longer. It has led to companies raising many more and much larger rounds of financing while they're private as well.

• 5:40Speaker 02

  So I think all of these have had an impact across the entire spectrum of venture financing. If you look back to maybe 2009 timeframe, so going back almost 11 years from now. At that time, a seed round was $500,000. Today, a seed round is $2-3 million, if not more. And founders still need to be able to get to that very first amount of capital in order to figure out whether they even have something or to put together a team. And so that is what I refer to today as pre-seed, which is essentially the first institutional capital that a company is raising that is mostly used to build the team and the product. So that's on the early stage and then we've all seen what's happening at the later stages

• 6:23Speaker 02

  with companies raising hundreds of millions of dollars in sorbitant valuation levels.

• 6:28Harry Stebbings?

  We all have indeed in later stages changed so dramatically. I think in the earlier stages, you mentioned the excess capital there in the later stages. But in the earlier stages, we've seen also just a number of different entrants and one of them is the rise of operator funds and scouts. Seems that everyone's a scout these days, but I do have to ask, how do you think about and analyze the evolution and rise of operator funds and scout programs? Really moving into that pre-seed and seed stage?

• 6:51Speaker 02

  I am a big fan of previous founders becoming investors and that's effectively me, right? Like I've founded a lot of companies and I feel like if I want investors, I want investors who've actually walked in a founder's shoes. So I'm a big fan of operators starting venture funds. Honestly, I have not had a lot of experience with scouts. The very few of my portfolio companies actually have capital in them from scouts. And it's just not something I've had a lot of visibility on to.

• 7:19Harry Stebbings?

  No, I do agree and I think they can tend to concentrate in a lot of respects. The other element is also we've seen large multi-stage funds move into seed and pre-seed. Now, this is definitely one that gets my blood boiling in certain cases. Samuel Shaw said on the show that founders are voting with their feet in taking multi-stage money at seed. As I said, you've got a front row seat for this. Would you agree with this statement?

• 7:40Speaker 02

  I think founders may be voting with their feet, but what they're really voting for is the easiest capital they can get their hands on. And the primary imperative for a founder is to get their company funded. And so their imperative is to take the easiest of the first dollars that they're offered. And if they're offered multiple, then the imperative is to take the one that's offered to them at the highest valuation. And so, yes, I can see founders actually taking money from multi-stage firms, but I've also seen that go bad many, many times. And in particular, because for a lot of these multi-stage firms, the capital that they put into a company in the early stages is just an option value.

• 8:19Speaker 02

  And if it's just an option value, then if things don't go well, that company is going to have an incredibly difficult time at raising capital. And this has played out on many, many occasions. Founders are optimists at heart and so they always expect the things will always go well. But they do need to be practical and real. Things are not always going to go well and even if things don't go well, you want your company to survive. You want another shot at gold. That's the advice and the caution that I give to founders who are raising larger rounds than they showed at higher valuations, which is like you want to make sure that your company survives and you don't just want to be an option value for a bigger fund.

• 8:58Harry Stebbings?

  Can I ask, do you think that their presence in the earliest stages of financing is here to stay? Or do you think it's actually just emblematic of an increase in terms of later stage investing pushing them further down the funnel? And also just in the kind of increased desire to create value and generate returns at the earliest and most price beneficial points today?

• 9:15Speaker 02

  I've actually struggled to kind of figure out exactly what's happening there. And in a lot of cases, I think the answer may actually be something even simpler. And the simpler answer may be that a lot of the bigger firms have added new people to their ranks. And what better way for a new person to kind of get started than to actually do a few small investments to get the ball rolling?

• 9:37Harry Stebbings?

  Yeah, absolutely. No, totally.

• 9:39Speaker 02

  In a lot of cases, I feel that some of the multi-stage firms coming in and investing at the seed stage is not a function of a calculated strategy, but more of essentially providing a safe playground and training wheels for some of the new folks who are there. And that serves a very good purpose. The question is, how long does that last? And my hypothesis is that that is something that will eventually phase out.

• 10:04Harry Stebbings?

  Yeah, no, I do agree. And I hadn't actually thought about it as a kind of training wheels or education ground for newer partners. That's a super interesting perspective. And also interesting because you said about the time to value money there in terms of the fastest and the money that comes first for those founders. The thing that really troubles me, Manu, honestly, is the compressed fundraising timelines today with such excess capital. How do you think about the compression of fundraising timelines today for you investing?

• 10:27Speaker 02

  So at the stage at which I'm investing, at the pre-seed stage, I still have the luxury of actually spending some time with the teams and getting to know them before making a decision to invest. That's also a core part of my model because I only do maybe three to four new investments in a year. So I have the luxury of being extremely selective. And being able to spend time with the teams before determining to engage with them. But when I look at what is happening in later stages of the ecosystem, I fully agree and share your concern that fundraising rounds are actually moving very quickly. They tend to be highly competitive and it's a tough time to be an investor is how I would put it.

• 11:06Harry Stebbings?

  You said that about doing three to four new investments a year and I'm sorry, this is off schedule, but I'm too intrigued. Being kind of the solo GP that you are, with three to four on a traditional fundraising kind of life cycle, that'd be 12 investments per fund. How do you think about portfolio construction today with K9 and with the dollar's raise that you have AUM?

• 11:24Speaker 02

  So you're hitting on one of the fundamental reasons why K9 is different is because first my investment period is five years. So I only go out to market with a new fund every five years and not every two to three years. And so we're doing three to four investments over a five-year period. I'm essentially shooting for between 15 to 20 portfolio companies per fund. And that's pretty much the number that I've ended up with. Fund one had about 19 portfolio companies, fund two had 14 portfolio companies. And I'm about a third of the way in fund three where we have about six investments so far. And I still have several years to go before we'll go out to market for the next fund.

• 12:04Harry Stebbings?

  Have you witnessed what every other investor I think is feeding the pain off, which is increased initial check sizes and decreased ownership? Has that been something that you've witnessed too, even at the pre-seed?

• 12:13Speaker 02

  At the pre-seed level, I would say that the check sizes have kind of inched up a little bit, but only marginally. My initial range used to be between 400 to 600K as an initial investment. I would say I'm probably closer to the higher end of that range today than I was earlier. But I've still tried to keep it very stable and disciplined. I'll also emphasize, Harry, that I take the opposite effect. I have no formal. I have absolutely zero fear of missing out. And so if there's a company that has got multiple term sheets or offers even at the pre-seed stage and stuff like, I'm not going to be chasing that deal and trying to move up in valuation in order to win that deal. To me, there's a matchmaking process that needs to happen.

• 12:58Speaker 02

  Half in between, I need to choose the founders that I want to work with and they have to choose whether they want to work with me. So it has to be kind of a mutual decision. And if it's not a mutual decision, there's signal for me in that as well. So life's too short to basically chase after people who don't want to work with you and they were and you're working with them just because you're giving them a higher valuation, that's just not my MO.

• 13:21Harry Stebbings?

  Totally with you there in terms of that really kind of mutual request and desire. I am interested in terms of the portfolio again, like we chose and we very much believe in a very concentrated strategy too. We always said twenty to twenty five, we got a lot of LPs say, oh, that's uncomfortable from a diversification perspective. We feel a lot more comfortable with our thirty five to forty company portfolio funds. Did you get a lot of pushback on diversification when you presented the portfolio construction?

• 13:46Speaker 02

  My LPs tend to prefer a concentrated portfolio. And so most of my LPs are kind of pushing me in the other direction, which is like, go ahead and take a, take as much ownership as you can in a company. Do fewer companies and if you win with fewer companies, you're going to have a massive outcome.

• 14:04Harry Stebbings?

  Yeah, no, I think that's the wiser, we believe the wiser approach. It's interesting, kind of, we said about also the check sizes notching up there. And I spoke to Michael Kim, a mutual friend of both of ours before the show. And he said about founders now skipping pre-seed altogether. And his question was, how do you avoid adverse selection with founders who agree to do a pre-seed financing versus founders who don't do pre-seed and go straight to a larger round at a higher valuation? How do you think about that adverse selection?

• 14:30Speaker 02

  So first, that's a genuine issue that faces most pre-seed stage funds. And I think the two people that I can think of who've been doing this the longest are probably me and Tim Connors at Pivot North. And Michael and I have talked about this often as well. I think the things that kind of helped K nine from kind of avoiding adverse selection here is the first thing is just the number of investments, right? So if I'm only making three or four new investments in a year, it's an incredibly tight filter to begin with. And so I'm specifically looking for those companies that are a fit both for my investment thesis and my model and for companies who want to work with me. And I want to work with them. So it's a it's truly comes down to that matchmaking

• 15:12Speaker 02

  process is the first thing. The second thing is that it comes down to making a call on people. I'm literally looking for founders who I can kind of to use my my kids just watch Aladdin again. So the term that's in my mind is diamond in the rough. So I'm looking for people who are that diamond in the rough. And my job as a pre-seed stage investor is to actually help them show that they are a diamond by actually doing the cutting and the polishing that's required.

• 15:38Harry Stebbings?

  I love that diamond in the rough analogy. That's fantastic. I am really interested because again, I'm kind of picking these disparate points. I hope it's okay for me to kind of unpick your statements. But you said about kind of the five year fund cycle there. And I loved your piece on time really being the enemy for startups. I guess my question for you is, is the five years temporal diversification based on fears around macro refinancings and you then having to kind of refinance the portfolio yourself and so ensuring that you have this kind of temporal diversification across the five years? How do you think about that temporal diversification?

• 16:08Speaker 02

  So I'd say first, Harry, that's a very astute observation because it's not one that I made.

• 16:14Speaker 02

  And I think when I think about it, yes, the the five year investment period is probably adding some level of temporal diversification to the canine portfolio. But that was not the reason why I chose a five year investment period. The reason why I chose a five year investment period is because the thing I enjoy doing most is actually building companies. And I truly think of myself as a company builder rather than a company picker. And so I'm trying to optimize spending my time on helping founders to build their companies. And I just figured that fundraising takes time, even when it goes quickly, it can it'll take at least three months or more or more in order to kind of just herd all the cats together for pulling together a fund. And I just figured I would rather take that on less frequently rather than more frequently.

• 16:59Harry Stebbings?

  Listen, having been through a fundraiser process, I know the joys of fundraising. So I completely sympathize with you there. I do have to ask, because you know, it's such an interesting structure you have with K9. I benefit so much from the decision making with my partners today. My question for you is, how do you think about decision making as a solo GP? And really look to kind of optimize that for you and for the fund itself?

• 17:20Speaker 02

  By the way, that topic, we can have a whole long, long conversation on because it's something I've thought for a long time. First thing is, I have the benefit of having been a solo founder before. And so when I started my first company back in 1996, I started that as a solo founder. And so I kind of learned how to deal with that. And I think that experience of having been a solo founder is critical for me today, being a solo GP. Because I have to be comfortable in making a judgment call, effectively trusting my gut in a lot of cases. In fact, just this morning, I tweeted about taking leaps of faith, like where you're operating in the absence of complete data. And how do you and decision making in the absence of complete data is not easy, it's difficult.

• 18:04Speaker 02

  The benefits of being a solo GP are that you are also a hundred percent accountable and a hundred percent responsible. Like if you make a mistake, it's your mistake. You get something right, you got it right. And so it's just somewhat liberating and very refreshing in a way that I am fully responsible for how K9 does. And it's all on my shoulders and I'm comfortable with that.

• 18:27Harry Stebbings?

  I do get your accountability for sure. Before we move into the founding companies element, which I definitely want to speak about. But it's the element that you said about time being obviously the enemy for startups. When you look at the cohort of different venture firms that we have today, what do you think is the enemy for venture firms? In terms of their process, in terms of their ops, their structure, their workflow? What's the enemy for venture firms as a parallel?

• 18:49Speaker 02

  I think the biggest enemy for venture firms is actually group think. And that kind of almost goes back to the solo GP versus a partnership type of a model. There's a lot of benefits to having partners and people questioning and serving as a as checks and balances. But there's a limit to where it's healthy. In the extreme. You can almost end up in a situation where a fund is operating based on group think and consensus. And that to me is extremely dangerous for a venture fund. The most interesting companies are typically doing something that is unusual and different. And you just have to have a gut and conviction on, do you think this can work? So I describe it as that, like, when founders come in to pitch me and K nine, they're coming in and painting a vision of the future.

• 19:34Speaker 02

  And my job is basically to make a call on, do I believe in the vision of the future that they are painting? And if I believe that vision of the future, the next question I have to ask myself is, do I think that these are the people who can actually make that vision of the future come to life? And if the answer to both of those two questions is true, then I should do the investment. So I think the group think is probably the, the answer that I would give to like, that's the biggest enemy for a venture firm. And just having diversity of opinions and not requiring consensus is super important in a venture fund.

• 20:05Harry Stebbings?

  I think it's totally unfair to actually be group think to venture firms with such individual thinkers, our VCs. I, I do want to touch on the founding companies element because you said there about really being an innate founder. And as I said, such an interesting structure with obviously K nine also creating a new founding companies alongside investing. Honestly, I kind of look at it and when we email back and forth, I go, what on earth does Manny's day look like? So from a more practical perspective, how does it mean that you split your time between operating and investing? And what are the challenges of doing both simultaneously?

• 20:37Speaker 02

  The simple answer is it is not easy. It is incredibly difficult to be operating and investing at the same time, mostly because of a function of time. And I found companies because that's what I'm inherently passionate about. And I kind of jokingly say that in order for me to co-found a company today, I have to get pissed. And I have to get pissed about something being wrong in the world that I feel could be done better. And if I keep getting that same feeling over and over and over again, and I don't find a company that is actually solving that problem, then my answer to that is that I'm actually going to start a company and I'm going to damn well solve that problem. And so this is something that has been a core part of the K nine model.

• 21:22Speaker 02

  And so we've talked about Karta before. And so I'll tell you the brief story behind Karta is that in two thousand and nine, when I did my first official investment out of K nine, I ended up receiving a massive stack of paper for the closing docs and a paper stock certificate. And I'm sitting over there wondering like, what do I do with this stock certificate? And I called a bunch of GPs and I asked them, what do you do with your stock certificates? And they said, well, I hand it to my CFO and my CFO walks it down to the bank and puts it in a safe deposit box. I'm like, well, that's a problem for me because first I don't have a CFO and second, I don't have a safe deposit box. So what do I do with this piece of paper? And that that became the kernel for what started Karta. Because it was like, why is it that we can buy stock in Apple and Google

• 22:07Speaker 02

  and never touch a piece of paper, but we invest in a two person private company and we end up holding a piece of paper? It just made no sense. And I spent three years socializing that idea with various teams in order to get them to start a company to solve that problem. Until in two thousand and eleven, I finally met Henry. And in two thousand and twelve, I pitched him on the idea. And in fact, I had to pitch him twice because the first time it didn't stick. But the second time it stuck and that's how he and I ended up starting what is today Karta.

• 22:35Harry Stebbings?

  I mean, I absolutely love it as a story. And yeah, you know, my things on Henry, I think he's exceptional. I I do want to ask you because it's such an interesting kind of dual mindset. How has on the flip side, investing changed the way you think about starting and building companies? Having seen so many do it from the investor seat?

• 22:52Speaker 02

  So that's actually a fascinating question because I just talked about this at my LP meeting in October of last year. And so the most recent company that I have co-founded and I am actually running as CEO is called Hi Hello. And this is again, coming from a personal problem that has bothered me for over two decades in terms of I want tools that help me to manage and grow my network. And I just don't have the right software tools for doing that. So I essentially decided I'm going to start a company to do exactly that. And the experience of actually having founded a company. And now running that company as the CEO has changed my mindset as an investor.

• 23:32Speaker 02

  Right. There were fundamental learnings from Hi Hello that have now changed what I look for in companies that I would invest in. So I'll give you one concrete example. And in fact, even till today, if you go on the K nine website, you will see blog posts that I have written from many years ago that talk about no outsourcing, no distributed teams, no remote teams, and I want everybody in the same room working together. And it was only after starting Hi Hello where I spent a year trying to build the team and recruiting in the Bay Area has just become such a nightmare that the only option was to go with a remote team. And it was through that process that I'm like, wow, my fundamental belief that I do not want to have remote teams is wrong.

• 24:15Speaker 02

  And I need to actually embrace the new realities of the world and actually learn from that and adapt to it. And so now, when I'm talking to companies that I would invest in, I'm totally comfortable with them having remote teams. And in fact, I advocate that they should have remote teams. So that's just one example. Another example is as an investor, you are not at the cutting edge of all the technologies and applications and products that your portfolio companies are using. As a solo GP, I never really understood Slack until I actually started using it for Hi Hello, especially with a remote team. Like, that's what made me understand, like, oh, this is how it's supposed to work. And in fact, I now have a very strong opinion on things you should and shouldn't do on Slack,

• 25:00Speaker 02

  which I'm going to write a blog post about in the near future. But you actually get to experience the new stack, right? Like, what are you using for payroll? What are you using for insurance? What are you using for communication? Right? Like, as a CEO, I get to actually experience all of that. And that actually opens up my eyes in terms of like, oh, these are areas where there are unsolved problems. And it would be interesting to actually have new companies that could come in and actually solve these problems. So I think the the the combination of being an operator and an investor can be very, very complimentary and helpful in terms of in terms of even thinking about which companies you invest in.

• 25:39Harry Stebbings?

  Can I ask, do you agree with founders actively aiming for investing? And what I mean by that is, you know, a lot of high-growth companies today have had founders where they've, you know, sold some secondaries and they're actively investing, maybe doing five to 10 deals a year even. Do you agree with that, having had this experience and perspective?

• 25:54Speaker 02

  I do. I think founders helping founders is incredibly powerful. And if you're a young founder, getting somebody else who has founded a company a few years ago that is much bigger than where you are today. Just being able to access that person and their advice in critical situations is hugely valuable for the early-stage company. So I think it's actually valuable for the early-stage companies to have other founders as investors and to have that perspective accessible to them. So I'm supportive of this.

• 26:23Harry Stebbings?

  I'm Hiji's supportive too. No, I totally agree. Nani, you know the drill. I love the quickfire round and I want to move into it. So it's sixty seconds per statement. Are you ready to rock and roll?

• 26:33Speaker 02

  Sure.

• 26:33Harry Stebbings?

  Okay, so my new year's resolution was to do more reading. What's the favourite book and why?

• 26:38Speaker 02

  I'm actually gonna pick a classic. And we were just talking about this book on Monday at our K9 founders dinner. It's How to Win Friends and Influence People by Dale Carnegie. And that's a book that was recommended to me and I never read it for the longest time because I thought, I do not want to manipulate people. That's not what I'm about. And so I never read that book. And I would just say that that's a terrible title for the book, but that the book is full of all kinds of amazing, good stuff.

• 27:03Harry Stebbings?

  Who is the best board member that you sat on a board with and what made them so special?

• 27:07Speaker 02

  So that's a tough question and I actually spent some time thinking about this. And I would say, I think different board members add value in different ways. And there's no board member who I would say is perfect. And that's the reason why you have a board, because you need different opinions in order to actually make those judgments. So I'm gonna cop out of that one and say that the diversity actually helps and I'm not gonna pick a single person.

• 27:31Harry Stebbings?

  Well, at least you know now, after investing and founding companies, you have a career in politics with that question.

• 27:38Harry Stebbings?

  Tell me, what's the single toughest and best thing about founding and investing simultaneously?

• 27:43Speaker 02

  The toughest thing is simply time. It is very difficult to manage time. I often give this example to others, but I'm not sure how well I follow it myself. Like if you assume that you have a hundred dollars and you'll never get another dollar again, you're probably gonna be really careful about how you spend. But when we think about time, we don't think about it. The same perspective. We all have a limited amount of time and I hope we all live to a hundred years. But just kind of thinking about how to manage time is the toughest part. The best part about being a founder and an investor at the same time is just the the cross-functional learning that happens from one direction to the other and the ability to apply lessons from one side to the other. Like, I mean, I can go to a portfolio company

• 28:28Speaker 02

  and see what they're doing and learn something over there that I can bring back and actually apply in my own company. And vice versa, I can actually take the learnings from recruiting as an example and use that to help shape the advice I give to a portfolio company as well.

• 28:42Harry Stebbings?

  What do you know now that you wish you'd known at the start of your time founding K9?

• 28:46Speaker 02

  The answer to that is nothing. I fundamentally believe that it is important to learn all the time and if you know too much, that can actually be a deterrent for you doing something. And so being naive when you're starting something is often, is often a good thing. Because otherwise you wouldn't take the same steps that you did. So I wouldn't go back and change anything. I, I think you learn things at the right time because your mind is open to absorbing those lessons at that time. And yeah, I, I wouldn't change anything.

• 29:18Harry Stebbings?

  What's the best and the worst thing to have happened to venture in the last five years?

• 29:22Speaker 02

  Well, the worst is probably easier to describe, and I think that is the, the mega funding rounds, the hundreds of millions of dollars coming into companies in the late stage. I think in a lot of cases, those lead to unhealthy companies and we've seen examples of that in the last few months. The best thing I think that's happened is really, as you pointed out, a lot of operators are turning into investors and I think that's a good thing for the ecosystem.

• 29:48Harry Stebbings?

  And then the final one, what's the most recent publicly announced investment money? And why did you say yes and get so excited?

• 29:54Speaker 02

  The most recent publicly announced investment is a company called Vercona, workona.com. And Vercona's thesis is that today, as knowledge workers, we spend most of our time working inside a web browser. And all the organizational tools that exist on the desktop for helping you organize and manage work, we're not taking advantage of those anymore. So what Vercona is doing is they're literally building the missing desktop for the cloud. So that's a company that I've invested in and I use their product every day.

• 30:25Harry Stebbings?

  Manu, as you know, I absolutely love our relationship. I've so enjoyed this chat. Thank you so much as always for joining me and I can't wait to see the next five years for Hi Hello as well.

• 30:33Speaker 02

  Thank you, Harry, and I hope you get a chance to use it as well and welcome any feedback you have.

• 30:40Harry Stebbings?

  Absolutely love Manu and what he's built with Canine is just incredible. If you'd like to see more from Manu, you can find him on Twitter @ManuKumar. Likewise, I'd love to see you behind the scenes on Instagram at H Stabbings1996 with two Bs. However, before we leave you today, I wanted to take a moment to mention HelloSign, a great example of a company that found success in building a product focused on user experience. HelloSign is an effortless e-signature solution used by millions to securely send and request legally valid digital signatures and agreements. They raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million. Check out HelloSign.com/20vc to join the thousands of companies and founders, including me, who value fast, secure and simple e-signatures. It really is a must.

• 31:25Harry Stebbings?

  And speaking of amazing products there with HelloSign, the team over at Pendo, the product cloud company, just launched a free product performance benchmarks microsite where you can see how your product status up against your peers. And they gave me this incredible sneak preview of it and my reaction was bleep me. I know so many founders who are desperate to compare their products to competitors and that's what Pendo has done. They've analysed more than a thousand software products and created benchmarks for startups, scale-ups and enterprises across five different categories. It's all presented with some pretty slick visualisations and you should check it out today at pendo.io/products-benchmarks. That's pendo.io/products-benchmarks. And finally, creating great products is why you start companies, not to track financial

• 32:10Harry Stebbings?

  statements or make cash flow spreadsheets. However, now we have Pilot and Pilot for bookkeeping gives you back the freedom to focus on your business and your product. Every month, your dedicated account manager will send you an accurate, detailed financial report and Pilot does accrual basis bookkeeping in QuickBooks Online. So you're never locked into a proprietary platform, plus you'll work with the same person each month, so you can really rely on them to become an expert in your business. And with Pilot, you can say goodbye to exporting CSV files and emailing attachments to a bookkeeper you can never get a hold of. Get your company's books in order today and get your time back. Check them out today at pilot.com/20vc. As always, I so appreciate all your support and I can't wait to bring you a fantastic episode on Friday.