20VC: Michael Dearing on 5 Key Principles He Uses To Assess Startup Founders, Why Benevolent Dictatorship Is A Beautiful Thing & Why Markets Are Better Capital Allocators Than CEOs

Michael Dearing has established himself as an icon of early-stage venture over the last decade. With his founding of Harrison Metal in 2006, he has backed the likes of Twitter, MoPub, Birchbox, 99Designs and PagerDuty just to name a few of his incredible companies. Prior to being in VC, Michael spent 6 years at eBay across numerous roles and before that held positions at Shoe Warehouse as CEO, The Walt Disney Company in corporate strategy and then Bain & Co as a consultant. In Today’s Episode You Will Learn: 1.) How Michael made his way into the world of venture from selling shoes with Shoe Warehouse to eBay to founding his own fund? 2.) Michael has said before that he looks for "personal exceptionalism" within the teams he backs, what does that really mean? How does he distinguish brilliance from arrogance? What is the balance between vision and stubbornness? 3.) How does Michael think about price sensitivity? How does he use it as a determining factor to test his level of conviction in the deal? More broadly, how does Michael view pricing in the market today? Why are the convertible debt markets so toxic? 4.) How does Michael view strategy around reserve allocation? Why does Michael believe reserves are where he has made the biggest mistakes? What are his takeaways from those mistakes? Why does recycling not feature as a core tenet of his strategy? 5.) Why does Michael believe that "benevolent dictatorship" is a beautiful thing? Does this thesis change in the debate over founder vs company first? How does Michael use McCallum's 5 key principles to assess founders and their ability? Items Mentioned In Today’s Show: Michael’s Fave Book: Confederacy of Dunces Michael’s Most Recent Investment: Astro As always you can follow Harry, The Twenty Minute VC and Michael on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Lattice is the #1 performance management solution for growing companies. With Lattice, it’s easy to launch 360 performance review cycles as often as you want. And you also get a continuous feedback system with OKR goal tracking, real-time feedback, and 1-on-1 meetings to make sure employees get feedback between reviews. Find out why the likes of CoinBase, PlanGrid, Birchbox and WePay trust Lattice as their performance management solution by heading over to lattice.com to start investing in your people. That’s Lattice.com. Recurly, the company powering subscription success, with Recurly’s enterprise-class subscription management platform providing rapid time-to-value without requiring massive integration effort and expense and they have the ability to not only increase revenue by 7% but also reduce the all-important churn rate. That is why thousands of customers from Twitch to HubSpot to CBS Interactive trust Recurly as their subscription management platform. Check them out on recurly.com that really is a must.

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

• 0:00Harry Stebbings?

  We are back for another week in the world of the 20 minute VC with me, Harry Stebbings, at H Stebbings with two Bs on Snapchat. I'd absolutely love to see you there. But diving straight into the show today, as I'm very excited for this guest. He's been a huge source of inspiration for me as I've progressed with the 20 minute VC. And so I'm thrilled to welcome Michael Dearing. Now, Michael's established himself as an icon of early-stage venture over the last decade. With his founding of Harrison Metal in 2006, he's backed the likes of Twitter, MoPub, Birchbox, 99designs, and PagerDuty, just to name a few of his incredible companies. As an addition, I've also had more previous guests suggest Michael than I can remember. Genuinely, it's been incredible to hear. But prior to being in VC, Michael spent six years at eBay across numerous roles.

• 0:41Harry Stebbings?

  And before that, held positions at Shoe Warehouse as CEO, The Walt Disney Company in Corporate Strategy, and then Bain & Company as a consultant. And I'd also love to say a huge thank you to both Christopher Jones and Zach Bloom at Fleet Smith for the intro to Michael today. Hugely grateful for that. But before we move into the show today, if you're a founder or operator, your most important job is people operations, whether that be hiring execs, developing managers, or attaining top talent. And that's why you need Lattice. Lattice is the number one performance management solution for growing companies. With Lattice, it's easy to launch 360 performance review cycles as often as you want. And you also get an incredible continuous feedback system with OKR goal tracking, real-time feedback, and one-on-one meetings to ensure employees get feedback between reviews. So find out why the likes of Coinbase, PlanGrid,

• 1:26Harry Stebbings?

  Birchbox, and WePay trust Lattice as their performance management solution by heading over to lattice.com to start investing in your people. That's lattice.com, the number one performance management solution for growing companies. And speaking of number one there, you must check out Recurly, the company powering subscription success with Recurly's enterprise-class subscription management platform, providing rapid time to value without requiring massive integration effort and expense. And they have the ability to not only increase revenue by 7%, but also reducing the all-important churn rate. And that's why thousands of customers, from Twitch to HubSpot to CBS Interactive, trust Recurly as their subscription management platform. And you can check them out now on recurly.com. That really is a must.

• 2:07Harry Stebbings?

  But I'm now so thrilled to hand over to Michael Dearing, founder at Harrison Metal.

• 2:17Speaker 01

  You have now arrived at your destination.

• 2:20Harry Stebbings?

  Michael, it's such a pleasure to have you on the show today. The videos on Harrison Metal have been foundational to my learning. Huge thanks to Chris Farmer at Signal Fire for the intro, but thank you so much for joining me today, Michael.

• 2:31Speaker 02

  Thank you for inviting me, Harry.

• 2:32Harry Stebbings?

  I'd love to start today with a little on you and how you made your foray into what I call the most wonderful world of venture capital.

• 2:39Speaker 02

  Wow, you are really rounding up to describe it as the wonderful world of venture capital. It is fun, but a very unexpected place for me to land. I left eBay in 2006. I had been there about seven years and I was convinced that my next job was going to be inside a company and probably a small company. And so I set about to go meet as many founders in very, very early-stage companies as I could. You know, in the process of doing that, I found not one, but more like three or four that I really loved and started spending time with them, day or two a week, sometimes more. And after about three or four months of doing that, I said, this is really fun. I'm going to keep doing it. About three or four months later, a couple of them were raising money and I decided to kind of put my money where my heart was and back them.

• 3:23Speaker 02

  A year later into this, I realized I was having the most fun of my career. I was also doing some really fun work with terrific people. And so I realized that this was actually a portfolio. And a friend of mine, Jim Gatz at Sequoia Capital, said, you realize that, you know, you could do this full-time? And I asked what he meant and he started telling me about the gap that he saw in the seed market, you know, the space between inception of a company in their A round. And I had noticed that too. And in fact, it was the only reason I was able to invest in some of these great companies. So it kind of organically grew and I was lucky enough to figure out that I loved it. I was pretty good at it and it was making me really happy, which was a new sensation for me when it came to work.

• 4:06Harry Stebbings?

  Can I ask, did anything change fundamentally with the institutionalization away from spending time and investing personal money to kind of institutionalizing it with the fund being Harrison Metal?

• 4:16Speaker 02

  Yeah, great question. The main reason why I raised money from outside parties was because I wanted to be part of the longer journey. With these companies, I wanted to have capital for reserves to follow on. I also wanted to be able to lead and I couldn't. My nest egg was only so big and so I couldn't write term sheets and once I had a fund behind me, I was able to do that and take a bigger leadership role on the cap table and in the governance of the companies.

• 4:39Harry Stebbings?

  You said there about kind of spending time with the entrepreneurs themselves and I want to start today with something that's commonly discussed by VCs on the show being it's all about the team. You've said to me before though, that bad management and leadership kills more startups than bad products. So

• 4:53Speaker 02

  Yeah.

• 4:53Harry Stebbings?

  Starting on the founder, before we move to the team, you said that founders need to have a sense of personal exceptionalism. How do you look to think about this first and then distinguish between potential brilliance and potential arrogance?

• 5:05Speaker 02

  Yeah, it's a, it's a hard one. I think my radar for personal exceptionalism has evolved over time, but I think the constant is looking for people who have broken out of the bounds of normal for their peer group. Now, that does not mean in business, that does not even mean as technicians or technical talent. It just means that whatever the circumstances were in their lives, that that was not the determining factor. They were able to break out either because they took some crazy personal risk, they took some very sharp left-hand turn. They ended up accomplishing more and seeing more and building a much better experience base because of that risk-taking. So that personal exceptionalism, that sense that they are special, that they are destined for really unique outcomes relative to their peer group.

• 5:50Speaker 02

  I think that shows up early in somebody's life and it's independent, quite independent of pedigree or brand name, work experience. In fact, sometimes those things are negatively correlated, but the distinction you make between arrogance and personal exceptionalism is an important one. Personal exceptionalism just means that they see themselves as special and that their outcomes are going to be outside the bounds of normal. I think that they, a lot of times are some of the most self-critical people I know and they beat themselves up when they do miss a goal or they fail in a venture. They beat themselves up far harder than anybody, than any third party could. And so the arrogance piece, I think, is easy to suss out. You see it in the form of the people.

• 6:33Speaker 02

  That they attract around them, the kinds of networks that they build, how much are they a taker versus a giver in those networks? So I actually have over the years found it's relatively easy to separate the sheeps from the goats, so to speak. The people who have that personal exceptionalism sense, not necessarily the people who are arrogant. I don't want to, I don't want to back the latter.

• 6:53Harry Stebbings?

  Absolutely. Another balance that I'd love to address is at the early stages, obviously, there's this kind of environment of iteration and testing. I'd love to hear how you assess the balance in founders between vision to carry on and pursue the mission, and then stubbornness to continue with something that's not working. How do you look to judge between the two?

• 7:11Speaker 02

  I think, you know, everybody walks around with these sort of, I'm a big fan of Daniel Kahneman and Amos Tversky. And, you know, their big insight was that every human is walking around with two processors running in parallel. One processor is that gut instinct, that intuitive perception of the world. And the other is the analytic, more rational and reasonable one. Now, the gut perception of how the world works is very dominant among founders and very dominant among early teams. It has to be because if you stack up the evidence, it would all point to, please don't do this for a living. So they're following their gut, their instinct. But I like to see the evidence, and it's not hard to find in people who operate this way, see evidence that they're willing to reevaluate their gut and they're willing to subject their gut to market forces and market discipline.

• 7:55Speaker 02

  So if they're kind of a high velocity intuitive and rational cycle is going, I think then that that shows up. And that's the kind of person I like to back. The practical measure of that is how fast do they release prototypes? How many days a week do they push new software to production? How quickly do they start sketching an idea versus just talking about it in very macro terms? And how quickly does a pen go to paper? Those are markers of people who operate at the kind of velocity that I think is necessary nowadays, at least in in software world.

• 8:27Harry Stebbings?

  If we expand that kind of assessment to the wider management team, how do you assess the quality of the management team as a broader spectrum, not just the founder? Is there a process that you've developed behind it?

• 8:37Speaker 02

  Yeah, I'm sort of a disciple of this fellow named Daniel McCullough, who was an executive in the railroads. In the mid eighteen hundreds, Daniel's story was he was promoted up from within the railroad, from the inside the New York and Erie Railroad, which was a huge, high-growth company of its day. He was promoted up from individual carpenter to bridge builder to superintendent of bridges, and then up through the ranks of general management, until he found himself very quickly at the top, essentially what would today be called the CEO of the railroad. And he wrote this treatise on general management, which I still use to this day in teaching the general management class that I do at Harrison Metal. His philosophy boiled down to a handful of things. He said, "Look, the general manager has to get everybody aligned behind the right projects,

• 9:20Speaker 02

  the right investments. Second, make sure that the responsibility and authority is allocated appropriately. Third, measure how things are going along the way. Fourth, stop and make corrections if things are going badly. Fifth, do all of this with humanity and respect for other people." Now, the way he phrased humanity and respect for other people was in a very nineteenth-century way. It was, "Don't embarrass people who are senior," et cetera. But, you know, I sort of round that up to treat other people the way they deserve to be treated. So, that checklist of five things is the same today as it was in eighteen fifty-five, when he first wrote that treatise. And so, I very much subscribe to the idea that I could take that checklist into any company. I could talk to a handful of people, and I could come away with a real strong opinion

• 10:03Speaker 02

  about how are they doing on picking the right stuff to work on, allocating responsibility, checking how things are going, et cetera, et cetera. So, that very simple five-part checklist is exactly what I use today when I diagnose and try to coach and help these companies that I work with.

• 10:17Harry Stebbings?

  You've worked with some of the very best. Is there anything that separates the truly great from the good?

• 10:23Speaker 02

  Yeah, I think the personal exceptionalism point is important, because that's the reservoir, that confidence that you are capable of building extraordinary things. That confidence is very necessary in the low points to get you through those disappointments. But in addition to that, I'd say high velocity. The fact that their impatience and their ability to iterate their product and their services and their team and every aspect of their business system is hugely important. And I also think this checklist of five things that McCallum gave us. If they are good at those five things, they are in The ninety ninth percentile of general managers on earth. Now, that is a pathetic indictment of the state of general management, that it's that easy to be exceptional, but it really is. Uh, it really is, and I'm encouraged by how many people are starting to realize that.

• 11:08Speaker 02

  It'd be hard to not conclude that general management matters, just reading the news.

• 11:11Harry Stebbings?

  Going back to the core statement, though, that bad leadership can kill companies easier than bad products. We recently had Mike Dorbrett at Amplify Partners on the show, and he said that timing killed more startups than dollars. I'm intrigued, would you agree with this statement as a mortality kind of causation of startups?

• 11:27Speaker 02

  Well, I like the point, and I certainly have observed situations where timing was a huge handicap on an otherwise brilliant product or a brilliant team. I would say, though, that if you start with the premise that timing is always slightly wrong. I mean, listen, what are the odds that we invent something, we productize it, and we turn it into a company at exactly the right moment? It's practically impossible. So if timing is always a little bit off, it becomes a general management problem to figure out how to either accelerate the external conditions such that your product is a fit, or pace your product investment so that you don't run out of money before the market becomes amenable to your product. And so, you know, listen, I'm a man with a hammer, I seal out of nails.

• 12:10Speaker 02

  So I am going to see every problem as a general management problem and a business leadership problem.

• 12:15Harry Stebbings?

  We spoke earlier about the movement to the institutionalized fund structure that you have at the moment. I'd love to dive in on this a little bit, and you said about the benefits in terms of being able to lead rounds and ownership stakes. So if we're to take kind of three core tenants that I always feel are kind of quite crucial. I'd love to start with price sensitivity. Peter Fenton said on the show, never turn down a company based on valuation. It's a mental trap. How would you respond to that, and what would you evaluate as your price sensitivitiness?

• 12:42Speaker 02

  Well, I'm tempted to say that if I had Peter Fenton's resources, I might feel exactly the same way. But, but I think where I come down on this is the message I see behind his comment, or the assumption beneath that statement, is that price is but one consideration, and that you always have to manage your sensitivity to price against your conviction in the business. And so the way I think about it is I try to stay away, put it mildly, stay away from situations where pricing expectations are totally out of whack with the opportunity and the team's level of progress so far. Look, I mean, pricing is the way that we manage our risk. It's the primary tool I have to manage my own risk in the situation.

• 13:25Speaker 02

  And so as my risk goes up, my price should go down and vice versa. And so I just try to keep a very disciplined view of, okay, given the level of progress they've made, given the level of potential outcomes here, what's a percentage ownership that I feel comfortable with? And what's the check size that feels right to go with that? And have a very honest conversation with the team about how my thinking evolved around each of those points. I would agree with Peter if what Peter means is that pricing is one consideration. And for those companies that you have strong conviction and you have evidence of terrific progress, you should be willing to pay up for those.

• 14:00Harry Stebbings?

  Where do you feel we are at now in terms of market timing and kind of pricing in the market itself?

• 14:05Speaker 02

  I think this is a multi-sided market and this wasn't true 10 years ago. You know, 10 years ago, there was a handful of people doing institutionalized seed investing. There was a relatively small market for seed capital. Today, it's completely exploded and there are hundreds of firms that are organized just like mine. And there, forget about the thousands of individual angels who are chasing convertible debt deals or these so-called safe notes. So I would say on the equity side of the market, I believe for the most part, companies are priced reasonably. That equity investors that I work with are very conscious of the kind of calculation I mentioned before. How much progress have they made? How much potential is there? And let's price that asset accordingly.

• 14:50Speaker 02

  On the convertible debt side of the market, I think it's terribly toxic and about as undisciplined as it could possibly be. I think there's a lot of factors behind that, the abundance of capital among the angel community. I would say the tulip auction vibe that you get from some of these demo days. But I think overall the market's got two sides to it. The equity side of the house, I think. Is much more disciplined. The convertible debt side of the house is about as undisciplined as it could be.

• 15:18Harry Stebbings?

  No, I agree. In terms of kind of dividing elements into two, I always believe that the best investors not only pick companies once, but pick them twice in terms of the reserve allocation. I'm super interested to hear your thesis then around reserve allocation.

• 15:31Speaker 02

  Oh, sure.

• 15:31Harry Stebbings?

  And let's start with that. What's the thesis around reserve allocation?

• 15:34Speaker 02

  Boy, if there's anything I've gotten wrong over the years, it's this. When I started, when I, when I built the very first spreadsheet model of what would Harrison Metal Capital One look like, reserves was the big unknown to me. Cause you have to make a range of assumptions. You have to make assumptions about the mortality rate. You have to be cognizant of what the premature M and A exits look like. You have to be cognizant of what's going to happen in the A and the B market two years or more after you make the initial investment. It's full of guesses, basically. And so initially what I did was I used to reserve one dollar of reserve money for every, for every dollar of primary money. And so when I made an investment, I would basically just sort of park the same amount of money in my reserve account.

• 16:16Speaker 02

  Now, that reserve account is allocated very unequally. So we don't park the money in the name of that company. We park the money in the name of general reserves. And so I fund the reserves separate from the decision about who gets the money. Over time, the way I've funded the reserves pool is varied between taking that ratio all the way up to two to one, back down to now I reserve about a buck fifty for every initial dollar. I'm confident that each of those guesses is wrong, but I don't know for several years, how wrong is it?

• 16:45Harry Stebbings?

  In terms of the signaling function and potential negative signaling function, is it a case where you have to at least put some dollars into the companies that you initially go into?

• 16:53Speaker 02

  No, and I really straightforward with the founders about that. I mean, I have reserves. They also understand that I don't have unlimited resources and so I have to make decisions on the margin. And I have to say, is this the highest and best use of this one dollar? And just try to be transparent about that. I've rarely come into a situation where I've completely pulled out. I mean, it has happened, but usually for real values violations, you know, dishonesty. And thank God that's only happened to like, you know, two times out of more than a hundred cases. But yeah, so the reserve strategy for me is to treat it like, as you said, it's a fresh backing decision. Would I have presented with this opportunity, make that investment today on behalf of my investors? And so I try to treat it very much like a fresh decision.

• 17:38Harry Stebbings?

  In terms of kind of another core tenant, recycling is one that's always very interesting for me, especially with kind of smaller fund sizes and, as you said, not the resources of Peter Fenton. So with a fund size like Harrison Metal, how do you think about recycling and really kind of optimizing every dollar?

• 17:53Speaker 02

  Well, we've done a little bit of it over the years, but it's really not a core part of the strategy. And, you know, I've talked to people who feel very differently and who run terrifically profitable businesses and who believe very strongly that recycling is an important part of the strategy. I mean, if I did it, it was in the case, it was in just a handful of cases where, you know, we were slightly off on reserves. I don't consider it a bulk part of the strategy because, let's be honest, my numbers, call it eighty, ninety percent of my final outcomes on a fund are driven by my initial investment picking. So picking is the primary thing I do. If I pick really well, I should generate great multiples and liquidity for my investors. I just sort of have an operating principle that I want that liquidity back in their hands as quickly as possible.

• 18:37Speaker 02

  When you stop and think about the mission of these organizations, universities, museums, scientific research foundations, getting that cash back to them is incredibly important. So I tend not to try to hold back liquidity once I get it.

• 18:49Harry Stebbings?

  No, absolutely. That makes complete sense. I would love to move into a quick fire round there where I say a short statement and then you give me your immediate thoughts. Sixty seconds per one, okay?

• 18:59Speaker 02

  All right, I'll do my best to keep up.

• 19:00Harry Stebbings?

  So let's do your favorite book and why.

• 19:02Speaker 02

  Oh, Confederacy of Dunces. John Kennedy Tool wrote this book about these wacky, wacky figures in New Orleans. I think he wrote this back in the sixties. Tried hard to get it published, was unsuccessful, really suffered from a terrible depression and took his own life. His mother made it her mission to get this book published after his death. It was published and won the Pulitzer for fiction, which is a triple tragedy. So it's, but it's a phenomenally funny book, probably the funniest thing I've ever read in my life.

• 19:29Harry Stebbings?

  Well, well done, Mum. I think that deserves a pat on the back. I know you like stories. Tell them.

• 19:33Speaker 02

  Yeah.

• 19:33Harry Stebbings?

  A story about a time that was transformational to you as an individual. I'm gonna leave it open for you.

• 19:38Speaker 02

  Oh, sure. Well, after I left, I had a job, a really good job at Disney after grad school. I worked in corporate strategy. I worked with some amazing people. And I got this bug to start a company. And so I joined a business partner. We started a chain of, well, he had one store up and running and then we expanded it to five. It was my entrepreneurial dream come true. You know, I was, these were physical stores, by the way, back in the nineties. Fast forward to the end, the whole thing fell apart and failed pretty miserably. And I was financially wiped out. And stayed through to the closing of the very last door, sold the very last pair of shoes. The transformation for me came when I was out of money personally and I needed to raise cash as much as possible.

• 20:22Speaker 02

  And for the business to pay back our creditors, I started selling on eBay. I started selling on eBay in nineteen ninety nine. I didn't know what I was doing, but I sold some stuff and I, strangers paid me. And a couple of those people who bought from me said, you know, your listings would be better if you had pictures. And I didn't know how to do that. And so strangers on the internet taught me how to make better eBay listings. And that was for me, I mean, I was really bummed. I thought my career was over when this business failed. And to have that experience and have people say, you know, hang in there, let me show you a cool trick on how to sell more stuff better. That was like a lifeline. And that lifeline turned into a job at eBay.

• 21:04Speaker 02

  And I'll never, I couldn't even imagine my life today not having gone through that period.

• 21:09Harry Stebbings?

  What do you believe that most around you disbelieve?

• 21:12Speaker 02

  I think that most people are basically good. And I believe that if you leave people alone and you give them the right incentives, they can self govern.

• 21:21Harry Stebbings?

  Why are markets better at capital allocators than CEOs?

• 21:24Speaker 02

  Oh, mostly because of the pricing system that's inherent in the market. So one of the biggest problems with internal capital allocation inside a company is very rarely do CEOs have access to true opportunity cost based prices. And the market's really good at that. The market's really good at saying, well, if you're gonna use my fill in the blank labor. Technology, physical asset to build your thing, you gotta pay me for the next best use of that asset. What I could be making from someone else, that doesn't happen inside companies very efficiently. And so when people are confronted with those very clear crisp pricing signals, they're able to make way smarter choices about what to buy and what not to buy.

• 22:01Harry Stebbings?

  Are you a fan of Adam Smith's Invisible Hand?

• 22:03Speaker 02

  Uh, very much so, yeah. I, it was a big moment for me in college when I, when I read that and I realized that some of these wacky ideas that I believed personally were actually.

• 22:13Harry Stebbings?

  You considered beforehand?

• 22:14Speaker 02

  Yeah, somebody else thought of it and they said it better than I did. And by the way, I wasn't alone.

• 22:19Harry Stebbings?

  I know, exactly the same as me. I remember I had a lightning bolt moment with that one. Uh, towards me, favorite blog or news outlet? What are your must reads? Rainy day, what does Michael sit down to?

• 22:27Speaker 02

  Rainy day, I read a lot of economic history. And so I follow this gaggle of economic historians on Twitter. And one of my favorite is this guy named Anton Howes. Anton is an historian who was at Brown, my alma mater. He's way younger than me, so he just finished his PhD, I think, not that long ago. Anyway, he and I met on Twitter and he runs this fantastic daily invention quiz where he puts up an invention from the seventeen or eighteen hundreds and, you know, part of the industrial revolution. Puts up an invention, picture of an invention and, and asks people to guess based on the design of and look and feel of it, what it was for. And it's a fun little contest and I love following along with that.

• 23:08Harry Stebbings?

  No, I will, I will check in and see that. You've said before that founders are the benevolent dictators when it comes to product roadmap. Does this change today then with the likes of Travis at Uber?

• 23:17Speaker 02

  Well, him, I don't know. I only know what I read and I hesitate to opine on that. I would say that benevolent dictatorship is a, is a beautiful thing. And when CEOs can master and notice the word benevolent comes first.

• 23:34Speaker 02

  You know, in that, in that label, if they can manage to be that benevolent dictator, it is a beautiful thing. The benevolent dictator in product roadmap decisions to me is a, is a very listening focused executive. She or he spends a ton of time listening to people. And then after the listening is done, there is a judgment call. Listen, this is what we pay people for is to make judgments. We don't pay people to run A B tests. We don't pay people to do boil the ocean analytics on what is the quote right answer. We pay people for their judgment. And so when she or he exercises that judgment, I think that's a magic moment and product roadmap is a is a particularly powerful place to exercise that judgment.

• 24:14Harry Stebbings?

  And then let's finish today on the most recent publicly announced investment from you and why you said yes.

• 24:19Speaker 02

  Oh, publicly announced, that's hard. I can't keep track all the time of what of what we publicized and what haven't. Well, I know one for sure that I just tweeted about yesterday is Astro. Astro is basically saying, look, there is a whole bunch of work that we do in our daily lives. And that work can be made much simpler. And the way to make it simpler is to take A I and voice and even rules based heuristics that the user provides. Combine all that into kind of a personal turbocharger, somebody that's a service that can live on top of Slack and email and chat and eventually things like Google Docs and Salesforce. What can live on top of that to organize that work and make it zoom, make you able to zoom through it a lot faster?

• 25:02Speaker 02

  They the company just now voice powered email feature where you can read and respond to your emails with voice. This is across different email platforms and it's powered by some of the smartest people in the world of of work productivity. And so that was a really easy one. This is an accomplished team, knows their domain cold. And as a as a market that I love, which is, you know, bringing productivity tools to business.

• 25:26Harry Stebbings?

  I'm literally signing up now. I've been looking for a voice enabled email product for a long, long time. So I'm signing up now. Michael, it's been such a pleasure. As I said, I'd learned so much from you and from your content. So thank you so much for coming on today.

• 25:38Speaker 02

  Thanks, Harry.

• 25:40Harry Stebbings?

  And rarely do I do this, but I do want to give a personal recommendation for Astro. Not an ad, but it really is a must use tool for me and one on the desktop homepage for me on my phone. But I do also want to say a huge thank you to Michael for giving up the time today to be on the show. As you could tell, I so enjoyed the episode and I really have learned so much from him in the past. So a huge thanks to him for that. And if you'd like to see more from us behind the scenes at the 20 minute V C, then you can follow me on Snapchat. At H Stebbings with two Bs, it'd be fantastic to see you there. But before we leave you today, if you're a founder or operator, your most important job is people operations, whether that be hiring execs, developing managers, or retaining top talent. And that's why you need Lattice. Lattice is the number one performance management solution for growing companies.

• 26:21Harry Stebbings?

  With Lattice, it's easy to launch 360 performance review cycles as often as you want. And you also get an incredible continuous feedback system with OKR goal tracking, real time feedback, and one-on-one meetings to ensure employees get feedback between reviews. So find out why the likes of Coinbase, PlanGrid, Birchbox, and WePay trust Lattice as their performance management solution by heading over to lattice.com to start investing in your people. That's lattice.com, the number one performance management solution for growing companies. And speaking of number one there, you must check out Recurly, the company powering subscription success with Recurly's enterprise class subscription management platform, providing rapid time to value without requiring massive integration effort and expense. And they have the ability to not only increase revenue by 7%, but also reducing the all-important

• 27:06Harry Stebbings?

  churn rate. And that's why thousands of customers, from Twitch to HubSpot to CBS Interactive, trust Recurly as their subscription management platform. And you can check them out now on recurly.com. That really is a must. But show over from us at the 20 Minute VC, and we look very forward to bringing you Wednesday's episode.