Breaking News: Meet First Round Capital's Newest Partner, How To Approach Generational Transition as a Venture Firm & The Dangers of Attribution In Venture

Todd Jackson is First Round Capital's newest Partner (announced today) having spent the last 2 years as a Founder-in-Residence working with the FRC portfolio. Prior to his time in venture, Todd spent close to 3 years at Dropbox as VP Product & Design. Before that he was with Twitter as Director of Product Management, following his startup, Cover, being acquired by Twitter in 2014. Before founding Cover, Todd was a Product Manager @ Facebook where he helped lead major redesign of Newsfeed. Finally, Todd started his career at Google as a Product Lead taking Gmail from 0 to 200m users in 4 years. Todd is joined today by his Partner @ First Round, Phin Barnes. Phin also writes the most fantastic blog, sneakerheadVC, that really is a must-read. In Today’s Episode You Will Learn: 1.) Phin, what is the exclusive news you would like to break on the show today? Todd, taking one step back, how did you make your way to this stage, what was your entry into technology and how did you come to be a Partner @ First Round Capital today? What were Todd's biggest takeaways from working on some of the most transformative social products in Gmail, Twitter, Newsfeed @ Facebook and Dropbox? 2.) What advice does Phin have for Todd when it comes to entering a venture partnership? Where do many people go wrong in their first year in venture? What should Todd be optimising for in the partnership? In terms of measurement, how does one measure success of the first year of work as a Partner? 3.) Todd, making the move from angel to institutional VC is a mindset shift, how does Todd think his investment mentality will be impacted by the shift from angel to institutional VC? Having raised funding as a founder, what type of founder experience and investor does Todd want to be and bring? 4.) Phin, it has been a long time since FRC added a Partner, walk me through the recent changes at the top of FRC? What are the most important qualities for First Round when adding a Partner? What are the biggest tips to doing generational transition well? Where do many firms go wrong in generational transition? Items Mentioned In Today’s Show: Todd’s Fave Book: Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs, Trillion Dollar Coach: The Leadership Handbook of Silicon Valley’s Bill Campbell Todd’s Most Recent Investment: Papaya Payments, Snackpass As always you can follow Harry, The Twenty Minute VC and Todd on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC. Businesses are always looking for ways to shorten their sales cycles. HelloSign provides secure, effortless eSignatures proven to speed up contract signing by 80%. Most clients go from a multi-week turnaround to a multi-hour one. They’re an industry leader and have been voted #1 for Ease of Use two years in a row on G2 Crowd. Don’t let pen and paper processes slow you down. Click Here to join the millions of users already using HelloSign to close more deals faster!

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

• 0:00Harry Stebbings?

  Welcome, you are listening to the 20 Minute VC with me, Harry Stebbings. It would be amazing to hear your thoughts and feedback on the show. You can do that on Instagram at H Stebbings 1996 with two Bs. However, to the episode today, and this really is a special one, as it's the first time ever on the show, we have had two guests, so that's pretty awesome. And then there's also an exclusive news announcement that we're very honoured and proud to be announcing in today's episode. In terms of the guests, one new and one existing, Todd Jackson and Finn Barnes at First Round Capital. Now, to prevent any spoiler alerts for this coming show, I have to be tight lipped here, but if you haven't listened to Finn's prior episode, then that really is a must. And as for Todd's first time on the show, a little background. Before First Round, he worked on some of the most transformational consumer products of the last decade, including as a PM at Gmail, taking it from zero to 200 million users,

• 0:45Harry Stebbings?

  to leading a major redesign of Facebook's newsfeed, to serving as Director of Product Management at Twitter, and then most recently being Dropbox's VP of Product and Design. Now, to prevent any spoiler alerts, that's all I'm going to say. 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. I have to say, I absolutely love their design and workflow, it's just so intuitive. And they've raised a total of $16 million in funding and recently got acquired by Dropbox for an impressive $230 million.

• 1:24Harry Stebbings?

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• 2:10Harry Stebbings?

  And for 20 VC listeners, you get the first month free. Go to fourhymns.com/20vc5. That's fourhymns.com/20vc5. Disclaimer, prescription requires an online consultation with a physician who will determine if a prescription is appropriate. Offer valid only if prescribed. Three-month minimum subscription. Additional restrictions apply. See website for details and important safety information. Remember, that's fourhymns.com/20vc5. And this episode is also brought to you by the stalwart of Silicon Valley banking, Silicon Valley Bank. For over 35 years, Silicon Valley Bank has been the bank for visionaries of all kinds, people and businesses who've revolutionized everything from software to social media,

• 2:53Harry Stebbings?

  from workspaces to wine. With nimble banking services and solutions, Silicon Valley Bank helps startups adapt to the changing needs of a growing company. Learn more at svb.com/next. That's Silicon Valley Bank, ideas bank here. However, that's quite enough from me. So now I'm very excited for this very exclusive announcement from Finn Barnes and Todd Jackson at First Round Capital.

• 3:20Speaker 01

  You have now arrived at your destination.

• 3:24Harry Stebbings?

  My word, chaps, I am very excited for this. This is the first ever 20 VC episode in 2800 where I've had two guests. So Finn, Todd, thank you so much for joining me today for this very special first time.

• 3:35Speaker 02

  Thank you, Harry. Yeah, thanks for having us, Harry.

• 3:37Harry Stebbings?

  I would though love to kick off, and this is a little bit of an unstructured, unusual episode in the way that obviously with two guests, we're mixing up the format. So Finn, why don't we start with you? We hear that's some big news. So why don't we start with your announcing the news?

• 3:49Speaker 02

  Yeah, sure. So many of your listeners may be familiar with Todd from his excellent product advice he's given on the First Round Review, his time founding a startup, and also headed up some product at some amazing companies and established himself as an angel investor over the last couple of years. But today, we're here to announce that Todd is actually joining First Round full-time in an investing role as a venture partner. And we couldn't be more excited to officially welcome him and to have this conversation with you to talk about that role.

• 4:14Harry Stebbings?

  I mean, Todd, that is such amazing news. Huge congratulations. Before we dive in, I guess, I would love to kind of hit on a little bit of your background. As Finn mentioned there, the incredible product experience that you've had. But how did you make your way into the world of venture then, as of, you know, the news today, and come to be a partner at First Round?

• 4:30Speaker 03

  Yeah, so I started my career in Silicon Valley at Google in 2004 as an associate product manager. I think I was actually in the second class ever of Google APMs. And I shared this tiny office with my boss, Marissa Meyer, at the time. And I worked on Gmail for five years. And it had just launched in beta when I joined. So these were four of the days of G Suite before anyone was really using Gmail for work in a serious way. And we grew Gmail to over 200 million users during my time there. And now I think it's well over a billion, which is just mind boggling to me. And then I went to Facebook in 2011 because I wanted to experience a different culture and I wanted to work on a social product. And so at Facebook, I worked on photos, groups, and this big redesign that we did of News Feed. And then ultimately, I wanted to be a founder. So I left Facebook to start my own company in 2013, which was called Cover. And First Round was our lead investor.

• 5:15Speaker 03

  Josh Cobbleman was our board member. So that's when I first got to work with First Round. And Cover was a custom lock screen for Android phones. So we were one of the first companies in Silicon Valley to really focus 100% on Android when most other companies were treating it as this afterthought. And so at Cover, I got the experience starting something from scratch, finding product-market fit. We grew to over 2 million users in our first couple of months with zero money spent on paid acquisition. And we got acquired by Twitter just 14 months after founding the company. And so at Twitter, I worked on the home timeline, search, trends, and news. And we took the home timeline from this simple reverse chronological feed. I introduced things like ranking and recommended content. And we started organizing tweets around news stories. And then finally, most recently, Dropbox. So my startup was acquired by Twitter, but we were almost acquired by Dropbox.

• 6:00Speaker 03

  So I got to know the founders, Drew and Arash, really closely during that acquisition process. And I got the opportunity in 2015 to become Dropbox's first ever VP of Product and Design. And at Dropbox, I helped the company build this bottom-up revenue engine that we became known for as we transitioned really from a consumer company over to a SaaS company and ultimately through an IPO. And so at Dropbox, I got the experience of being on an executive team and of managing hundreds of people in product and design. And so these were all amazing opportunities. It was super interesting for me to see how these different companies operated from the inside. But by 2018, I was feeling ready for something different. So I left Dropbox and I joined First Round as a founder and resident. And I've been spending time advising founders in the First Round network, doing a bit of angel investing, helping bring deals to First Round.

• 6:43Speaker 03

  And I was really contemplating three different future paths: to be a founder again, to be a head of product again, or to be an investor. And I'm really excited that I've decided that I want to turn towards investing and very, very happy to be joining First Round full-time.

• 6:56Harry Stebbings?

  I I think it is one of the most incredible positions. So it totally aligns to you in terms of your thinking there. I do wanna, we mentioned my love of Amaretto before this show. So I wanna picture the scene. Finn, Todd, you're sitting around a fire. Now, Finn, you have the chance to, having smashed it, quite frankly, as a partner at First Round over the last five years or so, what advice would you give to Todd, sitting around this fire, Amaretto in hand, don't forget that one, but on joining the First Round partnership, what advice would that be?

• 7:21Speaker 02

  Yeah, no, it's quite a scene. So I think, I think there can be a bias when you join a team, and especially it's exacerbated when, when you join a small, close-knit team, frankly, in a role that you've never held before. And the bias is to shift into a hundred percent learning mode. And when you do that, you miss early opportunities for impact. You know, your new teammates are sort of excellent at their craft and generous with their knowledge, you know, as, as our partnership is. I think you can lose yourself sort of in this fire hose of best practices, advice and guidance that's now coming at you every hour, twenty-four hours a day. And so I think, I think for me, the piece of advice would just be to encourage Todd to balance the learning and the doing. So take risks by pushing for what he believes and to help us continue to evolve our product and our firm from his first day. We wouldn't have invited you, Todd, you know, into the room if we didn't have tremendous confidence

• 8:06Speaker 02

  that you'd be able to move us in the right direction. And we're obviously happy to have you and can't wait for the impact you're gonna have.

• 8:10Harry Stebbings?

  I'm so pleased you said there about the learning, because Todd, this was something that I was thinking when you were mentioning the incredible consumer products that you've worked on, from, as you said, Google Mail there to two hundred million, now in a billion, Facebook News Feed, the Dropbox and Twitter. My, my question to you was, in terms of the learning, if you were to choose, say, two or three of your biggest takeaways from working at these incredible product companies, what would they be? And how do you think they impacted your mindset?

• 8:33Speaker 02

  So there were so many, but I'll highlight three big takeaways, one on products, one on business model and one on culture. So on products, you know, it was really interesting to see how Google approached product development from the inside. We were all about products that were simple, fast, useful. And the interesting part was what it took behind the scenes in order to get that. So for example, I, you know, I mentioned I was on Marissa Meyer's APM team, and she used to run this very rigorous process called Consumer UI Review, where you would bring your early product designs in front of this panel of senior designers, you'd project them up on this big screen, and then they would critique them.

• 9:06Speaker 03

  And then you go back to your desk and improve them. And this created an environment where all the details were scrutinized and everything was in service of making the UI as intuitive as possible. And Gmail was the same way. You know, we were totally obsessed with making an email experience that was powerful and simple and always fast. So there were features we'd refine over and over before releasing them and our bar was just incredibly high. And I remember one time we had gone through this big redesign of the label system in Gmail and we were about to launch it. And actually, the night before launch, we held it back because we realized we had unintentionally added about thirty milliseconds or forty milliseconds of delay to the experience. And that's a pretty small delay, but to us, we didn't want to introduce anything that would degrade the speed of the product. So we scrapped it, we started over and we made it a lot faster before launching it.

• 9:50Speaker 03

  And so the takeaway for me was really about the discipline it takes to build really high quality products. A business model takeaway, you know, I think that Dropbox was super interesting because it was one of the first companies to define what's now known as bottom up SaaS. But it wasn't always that way. When I joined Dropbox in twenty fifteen, my first official task actually is as VP of Product was to shut down this product called Carousel, which was this beautiful consumer photo sharing app. And it was really popular in some circles, but it just wasn't growing in a way that would have moved the needle for us as a company. And so we had all these folks working on it internally and it was just this key moment for us. Can we afford to support and invest in this consumer oriented part of Dropbox? Or did we really need to turn the ship and focus a hundred percent on SaaS? And we chose the latter, which was in retrospect, I think, a really good decision.

• 10:35Speaker 03

  So over twenty sixteen and twenty seventeen, we got really good at understanding the entire SaaS funnel through acquisition to activation to retention and expansion. And so we were able to build an incredibly efficient self-serve business. You know, I think people in venture talk a lot about customer LTV or lifetime value and CAC or customer acquisition cost and the ratio of one to the other. And a ratio of three to one is often considered good. At Dropbox, you know, the LTV to CAC ratio was actually in the double digits when I was there. And so that enabled us to have the revenue predictability that was key to our IPO in twenty eighteen. And it was just a few years after we pivoted most of the business from consumer to SaaS. And so the learning there is that you've got to find the business model that fits with your product and that's going to scale. And at Dropbox, that really meant becoming a SaaS business.

• 11:19Speaker 03

  Last, on the culture-related takeaway, you know, the thing that I've loved learning about seeing how these different companies operate internally, and one of the patterns that I've seen is that the way a company operates, its culture, its values, the way it makes decisions, it's really a manifestation of the founders and of their values. And so, Google was defined by Larry and Sergey. Engineering-driven, quirky, altruistic. And at times, to be honest, it felt a little bit disorganized, like we were doing all these different things at once. But a lot of those projects, Search Maps, Gmail, Chrome, Android, ended up being super successful. Facebook felt really different. It, you know, was defined by Zuck. More competitive, more centrally planned, more focused on winning against competitors, and a little more okay with the move, fast, break, things mantra, or my personal favorite, which was done is better than perfect.

• 12:02Speaker 03

  I'd say that Twitter was the most chaotic internally. You know, maybe that's because the founders themselves went through a lot of churn in the early days. And then Dropbox was completely defined by Drew and Arash. Very obsessed with quality and what we called sweating the details, and very collaborative, very kind to one another internally. So, the advice I often give to founders these days as an investor is that the culture of their company at scale is naturally going to be a manifestation of their values, but they should work really hard to codify them and communicate them, and hopefully their values align with the market they've chosen. So, at Dropbox, sweating the details was critically important because Dropbox has to reliably sync all your most important files.

• 12:38Harry Stebbings?

  I mean, I absolutely love those takeaways. You hit on one there, and as I said, I probably would have gone off schedule. Didn't quite expect this early, but let's just roll with it. You said about CAT to LTVs then, how you thought about them specifically at Dropbox. We both invest at the same stage when CAT to LTVs are often undefined, unknown if it's pre-product launch. How do you guys think about the centrality of CAT to LTVs? Because I get very, very annoyed when I hear pre-seed and seed investors harp on about CAT to LTV when, quite frankly, they are so unpredictable and undefined at this stage. How do you think about them? And am I maybe being short-sighted in this lack of respect for them almost at this stage?

• 13:14Speaker 03

  Yeah, Harry, I mean, I think as we think about those things early, you want to think about the founder's orientation towards those things, the fact that they are aware that this will be an important metric at some point in their business. And as they are testing hypotheses... And sort of learning as they spend the money and build the company with the initial investment, that they have a view towards how they're going to establish an understanding of what CAC will be, how they're going to understand churn and the other things and engagement, the other things that contribute to LTV. But I don't think that if a founder came in at a pre-seed or seed stage and said, "When I go out to raise my Series A, I'll have a CAC of, to LTV of three to one or a 10 to one", that we'd be more or less interested, and probably actually less interested, given that they think they can predict that so far out. I actually think that earlier on, it's much more a journey, searching for product market fit,

• 13:59Speaker 03

  which is something I know Todd's thought a lot about. But I think CAC to LTV and some of these other specific metrics, don't really become clear in terms of how much leverage you get out of them or how you'll optimize them until much later in the business evolution.

• 14:10Harry Stebbings?

  Sodhi, you teed me up so well there, Finn. So again, flunking the schedule, but I'm a massive product market fit nerd. I'm obviously a huge believer in a lot of what Rahul at Superhumans proclaimed and provisioned with a lot of his work. Todd, what are your thoughts on product market fit today? How founders assess it, your experience with it, when you know you have it? How do you think about that?

• 14:29Speaker 03

  Yeah, so I think it's probably a good time to talk about my startup, which was called Cover in 2013. And we thought a lot about this at the beginning. And honestly, when you talk about finding product market fit, in my opinion, the most important choice you make as a founder is picking a good market. And other than choosing your co-founders, I actually think that that's the single most important choice that a founder makes. And so Josh Koppelman refers to this as the pick. And so I'll share the framework that I recommend that founders use, which is the one that we use at Cover. So number one, does the idea or the product address a clear functional need that users have? And that's often why they will try the product. But does it also address an emotional need that users have? And that's often why they'll tell others about the product. Is it in a large, underserved market? Or is it in a market that can become large?

• 15:14Speaker 03

  And not always necessary, but helpful. Is there something just kind of novel or unique about the user experience? Does it feel a little bit like magic the first time you use it? And so really quickly, I'll just run through how we experienced this at Cover. On the market, Cover was an Android-focused company. And Android was just a terrific market for us to focus on. It was massive. I think at the time, there were like three times the number of Android users to iPhone users. And nowadays, I think- Like five times, but the market was also just massively underserved. So we didn't see any other startups in Silicon Valley who were truly focused on Android. And that was kind of a contrarian idea in 2013. Most startups treated Android just as this afterthought to iPhone. And so Android users really felt like second-class citizens.

• 15:52Speaker 03

  On the functional side, the stock UI that Android came with, and this was back, if you can remember, in like the jelly bean era of Android. It was very, very clunky. And so we saw an opportunity to make it better, and that's what Cover did. It replaced the lock screen that came with your phone and it just made it way sleeker and smarter. And emotionally, Android users loved it and they felt like there was finally a company making something just for them. And so that's what made the word of mouth really strong. And we grew to over 2 million users in just the first couple of months with zero money spent on paid acquisition. And then, you know, lastly, actually, when it came to being acquired, we were acquired by Twitter in 2014. It was again, the market that was super important. So within the first few months of launch, we were approached by over 10 companies, all of whom felt they knew how important Android was, but they just didn't have any internal expertise on it.

• 16:37Speaker 03

  And that's what enabled us to get a great outcome in the acquisition.

• 16:39Harry Stebbings?

  I do have to ask, you mentioned that the incredible journey with Cover and short journey, though. I want to ask, in terms of how you think that impacts you as an investor, Todd, having raised for your own startup being Cover in the last seven years or so, how do you think that informs maybe the founder experience and the type of investor experience that you would like to deliver to founders now as a partner at First Round?

• 16:58Speaker 03

  Yeah, so in our seed fundraising process for Cover, we actually talked to over 50 investors, angel investors, seed funds, all the big sandhill road firms. And we actually met First Round and Josh Koppelman towards the very end of that process. So we had developed a good sense of what the other VCs were like. And immediately we knew that First Round was the right firm for us. And so kind of drawing from that experience, here's what I hope to personally to deliver to founders as an investor. First off, just as a former founder myself, I went through fundraising. I went through the early days of finding product market fit, growing organically to millions of users and ultimately through this successful acquisition. And I leaned so much on Josh during the most critical pieces of that journey. And so I just have a good recent feel for how investors can and should be helpful to founders.

• 17:41Speaker 03

  You know, but I've also had other experiences of scaling as an executive through to IPO and managing big teams. People across product design and analytics. So I know how to run large teams and I want to help founders evolve from the very early days of just these two people sitting in a room together, all the way through to being a world-class CEO, running a thousand-person company. And I've already spent a lot of time over the past couple of years advising founders in angel investing and as a way of seeing what it's like to be in a coaching role rather than an operating role. And so I've done this with a few dozen companies. Usually I meet with the founders and their heads of product every few weeks. And we cover a lot of things, but we tend to focus on what I'd call the two critical pieces of product. Product strategy and how to get to product-market fit. And then also product development and how to run an effective internal team with goals and roadmaps and metrics.

• 18:26Speaker 03

  And so by doing this, I've really gotten a sense, I think, for what it's like to be in the role of coach. And it's something that I've loved and it's one of the big reasons I think I'll be very happy as an investor. So, you know, even though I'm relatively new to being an investor, I'm lucky to have already worked with hundreds of product builders and founders over the last 15 years. And hopefully I'll hit the ground running at First Round.

• 18:43Harry Stebbings?

  Can I ask, Tom, what does it take to be a great coach to founders, do you think?

• 18:46Speaker 03

  I think that one of the traps that I fell into very early on as an angel investor was trying to solve all of the founders' problems myself and trying to help them come up with the perfect answers, especially if it was something product-related. Product ideas just kind of naturally come to me and it's something that I'm excited to talk about. But I learned over the course of working with many founders that it's better to be in a listening mode, helping the founder themselves deeply understand the problem and the different approaches they might take to thinking through the problem, rather than trying to answer the question yourself. And I think that's probably something a lot of former operators and especially a lot of former product people kind of have to learn the hard way as they learn to become great investors and great coaches.

• 19:29Harry Stebbings?

  Absolutely. No, I hear it a lot on the show in terms of operators telling investors struggling with that. If that's the type of investor that you'd liken, you think you will be with First Round, I think, I mean, it's quite a direct question, so apologies for this. But walk me through the changes that have happened at the top over the last few years and how you're thinking about that.

• 19:46Speaker 02

  Yeah, sure. So as you know, we haven't added any new partners since Haley Barna joined us, first as a venture partner in early 2016, and then as a general partner in late 2017. At the same time, since then, there have been some changes with founding partners Chris and Rob transitioning to board partner roles in 2018. And so the truth is, we've been operating as a smaller team for more than a year now with really only four investing partners. And so what we've known that we'd like to add to our partnership eventually, we weren't in a huge rush. We found that we were really gelling as a core group and really firing on all cylinders. And so Haley, she's led some really exciting investments for us in New York, like Mirror and Studs. And she just got back from eternity leave and we're super lucky to have her in the flow again. Bill had a big win with Looker this past summer, and he's really honed his process down to a

• 20:29Speaker 02

  science. It's super impressive how he continually optimizes his process. And I've worked with Josh for so many years now, and yet I find myself still sprinting to keep up with the intensity he brings to founders, to finding new investments, and the way he engages with the partnership every single day is nothing short of inspiring. So when it comes to team, anyone that we were going to add would need to complement this great group that we already have.

• 20:51Harry Stebbings?

  Totally. Can I ask, what does that internal discussion look like? In the schedule I put, does one partner say, hey, that Todd bloke is doing a banging job? I realize that that's probably very English in terms of how it's phrased. But how did that discussion look internally? And how does that take shape, more importantly, especially when you referenced the pick in Josh Hoffman's statement earlier? How do you think about the important qualities for First Round when adding that new partner? As you said, it happens very rarely.

• 21:14Speaker 02

  Sure, sure. So there's a lot there. So bear with me. I'll start with Todd, and then I'll talk about what we look for in a partner. So first with Todd, we've known Todd for quite some time. We invested in his startup, as you mentioned, back in 2013. And similar to over half of our investments, Todd was referred to us by another founder that we'd already partnered with, Dave Girard from Upstart. And after Josh met with Todd and his co-founder Ed, he sent an email to all of us that he had met two founders and absolutely fell in love. And it was particularly because of Todd's incredible product experience as the PM of Gmail and Facebook's newsfeed. And actually, your listeners may know, this is similar to how we brought Haley on board as a partner. She had been a member of the First Round community since 2010. She was a co-founder and co-CEO of Birchbox. And so we had front row seats as she grew as a leader, company builder and advisor, and then similar to Todd, an angel investor. And so it's a very

• 21:59Speaker 02

  familiar path for us. And Todd has just been such a tremendous value add to the First Round community, and we've loved working with him. So much so that actually, when his startup was acquired, it was a little bittersweet because, you know, great outcome, but we were sort of wondering, like, well, does this mean we have to stop working with Todd? And so we figured out ways to continue to work with him. You know, he's been part of the first angel track cohort. We brought him on as a founder in residence, as you mentioned, after he left Dropbox in 2018 and was sort of thinking about what was next. And the truth is, through that role, we got to watch up close as he worked with dozens of companies on a range of products and people challenges. And each and every time he worked with a first round founder, we heard just unbelievable praise of how helpful he was as an advisor. And you know, to the point where more than a few founders brought him on as a full-time

• 22:43Speaker 02

  advisor and even more than that, mentioned to us that, you know, we should probably be trying to hire him as a partner. And so we started thinking, oh, interesting, maybe he'll lean towards investing. We kind of had our fingers crossed. And then in his work as an angel investor, we got to see the way he attacked the idea of learning this new skill of being an investor. And we also got a preview to the kinds of companies and founders he was drawn to and how they aligned with our interests. And we actually ended up investing in a few of the startups he backed as an angel. And so when Todd decided that he wanted to be an investor full-time, you know, we weren't running a full process to find a new partner, but we knew we couldn't pass on the opportunity to work with Todd. And so the decision was really simple. Zooming out a little bit to talk about how we think about adding partner more broadly. You know, when it comes to the art of picking a partner, there are definitely a few traits that are top of mind for us. So first, you have to remember our founders are our customers.

• 23:28Speaker 02

  And so that comes first. And so we think, will this person be a founder magnet? Someone founders are absolutely a few so about. Someone that the best founders are dying to work with. And then, once we've invested, will this person be the founder's first call whenever there's a problem? The next is a focus and alignment with our mission, right? At the end of the day, First Round wants to be the best franchise in the world for founders who are just getting started. We focus on that one thing absolutely relentlessly. And you know, we're not dabbling in seed or exploring other models, like seed stage and early stage investing is our obsession. And so when we're adding a partner, we need someone that wants to dedicate themselves to investing at the earliest stages, you know, to backing two people with an idea, as Todd was just talking about, and then partnering with them all the way up through leading a really meaningful company. You know, we need someone who believes this mission of early-stage investing and partnering

• 24:12Speaker 02

  with the very best founders at that stage could be their life's work. And then the last bucket is making sure that the individual sort of meshes with our team and the way we operate. Do they bring some new element or dynamic that we

• 24:23Speaker 03

  Need that makes us stronger as a team. Are they a systems thinker? Do they have an intense desire to win? Are they competitive? You know, they have a unique network and would they bring us more access to great founders? And then we also look at things like, you know, are they a kind person? They don't take themselves too seriously and are they fun to be around? And then last is, you know, we think, could they play a leadership role and set an example to the rest of the first round team? When we find all of those things in one person, the actual decision process is relatively straightforward.

• 24:50Harry Stebbings?

  Todd, this is all super nice to you to hear, but I do want to touch on the element of the options that you had. Cause we heard a little bit there from Finn about the angel investing beforehand. And I've obviously had incredible things, both from your angel chats and also from Katie Stanton most recently. But I wanted to ask, cause when we had Josh Koppelman, your now partner on the show, he said he became more conservative when he made the move to institutional investing from angel investing. I'm really interested, how do you think your mindset will shift with the change from previously being angel to now first round and institutional investing?

• 25:20Speaker 03

  Yeah. So the biggest reason that I wanted to join a fund instead of starting my own fund or instead of staying as an angel is that I really wanted partners. And I've gotten to see a lot of my friends who are great investors, Katie Stanton, like you mentioned, love, love the episode with her, by the way, Ben Ling, Brienne Kimmel, start their own funds as solo GPs. And I'm actually an LP in those funds. So I've gotten to see how they've approached it up close. And I have massive respect for them, starting brand new funds on their own. But for me personally, I just wanted something different. I wanted partners who were five to 10 years ahead of me in their investing careers and that I could learn from. Because at every point in my career, when I reflect, when I've developed the most, when I learned the most every day was when I had a great mentor.

• 26:01Speaker 03

  And I think this is especially true in seed investing where it can take like five to seven years to know whether an investment was a good one or not. And so here's how I thought about it. How will the first round partnership make me better? And the answer is that I'll be bringing the same mindset that I've had and been honing as an angel and an advisor for these past five years. But that mindset, I hope, is going to evolve rapidly and be accelerated by spending all this time with Haley and Bill and Finn and Josh. And I'll see more companies, I'll have more at bats because I'll get a chance to apply my mindset to the investments that I'm considering, but also to each one of theirs. And so immediately I think it's going to be.

• 26:33Speaker 02

  Like a 5X learning, just in terms of volume. And hopefully I'll be an incredibly different investor, even just a year.

• 26:39Harry Stebbings?

  Absolutely, I'm sure you will. You mentioned the mentorship element now, and it does bring me to what we said earlier about, you know, Chris and Rob slightly transitioning out, and then also with Hayley and Todd joining the ranks. It's really kind of generational transition in action. And so this is kind of open to the floor here. But where do you think many go wrong? Because it's obviously kind of front and center for many firms. Many firms struggle. Where do you think many firms maybe go wrong when approaching this? Let's start with that.

• 27:02Speaker 02

  Yeah, it's a great question. And certainly, you know, I've heard more than once that the generational transition is the number one cause of death for venture firms. And I think it really comes down to be successful at generational transition. I think it really comes down to the orientation of the team. What each individual defines as success, and creating a culture that aligns team success, including the addition and departure of partners with individual goals. And as Tom was talking about founder DNA being so important, you know, I think that's true of companies. It's also true of firms. And when Josh started First Round more than 15 years ago, he made a choice and he didn't call it Koppelman Capital. This is very intentional, and that's been infused into everything we do. He called it First Round for a reason. And when you make a move like that, you're declaring that you want to build a forever institution. You're declaring an aspiration and a north star.

• 27:46Speaker 02

  And I think that that aspiration is shared by every First Round partner. And this is a huge part of why we've cultivated a team approach to decision making, investing, and even brand building. And so this DNA, I think, for us anyway, insulates us a little bit from some of the challenges that other firms face, because we just operate differently as a partnership. We don't have an attribution model. And so when we make an investment, it's a First Round company. I don't have my portfolio and over time Todd won't have his and so on. And so when you think about generational transitions at other firms, you think of politics and power vacuums and our operating model has really helped us avoid many of those issues. Because our team approach and sort of universal willingness to put the First Round franchise ahead of any personal scorecard really comes through.

• 28:27Speaker 02

  And I have no doubt that this also allows us to do a far better job in our service to the entrepreneur as well, whether it's choosing to make the initial or follow on investment, or how we advise companies and align their needs with what we can offer. Everyone's operating as a team across the entire organization. And so at the end of the day. First round, like like every other fund, has a product that we're building and we need founders to choose to buy our product. We also need people to deliver that product over the life of our partnership. And from the first email to the first meeting, to our decision to invest, to the support we provide afterwards, all of those product delivery touchpoints, they need to be consistent. And we need to build the best team to bring the first round product to the founders we serve and to deliver the results we aspire to generate for our shareholders, for our LPs.

• 29:10Speaker 02

  And I might deliver the product in a slightly different way than Haley does or Josh does, but ultimately, we want a solid through line of how we serve the entrepreneur. And by the way, this framework of product creation and delivery, when you think about it that way, what's really special about both Todd and Haley is that they've been consumers of this product. So they have the added benefit of being on the other side of things very recently. And they've seen how we deliver firsthand. They've got a strong perspective on what's most helpful, on what founders truly need from their investors and on what they might want to add from day one.

• 29:38Speaker 03

  Yeah. And so, Harry, this is actually a big part of why we picked First Round when we were choosing investors for our startup. Not all VC firms feel like this, honestly. This team-based approach, you can feel it as a founder. The warmth, the collaboration, all these relationships we got to build, super meaningful for us. And so while Josh led the investment in cover and was on our board, I talked to Finn and Brett all the time and I worked frequently with all these folks on the First Round platform team. So we really felt like we had the support of the entire firm the whole time.

• 30:05Harry Stebbings?

  I absolutely love that. And I think it's where First Round really have innovated so well in terms of you and venture as a product. And you also said in terms of the community and the content platform you've built out. But it's, I think it's absolutely something where the venture community fully recognizes and respects it, all that First Round's done in terms of productizing venture. I do want to move into my favorite element, though, chaps, in terms of the quickfire round. So I say a short statement, you give me your immediate thoughts. Finn, you're a master at this already. Todd, this will be great fun. And I'm going to start with you, Todd. I promised myself I would read more in 2020. Help me out here. What's the favorite book and why?

• 30:37Speaker 03

  All right. So I'll give you two books that I actually heard on this podcast. So kudos to you, Harry, for sourcing some great reads. The first one is Creative Selection. It's a story of how the design process worked internally at Apple during the age of the iPod, the iPhone and the iPad. And I'm just definitely a sucker for any book that talks about the internal are the secret sauce of a great company like Apple. And the second is Trillion Dollar Coach by Eric Schmidt and Jonathan Rosenberg. And I just loved it because there's so much gold in there about how to be a great leader of people. And also because it gave me this window into the very early days of Google before I got there.

• 31:08Harry Stebbings?

  Finn, your turn. What do you know now that you wish someone had told you when you started with First Round many years ago?

• 31:14Speaker 03

  Yeah, I think when you started as a VC, you assume and everyone else assumes your job is go find great companies. And the thing I wish someone had told me is that actually your team will define your success. They'll make you better and any investment you make in pushing them to be their best will come back to you sort of 10 times over. And it's the great partners and a great partnership that earn you the right to serve the very best founders in the world. And focusing on that is the precursor to success in venture.

• 31:37Harry Stebbings?

  Todd, you sold your startup to Twitter. If the time came again, would you do it again? And what's the reasoning?

• 31:43Speaker 03

  Yeah, so the biggest thing that I reflected on a lot in the years afterwards and that I would say I'm not still 100% sure of. Were should we have sold and should we have sold to Twitter versus Dropbox or one of the other companies that we were talking to? And I think in retrospect, we made the best decision we could with the information we had at the time. We ran a really good process. We sort of ran it like a fundraising process where we had multiple companies that we were talking to. And so that allowed us to really control the timeline and get a great outcome on the acquisition. If I'm honest, certainly Twitter was a bit of a rough ride in 2014 and 2015. And the stock price on the day I left was lower than the day I started. And a lot of the acquisition was based on stock. But at the end of the day, it was a really good learning experience and I'm glad it's in my history.

• 32:23Speaker 03

  So that I have some firsthand knowledge to coach founders with today as they go and think about acquisitions potentially. We worked on some really interesting projects at a very interesting time in Twitter's history. And some amazing people who I still work with today. And we all did fine financially. So I think the best decision is the one we made at the time, given what we knew. And I'd probably make that decision again today.

• 32:43Harry Stebbings?

  Totally. And hindsight is always a beautiful thing. Finn, how does one define success in their first year of being a partner, do you think, in venture?

• 32:50Speaker 02

  It's a hard question because of course it's a long term game and given we form our partnerships with founders at the earliest stages, a new partner, you certainly won't be able to measure returns for some time. So for me, it's really about being able to move the room. And what I mean by that is thinking through, how do you influence the thinking of the partnership? Whether it's convincing the team on an investment you think we should make or one we really shouldn't make, regardless of who the point partner is for the specific opportunity, or if it's initial investment or a follow on, how you move the room to make a higher quality decision is the critical metric. And at First Round, it's not just investment decisions. It could be marketing strategy for the firm, like should we launch 30 minute VC podcast? Or maybe an experiment around better service for founders with some product that we want to deliver.

• 33:30Speaker 02

  But when you look at your first year, I think what you really want to see is your ability to influence and generate engagement from the rest of the partnership. And you want to see that go up over the course of the year.

• 33:39Harry Stebbings?

  Finn, I wish you the best of luck with the 30 minute VC. I look so forward to that one. Tell me, Todd, who's the biggest mentor to you? And what's been the biggest takeaway that they've taught you?

• 33:48Speaker 03

  So I've been incredibly lucky to have this string of amazing mentors along the way, mostly product leaders. So Marissa Meyer, Ben Ling, Keith Coleman at Google and Kevin Wheel at Twitter. But the biggest probably been Josh Koppelman here at First Round. And for the last seven years, whenever I faced a really big decision in my career, Josh was my first call. And as we discussed, Josh is really big on this idea of the pick. And so he gave me the advice to take the time after Dropbox to make the right next pick in my career, especially if it's something I want to do for the next 15 years. And I'm just super excited that the pick is to join the team here at First Round.

• 34:20Harry Stebbings?

  Penultimate one, and I couldn't agree with you more there on Josh, such an amazing person. But Finn, penultimate one, what advice do you hear most often given that you maybe disagree with?

• 34:29Speaker 02

  I think recently when I hear people say ideas don't matter, it just drives me crazy. Like the idea is the most valuable thing you have when you start. And the best ones are the result of tremendous amount of work and effort, experience, insight. They're unique and almost magical by nature. I think they hold the energy that can propel a team forward through the tremendous uncertainty you face when you first get going. And oftentimes the idea defines the mission of some of the most important companies in the world. So I think a great idea obviously is necessary, not sufficient, you need execution. But when people say the ideas don't matter, I think it's sort of garbage.

• 35:00Harry Stebbings?

  Now Todd, I want to finish with you here, and this is a tough one, given the recency of the announcement. But what's been your most recent personal or professional institutional investment, maybe? This may be publicly announced, and why did you say yes and get so excited?

• 35:14Speaker 03

  So I'll break the rules, Harry, and give you two. They're not the most recent, but they're the most top of mind for me because I've been working really deeply with them over the past year. And because they've also raised great follow on funding rounds. First is Papaya Payments, founded by Patrick Kahn and Eric Meltzer. Papaya is this mobile payments app where you can take a photo of any paper bill, like a medical bill, a parking ticket, and they just pay it for you automatically. So it's that very magical experience that we talked about earlier. And their seed round was led by First Round, I think, a few years ago. And they later raised their Series A from Sequoia. And then Snack Pass. So Snack Pass is also a first round seed company. Snack Pass started when the founders Kevin Tan and Jamie Marshall were actually undergrads at Yale. And they built this app that lets you order ahead at restaurants and skip the line. And it's also got a bunch of really cool social features like gifting and group discounts

• 35:59Speaker 03

  that make it spread virally on college campuses. And so they just raised a fantastic Series A led by my friend Andrew Chan and Andreessen. And I love working with the Snack Pass team, and it's also been really fun being in board meetings with Andrew.

• 36:10Harry Stebbings?

  Guys, this has been so much fun. I think it's clearly a sign that I should do two incredible guests more often. Todd, I'm so excited for the first year I had for you at First Round. You couldn't have joined a more brilliant partnership. Finn, you know how much I always appreciate your support and Josh's. So thank you so much for joining me today. It really means a lot to me.

• 36:25Speaker 03

  Thank you so much, Harry.

• 36:26Speaker 02

  Yeah, thanks, Harry. It was a great conversation and really fun to be with you again.

• 36:31Harry Stebbings?

  What an incredible duo, and I can't wait to see Todd's entrance into the world of venture full time. And if you'd like to see more from us behind the scenes, you can on Instagram, at H Stabbings 1996 with two Bs. I always love to see you there. But 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. I have to say, I absolutely love their design and workflow. It's just so intuitive. And they've 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 thousands of companies and founders who value

• 37:16Harry Stebbings?

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• 37:56Harry Stebbings?

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• 38:41Harry Stebbings?

  With nimble banking services and solutions, Silicon Valley Bank helps startups adapt to the changing needs of a growing company. Learn more at svb.com/next. That's Silicon Valley Bank, ideas bank here. As always, I so appreciate all your support and I can't wait to bring you a fantastic episode with an incredible founder on Friday.