20VC: Learnings From Mary Meeker & Larry Summers, Missing Out On Uber & The Changing World of VC with Canvas Partner, Rebecca Lynn

Rebecca Lynn is a Partner @ Canvas, where she focusses on Fintech, Digital Health, SaaS and mobile. Rebecca led an early stage investment in Lending Club, which was the largest US technology IPO of 2014 and the 4th largest Internet IPO since 2001. She has also led investments in the likes of Check (acquired by Intuit), RelateIQ (acquired by Salesforce), Proximity, Practice Fusion and more incredible companies. Prior to being in VC, Rebecca held operational roles at NextCard where she rose to become VP of Marketing and Head of Customer Acquisition and saw the company going public with a $1.3bn market cap. In Today’s Episode You Will Learn: 1.) How Rebecca made her way into the wonderful world of VC? 2.) How does Rebecca view the importance of brand and thematic focus in the world of VC today? How can a VC be focussed thematically without missing moonshots? 3.) What were Rebecca's biggest lessons from sitting on boards with the likes of Mary Meeker and Larry Summers? How did that change how Rebecca viewed being a board member? 4.) "Fintech is all about distribution and acquisition". What does Rebecca make of this statement? How have we seen evolution in both distribution and acquisition in the rising tide of new fintech startups? 5.) How does Rebecca analyse fund economics? What does she make of the mega $1Bn funds raised over the last year? What is the optimal size fund for Rebecca? Items Mentioned In Today’s Show: Rebecca’s Fave Blog: The Daily Shot Rebecca’s Fave Book: Influence by Robert Cialdini As always you can follow Harry, The Twenty Minute VC and Rebecca on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Pearl believes the latest automotive technology should be available to every driver – whether it’s time for you to buy a new car or not. RearVision is our first step in driving this commitment forward. Pearl RearVision is the only wireless backup camera and alert system that installs in minutes and updates throughout its lifetime. Pearl literally takes less than 10minutes to install and is completely wireless because it’s solar powered. Since RearVision is software based, we’re able to push updates and new features over the Pearl App in the exact same way you receive updates for other apps on your phone. Pearl RearVision is perfect for anyone who wants to upgrade their car in minutes. Pearl RearVision is $499.99 and available at PearlAuto.com. It’s also available on Amazon and through Crutchfield. Xero is beautiful, easy-to- use online accounting software for small businesses. With Xero, you can easily manage your accounting anytime, anywhere from your computer or mobile device. When you add Xero to your small business you are able to: Send online invoices and get paid faster. Get an instant view of your cash flow. Track your payroll and keep tabs on your inventory. Partner with your accountant and bookkeeper in real time whenever you like. You can also customize your Xero experience with over five hundred business apps, including advanced solutions for point-of- sale, time tracking, ecommerce and more. Sign up for a free thirty-day trial at xero.com/20vc

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

• 0:00Harry Stebbings?

  Hello and welcome back to the 20 minute VC with your host Harry Stebbings. And you can find me on Snapchat at H Stebbings with two Bs, or writing some hopefully rather thoughtful pieces on the new blog mojito vc.com. Now for the show today, and I really am so excited for our guest. I heard her first on Stanford's ETL podcast and realised that I simply had to have her on the show. Therefore, I'm delighted to welcome Rebecca Lynn to the hot seat today. Now Rebecca is a partner at Canvas, where she focuses on fintech, digital health, SaaS and mobile. And Rebecca led an early-stage investment in Lending Club, which was the largest US technology IPO of 2014 and the fourth-largest internet IPO since 2001. She's also led investments in the likes of Check, acquired by Intuit,

• 0:40Harry Stebbings?

  Relate IQ, acquired by Salesforce, Proximity, Practice Fusion and many more incredible companies. And prior to being in VC, Rebecca held operational roles at Next Card, where she rose to become VP of Marketing and Head of Customer Acquisition and saw the company going public with a $1.3 billion market cap. I do also want to say a special thanks to Matt Garrett at Salesforce for the intro to Rebecca, without which the interview would not have been possible today. However, before we welcome Rebecca to the hot seat, what if accounting could be easy, efficient, maybe even enjoyable? Well, that's where Xero come in. Xero is beautiful, easy-to-use online accounting software for small businesses. With Xero, you can easily manage your accounting anytime, anywhere, from your computer or mobile device. When you add Xero to your small business, you're able to:

• 1:23Harry Stebbings?

  Send online invoices and get paid faster. Get an instant view of your cash flow. Track your payroll and keep tabs on your inventory. Partner with your accountant and bookkeeper in real time, whenever you like. You can even customise your Xero experience with over 500 business apps, including advanced solutions for point-of-sale, time-tracking, e-commerce and more. It's no wonder over 860,000 customers in more than 180 countries use Xero. So sign up for a free 30-day trial at xero.com/20vc. That's xero.com/20vc. And now the books are in order, you might have some extra dollars to spend. And what better way to do that than with Pearl? Now Pearl believes the latest automotive technology should be available to every driver, whether it's time for you to buy a new car or not.

• 2:06Harry Stebbings?

  Pearl Revision is their first step in driving this commitment forward. Rear Vision is the only wireless backup camera and alert system that installs in minutes and updates throughout its lifetime. Pearl literally takes less than 10 minutes to install and is completely wireless because it's solar powered. Since Rear Vision is software-based, it's also able to push updates and new features over the Pearl app in the exact same way you receive updates for other apps on your phone now. Pearl Rear Vision is perfect for anyone who wants to upgrade their car in minutes and costs $499 and is available at pearlauto.com or amazon.com or through Crutchfield. However, it's now time for me to shut up and I'm delighted to hand over to Rebecca Lynn, partner at Canvas.

• 2:50Speaker 01

  You have now arrived at your destination.

• 2:53Harry Stebbings?

  Rebecca, such a pleasure to have you on the 20-minute VC stay. So many people have recommended you. It was tough to exactly remember which one to thank, but let's thank Matt Garrett at Salesforce for the intro, but thank you so much for joining me today, Rebecca.

• 3:05Speaker 02

  Thank you so much and thank you, Matt.

• 3:07Harry Stebbings?

  But I'd love to get started today by discussing a little bit about you and how you made your way into what I most definitely call the wonderful world of venture.

• 3:15Speaker 02

  Absolutely. So I think like most venture capitalists, I never intended to be in venture capital. I started out in the Midwest. I was a chemical engineer in my old life. I was a first-generation college kid. I knew what venture did as an engineer back in the Midwest, but I really hadn't thought that that would be my path. I moved out here, though, in 98 after working at Procter and Gamble in their global team and was one of the first people at a company called NextCard. And NextCard was funded by Sequoia. Mike Moritz was on the board and backed Cliner Kirkens, NEA and others. And it was phenomenal. I was employee 30, the first product person. Product is where a lot of VCs actually do come from. And we were the first online credit card and credit product.

• 3:58Speaker 02

  And that company grew from 30 to 1,300 when I was there. We went public and I was there for about four years running one of the top online advertising efforts. That was amazing experience. From there, I went and I did my own company where I had more of a consulting organization that helped the large financial institutions really figure out their product and their online presence. And then at some point in my Life, I decided it was better. I wanted to go on a sabbatical. And my husband encouraged me to go back to get a, get my higher level degree that I'd always wanted to get. So I went back and I went on a sabbatical as I determined, did a J D M B A. At the University of California at Berkeley and it was just phenomenal. It was most more phenomenal probably because as an undergraduate, I, I worked three jobs, including a stint in a, a nuclear reactor.

• 4:42Speaker 02

  As a, as a chemical engineer.

• 4:44Harry Stebbings?

  My worst.

• 4:44Speaker 02

  Uh, just, just, yeah, it was, it was interesting. They, I, they liked to call me Homer Simpson in the sorority house. It was great. But I worked three, three jobs, you know, as a, as a chemical engineer going through school, which wasn't easy, but, but it, we got it done. And then being able to go back and then just enjoy graduate school was phenomenal. So I went back to Berkeley during my J D M B A. And really focused on starting another company that would be highly scalable. And I was working on a couple of different ideas and we had the good fortune of meeting the, the folks here at Morgan Thaler Ventures. And they pulled me in. It was just supposed to be for a summer. And I found that I really loved it because what I was doing naturally was what the venture job was. Which was helping companies get their business together, helping to connect people, helping to hire people.

• 5:29Speaker 02

  And really being a thought partner. And that was what I was doing when I was in school. People would seek me out for assistance in starting their company because they knew what I'd done in the past. And in venture, that was exactly the job. And in fact, one day I told Gary Little very early on, I said, wow, this is so amazing. I, I can't believe people pay me to do this. And he quickly offered to stop paying me.

• 5:52Harry Stebbings?

  No, no, no, no, no, no.

• 5:53Speaker 02

  I said, no, no, no, I'll, I'll, I'll keep that, right? So it's just been really fortunate. I think it's one of the few jobs in the world that reward A D D. And the ability to sort of, you know, multi-stream and focus on many things at one time. And that's something I've always really enjoyed and, and been really good at. So it's been great.

• 6:09Harry Stebbings?

  And fantastic to have a fellow law student on the program too.

• 6:12Speaker 02

  Thank you.

• 6:13Harry Stebbings?

  Yeah. I was only there for three weeks, but I still count.

• 6:18Speaker 02

  You were smart.

• 6:19Harry Stebbings?

  No, genuinely, I've had longer holidays than I've had law school, but anyway.

• 6:24Speaker 02

  Sounds like another topic.

• 6:25Harry Stebbings?

  Anyway, another topic, but I do want to discuss then because you joined first Morgan Thaler, which then kind of transitioned slash pivoted into Canvas. So talk to me about this because you seem to be the only person who's done this so successfully. So I'd love to hear how you navigated that process and the real motivation behind it.

• 6:42Speaker 02

  Yeah, I think I would say we navigated that process and ended up with three amazing firms because of the thoughtfulness of the leadership. And I'll give a lot of that credit to Gary Little in terms of how he helped the firm transition. And so what we really realized pretty early on was that focus and brand were becoming more and more important in venture. And so these firms like Morgan Thaler that had been around for over 40 years, that were many different pieces and parts. You know, they were buyouts, they were life science, meaning very hardcore, you know, biopharma and med device and then and then tech, right? Lightweight software and services. Those were all in one entity and it's really hard to build a brand when you are many different things to many different

• 7:24Speaker 02

  people. And so the three teams worked together very collaboratively and decided essentially spin out each one of those functions. And so we have Lightstone in the life sciences group and they're a top life sciences fund. They're absolutely amazing. And then we have Canvas that spun out to really focus on software and services and technology. And and that has been a much better way for us to position ourselves in the market and with LPs as well as entrepreneurs. So that has been very effective. And the other thing we know too is it's incredible that we believe at least is it's incredibly important, especially in this day and age to be very thesis driven because there, you know, there are hundreds of financial services startups, for example. And how do you know which one to pick? And

• 8:09Speaker 02

  we're a boutique shop. And so we need to really understand the marketplace, go very, very deep, and then pick the winner in that particular category. And then the other thing that this helps us do is because we're very thesis driven and because we've made all those connections and done our homework, we're really able to help our entrepreneurs with strategy, with introductions, and with the overall business because we understand very well what's happening in the overall space from the large companies that are moving in the space to the very small.

• 8:39Harry Stebbings?

  The thesis driven element is super interesting to me. We recently had Gary Tan on the show from initialized and Gary said that if you're thesis driven to a large extent, you'll miss it out on a lot of things in terms of drones or

• 8:52Speaker 02

  Absolutely.

• 8:53Harry Stebbings?

  So how do you be thesis driven but still have the wider scope of not missing out on the anomalies?

• 8:59Speaker 02

  Well, that's where having ADD just helps you immensely because if you're, if you have a little ADD, you can't help yourself but look at all these other things. And so while I say I'm thesis driven, I'm not, if I'm looking at, if I'm diving into life science or healthcare services or whatever, I'm always looking at some different opportunities, right? And those are often the most interesting. And so my, one of my latest investments was in the autonomous driving space. It's a full autonomous driving sort of system, including the new, a new LiDAR system and the software and everything that bundles with that. And that hasn't been announced yet, but you know, probably will be soon. So that was not in our thesis area, right? We were looking at AI and we were looking at, you know, different applications.

• 9:42Speaker 02

  And I had a call from a friend that I really respected saying, can you help this entrepreneur? And here's what he's dealing with. And I said, absolutely, have him come in. I'll, I'll talk to him. Right? I started helping him and it was just so blown away by that, by him as a person. And then what I learned, because again, as you're kind of pulling the thread, you're learning more and more. And as you're helping that entrepreneur, you're getting resources to him to help him figure out what he needs to do. You're, you're just hearing this validation, right? That this is really the, the next greatest thing. And so while we are thesis driven, we are always, always, you know, keeping our eye open for what that next thing might be, whether it's the microbiome or autonomous driving. We see a fair amount of that day to day.

• 10:24Speaker 02

  So I think you have to have sort of, I would say it's steerage, right? With the thesis, that's how I think about it, even from a sailing perspective. If you don't have momentum and steerage and kind of focus, you're, you're not going to get anywhere. But you also have to be opportunistic. And the other thing too, is that there is just so much out there right now. It's insane in terms of the number of deals, you know, deal flow is, is not at all a problem. Deal filtration is your problem. If you're not thesis driven and if you don't have thoughts about what's happening in the financial services space, you'll see something and you'll think, oh, this this sounds great and and it does sound great, but you need the context of the other five companies in the market doing exactly the same thing. You need the context of what the big banks are doing and where they're moving.

• 11:07Speaker 02

  And you also need the context of what's happening in the regulatory environment, right? That might help or hurt these different these different companies. And so by being thesis driven, you can really be ahead of the curve. So we were one of the first people that jumped into healthcare services back in oh nine. And we were so early, in fact, that we had to start a whole conference called DC to VC just to bring Anish Chopra and the people from Washington DC to the valley to explain to VCs, you know, what was happening in the regulatory space. So we had the High Tech Act and the Affordable Care Act that had just rolled in. Cost incentives were really shifting and there were less than a handful of VCs that were doing anything in healthcare services at that point in time. And it sounds really great to be first and be on your own until your company needs a series B.

• 11:51Speaker 02

  And then then you then you want other people to be very interested. And so by being very thesis driven, we were early and we got to plant the flag. And then other people followed and now healthcare IT is one of the biggest categories that people are are really looking into so and and investing behind. So I think I think it's both.

• 12:08Harry Stebbings?

  And you you mentioned one of your investments there earlier being the autonomous driving. And you mentioned also your interest in the fintech space. I do want to dive on one of the investments you made early on in your career being Lending Club. Because Rena Rena Rena, you can correct.

• 12:21Speaker 02

  Rena Rena, yes.

• 12:23Harry Stebbings?

  Asked asked you to be a board member early on and Gary, your partner, take the observer role. And you said before that there were huge lessons from being with him and with Mary Meeker and Larry Summers on the board. I'd love to hear what those lessons were for you in your more formative years and how it made you think about what being a good board member really was.

• 12:42Speaker 02

  Such a great question and and people discount this a lot. But it it I see people go through this all the time when they first step into venture. And this is where I can't tell you how invaluable somebody that really will mentor you and give you honest feedback it is in your life. And so. When I first stepped onto that board as a full board member, it was myself and Jeff Crowe and Dan Saporin and Renaud. I mean, all amazing, amazing, you know, very accomplished people and very good board members. And what the transition is, is going from, you're really going from a player on the field to a coach on the sideline. And, and making that transition is hard. And, and to get the right kind of coaching in terms of when you say something, what battles you pick, what you don't pick,

• 13:27Speaker 02

  and how you help the company is really important early on. And so you learn really valuable things that I think everyone will agree with, like just pick one thing. Like if you, if they're, you know, they're, a startup, their wheels are just falling off the bus in every startup. There are always issues in a startup, right? And, and you can't fix them all, but being able to figure out what that one thing is, that if you help fix it, it will make a difference, is really the, I would think, what being a board member is all about. And so with Renaud, I have, you talked to him, I think what he would tell you is, you know, hiring and recruiting were the, was the one thing, because I'd had so much experience in that space that in financial services that I could go in and really be helpful.

• 14:10Speaker 02

  And so I would go in and spend a day or two a week at the company for a while to get a feel for the job and the relationships and the interactions internally in terms of what people could do and what they couldn't do, and where they needed to fill the holes, and then I would help hire. And I probably brought in a dozen or so people into that company and helped hire Scott Sandborn, the current CEO, who was a CMO when we brought him on. And so being a good board member is figuring out where you independently could add value and actually help do some of the work, not just offer advice and guidance, but just say, hey, you have a lot going on, you need a chief marketing officer, let's talk about what that person will look like. I will take this piece on for you. And then also knowing when, you know, it's not your role. What I see people really make mistakes is when they get too involved and they get too entrenched.

• 14:54Speaker 02

  And if a board member is actually doing the work, it, it's not good. It's like, it's like if you have a kid and you're doing their homework for them, it's not going to help them at the end of the day take the test, right?

• 15:04Harry Stebbings?

  How do you know, how do you know the balance? How do you know the balance between involved and benefiting the company and too involved and potentially detrimental?

• 15:13Speaker 02

  You know, I always talk to the CEO. I mean, and you have to have a very trusting and direct relationship. And so I really, I will ask permission before I really jump in. And I'll ask, I mean, how much do you want me involved? I mean, it is a feel thing, right? As soon as I feel like it's too much, I always, I go immediately to hiring somebody. So now that I've been doing this for about 10 years, it's pretty easy. Now, as soon as I feel like I know what the person needs to look like to take that job, whether it's, you know, a product person or a marketing person, as soon as I feel like I have a good sense in my head, I just say, hey, you know what? Let's start a recruiting process. I have some people in mind. I'll help you with this. And so I go very quickly into let's hire somebody. And that my job really is just to figure out the needs assessment and then hire that person for them.

• 15:58Speaker 02

  And, you know, when I've had companies that have had challenges, which are probably all of them at some point in their life, and then really ended up on the other side of that, which is most, which is phenomenal, right? It's all, when you look at what changed, it was the people. It was that we added like a couple of people in different areas that just helped the company take off. And I, you can, I can see that in almost every company across the board. And when that didn't happen, it's because there was resistance to adding those people.

• 16:26Harry Stebbings?

  In terms of you said about adding people there, is there ever the case of losing people? What's your take on management churn as you progress through the stages? Do you think everyone's meant for the kind of multitude of the journey? Or are some people series A players and then not ready for series C?

• 16:40Speaker 02

  Yeah, some people can scale and some people can't. And the hard thing about this is that it's seen as a negative sometimes if people can't scale. And I look at this and I just think, wow, you know, there are people that are really good at starting companies and getting them off the ground. And oftentimes, the reason that they're really good at that and the reason they chose that was because they tried to be in a big company and they hated it and they were miserable and it was nothing they ever wanted to do, right? And so somehow later in their life, they feel like now not being able to be at like that big company and not liking it is some kind of negative issue. And I look at them, I just, I think it's sad to some extent because, you know, there are people that are really good at getting things off the ground. There are people that are really good at scaling the company. And, and those often are two different things.

• 17:23Speaker 02

  Things and sometimes it can you can do both and sometimes people are very good at doing both. But you know, the truth of it is often people aren't very happy at doing both. You know, people are kind of in their element, right? When they're very early and and just sort of figuring all the problems and getting everything together. And you just see people thrive. And then you see them and I see them later and I kind of see them being OK. But you want to get that old person back and you think, gosh, if I could just put you in a new startup, you would just be amazing because that is you. But they they kind of feel like they need to keep, you know, they need to they need to do that scaling process. And there are other people who really enjoy the whole ride. I would say Renault is one of those. And, you know, to his credit, what he did. I don't know anyone that I've met that has more of a learning mentality. You know, he called it a learning mindset and a fixed mindset.

• 18:08Speaker 02

  Always learning and always asking questions. And he went out very early. He joined Y P A Y P O. He got a coach. He was always, always coming to the board and asking, how am I doing? What's going on? And that, I think, is what enabled him to scale from a, you know, a raw startup to a public company CEO. And, you know, we can I look for people like that that have that learning mindset. But we've had big successes too, where the CEOs come to us at some point and just said, or the founder and said, you know what? Company is doing great. I really love being there, but I I don't want to do all these like administrative things, right? I want somebody else to do that and I want to do what I love. And then if you have a good working relationship with your board, that can be an incredibly successful transition. And I've led at least one of those. And I'm proud to say the founders are still there.

• 18:53Speaker 02

  The founders are still productive and super happy. And all the kind of crap they didn't want to do, somebody else is doing and they're doing it really well. And they like doing that job, right? And so it's very much trying to figure out, you know, the right thing for the right person and and making sure that people are are doing what they're best suited to do at all points in time. And that's where you get that efficiency of a team. Like you wouldn't expect somebody who was a great, you know, point guard to be able to play center, right? You just would not and then consider them a failure if they couldn't do that, right?

• 19:23Harry Stebbings?

  Absolutely. I completely understand your US sporting analogies. I'll pretend to you along with that point to the center.

• 19:29Speaker 02

  I'm sorry, I don't I don't know cricket or I would have tried that.

• 19:32Harry Stebbings?

  I I mean. Hey, I can teach you cricket, but you you mentioned Renault there and Lending Club. And I spoke to your partner, Ben Marison, and he told me that I had to discuss fintech with you. And you were the fintech.

• 19:44Speaker 02

  Oh, sure. Absolutely.

• 19:45Harry Stebbings?

  So so I do want to deep dive on that because one of our recent guests stated that fintech can be baked down to two things, either finding better ways to model risk like Climate Corp or mobile credit scores, or innovate on distribution like Zenefits. So what do you make of this kind of baked down assessment of fintech innovation with this comment? Do you think it's fair?

• 20:06Speaker 02

  You know, I don't think it's wrong. I just don't think it's complete. Yes, you find better ways to model risk, but you know, other people do that very quickly. And actually, Climate Corp didn't sell the Monsanto to be an insurance play, right? It was actually a very different thing that they were acquired for. And so, you know, and so you do want to look for the better underwriting mousetrap. I have rarely seen that, to be honest, because most of the data, I mean, people always claim it, but I've rarely actually seen that better underwriting. I think SoFi is probably one of the better examples, but they've essentially said, we're going to go after people, you know, from top tier schools and great degrees. And that's a pretty, that's a pretty, you know, fair assessment of, you know, credit risk, right? And they're right. The distribution, I think, is probably more important. It's all about acquisition at the end of the day.

• 20:50Speaker 02

  And acquisition is incredibly important. And we've seen real innovation in fintech. You know, Lending Club figured out a few different channels, but they they ended up direct mail. And direct mail worked again for them, and it's worked for financial services for a long time. When you look at Credit Karma, they're doing, you know, TV and videos and things like that. And Nerd Wallet is content. And they just get really, really, really good at their distribution, and they have a good backend product. So I think it's that. But I really think what's happening is there are also times in the market where there's these existential things that happen to companies, and we look for that. So we look for, you know, that whole question is, so yes, on terms of distribution, absolutely. You've got to figure that out, or you're you're really dead in the water. Being really good at distribution is hard.

• 21:35Speaker 02

  Yes, you've got to be very good at credit underwriting, but thinking you have some magic secret sauce, especially under the guise of Thicra. Often hard to get a handle on, but you want that exogenous issue. And so I'll tell you a few examples of that. So Lending Club, we came in in Q1 of 2009 after Lehman crashed. And I actually sent Reno my investing memo when I stepped off that board. And it was amazingly on in terms of why this company could be big. And it was because the banks would be asleep for three to five years. And it created this chasm in the marketplace where even if you were super prime, you couldn't get a credit card at that point in time. You had to have at that point in time 30 to 40% down on a house even to buy a house.

• 22:18Speaker 02

  And so the banks shut down. And what that allowed Lending Club to do is come in and attack that prime and super prime market with a pretty reasonable product, right? And to pay down those high interest credit card rates that had just jacked up due to that cycle in the economy and get a toehold and build their business and learn how to acquire and learn how to underwrite and actually be able to acquire at a pretty good rate and then have the volume by the time the banks woke back up that they were competitive, right? So it was a very special time in the market. I would say Chek was incredibly similar. Chek exited very well to Intuit. And Chek was really the last mile kind of consumer interface. And I hate to use the term mobile wallet, it was really or PFM, but it really was, we're going to help you be smarter about your financial life

• 23:03Speaker 02

  and we're going to take that over for you. And it was at a time when the iPhone now existed. People were very comfortable at that point putting in their username and passwords from banks. And they built a phenomenal technology backend that was essentially better than Yodlee with their engineering team in Israel. And so that was a really, again, time and place in the market. You know, why now? Well, the technology and the consumer, they're both ready. And yes, they have an interest, they actually did innovate on acquisition. But that was why them. And then when you look at NerdWallet in terms of content marketing. So they figured out acquisition and content marketing had really just taken off. And they were on the very forefront of that. And Credit Karma had a very special deal. Free credit report, I worked on that product ages ago with Experian. But they truly had a free credit report.

• 23:47Speaker 02

  And it didn't cost them anything because of their relationship they had with TransUnion. So I think there is truth to the, yes, you have to have underwriting. Yes, you need acquisition, both is better, but it's not even pleaded that, you need something else.

• 23:59Harry Stebbings?

  Mm-hmm, absolutely. No, I do agree with you. But I do wanna dive into a quickfire round. Probably one of my favorite elements of the show. So I say a short statement and then you give me your immediate thoughts. In about sixty seconds or less. How does that sound? I'm pretty, I'm pretty strict on this one.

• 24:14Speaker 02

  Oh, okay, I'll, okay.

• 24:15Harry Stebbings?

  So let's do your favorite book and why.

• 24:18Speaker 02

  Influence by Caldini because it helps you understand people. And it helps all the marketing and the business and people and relationships make sense. And I also love any historical fiction.

• 24:28Harry Stebbings?

  And then is brand a sufficient motive, defensibility or IP?

• 24:33Speaker 02

  I think you need both.

• 24:34Harry Stebbings?

  Okay, absolutely. Biggest mentor and how did it come about?

• 24:37Speaker 02

  Gary Little, my partner here at Canvas and before that Morgan Taylor. And we met in line for pizza at Berkeley when he was doing an event for me there. And yeah, literally in line for pizza. It shows you how little serendipity in life is never a bad thing, right?

• 24:52Harry Stebbings?

  Uh-huh.

• 24:52Speaker 02

  And he's, he's just been terrific. I mean, he backed me when Renault asked me to be the board member at Lending Club. He said absolutely. He has given me really constructive, honest feedback and critical advice that I have welcomed. And he's, he's been a great partner.

• 25:07Harry Stebbings?

  Favorite blog or newsletter? What are your must reads?

• 25:09Speaker 02

  I alternate all the time, but the one I love is the Daily Short. I don't know if you know that one or not, but a very great synopsis of, you know, what's happening. And from a economic perspective around the world and the Wall Street Journal just purchased it. So we'll see what happens there.

• 25:24Harry Stebbings?

  And then the biggest miss and, and have you avoided the FOMO for a minute?

• 25:28Speaker 02

  Yes. So the biggest miss was Uber. And Travis Kalanick was actually in my office talking about his angel portfolio years ago. We both had a healthcare IT company. He was in Cario and I was in Practice Fusion. And I brought him in to talk about, you know, how we can help those two work together more constructively. And we went through Travis's angel portfolio and Travis said, you know, there's this company called Uber Cab and I think you should really take a look at it. I might be the CEO. And I said, you know, I, I hear you, but I've seen a couple of those already. And here's the issues and the regulatory problems and all that. It's like, yeah, but you know, I'm really kind of thinking about this. And I kind of blew it off. And, and then here we have Uber today, right? So that would by far be my biggest miss. And in terms of, you know, fear of missing out.

• 26:09Speaker 02

  We are a boutique firm and so we get rewarded for what we do, not what we don't do. There are other firms with billion dollar plus portfolios and those firms have to, they have a capital deployment problem where they just need to find places to park their capital. We don't have that. We just have to be highly selective. And so for me, I try to be very selective and we try to be smart about our investments, but we don't, we know we don't have to be in every single deal.

• 26:34Harry Stebbings?

  That's a great question. What do you make of the rise of the mega funds, the billion dollar plus?

• 26:38Speaker 02

  You know, we had one at one point in time and we no longer do, by choice.

• 26:42Harry Stebbings?

  Yeah, fund economics, too difficult?

• 26:44Speaker 02

  It's really hard. I like the situation where one amazing deal can return the entire fund. Because then my incentives are aligned, my LP incentives are aligned, and my entrepreneur incentives are aligned, right? Having these huge funds where you're waiting, you know, 10 plus years for a single carry check, I don't think that aligns the interest properly.

• 27:02Harry Stebbings?

  What size fund do you think that is? Is that a 150 fund where you can easily close it in one?

• 27:08Speaker 02

  No, I think it's a 300 to 400 million dollar fund. And the reason is, A, you know, when I look at the people I really respect and admire, the Sequoias and the benchmarks, that's what they've proven out and that emergence to that mix in terms of funds that I look up to and want to emulate. And then the other thing is that you have to be above the fray. And so what's happened now is there are, I just talked to Silicon Valley Bank and they're tracking over 200 firms, only in the Bay Area, of 150 million dollars or more, or less, like 150 or less, without institutional capital. So this is not even counting the number of firms that have institutional capital at 150 or less. These are just firms, 150 or less, with high net worth individuals and family offices and the like,

• 27:51Speaker 02

  and over 200 in the San Francisco Bay Area and over 75 in New York City. So for me, it was very important to be big enough to be able to have the dry powder, to really participate going forward and be one of those longstanding firms and entities, and not be so big that I felt like our alignment with our LPs and entrepreneurs was not there. So I feel like that's an optimal range. 300 to 400 is really your optimal range. It's also the right, you know... In terms of partners and capital deployment per partner in a fund. So that was what we thought our sweet spot was and we were so proud to have gone up from like one seventy five in our first fund to three hundred. And we feel really good about the three hundred mark.

• 28:32Harry Stebbings?

  And then penultimate question, how do you assess market creation?

• 28:35Speaker 02

  Market creation is really interesting. I think some of the biggest misses I have seen us make or other people make or when we thought, well, I can't see a company buy this company, right? Because it really was a market that didn't exist yet. And what we've learned is when we, when we say that, we stop each other and like you said, no, no, no, that is not the answer, right? Because there's one time when Apple didn't buy anybody or Microsoft didn't pay anything if they did buy somebody. And so those things change over time. And so what you really have to do is in venture, what you're paid to do is look at the future. Really think about what the trends are and what is changing because the biggest opportunities are ones nobody could have predicted. And so what I like to do is listen very intently to the entrepreneur and see if they have really interesting insights that are surprising

• 29:20Speaker 02

  and that perhaps I disagreed with in the past. So usually when I make an investment, it's when I had sort of one thought in my head and the entrepreneur changed my mind by their own belief system and what they've proven out. And so I think when you assess markets, you really have to be open minded because the biggest, biggest opportunities are opportunities that weren't obvious at the onset and where new markets are created. They're also the hardest to predict, but they're definitely why we're in this business.

• 29:48Harry Stebbings?

  And then I want to finish today on your most recent public investment and why you said yes.

• 29:55Speaker 02

  Oh dear. So I was quiet for a long time. And so my most recent, I've made two investments very recently. And I, I would like just to talk to those two because I think they're the most interesting and they'll be public very soon. I can tell you why I said yes. So two, two investments very recently. One is this autonomous driving company. And it was really, the reason I did that deal was how incredibly impressed I was with the CEO and the team and what they had developed to date. And also just the space that they're in. It's a, it's an incredible space. A lot of the companies that have exited thus far Have done so on very little proof points. And I feel like this is one of the only companies out there that has really solid technology and a huge vision.

• 30:38Speaker 02

  And I believe that they can accomplish that vision. They've hit sort of every milestone to date, you know, ahead of time, which has been really impressive. And it's just, it's one of those spaces too, where it has the opportunity to probably be one of the most impactful things in our lifetime. And when you look even at the number of deaths that are auto related deaths, it can actually impact all of us very, very, very greatly. And so that's one. The other one is in healthcare and healthcare services. And it's more in the coaching space. And it's a company, it's a space that my initial thought was, hey, this is kind of over invested, but you, it's needed. And I was, I was interested, but I didn't really think it was where I would actually pull the trigger. And there was a CEO that I've had an enormous amount of respect for.

• 31:22Speaker 02

  And she came to me and she said, here's what we've done. I've been following her for three years and the numbers just blew me away. And what she had pulled together, I, you know, I had had more and more validation was actually the right approach. And, you know, being the entrepreneur, she'd seen that three years ago, right? Being the VC I saw three years later when she showed me. And, and it was, it was just incredibly impressive. And so here's an entrepreneur that I really want to work with. And in a space, again, that I think can be very impactful with really interesting numbers and an approach. And she had taken the very hard path of being an all encompassing platform and then had, had pulled it off in a, in a really great way. So, so hopefully that will be announced soon as well. So I've done two sort of deals very quickly together.

• 32:05Speaker 02

  And we continue to look at more and more interesting opportunities going forward. My partner Paul's actually done a couple very recently too, also not announced yet. So you'll have to, we'll have to reconnect in a month.

• 32:17Harry Stebbings?

  We're gonna have to reconnect in a month. Rebecca, I've wanted to do this since, when was it, nine months ago? Yeah, about that, since I heard your Stanford talk. So it's been so fantastic for me to have you on the show. So thank you so much for joining me today.

• 32:28Speaker 02

  Thank you very much and I'm flattered and this was really fun.

• 32:33Harry Stebbings?

  Such a fun episode with Rebecca and a huge thanks to her for giving up the time today to be on the show. Also a massive hand to Matt Garrett at Salesforce Ventures for the intro to Rebecca, without which the show would not have been possible. And if you loved the episode today with Rebecca, you can check her out on VCRebecca on Twitter, or you can follow me on Twitter at Harry Stebbings or on Snapchat at H Stebbings, or even read some hopefully thoughtful and rather pensive pieces on mehito vc.com. However, before we leave you today, as I said earlier, accounting was always a real headache for me, and then Xero came along. Now, Xero is beautiful, easy to use online accounting software for small businesses. With Xero, you can easily manage your accounting anytime, anywhere, from your computer or mobile device. When you add Xero to your small business, you're able to send online invoices and get paid faster, get an instant

• 33:18Harry Stebbings?

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• 34:02Harry Stebbings?

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