20 VC 015: Marketplaces, IPOs and the NY Startup Scene with Lisa Wu

Lisa is Vice President at Norwest Venture Partners (NVP), where she focuses on early to late stage investments with emphasis on consumer internet. Before joining NVP, Lisa worked in Amazon's Worldwide Corporate Development Team, in which she evaluated acquisition targets and identified strategies for potential expansion. Prior to Amazon, Lisa was at Bessemer Venture Partners. If that wasn't enough Lisa also founded her own startup, Banzaa! Fresh, providing high quality nutritious foods to schools and hospitals in Northern California. Items Mentioned in Todays show: Etsy Lending Club SkyBox FireEye Jet DoubleClick What you will learn in today's show: How Lisa got into the investing game? Why Lisa is investing in marketplaces? What Lisa's normal investment size is? Lisa's most recent investment and why Lisa said yes? Does Silicon Valley deserve the accolade it gets? Or is NYC fast approaching? Do VCs investment attitudes differ when comparing SF to NYC? How early is too early for Lisa to invest? What was the one thing that propelled Lisa's career? We then move into a quick fire round where we hear Lisa's thoughts on the best advice she has ever been given, the number 1 reason Lisa says no to startups and what Lisa would do if all she had was a laptop and $100!

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 to episode 15 of the 20 Minute VC. Now, I'm hugely, hugely excited today to welcome our first female guest. I'd like to welcome Lisa Wu. Lisa is currently Vice President at Northwest Venture Partners, where she focuses on early to late-stage venture investments across a wide range of sectors, but with a particular emphasis on consumer internet. Before joining NVP, Lisa worked at Amazon's Worldwide Corporate Development Team. Here, Lisa identified strategic investments for Amazon, as well as providing strategies for potential expansion. Prior to Amazon, Lisa was on the team at Bessemer Venture Partners, working on early-stage investment opportunities.

• 0:43Harry Stebbings?

  As if this wasn't enough, Lisa founded her own startup, Banza, a small business providing high-quality nutritious food to schools and hospitals in Northern California. Before we dive into the interview, would you like the chance to pitch to one of the VCs interviewed on the show? If so, head on over to iTunes and leave a review and then email [email protected] with the name that you left a review under on iTunes. Without further ado, it's time to welcome Lisa.

• 1:17Speaker 01

  You have now arrived at your destination.

• 1:20Harry Stebbings?

  Lisa, thank you so much for coming on the show. I'm extremely honoured to have you on as our first female guest. This is very exciting for us. And I really always like to start the session with a little about yourself and how you got into the industry.

• 1:35Speaker 02

  Sure, so it's great to be on the show and I'm happy to tell you about my background. So basically, after college, I started my career in investment banking at Merrill Lynch. And I ultimately left Merrill to start my own business. I launched a company focused on bringing healthy, high-quality and affordable food to Bay Area high schools and hospitals in California. And while doing that, I also realised that time is all of our most valuable asset. And whether you create a company that is a profitable lifestyle business or one that eventually goes public one day, it still takes the same amount of effort, which is 24/7 of your time. So that's when I decided I was, I guess, looking for a bigger opportunity and I realised that working in venture

• 2:19Speaker 02

  and with some of the best entrepreneurial minds would be a really ideal next step in my career. And I guess I just wanted to learn from the best. And at a VC firm, it's possible to learn those patterns that create a successful, scalable business and then eventually go on and start another business. In terms of getting into the industry, you know, at the time, it was two thousand and seven and there weren't a lot of positions in VC, especially for junior people. But there was a firm called Bessemer Venture Partners out in New York that had an analyst program. So I applied to the program, unfortunately made it through the interview process and joined Bessemer, really with the intention of staying in VC for just a year or two before starting a business again. However, I guess over time, I just found that my interests and skills sets better

• 3:01Speaker 02

  fit venture and I've been in the business now for more than six years, so I guess it kind of stuck.

• 3:07Harry Stebbings?

  Do you, do you still have that entrepreneurial drive deep down? Do you think one day you might wanna start your own again?

• 3:13Speaker 02

  Yeah, you know, I, I definitely do. Fortunately, with the setup I have in Northwest is I, I actually was brought on to open our New York office, so I'm able to kind of apply some of my entrepreneurial skill sets to do that. But there's definitely an itch inside and although, I'll tell you the truth, what happens in venture is the longer you stay in, it's almost harder for you to go start a business because your bar becomes super high because you understand all the challenges and how difficult it is to actually scale a business. So eventually at one point, I'd like to, I think it just really has to be the right idea.

• 3:50Harry Stebbings?

  Okay, absolutely. And do you, do you see any, are there any sectors that you prefer, do you think? Are you drawn to one sector above another? I mean, you mentioned your previous startup. Do you, do you have any passion or desire to enter one industry?

• 4:05Speaker 02

  Yeah, you know, I would say, I can speak from an investment standpoint. So currently, I'm probably most excited by marketplaces, which are platforms that don't hold inventory, but instead connect sellers who have it to buyers who want it. And they're typically hard to get off the ground, but when they are successful, these marketplaces benefit from these things called network effects that result in these winner take most dynamics. So it just means that when they get bigger, they actually get stronger. And for winners, this ends up being Very defensible and they can create billion dollar businesses. So, you know, we've seen a number of great marketplaces emerge and thrive in just many sectors of the economy these past few years. Uh, you might be familiar with, you know, Uber in transportation, Airbnb.

• 4:48Harry Stebbings?

  Absolutely.

• 4:49Speaker 02

  Yeah, Grubhub and food ordering and delivery. Um, so I think that's the area that excites me the most. And, you know, at Northwest, we've made several bets on marketplaces. We were, um, the Series A investor in this company called Lending Club, which is a marketplace for peer-to-peer lending.

• 5:03Harry Stebbings?

  Absolutely.

• 5:05Speaker 02

  Yeah, it went public last year and as we know.

• 5:07Harry Stebbings?

  Congratulations.

• 5:08Speaker 02

  Yeah, thanks.

• 5:08Harry Stebbings?

  Uh, uh, so, so now you're at Northwest, that, uh, in the New York office at Northwest. What's your normal investment size? Do you have a typical size?

• 5:21Speaker 02

  I would say that it really depends. Uh, given that we are a one point two billion dollar fund, we have a lot of flexibility in our investment size. So we can invest anywhere from a couple hundred thousand dollars to as large as tens of millions of dollars. And we also have a separate growth equity practice. But, so I would say it depends, but in general, we're just focused on investing in smart teams, building disruptive products in large markets.

• 5:45Harry Stebbings?

  Sure. And do you have a preference in terms of founder compared to founders? Or, or are you not bothered about it?

• 5:53Speaker 02

  Uh, sorry, can you clarify that question?

• 5:55Harry Stebbings?

  So do you prefer investing in a company with a, a single founder or a multiple founding team?

• 6:02Speaker 02

  Um, I don't think that there really is a preference, but I will say that the founder or CEO is a pretty important, uh, person that, that for us, that we have to back behind. Because we have to trust in their ability to have good business judgment as well as execute. Um, and if it's a group of founders, that's great too. Uh, we would hope that they all have differing skillsets so that they can, you know, be a stronger team together. Um, but, but no, it doesn't really matter whether it's a founder or founding team. It just, in general, we just hope that it's a solid management team.

• 6:34Harry Stebbings?

  And, and I've received a lot of emails, um, since the start of the podcast, um, about, from founders saying, I've got my product. Um, and I really want to get in front of a VC just to show them to, to have the chance to pitch. How would, how would you like them to come to you? And how would you like them to pitch it to you to get a meeting in the first place? Is, should they just cold email you or should it be through introductions or LinkedIn?

• 7:02Speaker 02

  You know, I think the best way to increase the chances of networking with VCs is through a warm introduction by a mutual connection. You know, we get a lot of inbound via LinkedIn and also through our website, and we do review each of those opportunities that come through those, but it's actually pretty rare that an opportunity that comes in through those channels actually converts into an actual investment done by the firm.

• 7:24Harry Stebbings?

  I think we should also give a shout out now to Joe Floyd, who was a previous guest on the show, who actually introduced me and Lisa today, so I think shout out to Joe there.

• 7:34Speaker 02

  Joe.

• 7:35Harry Stebbings?

  Now, when you invest in a company, we've spoken about your investment size, do you have a clear timeline in your head of when there's a desired exit, or do you go with the flow and let it just take its course?

• 7:49Speaker 02

  I would say that it also really depends here. We've had cases where it's been a short investment cycle and others that it's been longer. You know, for example, we made a series A investment in this company called Skybox, and then about a year and a half to two years later it was sold to Google for 500 million. But as you may know, every startup has ups and downs, and we try to be pretty patient with our entrepreneurs. And I guess an example of a longer investment cycle is a company called FireEye, which is an enterprise security platform. And so we led the series A investment in the company in 2005, and it went public last year in 2014. So it really had to overcome some big challenges over

• 8:32Speaker 02

  those nine years, and it took a lot of conviction, perseverance, and patience from the company and investors. And so it depends. You know, sometimes it's short, sometimes it's long. But in the case of FireEye, it's currently, you know, a 67 billion market cap company, so it's definitely done well.

• 8:47Harry Stebbings?

  And what's been your most recent investment then, would you say? And why did you say yes to it?

• 8:54Speaker 02

  Uh, the most recent investment that we did is a company on the east coast named Jet. It's a member-based e-commerce marketplace founded by a guy named Mark Lor, who is a repeat entrepreneur. And so Mark successfully sold his company, Quidsy, uh, which was the parent company to diapers.com, which you might have heard of, uh, to Amazon for five hundred and fifty million.

• 9:16Harry Stebbings?

  Absolutely.

• 9:17Speaker 02

  He spent a couple of years at Amazon, learning as much as he could before starting Jet. So I guess Jet is another example of just, um, you know, what we're looking for, which is just smart teams building disruptive products in large markets.

• 9:31Harry Stebbings?

  And when first-time founders come to you, are you always a bit skeptical towards them compared to repeat success founders? Do you, do you find that, or do you find that actually there's no difference in your mind?

• 9:45Speaker 02

  I actually don't think that there is much difference in our mind. Um, I would say that actually, if you look at a lot of great consumer companies, there isn't really, you know, they're started by young people these days, right? And so you not necessarily have that track record. Obviously, when a entrepreneur comes and they have been a successful repeat entrepreneur, it, it helps, I guess, decrease the risk on our end of whether they have the ability to execute and scale a business.

• 10:10Harry Stebbings?

  Absolutely.

• 10:11Speaker 02

  But there really hasn't been a correlation in the consumer space of, you know, having to be a prior successful entrepreneur and the success of their current business.

• 10:20Harry Stebbings?

  Now, Lisa, we, we've just touched on a little bit that you're located in New York. Leading me to question, do you believe that Silicon Valley deserves the plaudits that it gets for, for the tech that comes out of it? Or do you believe that New York can more than adequately, adequately compete with the Valley?

• 10:39Speaker 02

  You know, I, I get this question a lot.

• 10:41Harry Stebbings?

  Do you? Okay.

• 10:42Speaker 02

  Yeah, so.

• 10:43Harry Stebbings?

  Sorry about that.

• 10:44Speaker 02

  I guess I will start off by saying I love New York. I live in New York and I'd love to find more great companies in New York. And while it's a very exciting time in New York for tech, the, the New York startup ecosystem is just still behind Silicon Valley. And there's a variety of reasons for this, but I guess I'll just focus on one in interest of time. And, you know, the way a lot of interesting companies get started is because one company becomes very successful. And then there's a whole group of people who grow up inside that startup that go off and start the next generation of companies.

• 11:16Harry Stebbings?

  Kind of like the PayPal effect.

• 11:18Speaker 02

  Exactly. So with PayPal, you know, their former employees, they have since founded such companies like LinkedIn, Yelp and Yammer, right?

• 11:26Harry Stebbings?

  An intimidating force.

• 11:27Speaker 02

  Yeah. And on the East Coast, I would say the preeminent example is this company called DoubleClick, which led to some interesting offsprings like Guild Group and Business Insider and MongoDB. And so I think that New York is still waiting for that next DoubleClick that could host, you know, some new and interesting companies. I know one company that I'm following closely is a company called Etsy over here. But so I would just say that it just, it's going to take several, you know, maybe even decades for it to catch up to Silicon Valley, just because the West Coast has really been a breeding ground for innovative tech companies for a while now.

• 12:01Harry Stebbings?

  Do you think the VCs investment attitude is different in New York compared to Silicon Valley? Or do you think it's very similar?

• 12:09Speaker 02

  You know, I think it could be, it might be a little different. I obviously, my firm is based out in West Coast. I kind of have that West Coast mentality here. But I would say that people, the investors in the West Coast are probably more likely to swing for the fences and take those big visions versus on the East Coast, there might be a little more, I guess, you know, wanting a business model and all that stuff. So.

• 12:35Harry Stebbings?

  I mean, how early is too early to invest for you? Would you ever invest in the pre-product idea stage?

• 12:43Speaker 02

  Yeah, we definitely do. I mean, especially if that they are an entrepreneur that we've backed before, that we just, we would, we would like to back again. And oftentimes they come with a PowerPoint deck and we're backing them again. And we've also invested, you know, with Jets, they haven't launched yet. So it really comes across many stages. So there isn't too early. We definitely do seed investments.

• 13:05Harry Stebbings?

  Okay. And before we get into the quickfire round, you've, you've achieved incredible success in your career so far. And I wanted to ask, if you could pinpoint one thing that really propelled your career, what would you say it would be?

• 13:22Speaker 02

  You know, if I had to pick one action, I guess, that really propelled my career, I would say that it was leaving investment banking. At the time, everyone discouraged me from doing that, so for me, that moment really represented just me taking ownership of my life versus doing what society expected me to do. And I guess in general, I just think your twenties is the time to take a lot of risks, to get a variety of experience, make mistakes, feel fast, feel often, and figure out what you like and dislike. That way, you can really focus on establishing a career in an industry that's a better match for you in your thirties, forties, and fifties.

• 13:56Harry Stebbings?

  And when you left investment banking, how did you feel when you first went into venture? Did you know it was right for you the minute you went in, or did it take some time?

• 14:05Speaker 02

  So I actually, I think I mentioned this earlier, but when I left investment banking, I actually started a small food business first, and then I did that for about a year before joining venture. And so, you know, when I left banking, I was definitely excited to do something that was a little more tangible and a little more focused on value creation. And then after doing that food business for a bit, I thought venture was actually an ideal next step, just because it really pieced together my interest in finance as well as entrepreneurship.

• 14:35Harry Stebbings?

  Absolutely. Now, if it's okay with you, we're gonna move into the quickfire round, where I ask you, I say a word or short statement, and you give me your immediate thoughts.

• 14:44Speaker 02

  Okay, great.

• 14:46Harry Stebbings?

  Okay. So the best piece of advice you've ever been given. Doesn't have to be business, it could be life, but it may be business, it's up to you.

• 14:54Speaker 02

  It's easier to hold to your principles a hundred percent of the time than it is to hold to them ninety-eight percent of the time.

• 15:00Harry Stebbings?

  Wow. That was definitely tweetable. That's a cracker. Okay, and the number one reason you say no to entrepreneurs?

• 15:10Speaker 02

  I would say, given our fund size, it would be market size.

• 15:15Harry Stebbings?

  Okay. Too, far too small? Or too big? Do you go on the piece-deeled assumption that you've actually got to select a niche market to be successful?

• 15:26Speaker 02

  Um, I would say for us, we're looking for companies that we think can really become these unicorns over time. And so it's really that we're looking for larger markets. We want a total addressable market to be large.

• 15:39Harry Stebbings?

  Absolutely. Okay, this one's a bit out there, so I'm just just giving you a little bit of warning here. If if I took away all the possessions you have now and left you with a laptop and a hundred dollars, what would you do?

• 15:55Speaker 02

  A laptop and a hundred dollars?

• 15:57Harry Stebbings?

  Yeah.

• 15:59Speaker 02

  I would probably do exactly what I'm doing now, which is really just learning about startups, you know, proactively reaching out to entrepreneurs to learn about their businesses, because I love interacting with people who are just passionate about what they're doing. And then, you know, maybe try to invest in them with it with that hundred dollars.

• 16:17Harry Stebbings?

  A hundred dollars, crowdfunding style, okay.

• 16:20Speaker 02

  Exactly.

• 16:21Harry Stebbings?

  And and then finally, the book that has inspired you the most?

• 16:27Speaker 02

  Uh, so this might be out there. So it's called Love, Aloneness and Freedom. It's a book by a philosopher named Osho.

• 16:34Harry Stebbings?

  Okay, and and why does it inspire you? What what's it? Sorry, what's it about? I'm not, I'd love to say I'm familiar with it, but I'm I'm not.

• 16:42Speaker 02

  Oh, you know, Osho, he's just this, I guess, an Indian guru or spiritual teacher, and he just emphasizes the importance of just meditation and self-awareness and just love and celebration. And so they're just a lot of attributes that I think identify with my personality.

• 16:58Harry Stebbings?

  Well, thank you so much for coming on the show. Um, it really was an honor to have you as our first female guest. Very, very exciting. Um, and I'd love to have you on the show again soon.

• 17:09Speaker 02

  Yeah, I'd be happy to.

• 17:12Harry Stebbings?

  For all the resources mentioned in today's show, do head on over to www dot the twenty minute V C dot com, where you will find them all under items mentioned in this show. Likewise, this podcast is really for you. So please do let me know if there are any guests that you would like to have on the show, or if there are any questions in particular that you would like to be asked. Again, if you have any, please do email Harry at the twenty minute V C dot com. Thank you so much, and we can't wait to see you in the next episode.