20VC: Loom Founder Joe Thomas on Whether To Take Multi-Stage Money at Seed, How Early Stage Founders Should Select Their VC, How Sequoia Won The Loom Deal & The 3 Rules To Operate Remote Teams Successfully

Joe Thomas is the Founder & CEO @ Loom, the startup that helps you get your message across by making it easy to record instantly shareable videos. To date, Joe has raised over $68M from some of the valley's leading firms including Sequoia, Kleiner and Coatue as well as individuals such as Mathilde @ Front, Kevin & Mike @ Instagram and Dylan Field @ Figma to name a few. Prior to founding Loom, Joe was in LA as Director of Product at MyLife.com and before that Director of Operations at MediaPass. Due to Loom's success, Joe has been named to Forbes 30 Under 30 for Enterprise Tech. In Today’s Episode You Will Learn: 1.) How Joe made his way from the mid-West to the valley and came to found one of the hottest startups today in Loom? 2.) What does Joe believe are 3 rules to operate remote teams successfully? Why does Joe believe in remote + HQ as a model so much? How do the tools and culture need to change with this as a new format for work? How do leaders now need to learn to write more than ever before? 3.) How has fundraising fundamentally change in the world of COVID? What are the benefits? What can founders do and tools can they use to increase their chances of getting funded in a COVID world? What did Coatue do to build rapport and trust without meeting in person? 4.) What advice would Joe give to founders on how to pick their early VCs? How does Joe advise founders when it comes to accepting multi-stage money at seed? Why does Joe believe you need to be upfront with your VCs about their ability to build future ownership? 5.) Sequoia and Coatue led the Series B, how did the round go down many months before Joe and Loom planned to raise it? What did Sequoia do to win and close the deal? How did that as a founder make Joe feel? How does Joe advise VCs on what it takes to win the most competitive of deals? Items Mentioned In Today’s Show: Joe’s Fave Book: Enders Game, Think On These Things As always you can follow Harry and The Twenty Minute VC on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

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

• 0:00Harry Stebbings?

  This is the 20 Minute VC with me, Harry Stebbings, and my word, I'm so excited for the show today. I'm probably the biggest fanboy of this product in the ecosystem. I use it 10 plus times a day and it's just incredible. And so I'm so delighted to welcome the founder behind the magic product, Joe Thomas, founder and CEO at Loom, the startup that helps you get your message across by making it easy to record instantly shareable videos. To date, Joe's raised over $68 million with Loom from some of the valley's leading firms, including Sequoia, Kleiner and Co., too, as well as individuals such as Mathilde Collin at Front, Kevin and Mike at Instagram, and Dylan Field at Figma. And prior to founding Loom, Joe was in LA as Director of Product at MyLife.com, and before that, Director of Operations at MediaPass. And this schedule was such a team effort, and so a huge thanks to Shahid Khan, Ilya Fushman,

• 0:44Harry Stebbings?

  Monica Desai, Ben Shelf and Christoph Jans for some fantastic questions and suggestions today. I really do so appreciate that. But before we move into the show today, I'm sure you've heard about it, but my word, there is a product that I love, Carter. Carter simplifies how startups and investors manage their equity, track cap tables, and get valuations. Go to Carter.com/20vc to get 10% off. More than 800,000 employees and shareholders use Carter to manage hundreds of billions of dollars in equity, and Carter now offers fund administration, so you can see real-time data in the Carter platform and work with Carter's team of experienced fund accountants. Again, that's go to Carter.com/20vc to get 10% off. And speaking of amazing products, if you've been listening to 20 VC before,

• 1:26Harry Stebbings?

  you've probably heard of Brex, the first corporate card for startups with no personal guarantee or credit check, up to 20 times higher credit limits than traditional cards, plus rewards like 3X on eligible Apple products, so helpful for me with the rate I go through AirPods, and 7X points on tools like Zoom and Slack. And Brex has helped thousands of companies scale faster to reach their full potential as a result. This month, they're giving our listeners a very special offer. Apply for the Brex card by September 30th with the code 20VC, all spelled out, 20vc, to receive a $500 credit after spending $1,000. Even better, you can also apply for Brex Cash, a bank account alternative with unlimited free wire and ACH transfers with no minimum balance required to create an account at all.

• 2:10Harry Stebbings?

  You can apply for an account today at brex.com. And finally, today, more than ever, if you want to get a deal done, you really need to build that relationship. And there's nothing like meeting face to face. And there's nothing like Zoom to make that happen. Zoom lets you connect and do business across town or around the world. Zoom ties together all your communication needs into one easy platform for video conferencing, for video calls, group chat, webinars, and your conference rooms, and connect easily from anywhere, your mobile phone, your laptop, or conference room itself. Zoom is how business gets done today. Get your free account at zoom.com today. Meet happy with Zoom. That is quite enough of this dreary British accent, though. So now I'm very excited to hand over to Joe Thomas, founder and CEO at Loom.

• 2:55Speaker 01

  You have now arrived at your destination.

• 2:58Harry Stebbings?

  Joe, it is such a joy to have you on the show today. As we said before, I've heard so many great things from Andrew at Sequoia and most notably Christoph at Point9. So thank you so much for joining me today, Joe.

• 3:07Speaker 02

  As my Twitter bio says, happy to be here, Harry.

• 3:09Harry Stebbings?

  That is, that is very kind of you. Now, I have to admit, I'm probably one of the biggest fanboys of Loom, but I'm going to pretend like I'm not. So tell me, Joe, how did you make your way into the wonderful world of startups and tech, but also come to find the game changer that is Loom today?

• 3:22Speaker 02

  It all started in the Chicago suburbs. Fun fact is that Shahid, Vinay, and myself are all from a 20-mile radius of each other, who are the co-founders of Loom. But we didn't know each other until California. So for me personally, I come from a family of entrepreneurs, but they're not the Silicon Valley entrepreneurs. They're the Midwest entrepreneurs, like running a golf course or having a paper print shop or even a local cable hunting television show. So I was always encouraged to do my own thing growing up. And when I went to school for economics at Indiana University, my freshman year was actually the 2008 market crash. And when I was looking around for internships, most specifically in the finance world, nothing really spoke to me.

• 4:04Speaker 02

  And it was something that really caused me to look internally and say, what is it that I want to do relatively early on in my college career? So I actually started a creative agency because my childhood best friend was a design major at University of Illinois. And we just started working with local business And college startups. It was really fun. It paid the rent and bar tabs. And over the course of a couple of years at college, by the time I got midway through my senior year, I realized I wasn't going to do anything with my major. So I actually ended up dropping out and moving out to California, and that was much to my parents' chagrin. So we moved to Silicon Beach to get closer to the tech scene. And naturally, California, right? When you're born and raised in Illinois, California has a certain appeal to it.

• 4:47Speaker 02

  So very, very quickly after we moved out and started working with SaaS-based companies that had this SaaS model, it was apparent that the agency model, which is linear in nature, did not hold a candle to the SaaS model, which is exponential in nature. So I was offered a product role at my favorite client. And over the course of a couple of years, I learned as much as I could about being a great product person, about being a good product leader, about what it means to be a good operator within different sized companies, like fifteen individuals and then two hundred individuals, and learning from leaders about just what works and what doesn't work on the culture front. And all of this was to recharge the batteries. I knew that I wanted to start my own business again.

• 5:32Speaker 02

  And I was impatiently waiting for the right idea and great co-founders. Hence, insert Shahid and Vinay. I built a relationship with them and we were really good friends over the course of a year. And so one Sunday, we got together on a video call and just started putting ideas on the whiteboard. And video was always at the core of what we were working on. It was everywhere in consumer. I was in Santa Monica during the rise of Snapchat, which was visual-based communication. And we were using it all day, every day to communicate with each other. So how can we bring a highly valuable seamless video product to the workplace with this new consumer trends and comfort with video? So first, it was video feedback from product experts.

• 6:14Speaker 02

  But we very quickly learned that larger organizations wanted real-time feedback from their users. So we ended up building a Chrome extension to collect real-time video feedback from their users. And then from there, we had built such a beautiful user experience that a lot of folks just wanted the video recorder. Independent of the survey platform. So we said, that's actually relatively easy. But the most important thing, and this is Vinay's technical wizardry that we now have a patent on, is that he was able to make videos render instantaneously, which was the most important component of building a day-to-day communication tool. So we packaged that up and launched it in June of 2016, and it's been off to the races ever since. Beyond the comfort with video, the world of work is changing.

• 6:56Speaker 02

  Certainly during COVID, but well before that, our work is increasingly done with folks we don't share office space with, or we don't meet with in person nearly as often. So we need more sophisticated communication tools to support this. And video recording and sharing is a new mode of communication that offers more efficient, effective, and expressive means of communication. A fun fact is that you can actually talk six times faster than you can type. So that long next message or email that you're about to write, you should do yourself a favor and record a loom, shameless plug. We feel like we're at the beginning of a workplace communication revolution that's powered by asynchronous video recording and sharing, what we're calling video messaging.

• 7:35Harry Stebbings?

  Speaking of that revolution, I think every great founder and every founder and CEO today is thinking, should we go back to our office? Do we do remote? Do we do remote plus HQ? How should we be thinking about this moving forward? And I always have to admit, I always say, do remote or don't do remote. The worst is when you do remote plus HQ because people feel left out. It's really kind of a lack of synchronicity. I'm intrigued. You've done remote plus HQ since you were just Adam Poyce. So I guess, why am I wrong? And what are the benefits of remote plus HQ?

• 8:04Speaker 02

  Fundamentally, we want to work with the most talented people, wherever they are. And geolocation tends to be the predominant limiting factor. So I feel, and we, like Vinay Shahid, and I feel very fortunate to have been guided to this conclusion of a hybrid company by our users. When we were five people in an SF office slash apartment, we ran a survey that found that 80% of our professional power users were using it to communicate with folks that they weren't sitting right next to, aka remote communication. So we knew that we had to dog food that, and the next Five hires we made were all remote and we persisted that fifty fifty split ever since.

• 8:44Speaker 02

  Now, remote communication is the most complex, so you default to those rules of engagement for everyone, regardless of HQ or remote, which is why we have Remote First as one of our five cultural values. First, you have to default to asynchronous communication, Slack messages, Looms, documents. Be very intentional about the time that you spend live together. And related to number one, you have to document everything by default. You record every meeting, you document your decisions. And if you do those two things right, of default to async and document everything by default, you have second order effects, you have a more resilient organization. If somebody leaves or is out on vacation, you have the information you need to keep things moving along.

• 9:25Speaker 02

  More flexible collaboration, so that time zones are not nearly as big of an issue. This loops us back around to being able to work with the most talented folks, no matter where they are. Six of our eleven members of our leadership team, which is VPs or directors, are remote. And five of six of those would not be at Loom if we didn't have Remote First as part of our DNA as a company. So from there, what's the benefit of having an office? I personally love going to an office myself. Physical separation of home and work is really important to me. And spending informal time with peers, it's easier to build a relationship. There's a big space for big ideas. But also, we hear many times in our talent pipeline that people are worried we're a Remote First company because they've tried Remote and it's not for them.

• 10:09Speaker 02

  So fundamentally, it boils down to power to the people. There are people we wouldn't be able to work with if we didn't support Remote. There are people who would seriously reconsider the opportunity at Loom if we didn't have office space. So setting up a hybrid culture allows us to work with the most talented people, no matter where they are.

• 10:27Harry Stebbings?

  I do want to really dig in on one element there, which is you mentioned kind of the heavy documentation process that you really adopt. I've spoken to John at Stripe about this quite a few times. He's a big fan of long form writing and I know you're a big fan of long form writing too. So why are you such a big fan of long form writing? And I guess, what's the structure to your writing from kind of a meta perspective? And how do you unpack that?

• 10:47Speaker 02

  Yeah, it is a great question and credit where credit is due. Bezos is the one to popularize long form writing in the modern workforce. He said something along the lines of clear writing and clear thinking go hand in hand. So over the years, there have been many different beads of writing strung together that I've done. From investor updates to fundraise learnings to board letters. This is actually a shout out to Peter Reinhardt of Segment who strongly encouraged me to get into the habit of writing board letters from the very first board meeting that we had. It's also team charters. I try and do a weekly CEO note, although that goes in waves depending on how busy I am. And each having their kind of like own structure and cadence. With one of our cultural values being lead with transparency.

• 11:31Speaker 02

  I'm pretty open book with the challenges we're facing with whatever group I'm writing for. And that's all rooted in confidence that whomever you share this long form writing with, they'll only be able to be truly helpful if you're open with the situation and how you're feeling about it. That was Ilya Fishman, our board member from Kleiner encouragement at every turn. Don't just give the facts, provide the perspective. And my advice to founders is that writing is a skill. Start sharpening it early, write in narrative form, tell a story. Make sure that it's relevant content and data, sure, but make it compelling. And if you do so, your ability to utilize this content beyond the initial reason for writing it is truly evergreen in nature.

• 12:10Speaker 02

  You can take a weekly CEO note and share it with a VIP candidate to give a true lens into how you think and what's going on in the company. You can share a letter to the board with a broader investor base to get help with the key issue. When you do long form writing, it has long term value.

• 12:25Harry Stebbings?

  Can I ask, so I'm on five boards today and I consistently get the board deck three to four days beforehand. And I haven't got a board letter ever before. So I guess my question is like, how do you structure the board letter? If you double click on the board letter itself, how do you structure that? Is it the same every time? Do you send it four, five days before? What's the process around the board letter?

• 12:44Speaker 02

  It's evolved over time as the business has evolved. But really what has stayed true from the beginning is that there's an intro then yet. So what is something that's top of mind that's interesting? I feel like is very relevant to our vision and mission. So make sure to start the letter with what it is that we're really doing at the company and where we're striving to go. From there, you touch on the key metrics to the business. What are the two or three North Star metrics that you're driving against? What was the progress over the last three months? And how do you feel about them? And then from there, there's going to be the key things that you as a board have decided is most important for you to work on in that quarter.

• 13:24Speaker 02

  And so you deep dive on those topics and you share what progress that you've made and how, again, how you're feeling about it. And then the last part of it is there's usually a special project for a CEO. So whether it's recruiting for a VP or whether it's working on a workplace communication and collaboration doc for the entire company that you feel is critically important to spearhead because that's what your company offers to the world. And what's really important as you triple headcount over the course of the year that you're able to clearly articulate to the company how to best communicate and collaborate with each other. So you give an update in terms of your progress on that front. And then from there, you do a wrap up, which leads to the board content, which is the slide deck usually.

• 14:07Speaker 02

  So you give a few highlights from that content and then you just link to the deck has generally been the structure. And then in terms of timeline, it usually takes me, I like to do it on Sunday because I can think big from that perspective. And so depending on if we have the board meeting on Wednesday or Thursday, I try and target getting the board content out at least forty eight hours in advance. Sometimes I'm not that good at it, but usually it goes out with the rest of the board content. And it's the first thing that we link to in the email that we send out to the board.

• 14:36Harry Stebbings?

  I mean, I absolutely love that as kind of an ancillary or kind of a complimentary resource to the deck. I guess a question for me, Joe, and it's not on schedule, but you know, we're both quite young. And a question that I'm thinking about more and more is that I've joined my first boards over the last eighteen months. And I fundamentally want to be the best and most impactful board member that I can be. What advice would you give me from the founder's perspective of what I can be to be the best board member to you?

• 14:58Speaker 02

  Yeah, it's a really good question. And I think about the early investors that we were able to bring on and also how that. That's kind of scaled out to our board members in Ilya and Andrew. I've found that the best board members just very simply ask the best questions. They obviously have opinions about where it is that the company should go, but they don't mandate solutions. They don't mandate their thinking because the thing is that founders and operators are the ones who are doing the day to day work. So if you don't fundamentally believe in a path forward, then it's going to be hard for you to kind of get that conviction and execute on it. So Ilya and Andrew and early investors have helped us

• 15:42Speaker 02

  see around corners in so many different ways over the years. But what I've found universally to be true is that when they ask me a series of questions, when we have a true dialogue with each other and we come to the same conclusion from there, we're able to get significantly more momentum in the short term versus here's the solution, go execute against it. And then you kind of loop back around maybe one or two weeks later and you're like, eh, I'm not quite sure I'm still aligned on this front. So fundamentally boils down to just ask really high quality questions.

• 16:11Harry Stebbings?

  Can I ask a really tough one? How do you think about, I always think like the best CEOs know the 90% of investor advice to disregard and the 10% to keep. How do you think about deciding which advice to keep versus which to disregard?

• 16:24Speaker 02

  I think that it relates to the most recent question as well, which is the fact that really good investors also caveat any suggestions that they provide with, this is just a data point. And that's what I actually have felt really encouraged by Ilya and Andrew and the early investors is that they don't have full context into the business. As passionate as they are, we are the ones who are working on it day to day, hour over hour. And so I think that investor advice is always, always comes from a good place. We're all trying to maximize the value per share of the company and we're trying to innovate on behalf of our customers. But it's just one data point. And so to me, a data informed decision is critically important.

• 17:07Speaker 02

  Your investor's perspective is an important data point, but fundamentally, you're never going to have perfect information to make a perfect decision. And so it boils down to of all the data that You've collected, including an investor opinion or advice. What is your intuition and gut telling you and just go forward with that?

• 17:23Harry Stebbings?

  Yeah, no, I totally agree with you in terms of it being one aspect of multiple data points to collect. We're speaking about the investors there and I do want to discuss fundraising itself. Because when we chatted before, you mentioned the words to be highly inefficient, mistrust laden and overhaul. When it comes to kind of the more matter of fundraising itself, walk me through your thinking here. What are your thoughts on this and how do you think about that?

• 17:44Speaker 02

  So I'll take a few steps back here because hearing mistrust laden out loud is a little bit more negative and harsh than I thought when I originally wrote it. But I stick with the highly inefficient part. We kept hearing over and over again when we were raising our most recent round that was co-led by Sequoia and Co2 that we're calling our Series B plus is that we're not quite sure we can make an investment with a company and team. We haven't met in person. And it goes without thinking now, a few months on, that we're all kind of in this COVID territory. Is that this is antiquated thinking. The fundraise industry was very quickly and radically forced to change their operating procedures.

• 18:27Speaker 02

  Because some firms were willing to take that leap to make the investment during early COVID without meeting in person. And they won deals as a result. So the inefficient part for me during an in-person was running, literally running sometimes from VC office to VC office for a couple of weeks, which is a ton of work and overhead. And for those that haven't done a fundraise process, it sounds prestigious and fun, but it's really, it's a slog. And so this most recent fundraise was my favorite for a couple of reasons. One, it was all over video conferencing. So there was no time between meetings trying to squeeze in emails or messages from a phone. I got a meaningful amount of non-fundraised work done during this time

• 19:10Speaker 02

  with all that time saved commuting from office to office or down to South Bay. And a willingness from VCs to rethink, a shameless plug for Loom. I probably saved myself about 10 hours during this fundraise process because I had pre-recorded a 10-minute Loom. Walking through the deck that we had pulled together, that I'd leave with the one or two partners that I talked with in the initial meeting. And that included a link to the deck, timestamps to jump to certain parts of the deck. And it was incredibly well received because they were able to forward along to their partnership. And we actually saved multiple partner meetings and got multiple term sheets without having to do that fifteen or twenty person meeting, very simply because they watched the loom and that was essentially the pitch.

• 19:53Speaker 02

  And so they also loved it because they could watch it at one point five or two X versus doing the meeting at one X. So with these changes to the process, being less geolocation anchored and more asynchronous, I think it opens up investment opportunities in a meaningful way for both founders and VCs.

• 20:08Harry Stebbings?

  Do you think that's purely at the later stages? And what I mean by that is, you know, with Loom today, there's a lot of substance and tangible material to point to. There's a lot of data to show signaling. There's a lot to get your arms around. When it's you, Shahid and Vinay with an idea at pre-seed and it's very much person to person, whites to the eyes. Do I trust you? Do you trust me? Are we going to build a big company together? Do you think that's a very different one that needs to be in person? And it's actually at the later stages when ironically more money is at stake, you can go off with video only. I'm intrigued, like, does it change then? And do you not feel as a founder, you want to see the whites of my eyes to trust me?

• 20:43Speaker 02

  It's a great question and I do believe that video is specifically like video conferencing is an incredibly powerful way to get to know somebody if you are structured with your time together. So one thing that I actually really enjoyed with Co2 and their onboarding process, this happened after the fundraise, is that we did a dinner together and it was over the course of two, two and a half hours. There were partners that came in and out of the video call. But what we did for one part of it was we actually went through that New York Times, like thirty six questions to fall in love. And we asked these really deep and meaningful questions of each other to get to know the individual.

• 21:26Speaker 02

  And I felt like even though I still haven't officially met Matt Mazzio or Lucas Swisher of Co2 in person, I feel like I know them at a pretty intimate level at this point. So I do believe that you can get to know somebody when you don't meet them in person. I also, one anecdote is that it wasn't quite the pre-seed round, but our seed round that was co-led by Point9 Capital, Christoph and the Point9 team had a ton of conviction around Loom after only meeting one of the co-founders, Shahid. And after one 45-minute conversation, they put a term sheet on the table. And we ended up working together because Christoph and the Point9 team had recorded a bunch of Looms and sent them over to us about what they felt like could be the partnership going forward.

• 22:09Speaker 02

  And I felt like that was enough for us to start to work together, even though they were in Germany and we were in San Francisco. So I think that there is a way to build meaningful trust with each other, if you're intentional about it.

• 22:20Harry Stebbings?

  I mean, I absolutely love that. And the only thing I would say there on Matt Masia is it's well worth the dinner in person. Give him a nice knee stroke. He loves a good knee stroke.

• 22:29Harry Stebbings?

  That's a very funny to hear. I do want to also, because if you go back to like the earlier stages, I spoke to Ben at Elementum, who was one of your earliest seed investors. And he asked, what advice would you give to founders on how to pick your early VCs? Let's start with that and then we can discuss ramifications for future rounds. But in terms of picking, how do you think about picking the early VCs and the advice you give?

• 22:48Speaker 02

  I think that the three things that I thought about was conviction. So having true believers in the company that trust your vision is the most important. So the signal here again is kind of looping back to questions that they ask versus giving advice, I think, is conviction. They immediately want to invest because they just see the future that you see and that they're gonna ask really good questions. The other part is supporters. So when the going gets tough, and it absolutely will, you want investors who support you and your decisions while you're also asking the tough questions to test your logic. And then the third thing that has been incredibly helpful for our earliest investors

• 23:32Speaker 02

  is the former operators and founders. I'm not saying to exclusively fundraise from former operators or funders, but certainly have them on the cap table because you want your earliest investors to be those who have been on the other side of the table. They will have deep empathy for the early journey. And I think that between those three kind of criteria, we were able to bring together a group of folks that were incredibly valuable to us in the earliest days.

• 23:59Harry Stebbings?

  This is really unfair of me to ask. You mentioned the kind of the challenges that do inevitably occur. When you look at Loom's story from the outside, honestly, it kind of just looks like up and to the right. When you think back, what was the holy shit, that was a challenge moment when the servers went down, when your fee P of sales left and the world was falling apart. When you think back to the real oh shit moment, is there one that stands out?

• 24:21Speaker 02

  I think that there was an oh shit moment when we were going to raise our Series A and we had not deployed our revenue generating product yet, which we believed was a critical risk vector to de-risk for our Series A investor to prove that people were willing to pay for it. And all the surveys and research in the world is not going to be the same data point as having a user actually paying you. And so as we went to go into the Series A fundraiser and cash was starting to get low on the balance sheet and you start to worry about, are you actually going to be able to get

• 25:02Speaker 02

  a meaningful investment in this next round without diluting yourselves like crazy, where all of a sudden you own a relatively trivial amount of the company early on in the lifecycle in order to just keep it alive and make sure that it survives. And so as we started to gear up for our Series A fundraiser, I was having a lot of anxiety about getting that done. And pretty much every single investor helped in their own way in terms of packaging up the stories, making connections, doing the back channels to make sure that certain investment partners were hearing the right things. Now, we ended up fundraising from Ilya, who had moved over to Kleiner at that point from Index,

• 25:44Speaker 02

  but we were worried, even though he individually had a ton of conviction about Loom, we weren't able to get the seed round done with Index. And so there was no guarantee that it was going to end up working out with him and Kleiner Perkins. And so there was just a ton of anxiety for about three, four months as we started to gear up for the Series A, knowing that we weren't going to have revenue in order to show for the company's progress.

• 26:06Harry Stebbings?

  Yeah, no, listen, I totally see that anxiety and I love, to be fair, Ilya's conviction. No, I'm fans like going in pre-revenue without that existing like paying customer base bait out. So I do love that. A question that Ben at Element did also ask was, in terms of when you look at that early investor base, what are the ramifications of the early choices of your investor selection for the follow-on rounds with tier one investors?

• 26:26Speaker 02

  Yep. So all investors, you have to, as a founder, see this with eyes wide open because while your partners in the business, their business model is to maximize their ownership in your company while not harming the trajectory of it. And so having investors who know where that threshold is of when to fight for ownership, when to push for it, and then when to let a tier one firm in who also has their ownership requirements is really, really important. I think that we got ourselves into a couple sticky situations when you go into fundraising is how much are you talking about in terms of ownership for each investor as they get really interested in the company?

• 27:10Speaker 02

  And making sure to have those early conversations with the early investors to let them know what's coming, to let the tier one in is critically important. And I think I've learned my lessons on that front is proper expectation setting. And I think that those investors who are willing to work with you as a founder and maybe as a first time founder who's learning these lessons as they go is really important.

• 27:35Harry Stebbings?

  This is very unfair of me, but the joy is we can edit it out if it's too personal. So fuck it, I can ask it anyway. You know, you had General Catalyst in at the seed. I love General Catalyst and I think that's great. Bluntly, I'm a seed fund, so this is biased advice. I always say, hey, from a pricing and optimization perspective, it makes way more sense to just take point nine. Because if you have General Catalyst in at the seed, bluntly, they're not incentivized to massively price up your next round like they would if they weren't in at the seed and they were coming in fresh at the A. How would you respond to that and maybe benefits of taking multi-stage money earlier than maybe anticipated?

• 28:10Speaker 02

  Yeah, I think that with our seed round being co-led by point nine and G C, Christoph and point nine were incredibly gracious with, they originally put a term sheet on the table. It was exclusively to lead themselves. And after spending about a week on that term sheet, we decided to sign it because we just hadn't met Trevor at General Catalyst yet. And after we had signed. The term sheet, we had a conversation with Kristoff because Trevor and GC were incredibly excited about working together and getting involved early. And asked him if he would be willing to do a co-lead between Point 9 and GC.

• 28:50Speaker 02

  And there was no real incentive for Kristoff to do it outside of just wanting to be a great early partner from the onset. And after him spending a little bit of time with Trevor and us coming to even split between GC and Point 9, we ended up doing the co-lead in the seed rounds. Now, I think that there was the benefit of the halo effect of having a tier one funds like GC being involved in the early days. It's a validation to talent that you want to bring into the team. It's validation to customers that potentially want to get involved and use the product. Like if General Catalyst invested, then I think that we have a pretty high degree of confidence that they'll continue to be around.

• 29:32Speaker 02

  And so I think that there was very real tangible benefit to having General Catalyst join in the early days. But co-leads are tough because there isn't the clear incentive for one individual to kind of like be that guiding hand and be super involved. And there's also the aspect of it, like you said, about maybe they aren't incentivized to increase or fight for the next round and increase the valuation in a meaningful way, AKA price anchoring a little bit. So we always knew that we would have to go out and run a full fundraise process for the Series A. And we wanted to to create that leverage for ourselves, knowing that GC and Trevor to lead the Series A was always an option on the table.

• 30:14Speaker 02

  The reason why we ended up going with Ilya and Kleiner is that his experience with Dropbox being head of product, he just had a depth of knowledge in terms of building this bottoms up growth viral product within the workplace. And so we wanted to bring that into the Loom world.

• 30:29Harry Stebbings?

  I guess kind of taking the logical next step though, then obviously Andrew from Koya came in and I spoke to Andrew before the show. And he said, ask about the Series B, ask how it went down. And specifically, what did the Sequoia B team do to try and win and close the deal?

• 30:43Speaker 02

  So Andrew Reid was an intro from Dylan Field of Figma, one of our. Early Angels and Andrew and I built the relationship over the course of nine months. At one of our coffee meetings, he told me, I know this is weird logic, but bear with me. I'm getting married in October and I'd just really like to lead your series B before I leave for the wedding and honeymoon. And we told him that, and I told him that we didn't think we were going to be fundraising for another couple of quarters. But, you know, we'll pull a deck together and see what progress we've made. And after a couple of turns of feedback on the deck, Andrew asked me to meet him for a drink. And I thought that this was just to spend a little bit more time in a casual manner, which most of our meetings up until that point had been coffee meetings during the day or in the loom office.

• 31:28Speaker 02

  And so I thought it was just kind of like a little bit of casual hangout. When we were about to leave, he was like, oh, I also have this for you. And it was a term sheet that he put on the table. And the even more casual leave behind was when we were walking out, we were like high fiving, like doing the hug thing. He was also like, oh, and one more thing. And he sent an email that had 20 Sequoia partners and team members, including Ruloff, Doug Leone, Michael Morwitz, who all recorded a loom, talking about why they were so excited to join loom on our journey. And my wife and I went to Vinay's apartment that night to watch all of them together.

• 32:09Speaker 02

  And the cherry on top of all these looms was Doug Leone was in Hawaii at that time on vacation. And he has this incredible loom of him in the pool, coming out of the water and talking authentically about the excitement for loom. And his sign off at the end of the 60 second loom was bye for now, and then submerging back under the water again. So a special shout out also goes out to Andrew's now wife, Lizzie, for recording a loom, even though she had lost her voice. There was just so much passion that you could feel across the entire partnership. And I was so incredibly impressed with the above and beyond effort that Sequoia did with recording all those looms and sending them over.

• 32:53Harry Stebbings?

  I have to say, I had no idea about that. I think that has to go down as probably one of the best ways to win a deal. And I really hope that at some point you can open source and share that video of Doug Leoni. Cause I think that has to go down in fundraising history. But I do wanna move into my favorite, Joe, being the quickfire round. I'm not sure how you can kind of go anywhere from Doug Leoni doing a luminous swimming pool. But I'll try and make it a swift transition to the quickfire round. So I say a short statement and you hit me with your immediate thoughts. Does that sound good?

• 33:19Speaker 02

  Absolutely. Let's do it.

• 33:20Harry Stebbings?

  So what's your favorite book and why?

• 33:21Speaker 02

  Sapiens. No, I'm just kidding. No, as a kid, it was Ender's Game. So ignore the movie. Unfortunately, it didn't turn out, but it checked all the boxes for me. I'm a big science fiction fan. It has a competitive component to it. It was really fun. It stretched my mind from imagining what it would be like to operate in zero gravity. It revealed different aspects of humanity. It had a major plot twist I didn't see coming. And as a children's book, I read it when I believe I was like 11 or 12 years old. It didn't shy away from a sad ending, which made me feel like a grown up. So I really, really love Ender's Game. But then as an adult, Krishnamurti's Think on These Things.

• 34:03Speaker 02

  I believe that the quality of life is largely based on the quality of questions that you ask. And this book is chock full of deep questions and thoughtful answers that I revisit regularly.

• 34:13Harry Stebbings?

  Wow, that's a good suggestion. I always say the same on interviews. I always say there's no such thing as a bad interview, only kind of bad questions. So I'm actually probably gonna read that one. So that's exciting and the first. Normally I just say I'll read them, don't read them. Uh, but uh, tell me, what's your biggest strength and biggest weakness as a leader, Joe?

• 34:28Speaker 02

  I believe my biggest strength is authentic empathy. To understand where a customer, a candidate, or a coworker is coming from. To genuinely wanna find a mutually beneficial path forward because you deeply care about them. Finding win-wins is truly the key to life and that comes from a place of authentic empathy. But it also cuts both ways. It's my weakness as a leader too. It can be exhausting and in an extreme form of empathy, you become a people pleaser. And so sometimes at the expense of what the company needs me to do, I want to make an individual happy. So this is something that my executive coaches highlighted that I really need to work on. But I also believe it's my biggest strength.

• 35:11Harry Stebbings?

  Yeah, no, I'm with you. I have the people pleasing too, and it's definitely a challenge. I do want to ask a very serious one, but I got asked it the other day and I thought it was bloody brilliant. What cocktail most resembles you and your personality and why?

• 35:22Speaker 02

  So I asked my wife this last night when we were kind of like thinking about these questions and she said a Negroni. I think that she was a little bit influenced by our summer vacation that we took a couple of weeks ago. But I'll go with it because it's a classic. It's colorful, it's on the flavorful side and it's still grown up. So I like to think that I'm a Negroni.

• 35:43Harry Stebbings?

  I like that. That's good. And I'm glad that I've provided some dinner conversation. Tell me, what would you most like to change about the world of tech in the valley?

• 35:50Speaker 02

  Yeah, this one is actually pretty serious in nature. I was talking to a candidate the other day for a leadership position at Loom and one of the questions that I asked them that is to get to know them was, what have you noticed that surprised you most in the last couple of weeks? And they happened to be black and they said that they were surprised that the next civil rights movement akin to the movement in the sixties is starting right now in the States. And they were shocked with how much open pushback there has been across the nation in some of the highest positions in the country. And so I feel like it's our duty as leaders to look at ourselves and ask, what are we doing to provide equal opportunity and representation?

• 36:35Speaker 02

  Particularly for the black community to make up for historical inequities. And then for myself personally, where I feel like I have control is within the tech sphere. So I think that generally we need to be doing this across the board. And today I would like to see a meaningful change in diversity and representation across all aspects of tech, particularly for the black community.

• 36:55Harry Stebbings?

  Yeah, no, I absolutely agree. And can I ask, in terms of like what Loom is doing specifically, I'm just interested here, what are you doing specifically? Because I see so many of these company posts which are recognizing it and talking about the education. What specifically is Loom doing to move the needle?

• 37:08Speaker 02

  Yeah, so we initially did a block of donations about three weeks ago, four weeks ago, when this all really picked up. But what we collectively discussed as a leadership team, and this was spearheaded by Salesforce, which is the 1% contribution. And so we collectively, as a company, said that we were going to do that 1% donation. Right now, it's revenue. In the future, it'll be profit and we'll kind of like start to transition that over time. Is it 1% revenue, 1% profit? But we are committed to every single month donating 1% of our revenue to causes. And in the near term, over the next six to 12 months, it is going to be to organizations that are helping and on the front lines of civil rights.

• 37:50Speaker 02

  And I believe if you have consistent donations to certain communities or certain organizations over the long term, it means that you will mentally commit and invest yourself as well. We're also implementing and working with organizations and programs in order to, from an inclusion and equity perspective, how do we make sure that we have equal pay and equal opportunity across the entire company? And how do we make sure that we do not have biasy within any of our operations? And so we're working with organizations on that front and moving pretty aggressively to make sure that we unroot any of that biasy as quickly as we can.

• 38:29Harry Stebbings?

  What do you believe that most around you disbelieve, Joe?

• 38:32Speaker 02

  So I believe dogs are way smarter than we give them credit for. And this is one that is pretty far out there and it's not supported by any hard evidence. But human consciousness is one of the greatest mysteries that we have to this day. And I believe that we might have quantum elements to it that might actually help explain human consciousness.

• 38:53Harry Stebbings?

  You're right, that is totally out there, but I think it's one for a session of Negronis and then we can unpack it a little bit further. An ultimate one, Joe, mentors have always been super important to me. Who's the biggest mentor to you? And I guess what's been like the biggest takeaway for you from that relationship?

• 39:06Speaker 02

  Yeah, so my grandpa on my mom's side, Wally, he was my mentor and idol. I grew up only 15 minutes away from him. He was the one to have that printing business that I met. Mentioned at the top and he just always treated me as an adult like there wasn't ageism in our relationship. And he taught me critical life lessons and they're like very simple things, but life is relatively simple. If you find out the keys to them. So one of them is treat people on the way up as you do on the way down. Meaning treat everybody equally and don't have an inflated ego and smile because they're infectious.

• 39:46Speaker 02

  Just like bring joy and happiness to the world. And I think that for myself, I don't have him in my life anymore, unfortunately. But in the like 20 years that we spent together, I felt like he truly built the foundation for who I am as a like partially as a man. But like largely as a leader.

• 40:02Harry Stebbings?

  It sounds like an incredible person. So I'm sorry for the loss of that, but um yeah, I'm glad that you had that time with him. I do want to do a final question and probably the most important, which is the next five years for you and for Lumen. Just how big could it be? And what does that roadmap look like?

• 40:16Speaker 02

  We want to accelerate information flow for the global workforce. And we want to empower people to communicate more effectively wherever they are. I think that there's great examples of organizations that have remained incredibly disciplined. Provided best in class user experiences for us specifically, it'll be video messaging. And from there, we can scale ourselves really, really far. I mean, we plan to address every single knowledge worker in the world. And what's interesting is now that we have a mobile app in the space, we're starting to see not just knowledge workers, but people at work using video messaging to communicate with each other. So I like to say that we're changing the face of workplace communication, fun little pun there.

• 40:56Speaker 02

  And that it's going to be a revolution in terms of percentage of communication that's happening over much higher bandwidth communication. That's more efficient, that's more effective and most importantly, more expressive. And so if you can make workplace communication more efficient and more effective first, but also at the same time, make it more expressive. So that way you build meaningful relationships with each other with a globally distributed workforce. I believe that we're really just scratching the surface with where we're at with video messaging and how far Loom can take it for the world.

• 41:26Harry Stebbings?

  Joe, as I said, I had so many good things from Christoph and Andrew, most notably. This has been so much fun as you can tell, and thank you so much for joining me today.

• 41:33Speaker 02

  Harry, thank you so much for having me. I really, really appreciate it.

• 41:38Harry Stebbings?

  I mean, I think you can tell just how much I enjoyed that episode and I want to say huge thank you to Joe for being so open and wonderful on the show there, a brilliant element there with Sequoia winning the deal with that Lumen. If you'd like to see more from us behind the scenes, you can on Instagram at H Stubbings1996 with two Bs. I always love to see you there. But before we leave you today, I'm sure you've heard about it, but my word, there is a product that I love, Carter. Carter simplifies how startups and investors manage their equity, track camp tables and get valuations. Go to Carter.com/20vc to get 10% off. More than 800,000 employees and shareholders use Carter to manage hundreds of billions of dollars in equity and Carter now offers fund administration. So you can see real time data in the Carter platform and work with Carter's team of experienced

• 42:21Harry Stebbings?

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• 43:05Harry Stebbings?

  a bank account alternative with unlimited free wire and ACH transfers with no minimum balance required to create an account at all. You can apply for an account today at Brex.com. And finally, today, more than ever, if you want to get a deal done, you really need to build that relationship and there's nothing like meeting face to face and there's nothing like Zoom to make that happen. Zoom lets you connect and do business across town or around the world. Zoom ties together all your communication needs into one easy platform for video conferencing, for video calls, group chat, webinars and your conference rooms and connect easily from anywhere, your mobile phone, your laptop or conference room itself. Zoom is how business gets done today. Get your free account at Zoom.com today. Meet happy with Zoom. As always, I so appreciate all your support and I can't wait to bring you a fantastic episode next Monday.