YouSaid · the spoken record

Adam D'Augelli

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19
first
2019-12-16
most recent
2019-12-16
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1
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podcast

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  1. “Most recent investment is a company called MemBio, which manufactures red blood cells outside the human body. It's a great mission to go back to the kind of core of conversation, great mission-driven founders, crazy ambitious idea, a kind of huge positive impact on the world of successful, raising our type of money at our type price.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “I'm going to name a few because they're all different in their style and approach. I would say David Scott at Matrix. He has such a deep level of knowledge on software metrics and how to create a predictable, repeatable, scalable business model is awesome to watch him work. Randy Glein of DFJ growth as a growth investor, Randy's unique in the way he embraces risk, takes a very human approach in their business. Andy Weissman at USB, who's my favorite example of having a small syndicate of aligned co-investors and how that can help make a company more successful, and then Pac Rady at Sequoia, who I know you've had on here before, who is a kind of a peer in age, but I think his incredible depth of knowledge on being a good board member and partner to CEOs. So I aspire to be more like that all the time”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Say this in the context of our business model as early state, really early stage investors are true. We tend to back people who have incredible domain expertise and unique insights on a particular market. So to argue we could get as smart of them as quickly as we would need to, then creates a false sense of security. An extreme example in our portfolio is Brendan Frey, founder of Deep Genomic. Brendan was a mentee of Jeff Hinton. I was doing deep learning at the University of Toronto during kind of the deep learning dark ages and was the first in his group to shift from cat pictures to human DNA and then built one of the first labs focused at the intersection of those two things. He wanted to start a company, the drug discovery focused on genetic medicine. There's no amount of work I could do to catch up with him in his knowledge. And ultimately his conviction on the opportunity and why he wanted to do it is what drove our investment decision. As an aside, there's an awesome academic paper called Investing in the Unknown and Unknowable, which argues that in markets with many unknowns and things you cannot know, knowing more actually leads to worse decisions for an investor, and rather they should focus on finding someone who's very knowledgeable in the space and making an aligned investment alongside them.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “It takes longer to build knowledge and feel of what a good investment looks like. And I guess going back to the previous question, I think the advice given to new investors is that sourcing early is super important. And while technically true, it takes more time than you think to learn what good looks like and to have a differentiated viewpoint.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “So, I think VC is a strange job. We're doing more, doesn't often correlate to improve performance. And I'd argue filling your calendar with lots of meetings doesn't create the space for luck and serendipity to occur. Some examples with Mitchell and Hashi Corp, Mitchell was the first engineering hired to fund two company when he left that company. He didn't plan to raise money, but we built relationships with him over time and worked were really hard to be as early as investment partner. With Kim at Prime Roots, we had spent two years meeting companies in the alternative protein space. Thought something interesting could be there, but didn't click until we met her and heard her vision. It's Steve and Splice. We initially met at a conference in Bogota, Colombia, hosted by a mutual friend, and I happened to run into him at New York City for breakfast. These are just like a handful of examples, but I think it's difficult to plan for these types of outcomes. But having the space for serendipity to strike is super important. And the challenge being that you don't know which activities are the right one and without thinking about it, your calendar fills up. And so each year I think about this a little bit differently, but the goal continues to be do a little bit less better and be more present.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Doing capitalism in the innovation economy by Bill Janeway. Bill Janeway started the venture capital practice at Warburton Pinkis. His book, for to me, is the best overview of economic theory, of the economic theory of venture capital, really as an interplay between private markets, public funding, and the creative power of founders. I would say it, combined with Carlotta Prez's technological revolutions and financial capital, are must-reads for anyone in the business of venture capital.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “As part of diligence, and they were in the back underneath the fans because no one bought doorbells. But he had a vision for how you can improve home security starting with the front door. It was bold and ambitious and big if successful. And more than anything, when I walked into their office, they had painted on the wall to lower crime and community. And so at that moment, I knew we were going to invest, despite the fact they were called doorbot, 50% of their products at that point didn't work. It was this kind of big ambitious goal they were going to go after. And if it worked, it would be a really meaningful company. Steve, I would say, it was a similar thing. I don't think you could have chosen a less popular category for VCs than the intersection of music and creator tools, but he's arguably one of the best product brand-centric founders of kind of the last 10 years. And this is how he wanted to spend the rest of his life building the most important company for music creators to accelerate the creative process for the current set of artists and dramatically increase the number of individuals who have to be creative and finish their work. And I'll paraphrase our co-investor, Andy Weissman from USV. The market size for creativity is much bigger than people think.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Can lean in as good partners to the founders we work with, which goes to the heart of your previous conversation with Panit around EQ. And so at true decisions, I'm going to dodge a bit and say both are important. You can't have one without the other. So to tie back to the above framework, I don't think you have one or the other, but it's rather the why of the founder, their path to starting that company and their underlying biases or assumptions about how the future will evolve based on those experiences. And so I guess I could go into some examples. I think you spoke with Jamie Simonoff of Rang and Steve Martocci of Splice before. I think their Grace case studies and how our business model at stake differentiated risk that other firms may be uncomfortable with. In both cases, we weren't the first investor to meet either company, and often they have been turned down by many other investors before us. But for us, the decision lead their financing rounds was straightforward, happened relatively quickly. Great founders doing ambitious things, introduced to us by an existing founder in the true portfolio, raising our type of money at our type of price. And in both cases, the markets were super weird, but they had a vision for how their company could impact the world in a positive way and how that ultimately would lead to a very large business, which for us would generate meaningful venture scale returns. And so with Jamie, when we invested the doorbell market was zero dollars, as an aside, I went to Home Depot to try and buy a door.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “For reinvestments, I'm going to take one step back and go a little bit deeper on the model because I think it will be important here. And so in each fund, we'll make between $45 and $50 initial investments in reserve really heavily. And the goal is being able to continue to invest and support the best performing companies through their entire life cycle. And our current data would say in each fund, we've shown an ability to partner with one or two founders where our investment in the company over time will end up returning the entire fund, bit duo security, hashy core, peloton. And then six to eight investments will generate kind of a fund level return, which we talk about as 25% plus of the cost of the fund. And so great founder taking tons of product, market size, market timing risk, raising our type of money at our type of price. What that does is as a group, there's 10 of us who each week kind of know what we're looking for and it makes the decisions really easy. And so the second part of the model, and I don't think John and Phil good enough credit for, is the culture they've created, the firm, which gives us the security and confidence to embrace this type of early.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Are companies that today I think people are like those are really interesting businesses, but there were kind of weird markets, they're doing kind of weird things. And so at some level, in the earliest stages, them having us as a group that had meaningful amounts of capital to deploy into them were able to continue to support them until they were able to get to a point where people like, oh, yes, they should do it. Companies all need meaningful amounts of downstream capital to continue to work. Very few companies out of the gate will be profitable. And I think it creates kind of this have, have-not situation where we're excited to see Trey AO and others continue to grow and have the capital to grow. But also, I think there's a meaningful opportunity for other companies who may not be as to have or have not to be really interested in returners for us. I mean, that makes me so happy. I was with Rich last night. He is an all-time hero and desperately sad about him leaving the UK to go to the valley. We're losing a grade. But I do want to touch on the decision making process because we mentioned their kind of initial investment. We mentioned reserve investment. They're different decisions, so what is the initial decision making process look like? And then how does it differ?”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Sequoias, benchmarks, you name the tier one fund of the world. So, do you think you can build ownership over time in your very best? No. So I would say our model really is predicated on the idea that we will lead the round, will take the most risk early on market-sized market timing product, constrain downside by our initial capital, and really working with people that are truly special who often come through existing relationships, often the founders in our portfolio. And then over time, as they continue to raise subsequent under financing, I would say the most of them will raise money from later stage firms, and we will continue to invest our proata throughout. And so our call 20 to 25% in the beginning, if we do everything right, we'll own between 17% and 20% outcome. But I think it's very difficult over time with success to continue to buy ownership. Can I ask, what do you actually think about the rise of preemptive rounds and stay there? They're almost the norm in many cases. How do you feel about that? I would say in most of our successful companies over time, they were not perceived as successful in the beginning. Things like Ring or Splike.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Pockets, somewhat self serving, but we also think it's the best way to go build very important companies. And so it's not to say there will not be co-leads, and often what's interesting about the market today is if you go back to 07, many of the groups we worked with back then, soft tech first round, have grown fund size and now compete more directly with us. But there's a new group of firms where tend to lead these rounds, but we'll often work with one or two emerging managers that have smaller funds that the founders want to bring in as well. And so we target an ownership number that we think is good, but also not to the point where it's greedy. We don't want others to be in the capture. Totally. And I really think that's what's super cool about the operator style funds, which are much smaller, the 100K checks, where you can bring them in and kind of all come into the syndicate nicely together. I do want to touch on a couple of other points, though. And you mentioned there about, as you said, kind of piling into the winners. Often instead of the belief that really for the massive outlier companies that are very obviously performing incredibly well, as you said, Ring, Simon Peloton, the best come in, especially now, preempt rounds and swoop them up early.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Raise $10 million culturally, they want you to make it work, whereas we at the time were saying, listen, it's okay if it doesn't work. Let's go try another thing. And often that is the case. And again, the opportunity cost piece, I think, is really big. And us being really open about it in the beginning, we're like, we can have very honest conversations with founders. And I think it is more difficult for a founder to say, hey, it's not working with their investor. Whereas we from the beginning is like, listen, this is an experiment. Let's go run it. And then together make a decision. Is it worth your time and additional capital from us? So given the ownership, and I do want to touch on, you said there about kind of really piling into the winners, as you said, Peloton rings at many in the true portfolio. But with the ownership being where it is, as you said, 20 and above, does that mean the days of kind of co-leads is really overstage, you think? Again, for our business, our main product is we will lead a pre-seeder seed round with that investment amount and target that ownership. There are other ways for founders to raise money. You can raise money without a lead. You can raise money with co-leads. We have a meaningful bias towards priced equity rounds with a single lead who have really”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “I think the question is, I think we also self-select into a type of founder where I think before this call, you talked to Steve and Jamie, you know, at some level, these are incredibly talented people who do many things. Starting a company is not always the most rational decision in a way that it's from a relative basis, probably not the best economic, best social, best personal health decision, but they tend to see something that others don't. And so at some level, Amy Erett, when she started Madison Reed, came to us and said, hey, I have this crazy idea around building a better for you hair care product company. If I need $2 million to get it off the ground, I'm happy to trade ownership for that because I want you all in the business because I think if it works, I will need meaningful amounts of capital. I want to trusted partner at the table. But like, it is very likely to not work. And so I think that kind of awareness goes into it. That's really interesting. Yeah, the best founders do a kind of view the opportunity costs of their time more than their dollars, so to speak, in a lot of cases. And so actually going for the risk upside maximization, then it totally makes sense in the line. Yeah. Well, I think if you go back to 06, we spent a lot of time educating founders on why they should raise less. And part of it is, you know, if you raise.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Take two steps back and I'll say part of the reason I think it's important to have this discussion on business model for us is that we can go in and understand what is good, what is bad for us. And so with founders, these numbers I'm sharing here, like in our first meeting with a new founder, we will share them. When we talk to our existing portfolio, we share these numbers. And we say, hey, if you someone great that we should meet, this is the type of deal we do. And so part of it is there's a self-selection bias into this is the type of thing we do at true. And I can talk to you kind of why we think it's a better product for founders. But at some level, we were very upfront with the type of investment we make and not make by related to that. And part of that is then people can say, oh, this is interesting. This is not interesting. Highest level, we don't have to do every great investment in the world. But if we only do great investments over time, we will consistently”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Yeah, so I'd say one of the benefits coming out of this podcast after your partners is that you get to fill in a different piece of the firm story. And I think the context of business model is often underemphasized in discussions on venture capital investing. Highest level, venture capital is a type of asset allocation business where we manage funds on behalf of our limited partners. So for true, those are nonprofits, foundations, endowments, groups that need to generate a return on their capital to continue their important work. I don't think there's one correct type of business model in venture. And at some level, the system works because there are many different ways to finance innovation. But I think the best venture funds focus on fund level returns because that's ultimately what's important to our limited partners. And so to dive in on true, we manage funds of roughly $300 million and really focus on leading the first round of institutional capital, usually pre-seed or seed with investments of 500K to 3.5 million, targeting 20 to 25% initial ownership. Our median initial investment is roughly $2 million for $22.2%.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Yeah. And I would say most broadly, I'm a believer that venture capital is very much a mentorship business. I mean, I couldn't have asked for a better group of partners to work with. I've been fortunate to learn from each of them. Kind of fun to come out of the show after them, but they were super patient as teachers in my early career because there's a lot to learn adventure. It's a very steep learning curve”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Think I was very fortunate. It definitely could not have worked out well. So I would say higher risk, higher volatility. So in my initial role when I joined, I had the opportunity to work all the functions in the firm from helping design content for FounderCamp to helping build fundraising decks for LPs to helping partners model potential financing rounds, all of which provided incredible context for the business of venture capital, which is much broader than picking companies. So over time, that work evolved to sourcing new investments and ultimately to work more independently as a partner on the investment team. But without the context of all the work and do your question on, there's just a lot to do and lots of opportunity. At least for me, I think it was super valuable to learn that because I think it makes me better at the job that I do today.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “So I joined True full time June of 2010 at the time the firm was super small, so nine people total in the middle of semestering their second fund. I met the true team through one of their portfolio companies BSOC Solutions, who had worked for the summer prior summer of 2009. And as I was getting ready to graduate, I reached out to Phil, John, and others on the team for advice, an introduction to substantial roles in the Bay Area. I knew I wanted to work at the intersection of technology and finance, but didn't entirely know where to start. And the University of Florida, where I went to school isn't as well known in this region as other schools. At the time it was mostly undefined, but effectively we like you. We've never hired someone junior at the firm, but come here and we'll figure it out together. Pause here to say, I've been super fortunate in my life to be in a position to work with great people who believe in me. I'm lucky that those roles have worked out over time. Looking back, joining true is actually the best decision. If you're going to join a venture fund, join one that is new where they have lots to do with people that you like and you're aligned with their values is super important.”

    2019-12-16 · The Twenty Minute VC · 20VC: How To Think Through Portfolio Construction and The Business Model of VC, Why You Cannot Grow Ownership In Your Best Companies Over Time & How To Make The Space for Serendipity To Strike in VC with Adam D'Augelli, Partner @ True Ventures · IDENTIFIED FROM THE TRANSCRIPT · source