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Charles Hudson

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29
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2016-05-09
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2016-05-09
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1
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  1. “Wow, so I just made a commitment the other day to a team. I can't say sort of the name of the company, but one of the founders has worked for three people that I've known very well for a really long time. And all three of them tried desperately to retain this person before he quit. And they all had sort of remarkably similar commentary about his leadership and vision around product. And so I'm really excited to work with that team.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “I get up very early. I have a very specific coffee ritual I do at my house every day where I make myself some coffee with some fancy gadgetry I've assembled. I spent about 10 or 15 minutes in the morning looking at my to-do list to kind of rearranging things to make sure that I've got the right stuff at the top. And then I tried to get 30 to 40 minutes of just uninterrupted work done from around six to seven before the emails start coming in. And I usually try to pick the two or three stickiest, thorniest, or thought intensive things I have to get done that day and get them done before I head out the door. That's my typical morning.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “You know, I really like reading the information. I've been a subscriber of the information for a while and read it every day.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I really like robotics at the moment. I've spent a fair amount of time looking at that space, and it's one that I think is very, very interesting. I continue to be interested in core consumer. I just think consumer internet usage patterns are just not stable. And every three to five years, there's an opportunity largely because of hardware improvements on smartphones to rethink many core experiences on the phone. So those are two areas where I've been spending a lot of time. And I did the third one is kind of consumer facing digital health. I'm not a med tech deep health tech person, but I've certainly been seeing some really interesting companies that bring the power of digital health to the consumer.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “You know, the thing I enjoy the most about precursor is I get to work with people from effectively day one of their company. And if I can do a good enough job with the fund in terms of providing returns for my LPs, that I can work with brand new teams every year and be kind of the person who first believed in them for the next 10 or 15 years, I'd be really happy with that.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I generally agree with that strategy. I think having a pretty consistently sized check makes life easy. A, it makes life easy for your co-investors because they always know how much money they should pencil you in for. Two, it also takes away this question of like, let's say you write a 500K check and a million dollar check. You don't have to ask yourself, do I like this 500K or do I like it a million? There shouldn't be that kind of conversation. You either think it's a great company and you should invest in line with what you typically do or you don't think it's a great company and you shouldn't invest at all. So I'm a big fan of having a pretty narrow check size range or having a pretty narrow if your ownership driven ownership target range. I think it helps keep you having your own set of checks and balances and not falling in love with something that you think is amazing and writing a gargantuan check.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Be appropriate for a small fund to stay in that company, or there may be other structures like SPVs that provide a better mechanism for continuing to participate. But for the main fund, my view is that the LPs I've talked to, their goal is to have me deploy that capital against really early stage, high potential new companies, and to get into as many winning ones of those as possible as opposed to accumulate ownership in a relatively small number of names.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “I've been influenced by a lot of people that I've co-invested with in my time at Soft Tech. And I also try to apply one additional lens, which is stage. And the way I think about it is precede is generally the lowest possible price at which you can get into a company. At the end of the day, my job as a produce returns. And for me, the best way to produce returns is to have the most money in at the lowest dollar cost average. I'm not trying to deploy a billion dollars and turn that into two or three. I'm deploying a lot less capital. So my view is given that preseed companies will have a higher failure rate than Series A companies, it's better to have more first check investment debts on the table, and it's better to be more aggressive in getting into companies. And for those that graduate to the next level, make sure that there's appropriate reserves to at least do the next round. Beyond that, it may or may not be.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “And so you have to find people for whom your strategy and mine's been pretty simple. I'm a generalist investor in hardware and software and it's a solo GP firm. That's a very specific set of investors who can look at that model and say, that's something that I want to be a part of because it's worked for me in the past. Or that's something I want to be a part of because I believe that that type of model given the stage at which Charles is investing can work. And so I think a lot of it is this sort of getting your own kind of product market fit as a VC fund and realizing that there's some traditional institutions for whom small solo GP funds are just not a great product”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “The thing I will say is the questions that you've asked are very much in line with the questions that LPs asked. And I think And the thing I would say is that I think when you're a solo GP fund, there's a set of investors who they just don't like the single key man risk of a solo GP fund. It just doesn't fit their model. It's not how they like to invest. That disqualifies a certain set of people. There is a set of people out there who have a lot of exposure to micro VC already. They were early on the trend and they've got a fair number of relationships. And, you know, to add another one means that someone else needs to be displaced. And third, there's some people who have different preferences for generalist versus vertically oriented theme specific funds. So what I would say is my experience is the fundraising for a venture fund is kind of like the fundraising for a tech startup, but a little bit slower.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “500 starts up still. Like 500 startups or SV Angel, there's a lot of different strategies that can work. I think the question is, what strategy do you believe in? And what I've told folks is my goal is to have a portfolio that's large enough that allows me to take risk on an annualized basis, but that's small enough where I know all the founders by name and have the opportunity to have a real relationship with them, which is different than kind of a high conviction two to three investment a year model. And it's also different than a sort of 50 to 75 investment a year model.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “The market that we're interested, and we can tag along and create value that way by adding capital to help you close out around.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Sure, you know, I think there's a couple of different ways one can differentiate. I'll tell you the things that I think about. One, I know this sounds maybe a little too touchy feely, but I think not every entrepreneur is for every VC and vice versa. I think there are sort of personality types, market spaces, worldviews that tend to cause people to gravitate towards people who have shared views. And so I think that can be hard for LPs to understand sometimes, but people are looking for that human connection. Two, you know, I think the other question is, you know, what's the value prop to the companies that you back? You know, there are some people who say, I do a very small number of investments. You will get deep engagement from me, but I'm super picky. And if you get chosen, you'll get this kind of bespoke white glove service. I think there's sort of the other end of the spectrum, which is we're fast. We don't have a complicated diligence process. And we can make decisions quickly and we can signal.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Yeah, I think that's something I honestly struggle with. And I'll tell you the way I think about it. I don't know that I'm very good at predicting whether a market will be a billion dollars in size. What I do think I can predict is, do I think there's a sufficiently large pool of buyers to help the company that I'm working with get to 75 to $100 million in revenue at scale? And to me, scale means the life cycle of a fund. Because for me, if you start planning for M&A exits from day one, they never end up.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Yes, it was. In other cases, it's a technology platform. In some cases, it's a hardware platform. The ones I like the most, though, here are the ones where I feel like a bunch of different trends come together at the same time, like computer vision, robotics, GPS, low-cost manufacturing of hardware. To me, those are kind of powerful megatrends that when they come together, you get kind of these unique sets of circumstances where you can build really, really interesting companies. And so I think with market, I always try to figure out like, what is it that I believe? What's my point of view about why this market will exist? And will it produce a company that has decent gross margins at scale?”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Are comfortable ordering a car from a stranger using an app gives us confidence that the core behavior here is not truly novel.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Yeah, markets are really tough. I mean, my basic investing pieces is sort of team is greater than market, is greater than product, which to me means I have to have real conviction about the people and their ability to execute. And then the next thing of almost equal importance for me is the market. And by definition, I'm usually looking for markets that don't get exist or that aren't yet quantified or quantifiable, but where I think in the next 12 to 18 months, there's going to be some inflection point that causes them to happen or causes them to become more interesting than they used to be. And for a lot of that, I always ask myself, well, what do I have to believe to believe what this company's telling me? And is their general worldview consistent with where I think things are headed? You know, when I think back to when we first invested in Postmates, Postmates did not have meaningful delivery volume at all, but this was sort of in the shadow of Uber. And I think the knowledge that, hey, a subset of people.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Oftentimes it ends up being the connection between the product that they're building and the way that they want to market it or launch it to the public. Sometimes I'll start writing about the business model and I'll say, hang on, this isn't quite as clear in my head as it was when I was sitting in that meeting. Or hang on, I guess I don't maybe have as clear a perspective on the competitive landscape as I thought I did when we were in that conference room talking about the product of the market. And so it tends to vary. It's rarely about the people. It tends to be about some nuance of the market or some nuance of the strategy that upon reflection isn't as clear as it was when we were together.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Absolutely. I am not afraid to be the first commitment. I do that quite often. I find for founders the first commitment is the hardest one to get. And having a committed investor makes those other conversations much easier. And I think that's part of the role of really early stage capital is to signal your belief with a check.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Yeah, so I have a handful of advisors that I tend to run things by before I do them. I actually write myself investment memos And I try to stand back and read them and say, Does this hang together? Does this story I've written on this page? Do I actually believe what I just wrote? And more importantly, are there parts in the company's story that I have trouble connecting the dots? And I think last but not least for me, I have to syndicate everything I do because I don't write large checks at the firm. And so eventually I have to convince at least one or two other people in the ecosystem that the company that I'm interested in has merit.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Absolutely. But I'm dealing with companies where there isn't really very much in the way of data to analyze. It really comes down to perspective on the founder and perspective on the market.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “A fund on their own was something they never considered because they deeply felt like they wanted a partner. They deeply felt like they wanted a partner from day one so there was no question as to kind of whose firm it was. And they also just felt like it would help them make better decisions. And when I look at the way that Satya and Hunter interact and Josh and Dave at freestyle, those to me are examples of partnerships that are really healthy and functional where people got together kind of from day one and decided we want to build something together. I think that can work. For me though, I invest at the really, really early stage. And for me with pre-seed, I really feel like one of the key vectors is speed and the ability to kind of process opportunities quickly. And I don't have any coordination costs at the firm. I don't have a second partner who needs to sit in on the meeting. I don't have to deal with the second person's schedule. And do I think a second perspective at times could be helpful?”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “I think the thing I've come to appreciate is that there is no right and wrong on an absolute basis for venture as to whether it should be a team sport or an individual sport. I think there's a class of people who deeply believe that venture is a team sport and that firms with a variety of viewpoints and partners will make better decisions than a single individual without any checks and balances internally. I'd argue that that's possibly true, but then I look at a handful of people. Chris was very successful before he added Matt to his firm and they've continued to be successful since. Mike Maples was successful before he added Anne, and I think Anne has done a lot to grow the footprint and returns profile at Floodgate. And I can look at people like Steve Anderson and Michael Deary and Manu Kumar who've continued to be successful on their own. And I think part of it just comes down to culturally, how are you wired? I've met a bunch of GPs for whom the idea of starting.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Think that's part of it. I actually think that there's a lower threshold because people like Jeff, Steve Anderson, Chris Saka, and others showed that you could take a small amount of capital and actually turn it into meaningful returns. I think the fact that they proved that those early micro VC funds from the early vintages were really strong. It gave LPs the confidence to say, hey, maybe there's another wave of folks with this strategy behind the first wave that we backed that. Maybe we should think of that as a new sub-asset class inventure.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Kind of funded administration and back office for me. I have a large chunk of my portfolio companies on eShares, which simplifies kind of keeping track of cap tables. I use Angela. So there's a bunch of tools that have been developed that mean as a solo GP, you don't have to own all of these things in-house. And that has tremendous implications for the management fee overhead you need to run a fund.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “I think that there's two reasons that it's happening. I think one is that because the micro VC folks like Jeff and Eiden and Mike Maples and Steve Anderson and Michael Deering, and I think that first wave of microVC pioneers, they created an environment where it was okay to raise an institutional fund of less than $100 million and to have that thought of as actually a viable venture model. So it's really hard to go raise $100 million as yourself for a solo GP. So just the kind of entry table stakes of raising a fund kind of meant you had to have two people just in order to get to what was thought of kind of as the threshold level of capital required for the business. I think the other thing is that there's just more third party services and things you can use to make your life easier as a solo GP. So for example, I don't have an in-house CFO. I have a third party firm that does all of my”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “I think the biggest takeaway, and I encourage a lot of my friends who are in venture who haven't had as much operating experience to try it, because I think as a VC, it's easy to sit in the boardroom and see strategically that there's something off with the business and to kind of dictate, hey, we should fix sales or, hey, we've got to fix marketing. We've got to fix product. But until you've actually been in an organization and seen what it actually takes to change the way that a company or group of people behaves, it gives you a much better sense of just how hard it is to tell a founder that like, hey, we need to fix marketing and fixing marketing is probably a two-quarter project. Or hey, we've got to revamp the product, revamping the product probably is going to take an entire year. I think it gives you a much better nuanced sense of the interdependencies that happen inside of companies because most venture funds are small. You've got three or four people. So you don't have a maybe a sense for the...”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “A solo GP shop to more of an institution. And I really liked Jeff's vision for what he wanted to build the Soft Tech. And so we started working together, worked together for about five years. And then I think like many of the micro VC firms of that vintage, Softech's had a tremendous amount of success backing companies like SHIPO and Fitbit and Poshmark and Postmates. In Venture when you're successful, LPs trust you with larger and larger amounts of capital. And so I've been really impressed with the way that Jeff is sort of scaled Softech. But like many kind of entrepreneurs, I had my moment where I looked at our model and thought about kind of some things that I was seeing in the venture landscape, but we can get into this later. But it really gave me the impetus to think about branching out on my own and starting my own fund.”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “The brief synopsis is my first job out of college was as a venture analyst for InQtel, the CIA's venture capital group, and that really gave me some early exposure to venture. And it taught me a lot about the job and the career, but it also kind of humbled me and made me realize that without kind of a deeper set of business experiences, there was limited value I could provide to the companies that we had funded. So took a stint in the operating side, worked at Google and a handful of games companies, learned a lot about business development. Was a founder myself, raised some money for a venture-backed startup myself and really felt like I wanted to have the full suite of experiences as a founder and exec before I returned to venture. And then I was fortunate enough to reconnect with Jeff in late 2009. And we started talking about sort of his future vision for soft tech and taking it from”

    2016-05-09 · The Twenty Minute VC · 20VC: Raising A Solo GP Fund & Why They Are So Prominent Today with Charles Hudson, Managing Partner @ Precursor Ventures · IDENTIFIED FROM THE TRANSCRIPT · source