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Jonathan Hsu

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22
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2019-06-17
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2019-06-17
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1
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  1. “The most recently announced one was when we co-led the series D of Carta back in, I think it was November with co-led that round with Meritech. So we did that with the tribe. Why was that so exciting? Well, because Carta is sort of a singular special company, potentially, we believe Adam 1, as we have said before.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Yeah, maybe it wasn't a moment, but I know that a lot of this early stuff, when I had just gotten into venture, a lot of my early thinking, you know, I had thought a lot about physics. I had thought a lot about sort of data science, but I hadn't actually thought about accounting. So I spent some time learning like how private equity people think and the history of accounting. And that stuff was really pivotal for me because it helped me understand that this stuff sits in a much broader frame, this data stuff, that it sits sort of in this tradition of using data to try to make unbiased decisions as much as possible. So learning good old fashioned accounting. I really mean like old fashioned style account”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Yeah, I think the biggest misconception here is that the only way to use data is like the way that machine learning or AI works. You know, people overlook things like good old-fashioned accounting. You know, accounting was sort of the very first data science. That is a big application of data. That's all that is, right? People have been doing that forever. Or even overlooking things like college admissions. Of course, you know, sort of college admissions is thing that everybody point fun at and think of as massively biased thing. But actually the college admissions process has a lot of data in it and much more than most things and has been doing so for many, many years now.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “This happened a couple of times where the LP actually has some background in physics, and we actually end up having a conversation about, okay, you know, what did you study in string theory? Oh, okay. What do you think about XYZ and particle physics? And I can actually have that discussion. That has happened more than once.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “I would say that the biggest things that we face is really just the stuff that you face when you're trying to start any new company. Right now we're, I guess, eight months old right now. And so we're going through those really early growing pains of just making ourselves a big, real thing. And I think we're making some good progress there. We're making a lot of great progress there, but it remains something the thing that we focus on.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I believe that data can be useful in a wide variety of contexts, much wider than most people give it credit for, in particular in their early stage of investing.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “My favorite book was actually The Origin of Political Order by Francis Fukuyama. It's really a sort of a history of how humans organized themselves, specifically like into political units, going back to early hunter-gatherer days.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Effects usually when they occur, it's not because you set out to engineer it. There are many people who have tried to engineer network effects who have failed. And then the ones that have succeeded are the ones that we see. Those are sort of the dominant paradigms for today. And we don't know if that'll be the only thing forever. That's sort of where we are right now. And part of our job as venture capitalists is to be eyes wide open into any potential new models that might be able to generate that sort of at least medium-term defensibility.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “I think in the long term, you're absolutely right. Nothing is defensible in the long term, right? The question is, are you in an era where you can defend it for a while and give yourself enough breathing room to possibly innovate something else, build something else that can give you an edge elsewhere? So, I mean, I think that's how we tend to think about that. You know, when we think about defensibility right now, the most obvious pattern that we've seen in the last 15 years now is really the concept of a network effect, right? The concept of a network effect seems to really be able to put in a chunk of defensibility that gives you, or at least medium-term defensibility that's very hard to assail. And in some sense, marketplaces are a reflection of that, right? Marketplaces are sort of the situation where there is, in theory, some strong network effect on both sides that helps to propel the business forward. Other things other than network effects, obviously a very strong brand can be something that's very hard to replicate, but it oftentimes takes longer. It's not so clear that you can build those things completely methodically the way that you can sometimes build marketplaces. But then again, or network effects. But then again, they even”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Yeah, one thing that is common is that early stage companies, they're never great in execution. And when I say that, what I mean is that when you look at Facebook in the late 2000s, they were really remarkable execution-wise. They were able to just do a lot of things right quickly and be able to understand what was going on as they were doing it. And early stage teams, of course, they're not going to be at that level yet, but it's all about sort of striving to get to that next level, striving to execute at the next level. And executing at the next level doesn't necessarily mean just doing more stuff. It means doing the right stuff and knowing that you did the right stuff. And it's that aspect of knowing that you did the right thing, which is often a bit lacking in these early stage companies. I think anecdote works really well when you're dealing with the first couple of customers, when you're dealing with only maybe a dozen users.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Market development thing, they have that amazing sort of enterprise sales thing. And that's their thing. Our focus was really intending to be focused on this product market fit using data to drive product market fits, amplify product market fit, and to drive that flywheel. That's always where we had spent our time. And I think a lot of that comes from our history, you know, as I mentioned at Facebook, but also from our history social gaming, where a lot of these tactics were figured out. And basically going into these portfolio companies and helping them to see where we could leverage them, where we where it didn't make sense and sort of exploring the space of possibilities through data.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Yeah, this is actually really where I started out on Venture when I joined Social Capital back in 2014. Back in that era, the thinking was really that, you know, at Facebook, we had developed this set of discipline around growth, right? And when you use the word growth, we don't really mean growth hacking, but it's more like product development through the philosophy of growth, which is really about being fast, being very data informed. It's not necessarily data-driven, but it's more make sure you know as much as possible and have measured as much as possible when you make these changes and then make the changes quickly so that you can try as many versions of the thing as possible given your limited time. And so at Social Capital, when we started doing this stuff, it was really around can we bring that model of product development that we had done at Facebook to the extreme at that point? And could we bring that to these early stage companies, you know, sort of get them one level up? And that's really where we focused on, you could call it, I guess, value added to the company, but where we really try to help the portfolio companies. Mark Andreessen, Andreessen Harowitz, they're really good at this.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Of what we think is important, what they think is important, what we think we can help with, namely amplifying this type of product market set and whether or not they value that and see if we can come to a place where it makes sense for both sides, for us to invest in a company. So for us, winning is sort of that last step. It's where we've developed that context, which data is such an important piece of, right? We want them to understand that it's not just us investing in them. Like we're buying a piece of this company, right? We believe in the thing that they've built. And that belief doesn't come from nowhere. We have a very high bar for believing that and we attempt to articulate that cleanly to every founder that we work with.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “For us as a tribe, we really think of data as just a form of truth, right? Like really our goal is to just find the truth and articulate it clearly. That's the goal. And data happens to be sort of the purest form of truth. Data is actually totally unbiased when you infer something from data and you do something biased, right? That's where you introduce bias. So a lot of our work is around sort of just articulating very clearly this is what we see and this is how it sits in the world of things we've seen before. You know, over here, your kind of top coin file. Over here, you're kind of bottom cointile. And be able to articulate many facets of product market fit through that lens and give it back to the founder. And for us, we find that founders by and large find that feedback extremely valuable. They understand that a lot of times founders are like, okay, you know, I had an intuition that this piece was strong, this piece was weak, but I didn't realize that this was median and that this was top quintile. I thought it was maybe both of them were median. It can sort of kick off a very high common context conversation between us and the founder. And it's really through that back and forth where we develop that relationship and understand.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Mostly a business, right? And that's definitely some founder, but mostly a business. And really, it's in that, and at that point, when you're buying the business, there's a ton of data. Of course, we know that these growth equity firms, they're great at this stuff. I mean, that's what private equity firms do. That's what, you know, this is a lot of what growth investors can do is they have a lot of data in front of them and they can do it, they can use it to properly price the asset and try to win the deal. It's really in that stage in between, that sort of series A, series B where it's not quite obvious, where there is some data, but it's not the only thing. At that point, you are still buying the team, but you're also buying the business, right? At that point, you're definitely trying to value the asset as more than just the team. And if you're trying to do more than that, there better be some extra evidence of that. And the evidence for us really comes in the form of seeing some of that product market fit and really being able to think about that product market fit in a way that tends to be as objective as possible, attempts to control bias as much as possible so we can get a clear view, as clear a possible view when evaluating and do it as quickly as possible to help us just understand the situation.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “This is really where we spend the vast bulk of our time sort of data science in evaluating. And I think that this is largely a reflection of sort of where we focus. I think evaluating means different things at different points sort of in the life cycle of a company. When you're talking about sort of a seed company, very early stage companies that have no product or where the product is just hitting the market, I mean, there's not much data to look at. So it's sensible to not really rely as much on data. There might be some data in the sense of attempting to score objectively score founder profiles or attempting to score the founding team somehow attempting to score the market. And I think that's totally reasonable. But it's true that there's not a ton of data there, right? And then if we look at the other end of the scale, right, if you look at sort of once you get to series C, series D, you know, at that point, right, the investor is really valuing the business. They're buying the business. They're definitely buying the founder, right? But I mean, if you think about the seed stage, right, they're really buying the founder when the investor invests. And when you think about the late stage, they're buying.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “So definitely, I would say there's one end of the category, which is, as you described, basically using LinkedIn and behaving like recruiters, right? And then in terms of really transformative, you know, there are some things out there that are interesting, I think. I don't know if it's probably early right now to call them transformative purely in terms of sourcing. I think that's because you really get down to what it means to be good, traditional”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “But if you manage to get your hands on some of these data sets, there are things you can do on top of them to help you find signals. But really, it's like no one of these things ends up being the thing. Sourcing ends up being this like multifaceted sort of problem where you need to be doing everything to make it happen, I think successfully.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Yeah, you know, we really think of sourcing as sort of a multi edged prong. You know, I know that there exist firms out there that really rely a lot on data science on sourcing. And we did that type of work early on as social capital also. And, you know, we ended up finding by and large that there's no one silver bullet in sourcing, right? Sourcing is one of these things where good old ground game, just raw networking and being out there is a really important piece of it, building brand is an important piece of it. And having an outbound strategy is an important piece of it. And then with regards to how you power your outbound strategy, you can do all sorts of things with data sets out there that can help you do that. But it's no one of them that sort of wins all the time. There are a bunch of public signals that you can get your hands on these days by effectively running algorithms on top of Crunchbase. You acquire that data or possibly a better version of it. There exists panel data that you can get, both sort of app usage panel as well as credit card panel data. And you can, you know, if you can, you can get possibly get a hold of LinkedIn or something like that talent data, which is also difficult to get.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Yeah, well, I wasn't the first one for sure. There was a data science team. I actually originally was brought into the marketing team because they needed data help. Part of what was going on in Facebook in that era was that it was actually very hard to just count things, right? Like doing data science was actually difficult because the technology was hard back then. I were sort of relatively earlier in their life cycles. And so there were only a few people who were sort of doing it every day and a lot of teams were not getting the amount of support they wanted. And so there ended up existing a bunch of these little teams in many other groups such as marketing, myself. And then over time, we ended up pulling those teams together. We created the data science and analytics team sort of one full boar team sort of into 2011, I think. And then that team was came sort of the core thing that grew into the ginormous data science and analytics organization at Facebook today.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Yes, so me, I did that with a couple of friends. We ended up getting acquired by a company called Slide, which was Max Legends social gaming company back in that era, and was there for a couple years running data before going to Facebook. In 2009, and I was there until 2014, at which time I went to Social Capital up until last year.”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Been so lean forward to this one, having heard so many things both from your partner. So much Excited to be here Start with a little bit on you, so not many of my guests have done string theory PhDs. So how did you go from that to the wonderful world of Venture Today? Yeah, sure thing. Yeah. When I was younger, I wanted to be a physicist. So I went to Berkeley to study physics and then ended up doing my PhD at Stanford, studying black holes in cosmological inflation and string theory. This was in the sort of early 2000s. It's really sort of the most useless topic you can probably get your PhD in. Towards the end of my PhD, it was just clear I didn't want to be an academic and in the, you know, this is in 2006. So back then, everybody was trying to go to investment banks, but I wanted to go into technology somehow and ended up landing at Microsoft to be a product manager in the web search group. This was in the very narrow amount of time between MSN and Live and Bing. Right now it's called Bing. In the middle, it had a little bit of time where it was called Live Search. So I worked on live search for a little bit. While I was there, the Facebook platform opened up in a couple of friends, built one of the very first sort of social networking games directly on”

    2019-06-17 · The Twenty Minute VC · 20VC: Why Historical Loss Ratios Are Simply Too High, Why Data Is The #1 Most Important Piece When Evaluating Effective Reserve Allocation & Why Nothing Is Truly Defensible Today with Jonathan Hsu, Co-Founder and General Partner @ Tribe Capital · IDENTIFIED FROM THE TRANSCRIPT · source