YouSaid · the spoken record

Josh Felser

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29
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2017-04-17
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2017-04-17
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1
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  1. “So the last message I made is in carbon robotics. It's a sub $5,000 robotic arm with the payload of a massively expensive robotic arm. And with this, it was easy. Amazing team, perfectly adapted to solve this problem. And I don't know if there's a market bigger than the robotics market.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Kind of walks of life adventure, and I said, What am I doing wrong? And they kind of ripped me apart, and they said that it read this, you say crushing it. And they basically took the language out of the description and they replaced it with more friendly language. And then they distributed the job description to all the women they knew. And I think we got about 30 resumes within about a week. And we ended up hiring a woman, Joyce Kim, who was our first addition to the team.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “So, the best men who make up most of the venture capital community, men hate asking men or other women for help. We just hate asking for help. So the best way to add more women in tech, though, is to ask for help. If you're recruiting, if you're either recruiting for your own venture capital firm or you're trying to help your company, your portfolio company recruit, ask women for help. Ask women for helping the job description. Ask women for help distributing the job description. Women are the best resource for reaching other women. So that's what I do. We actually have time for this. But briefly, we were trying to hire a woman at freestyle. We posted the job description. We got 150 or so resumes quickly. And of those resumes, five were from women. And it kind of freaked me out. I'm like, wait a minute, what are we doing wrong? And so I had this, hosted this breakfast with or dinner with all these women from all.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “It did propel me into some politics. I am working with a candidate for the governor of California to try and bring a more digital technology to the campaign. But let's discuss the best way to cold email a VC. What is it? So we have massive egos as VCs. And so I think, and you have to remember we get thousands of emails. So make me laugh, make it personal, and make it insightful. It worked for me, a thousand interviews down. Let's do your favorite blog or newsletter. What are the muster eats when they come in? You know, everybody says the same things. I'm going to go off on the deep end and say that it's the five best ideas of the day from the Aspen Institute. Okay, nice”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “You're too young. You don't know Rush. Maybe you do. Free will. I have no idea, but I'll laugh just to say, yeah. If you choose not to decide, you still have made a choice. But in terms of day-to-day, I'm now asking purely out of interest. How's Trump affected your day-to-day activities? Basically, it's taking up, I would say, a quarter of my day in thought and tweeting and responding and strategizing how to get ourselves out of this fucking mess. Well, you can always come to Rainy London.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “This, I knew that the psychology would be hard to change, even though I gave advanced warning, and sure enough, I wasn't able to change the founder. They ended up selling at a price that I think was considerably lower than they could have gotten, but they crossed over. And the idea of going back to operating was that idea vanished. But I'd love to dive into a quick firearm with you now. So I say a short statement, and then you give me your immediate thoughts. And we've got some dicey ones in here, okay? So let's start with your favorite book and why. Snow Crash, because it propelled me to do tech. It kind of has everything in there, dystopia, politics, you know, metaverse. You said politics there. We have to ask briefly, do politics and tech go together? So here's a quote from Rush”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “It's one of the great challenges with the aqua hire, and I feel fortunate, you know, I think that we've been in this situation that our investors have, I mean, our entrepreneurs have done right by us. I do want to discuss one final element. And we mentioned transparency earlier. I'd love to apply that to this exit scenario and discuss, is it worth being open and transparent with your team about potential exit situations, or is that merely a distraction? I wouldn't tell the team until you have a deal. Like the founders just have to bear this burden on their own. And with fact there's a recent M&A transaction that I have been involved in with one of our companies, and I remember telling the founder warning founder that once they actually go down this path of enabling M&A and actually being promised an offer, it's almost impossible to go back to running the company. And that psychology, even though I told the person,”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “And aspects surrounding that and the exit scenario. So, how do you approach that in this kind of potential liquidity event? You mean like when acquirers try to split the cap table? Exactly. Yeah. So obviously I hate it. I was fortunate that the companies that I sold, I think we had one, the breakdown of Crackle was 60 million and 5 million. So 5 million was just set aside for management and 60 million was for the cap table. With Spinner, it was all cap table. So my feeling is like, just do the best you can for your investors. You won't always win, but you want to feel as a founder, you want to feel like you support the people who supported you. Now, if your investors are assholes and like, I guess it changes the whole dynamic. If you appreciate the support of your investors, like really good at bat for them, it's the fair thing and the right thing to do. You won't always win it, but really feel like you made an effort.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “It's a great way every corp dev guy in the valley now is going to be listening for that. Josh, you're playing us. I know. I've ruined it. I've ruined it. That is good. In terms of then the cap table and kind of cap table management, what's the thesis around that in the exit scenario? Well, I'll say one more thing about the second weapon, just the board, is use your board, like blame everything on your board, say the board is the impediment to getting a deal done. Don't be the bad cop if the board be the bad cop. I think that's really important. You know, the acquires will do it all the time. They'll, especially the medium-sized ones, will say, you know, I've got to go to my board. They're probably not going to their board. They probably have permission to go up to a certain price. So they're using that in the same way that you should. So time and the board are your two greatest friends. If you don't have alternative offers, so back to your question you just asked. Can you ask again? Yeah, no, absolutely. I'd love to hear your thesis stand around kind of cap table management.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “So we ended up with $320 million, which was my board, I think the board had given us the freedom to sell the company for 200 million or more. So that is a unique skill to do that. So anchoring is key. Yes. And then in terms of kind of urgency, is there ever a sense where does urgency need to be created? Is it bad to make them feel like there's kind of a deadline to this? And what's the thoughts around that? Well, remember that this is another thing that I find that entrepreneurs forget they're likely negotiating with a professional. This professional is trained in one thing, getting the best possible deal for his or her company. And so they're going to be better at it than you are. So you have to use every resource you have. So your two greatest weapons are time and you're bored. There's a phrase that this is the secret, my companies know how to use this phrase and they use it a lot, which is I wouldn't want time to be the reason we don't work together. Oh, that's good.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Planner will try and anchor low, right? So your goal is when you're asked that question, even if you're not asked, your goal is to anchor high in your language, and you don't actually have to give a number to anchor high. You can anchor high by saying that you have significant interest in the company and it's urgent and you have term sheets you're expecting, and or you can actually give answed what our number was. And I remember I was sitting in the board with AOL, and I said 500 million. Now, what was that based on? Nothing. It was just, I said it with conviction. I remember I looked the Corp dev person in the eye when I said it, and he looked down first. He said, give us a minute. And we had this crazy negotiation where he came back with $250 million. Now remember, I've anchored high now. I would have taken 250 million, but because I'd anchored high, we ended up negotiating around my anchor.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Certainly reading what you're sending them via email so every single interaction is an opportunity for you to sell. And I think that entrepreneurs, well, I know they forget it because I'm kind of like I'm going through, there's a company in our portfolio that's going through M&A right now. And I can't tell you how much I appreciate it when the entrepreneur says to me, like, I'm not good at this. I know this may be an area where you're better than I am. Please edit all my communications with the acquired. I know I'm good at this. I'll sit down and I'll kind of make it into a not slick, but everything that I'm saying is designed to elicit an outcome that I think will be great for the company. In terms of that outcome, how should they approach the valuation game? Well, it's all about anchoring. So when an acquirer asks you that, the goal is to come up with evaluation that's way higher than what you would take, but not so high that the acquirer hangs up on you. It's all about anchoring. So you want to anchor high. If you don't anchor high, then the”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “So I'm really sharing the secrets of the kingdom. Great entrepreneurs will extract the most value out of what they've created, whether they're building their company or selling it. So they're in the best position to create value. So that's obvious statement. But it's less obvious is entrepreneurs don't understand how that can apply to every single interaction in the acquisition process. every text, every email, every tweet, every call is an opportunity for you to sell your company, right? Or to improve the valuation. And you have to think about it. You can't just be impulsive. about how massive your industry is or you might you might leak things”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Well, I will say that it's my own experience as an entrepreneur that really has driven this existential approach to being a board member. It really has. And it's been reinforced by the feedback I've gotten from founders that I've worked with. I mean, even though we may disagree, every single time we have these arguments, I can't say everything. And they will acknowledge the conflict that can exist between a founder and a board member and appreciate the transparency when we discuss it.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Hand, I really feel the pain of the entrepreneur, let's say if it's something negative, but yet I still need to be forceful in pushing this my agenda forward that maximizes the value for the company. So I guess my evolution is really around my communication style and being more transparent when we actually have a conflict. And I have an internal conflict. So I think shedding more light on these challenges disinfects them. And I think it allows for, typically allows for a resolution that everybody can live with. But when you kind of keep it inside or you have private conversations that don't involve the entire board, I think you run into risk. So I promise entrepreneurs that I will never have a conversation about them that they don't know about with other investors.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Jenny is a much better board member than I am. She is. So, you know, I'm going to lift her up because it's true. I'll compare my role to Jenny's because we're so different. So I am more board member. So what are my responsibilities and then which of those do I shirk because my roots are our founder, right? So I'm a good generalist board member. I focus sometimes on metrics, sometimes on therapy, sometimes on the interpersonal stuff and the stresses that go with being an entrepreneur. I do try and represent my fellow shareholders. And so sometimes representing the shareholders does come into conflict with being a supportive emotional pillar for the entrepreneurs. It happens rarely. So I've become better at both calling that out and saying to all the parties involved that I am on the one”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Right. I think, well, there's that. So the signaling risk I think you can overcome if the insiders decide to leave the next round, I think you can rage the company and the new CEO to some proof points that would work for the subsequent rounds. But I do think that it's more that kind of disjointed leadership at this stage. It's very hard to create a profitable path for the company.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Support. And so, even though I'm expressing my strong opinions, I'm openly going to support what the founders want because the history of replacing a founder at the siege stage with a new CEO, that historical performance of that experience is so poor that I can't imagine it would have to be almost a fraud situation for me to do that versus kind of replacing a founder who wanted to sell early.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Great question, and I went through this whole process of trying to break down what is an early stage board member look like versus a later stage board member? How are they different? And also reputationally, how important is reputation in all this? So I could make a short-term decision that would actually maximize shareholder life for that company, but I could destroy my reputation doing it. And so then that, so if I look at my ultimate, my ultimate duty is to my LPs. So short-sightedly, I could have said, well, I'm going to fight this acquisition and maybe maximize shareholder value for this company. But that could damage my reputation to the point where it impacts my ability to create great returns, my LPs longer term. So it was a very, very like, so that's the clinical kind of look at the challenge for me. But then there was the human approach. I really do relate to what these operators are going through. And I really always err on the side.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Fucked it up, but I felt like I might have found a path versus throwing in the towel. So in this case, I think the entrepreneur, again, easiest an outsider looking in, I believe the entrepreneur for his or her own personal reasons threw in the towel early because they were having a moment in time that was very negative around fundraising.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Well, I'm going to answer that with an example because I think it's going to be more interesting. So last year we had a company go through the M&A process and we were surprised by it because we were on the page of this company being a billion dollar company. We really were. And all the investors were. And the founder had a rough experience raising capital from outsiders. And so the insiders all said we would bridge the company and we're excited about it. And the founder kind of rejected that offer and ended up selling at a price that was quite low by any standard. And so it was a really tough place to be in because I gave the founder my undying support and I really did. Yet I communicated in very strong terms what I wanted to happen. And it was the first time I think that I really was like, I fucking wish I was running this company. Now I'm not arrogant enough to say that maybe I would have totally”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Of a kind of emergence between the two. There is hopefully a trend towards more transparency between founders and VCs so that it's actually not a mystery when you're not on the same page. What I can't stand when I was an entrepreneur, what I couldn't stand about my working with my VCs is they were open about the things that were troubling them about me. We had a horrible situation Dave and I did when we started Spinner. We had a VC who was whispering and I think I wrote about this whispering in Dave's ear bad things about me and whispering in my ear that things were okay like not thinking Dave and I would eventually figure it out which we did. I think movement towards greater transparency between founders in VCs is a positive element and I think it's happening.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Depend then on stages like pre-investment, post-investment, the trust in the transparency element. How does that fundamentally alter, do you think? Well, later stage VCs really are become more transactional. I think than early stage VCs. And so when you're operating in a more transactional environment, probably makes sense that you should be more aware eyes are open more widely. In earlier stage, there's so much that goes into the relationship you're building with your entrepreneur. It's a more humanistic kind of experience, I think, as you build and as the number, the numbers themselves become even more important. The numbers, the financials in your business, the relationship changes and it does become more transactional. How do you perceive the founder VC relationships evolving in the future? We've seen obviously the move to founder-friendly VCs. Everyone's founder friendly. How do you perceive it evolving in the future? Will we see kind of even more...”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Does that make you nervous? How do you feel that we talk about that? And I want to be in a place where my VCs are comfortable telling me things that they want to keep private. And part of what I do is therapist. And if you don't trust your therapist, you can't actually be effective. And so there are moments when you shouldn't trust your VC, and those moments should be called out. They shouldn't be mysteries before I've invested in you. I'm going to try and get the best deal I can, and you're going to try and get the best deal you can as an entrepreneur. And we're not going to be aligned. Once we invest, we seek to be aligned in every possible way. There are some other areas where we're less aligned. I tweeted something about this yesterday. One percent of the time I find myself out of alignment with an entrepreneur at some point in the process. It's so rare. Around M&A, sometimes VCs want entrepreneurs to sell more rapidly, and other times they want them to go for it. And these may be, these desires are being conflict with what the entrepreneur wants. And when that happens, don't trust your VC.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “I think the easy answer is it depends, right? It really depends on the VC and the situation. So I always think about when I talk to entrepreneurs, I sometimes will say we're in the process of getting to know each other. I'll say, listen, can you imagine telling me a deep personal secret?”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Well, you know, it's not that it's easy being a VC, it's obviously a lot easier than being an entrepreneur, but I can do it from anywhere. I'm flexible about my hours. I can work, you know, as sometimes I work until 1 a.m., sometimes I work until 3 p.m. And I have a portfolio of companies to spread the stress across. And so it's a very different existence. And so it was the next best thing to being an entrepreneur. Absolutely.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “You know, both. It was such a relief to have sold it. And then I kind of, all the things that you push down inside as an entrepreneur while you're in the middle of it, you can't afford to be depressed. You can't afford to have anything sway you from your mission. And so once we sold it, I let it all out and I'm like, I can't do this again for a long, long time.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “And I thought I'd be an entrepreneur once I started the process. I thought I'd be one the rest of my life because it was my calling. But being an operator is the most stressful thing you'll ever do. And so I think it can evolve you, but it can also make it hard to experience the other pleasures in life. And so Dave and I have started two companies together, one of the first internet music companies called Spinner. We had a great outcome and we sold it for $320 million in 1999. And then we started a second company, which was a mass market darknet that became Crackle. And we sold that to Sony. I'm giving you the short version of all these things. They were wonderful journeys. One was a rocket ship to the moon. The second one was a pivot. They were certainly the most festive ever been in my life. And after we saw the second company, I kind of literally broke down and”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “Well, I did name freestyle. I did come up with it. Everyone has a different interpretation. So I'll say it personifies the way that Dave and I kind of moved through the world. We don't conform to anybody else's definitions of what we should be our VCs should be like. And so freestyle seemed to be a perfect name. You know, we're entrepreneurs at heart, we're operators, and it defines how we are as VC. So freestyle was the best image I come up with.”

    2017-04-17 · The Twenty Minute VC · 20VC: Can Founders Really Trust Their VC & How To Navigate The Acquisition Process Successfully with Josh Felser, Co-Founder @ Freestyle.vc · IDENTIFIED FROM THE TRANSCRIPT · source