YouSaid · the spoken record

Kent Goldman

lines on the record
25
first
2016-12-28
most recent
2016-12-28
sittings or episodes
1
sources
podcast

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  1. “Such a pleasure to have you on the show today, Kent. I can't thank you enough for giving up the time and been brilliant to hear the journey with Upside. Thank you. Appreciate you having me. Fantastic show that was with Kent, and so appreciate all he has done for me and the show, both since the recording and with his ongoing support, it really does mean a lot to me. I'd also like to say a huge thanks to Sean Flynn at Shasta for the intro without which the show would not have been possible today. And if you love the show State and would like to see more from me, then do not hesitate to add me on Snapchat at H Stebbings with 2Bs or check me out on MahitoVC.com. I'd absolutely love to hear your thoughts and feedback on that. And although Christmas is over, it does not mean you cannot treat yourself. And what better way to do that than with Pearl? Pearl believes the latest automotive technology should be available to every driver. Whether it's time for you to buy a new car or not. And Pearl's rear vision is”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “What are the muster eats for you? Whenever Howard Marks from Oak Tree Capital publishes a new quarterly letter, I drop whatever I'm doing, I race off to read that. I love reading edge.org, which has some longer-term think pieces about the future and technologies role in it as well. And then let's finish today with your most recent public investment and why you said yes. This one hasn't really been announced, but it's on our website, so I think it's fair to talk about as being public, but it's a company called Live Neighborly, which is founded by a fellow named Jonathan Kabira, who is one of the foundational team members of Google Shopping Express. And while he was working on that, he just kind of became obsessed with solving the traveling salesman problem. And what I loved about Live Neighborly is this is such a natural extension and expression of sort of someone who had become obsessed with physical routing challenges.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Vision for upside, think five years time, ten years time, do you want upside to be a scaling fund like the ones we discussed earlier? Or do we want to retain the small size fund one GP? What's the vision? The vision is vertically continue to be a small fund, somewhere where it is now the second fund that we raise is $44 million, I think. Sort of get too far above that, the model we're seeking to work with begins to break down a little bit. There may be additional GPs. I've not focused on the idea that this has to be a single GP fund by any means. I just, I want to make sure we can stay small. We can stay in that place where we can give founders great advice and we can work well with other funds.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “A river runs through it by Norman McLean, only about a hundred pages. It's semi autobiographical, novella about his brother who he just adorned. He wanted every word to be perfect. So even though it's 100 pages, it took him 25 years to write. And the language is beautiful, what he's written about, helping people who don't always want your help is beautiful. And then I also just love it because I have a physical copy of it that it was my dad's. And when I was in college going abroad for the semester, I grabbed the copy off of the shelf and took it with me and I sort of read it many, many times while I was abroad. And somehow over the years, I just hung on to that actual physical copy. And my dad has since passed away, but it has some of his writing and his notes in it. So not only do I cherish the words in the book, but I actually cherish in this case the physical book that I have as well.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Just doing it. I think any founder will tell you when they start companies, they go into them knowing full well the risks ahead. And that was certainly the case with Upside. I knew it was going to be risky for me to do, but it's been enormously fulfilling. And so I think it's just the biggest challenge is making that first step. Once I took that first step and got going, everything else just began to fall into place from there. The first step was having a conversation with my partners at first round. And so I think this is what I'm going to do. There are a lot of steps between that and the first money. Your”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I always start with the team. I mean, upside's not a thematic investor. I think it's very hard to be thematic at the seed stage. I think generally by the time you can identify a theme at the seed stage, it's probably too late. So instead, I focus on trying to find people who are experts in their field or have thought about a problem long before most of us even knew that problem existed. I overweight on team and then I try to get a sense for sort of what the market could be like or what it might grow into. Product is probably the last thing I worry about when I think about product, especially at the seed stage or what the early vision of a product is. That helps you understand how the team thinks about the space as opposed to sort of being the thing you're really investing in.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Trickiest thing is when I was at first when I had my partners kept me out of trouble and you had people who if your process of sort of doing diligence on a company fall apart there there are people to catch you and remind you and put in place so one of the things one of the changes that I made is actually I now and I keep this on my physical desktop I keep it on the desktop of all my computers is a investment decision checklist. It's not about what the metrics company needs to show in order for me to sort of make an investment, but it's sort of like have I followed the right process around making that decision. And so every investment I go through that now and I've broken it out into segments. I'm looking at it now. It's market, product, team, risks, things which are sort of germane to sort of upsides view of the world and then also there's a separate section just as I go back to think about whether or not to make a follow-on investment. So that's been a big change. I think the discipline of being on my own has been a big change.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “And see whether or not the company is sort of like appropriately mitigated risks along the way, but I haven't worried about dilution too much yet.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “So far, we've been fortunate where we've always been able to get pro rata when we've wanted it, and I think a lot of that comes from founder alignment. Yeah, well, founder alignment, the fact that we really focus on becoming sort of trust counsel to founders. So I don't worry about whether or not we have a board seat. In fact, I almost prefer to sort of not have a board seat. And that way, sort of I'm getting calls from founders when they're saying, look, I have a board meeting coming up. How do I message this? Or how do I have this discussion with the board? So you begin to feel more like an advisor. And I think when it comes time to earning the right for pro rata, truly not the contractual right, but really earning it. We do that pretty well. And also in the majority of our investments, what we don't lead, we've been the first institutional investor to commit the majority of the time. And that bond that you create with the founder from doing that goes a long way. So I worry about dilution. I worry about valuations escalating sort of more quickly than I've been able to sort of gather new facts to sort of understand.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “The series B, I think about the valuation sort of more, but largely from the standpoint of how to invest from a smaller fund into higher valuations, which is just trickier because your dollars just aren't going to go as far. So before I mentioned, usually we, you know, upside has been petering out as companies hit $100 million in valuation. And that's because when I think about putting another 300K to work at $100 million versus that sort of allocating that $300K and saying, well, I'll put it to work at another $5 million.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Way we get graded is the multiple vir returns, right? And so that's a factor of the price coming in and the price coming out. And so very obviously, of course, I prefer lower prices. But having said that, at the seed stage, I don't think valuation matters quite as much. I always find myself chuckling a little bit when I hear someone talking about a seed investment. Well, I liked it at 5 million, but when I heard they wanted a $7 million pre, I just thought it was too high. Because I scratched my head when I hear that I said, well, if you think this is going to be a billion dollar company, If you think you found one of the rare companies, which can truly be a billion dollar company, is that really going to be the reason you let it get away? Because you only want to invest in a 5 pre, not a seven pre. So internally, when I think about valuation, I almost use it as a litmus test for my own enthusiasm, my own belief in whether or not a company can achieve its high aims, but I don't focus on it sort of that much at the seed stage. When we get to sort of the series A.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Be and the amount of feedback and insight into the market that I can get from them and that they provide me has been tremendous.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “I disagree. I've been very fortunate to work with high quality LPs throughout my career. And certainly I think it's better to raise some money than being too snobbish and not raising a fund at all. But Seed Stage, these companies take an incredibly long time to grow and gestate and return capital. And so I actually think for founders of companies, it's important for them to understand sort of where seed investors dollars are coming from. If you're going to build a company that's going to take 10 years to do it, you want to make sure the capital behind you is patient and the investors behind you are patient and that they're not trying to force you into any unnatural acts of growth or to exit too soon in order to make less sophisticated investors happy. So I think having the backing of people who really sort of understand the asset class is incredibly important. And I've also found that sort of a number of my ILPs, they work with funds that are at the seed stage, the A and the”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Having said that, and I think what LPs have told me they took away from the conversation, I said, look, I want to try this innovative structure of making founders, partners in the fund. It's a signal to them that you're willing to try different things and you're willing to innovate. It's really a sort of an expression of the culture you want to build and sort of that you're willing to be innovative. It also shows that sort of you're willing to set aside effectively some economics. They would have been minded and saying, look, I'm willing to give them away because I think that will allow all of us to do better over the long term. And so I think this heard about the shared care and said, great, it's an expression of values. We'll see if the mechanics of it actually work out, but at least here's a GP who is willing to walk the walk.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Whenever I talk about my fundraising or the fundraising upside went through, I think it's really important to be self aware about it. And I think sort of what drove first fundraising for upside, I have to give a lot of credit, frankly, just to the group of people that I was coming from. First round had been a largely oversubscribed fund for a long time. No expressed plans for it to sort of grow and make more room for new LPs. I'd invested a number of times alongside Steve Anderson, and the same thing was true of baseline, where he didn't want to add new LPs. So before talking about sort of how the innovative side of upside played into those LP conversations, I want to sort of make sure that I acknowledge the fact that I benefited from the standpoint of having come from a peer group that was hard for a lot of new investors to the seed class to get involved with. And I think upside was probably viewed as a good proxy for some of the more established experienced funds in the category.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Question myself too. I said, What are things that we can do to build a stronger or more cohesive group of founders than any fund out there? And I had this idea, you know, at that point that if we could actually make founders partners in the fund, they would be more supportive of one another and that it would also sort of reflect the relationships that I wanted to build with founders where I didn't view them as people I was just investing, but I was viewing them as people that hopefully I would help them build their businesses and they would help me build mine and over time there'd be enough where they could help one another. So I think it's that way of sort of saying how can we innovate in service of founders?”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “It very much sort of starts culturally sort of with first as a whole. If you look at sort of the people who built it, Josh, Josh Koppelman, Howard, Morgan, Rob Hayes, Chris Freich, they all, along with people like Steve Anderson and Michael Deering and Jeff Claviet and Mike Maples, they really were pioneers into this whole seed movement. And a lot of that, when you talk to all of them, they were really driven by this idea that they wanted to serve founders better. You talk to any one of them, they will say they felt that at the earliest stages of a company were oftentimes the most challenging stages of a company. And institutionally, that was where there's the least amount of support for a founder. And so that piece is something we took sort of very much that sort of I still sort of live and breathe every day. But what I think first round really focused in on is they kept saying, what can we do to innovate? Like, why should we accept that the established venture model is the only way to go forward? And so when I set out to build upside, I asked that.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “We actually have a large portion of the fund set aside for follow on investment. So we've raised two funds. We're still actually investing out of the first right now. That fund is $30 million. We expect that about 70% of that will actually be deployed into follow-on investments. And so, yeah, in a lot of that comes from some of what we learned at First Round, which is just seed stage investments, they're going to have a higher fail rate than a Series A investment, which is going to have.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “My weight in terms of the value we can bring to an investor. And so that idea starts rattling around my head. And I really just couldn't let go of it”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Always going to have that side of the business done better than anyone else. And I just start thinking about, again, where are the holes in the landscape? What are people missing here? And it just sort of struck me that there's this incredible opportunity to sort of build a smaller fund and keep it small. And if you did that, there are a number of things that you could do. One is that you could, as seed funds were getting larger and larger, it's harder for them to sort of play more at the friends and family type stage, where in 2008 there's very little difference between a seed round and a friends and family round. And so I thought if you had to fund that allowed you to play at those early days, that could be really interesting. I also sort of felt that sort of as all these funds are trying to grow up and everyone was trying to be a lead investor, they're putting themselves in deeper and deeper competition with one another. So why not play a different game and sort of say, look, I don't have a fun that forces me to write lead size checks. I can write smaller checks and instead focus on sort of punching above.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Well, there are a couple things. One is from 08 to 2014 when I left. The seed world changed a lot. I had sort of like been there in the earliest sort of formational days and sort of as groups like first round and baseline soft tech floodgate had Harrison Metal had success. Other firms sort of began coming in. And I often sort of felt I would ask myself as I saw new firms start, okay, if I were starting to fund now, how would I disrupt the established players? And increasingly, I kind of felt that people were sort of following the exact path that we had laid, where they would start with a small fund and then they would try to grow it to be a little bit larger and become a lead investor or sort of in the case of first round, which is sort of, I think, sort of really better than anyone else in the venture universe sort of pioneered this, you know, the idea of sort of building a platform for their founders, you would hear firms talking about, we're going to have a platform too. And I sort of had this feeling that sort of like first done was”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “So on the day when my friends and colleagues were all sort of nervous about their futures and their jobs, they all thought I was there trying to convince everyone to abandon ship and run. So at that point, you know, when I saw it, I knew exactly what had happened and sent Josh a note saying, hey, don't know if you know this is how the ads are playing, but they're making me a little bit uncomfortable. Would you mind pulling them down? And before that, I only knew Josh at the most cursory level and really sort of that began a five-month conversation and dialogue and getting to know one another where I wound up actually joining first round as a principal back in 2008.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “And finally, I got a message from one person I was pretty close to, and I just said, getting these messages all day, like, what did I do? I'm as confused as everyone else as to what's going on here. And he sent me a screenshot of his Facebook feed. What I didn't know was that Josh Koppelman, who had just started first round Capitol, had decided when he saw the news of the takeover attempt, he wanted to see if there's anyone at Yahoo who's sort of loose in the saddle and maybe thinking about joining a startup or starting a company. So he had run an ad that said thinking of leaving Yahoo to join a startup, contact first round capital. And of course, right next to that ad was my smiling profile picture.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Just as everyone sort of many other people sort of at my level were. And throughout the day, I was just getting these messages from colleagues that said, I can't believe you. You're such an asshole. Fuck you. And I was sort of taken aback and I didn't understand where the vitriol was coming from.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Sean Flynn, who connected the two of us. He and I shared a cube wall at Yahoo for many, many years. And while I was there early 2008, Microsoft launched a hostile takeover attempt of the company. And this was also sort of right around the time that there's this thing called Facebook Beacon, where if you had liked a brand or a company, that meant they could use your profile picture and any ads they ran. The intent being if you liked Nike sneakers, Nike could show an ad to all of your friends. Kent likes Nike sneakers. maybe you should try them too. And given the work I was doing at Yahoo at the time, I had sort of gone around and sort of liked every venture capital fund that I knew that had a presence on Facebook and one of those first round capital. So early one morning I get a call from some friends on the East Coast. Oh my God, have you seen the news? Microsoft is trying to take over Yahoo. I sort of roll out of bed at four in the morning, five in the morning, you know, drive right to the office and sit there dazed and convenient.”

    2016-12-28 · The Twenty Minute VC · 20VC: Using Valuation As A Litmus Test, Why Valuation Does Not Matter At Seed Stage & How Seed Funds Can Serve Founders Better with Kent Goldman, Founder @ Upside Partnership · IDENTIFIED FROM THE TRANSCRIPT · source