20VC Benchmark's Scott Belsky on What Makes Truly The Best VCs Why Entrepreneurs Must Focus on 'The First Mile' & The Key Ingredients To The Perfect Onboarding Process



In this episode of "20 minutes VC," host Harry Stebbings interviews Scott Belsky, a multifaceted entrepreneur, author, and investor. Belsky, who co-founded Behance and served as Adobe's VP of Products post-acquisition, is currently a venture partner at Benchmark. He discusses his journey from bootstrapping to venture capital, emphasizing the importance of the "first mile" in product development and the challenges of enduring the "journey in between" startup phases. Belsky, who has invested in companies like Uber and Pinterest, shares insights on the evolving landscape of social media, the potential public utility model for autonomous vehicles, and the significance of diverse perspectives in venture partnerships. His central theme revolves around the critical yet often overlooked middle stages of entrepreneurial ventures and the balance between hands-on building and strategic investing.

Summary Notes

Introduction to Scott Belsky and the Show

  • Harry Stebbings welcomes Scott Belsky to the 20 Minute VC podcast.
  • Scott Belsky is introduced as an entrepreneur, author, investor, and venture partner at Benchmark.
  • Background on Belsky includes founding Behance, serving as CEO, and later as Adobe's VP of Products post-acquisition.
  • Belsky has invested in notable companies such as Uber and Pinterest.
  • Mike Mignano from Anchor is thanked for introducing Scott Belsky to the show.

"Now. Scott really is a man of many skills, so I'm not really sure where to start. Scott Belsky is an entrepreneur, author, and investor."

This quote introduces Scott Belsky, highlighting his diverse skill set and achievements in entrepreneurship and investment.

"I also want to say a huge thank you to Mike Mignano at anchor for the intro to Scott today, without which the show would not have been possible."

Harry Stebbings expresses gratitude to Mike Mignano for his role in facilitating Scott Belsky's appearance on the podcast.

Product Recommendations by Harry Stebbings

  • Harry Stebbings discusses the indispensability of certain products in his life.
  • X AI's AI-powered personal assistants, Amy and Andrew, are recommended for scheduling meetings.
  • Workable, an all-in-one recruiting software, is suggested for hiring processes in companies.

"Today, there are some products that you simply cannot remember what life was like before them."

Harry Stebbings shares his personal experience with products that have become essential in his life.

"Absolutely fantastic. And you can check it out now. At X AI, it really is a must."

Stebbings endorses X AI, emphasizing its effectiveness and recommending listeners to try it out.

Scott Belsky's Journey to Venture Partner at Benchmark

  • Scott Belsky shares his transition from entrepreneur to venture partner at Benchmark.
  • He discusses his time at Adobe, working on mobile products and the Creative Cloud.
  • Belsky explains his decision to pursue a hybrid role, combining investing with hands-on building.

"I had been at Adobe for a little over three years, helping change some parts of the company, like mobile products and some of the creative cloud stuff."

Scott Belsky describes his impactful work at Adobe, which included revamping mobile product strategies and contributing to Creative Cloud developments.

"I get to spend some of my time on things. With benchmark, I jumped into one of the businesses that we recently backed that I actually helped found and also get to do some of the earlier stage seed investing again as well, which is exciting."

Belsky outlines his multifaceted role at Benchmark, which allows him to be involved in both founding new ventures and early-stage seed investing.

Transition from Bootstrapping to Venture Capital

  • Belsky reflects on the differences between bootstrapping a business and receiving venture capital.
  • He emphasizes the discipline required in bootstrapping and how venture capital enables longer-term thinking.
  • The conversation touches on the potential dangers of operating without a focus on profitability.

"When you're bootstrapping a business, you get a tremendous feel for the granularity of your business."

Scott Belsky highlights the intimate understanding of a business's finances that comes with bootstrapping.

"I benefited from the discipline, but of course, I also benefited from being able to scale and grow more quickly once we had venture capital."

Belsky acknowledges the advantages of having venture capital, such as the ability to scale and grow a business more rapidly.

Constraint Enforces Creativity

  • Belsky agrees with the thesis that constraints can foster creativity.
  • This idea is related to the experience of bootstrapping a business and the discipline it requires.

"You're a big fan of the kind of thesis that constraint enforces creativity."

Harry Stebbings makes a statement about Belsky's belief in the positive impact of constraints on creativity.

"I am, yeah."

Scott Belsky confirms his agreement with the concept that limitations can lead to innovative solutions.

Angel Investing vs. Traditional Venture Capital

  • Belsky discusses the mindset shift from angel investing to traditional venture capital.
  • He explains the importance of momentum in venture capital investments at the level of Benchmark.
  • The discussion explores the challenges of focusing on momentum measurement.

"When you start to do more traditional venture capital, and certainly venture capital at the benchmark level, it's a lot more. Or it's also about momentum..."

Scott Belsky contrasts angel investing with traditional venture capital, emphasizing the significance of momentum in the latter.

"So it was hard for me in some ways, to start focusing more on the measuring of the momentum side than anything else."

Belsky shares the difficulty he faced when adapting to the venture capital approach, which places a strong emphasis on gauging a company's momentum.

Key Learnings in Venture Capital

  • Belsky reflects on the paradoxical nature of venture capital, which values both exceptions and pattern recognition.
  • He shares insights on balancing these opposing forces in investment decision-making.
  • Discussions with the Benchmark team have been instrumental in shaping Belsky's understanding of investment strategies.

"Venture capital and investing in general is a business of exceptions."

Scott Belsky points out the unique aspect of venture capital where standard criteria may be overlooked in favor of exceptional cases.

"And I think the learning that I had from the many conversations we had and continue to have as a team, looking at potential investments, you start to learn how to weigh the exceptions versus the rules..."

Belsky describes the learning process of evaluating when to make exceptions and when to follow established investment patterns, a key skill in venture capital.

Value Investing and Team Dynamics

  • The importance of having a diverse team that you respect and think differently from.
  • Diverse teams challenge your thinking and help balance investment decisions.
  • The challenge of momentum in investments and identifying whether it is sustainable or likely to fade.

"I think that's certainly one of the greatest benefits of a partnership, is having a group of people that you really respect and have a lot of affection for, but think extraordinarily differently." "The trouble with momentum also is that when something has too much momentum too quickly, in my experience at least, it tends to fade out."

These quotes highlight the value of diverse perspectives in investment partnerships and the need to be cautious of investments with rapid momentum, as they may not be sustainable.

Momentum in Investments

  • Identifying the difference between momentum driven by novelty and momentum sustained by increasing value over time.
  • Examples of transient momentum (e.g., Pokémon Go) versus sustained momentum (e.g., Uber).
  • The importance of analyzing whether a product's use benefits increase over time to determine investment potential.

"When there is an increasing level of benefit from using a product over time, I feel like that sustained momentum versus you get this big hit." "It's fun, it's cool... But it wasn't like the more you used it, the better it became."

Scott Belsky explains how sustained momentum, as seen in companies like Uber, is driven by increasing benefits over time, contrasting it with products that fail to offer long-term value despite initial popularity.

The First Mile of a Product

  • The concept of the first mile includes onboarding, default user states, and initial engagement.
  • The common failure to address users' immediate needs and desires in the first mile.
  • The necessity for products to provide immediate value to users upon first interaction.
  • The long-term relationship with customers should be built after establishing sustained engagement.

"The failure of the first mile for most products is that the teams fail to remember that every user in his or her 15 seconds is lazy, vain and selfish." "They should make sure that a customer can get in, can see something in it for themselves, they know why they're there and what to do next."

Scott Belsky emphasizes the importance of designing the first mile of a product to cater to users' tendencies to seek immediate benefits without effort, ensuring quick and clear value is provided.

The Ever-Increasing Importance of the First Mile

  • The first mile's importance grows with the proliferation of apps and the need to engage a broad user base.
  • The need to continually optimize the first mile experience for new cohorts of users with different characteristics.
  • Recognizing that the first mile experience can create a ceiling for a product's potential if not revisited and optimized.

"The first mile is forever more important, especially as you try to engage more and more people." "You have to continually revisit it and optimize it for new groups of new users with different psychographics, different expectations, different ages."

Scott Belsky argues that as a product's user base grows and diversifies, the first mile must be continually refined to meet the evolving needs and expectations of new user segments.

Optimizing the Onboarding Process

  • The necessity of continually reinventing the onboarding process.
  • The importance of observing customers' use of the product and understanding analytics to identify and address points of friction.
  • The strategy of providing a great service without overwhelming users with information requests at the start.

"You have to consistently go through it yourself, and you'd be surprised how many teams don't revisit it." "Let's just find a way to deliver a great service without that information and then garner it over time from regular use."

Scott Belsky stresses the need for creators to regularly revisit and improve the onboarding process, focusing on ease of use and gradual information gathering to enhance user experience.

The Journey In Between

  • The media's obsession with the beginning and end of ventures, neglecting the middle journey.
  • The critical importance of endurance and optimization during the journey.
  • The need to focus on optimizing team performance, culture, and product development.

"What really makes the difference in any sort of venture is your ability to endure everything in between, the anonymity, the struggle, the lack of financing, at times, the failed products and the iteration." "There's just not as much discussion and coverage over the most critical insights for the journey in between that endurance and optimization phase."

Scott Belsky highlights that the key to success in any venture lies in navigating the challenges and continuous improvement that occurs in the middle stages, which are often overlooked by media narratives.

Entrepreneurial Focus and Practicality

  • Entrepreneurs who are admired most are practical and focused on the essentials.
  • A story about Ben Silberman (Pinterest) illustrates the importance of focusing on process as a foundation for future success.
  • Silicon Valley can distract from the unsexy, yet crucial aspects of running a startup by emphasizing sensational headlines.

"The entrepreneurs that I admire the most are just very practical heads down. They are obsessed with... I remember talking to Ben Silberman in the early days of Pinterest, asking him what his plans were for the next six months... And he looked at me and he said, I want to have a better process."

This quote emphasizes the value of focusing on foundational elements like process improvement over more superficial or short-term objectives. It suggests that practicality is a key trait of successful entrepreneurs.

Investor vs. Entrepreneur Perspectives

  • Investors have a broad view, connecting trends and assessing why certain ventures fail or succeed.
  • Entrepreneurs require tunnel vision to intensely focus on making their idea a reality.
  • Both roles can benefit from occasionally adopting the other's perspective to maintain a balanced approach.

"And so I'm struck by the juxtaposition between the perspective of the investor and the wide lens, and then the entrepreneur, super focused."

Scott Belsky highlights the contrasting viewpoints of investors and entrepreneurs, suggesting that a balance between broad and focused perspectives can be beneficial.

Autonomous Vehicles as Public Utilities

  • Autonomous vehicles may become a more efficient alternative to traditional public transport.
  • The government might use autonomous vehicles as part of city transportation systems.
  • Companies like Uber and Lyft could adapt by providing technology for managing these systems, changing their business models.

"And if so, why wouldn't those be operated off of some of the same software and planning infrastructure as city transportation today?"

Scott Belsky proposes that autonomous vehicles could be integrated into existing public infrastructure, potentially managed by government agencies.

Data Ownership in Autonomous Transportation

  • Some transportation data may be shared with governments to improve systems like traffic congestion management.
  • Other data might remain private and be considered trade secrets by companies.

"But I wouldn't be surprised if there's a lot of that data becomes a trade secret, if you will."

Scott Belsky suggests that while some transportation data could be shared for public benefit, companies may keep other data private for competitive advantage.

Competition and Branding in Transportation

  • The future of transportation may involve an "interface layer" that aggregates services, potentially reducing brand loyalty.
  • Companies like Uber and Tesla could either focus on brand-centric experiences or become more utility-like in nature.

"I just find it hard to believe that it will all still be through their individual branded apps."

Scott Belsky speculates on the diminishing role of individual brand apps in the future of transportation, hinting at a shift towards service aggregation.

Brand Perception of Uber

  • Uber is perceived as a safety net by consumers, which is a strong brand association.

"And all three of them said, safety. Safety net for them. If they can't get a bus, if they can't do something else, they always have Uber, which I thought was a very interesting alignment with the brand..."

This quote reflects the public perception of Uber as a reliable and safe transportation option, which is a significant aspect of the company's brand identity.

Societal Comfort and Complacency vs. Calamity and Cooperation

  • Sebastian Junger's book "Tribes" discusses societal behavior in times of comfort versus crisis.
  • The book suggests that comfort leads to complacency, while calamity fosters unity and cooperation.
  • The concept is applicable to understanding networks and addressing significant societal issues.

Sebastian Junger right now on tribes, and it just talks about how when we get too comfortable and complacent as a society, we tend to not be at our best. But when there's calamity, when we're at war, when something happens to us, is when we really band together.

The quote highlights the main argument of Sebastian Junger's "Tribes," which is that societal challenges often bring out the best in human cooperation and collective action, as opposed to times of comfort that may lead to complacency.

Evolution of Social Media to Passive Engagement

  • The shift from actively crafting content to passively sharing real-time activities and locations.
  • Authenticity is becoming more valued, with younger generations leading the change in privacy expectations.
  • Social media may evolve to constantly sharing updates, making advertising akin to product placement in users' lives.
  • The trend towards passive engagement is evidenced by products with an "always-on" state, such as Alexa.

Social media will become more passive in the sense that we'll always be sharing what we're doing, what we're reading, what we're looking at. And other people who follow us can, at various times, jump in and see what we're doing or search it in smart ways.

This quote explains the predicted shift towards a more passive form of social media, where continuous sharing and live updates become the norm, changing the nature of user engagement and privacy.

Mentorship and Its Impact

  • Scott Belsky values mentorship and gains insights from individuals like Seth Godin and John Maeda.
  • Mentorship is seen as flexible, with mentors coming from various ages, industries, and backgrounds.
  • Mentors provide different perspectives that challenge and refine one's thinking and decisions.

There's some people know Seth Godin that I've only met with a handful of times. But every time, he really makes me think and rethink a lot of the decisions and career points in my life.

This quote illustrates the profound impact a mentor can have, even with limited interaction, by prompting critical reflection on career decisions.

Preferred Sources of Information and Influence

  • Scott Belsky enjoys content from Jessica's technology writings on The Information.
  • Twitter is a platform for discovering what respected peers are reading and thinking.
  • Certain individuals are followed for their expertise in specific areas, such as MG Siegler for Apple-related content.

I enjoy, on the technology side, I enjoy a lot of Jessica's stuff on the information.

The quote indicates Scott Belsky's preference for substantial technology content, specifically mentioning Jessica's work on The Information as a valuable resource.

Challenges and Strengths in Venture Capital

  • Scott Belsky's challenge at Benchmark was balancing his desire to build with the privilege of advising established companies.
  • He recognized his strengths in assisting teams before they achieve product-market fit.
  • The challenge was reconciling the desire to contribute to early-stage companies with the opportunities at Benchmark.

I just missed building and I realized that a lot of my strengths are around helping teams before product market fit, helping them find it, helping them before they have momentum.

The quote reflects Scott Belsky's self-awareness of his strengths and preferences in the venture capital space, particularly his passion for the early stages of company development.

Future Aspirations and Focus

  • Scott Belsky wants to continue seed investing and supporting early-stage teams.
  • He has an interest in consumer products with momentum and in sustainable growth strategies.
  • Belsky enjoys turnarounds, as evidenced by his work at Adobe, and contemplates engaging deeply with specific problems.
  • The next five years are open, with a focus on varied work and meaningful contributions.

I still have a lot of conversations with other technologists and designers that I respect about problems that should be solved, and there's always a part of me that thinks, well, I jump in someday and focus more of my time on a particular problem.

This quote captures Scott Belsky's ongoing dialogue with peers about potential problems to solve and his openness to dedicating himself to such challenges in the future.

Acknowledgements and Promotions

  • Harry Stebbings expresses gratitude to Scott Belsky for participating in the podcast.
  • Listeners are encouraged to subscribe to Scott Belsky's newsletter.
  • Thanks are given to Mike Minyano at Anchor for facilitating the introduction.
  • The podcast promotes X.AI's AI-powered personal assistants and Workable's recruiting software.

And you must sign up to his newsletter. It's absolutely incredible and I've included the links in the description for today's episode.

Harry Stebbings endorses Scott Belsky's newsletter, emphasizing its value and providing a link for listeners, which demonstrates the importance of sharing resources within the community.

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