20VC Eero's Nick Weaver on Why You Have To Grow One Stage Ahead of Where Your Business Is At and Why If You Want A Great Customer Experience, You Have To Own All The Parts

In the final segment of Redpoint feature week on the 20 minutes VC, host Harry Stebbings interviews Nick Weaver, CEO and founder of Eero, a company revolutionizing Wi-Fi through speed, simplicity, and efficiency. Weaver shares his journey from co-founding StartX at Stanford and working as a VC at Menlo Ventures, where he dealt with companies like Uber and Betterment, to creating Eero out of frustration with existing home network solutions. He emphasizes the importance of a great market, team, and responsiveness to customer feedback for a startup's success. Weaver also discusses Eero's strategic in-house development, the challenges of hardware production, and the company's focus on customer experience to build a strong brand. Additionally, he touches on competing with established firms like Netgear, handling copycat startups, and the necessity of significant pre-launch funding for hardware ventures.

• Harry Stebbings introduces the third installment of the Redpoint feature week on the 20 minutes VC.
• Nick Weaver, founder and CEO of Eero, is the guest for Founders Friday.
• Eero is a company that enhances Wi-Fi speed, simplicity, and efficiency.
• Nick Weaver's background includes being a VC at Menlo Ventures and co-founding Startx.
• The episode also mentions Cooley, a global law firm, and Eve, a direct consumer mattress company.

Hello and welcome back to the third and final installment of this very special Redpoint feature week on the 20 minutes VC, with your host Harry Stebings at h Stebbings on Snapchat.

This quote is an introduction to the episode, indicating it's part of a special feature week and introduces the host.

So joining me today, I'm thrilled to welcome Nick Weaver, founder and CEO at Eero, the company that makes your wifi hyper fast, super simple and brilliantly efficient.

This quote introduces Nick Weaver and his company Eero, highlighting the company's focus on improving Wi-Fi technology.

• Nick Weaver was a venture capitalist at Menlo Ventures.
• He worked with companies like Uber, Betterment, Periscope, and Dropcam.
• Prior to venture capitalism, he co-founded Startx, a community for Stanford entrepreneurs.
• His experience includes working with large technology companies and private equity firms on strategy.

And prior to founding Eero, Nick was himself a VC at Menlo Ventures, where he worked with companies like Uber, Betterment, Periscope and Dropcam, just to name a few.

This quote summarizes Nick Weaver's experience as a venture capitalist at Menlo Ventures and the notable companies he worked with.

Nick co-founded Startx, the community for the best Stanford entrepreneurs, providing them with the required resources to build the next generation of leading companies.

This quote explains Nick Weaver's role in co-founding Startx, a resource for Stanford entrepreneurs.

• Nick Weaver's personal frustration with home networks led to founding Eero.
• He noticed the growing importance of connectivity in homes, akin to utilities like water and power.
• Despite searching for an investment opportunity like Eero at Menlo, he didn't find one and decided to create the company.
• The founding of Eero was also influenced by the increasing number of devices connecting to the Internet and the rise of streaming services.

Yeah, to be honest, I have been frustrated with my home network basically my entire life.

This quote reveals the personal motivation behind Nick Weaver founding Eero due to longstanding issues with home networking.

The connectivity in our homes is now just as important as our running water and our power.

This quote emphasizes the essential nature of home connectivity and its comparison to other critical utilities.

What I started to see was just how reliant people were on connectivity in their homes, how more and more products were beginning to connect to the Internet, and streaming was still kind of in its early trajectory, was nowhere near as dominant as it is today.

This quote explains the market trends and user reliance on home connectivity that inspired the creation of Eero.

• A great team, technology, and product are important, but a receptive market is crucial for a startup's success.
• Nick Weaver highlights the importance of market conditions, noting that without a good market, a startup cannot achieve amplification of its efforts.

You can have a great team, you can have great technology, you can have a great product, but if you don't have a great market, you're really not going to have this amplification effect.

This quote underscores the significance of a good market for the success of a startup, regardless of the team or product quality.

• Identifying gaps in product solutions is a key starting point in market analysis.
• Having unique insights that others do not see is crucial for market differentiation.
• Trends in the connectivity market showed declining average selling prices (ASPs) before Eero's inception.
• Upgrade cycles were lengthening, and costs were reducing, leading to lower spending on networks.
• Eero observed a shift with people spending more on their home networks as they became central to home infrastructure.
• Eero's initial position was contrarian, assuming customers would pay a premium for superior home network connectivity.
• The market has since validated this assumption, with a significant portion willing to invest heavily in home connectivity.

"Well, so there it's what are the gaps in product solutions? Is usually the first place to look, and then the second is what's the insight that you have that others don't see?"

This quote highlights the importance of identifying unmet needs in the market and possessing unique insights to create a successful product.

"Since we started Eero, what we've seen is actually the amount of money people are spending on their networks is increasing pretty dramatically."

This quote confirms the trend observed by Eero that consumers are now investing more in their home networks, indicating a shift in market dynamics.

• Hardware products have inherent hard costs, unlike SaaS products.
• Margin structures must support omnichannel distribution, including e-commerce, online marketplaces, and physical retail stores.
• Adequate margins are necessary for customer support, marketing, and R&D investment.
• Pricing involves a formulaic approach based on unit costs and required investments.
• Setting the final price also involves an element of art, taking into account multiple inputs before finalizing the pricing strategy.

"One thing we've spent a lot of time looking at is what type of margin structure do we need to have to be able to support omnichannel distribution?"

This quote discusses the consideration of margin structures to support various sales channels and the associated costs of providing comprehensive customer service and ongoing product development.

"But at the end of the day, setting that final price, it is a little bit of an art."

This quote acknowledges that while pricing has a formulaic component, there is also a subjective aspect that requires judgment and consideration of various factors.

• Eero's physical retail presence began with Best Buy as a launch partner.
• Despite the rise of online shopping, physical retail remains a significant sales channel.
• Retail stores offer product discovery opportunities that are not easily replicated online.
• Early market presence in physical retail can lead to customer discovery and advocacy.
• Sales patterns indicate that physical retail is still a dominant force outside of tech-centric areas like Silicon Valley.

"Living in Silicon Valley, it's easy to think that everyone just presses a button and has packages show up two days later."

This quote addresses the misconception that online shopping has completely overtaken physical retail, which is not the case across different regions.

"There isn't a great online substitute for walking down the aisles of a best Buy and seeing all the new products, especially in the early days of us being in the market."

The quote emphasizes the unique value of physical retail in product discovery and customer engagement, particularly for new products entering the market.

• Strategic decisions were made to own the full stack of technology in-house to respond quickly to market needs.
• Owning all parts of the product ensures control over the customer experience.
• Building a full end-to-end team requires a larger workforce and specialized skills.
• Significant time is invested in recruiting talented individuals to support this integrated approach.
• Having control over hardware design, operating systems, cloud services, and mobile applications provides a strategic advantage.
• The CEO spends a significant portion of time on recruiting, which is seen as essential for team growth and execution.

"If we wanted to be able to react quickly to our customers, most importantly provide a great customer experience that we were in full control of, we just had to own all the parts."

This quote explains the rationale behind Eero's decision to develop all technology in-house, emphasizing the importance of agility and customer experience.

"Having that full end to end team, from the design of the hardware to our own operating system, to our own cloud, to our own mobile applications and all the tools and plumbing kind of behind that to validate our product and make sure it's working as intended for as many customers as possible."

The quote illustrates the comprehensive scope of Eero's in-house capabilities, which is seen as a key strategic advantage for the company.

• Hiring is a critical activity for CEOs, often taking up a considerable amount of time.
• While some CEOs find the focus on hiring frustrating, it is essential for building a capable team.
• A strong team allows for better execution and growth, which can be rewarding for the CEO.
• By investing time in hiring, CEOs can witness the positive outcomes of their team's work.

"There are times when it can, but there's nothing more rewarding than seeing your team execute and grow."

This quote reflects the CEO's perspective on the importance of hiring, suggesting that the rewards of a high-performing team outweigh the frustrations of the time-consuming hiring process.

• Hiring great people is essential for scaling a company.
• The CEO's role includes writing product specs and sales analyses, but prioritizing hiring is crucial.
• Effective hiring contributes significantly to the business's success.

"But at the end of the day, you have to keep scaling the company and scaling the organization and hiring great people is one of the most important things I can do for the business."

This quote emphasizes the importance of hiring as a key strategy for scaling a business, highlighting it as a critical responsibility of the CEO.

• Eero competes with large, established companies like Netgear.
• Entrenched companies have a set way of doing business, which can be a disadvantage when markets change rapidly.
• Eero's competitive advantage lies in owning the entire product stack and focusing on a single product line.
• Being nimble and responsive to customer feedback is crucial for success against larger competitors.

"Entrenched means you have a way of doing business and you've been operating in that cadence for many, many years."

This quote explains that entrenched companies may struggle to adapt to market changes due to their established business practices.

• Innovative startups face the challenge of copycat competitors.
• Hardware businesses have higher barriers to entry compared to software-only businesses.
• The complexity of delivering physical goods and supporting customers creates a competitive advantage for Eero.
• Scaling distribution and expanding features while managing customer support is complex and acts as a barrier to entry for new competitors.

"Hardware is hard. That actually ends up being a pretty big competitive advantage."

This quote suggests that the inherent challenges of hardware development can deter competitors and act as a protective barrier for the business.

• Hardware businesses face challenges due to different team cadences.
• Timing is critical to align various components like sourcing, product development, bug fixes, customer service, and branding.
• Executing perfectly requires precise sequencing of all these components.

"Ultimately there's specific milestones, whether it's a new feature launch or a new product launch or a new retailer launch, where you have all these teams on different cadences and timing has to align perfectly so that you can execute properly."

This quote highlights the complexity of managing a hardware business, where successful execution depends on precise timing and coordination across various functions.

• Fundraising is fundamental for scaling a business, especially in hardware.
• Eero has raised multiple rounds of financing, including a Series C.
• The CEO's experience at Menlo provided insights into storytelling and tailoring messages for fundraising, which is also beneficial for customer engagement and recruitment.
• Understanding the company as both a product and an investment opportunity is essential.

"We've been fortunate enough to have some great investors and we've raised four rounds of financing recently raised our Siri C."

This quote reflects on the successful fundraising efforts of Eero and the importance of having supportive investors for business growth.

• Heavy funding before product launch is common in hardware due to upfront costs.
• Costs include tooling, manufacturing line support, and building a team ahead of revenue.
• Pre-launch funding ensures a sufficient team is in place to support customers once the product is launched.

"You almost have to grow one stage ahead of where the business is."

This quote explains the proactive approach to scaling a hardware business, where investment in team and infrastructure must precede revenue generation.

• The challenge of scaling a team was highlighted.
• The importance of having a team capable of managing a larger, more complex organization was emphasized.

"How are you going to triple the size of the team and who on your team is going to be able to scale into that new role of having to manage a much larger organization."

This quote from Nick Weaver addresses the difficulty in planning for rapid team expansion and ensuring current team members can adapt to and manage the growth effectively.

• Customer focus is crucial for brand building.
• Delivering an exceptional product is necessary.
• Respectful and honest customer engagement is key.
• Approachability helps in getting feedback and building brand loyalty.

"First it's all about having great customers and customers that become advocates for us. To do that, you have to stay focused on delivering a just fantastic product."

Nick Weaver emphasizes the importance of customer satisfaction and product quality as the cornerstone of building the Ero consumer brand.

• Nick Weaver finds value in reading about VC and private equity.
• "Term Sheet" is a daily read for staying informed.

"I think I probably read term sheet every morning. So it's a great way to still stay in touch informed about what's happening in the VC and private equity world."

This quote indicates Nick Weaver's commitment to staying updated on industry trends through a specific newsletter, suggesting its utility for professionals in the field.

• Missing the diversity of exposure in VC.
• Enjoyment in building a great team at Eero.

"I miss being exposed to so many different businesses, so many different types of products and challenges at Eero."

Nick Weaver expresses nostalgia for the variety of experiences in the VC world but also appreciates the focus and team-building aspects of his current role at Eero.

• Belief in the increasing significance of a reliable home network.
• Vision of the network as the home's central nervous system.
• Commitment to continuing product excellence and team development.

"If all of our content is delivered over the Internet, if all of our devices are connected to the Internet, then you really have the opportunity here to build the central nervous system, something much more than just a Wi Fi network."

Nick Weaver's quote reveals his long-term strategy for Eero, framing the home network as a fundamental component of future home ecosystems.

• Gratitude expressed to Nick Weaver and venture capital partners.
• Invitation to follow Harry Stebbings on social media and subscribe to the newsletter.

"A huge hand to Nick for giving up the time today to appear on the show and to rob Hayes at first round, Nicole at Shasta and Ilya at index."

Harry Stebbings thanks Nick Weaver and his investors for their contributions to the show, emphasizing the collaborative nature of the venture community.

• Cooley is recommended for legal services for startups.
• Eve is endorsed as a direct-to-consumer mattress company.

"Cooley are one of the market leaders in working with thousands of entrepreneurs and newly formed companies to ensure that they are structured for growth and long term success."

Harry Stebbings promotes Cooley as a valuable resource for startups, highlighting their experience and success in the industry.