20VC Felicis' Aydin Senkut on Scaling Felicis From $4m to $120m, Doing Venture Differently and Why Being A VC Is Like A Jamaican Bobsled Team!

In this episode of "20 Minutes VC," host Harry Stebbings interviews Aydin Senkut, the founder and managing director of Felicis Ventures. Senkut shares his unconventional journey into venture capital, having started in tech at companies like Silicon Graphics and Google before tapping into his entrepreneurial roots to venture into VC with a different approach. Despite initial skepticism from established VCs, Senkut's strategy of being ownership, stage, and geography agnostic, coupled with a thematic investment focus, has led Felicis Ventures to impressive success with over 150 companies, 55 exits, and three IPOs, including notable investments like Twitch, Fitbit, and Shopify. Senkut emphasizes the importance of judgment, opinion, and the ability to relate to founders in venture capital. He also discusses the evolution of Felicis Ventures, which maintains a bespoke VC approach, ensuring close alignment with founders' needs and adapting their strategy to the changing landscape of seed funding.

• Aiden Senkut is the founder and managing director of Felicis Ventures.
• Felicis Ventures started with a $4 million fund in 2006 and has since raised larger funds, with the most recent being $120 million in 2014.
• The venture firm has invested in over 150 companies, had 55 exits, and three IPOs.
• Their portfolio includes notable companies such as Twitch, Fitbit, Shopify, Mint, Brightroll, and Dropcam.
• Harry Stebbings considers Aiden Senkut a mentor and inspiration in the venture capital industry.

"Therefore, I'm delighted to welcome I, Senkut, founder and managing director of Felicis Ventures. Now, I'm going to do a bit of a numbers intro here, but these stats are simply too impressive to pass over."

This quote introduces Aiden Senkut and highlights the impressive growth and success of Felicis Ventures, setting the stage for the conversation about venture capital and investing.

• Aiden Senkut has an unconventional background for a venture capitalist.
• He was born in Istanbul, Turkey, and worked in tech for about 10-12 years at companies like Silicon Graphics and Google.
• Both of his parents were entrepreneurs, which influenced his interest in venture capital.
• The venture capital industry was relatively small when he started, with few angel investors and no platforms like AngelList.
• Established VCs initially did not see potential in him due to his unconventional background.
• Aiden's approach to venture capital was to think outside the box and be creative.
• Despite skepticism, he persevered and built Felicis Ventures into a successful firm with a team of ten people.

"I joke with my friends. Like me, being a VC is like a Jamaican bobsled team from Istanbul, no engineering degree, all of that."

This quote humorously conveys Aiden's unconventional path to becoming a venture capitalist, highlighting his unique background and the challenges he faced entering the industry.

• Aiden believes there are two key aspects to being a successful investor: having judgment and an opinion, and being able to relate to people.
• Traditional VC wisdom suggests a background in banking or consulting is necessary, but Aiden disagrees, emphasizing the importance of having the right ideas.
• His experience at Google taught him how to relate to a diverse range of people, which is critical in venture capital.
• The ability to build relationships with founders and work with them effectively is essential in the industry.
• Aiden advises leveraging unconventional backgrounds and networks, as they can be valuable assets in venture capital.

"I think there are only two things that truly matter to be a great investor in venture capital. One is having judgment and an opinion... The second part that is, I think the most underestimated part... is I can be in front of anyone... and I can immediately break the ice and relate."

This quote summarizes Aiden's perspective on the most important qualities for success in venture capital: having strong judgment and the ability to connect with people from all walks of life.

• Aiden Senkut transitioned from being an angel investor to a micro VC.
• Venture capital is likened to an art gallery, where VCs curate and support companies rather than build them.
• Aiden aimed to find the world's best companies while being ownership, stage, and geography agnostic.
• The strategy was perfected during his angel investing phase.
• Aiden foresaw the explosion of seed investors and seed funds, prompting the move to establish a franchise.
• He sought selective LPs for their experience and insights to refine his strategy.
• Aiden's board includes five of his earliest investors who have provided capital and challenged his team.

"I basically immediately realized that venture capital is a derivative business. It's like an art gallery. We are not building these companies, but we're curating these companies and we're supporting them."

This quote explains Aiden's perspective on venture capital being a business of curation and support, similar to how an art gallery operates.

"What started as a handful of angel investors, then maybe less than a handful of seed funds, the writing was on the wall that that part is just going to explode."

Aiden anticipated the growth of the seed investment landscape, which influenced his decision to transition to a micro VC.

"I wanted them to see me and my strategy and keep me honest."

Aiden values the role of LPs in providing more than just capital, but also guidance and accountability for his VC firm.

• Aiden Senkut discusses the differentiation of Felicis Ventures in a crowded seed funding market.
• Felicis Ventures focuses on companies with unique products or aspects that could become virtual monopolies.
• They employ a unique combination of being ownership, geography, and stage agnostic, while also being thematic investors.
• The firm uses net promoter score analysis with founders to understand what resonates with them.
• Aiden describes Felicis as a "boutique" or "bespoke" VC, emphasizing a tailored approach.
• He acknowledges the challenges for smaller seed funds due to increased competition and larger companies focusing on significant acquisitions.

"We have to do things in such a unique, creative way and we have to create a custom playbook that even though we're in the venture ecosystem, it somehow really separates us."

Aiden emphasizes the importance of having a distinct and creative approach to stand out in the venture ecosystem.

"I really feel for them today, because the issue is, when I started ten years ago, Google and Facebook were still buying a lot of small companies..."

Aiden sympathizes with smaller seed funds facing challenges due to the changing landscape of acquisitions and increased competition.

• Felicis Ventures is stage agnostic, leading investments from Series A to Series B and beyond.
• Aiden questions the traditional focus on investment stages, instead prioritizing growth and the compounding of growth.
• Success is seen as the ability of a company to maintain and compound its growth over time.
• Aiden focuses on the probability of a company's continued growth rather than its current stage.
• This approach has led to successful investments in companies at various stages.

"The bigger picture here is that the thing that predicates success in venture is growth and compounding of that growth."

Aiden identifies growth and its compounding effect as the primary indicators of success in venture capital, more so than the stage of investment.

"What's really special is even after they've gone public, they've been able to compound their revenues 4200% for ten years in a row."

This quote highlights the significance of sustained growth even post-IPO, which is a key factor in Aiden's investment strategy.

• Valuation mathematically seems significant but may not determine investment success.
• Felicis Ventures' data from 60 M&A exits and 3 IPOs shows expensive deals can still succeed.
• The probability of success is crucial, with human talent being the primary asset in startups.
• A flexible approach to investment size based on perceived risk allows for scaling investment with company performance.

"From a mathematical point of view, it feels like it should play a big role. But there is also another thing that people forget."

This quote emphasizes that while valuation might seem important from a mathematical perspective, there are other factors in the investment decision-making process that can be overlooked.

"Valuations or absolute stage has no impact on the eventual outcome if the companies are chosen well."

Aiden Senkut suggests that the success of an investment is less about the valuation or the stage of the company and more about the quality of the company and its team.

• Felicis Ventures adopts a flexible, risk-adjusted investment strategy.
• Initial small checks allow for affordable failure and potential to increase investment with success.
• The firm avoids rigid investment patterns, instead embracing a spectrum of opportunities and risks.

"So what we have learned, what I've perfected as angel investor, is to adjust the check size."

Aiden Senkut explains that adjusting the size of the investment based on the perceived risk is a strategy developed from his experience as an angel investor, allowing for more tailored investment approaches.

• Rovio investment showcases Felicis Ventures' persistence and creative approach.
• Felicis tracked Rovio for ten months across three continents before investing.
• Recognized Rovio's potential in entertainment, not just gaming, and their technical prowess.
• Leveraged connections, like with Shopify, to provide meaningful support to Rovio.

"We just kept meeting them, calling them and hounding them. We knew that they had something really special."

Aiden Senkut describes the persistent efforts to engage with Rovio, demonstrating the firm's commitment to investing in companies they believe have exceptional potential.

"All we did was a connection and it was a huge win for Shopify. It was a huge win for Rovio."

The quote highlights the strategic value of networking and partnerships in venture capital, exemplifying how a simple connection led to significant benefits for both Rovio and Shopify.

• Felicis Ventures maintains a thematic investment strategy with a focus on growth areas.
• The firm adapts to increasing founder expectations by enhancing partnership capabilities.
• New team members and capital are invested in to support and add value to portfolio companies.

"But what ended up happening is we tend to be very good pickers of companies. But as we kept doing that, we also realized that founders expectations of working with us have gotten higher."

Aiden Senkut acknowledges that as Felicis Ventures' reputation for selecting successful companies grew, so did the expectations from founders, necessitating an evolution in the firm's approach to supporting its investments.

"Our founders said, look, you guys are good at picking companies, but we need to see more operational, more founder experience in your team."

This quote reflects the feedback from founders, which led Felicis Ventures to recruit team members with operational and foundational experience, like Wesley Chan, to better meet the needs of their portfolio companies.

• Felisis measures feedback from founders, taking their input as a true north.
• They aim to resonate with founders in their investment decisions.

"we are very intently listening to them and everything we do, every investment we make, every move we make, we basically measure their feedback, what resonates with them, and take that into consideration and take that as our true north as we build our firm."

This quote emphasizes the importance Felisis places on founder feedback in shaping their firm's strategy and investment decisions.

• Felisis values the feedback from founders, which is likened to an "mps" or measure of satisfaction.

"getting an mps from your founders."

The quote highlights the unique approach of using founder satisfaction as a metric for success by Felisis.

• Influential books for Felisis include "Antifragile" by Nassim Nicholas Taleb, which aligns with their strategy.
• Military strategy and Navy Seals books provide management insights and creative thinking.

"The most influential book on me and our strategy at Felisis is 'Antifragile' by Nassim Nicholas Taleb." "I am obsessed with reading Navy Seals books and military strategy."

These quotes indicate the sources of inspiration behind Felisis's strategic thinking and management style.

• Felisis maintains an "anti-portfolio" of missed investment opportunities, such as Uber and Airbnb.
• They use this as a source of humility and inspiration to find new opportunities.

"Passed on Uber, passed on Airbnb, passed on Pinterest." "That made us find and hound adyan and adyan partners with a lot of the largest firms and technology."

The quotes reflect on missed opportunities and how they spurred Felisis to seek out other successful investments, such as Adyen.

• Gaining investment opportunities in companies like Shopify, Rovio, and Adian against larger funds is a highlight.
• Success is attributed to hustle, creativity, perseverance, and cannot be bought.

"Every time we get into a company that we have no business of winning or have a chance of getting in, but we do anyway." "It has to be earned and it cannot be purchased."

The quotes describe the sense of achievement in securing investments that seemed unlikely due to competition from much larger funds.

• Admiration for founders like Larry Page, James Park, Toby Luki, and Peter Vanderdoz.
• They are respected for their ability to question the status quo and foresee the future.

"The founder that influenced me the most is Larry Page." "They just have this insane ability to see into the future."

These quotes express deep respect for the vision and innovative thinking of certain founders who have impacted Felisis's approach.

• Dispot, an AI company, is Felisis's most recent investment due to its potential as a platform and data collection capabilities.
• Notable early investors and the potential for groundbreaking AI applications excite Felisis.

"Most recent investment is dispot." "It's one of the few true platforms... I think the only other company in the world that has that kind of data set is Google."

The quotes reveal Felisis's rationale for investing in Dispot, highlighting the company's unique position and promising future in AI.

• Harry Stebbings finds Aiden Senkut's journey inspiring and sees Felisis as embodying the future of VC.
• Aiden Senkut appreciates the conversation and looks forward to staying in touch.

"What a fantastic chap, and so many takeaways there, challenging the conventional wisdom of VC." "I really appreciate our conversation and my best to the readers and hope to be in active touch with you."

These quotes summarize the positive sentiments from the conversation, with both parties valuing the insights shared and the potential for future engagement.