20VC Greylock's John Lilly on How Greylock Continues To Invest In The Next Big Markets, The Importance Of Building Tribes & Why There will Be Another Boom In Mobile

Summary Notes


In this episode of "20 Minutes VC," host Harry Stebbings interviews John Lilly, partner at Greylock Partners, a venture capital firm with a track record of successful investments in major companies like Facebook, Airbnb, and Instagram. John shares his journey from CEO of Mozilla to venture capital, emphasizing the importance of building a strong network and investing in relationships. He discusses the evolution of productivity tools and the potential for new booms in mobile technology, driven by societal adoption and innovative use cases. John also touches on the challenges of the Series A funding environment and the distinction between virtual and augmented reality. Throughout, he provides insights into nurturing young founders and the significance of communication in venture partnerships.

Summary Notes

Introduction to the Podcast and Guest

  • Harry Stebbings is the host of the 20 Minute VC podcast and can be found on Snapchat and blogging on Mojitovc.com.
  • Greylock Partners, a top-performing venture capital fund, is featured in the episode.
  • John Lilly, a partner at Greylock, joins the show with a background in leading investments such as Instagram, Tumblr, and Dropbox.
  • John Lilly has experience as CEO of Mozilla and cofounder of Reactivity, an enterprise security company acquired by Cisco.
  • Special thanks given to Josh Elman at Greylock and Eric Tornberg for making the introduction for the show.

"Hello and welcome back to another week in the world of the 20 minutes vc with your host Harry Stebbings, found most often on Snapchat at htebbings with two B's, and writing some hopefully, academic and provocative thoughts on Mojitovc.com."

This quote introduces Harry Stebbings, the host of the 20 Minute VC podcast, and provides information on where to find him online.

"Yes, this week we are featuring Greylock partners and joining me today from Greylock, I'm thrilled to welcome John Lilly to the show today."

Harry Stebbings announces the feature of Greylock Partners and introduces John Lilly as the guest for the episode.

John Lilly's Career Path to Venture Capital

  • John Lilly joined venture capital at the age of 40 or 41 after a long career in operations.
  • He has been with Greylock for over five years and has a background in startups, including working at Apple's research group and founding a company.
  • Lilly's experience as CEO of Mozilla was foundational, growing the company significantly.
  • He chose Greylock because of a strong affinity with the firm and its people, particularly his partner Reed Hoffman.

"Well, it took me a long time. I didn't become a vc until I was 40 or 41, I guess. I've been a greylock for five and a half years, six years, I guess."

John Lilly explains that he came into venture capital later in his career after having a diverse background in technology and startups.

"But Greylock was always one of two or three that I had the strongest affinity with."

This quote highlights John Lilly's strong connection and eventual decision to join Greylock Partners.

Building and Growing One's Professional Tribe

  • The importance of building a professional network with shared values, ethics, and energy is emphasized.
  • Investing in relationships with these individuals can lead to a strong network across an industry over time.
  • John Lilly received advice to cultivate his professional tribe early in his career and has seen the benefits throughout his career, including in leadership positions across Silicon Valley.

"Now, I got a piece of advice from a professor right after I got out of school from Stanford, and he said, look, you should look around and figure out who you want to be on your team."

John Lilly shares advice he received on the importance of choosing the right people to build a professional network with.

"Because 20 years from now, you look around and you'll be the fabric of Silicon Valley."

The quote emphasizes the long-term impact of building a professional network and how it becomes integral to the industry's ecosystem over time.

Importance of Relationship Building in Business

  • John Lilly stresses the value of building and maintaining long-term relationships within the business community.
  • He reflects on a board meeting where he had a personal connection with each person present, some spanning over a decade.
  • Lilly emphasizes investing in people and nurturing those relationships for mutual benefit over time.

"And I think the more you can invest in people and the more you build those relationships, the more it comes back to you over time, really."

This quote underscores the reciprocal nature of investing in relationships, suggesting that the effort put into maintaining connections can lead to positive outcomes in the future.

Maintaining Networks at Scale

  • Harry Stebbings raises a personal concern about maintaining a network and dedication to building a tribe as one's connections grow.
  • John Lilly acknowledges the challenge and suggests making deliberate choices about whom to spend time with.
  • He advocates for regular interaction, whether through weekly meetings or digital communication, and personalizes his approach based on the individual and the relationship.

"But for me, it's kind of natural. Like, once you decide you're going to see the people you care about every week, you just make time for it."

Lilly explains his personal strategy for maintaining relationships, which involves prioritizing time for people he cares about and ensuring regular contact.

Greylock's Investment Strategy in Evolving Markets

  • Sarah Guo, a colleague of John Lilly, inquires about Greylock's approach to investing in new markets rather than relying on past successes.
  • Lilly acknowledges the past focus on mobile platforms, given their dominance in recent years.
  • He points out a current plateau in mobile app installations, suggesting market saturation and app fatigue.

"And so there's an open question, I think, whether we're at a plateau or whether we're at the top for mobile."

Lilly presents the current state of the mobile market as uncertain, with the possibility of a plateau indicating a need for new investment opportunities.

Predicting the Next Boom in Mobile Technology

  • Harry Stebbings expresses interest in understanding the potential for a new surge in mobile app development.
  • John Lilly references Horace Dediu's chart showing historical trends in technology platforms and suggests a pattern of growth, plateau, and resurgence.
  • He hypothesizes that society needs time to fully integrate new technologies, which can lead to subsequent waves of innovation and growth.

"But I think that as you see more and more technology and mobile phones diffuse into how everybody works and how everybody lives, we'll start to see new use cases and we'll start to see a secondary boom."

Lilly predicts that as mobile technology becomes more ingrained in daily life, new applications and a secondary boom in mobile technology will emerge, potentially driven by advancements like sensors and computational photography.

Mobile Technology Evolution

  • The potential for another boom in mobile technology is anticipated, with advancements such as 3D mapping mentioned.
  • Uncertainty exists around what specific innovations will drive this boom.

"I don't really know, but my sense is that we'll see more booms, at least another boom for mobile, but we don't know."

This quote expresses the speaker's uncertainty about the exact nature of future innovations in mobile technology but anticipates further significant developments.

Market Dynamics: Consolidation vs. Fragmentation

  • There is debate on whether the market will see consolidation due to acquisitions by large companies or the emergence of new massive consumer players.
  • Examples of successful new entrants like Snapchat and musically suggest room for more significant consumer platforms.
  • The speaker indicates a belief in the potential for new spaces and opportunities despite the presence of dominant players like Facebook and Google.

"Do you think there is room for another massive consumer player in the market, unlike Fred Wilson's belief in the consumer downturn?"

This question raises the issue of whether the market can support new large-scale consumer businesses in light of existing dominant companies and contrasting opinions like Fred Wilson's on consumer market trends.

The Role of Network Effects

  • Network effects are seen as a critical driver in the rapid growth of big companies.
  • Products with strong network effects become more valuable as more users join.
  • The speaker expresses a preference for investing in consumer products with network effects.

"The network is stronger, the product is stronger for me, if I get all my friends and you on it."

The relevance of this quote is to highlight the importance of network effects in enhancing the value and appeal of a product or service, which can lead to the rapid scaling of a company.

Market Cycles and Investment Environment

  • The current market cycle is described as "funky" and long, with political uncertainties complicating predictions.
  • The emergence of a permanent seed and angel investing environment is noted, with low capital requirements fostering innovation.
  • The speaker is uncertain about the macroeconomic outlook but notes consistency in investment activity.

"I think we've created sort of a permanent seed and angel investing environment."

This quote emphasizes the establishment of a stable early-stage investment landscape that supports continuous innovation and the creation of new companies.

Series A Funding Landscape

  • The speaker has not personally observed a "Series A crunch."
  • Investment pace has remained consistent, with a steady number of investments over recent years.

"No. We do some seeds, but we do A's and B's and our pace is about the same."

This quote indicates that, from the speaker's experience, there has been no significant change in the availability or pace of Series A funding for startups.

Rise of Productivity Tools

  • The speaker has a keen interest in productivity tools and has invested in this area.
  • Traditional dominant suites like Microsoft Office and Adobe Creative Suite are facing challenges due to changes in creation habits and distribution advantages.
  • Shifts in how and where people create content, along with the importance of design and cloud hosting, have opened up opportunities for new productivity tools.
  • The speaker believes there is significant potential for growth in productivity tools that cater to modern expectations and workflows.

"So I think that this sea change and how people expect their apps to be designed and work, this distribution change and sort of the materials change has all led into a zone where we're being more promiscuous than ever with a lot of these things, certainly on the office side."

The quote explains the speaker's view that significant shifts in user expectations, distribution models, and the nature of content creation have created a fertile ground for the development and adoption of new productivity tools.

Favorite Book

  • John Lilly's favorite book in the last five years is "Thinking, Fast and Slow" by Daniel Kahneman.
  • The book discusses the dual process of how we make decisions.

Five years is a book by Daniel Kahneman, a Nobel Prize winner. It's called thinking fast and slow. It's about how we make decisions.

This quote highlights the title and author of John Lilly's favorite book and summarizes its focus on decision-making processes.

MFBT Origin and Usage

  • MFBT stands for "something something beer time."
  • It originated at Mozilla among John Lilly's friends.
  • MFBT signifies the end of a long day or week when one decides not to continue working.
  • The tradition was to announce MFBT on communication platforms like IRC, Slack, or Twitter.

Right? So MFBT stands for something something beer time. And I'll let people do their own Google searches on it because it's fun to do. But it started at Mozilla, some of my Mozilla friends.

This quote explains the acronym MFBT and its playful nature, suggesting the audience look it up for fun, and notes its beginnings at Mozilla.

Mentors and Influence

  • John Lilly has had numerous mentors, including Terry Winograd, Sean White, Mitch Kapor, Reed Hoffman, Mitchell Baker, Todd Park, Jennifer Palkka, and Tim O'Reilly.
  • He credits his learning to the sharing culture of Silicon Valley and the tech industry.
  • John Lilly emphasizes continuous learning from a variety of influential people in his field.

Terry Winograd helped me learn Ui at Stanford along with Sean White. He's now in know. Mitch Kapoor, founder of Lotus, was an investor in my company. My partner, Reed Hoffman, I learn from all the time. Mitchell Baker is the chair of Mozilla and I learned from her.

This quote lists several of John Lilly's mentors and their contributions to his learning, showcasing the breadth of his influences.

VR and AR Convergence

  • John Lilly believes that Virtual Reality (VR) and Augmented Reality (AR) have different use cases and will not merge.
  • VR is about escaping the world, while AR is about engaging more fully with it.
  • He acknowledges that his view may not be the prevailing one and that he could be wrong.

Oh, yeah, I don't think so. I think a lot of people think they will. Good ods that I'm wrong, but I really think they're just different use cases.

This quote conveys John Lilly's opinion on the separate applications of VR and AR and his openness to the possibility of being incorrect.

Working with Young Founders

  • The key to working with young founders is communication and asking questions.
  • John Lilly values open relationships with founders, discussing challenges and thoughts candidly.

And ask questions and try to learn every day. I think the best relationships I have are the ones where we're just open with each other and we just talk about the things that are on our, things that we're struggling with, things that are on our mind and just be as open as you can.

This quote stresses the importance of open communication and continuous learning in relationships with young founders.

Challenges at Greylock

  • John Lilly finds it challenging to ensure that he sees as many interesting entrepreneurs as possible.
  • He wants to be as helpful as he can to the entrepreneurs he meets.

There's a lot of amazing companies and so you always struggle to make sure you're seeing as many as you can.

This quote reflects John Lilly's desire to discover and assist a wide range of entrepreneurs, highlighting a challenge in his role at Greylock.

Recent Public Investment

  • John Lilly recently invested in a communication app for a specific type of workers.
  • The investment decision was influenced by the product's growth and user love, the entrepreneur's openness, and the changing nature of communication in the workplace.

Yeah, well, the one that I just did is a communication app for a certain type of workers.

This quote mentions John Lilly's latest investment, emphasizing the factors that led to his decision, such as product traction and the entrepreneur's qualities.

Acknowledgments and Gratitude

  • John Lilly expresses appreciation for being on Harry Stebbings' show.
  • Thanks are given to Eric Tornberg and Josh Elman for introducing John Lilly to the show.

Well, I appreciate it. I really enjoy your works. I feel very lucky to be on.

This quote shows John Lilly's gratitude for the opportunity to appear on the podcast and his enjoyment of Harry Stebbings' work.

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