20VC How Investors Can Get Into The Best Deals & Why Founders First Point Of Contact Should Be With The Investment DecisionMaker with Spencer Kimball, Founder & CEO @ Cockroach Labs

In this episode of the 20 minutes VC, host Harry Stebbings interviews Spencer Kimball, CEO of Cockroach Labs, a company providing a resilient, globally scalable cloud database service. Spencer shares insights from his extensive experience in the tech industry, including a decade at Google during its hypergrowth phase and time at Square. He discusses the evolution of databases, the inspiration behind Cockroach Labs, and the importance of company culture and investor-founder relationships. Kimball emphasizes the value of direct communication with decision-making VCs and the benefits of maintaining ongoing relationships with potential investors. He also touches on the unique approach to work-life balance at Cockroach Labs with "Free Fridays," aimed at fostering creativity and satisfaction among employees.

• Spencer Kimball is the founder and CEO of Cockroach Labs.
• Cockroach Labs is known for its open-source database designed for global, scalable cloud services that can withstand disasters.
• The company has received investments from prominent VC firms such as Sequoia, Benchmark, Google Ventures, and Index.
• Spencer's background includes ten years at Google, two years at Square, and founding two previous startups.

"So joining us for the show today, we have Spencer Kimball. Now, Spencer is the founder and CEO at Cockroach Labs, the open source database for building global scalable cloud services that survive disasters."

The quote introduces Spencer Kimball and gives a brief overview of his current role and the nature of Cockroach Labs' business.

• Spencer has been dealing with database inadequacies for over 20 years.
• His experience includes sharding Postgres and Oracle at a dot-com startup in 1999.
• At Google, Spencer witnessed the company's hypergrowth and the challenges of scaling databases, particularly with AdWords.
• Google's infrastructure team developed Bigtable, Megastore, and Spanner, which inspired Spencer.
• After leaving Google, Spencer was dissatisfied with the available open-source software, leading to the aha moment for Cockroach.
• Initially, Cockroach was just an idea during his time at a photo-sharing startup and later at Square.
• Cockroach Labs gained traction in the open-source community and with venture capitalists, leading to its commercial success.

"And that's really where I first got the idea of cockroach, and I guess that would be what you call the aha moment, when I realized that the existing open source software with relatively modest tweaks could get you a lot further."

This quote captures Spencer's realization that led to the founding of Cockroach Labs, emphasizing the potential he saw in improving open-source database software.

• Spencer enjoys speaking with every venture capitalist, finding value in their perspectives.
• He learned from VC feedback during his initial pitches, despite being inexperienced at the time.
• VCs who approach him with a thesis are particularly helpful, offering complementary insights.
• Spencer finds that even less knowledgeable VCs can provide valuable input due to their intelligence and position.
• He continues to find discussions with VCs additive, even with sufficient internal investment.

"But I found that the VCs were typically a very intelligent audience, and everyone I talked to in that sort of initial round when I was raising money, this series, we called the series a for cockroach in 2015, was that every VC brought something to the table."

The quote highlights Spencer's appreciation for the intelligence and contributions of venture capitalists during the fundraising process.

• Being challenged helps question and refine current operating strategies.
• Engaging in conversations where others are willing to challenge can lead to beneficial insights.
• It provides an opportunity to present the evolved vision and strategy to fresh ears for feedback.

"But these things become received wisdom, whatever your current operating strategy is. And it's nice to have that challenge, and some people are willing to do that when you're having a conversation with them."

The quote highlights the importance of having one's ideas challenged to avoid stagnation and to gain new perspectives.

• Continual evolution of a company's vision and strategy is normal, even without a pivot.
• Presenting to a new audience serves as a test for the company's pitch and direction.
• Enthusiastic or negative feedback from this audience can be a strong signal for the company.

"For me to give this sort of latest version of our vision and where we think the industry is going, that has evolved, even though we have not pivoted yet in terms of our original idea."

This quote emphasizes the speaker's experience of sharing an evolving vision with a new audience, which is an essential part of refining the company's direction.

• Direct and constructive feedback is preferred over indirect or overly gentle criticism.
• Ego fragility can be an indicator of being wrong, and open to criticism can lead to better outcomes.

"I like to think I don't have a very fragile ego... But the frontal approach that is constructive always, I think, yields the best results."

The quote suggests that the speaker values straightforward, constructive criticism as it leads to the most productive outcomes.

• Adversarial negotiation tactics can be counterproductive and damage trust.
• Establishing and nurturing trust is crucial for long-term investor-founder relationships.
• Fair and open offers are preferred over lowballing tactics during negotiations.

"A very chaotic and unpleasant negotiation phase is not a good way to have that person transition onto your board."

The quote reflects the speaker's belief that the negotiation phase sets the tone for future interactions and should be approached with fairness and trust.

• Investors should establish direct contact with the decision-makers in a company.
• Benchmark's approach of partner involvement from the start is seen as effective.
• The quality of interaction with the company is more important than the size of the VC firm.

"The best way to get in is to have the true decision maker be the main point of contact for the company."

This quote suggests that for investors to secure deals, they need to engage directly with the key decision-makers in the company.

• Interacting with associates or non-investing partners can be beneficial for founders.
• These individuals can offer valuable insights and serve as a sounding board for ideas.
• The involvement of investing partners in fulfilling requests is indicative of a VC firm's quality.

"I wouldn't necessarily say that those people should be shunned, far from it. And I think they're quite useful."

The quote indicates that while non-investing partners can be helpful, the level of involvement from investing partners is a critical consideration for founders when choosing a VC firm.

• The value of having a prominent VC like Peter Fenton advocate on a company's behalf.
• Differences between associates or business development teams and influential VCs in securing deals.
• Strategies for entering the best deals, including getting in first or entering in secondary rounds.
• The importance of building relationships with VCs for future funding rounds.

"But I'd rather have Peter Fenton on the phone on our behalf."

This quote emphasizes the speaker's preference to have a well-known and influential venture capitalist, Peter Fenton, represent their interests rather than relying on associates or business development teams.

"I've probably talked to 40 or 50 venture capitalists now, and many of them seem to be very interested in the next round."

Spencer Kimball notes the high level of interest from venture capitalists in participating in future funding rounds, indicating a strong position for his company in the eyes of investors.

"You're much more likely to be considered... if you're constantly involved."

Kimball stresses the importance of VCs maintaining a relationship with the company if they want to be considered for future investment opportunities.

"The really good VCs... will stay in touch and they'll be proactive about it."

The differentiation between average and exceptional VCs is highlighted by their proactive approach in maintaining relationships with companies they are interested in.

• The concept of "Free Fridays" as a form of the four-day work week at Cockroach Labs.
• Comparison to Google's 20% time and how Cockroach Labs aims to improve upon it.
• The potential for "Free Fridays" to lead to the birth of new ideas and passion projects.
• The impact of a more relaxed approach to work on employee satisfaction and happiness.

"A better way to think of it is we call it free Fridays as opposed to a four-day work week."

Spencer Kimball clarifies that their version of the four-day work week, "Free Fridays," is about self-directed work rather than a reduction in workdays.

"By allocating a specific day and really where you have that full day, you really have that 20% time."

Kimball explains that by dedicating an entire day to self-directed work, they hope to encourage employees to engage in projects outside of the main roadmap, unlike Google's policy which was not as effective.

"I think that ultimately leads to a much happier work environment."

The speaker believes that having a day for relaxed, self-directed work contributes to overall employee satisfaction and a positive work environment.

• Spencer Kimball's favorite book is "The Decline and Fall of the Roman Empire" by Edward Gibbon.
• The book's impact on historical writing and its exploration of human influence on history.

"My favorite book is actually a series of books, six volumes, and it's called the decline and Fall of the Roman Empire by Edward Given."

Kimball shares his favorite book, indicating its significance and potential influence on his thinking.

"It was really the first work of history that truly broke the stranglehold the Roman Catholic Church had maintained over the idea of historical cause."

The speaker describes how Gibbon's work was groundbreaking in attributing historical events to human actions rather than divine providence.

• The conversation begins with a discussion about a historical work that spans 800 years and covers western and eastern Roman civilization.
• Spencer Kimball finds the work to be incredibly enjoyable and readable despite its ambitious scope and dense historical content.
• The meta thesis of the work and its readability after covering numerous historical epochs is highlighted.

"But the amount of information, the number of real epochs that are covered in something like 800 years, think it really splits the first three volumes into more, the western roman civilization and then the eastern empire. And it's incredibly enjoyable."

The quote emphasizes the breadth of historical information covered in the work and the division of focus between western and eastern Roman civilization. It also highlights the author's success in making such a complex subject enjoyable to read.

• Spencer Kimball expresses frustration with the lack of transparency in the startup and VC world.
• He mentions the difficulty in accessing information about appropriate salary and equity compensation.
• Spencer hopes for a trend towards more openness and resource sharing within the industry.

"And I know that there's efforts underfoot to help address this problem. But one of the big things that we're always wondering is what kind of salary should we pay, how much equity should we pay?"

This quote reflects the challenges startups face due to the lack of transparency around compensation norms, pointing to a need for shared resources to address these uncertainties.

• Spencer Kimball shares insights from his time at Google, emphasizing the importance of company culture.
• He credits Google's founders for their early recognition of culture as a key aspect of the company's DNA.
• Spencer discusses the challenges he faced in replicating Google's culture in his first startup and the conscious effort required to build a desired culture at Cockroach Labs.

"What we realize is that culture is something that takes a very conscious effort and it takes consistency, and you really have to apply yourself to achieve it."

The quote conveys the lesson that company culture does not emerge spontaneously but requires deliberate and consistent effort to establish and maintain.

• Spencer Kimball reveals his interest in economics, particularly macroeconomics.
• He recommends Ben Bernanke's and Paul Krugman's blogs for their accurate models of macroeconomic reality.
• Spencer criticizes the focus on microeconomics in academic programs and advocates for the potential benefits of studying macroeconomics.

"And those two writers seem to have the most accurate model like mental model of reality, especially as it pertains to macroeconomics."

The quote underscores Spencer's view that Bernanke and Krugman possess superior understanding and predictive models of macroeconomic trends, which he values highly.

• Spencer Kimball shares his perspective on the shortcomings of current database technologies.
• He discusses the ongoing challenge of databases not fully meeting business use cases and the need for continual advancement.
• Spencer outlines Cockroach Labs' goals, including achieving feature parity with Google's Spanner and supporting global services with low latency and compliance with data sovereignty laws.

"So what we're really trying to do is build databases that can span regions. So this is Cockroach is such that you're keeping individual customers or users' data, in close proximity to them, but still providing one logical global database for your application developers and for your system operators."

This quote explains Cockroach Labs' vision for creating a database system that allows data to be stored near users while maintaining a cohesive global database, addressing both performance and legal concerns.

• Harry Stebbings thanks Spencer Kimball for his participation and insights shared during the podcast.
• The episode ends with Harry promoting Spencer's work and mentioning the high regard for Peter Fenton.
• Harry also provides information about Foundersuite and Greenhouse, two software solutions for startups and hiring.

"Well, Spencer, it's been such a pleasure to have you on the show today. As I said, Jonathan told me it'd be a fantastic episode and I so appreciate you taking the time out to join me today."

The quote reflects the host's appreciation for the guest's contribution to the podcast and the valuable content provided for the listeners.