20VC How To Build Meaningful Relationships With Your Investors, 4 Key Elements CEOs Must Focus On In Scale Mode & How Top Optimise Leadership Team Dynamics with Joel Flory, Founder & CEO @ VSCO



In this episode of the 20 Minutes VC, host Harry Stebbings interviews Joel Flory, CEO and co-founder of VSCO, a photo-editing platform that has raised over $70 million in funding. Flory, a former professional photographer, discusses the origins of VSCO, emphasizing the importance of building a product by creators for creators and fostering a direct, value-adding relationship with consumers. He shares insights on fundraising, stressing the significance of aligning one's mission with their business model and the impact of choosing the right investors, like Ryan Sweeney of Accel and Adam D'Augelli of True Ventures, who listen and contribute beyond just capital. Flory also touches on personal development, leadership dynamics, and the future of VSCO, aiming to expand from 2 million to tens of millions of paid members while helping people embrace their creativity.

Summary Notes

Introduction to the Podcast and Host

  • Harry Stebbings is the host of the 20 minutes VC and Founders Friday podcast.
  • Harry interacts with listeners on Instagram for guest and question suggestions.
  • Joel Flory, the CEO and founder of VSCO, is the guest on the episode.

"You are listening to the 20 minutes VC and founders Friday with me, Harry Stebbings." Harry Stebbings introduces the podcast and himself as the host.

"I'm thrilled to welcome Joel Flory, founder and CEO at VSCO." Harry Stebbings expresses excitement about having Joel Flory on the podcast.

Background of the Guest, Joel Flory

  • Joel Flory is the founder and CEO of VSCO.
  • VSCO is a startup focused on enhancing photography and fostering creativity.
  • Joel has over a decade of experience running his own photography company.
  • Joel's company, VSCO, has raised over $70 million in funding.

"Joel's raised over 70 million in funding with VSCO from some of the best in the business." Harry Stebbings provides information on Joel Flory's success in raising funds for VSCO.

Sponsorship and Advertisement

  • The podcast includes sponsorships and advertisements for services like Ladder (life insurance) and Pilot (bookkeeping).
  • First Republic is mentioned as a resource for entrepreneurs.

"Are you thinking about life insurance in the new year? If so, you have to check out Ladder." An advertisement for Ladder life insurance is read during the podcast.

"Using pilot for bookkeeping gives you back the freedom to focus on your business." An advertisement for Pilot bookkeeping services is read during the podcast.

Introduction to Joel Flory

  • Joel Flory has been a fan of the 20 minutes VC podcast.
  • Joel and Harry met backstage at Slush, a startup event.

"Joel, it is such a pleasure to have you on the show today, having heard so many great things from Ryan at Excel." Harry Stebbings welcomes Joel Flory to the show and mentions a mutual connection, Ryan at Excel.

Founding of VSCO

  • Joel Flory was a professional photographer before founding VSCO.
  • Greg Lutzi, the co-founder of VSCO, was an art director and designer.
  • The founders wanted to create something for creators by creators, focusing on the relationship with the consumer.

"So I was a professional photographer for a little over ten years and Greg Lutzi, my co-founder, was an art director and designer." Joel Flory shares his and his co-founder's background before starting VSCO.

"That initial aha moment really was let's go out and do something our way and do it in a way that is focused on the relationship with the consumer." Joel Flory speaks on the foundational vision for VSCO, emphasizing the importance of the creator-consumer relationship.

Fundraising and Venture Capital

  • Joel Flory discusses the unique position of VSCO being founded in Oakland.
  • The current sentiment towards fundraising includes a strong desire to understand the source of the money.
  • Entrepreneurs are now in better positions to raise funds when it is right for their business.
  • VSCO is cash flow positive and therefore does not need to raise funds urgently.

"We're cash flow positive. We don't need to raise. And with that, though, we can do it when it's right for us and when we know how we're going to deploy it." Joel Flory explains the financial stability of VSCO and the strategic approach to fundraising.

Building a Product People Love

  • VSCO initially could not raise funds and instead sold a workshop and a desktop product.
  • The company grew profitably for two and a half years before raising any venture capital.
  • When VSCO did raise funds, it was more of a growth round rather than a traditional seed or series A.
  • The decision to raise funds was based on the need to scale the business due to rising server costs and increasing engagement on the platform.

"We launched a workshop that people paid for, and then we built a desktop product that sold for $119." Joel Flory recounts how VSCO generated revenue early on without venture capital.

"We were profitable out of the gate. And so we grew this business for two and a half years in 43 employees before we ever raised." Joel Flory describes VSCO's growth and profitability prior to seeking venture capital.

Investor Selection

  • Joel Flory emphasizes the importance of investor selection.
  • Adam Ross of Goldcrest Capital was one of the first investors, chosen for his down-to-earth nature and helpfulness in guiding VSCO's investment strategy.
  • The selection process involves considering who to add to the investor pool based on alignment with the company's values and needs.

"So I had actually our other kind of first investor, Adam Ross of Goldcrest Capital was someone that actually brought on before we had any investors." Joel Flory shares his experience with one of VSCO's first investors, highlighting the investor's influence and support.

VSCO's Investor Selection Process

  • Joel Flory emphasizes the importance of selecting investors who align with VSCO's vision and operational style.
  • Investors should add value beyond just capital.
  • Key investors mentioned: Ryan from Accel, Adam, and David Glynn from Glenn Capital.
  • These investors are characterized as phenomenal listeners who help VSCO be a better version of itself.
  • Narajan from Accel offers a different perspective, providing insights through analytics, data, and finance.

"And what I'm so thankful for was not focusing on people that would change the way VSCO operated or change Visco's vision, but really come alongside."

This quote highlights Joel's appreciation for investors who support and enhance VSCO's existing vision and operations, rather than trying to alter them.

"And so Adam really helped me kind of think through how to build who the investors were in VSCO and where we really landed."

Adam played a crucial role in guiding the process of building the right investor base for VSCO, focusing on alignment with the company's direction.

Assessing Investors' Qualities

  • Joel Flory discusses the importance of assessing potential investors' qualities.
  • Stress testing investor qualities involves observing their willingness to engage and listen.
  • Joel would meet VCs at a local bar, Prizefighter, and their willingness to come to him was a test of their interest and commitment.
  • Ryan and Voss from Accel demonstrated their commitment by actively pursuing VSCO and showing up for multiple dinners.

"And it's not just getting a drink, but really that wanting to get to know you, wanting to see the office, wanting to see how you work."

This quote emphasizes the significance of investors showing a genuine interest in understanding the entrepreneur and the business environment.

"They really won the deal. This was something where they went out and said, we want you, and they showed it and where they came in, and it's like VSCO's it for us."

Joel appreciates how Ryan and Voss from Accel showed their dedication to VSCO through their actions, proving their commitment to the partnership.

Common Founder Mistakes in Fundraising

  • Joel Flory reflects on common mistakes founders make in fundraising and capital deployment.
  • Founders should raise funds that can be meaningfully deployed to build value.
  • It is important to understand the expectations of VCs and LPs (Limited Partners).
  • Joel learned to plan and resource carefully, aligning business model understanding with fundraising.

"But ultimately, now we're so mindful of what that means when you bring on new expectations, because ultimately it's another consumer that you're needing to serve as it relates to not just the vcs, but also the lps."

This quote underscores the need for founders to be aware of the expectations that come with taking on investors and the responsibility to meet those expectations.

"This notion of our new CMO, Tessa, really came in and preached this plan, the plan, resource, the plan and work."

Joel highlights the importance of careful planning and resourcing as advocated by VSCO's new CMO, Tessa, as opposed to the previous approach of prioritizing growth at all costs.

Aligning Mission with Business Model

  • Joel Flory believes in the importance of aligning VSCO's mission with its business model.
  • VSCO aims for a direct relationship with consumers, offering continuous value through a subscription model.
  • A misalignment between business model and mission can lead to tension at scale and pressure to grow without delivering consumer value.

"And it aligns so perfectly. And I think the beauty of it is that as you scale, there's not this tension between your business model and your mission."

Joel appreciates the harmony between VSCO's subscription model and its mission, which avoids tension as the company grows.

"It's not only building something of value, but it's continuing to deliver value and a service that people are willing to not just pay for, but continue to pay for and renew."

This quote reflects Joel's belief in the sustainability of a business model that consistently provides value to its customers, warranting their ongoing investment.

Evaluating Business Model and Mission Alignment

  • Joel suggests taking inventory of company activities to ensure they serve the consumer directly.
  • Misalignment often becomes more apparent at scale, especially in ad-based models where the real consumers are advertisers.
  • VSCO's mission is to empower creators without exploiting them, which is reflected in their business model.

"I think if you take an inventory of what you're working on, who's hired, who's at your business, you start to really see, is there anyone building or doing anything that's not directly in service of the consumer?"

This quote implies that evaluating whether every aspect of the business serves the consumer can indicate whether the business model and mission are aligned.

"It's just that difference there. That is something that we set out with the initial insight."

Joel clarifies that VSCO's foundational insight was to ensure their business model directly benefits their creators, distinguishing them from other businesses where creators' work is used for others' gain.

Mission and Business Model Alignment

  • The company's mission is centered around helping individuals embrace their own creativity.
  • The business model is direct-to-consumer and service-oriented.
  • The goal is to help individuals fall in love with their creativity and find their voice.
  • This mission alignment allows employees to act as owners, independently delivering value to the consumer.
  • Projects not aligned with helping customers embrace their creativity are not pursued.

"It is direct to the consumer, it's service oriented with helping, and really it's personal. And then this is a big part. This was something for us, is that we really wanted to help the individual really fall in love with their self, with their creativity, and find their voice."

The quote emphasizes the company's commitment to a business model that is personal, service-oriented, and focused on empowering consumer creativity.

Transition to Subscription Model

  • VSCO sold a product from day one, setting it apart from social networks that plan to monetize with ads.
  • The company's community and platform are in service of creation, not social media.
  • This clarity of purpose helped navigate the existential crisis that companies often face during business model transitions.
  • VSCO's focus on not being an ad-based business was communicated clearly to investors and users.

"We really have been clear and upfront from the beginning that we were not going to be an ads based business."

Joel Flory explains that VSCO's business model was clear from the start, avoiding the typical ad-based revenue model of social networks.

Leadership Team Dynamics

  • The CEO's primary role is to build and grow the team, focusing on organizational health.
  • The importance of team dynamics became a focus about three years ago.
  • The team is encouraged to help each other be the best versions of themselves.
  • Servant leadership and collaboration are key to the leadership team's success.

"So I believe this is my primary role as a CEO is to build the team and grow the team and organizational health is everything."

Joel Flory states that his main responsibility as CEO is to foster a healthy and effective leadership team.

Challenges in Building a Leadership Team

  • Transitioning from a start-up phase to scaling requires a shift in leadership dynamics.
  • Early on, the focus was on hard work and individual ownership areas.
  • Scaling the business necessitated forming a true leadership team with a "first team" principle.
  • The "Five Dysfunctions of a Team" book was instrumental in shaping the leadership team's approach.

"And really, for me, kind of that aha moment. I sat in a fireside chat and there was a series of ceos that were talking about how dysfunctional their teams were."

Joel Flory shares a pivotal moment when he realized the importance of a cohesive leadership team for the health of the company.

Personal Development and Work-Life Balance

  • Personal development is a key hobby and focus for Joel Flory.
  • He emphasizes the importance of investing in oneself, family, and then the business, in that order.
  • The book "Essentialism" by Greg McKeown influenced his approach to prioritization.
  • Work-life balance is viewed as work-life prioritization, with clear expectations set for oneself, family, and business.

"And really, my hobby is personal development. I love learning."

Joel Flory identifies personal development as his main interest, highlighting his commitment to continuous learning and growth.

Work-Life Integration

  • Achieving work-life balance requires intentional effort and prioritization.
  • Saying no to certain things is a key part of maintaining balance.
  • Work-life balance is more about prioritizing effectively than achieving a perfect balance.

"Old it's like anything, you have to put the work into it. It was something that I always desired."

Joel Flory acknowledges that work-life balance takes work and is a result of focused effort and prioritization.

Time Management and Prioritization

  • Joel Flory acknowledges the importance of managing time and being selective with meetings.
  • He allocates specific time slots each month for meetings that may not seem initially beneficial.
  • The majority of these meetings do not lead to significant outcomes, but some can result in valuable connections.
  • Joel highlights how a seemingly unimportant meeting led to hiring a key team member from Nike.

"I leave unstructured time. I leave time for meetings that I probably should say no to. But I give just a little bit of my time towards that."

This quote emphasizes the strategy of leaving some flexibility in one's schedule to accommodate potentially valuable meetings, even if they may not seem important at first glance.

Leadership and Company Focus

  • Joel Flory focuses on four main aspects as a leader at VSCO: building the team, setting the vision, and telling the company's story both internally and externally.
  • He emphasizes the importance of knowing what to say no to and delegating tasks that do not align with his four priorities.
  • This approach to leadership helps provide clarity to the team about what matters most and what they should bring to his attention.

"So with VSCO I focus on four things. I focus on building the team... growing the team... setting the vision... and then finally is telling the story both internally and externally."

The quote outlines the four key areas Joel prioritizes in his role, which helps streamline his focus and decision-making process.

Impactful Literature

  • Joel Flory shares that the book "How to Talk So Kids Will Listen & Listen So Kids Will Talk" has greatly influenced him.
  • He applies the principles of the book to both parenting and the workplace, emphasizing the importance of truly understanding and acknowledging others.

"So the book that's had the most impact on me is how to talk. So kids will listen. And listen so kids will talk."

This quote highlights the significance of the book in Joel's personal and professional life, illustrating how parenting strategies can be applied to management and leadership.

Cultural Change in Tech

  • Joel Flory desires to eliminate toxic masculinity and bro culture in Silicon Valley.
  • He advocates for a shift towards servant leadership, which focuses on the growth and well-being of others.

"I'd love to absolutely get rid of this bro culture and toxic masculinity that exists today and really move towards a culture of servant leadership."

The quote expresses Joel's wish to transform the prevailing culture in the tech industry into one that is more inclusive and supportive.

Personal Mottos

  • Joel frequently reminds himself to do things right, stressing the value of quality and integrity in actions.

"Do it right. If something's worth doing, it's worth doing right."

This quote serves as a personal mantra for Joel, reinforcing the idea that one should strive for excellence in all endeavors.

Personal Growth and Family

  • Marriage and having children have been pivotal in shaping Joel's approach to understanding and communication.
  • He acknowledges that he is continuously learning and growing, thanks to his family.

"The way you think, combined both with getting married and having kids. And I think it goes back to that, listening to understand."

The quote connects Joel's personal life experiences with his approach to leadership and communication, emphasizing the transformative power of family.

The Rule of Voss

  • VSCO employs the "Voss rule" during meetings to encourage thinking from different perspectives.
  • The rule is named after an individual whose intense scrutiny and challenging ideas push the team to think more critically.

"We call it the Voss rule, and we ask ourselves, if Voss were sitting in this meeting, what would his response be?"

The quote explains the purpose of the Voss rule, which is to stimulate deeper thinking and problem-solving within the team.

Vision for the Future

  • Joel Flory shares his personal and professional goals for the next five years.
  • He aims to improve as a father and husband and to expand VSCO's reach to help more people embrace their creativity.

"Personal side, as I mentioned, of myself and family is really continuing to prove on being the best dad and husband I can be. And as it relates to VSCO, our mission is to help everybody fall in love with their own creativity."

This quote outlines Joel's long-term objectives, highlighting his commitment to personal development and the growth of VSCO's mission.

Endorsements and Recommendations

  • The transcript concludes with endorsements for Ladder life insurance, Pilot for bookkeeping, and First Republic Bank.
  • These services are recommended for their efficiency, expertise, and resources for entrepreneurs and businesses.

"And that's why with Ladder, there are no commissioned agents and no policy fees... Every month, your dedicated account manager will send you an accurate, detailed financial report... Why First Republic? Well, you get to leverage their incredible network of VC firms..."

These quotes serve as promotional endorsements for the mentioned services, emphasizing their benefits and how they cater to the needs of entrepreneurs and businesses.

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