20VC How To Design Investment Decision Making That Allows For Outliers, Why Personal Voice Computing Is The Next Big Platform & The Challenges That Could Prevent It with David Beisel, Founding Partner @ NextView Ventures

In this episode of The 20 Minute VC, host Harry Stebbings converses with David Beisel, a co-founder and partner at Nextview Ventures, an East Coast early-stage fund that recently announced a $50 million seed fund. Beisel recounts his journey from entrepreneur to venture capitalist, having sold his company Sombasa Media and then transitioning into VC through stints at Masthead Venture Partners and Venrock. The discussion delves into Nextview's investment philosophy, which focuses on the 'everyday economy'—investing in startups that reimagine daily life activities through technology. Beisel also shares insights on the burgeoning field of voice computing, the challenges of platform shifts, and the potential for startups within the Amazon-dominated ecosystem. The conversation concludes with Beisel's thoughts on the future of Nextview and his recent investment in a drone company called Skyways.

• The episode is part of "The 20 minutes VC" podcast hosted by Harry Stebbings.
• Harry Stebbings introduces himself and encourages listeners to follow him on Snapchat and submit suggestions for future guests.
• David Beisel, cofounder and partner at Nextview Ventures, is the guest for this episode.
• Nextview Ventures is recognized as one of the leading early-stage funds on the East Coast, with a recent announcement of a 50 million seed fund.
• David Beisel's background includes roles at Venroc and Masthead Venture Partners, as well as cofounding Sombasa Media.
• Acknowledgements are given to Lee Hower and Rob Goat for introducing David Beisel to the show.

"I'm thrilled to welcome David Beisel to the hot seat today. David is a cofounder and partner at Nextview Ventures, one of the East Coast's leading early stage funds, with their recent 50 million seed fund being announced just this month."

This quote introduces David Beisel as the guest and highlights his role at Nextview Ventures, emphasizing the recent success of their seed fund.

• Pendo is presented as a comprehensive platform for product teams, offering various tools to improve product usage, user feedback, and feature adoption.
• Treehouse is advertised as an online school for learning to build websites and apps, aimed at beginners and offering a free trial.

"With Pendo you can understand product usage and rapidly make data-driven decisions; survey users in-app for NPS and feedback; deliver contextual help to improve UX and user onboarding; promote new features in product to drive adoption without requiring any engineering resources."

This quote details the services provided by Pendo, illustrating its utility for product teams in understanding and enhancing user experience.

• David Beisel is welcomed to the show, with the host expressing enthusiasm for having him on.
• David shares his journey into venture capital, which began with his entrepreneurship in the late 90s and transitioned into VC after selling his company.
• His entry into VC was somewhat accidental, starting with a temporary offer from angel investors to join Masthead Venture Partners, which led to a longer tenure and then a move to Venroc.

"Yeah, so it was a little bit by accident, actually, so turned back the clock a bit. Entrepreneur turned VC in the late nineties? S think web one zero era, I co-founded an email marketing company and we ended up selling that company to about."

This quote explains how David Beisel's transition from entrepreneur to venture capitalist happened somewhat unexpectedly after the sale of his company.

• David reflects on the inflection point of his career when he realized he wanted to be a venture capitalist.
• His passion lies in being part of company creation repeatedly, which he can do most frequently as a seed venture investor.
• The founding of Nextview Ventures is seen as a long-term commitment and an opportunity to be involved in company creation from the ground up.

"I think it wasn't until we started Nextview together that it was at the point where, what do I want to be doing for the rest of my life? And I realized that I just want to be at the point of company creation over and over and over again."

This quote captures David Beisel's commitment to venture capitalism, particularly at the seed stage, to fulfill his desire for continuous involvement in company creation.

• David compares his experiences at three different VC firms: Masthead Venture Partners, Venroc, and Nextview Ventures.
• At Masthead, he enjoyed the advantages of a first-time fund with a blank slate, free from legacy investments and processes.
• Venroc provided a contrasting experience with its established 50-year history and legacy.
• These varied experiences allowed David to appreciate different operational styles within VC firms.

"So Masthead was a first-time fund, and I really saw the benefits at being at a firm where you really had a blank slate."

This quote emphasizes the unique opportunity David had at Masthead to shape the firm's direction without being constrained by past decisions or processes.

• Venture firms have classic training and operational processes that are essential for running the firm.
• Previous experience in different venture firms allows for cherry-picking the best practices and incorporating them into a new firm's culture and operations.
• Nextview Ventures, co-founded by David Beisel, Rob Go, and Lee Hower, utilized their collective experience from four different venture firms to shape their own firm's approach.

"And so when we started Nextview together, between Rob Lee and I, the three of us had been at four different venture firms. And so we had the benefit of actually kind of being able to cherry pick some of the best things from four different firms and incorporate that into our own culture and our own way, how we operate."

This quote explains how the founders of Nextview Ventures used their past experiences from various venture firms to create a unique operational culture for their own firm.

• Nextview writes an investment memo for every single seed investment, a practice borrowed from Venroc.
• The investment decision process at Nextview is designed to allow outliers, not the mean or median, to get through, reflecting the nature of venture investing.
• A two-step voting process is employed, with a vote taken both early after meeting entrepreneurs and again at the final decision stage.
• For follow-on funding, the decision-making process requires unanimity within the team.

"So we actually have a two step voting process where we vote very early on when we meet with entrepreneurs, then we actually vote again when we make the final decision making process."

The quote outlines Nextview's two-step voting process for investment decisions, emphasizing their method to filter in potential outlier investments.

• David Beisel's investment strategy has evolved over time, influenced by mentors Rich Levandov and Mike Terrell.
• Beisel has incorporated both intuitive and analytical approaches into his decision-making process.
• Over the years, Beisel has gravitated towards investments with a marketing theme, recognizing the importance of distribution in both B2B and B2C companies.

"But then what I've realized, I think over the last couple of years is that I have tended, given I'm an Internet marketer by background, I've tended to make investments that have some type of marketing theme."

This quote reveals David Beisel's realization that his background in Internet marketing has influenced his investment preferences towards companies with strong marketing strategies or advantages.

• Nextview has raised its third fund, a $50 million fund, and continues to invest at the seed stage.
• The third fund includes a slight twist in thematic focus, termed the "everyday economy."
• The everyday economy involves investing in founders who are redesigning daily living for everyday people across seven categories: food, home, transportation, work and money, health, apparel, and entertainment.
• The focus on the everyday economy is market-driven and aligns with the broader social impacts observed with every big wave of innovation.

"We want to invest in companies where founders are reimagining how these everyday activities can be changed by technology."

This quote encapsulates the core investment thesis of Nextview's third fund, which is to invest in companies that leverage technology to transform daily life activities for the average person.

• The recent surge in personal voice computing has been attributed to successful products like Amazon's Echo.
• Amazon's "Alexa everywhere" strategy is embedding Alexa in third-party hardware devices.
• The natural user interface of voice is becoming increasingly pervasive, with millions of devices connected to the internet and accessible by voice.
• By the end of the year mentioned, an estimated 50 million devices with internet connectivity are expected to be in homes.

"So 10 million devices were shipped in 2016. Somewhere between 20 to 40 million are going to be shipped here in 2017."

This quote outlines the rapid growth of Amazon Echo devices, indicating a significant market presence and consumer adoption of voice computing technologies.

"You're going to have literally tens and tens of millions of devices which are connected to the Internet in people's homes and then accessible by the most natural user interface possible, which is the voice."

The quote emphasizes the scale of voice computing's integration into homes and the naturalness of voice as a user interface, suggesting a transformative shift in how people interact with technology.

• Voice computing is currently at an early point on the Gartner hype cycle curve, approaching peak expectations.
• Amazon dominates the voice computing market, raising questions about opportunities for startups within the ecosystem.
• The challenge for startups in voice computing lies in monetization and distribution.

"We're still kind of approaching up towards kind of peak expectations."

This quote indicates that voice computing is still in the early stages of public and investor excitement, with potential for growth and development.

"Amazon right now is just a big behemoth and they own so much of the stack."

The quote highlights Amazon's dominance in the voice computing market, which presents both challenges and questions regarding the role and opportunities for startups.

• Investment opportunities may lie in addressing current challenges of monetization and distribution.
• Startups could potentially fill gaps in the voice computing ecosystem or help enable better monetization and distribution.
• Another area for investment is creating a cohesive experience across multiple voice computing platforms from different companies.

"I think maybe it's in two different places. Right. So the challenges right now with voice computing are really around monetization and distribution."

This quote identifies the primary challenges facing voice computing, which also represent potential areas for investment and innovation by startups.

"A consumer in their bedroom or in their kitchen isn't going to want to talk to the different device differently."

The quote points to the user experience challenge of interoperability between different voice computing devices, suggesting a market for solutions that unify the user experience.

• Uncertainty remains about whether companies will adopt an open-source approach or a walled garden approach to voice computing platforms.
• The approach taken by companies like Apple in the mobile market could provide indications for the future of voice computing.

"We'll have to see. I don't know."

This quote reflects the uncertainty and anticipation about the strategic direction companies will take regarding the openness of their voice computing platforms.

• New platforms often start with applications that replicate functions from the previous platform.
• Over time, applications evolve to take full advantage of the new platform's unique capabilities.

"The first kind of level application just replicates what the other one was, what happened in the previous one."

This quote explains that the initial wave of applications on a new platform tends to mimic the functionality of applications on the preceding platform, before evolving to more platform-specific functionalities.

• Early skills released for voice platforms often replicated mobile capabilities.
• Simple tasks like ordering pizza from Domino's were among the first apps on iPhone and are now available on voice platforms.
• A transition from web to mobile to voice platforms is observed, with each platform translating previous capabilities.

It's order an order. Yeah, order b, order a pizza from Domino's. Right. Just as one of the first apps on iPhone was order a pizza from Domino's, because that's what you could do on the web.

This quote illustrates the replication of functionality across evolving platforms, using the example of ordering pizza from Domino's as a consistent application from web to mobile to voice.

• The next level of applications takes advantage of unique platform opportunities.
• Voice-specific applications like opening a garage door are more practical on voice platforms.
• Gaming applications are emerging that leverage the unique aspects of voice.

I think the next level order is ones that take a unique opportunity or because of the platform has distribution or a specific presence. If you think here on voice, examples here include, like opening your garage door, that's something.

This quote emphasizes the potential for applications that are uniquely suited to voice platforms, such as voice-activated home automation.

• The concept of "truly native" apps to voice platforms is anticipated but not yet concrete.
• The potential for a killer app on voice platforms, analogous to the taxi app on mobile devices, is highlighted.

I'm really excited to see some skills that are truly native to voice.

The quote conveys excitement for future innovations in voice technology that are inherently designed for the platform, similar to how mobile apps revolutionized smartphone usage.

• A bridge round in funding may indicate missed Series A metrics, but it can also show unique investor insights or market shifts.

I would say only sometimes, but most often. I mean, I think other times you can see things that other investors don't see or the metrics weren't there.

This quote suggests that while bridge rounds can be perceived negatively, they may also represent strategic investment decisions based on factors beyond standard metrics.

• Success is viewed as the ongoing creation of new companies.

I want to just keep doing the same thing and just being part of creating new companies over and over is.

The quote defines success as the continual process of entrepreneurship and company creation, rather than a single end goal.

• David Beisel's favorite book is praised for its depth and richness.

My favorite book is look, Homer and Angel because it's so deep and so rich and I've read it more times than any other book, actually.

The quote shares a personal recommendation, highlighting the book's profound impact on the speaker.

• Morning routines involve early rising and running several times a week.

I usually get up a little bit before 06:00 and run a couple miles three to four times a week.

This quote provides insight into the speaker's personal routine aimed at optimizing the start of the day.

• Gotham Voices and Hearing Voices are recommended newsletters for tech and voice computing content.

Well, I'm going to do one plug, which is nexty's new newsletter. It's called Gotham Voices, which really highlights the best content from the New York tech community. Another one called hearing Voices, which is actually devoted around voice computing that Matt Hartman from Betaworks puts together.

The quote offers specific recommendations for newsletters that provide valuable insights into tech and voice computing industries.

• Skyways, a drone company from Y Combinator, received investment for its transportation potential and impressive demo.

It's a company that's coming out of Y Combinator called Skyways. It's a drone company. I said yes. Two reasons. One, in our everyday economy thesis around transportation. The second one was the demo just blew me away.

This quote explains the rationale behind a recent investment, emphasizing both the strategic fit within the transportation sector and the compelling demonstration of the company's technology.

• Pendo offers a platform for product teams to understand usage, make data-driven decisions, and improve user experience without engineering resources.

With Pendo you can understand product usage and rapidly make data driven decisions. Survey users in-app for NPS and feedback, deliver contextual help to improve UX and user onboarding, promote new features in product to drive adoption without requiring any engineering resources.

The quote describes the functionalities of Pendo, illustrating how it serves as a comprehensive tool for product managers to enhance their products and user engagement.

• Treehouse is recommended for learning to code with a vast library of content and interactive learning methods.

Their course library has thousands of hours of content where you can learn all sorts of topics including JavaScript, iOS, Android and more, with high-quality video instructions from real industry experts teaching you all you need to know, and quizzes and code challenges keeping you engaged and on track.

This quote promotes Treehouse as an effective online resource for learning coding and development skills through a structured and engaging educational experience.