In this episode of "20 minutes VC," host Harry Stebbings interviews Wayne Chang, a serial entrepreneur, angel investor, and co-founder of Crashlytics, which had a nine-figure acquisition by Twitter and later by Google. Chang shares his journey, from coding at seven to founding several companies, emphasizing the importance of time management for startups. He advises on hiring a recruiter early to focus on product and culture, discusses the "Delta of Wow" in product design, and the "triangle of focus" where founders should prioritize speed and quality over cost. Chang also delves into fundraising strategies, advocating for avoiding the boardroom to level the playing field and creating a competitive funding round without compromising integrity. He stresses the value of time over money and the significance of returning knowledge and resources to the next generation of entrepreneurs.
Welcome to the 20 minutes VC with me, your host, Harry Stebbings, and you can find me on Snapchat at H Stebbings with two b's. It'd be fantastic to see you there. Very special guest in the hot seat today, a phenomenal player in our ecosystem and a huge thank you to him for all he's done for me and his kindness and generosity in my journey.
The quote sets the stage for the podcast, introducing the host and the episode's guest, Wayne Chang, while expressing gratitude for Chang's support.
A quick, quick story. I started coding when I was seven, and then I created my first software. It was basically like Space Invaders on the Apple two e. And then when I was eleven years old, I started my first company, and that became a top 300 site at the time.
This quote provides a brief overview of Wayne Chang's early start in technology and entrepreneurship, highlighting his early coding experience and the success of his first company.
My favorite thing that I believe in is the enemy of founders and startups is time. And so what does that mean? That means every day that goes by, you're becoming old news. Every day that goes by, your burn rate just goes up.
The quote underscores the critical nature of time management for startups and the need for founders to focus on core tasks rather than recruitment.
Jeff and I, we hired a recruiter really, really early on. And what this meant for us is that it accomplished multiple things. One, it allowed us to free the mental capacity to think more about the product, to think more about customers, to think more about the design, the philosophy behind it, the culture, all these things that we couldn't have the mental space to do, we now do, and we did.
The quote explains the strategic decision to hire a recruiter early and how it benefited the founders by freeing up their time to concentrate on other vital aspects of the business.
That's one of the greatest challenges with this approach, is now then the founders needs to focus on the culture, which they should do anyways.
The quote highlights the importance of founders actively working on company culture, especially when rapidly assembling a team.
Before we brought the recruiter in house, we actually farmed out a bunch of different recruiting agencies. And the driver initially was financial. Why are we paying over $100,000 in recruiting fees when we could use that towards a recruiter in house?
This quote discusses the rationale behind hiring an in-house recruiter and the financial benefits of this approach compared to using external agencies.
Yeah, so Delta of wow. Great question. So this comes more into product and design and founder perspective.
The quote introduces the 'Delta of Wow' as a concept that relates to the impact of product design and user experience, emphasizing its importance from a founder's perspective.
"The IRS is really great at these because they're built on forms, on forms, on forms."
This quote highlights the complexity and bureaucracy often found in government forms, which can lead to a poor user experience.
"So one example would be then, in that government contract example, let's say instead of asking for all the information all at once, you ask for the name, the email password, and then you only ask for the shipping address when there's something that actually needs to be shipped."
This quote explains a strategy for improving user experience by only requesting information as it becomes necessary, rather than all at once.
"That's what I call Delta Wow."
This quote introduces the term "Delta Wow" as a way to describe the significant improvement in user experience over the industry standard.
"It sounds really simple because it is."
This quote emphasizes that simplicity can be revolutionary, especially when it contrasts with the complexity of existing solutions.
"So on the three vertices, you have one that's cost, one that's speed, and then one that's quality, and you can only pick two."
This quote explains the triangle of focus, a concept that forces entrepreneurs to prioritize two out of three critical aspects of product development.
"What I believe my big bias is the two qualities you pick should be speed and quality, which means what you're giving up is the cost of it."
Wayne Chang expresses his preference for prioritizing speed and quality over cost, even if it means spending more money.
"No, it doesn't mean that at all, actually. It just means that you need to raise whatever amount that's in your mind that you can say, hey, if I raise this, I don't need to think about speed or quality."
This quote clarifies that raising capital should align with the entrepreneur's goals for speed and quality, rather than a fixed amount based on conventional seed rounds.
"That, to me, is the worst type of entrepreneur, because they're more focused on the money that they raise and preserving, that they are about creating value than they are about building things fast and quality and gaining customers and gaining traction."
Wayne Chang criticizes entrepreneurs who focus too much on preserving capital instead of using it to create value and gain market traction.
"Time, to me, is definitely the enemy of founders and startups. So anything you can do in the fastest way possible should promote more growth and more success."
This quote emphasizes the importance of speed in startup success, suggesting that any measures that can accelerate processes are beneficial.
"What that means is that you're going to the boardroom, you're meeting this hotshot VC in his home territory."
This quote describes the disadvantage of pitching to a VC in a formal boardroom setting, which can be intimidating and disadvantageous for founders.
"So you're basically like a slideshow for them."
This quote illustrates how founders can be perceived as just another pitch in a line-up when presenting in a boardroom, reducing their chances to stand out.
And the reason why was this allowed us to sit together equally in the professional playing field, equally.
The quote emphasizes the importance of meeting on neutral ground to create an environment of equality between VCs and entrepreneurs.
I think visually it might be dying, but I think ego so much ingrained as part of human nature that I think that will never go away.
Wayne Chang suggests that while the stereotypical image of VCs might be changing, the presence of ego within the industry is a persistent human trait.
How do you put a ground together as quick as possible? The key there is one. If you can try to make it super competitive and bring out the competitiveness of the others, then that's one of the greatest drivers for motivation for them.
Wayne Chang discusses strategies to create urgency and competitiveness among VCs, which can lead to quicker and more favorable investment rounds for entrepreneurs.
The more time that a VC has, or the more time that a potential vendor or partner has, the worse off you are, the less likelihood of a deal completion to speed it up.
Wayne Chang highlights the importance of creating a sense of urgency to expedite the investment process and avoid giving VCs too much time to deliberate.
Would I speak to an associate just alone right now? If it's at a social event, I would. Just because it's a social event or some industry event, if it's an associate reaching out, saying they want to talk and learn more about it. When I hear that, what I'm hearing is they're just trying to pump as much information out of you and then put into a database somewhere and send it to the partners.
Wayne Chang advises on the selective engagement with VC associates, emphasizing the importance of prioritizing meetings with decision-makers to maximize the effectiveness of fundraising efforts.
The warm intro? It's been talked about in the industry a lot, in the VC industry or in the angel investor industry, in the entrepreneur industry. The warm intro is the currency that is needed in order to get someone's attention, right?
Wayne Chang discusses the value and necessity of warm introductions in the venture capital industry, highlighting the asymmetry between entrepreneurs and investors in initiating contact.
Wayne, I love Ender's game. So the endiverse, have you ever read it?
Wayne Chang briefly mentions his favorite book, "Ender's Game," during the quickfire round, indicating it as a must-read without providing detailed reasons.
"Once you pick it up and you read the first couple chapters, you will finish it probably in one or two sittings. It is phenomenal. The movie doesn't do it justice. Don't watch the movie. The book is. Think of it as a Disney book or a Harry Potter book, but for adults it's a military strategies technology, it's futuristic, it's amazing. It really ignites the entrepreneur in me when you think about it. Talks about problem solving, talks about persevering and surviving. It is such a great book."
This quote highlights the speaker's enthusiasm for "Ender's Game" and its ability to engage and inspire readers, particularly entrepreneurs, with its themes of problem-solving and perseverance.
"For me, it's the value of money. And I say that the value of time and money. Growing up and with my surroundings, I was extremely, extremely poor. So I valued money and what that meant to me extremely highly. And now I'm on the other side of it and I realize that time is actually the thing that I value the most now in youth, time, youth and health, and where I had it in abundance before, when I was much younger, I discounted it. You don't know about air until you don't have it anymore. So in that sense, I didn't know about my youth, my health, all that kind of things until I'm getting older and older. I don't believe now that money or things should be valued as highly as they are in society. And right now, splitting my time in LA, I see even more drastically in this community over here."
Wayne Chang discusses the evolution of his values, shifting from a strong emphasis on money due to his impoverished upbringing to a deeper appreciation for time, youth, and health as he ages. He criticizes the high societal value placed on material wealth, especially as observed in LA.
"The ultimate for me in career wasn't actually anything I accomplished in career. It was what the foundation was built on. So ten years ago, a little over ten years ago, I dropped out of UMass Amherst... But ten years after I dropped out last year, I got a call, and it was from the UMass Amherst dean for business, and he said, the board of trustees has nominated you to receive a phd, a doctorate. I was flabbergasted... And then a couple of months later, the chancellor called and said, hey, Wayne, would you be our commencement speaker?... It was able to look at my family and just have that sense of, I achieved the career highlight in the way that they perceived it."
Wayne Chang reflects on being recognized by his alma mater with an honorary degree and the opportunity to be a commencement speaker as a career highlight, emphasizing the personal and cultural significance of this honor, especially in the context of his family's values.
"I like reading Hacker news. I like reading slash dot, and I like opening up Twitter. And that allows me to get a pretty wide range of exposure to different."
This quote indicates Wayne Chang's preferred sources for staying informed, highlighting his interest in technology and current events through platforms known for their wide-ranging content.
"I remember being on the other side where I have an idea and I need the capital. And so for me, at my stage in my life, someone told me once there are three great stages. First stage is learn, second stage is earn, and third stage is return. And so I'm very, very fortunate that I breached a third stage and I just turned 34. And so my thinking now is, can I return what I've learned and earned to the next generation of entrepreneurs? And so through angel investing and through advisorships and mentorships and belonging to different startup groups, that allows me to pursue my passion, which is startups and innovation, that allows me to do it in a more macro way. It allows me to be part of so many other journeys, not just the one I built for myself, but allows me to be part of their dreams and their journeys. And that is really humbling, and it's also really thrilling at the same time."
Wayne Chang explains his approach to angel investing as a means to contribute to the entrepreneurial community by sharing his knowledge and resources. He emphasizes the fulfillment derived from supporting and participating in the growth of various startups.
"Where do you see yourself in five years? I never plan out, so I can never answer that question because I don't live my life that way... And the most recent angel investment. There'S a company out here in LA. He was originally from Boston and his name is Will Solinsky. He's doing a company called Pistol Lake... The reason why I invested is they invented this type of fabric. It's called uday... It is the softest shirt that I own... As soon as I got it, the first sample, I ordered maybe like 20 shirts the very next day."
In this quote, Wayne Chang discusses his approach to life, focusing on adaptability and making the best possible decisions with the information at hand. He also shares details about his investment in Pistol Lake, highlighting the innovative fabric that prompted his investment decision.