20VC Index's Mike Volpi on Making The Move From Player To Coach, What It Takes To Build Generation Defining Brands & How Europe Really Stacks Up To The US Venture Market



In this episode of "20 Minutes VC," host Harry Stebbings interviews Mike Volpe, General Partner at Index Ventures, covering his transition from executive roles at companies like Cisco to venture capital, where he emphasizes the importance of shifting from a decision-maker to an advisor. Volpe shares his insights on building successful brands, stating that customer delight is the foundation, and discusses the evolving enterprise space, highlighting the potential in machine learning applications and open-source models. He also compares venture markets in the US and Europe, noting the unique challenges and opportunities in each. Additionally, Volpe reflects on the influence of his international upbringing on his ability to connect with diverse entrepreneurs, a critical skill in venture capital. Notable mentions include First Republic's networking benefits for startups and Segment's data integration platform.

Summary Notes

Introduction to Mike Volpe and Index Ventures

  • Mike Volpe is a General Partner at Index Ventures, a leading global venture fund.
  • Index Ventures' portfolio includes Facebook, Dropbox, Slack, Supercell, and Deliveroo.
  • Mike Volpe sits on the boards of companies such as Cockroach Labs, Wealthfront, Blue Coffee, Sonos, and Zuora.
  • Prior to Index Ventures, Mike worked at cloud.com (acquired by Citrix) and StorSimple (acquired by Microsoft).
  • He held executive positions including Chief Strategy Officer at Cisco and serves on the board of Fiat Chrysler Automotive.
  • Harry Stebbings thanks those who contributed questions for the episode, including Dave Morin, Danny Reimer, Andy Ratcliffe, Nick Weaver, and Tienzo.

"Now, Mike is a general partner at Index Ventures, one of the world's leading venture funds, with a portfolio including the likes of Facebook, Dropbox, Slack, Supercell and Deliveroo, just to name a few."

This quote introduces Mike Volpe as a prominent figure in the venture capital industry, highlighting his position at Index Ventures and mentioning some of the high-profile companies in their portfolio.

Venture Capital as a Career Transition

  • Mike Volpe transitioned to venture capital in his mid-forties after 16-17 years in operational roles.
  • He describes the venture capital role as different from operating within a company, focusing on advising rather than being the primary decision-maker.
  • The transition requires a mindset shift from being the 'actor on stage' to being 'backstage', supporting and advising entrepreneurs.

"And I think being able to make that transition and not feeling like you're the one that is front and center is one of the really important components of being a good venture capitalist."

This quote emphasizes the importance of adapting to a supportive role in venture capital, contrasting it with the decision-making role in company operations.

From Operator to Venture Capitalist: The Transition

  • The transition from operator to venture capitalist involves a change from making numerous decisions daily to making fewer, but critical, investment decisions.
  • A venture capitalist's role is to ask good questions and provide advice, not to make decisions for the company.
  • Learning to let go of the instinct to make decisions for others is crucial for a successful venture capitalist.
  • Mike Volpe suggests that it took him two to three years to retrain his brain for this new role.

"And I think that your ability to let go of that instinct to make decisions and to be the actor is very, very important."

This quote highlights the necessary change in mindset from being a decision-maker in an operational role to being an advisor in venture capital.

Influence of Cultural Background on Professional Life

  • Mike Volpe grew up in Japan and Italy before moving to the United States.
  • His diverse cultural background helped him connect with people of different heritages and understand unique perspectives.
  • Being able to relate to and understand different individuals is essential in any profession, especially in venture capital.
  • The ability to establish a good communication channel with unique and talented entrepreneurs is a valuable skill for venture capitalists.

"And I think one's ability to connect with those kinds of unique and different people is an incredibly important resource."

This quote underlines the significance of being able to establish connections with diverse individuals, which is particularly beneficial in the venture capital industry.

Effective Communication Between VCs and Entrepreneurs

  • The approach to communication between venture capitalists and entrepreneurs should not be dictatorial.
  • Good venture capitalists engage in a dialogue that encourages entrepreneurs to think and reflect, rather than instructing them on what to do.

The transcript does not provide a verbatim quote for this section, as Harry Stebbings poses an incomplete question without a direct response from Mike Volpi on this specific topic.

Great Judge of People

  • Understanding human nature is crucial for entrepreneurship, especially in the early stages.
  • A good judge of people can discern motivations and incentives.
  • Empathy is essential for effective communication with entrepreneurs.

"Well, I mean, obviously, first of all, you have to be a great judge of people, right? Because ultimately, entrepreneurship, especially at the early age, is less about analytics and numerics, and it's really about understanding human beings, their incentives, their motivations and what makes them great."

This quote emphasizes the importance of being able to evaluate and understand people, which is a fundamental skill for entrepreneurs and those who work with them.

Empathy and Communication

  • Empathy in understanding the challenges entrepreneurs face is key.
  • Effective communication involves guiding entrepreneurs through their thought processes.
  • Entrepreneurs must develop conviction in their own beliefs for success.

"I think it's important to have a great degree of empathy. So understanding what they are going through and why they are facing what they are facing in good and bad is incredibly important."

This quote highlights the necessity of empathy in the entrepreneurial process, as it allows for a deeper connection and better guidance.

Building a World-Class Firm

  • Index's decision to open a West Coast office was driven by a desire to evolve and not rest on laurels.
  • The firm's success in Europe was due to alignment with entrepreneurs and a unique perspective.
  • Establishing a presence in Silicon Valley was seen as a long-term effort, building the firm one investment at a time.

"We were not going to do that remotely. So we made the decision to jump into the market here with a few thoughts in mind."

This quote discusses the strategic decision to physically establish a presence in Silicon Valley as part of Index's growth and evolution.

Differences Between US and UK Venture Markets

  • The support ecosystem in San Francisco is richer than in Europe.
  • European entrepreneurs often have a more solitary journey.
  • Venture capitalists in Europe play a more instructive role due to fewer available resources.
  • The investment process in Europe requires more patience.
  • Understanding and respecting market differences is crucial for success in both regions.

"They're extremely different. I mean, entrepreneurs obviously are fantastic in both places."

This quote compares the entrepreneurial environments in the US and the UK, highlighting the differences in support systems and market dynamics.

Brand Building of Generation-Defining Companies

  • Successful brand building starts with an exceptional customer experience.
  • Delighting the customer is at the core of brand development.
  • Great products and customer satisfaction are more important than marketing tactics.

"I would say that universally, the one common concept with anybody that's able to build a great brand is it starts with a fantastic experience for the customer."

This quote underscores the fundamental principle that a great brand is built on the foundation of providing an outstanding customer experience.

Brand Building in Venture Capital

  • Index Ventures focuses on delighting their portfolio companies to build a strong brand.
  • The firm emphasizes service quality over aggressive marketing tactics.
  • Brand building is seen as a process of earning referrals and trust over time.

"And by delighting them over time, we're going to build the brand. And it's less about getting a megaphone out there and writing a million blog posts and tweeting endlessly and so forth. And it's much more, I think, about providing a service to those people that you do serve, where they refer you to your friends, which is exactly what a net promoter score is, and doing that over and over again and letting time take its course."

This quote explains that brand building for Index Ventures is about creating a positive experience for their portfolio companies, leading to referrals and a strong reputation, rather than relying on traditional marketing efforts.

Future of Venture Capital

  • The venture capital industry will see diverse strategies for firm building.
  • There is no standardized approach to creating a successful VC firm.
  • Different VC firms may focus on operational value add or other unique services.
  • The venture capital industry values consistency and core beliefs of the principals.

"I think you're going to see a great deal of diversity. The venture capital is a fascinating profession because there isn't really a textbook way of building a great firm."

Mike Volpi suggests that the VC industry will continue to evolve with a range of different approaches and strategies, rather than following a single model.

Enterprise Market Dynamics

  • Periods of consolidation in the enterprise space create opportunities for new ventures.
  • Entrepreneurship is encouraged by the exit opportunities provided by mergers and acquisitions.
  • The current market is seen as stable, with appropriate funding paces and valuations.

"So I actually think it's a pretty exciting time. I actually think this is a very good time to wander into the world of entrepreneurship and venture, because 18 months ago, things were a little bit overheated and as you know, there was some significant corrections, both in the public markets as well as the private markets in terms of valuations and so forth."

Mike Volpi expresses optimism for the enterprise market, stating that despite recent corrections, the current environment is conducive to entrepreneurship and venture activities.

Exciting Segments in Enterprise

  • Enterprise software's shift to the cloud and SaaS is a major ongoing trend.
  • Machine learning applications in enterprise are particularly interesting.
  • Open source is believed to be the future of enterprise software platforms.
  • Security remains an important and challenging sector within enterprise.
  • The process of building software itself is evolving.

"I think the enterprise sector is incredibly interesting in multiple dimensions. The big themes, of course, are taking all forms of enterprise software and moving them to the cloud, which is really this theme around SaaS."

Mike Volpi outlines the major trends and sectors within the enterprise space that he finds exciting, including the continued growth of SaaS and the application of machine learning.

DevOps and Software Creation Process

  • DevOps presents significant investment opportunities.
  • The process of creating software has evolved over the last decade.
  • The enterprise space is fertile ground for new companies.

there's not huge opportunity around DevOps. And just the overall process of creating software, which has changed dramatically over the last decade, creates interesting investing opportunities.

The quote emphasizes the transformation in software creation and the resulting opportunities for investment, particularly in DevOps and the broader enterprise sector.

Favorite Book: "Undaunted Courage"

  • Mike Volpi's favorite book in the context of entrepreneurship is "Undaunted Courage" by Stephen Ambrose.
  • The book narrates the journey of Lewis and Clark, likened to an entrepreneurial venture.
  • It illustrates the uncertainties and challenges of exploration, similar to starting a business.

I will throw out undaunted courage, which is a book by Stephen Ambrose that is really kind of the story of Lewis and Clark discovering the american west.

Mike Volpi recommends "Undaunted Courage" as it parallels the entrepreneurial experience with the historical exploration of Lewis and Clark, funded by Abraham Lincoln.

Biggest Challenge at Index Ventures

  • The primary challenge is forming partnerships with exceptional entrepreneurs.
  • Venture capital is more than financial transactions; it's about building relationships and companies.
  • The focus should be on company building rather than just financial returns.

Look, I think the biggest challenge, as always, is convincing terrific entrepreneurs to view us as partners.

Mike Volpi discusses the difficulty in venture capital of persuading entrepreneurs to see venture firms as partners in building their companies, rather than just financial entities.

Mentors and Their Influence

  • Ed Cosell, CTO at Cisco, taught the importance of taking risks in M&A.
  • Andy Ratcliffe, a renowned venture capitalist, provided insights into being effective in the venture business.
  • Both mentors imparted valuable lessons that shaped Mike Volpi's professional life.

I've been incredibly blessed, I think, with broad number of people that have given me enormous advice over the years.

Mike Volpi acknowledges the significant impact of his mentors, particularly Ed Cosell and Andy Ratcliffe, on his professional development and understanding of the venture capital industry.

Favorite Blog or Newsletter: The Economist

  • The Economist is Mike Volpi's preferred publication for its distinguished quality and wise perspectives.
  • He also appreciates the work of Jessica Lessin and The Information for its high-quality journalism.
  • The Economist has been a long-standing source of information since his youth.

I would say that my favorite blog or newsletter is the Economist.

Mike Volpi expresses his admiration for The Economist, which he considers a paragon of journalistic quality and has been reading since he was fifteen, influenced by his father.

Most Recent Public Investment: Eero

  • Eero is a mesh Wi-Fi company that addresses home networking challenges.
  • The investment was driven by the product's innovative design and the founding team's capabilities.
  • Nick Weaver, Eero's CEO, is highly regarded by Mike Volpi.

We're investor is in ero, which is the mesh Wi-Fi company.

Mike Volpi explains the rationale behind investing in Eero, highlighting the company's approach to solving Wi-Fi issues in homes and his personal connection to the CEO, Nick Weaver.

Support for Startups: First Republic

  • First Republic offers resources, networks, and expertise for early-stage startups.
  • They provide a single point of contact and access to exclusive events and networking opportunities.
  • Successful clients include Instacart, eshares, and wish.

if you're an early stage startup, the right infrastructure and support systems are critical.

The quote underscores the importance of having a supportive financial institution like First Republic for early-stage startups, offering a variety of resources and networking opportunities to aid their growth.

Data Integration Platform: Segment

  • Segment allows collection and utilization of customer data across various platforms.
  • It integrates with over 200 sources and destinations, streamlining data management.
  • Segment is used by leading companies to drive growth and revenue.

Segment allows you to collect data from every platform, mobile, web, server, cloud, apps and load it into segment.

The quote highlights Segment's capability to centralize data collection and management, making it an essential tool for companies focused on leveraging customer data for business growth.

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