20VC Kevin Rose on Putting The Entire Fund Into Uber, The Future For Mobile & Whether Angels Should Have Super ProRata Rights



In this episode of "20 minutes VC," host Harry Stebbings interviews Kevin Rose, a venture partner at True Ventures and serial entrepreneur known for founding Digg and Revision3. Rose shares his journey from entrepreneur to angel investor and eventually to VC, discussing his investment philosophy, the evolution of his approach, and the importance of balance and health in the high-stress startup world. Rose also touches on the future of mobile and AR/VR technologies, and the role of niche markets in distribution. He emphasizes the value of essentialism, learning from failure, and the human side of entrepreneurship. Notably, he highlights his recent investments in Luigi's speaker platform, Leaders, and Laszlo Bock's new startup. Throughout the conversation, Stebbings also promotes Zoom and Viewdit as essential tools for business communication.

Summary Notes

Introduction to the Episode

  • Harry Stebbings is the host of the "20 minutes VC" podcast and can be found on Snapchat.
  • Kevin Rose is the featured guest, a venture partner at True Ventures.
  • Kevin is known for founding Digg and Revision3 and being a general partner and advisor at Google Ventures.
  • He is also an angel investor with investments in Twitter, Square, Facebook, Foursquare, and Zynga.
  • The introduction includes a thank you to Phil Black and John Callahan for introducing Kevin Rose to Harry Stebbings.

"But for the show today and this guest has been on my target list for guests for many months now, having been inspired by many of his episodes with the likes of Tim Ferriss. Therefore, I'm thrilled to welcome Kevin Rose to the hot seat today."

The quote explains Harry Stebbings's anticipation and excitement to have Kevin Rose as a guest on the podcast, highlighting Kevin's notable achievements and connections.

Harry Stebbings's Tools for Calls and Interviews

  • Harry Stebbings uses Zoom for video and web conferencing.
  • Zoom is endorsed for its ease of use, scalability, and clear pricing.
  • Zoom has a partnership with Sequoia and a recent $100 million funding round.
  • Viewdit is recommended for personalized video communications.

"My response Zoom, the number one video and web conferencing service providing one consistent enterprise experience that allows you to an array of activities including online meetings, video webinars, collaboration enabled conference rooms and business IM, just to name a few."

Harry Stebbings shares his preference for Zoom as a comprehensive tool for various online activities, emphasizing its enterprise-level consistency and versatility.

Kevin Rose's Venture Capital Journey

  • Kevin Rose started angel investing around 2005-2006 during the Web 2.0 movement.
  • He invested in fellow entrepreneurs' companies as a way to support friends and innovative ideas.
  • His transition to full-time VC was influenced by Bill Maris at Google Ventures.
  • Initially, Kevin did not have significant funds, starting with advisory roles and small investments.
  • He acknowledges the riskiness of early angel investing, especially when it involves a significant portion of one's net worth.

"So I ended up investing in some of their companies."

Kevin Rose describes his initial foray into investing, highlighting his engagement with other founders and his support for their companies.

Transition from Angel Investor to Venture Capitalist

  • Kevin's move to Google Ventures introduced him to various asset classes and a team-based investment approach.
  • The decision-making at Google Ventures involved debates and votes among partners.
  • Kevin contrasts the quick, individual decision-making of angel investing with the more deliberate, team-based approach at Google Ventures.
  • At Google Ventures, investments ranged from small seed checks to large-scale investments like Uber.

"Having a, I think, two ways into that, it changed. One, I received exposure to a whole asset, a set of assets that are asset classes that I would never have thought of before."

Kevin Rose reflects on the broadening of his investment scope and the collaborative decision-making process at Google Ventures, which differed from his earlier angel investing experiences.

Controversial Investment Strategy at Google Ventures

  • The discussion moves to Google Ventures' atypical strategy of investing an entire fund into a single company, Uber.
  • The rationale was based on the fund's annual refresh, allowing for a new $300 million checkbook each year.
  • This strategy was debated, considering the dependency on Uber's success, but was ultimately chosen due to Uber's capital needs and GV's unique funding structure.

"So why not just do the entire fund?"

Kevin Rose explains the thought process behind Google Ventures' unconventional decision to invest an entire fund into Uber, highlighting the debate and considerations that led to this choice.

Overlap Between Private and Public Market Investing

  • Harry Stebbings mentions Kevin Rose's talent in both private and public market investing.
  • The conversation is poised to explore the commonalities between successful investments in both markets.

"And it's that you're not only a gifted private market investor, but also a very gifted public market investor."

Harry Stebbings introduces the topic of Kevin Rose's dual expertise in private and public market investing, setting the stage for a discussion on the overlap between the two.

Evaluation of Public and Private Market Investments

  • Kevin Rose does not distinguish much between public and private investments, focusing on liquidity and accessibility.
  • He evaluates companies individually, avoiding very early stage or fresh out of IPO unless previously invested in privately.
  • Kevin looks for large market cap companies dominating their space, with potential for continued dominance, such as Amazon.

"Yeah, I really don't distinguish between the two. Really, the only difference is how liquid they are and how accessible they are to the public."

This quote indicates Kevin's approach to investing, where the primary consideration is the liquidity and public access of the investment rather than the distinction between public and private markets.

Long-term Investment Strategy

  • Kevin Rose focuses on a 5-10 year outlook when evaluating companies, particularly in tech, to determine their potential for lasting success.
  • He considers the vision and leadership of companies to assess their staying power over the long term.

"For me, I'm always just trying to look 5-10 years out and kind of seeing where the companies are set up and really figure out which ones are going to have that kind of lasting."

The quote highlights Kevin's long-term investment strategy, emphasizing the importance of a company's setup and leadership for sustained success over a decade.

Market Timing and Investment Approach

  • Kevin uses dollar-cost averaging in public markets by choosing a time frame and investment amount to gradually invest.
  • He has different buckets of risk, with early-stage startups being the most risky.
  • For cryptocurrencies, Kevin looks for truly unique products, not slight variations of existing ones.
  • He starts with small investments in high-risk areas and increases them over time based on progress.
  • Kevin seeks pro rata rights in angel investments and may push for super pro rata in subsequent funding rounds.

"Well, in terms of public markets, it's just kind of dollar cost averaging in over time."

This quote reflects Kevin's methodical approach to investing in public markets, emphasizing the gradual investment strategy to mitigate risk.

Founder Perception to Pro Rata Rights as an Angel Investor

  • Not all founders are willing to grant pro rata rights, but Kevin suggests that because his investments are small, it's not usually a significant issue.

"Yeah, it can. I mean, not everyone's going to want to give it to you, but we're talking small dollars here, so it's not like you're kind of taking up a large round, right?"

Kevin acknowledges that while not all founders are open to granting pro rata rights to angel investors, the small size of his investments often makes this a non-issue.

Perspective on AR vs. VR Technologies

  • Kevin is bearish on VR compared to AR, citing VR as a fad with limited adoption potential.
  • He believes that VR's isolating experience and cumbersome setup limit its appeal and longevity.
  • Kevin compares VR's lack of substantial improvement over existing technologies to past fads like Wii remotes and 3D televisions.

"I've always disliked virtual reality. I've never been a fan of it."

The quote expresses Kevin's personal stance on VR technology, indicating his lack of enthusiasm and skepticism about its future success.

Mobile Technology as the Center of Our Digital Lives

  • Kevin believes mobile technology will remain central for the foreseeable future due to its proximity to users and time spent on the device.
  • He sees improving distribution channels for startups, particularly through smart recommendations on platforms like Instagram.
  • Kevin provides examples of how niche markets benefit from sophisticated recommendation algorithms.

"I certainly believe it's the center and will be for quite some time."

This quote affirms Kevin's conviction that mobile technology will continue to be the primary computing device for individuals for an extended period.

Distribution Channels and Recommendations

  • Kevin observes that distribution for startups is improving with better recommendation algorithms.
  • He notes the precision of Instagram's Discover tab recommendations and the empowerment of niche communities through targeted content.
  • Kevin relates his personal experience with content curation on Instagram and launching a fasting app, highlighting the effectiveness of app store optimization for visibility.

"I think they're getting better. I think distribution is getting easier with smart recommendations."

Kevin comments on the evolving landscape of distribution for startups, emphasizing the role of intelligent recommendation systems in connecting niche communities with relevant content.

App Store Success and Niche Markets

  • Kevin Rose discusses the success of their fasting app in the App Store.
  • The app receives thousands of downloads per day.
  • Over 700,000 fasts have been started since the beginning of the year.
  • Success attributed to tapping into niche markets and being recommended to the right people.
  • Similar success is seen with Hodinkee's app for watch-related content.
  • Recommendation engines have improved and are beneficial for niche markets.

"You go into the App Store and Apple and type in fasting, we're kind of the number one app there. And that turned into thousands of downloads per day. We've now had, gosh, over 700,000 fasts started since the beginning of this year. And it just shows you that if you can tap into and get recommended to the right people, there are still great channels for distribution, especially around very niche markets. And that's what we're seeing at Hodinki as well in terms of our app downloads for watch related content."

The quote highlights the speaker's app's success in the App Store and the importance of targeting niche markets for distribution. It also notes the role of recommendation engines in highlighting niche content.

Podcasting and Inspiring Entrepreneurs

  • Kevin Rose shares his experience and goals with his podcasts, Foundation and The Journal.
  • The aim is to inspire a new generation of entrepreneurs.
  • The podcasts focus on the human aspect of entrepreneurs' lives, not just the business side.
  • Exposing the realness of founders is meant to encourage listeners to try entrepreneurship.
  • Kevin wants to show that successful entrepreneurs are relatable and make mistakes.

"For you to do the know around foundation, it was really to hopefully inspire a new generation of entrepreneurs, to let them know that when they hear someone like an Evan Williams or a cystrum or Elon Musk on the show, that I really wanted to take. You're the standard Bloomberg interview, and it's all about talking about finer details of the actual business and things at scale and these big intimidating questions that these ceos are quite good at navigating. But one of the things that they really don't tap into is just like the human aspect of the entrepreneur lifestyle."

This quote explains the purpose behind the Foundation podcast: to inspire entrepreneurs by showcasing the human side of successful figures like Elon Musk, beyond their business acumen.

Humanizing Venture Capitalists

  • Kevin Rose discusses whether venture capitalists (VCs) show their human side.
  • He feels that VCs often focus on the business aspect and not enough on personal stories.
  • There is a need for more personal connection and understanding of the trials and tribulations founders face.
  • Kevin is planning a new podcast to delve deeper into the personal side of entrepreneurship.

"Not really. I think a lot of that is really. We typically see the business side. So there's a lot of great business advice that come out of some of the learnings that vcs write medium posts about and do podcasts about."

Kevin Rose expresses that the human side of VCs is not often portrayed, with the focus usually being on business advice rather than personal stories or struggles.

Pressures of Failure and Long-Term Success

  • Kevin Rose shares his evolving perspective on the role of failure in driving success.
  • He used to believe that the pressure of failure was a motivating force.
  • Now, he emphasizes the importance of balance and not pushing too hard constantly.
  • Long-term success is more important than short-term wins.
  • Founders should focus on sustainable work habits to avoid burnout and maintain creativity.

"I think that I want my founders not thinking about how they can win over the next three 6912 months, but how they can really dominate over the next decade. And I think that we have to realize that it's okay to jog sometimes. It's okay to sprint sometimes, but you really have to be playing the long game here."

The quote reflects Kevin's belief that entrepreneurs should prioritize long-term success over short-term gains and the importance of pacing oneself to avoid burnout.

Overcoming Burnout

  • Kevin Rose has experienced burnout and emphasizes the importance of personal balance.
  • Founders need to understand that their life is more than just their startup.
  • He advocates for regular activities outside of work to maintain balance and productivity.
  • For Kevin, going to the gym three times a week is crucial for his well-being and effectiveness.

"Well, I think it's really sitting down with the founders and encouraging them to find their own personal balance. And that can be different for everyone."

This quote highlights the necessity of founders finding a personal balance between work and life to prevent burnout and maintain their overall well-being.

Health and Diet Advice for Entrepreneurs

  • Kevin Rose gives health and diet advice for entrepreneurs and VCs.
  • He stresses the importance of not getting caught up in the startup's lunch lifecycle.
  • Recommends eating something green every day and maintaining a balanced diet.
  • Mentions the potential for deeper discussions on ketosis, glucose monitoring, ice baths, and fasting.

"What would you advise as far as health and diet advice and fasting for founders, it's very easy to get caught up in the lunch lifecycle of a startup and that it can oftentimes be just taken, ordered into the office."

Kevin Rose advises founders to be mindful of their eating habits despite the busy lifestyle of startup culture and emphasizes the importance of incorporating healthy choices into their daily routine.

Continuous Glucose Monitoring and Dietary Choices

  • Continuous glucose monitoring can help track glucose levels and manage diet.
  • Kevin Rose uses a continuous glucose monitor to maintain stable glucose levels.
  • Stabilized glucose levels prevent energy dips and increase overall productivity.
  • Eating slow-digesting carbohydrates helps avoid glucose spikes.
  • A ketogenic diet can provide a significant boost in energy and cognitive function.

"So I always try to eat typically pretty low carb diet. Not in the sense that I'm a carbophobe and I avoid carbohydrates, but I try to eat slow digesting carbs, so carbs that don't spike your glucose levels."

This quote explains Kevin's dietary approach, focusing on low carb intake and prioritizing slow-digesting carbs to maintain stable glucose levels.

"And certainly when you take that a step further and you go into a full on ketogenic diet where your body is burning and using ketones for energy versus carbohydrates, that's a lot fat, heavier diet, that was just insane energy, really tangible difference."

Here, Kevin discusses the benefits of a ketogenic diet, including increased energy and better cognitive function, while also noting it requires strict adherence and monitoring.

Essentialism and Minimalism

  • Essentialism is about focusing on what is truly important and learning to say no.
  • Kevin Rose recently read "Essentialism" and advocates for its principles.
  • The book teaches prioritization and the trade-offs of saying yes to commitments.
  • Kevin is also influenced by the documentary "The Minimalist," which promotes living with less.

"Because it really takes the time to teach you to really just to say no."

Kevin emphasizes the book's central lesson on the power of refusal to maintain focus on essential tasks.

"So taking the 20 to 30 things that you could do every single day and narrowing it down to the five, I must do these things every day, just gives you clarity."

This quote highlights the book's strategy for achieving clarity by reducing daily tasks to only the most essential ones.

Mentorship and Seeking Advice

  • Kevin Rose has had several mentors, including Bill Maris and Tony Conrad.
  • He values mentorship for guidance through business challenges and personal growth.
  • Seeking advice is crucial, especially when facing unknowns or needing expertise in a particular area.
  • Admitting ignorance is difficult but necessary for learning and development.

"Certainly Bill Meris over Google Ventures and Tony Conrad has been another one and helped me think through some of the issues around how to deal with certain issues around management of employees."

Kevin shares his experience with mentors who helped him navigate management challenges.

"I think that the hardest thing for anyone is really to admit that you don't know something."

This quote reflects on the difficulty of acknowledging one's limitations and the importance of seeking advice from others.

Favorite Blogs and Newsletters

  • Kevin Rose is an avid reader of tech-related content, specifically mentioning Techmeme and Product Hunt.
  • He subscribes to AI newsletters for staying updated in the field of artificial intelligence.
  • Staying informed is a part of Kevin's routine, and he values resources that provide the latest industry insights.

"Well, I'm addicted to tech meme, obviously, and product hunt."

Kevin shares his favorite platforms for tech news, suggesting their importance in his daily information consumption.

Investment Decisions and Startups

  • Kevin's recent investment is in a platform called Leaders by Luigi, which simplifies the process of booking speakers for events.
  • He is also interested in investing in a startup by Laszlo Bock, former head of HR at Google.
  • His investment choices are influenced by the potential to disrupt existing systems and address large markets.

"And he recently came out with a new platform for speakers called leaders, and he's just the perfect entrepreneur for a broken system like this."

Kevin explains his rationale for investing in Leaders, highlighting the entrepreneur's suitability for innovating in the speaker booking industry.

Acknowledgements and Resources

  • Harry Stebbings expresses gratitude to Kevin Rose for his time and insights.
  • Shoutouts to Phil Black and Tony Conrad for facilitating the interview.
  • Harry endorses Zoom and Viewedit as valuable tools for business communication and video conferencing.

"And again, a huge thank you to Kevin for giving up his time today to come on the show."

Harry thanks Kevin for participating in the podcast and sharing his experiences.

"Zoom really is a must check out for your business. I cannot emphasize that enough."

Harry advocates for Zoom as an essential service for businesses, emphasizing its ease of use and scalability.

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