20VC Kleiner Perkins' Mamoon Hamid on The Strategy Behind The New $600m Back To The Future Fund, The Truth To Price Sensitivity at Series A & Why Venture Team Building Is Like Basketball Team Building

In this episode of the 20 minutes VC, host Harry Stebbings interviews venture capitalist Mamoon Hamid, a partner at Kleiner Perkins. Mamoon recounts his journey from a 19-year-old engineer to becoming a respected figure in Silicon Valley, highlighting his early exposure to venture-backed products at Xilinx, his venture into venture capital, and his tenure at US Venture Partners before co-founding Social Capital. The discussion delves into the intricacies of building a successful VC firm, likening it to assembling a top-tier sports team, with each member excelling in their domain. They touch on the importance of having a focused investment strategy, the art of reserve allocation, and the nuanced decision-making process in supporting portfolio companies through various growth stages. Mamoon and Harry also explore the challenges founders face when scaling, emphasizing the critical role of organizational development and the delicate balance of nurturing internal talent versus bringing in external expertise. They conclude with Mamoon's latest investment in Viz.ai, a company revolutionizing stroke triage in emergency settings, showcasing his passion for ventures that have a profound impact on human lives.

• Harry Stebbings is the host of the 20 Minute VC podcast.
• Mamoon Hamid is a partner at Kleiner Perkins, a prestigious venture firm in Silicon Valley.
• Mamoon has invested in and served on the boards of innovative software companies like Box, Figma, Intercom, Netscope, Slack, and Yammer.
• Mamoon's background includes co-founding Social Capital and being a partner at US Venture Partners.

"But what no one knows is actually a fun fact, and it's the first time I was in San Francisco as a nervous 18 year old. Not knowing many people, this individual took the time to really sit down with me, discuss my career, share their thoughts, discuss the options and the plans moving ahead for me."

This quote highlights the personal connection between Harry Stebbings and Mamoon Hamid, illustrating Mamoon's willingness to provide guidance to a young individual starting out in the industry.

• Silicon Valley culture is characterized by a "pay it forward" mentality.
• Mamoon acknowledges the advice and guidance he received when he was younger and continues to offer the same to others.

"I've had so many people give me great advice when I was a 19 year old kid who came to Silicon Valley to even now. So people, I think in Silicon Valley know how to pay it forward, and I think that's what I love about this place."

Mamoon Hamid expresses gratitude for the guidance he has received throughout his career and his appreciation for Silicon Valley's supportive culture.

• Mamoon's interest in venture capital began when he was an engineer at Xilinx.
• Early exposure to products backed by venture capitalists sparked his curiosity about the VC industry.
• Mamoon interned at a corporate venture fund and decided to pursue a career in venture capital.
• He attended Harvard Business School with the goal of becoming a venture capitalist.
• Mamoon's first venture capital job was at US Venture Partners, focused on semiconductor investments.
• Over time, he transitioned from semiconductors to software investments.

"And so really it was about how do these technical founders, engineers, really take venture capital money and create these really amazing companies?"

This quote captures Mamoon's fascination with how venture capital can help technical founders create transformative companies.

• Kleiner Perkins has a history of making an impact at every significant technological shift.
• The "Back to the Future" slogan reflects the firm's intention to continue shaping the future of technology.
• The new fund aims to partner with founders to create companies that change the way humans live.
• The Kleiner Perkins team consists of individuals with early-stage backgrounds as operators and technologists.

"Kleiner Perkins has made an impact at every tectonic shift of how technology has impacted humankind."

This quote summarizes Kleiner Perkins' historical significance in funding and supporting companies that have been pivotal in technological advancements.

• Kleiner Perkins aims to return to its roots by focusing on early-stage investments, particularly Series A funding.
• The goal is to be the first partner to great founders and assist them throughout their long entrepreneurial journey.
• The belief is that by focusing on what made Kleiner great in the past and executing it well, other aspects will fall into place.

"So the focus was around going back to the future. It was like, what made Kleiner so great was that body of work, and let's go back to doing that really well."

This quote emphasizes the strategic decision to concentrate on early-stage investments and replicate the successful practices of Kleiner's past.

• The new fund's portfolio construction is centered on both stage and sector, with a split across enterprise, consumer, fintech, and hard tech sectors.
• Enterprise is the largest focus area, followed by consumer, and includes applications, infrastructure, security, and vertical software tools.
• The team consists of specialists with domain expertise in each focus area, which is crucial for being additive and complementary to founders.
• Focus is viewed as essential for developing a coherent strategy and achieving consistent returns, but there is an acknowledgment that a portion of success is due to serendipity and luck.

"And I think focus really matters. Now, I always say that people have to have majors and you can have minors because we're all very intellectually curious people."

This quote underlines the importance of specialization and expertise in investment strategy, while also allowing for intellectual curiosity and exploration beyond a single focus area.

• Price sensitivity at the Series A stage is somewhat flexible, as investments are typically within a certain range of valuation and check size.
• The focus is on owning a significant percentage of the company rather than the exact amount paid, as long-term success can outweigh the initial cost.
• Historical perspective shows that what may seem like an overpayment at the time can be justified by strong conviction in the founder, market, and product.

"Price sensitivity is actually, you know what? Dirty little secret is that the series a price matters, but doesn't really matter that much."

This quote reveals the insider perspective that while negotiations on valuation occur, the precise Series A valuation is less critical compared to the potential growth and success of the investment.

• Reserves refer to the capital set aside for follow-on rounds in a company's funding lifecycle.
• The amount reserved varies based on the capital intensity of the business, with more reserved for hardware businesses and less for software companies.
• The decision-making process for reserve allocation typically involves supporting companies in successful follow-on rounds, with a tapering investment in later rounds to allow for new investors and maintain desired return multiples.

"Yeah, reserves is somewhat of an art and a science in itself."

This quote highlights the nuanced and strategic nature of reserve allocation, balancing the art of supporting portfolio companies with the science of managing fund economics.

• The mission of the early stage fund is to generate early stage returns for LPs (Limited Partners).
• The firm aims to be the first call for founders, emphasizing the importance of being a primary resource for entrepreneurs.
• Founders evaluate venture investors based on domain expertise, relatability, and the potential for a long-term partnership.
• Founders are encouraged to speak with other founders who have interacted with the VC to gauge the value the VC brings to their business.

"The mission of the firm is to be the first call for founders."

This quote outlines the core mission of the venture capital firm, highlighting the strategic goal to be the foremost support system for entrepreneurs.

"Founders make a decision around partnering with an investor based on a bunch of stuff. It's like domain expertise, relatability, which are more like soft things like, do you understand my business? Do I think you can help me with my business? Do I actually want to be partners with you for the next ten years as we go try to build a special company."

This quote details the criteria founders use to select venture investors, emphasizing the importance of expertise, understanding, and the potential for a long-term partnership.

• Venture investors are expected to be involved in various aspects of a startup's growth, from recruiting to structuring financing.
• Investors provide advice and serve as a sounding board for founders, helping with both micro decisions and significant weekly decisions.
• The ability to give good advice and make useful recommendations based on many inputs is a key trait of successful venture investors.

"It's the usual stuff that you hear about from folks when you say, hey, what do you do for founders? Like on a given day, you're interviewing candidates, you're recruiting, you're helping close new business, you're helping them structure their next financing, you're thinking through the numbers that matter in their business. You're helping them course correct on direction of go to market."

This quote lists the practical ways venture investors support founders, including talent acquisition, sales, and strategic guidance.

"To be a good advice giver and a good sounding board and be fairly real time is pretty important as a partner to a founder."

This quote emphasizes the importance of timely and effective advice-giving as a venture investor, highlighting the value of responsiveness and relevance in the investor-founder relationship.

• The current trend of compressed timelines for investment rounds is concerning, as it limits the time for due diligence and relationship building.
• Building a true relationship with a founder should ideally begin well before the fundraising process starts.
• Venture investors should have a prepared mind, with high-level thesis areas and a clear understanding of the sectors they are interested in investing in.

"There's a lot of compression around their time from first meetings to term sheets."

This quote describes the phenomenon of accelerated investment cycles, where the time from initial meetings to issuing term sheets is significantly shortened.

"But I think actually building a true human relationship matters in what we do because we have to think about like, let's just say it's a four week cycle. You're deciding on investing in a company in a four week cycle and getting to know people in a four week cycle, and you're about to go on a ten year journey with them."

This quote highlights the disparity between the short investment decision timeframe and the long-term partnership that follows, stressing the importance of building genuine relationships early on.

• Startups often struggle with scaling their early employees and leaders to match the pace of the company's growth.
• The human aspect of scaling is challenging, as founders may be slow to adjust the team to meet the demands of hyperscale.
• Board members and investors play a role in recognizing and suggesting changes to address scaling issues.

"I'd say the biggest challenges that companies hit are along the organizational building. The people side of it is scaling of early employees, early leaders, to people who can help hyperscale and double down on what's working."

This quote identifies the difficulties startups face with scaling their teams and the importance of aligning personnel with the company's growth trajectory.

• CEOs must trust their instincts when deciding whether to keep an employee who may not have scaled with the company.
• Passionate leaders who are as committed to the company as the founders may deserve a chance to grow within the company.
• These decisions are complex and should be discussed with the board, balancing the need for experienced executives with the potential of existing team members.

"I do believe in giving people a chance to grow from within. I actually love it when people surprise you."

This quote reflects the speaker's belief in the potential of internal team members to grow and adapt to the company's evolving needs, advocating for giving them opportunities to prove themselves.

• Discussing with board members should be balanced and contextual.
• Avoid making snap judgments or following a formulaic approach.
• Each company situation is unique and requires tailored advice.

And you want to be balanced about these conversations, not this jump to snap. Like, hey, you should go hire a senior vp who worked at X, Y and Z company because that's what the formula suggests you do.

This quote emphasizes the importance of having nuanced and balanced discussions with board members rather than making quick decisions based on a set formula.

• Venture capital is like a competitive sports league.
• Mamoon Hamid uses the analogy of a basketball team to describe building a top VC team.
• Each team member should be top in their field, akin to having a top player in each position on a basketball team.
• It's important to have a strong bench of players to draft and groom for the future.

I view venture capital as a bit like a sports league and it's highly competitive people have their time where they're in their prime.

This quote introduces the analogy of venture capital to sports, highlighting the competitive nature and the importance of being at one's prime.

• Mamoon Hamid shares his recent lack of reading due to having three kids but mentions Ray Dalio's "Principles" as a noteworthy read.
• He expresses a preference for Toblerone over Rittersport despite its Swiss origin and his German upbringing.
• John Doerr is recognized for his lifetime achievement and is considered a success by Mamoon.
• Mamoon's biggest strength is focus, and his biggest weakness is being too nice.
• He admires venture capitalist Irwin Federman for his ability to give clear and impactful advice.
• Uni is his current favorite type of sushi.
• The biggest misnomer about VC is that it's a lifestyle job, whereas it's actually hard work.
• He prefers LA over SF for its happier atmosphere and better weather.
• The most recent investment announced is Viz AI, a company that helps triage stroke patients in the ER.

And know I've had three kids in the last six years and I haven't read that many books, but the book that I read recently was actually Ray Galio's book principles.

Mamoon cites family commitments as a reason for not reading much recently, but he recommends the beginning of Ray Dalio's "Principles" as valuable.

• Viz AI provides software to triage stroke patients quickly in emergency rooms.
• The software reduces the time to get a patient to surgery from hours to minutes.
• Founded by neurosurgeon Chris Mansi, the company's mission is to save lives and prevent paralysis.
• Mamoon is excited about the impact and efficiency the technology brings to emergency stroke care.

The most recent investment that was announced, I believe is viz AI. It's a really cool company that provides software to triage stroke patients inside of the ER.

This quote describes Mamoon's excitement about Viz AI, a company that significantly reduces the time to treat stroke patients, thereby saving lives and improving patient outcomes.