20VC Lessons From Slack and Opendoor on Price Sensitivity, Why The Best CEOs Are Able To Manage Momentum and Why Being A Board Member is a Full Contact Sport with Glenn Solomon, Managing Partner @ GGV Capital

In this episode of "20 Minutes VC," host Harry Stebbings interviews Glenn Solomon, a general partner at GGV Capital, a leading global venture fund with $3.8 billion under management. Solomon, who joined GGV in 2005 and has helped seven companies go public, discusses the evolution of the venture landscape, highlighting the impact of mobile and cloud computing paradigm shifts. He emphasizes the importance of focus in investment strategy, the role of boards in early-stage companies, and the necessity of managing startup momentum. Solomon also addresses the interplay between the U.S. and China in the VC world, underscoring GGV's successful history and strategy in China. Additionally, he provides insights into Opendoor's growth, advocating for the company's business model despite skepticism. The episode concludes with Solomon's recent investment in Unravel Data and his enthusiasm for the company's potential in big data infrastructure.

• GGV Capital is a leading venture fund with $3.8 billion under management.
• The portfolio includes companies like Airbnb, DD, Alibaba, Slack, and Square.
• Glenn Solomon joined GGV in 2005 and has helped seven companies go public.
• Prior to GGV, Glenn was a general partner at Partech and worked at Goldman Sachs.
• Glenn also maintains a blog with insights on venture capital.

"GGV is one of the world's leading venture funds with $3.8 billion under management across eight funds and a portfolio including the likes of Airbnb, DD, Alibaba, Slack Square, and the list really does go on."

This quote emphasizes the prominence and success of GGV Capital as a venture fund, highlighting its extensive portfolio and significant assets under management.

• Glenn grew up near New York City and attended Stanford on a tennis scholarship.
• He worked at Goldman Sachs and then at an investment partnership in the Bay Area.
• Attended Stanford's business school (GSB) and was introduced to the internet in 1994-95.
• Discovered venture capital during his time at GSB and decided to pursue a career in VC.
• Glenn began his VC career at Partech International and then moved to GGV.

"So I really went to business school to try to figure out how to combine a burgeoning interest that I had in technology with a love of investing and it was during those two years that I discovered there was this thing called venture capital."

Glenn's quote reveals his journey of discovering his passion for technology and investing, leading to his career in venture capital.

• The startup and venture landscape has changed significantly over the last 20+ years.
• Glenn references a talk by John Doerr about computing paradigm shifts disrupting incumbents.
• Two major paradigm shifts mentioned are mobile computing (iOS) and cloud computing (AWS).
• These shifts have given rise to network effect businesses and new industries like IoT and AI/ML.

"These two shifts, the mobile computing and cloud computing shifts have been massive. They're interrelated. They're probably the two biggest paradigm shifts I'll see in my life, and they're giving birth to some of the most important network effect businesses and protocols we've really ever seen."

This quote highlights the transformative impact of mobile and cloud computing on the tech industry and venture capital opportunities.

• Glenn agrees with Elad Gil that paradigm shifts are crucial for venture capital.
• However, Glenn believes we are already in an important phase of cloud and mobile shifts.
• He emphasizes that the current technology trends offer a larger "sandbox" for VCs and founders.
• Glenn points out that these trends are global, which is sometimes overlooked by Silicon Valley-centric views.

"I disagree that we're waiting for anything. I think, in fact, I'd argue that these trends have created a sandbox that vcs and founders are playing in that's bigger than ever."

Glenn disagrees with the notion that investors are waiting for the next big innovation cycle, arguing that significant opportunities already exist within the current trends.

• The conversation was about to shift to how Glenn's investing style has changed over 20 years.
• Unfortunately, the transcript ends before Glenn Solomon can elaborate on this topic.

No direct quote is provided for this section as the transcript ended before the discussion could take place.

• Glenn Solomon has become more focused as an investor over time.
• He invests primarily in application-level software solving modern business problems due to cloud and mobile.
• Examples of companies he points to are Slack and Domo.
• Glenn also focuses on infrastructure supporting cloud-based applications in areas like security, DevOps automation, and application performance monitoring.
• Content creation and networking are key parts of his strategy to assist companies.
• He has shifted from Series C and D investments to earlier stages, such as seed, Series A, and B.

"I've gotten much more focused as an investor myself. If you look at what I've done over the last decade, 99% of my activity has been in and around application level software applications that solve really modern business problems brought about by cloud and mobile."

The quote highlights Glenn Solomon's strategic shift towards focusing on a specific niche within the tech industry, emphasizing his expertise in cloud and mobile application software.

• Glenn Solomon believes that most value is generated from winners in a VC portfolio.
• It's crucial to create an environment for winners to thrive without micromanaging.
• For struggling companies, effort should be made to help, but knowing when to move on is essential.
• Time is the most valuable asset, and it should be allocated effectively between winners and companies that need help.
• Glenn acknowledges the difficulty in balancing time spent with winners versus struggling companies.

"You make all your money on the winners that can run honestly. You don't want to get too involved and mess things up, but you want to try to help put an environment in place where the winners can continue to run."

This quote emphasizes the importance of supporting successful portfolio companies without interfering too much, allowing them to maintain their growth trajectory.

• Glenn Solomon has observed pricing as a delicate aspect of the VC industry.
• He admits walking away from deals due to aggressive pricing, which in hindsight were mistakes.
• The potential upside in successful companies often justifies high valuations.
• Glenn suggests that valuation should not be the sole reason to walk away from deals.
• He believes that the human brain struggles to comprehend the full potential of big companies.

"In the case where you have a winner, there is almost no price that's too high to pay relative to where outcomes can be."

The quote reflects Glenn Solomon's perspective on the importance of investing in winning companies, suggesting that the potential returns can far outweigh the initial high valuation concerns.

• Being a board member requires active involvement, especially in early-stage companies.
• Board members must be available, ready to listen, and offer advice.
• Geographic diversity is increasing, with startups emerging outside of Silicon Valley.
• VCs need to be willing to travel to be impactful board members.

"I think being a board member is a full contact sport, especially as you invest earlier and join boards that are of young companies."

This quote conveys the hands-on approach required from VCs when serving as board members, particularly for early-stage companies.

• By Series A, startups should have an established board.
• Small boards are recommended for the first few years to avoid wasting founders' time.
• Early board formation, even at the seed stage, can be beneficial if managed informally.

"Certainly by your series A you'll have established a board and it can be a small board."

The quote advises that startups should have a board in place by the time they reach Series A funding, highlighting the importance of governance and strategic oversight.

• Glenn Solomon enjoys his time with Domo's founder and CEO, Josh James.
• Domo runs its business on its own real-time data platform, which informs board meetings.
• Board meetings focus on the implications and predictions of data trends rather than reporting numbers.
• Key topics are discussed in-depth, and conclusions are reached due to pre-meeting data access.
• Exposure of key executives to the board is crucial for texture and understanding.
• First-time entrepreneurs often mistakenly focus board meetings on themselves rather than their team.

"Domo in particular is an interesting case because Domo, the product, is a platform that sucks in real-time data and helps execs run their businesses on their phone with great KPIs and metrics and charting."

The quote describes how Domo's use of its product for real-time data analytics shapes the structure and focus of its board meetings, leading to more strategic discussions.

• GGV has been invested in China since its inception in 2000.
• Half of GGV's team and over 50% of investments are in China, yielding stellar returns.
• China's role evolved from portfolio diversification to strategic interplay with other markets.
• The flattened global market has increased the interaction between China and other tech markets.

"Today, half our team is in China. Over half our investment team, over 50% of our investments have been made in the China market. The returns from our investments in China have been stellar."

This quote highlights the significant commitment GGV has made in China and the successful outcomes of their investments there, underscoring the country's importance to their overall strategy.

• US and European entrepreneurs are increasingly curious about China.
• Founders are actively visiting China to understand its market and innovations.
• China is no longer seen as a copycat market but as a source of innovation and potential partnerships.
• Founders seek capital, partnerships, and market opportunities in China.

"The best founders in the US and Europe are getting a lot more curious about what's going on in China."

This quote reflects the growing interest of Western entrepreneurs in the Chinese market, indicating a shift in perception and a desire to engage with and learn from the Chinese tech ecosystem.

• Startups must have a strategy regarding major Chinese tech companies like Alibaba, Tencent, and Baidu.
• These incumbents now prefer to invest in startups with breakout potential rather than copying them.
• The choice of corporate partner in China is crucial and can significantly impact a startup's future.
• Startups should be strong enough before accepting investments from major incumbents to maintain control over their destiny.

"If you're a startup, you need to know what your strategy is with respect to the baidus and Alibaba's and Tencents of the world."

This quote emphasizes the importance of a well-thought-out approach to dealing with large Chinese tech companies, which can be both beneficial and challenging for startups in China.

• GGV capitalizes on its relationships with major Chinese tech companies for strategic investments.
• The firm aims to invest early, before startups receive large incumbent investments but after they have shown initial scaling and traction.
• GGV values its independence and prioritizes the interests of its funds and portfolio companies.

"We need to make sure that we do the right things for our funds and then for our portfolio companies."

This quote conveys GGV's investment philosophy, which involves a careful balance between leveraging relationships with large tech companies and acting in the best interest of their own funds and the companies they invest in.

• Opendoor is an anomaly in GGV's portfolio, being a consumer deal in the real estate sector.
• GGV invested in Opendoor after extensive research in the real estate market and meeting with the founding team.
• Skepticism around Opendoor is seen as an opportunity, similar to past successful investments.
• Opendoor's value proposition resonates in less liquid real estate markets, which are significant target markets for the company.

"The value proposition just really resonated with me. And yes, there is a lot of skepticism about it. We like skepticism."

This quote explains GGV's contrarian approach to investing in Opendoor, highlighting their willingness to back companies that face skepticism if they believe in the company's value proposition.

• Managing momentum is critical for startups, which often lack external support.
• Building momentum in various business dimensions is necessary to garner attention and support.
• The Opendoor founding team is cited as successfully managing momentum.

"Startups are really, really hard. No one in the world really wants you to win, except for a very small cadre of people who you either have working for you or invested in you."

This quote stresses the challenges startups face and the importance of building momentum to overcome these challenges, which is a key trait of a successful CEO as exemplified by the leadership at Opendoor.

• The importance of maintaining momentum through various aspects of a startup.
• Risks associated with raising too much capital too early.
• Reference to Sam Altman's view on avoiding down rounds.

You need to continually step up and to the right along all of these dimensions to be successful. And if you skip a step, if, for example, you raise too much money at too big a price too soon, you introduce quite a bit of risk into that equation.

This quote emphasizes the need for a startup to progress steadily without taking overly aggressive financial steps that could introduce risk.

• Glenn shares his annual reading list on his blog.
• Recommends "Shoe Dog" by Phil Knight, "Born a Crime" by Trevor Noah, and "Irina's Children".
• Believes these books provide valuable lessons and perspectives for entrepreneurs and VCs.

I'll give you three provocative titles that are good reads that are kind of about people.

Glenn suggests that these books, while different in content, offer insights into the human experience which can be valuable to entrepreneurs and VCs.

• Glenn believes the application infrastructure stack is being rewritten.
• The shift is due to cloud computing, continuous software delivery, and containerization.
• There's a significant market opportunity for new industry leaders to emerge.

The entire application infrastructure stack is currently being rewritten. It's up for grabs.

The quote indicates Glenn's perspective that there is a major shift occurring in the industry, presenting opportunities for new players to establish themselves.

• Glenn's main concern is his companies running out of cash.
• Acknowledges that cash flow is critical for the survival of a startup.

The number one thing that keeps me up at night is my... Well, apart from my teenage daughters... is that my company's running out of cash.

This quote highlights the importance Glenn places on financial stability for startups, noting it as his primary concern.

• Trust and respect are key in VC partnerships.
• Willingness to compromise for collective success.
• Emphasizes the importance of in-person meetings and accommodating international partners.

We are willing to compromise on a collective basis to succeed.

Glenn stresses the importance of collaboration and compromise within a VC firm to enhance partnership dynamics.

• Led a Series B investment in Unravel Data.
• Decision driven by the team's expertise, unique technology, and strong customer feedback.
• Recognizes a broadly felt problem in the market.

They have very unique technology and are absolute experts in this field.

This quote explains Glenn's confidence in Unravel Data's team and technology, which contributed to his investment decision.

• Thanks to guests and hosts for their contributions.
• Mention of resources available online, including Glenn's blog and Twitter.
• Promotion of the 20 Minute VC show and its behind-the-scenes content.

You can find out more from him on Twitter at Glenn Solomon. Likewise, you can find out more from his blog on our show notes at the twentyminutevc.com.

This quote directs listeners to additional resources where they can learn more about Glenn and his insights.

• Harry Stebbings endorses Affinity and Highfive for their utility in business operations.
• Culture Amp is recommended for its employee feedback platform.
• These products and services are praised for enhancing efficiency and culture in organizations.

Affinity is the only platform that analyzes your team's communication data and automatically creates the relationship graph you need to achieve your business priorities.

Harry Stebbings expresses his admiration for Affinity's platform, highlighting its capabilities in managing business relationships.