20VC Lessons From Working with Bill Gates, How To Lead Without Authority and The Difference Between Leadership and Management & How Fundraising Changes In A COVID World with Quentin Clark, Managing Director @ General Catalyst

Abstract
Summary Notes

Abstract

In the first episode post-Christmas, host Harry Stebbings interviews Quentin Clark, Managing Director at General Catalyst, a firm with a portfolio including Stripe, Airbnb, and Snap. Clark, who transitioned from an extensive operating career including roles as CTO at Dropbox and Chief Business Officer at SAP, discusses his journey into venture capital, the importance of people in management, and how to effectively guide and mentor within the VC landscape. He also touches on the nuances of board membership, the impact of the pandemic on workplace dynamics, and the future of remote work. Additionally, Clark highlights the role of luck in success and the need for venture capital to move beyond FOMO-driven decisions. The episode concludes with insights into Clark's investment in Sprout Therapy, a company serving autistic children, emphasizing the alignment with General Catalyst's healthcare vision and the founder's remarkable capabilities.

Summary Notes

Introduction to the Episode

  • Harry welcomes listeners back for the first episode post-Christmas and introduces Quentin Clark, managing director at General Catalyst.
  • Quentin's background includes roles as CTO at Dropbox, Chief Business Officer at SAP, and 20 years at Microsoft.
  • Harry expresses gratitude to Hemont, Catherine Boyle, Brent at Camure, and Ajit at Thoughtspot for their question suggestions.

"We are back for the first episode post Christmas and is nice to be back. And what a show we have in store for you today with an incredible operator turn leading VC. And so with that, I'm thrilled to welcome Quentin Clark, managing director at General Catalyst, one of the most prominent firms."

The quote is Harry's introduction to the episode, highlighting Quentin Clark's prestigious position and rich professional background.

General Catalyst's Portfolio

  • General Catalyst is a prominent firm with investments in Stripe, Airbnb, Snap, Angel, Deliveroo, and Kazoo.
  • Quentin at General Catalyst has led deals in Kernel, Thoughtspot, Coder, and Camille.

"Including the likes of Stripe, Airbnb, Snap, Angel, Deliveroo and Kazoo."

This quote summarizes some of the high-profile companies within General Catalyst's investment portfolio.

Sponsorship and Product Endorsements

  • Harry endorses Carter, a platform for managing equity, cap tables, and valuations, offering a discount code.
  • Letter is highlighted as a private banking platform for high net worth individuals, offering exclusive investment opportunities.
  • Digits is praised for its intuitive financial software that visualizes company spending in real-time.

"Go to carter.com 20 VC to get 10% off."

The quote is a promotion for Carter, encouraging listeners to use a discount code for the service.

Quentin Clark's Background

  • Quentin shares his journey from being an operator to a managing director at General Catalyst.
  • He discusses his transition from Microsoft to the venture world, networking with venture capitalists, and his time as CTO of SAP and Dropbox.
  • Quentin highlights the importance of understanding the venture capital sector and the appeal of the diversity and impact of venture work.

"I was 20 plus years building software, building businesses, building teams, et cetera."

This quote provides insight into Quentin's extensive experience as an operator before moving into venture capital.

War Stories from Microsoft, SAP, and Dropbox

  • Quentin recounts engaging war stories, particularly involving debates with Bill Gates at Microsoft.
  • He shares a memorable moment of winning a debate with Bill Gates and the importance of hiring smart people to execute plans.

"Bill Gates famously had a little bit of drive and impatience, let's call it."

This quote reflects on Quentin's experiences with Bill Gates' personality and management style at Microsoft.

Management Lessons from Microsoft

  • Quentin emphasizes that success in business is all about the people you work with.
  • He reflects on the significant changes and challenges faced during his time at Microsoft, such as the antitrust case, the creation of the Xbox business, and competition with Apple.

"It's all about people, and it's always about people."

This quote underscores Quentin's belief that people are the key to any organization's success.

Trust and Delegation

  • Quentin advises on the importance of trust and delegation in management.
  • He shares a personal anecdote about learning to delegate effectively and the importance of allowing team members to grow and learn from their experiences.

"You robbed this person of this learning opportunity."

The quote is a lesson Quentin learned about the negative impact of failing to delegate and the importance of staff development.

Leadership vs. Management

  • Quentin differentiates between leadership and management, with leadership being about followership and management about maintaining a cohesive system.
  • He stresses that leadership is about guiding people in a direction, while management involves the operational aspects of running a team.

"Leadership is about followership."

This quote distinguishes leadership as the ability to inspire and guide others, separate from the operational tasks of management.

Leadership and Management as Complementary Skills

  • Great leaders and managers are essential for setting direction and creating systems for great work.
  • Leadership involves charisma, communication of an aspirational vision, and trust-building.
  • Management is more about creating and operating good systems, which can be taught through books and techniques.
  • Both leadership and management skills can be developed over time with practice.

"And yeah, they spike a little bit, one or the other. But saying that direction, getting the followership versus just setting up a system that is capable of doing great work, is also a different discipline, different art."

This quote emphasizes that while individuals may have inclinations towards either leadership or management, both are distinct disciplines that contribute to success in different ways.

Learnability of Leadership and Management

  • Quentin Clark believes most skills, including leadership and management, can be learned.
  • Leadership skills involve charisma and the ability to communicate a vision and establish trust.
  • Management skills are more structured and can be taught academically, with resources such as books and formal techniques.
  • Both skill sets require time, practice, and exposure to people to develop fully.

"These are skills that can be developed, but it definitely takes time, takes practice, and management is definitely something that more can be taught, like at school."

This quote suggests that while management skills are more readily taught through structured learning, leadership requires practice and the development of soft skills over time.

Choosing General Catalyst (GC)

  • Quentin Clark chose GC due to its rising status and successful investments.
  • The decision was influenced by personal relationships with the GC team and their culture.
  • GC's philosophy of responsible innovation and being partners to founders resonated with Quentin's values as an ex-operator.

"I was looking for a firm on the rise. And if you look at general Catalyst book, Lavango Stripe, ecommerce, some Serra, gusto, Oscar, lemonade, underlied intuition, canva Grammarly. I mean, do I have to go on?"

This quote highlights Quentin's criteria for choosing a venture firm, emphasizing GC's impressive track record and growth, which played a significant role in his decision.

Building Trust with Founders

  • The pandemic has altered the traditional ways of building trust with founders due to limited in-person interactions.
  • Quentin has adapted by using phone calls to create a more intimate setting for building relationships.
  • Despite the challenges, he has successfully made investments during the pandemic by finding new ways to connect with founders.

"So how do you create those moments? And I think one of the things that I've learned to do is use the phone more."

This quote reveals Quentin's strategy for building trust in a remote environment, showing adaptability and the importance of personal connection in venture capital.

The "Two Humps" in Venture

  • Quentin describes two critical transition periods for operators moving into venture: six months and two years in.
  • The six-month mark is characterized by an adjustment to the unstructured nature of venture work compared to operating roles.
  • The two-year mark involves the challenge of missing the control and decision-making power experienced in previous roles.
  • Quentin emphasizes the importance of leading without authority and supporting founders as a board member.

"The other hump comes around two years in where most people, after long operating careers, it's kind of a relief not to have to drive and make decisions every day and be in that machine. But after a couple of years, for a lot of people, that charm wears off and they have this reaction of I miss not being in charge."

This quote discusses the psychological adjustment experienced by operators transitioning to venture roles, highlighting the shift from direct control to a more advisory capacity.

Balancing Roles as VC and Operator

  • Quentin is recognized for his ability to switch between the roles of VC and operator as needed.
  • The decision to engage as a thought partner or to take a hands-on approach depends on the needs of the company and the founder.
  • Quentin values being asked to help as a sign of trust and finds fulfillment in providing support, while also knowing when to step back.

"I sort of tune into are they looking for advice or do they really need someone to pick up a shovel and help out."

This quote reflects Quentin's approach to determining the level of involvement required in his role as a VC, which is guided by the specific needs and context of the founders and their companies.

Knowing When to Step Back

  • The ability to step back is important both in operating roles and venture capital.
  • Understanding the desired outcomes and the team's grasp of them helps determine when to be hands-on or when to guide and mentor.
  • Quentin's experience allows him to set up systems and gradually reduce his involvement as the team becomes more capable.

"I think a lot of it has to do with understanding what the outcomes are really looking for are, and if you believe that a person or team really understands the outcomes that you're after, and they just need a little help with a system put in place to help push that forward, then you can very often let go."

This quote illustrates the thought process behind determining when to transition from an active role to a more advisory one, ensuring that the team can sustain progress independently.

Delegation and Empowerment

  • Delegating tasks over time allows others to take on more responsibility.
  • Gradual empowerment leads to the original leader becoming less central.
  • This process is beneficial and necessary for growth and development.

"The course of a number of weeks, just slowly letting go, you give more and more room to the people who are picking up the mantle, and very often, you can find yourself working your way out of being relevant in a lot of these engagements, which is good."

This quote emphasizes the positive aspect of leaders gradually stepping back to allow others to rise to the occasion, thereby fostering a culture of empowerment and growth.

Incremental Task Difficulty

  • Keith Raboy's "smoothie test" for interns exemplifies incremental task difficulty.
  • Tasks become progressively more challenging to build competence.

"I get you. It reminds me of Keith Raboy, who does a smoothie test with interns, where he gives them a test, get me a smoothie in ten minutes, and then with every test he does more and more and two weeks in, they should be doing something relatively high level, which I think is a funny one, in terms of, like, incremental loading on."

This quote describes a practical approach to training and evaluating interns by gradually increasing task complexity, which helps in assessing their ability to handle more significant responsibilities.

Venture Capital vs. Incremental Innovation

  • Venture capital involves underwriting risk and investing in potentially transformative ideas.
  • Incremental innovation investments focus on improving existing concepts for better outcomes.

"Ultimately, venture capital, we get paid to underwrite risk. Otherwise we'd be retail stock traders, I guess. And the risks are different at different stages."

This quote defines venture capital as an investment in risk, distinguishing it from less risky investment activities like retail stock trading.

Understanding and Impact of Brain Research

  • Kernel's venture in brain research aims to understand the brain as an organ and as a collection of software.
  • Understanding the brain could lead to significant advancements in managing emotions, learning, and recovery.
  • The potential impact of brain research is comparable to the genomics revolution.

"But what if we knew how the brain actually worked? And what if you could understand how the software was running? Imagine what you could do, right?"

This quote contemplates the transformative potential of fully understanding the brain, suggesting a comparison to the impact of genomics on medicine and research.

Differentiating Types of Innovation

  • Some innovations offer smarter, faster ways to do existing tasks.
  • Adoption of better tools creates opportunities for further innovation and agility in business.
  • Even if an innovation doesn't drastically change the world, it can still be significant by enabling new possibilities.

"It's the cloud version of this, or it's the AI enabled version of that. They're still important. Why? Because you get to better outcomes."

This quote explains that innovations, even if incremental, are important because they lead to improved outcomes and enable further creative possibilities.

Market Timing Risk

  • Market timing risk is a concern for investors, particularly when investing in groundbreaking technologies.
  • Successful investment requires a deep understanding of market development and conviction in latent demand.

"How do you think about market timing risk today, Quentin, when making these really quite out there bets?"

This question addresses the challenge of determining the right time to invest in innovative but unproven markets, highlighting the importance of timing in venture success.

Evaluating Investment Opportunities

  • Distinguishing between science and engineering is critical in investment decisions.
  • Assessing market support, latent demand, and the ability to create new markets is essential.
  • Evaluating the founding team's capability to execute their vision is also crucial.

"Is it science or is it engineering? That actually was a very important question because we're not that interested in investing in science because we don't know how that's going to turn out."

This quote reflects the investment strategy of focusing on engineering challenges rather than pure science, emphasizing the importance of predictable outcomes in venture capital.

Pandemic-Induced Behavioral Changes

  • The pandemic has accelerated certain trends and behaviors, such as telemedicine.
  • Investors must distinguish between temporary pandemic-induced behaviors and lasting changes.
  • The sustainability of consumer demand post-pandemic is a significant consideration for investors.

"Is that forced onboarding, creating new opportunity that's permanent, or is it just a bump in the road?"

This quote questions whether the behavioral changes induced by the pandemic will result in permanent market opportunities or if they are merely temporary shifts.

Board Membership and Style

  • Board membership involves guiding and supporting companies without being hands-on.
  • A Socratic method of asking questions helps founders find their own answers.
  • Experience allows board members to guide founders through challenges based on past learnings.

"Our job is really to help them find their answers by being a focusing factor."

This quote describes the role of a board member as someone who helps founders clarify their thinking and direction, rather than dictating solutions.

Weight of Experience in Guidance

  • Senior members must be mindful of the influence their experience has on younger founders.
  • Questions posed by experienced investors can carry significant weight and influence decisions.

"Do you have to think through that? And be very kind of cautious and deliberate in the weight of your own words."

This question acknowledges the potential impact of an experienced investor's guidance on young founders, highlighting the need for careful consideration in communication.

Importance of Clear Communication in Leadership

  • Leaders must be cautious about how they communicate to avoid misunderstandings.
  • It's crucial for leaders to differentiate between giving strong guidance and merely expressing curiosity.
  • Leaders should pose questions and allow their team to take ownership and evaluate the ideas.
  • Senior operators and board members occasionally make decisions, but mostly provide mentorship and guidance using the Socratic method.

"I've got to be cautious about being clear when I'm actually giving strong guidance or I'm making a decision versus when I'm just showing curiosity."

This quote emphasizes the responsibility leaders have to communicate their intentions clearly to prevent their teams from mistaking casual remarks for directives.

Board Management and Optimization

  • First-time founders often struggle with understanding the significance of their words and managing a board.
  • Effective board management requires no surprises, as unexpected news can erode trust.
  • Board members prefer to feel like they are collaborating rather than being led without control.
  • Comparing board management styles, a well-managed board feels like a jazz band, while a poorly managed one feels like an amusement park ride.
  • Founders should treat their boards as partners and engage them in a thought partnership.

"Don't surprise anybody. Just no surprises. Even good surprises erode trust."

This quote highlights the importance of transparency and consistent communication with board members to maintain a foundation of trust.

Vulnerability and Authenticity in Leadership

  • Vulnerability is a natural part of taking on new roles and learning.
  • Leaders should embrace vulnerability and surround themselves with knowledgeable people who can teach them.
  • Being vulnerable allows for growth and learning in new positions, even if it feels risky.

"The vulnerability for me right now is like, it's scary to take on something that's brand new this way."

Quentin Clark expresses his personal experience with vulnerability as he transitions to a new career path, emphasizing the challenge and excitement that come with change.

Future of Work Post-Quarantine

  • The traditional five-day office week is expected to change due to the realization that not all work needs to be done in an office.
  • A hybrid model with a combination of in-person collaboration and independent work is anticipated.
  • New approaches to work will emerge, such as varying in-person days for different departments and using collaborative spaces for team building.

"Because we realize that we don't need to spend 40, 50 hours a week in an office to do the day to day job."

This quote reflects the shift in perspective on the necessity of a traditional office environment for productivity.

Personal Beliefs and Perspectives

  • Quentin Clark believes that luck plays a more significant role in success than many people acknowledge.
  • He also finds humor in the fact that despite considering himself funny, his children disagree.
  • He advocates for recognizing the contributions of underrated individuals in the business world.

"I actually think that luck factors into things way more than people are usually one to give credence to."

Quentin Clark shares his belief that luck is an underappreciated factor in personal and professional success.

Venture Capital Insights

  • Quentin Clark criticizes the fear of missing out (FOMO) dynamics in venture capital that drive irrational valuations.
  • He emphasizes the importance of trust in one's judgment over succumbing to herd mentality.
  • Learning from missed opportunities is more valuable than regretting decisions in real-time.

"I don't get a lot of FOMO in real time. I do look back at some things and say, gosh, I wish we had seen that, or I wish we had had the right judgment for that."

This quote conveys Quentin Clark's approach to decision-making in venture capital, focusing on learning rather than fearing missing out.

Investment Philosophy

  • The decision to invest in a company should align with the venture firm's views on the industry and the potential impact of the company.
  • Sprout Therapy, a service for autistic children, was chosen for investment due to its alignment with healthcare visions and the founder's capabilities.

"We said yes because it aligned how we think about healthcare, building a big Persona based company like Lavango was, and you, jury the founder is just astonishing."

Quentin Clark explains the rationale behind a recent investment, highlighting the importance of strategic alignment and founder potential.

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