20VC Loom Founder Joe Thomas on Whether To Take MultiStage Money at Seed, How Early Stage Founders Should Select Their VC, How Sequoia Won The Loom Deal & The 3 Rules To Operate Remote Teams Successfully



In this engaging episode of "20 minutes VC," host Harry Stebbings interviews Joe Thomas, the founder and CEO of Loom, a video messaging service that has raised over $68 million from top Silicon Valley firms and notable individuals. Joe shares his entrepreneurial journey from the Midwest to Silicon Valley, highlighting his transition from running a creative agency to embracing the SaaS model and eventually co-founding Loom. He discusses the importance of authentic empathy as a leader, the evolution of workplace communication, and Loom's commitment to diversity and inclusion. Additionally, Joe reveals the unique fundraising approach taken by Sequoia, including personalized video messages from partners, which helped secure their investment. Throughout the conversation, Joe emphasizes the value of asking quality questions, both as a founder and a board member, and the impact of investor relationships on company trajectory.

Summary Notes

Introduction to Loom and Joe Thomas

  • Harry Stebbings is a huge fan of Loom, which he uses over ten times a day.
  • Joe Thomas is the founder and CEO of Loom, a startup that simplifies video communication.
  • Loom has raised over $68 million from leading firms and notable individuals.
  • Before Loom, Joe held positions at mylife.com and MediaPass.
  • Harry thanks various individuals for contributing questions and suggestions for the interview.
  • Harry endorses other products like Carter, Brex, and Zoom before introducing Joe Thomas.

This is the 20 minutes VC with me, Harry Stebbings and my word. I'm so excited for the show state. I'm probably the biggest fanboy of this product in the ecosystem.

This quote shows Harry's enthusiasm for Loom and sets the tone for the interview with Joe Thomas.

Joe Thomas's Background and the Founding of Loom

  • Joe Thomas comes from a family of Midwest entrepreneurs.
  • His college years coincided with the 2008 market crash, leading him to start a creative agency.
  • Joe dropped out of college and moved to California to get closer to the tech scene.
  • He transitioned from an agency model to a SaaS model, learning about product leadership and company culture.
  • Joe patiently waited for the right business idea and co-founders, which led to the founding of Loom.
  • The idea for Loom evolved from video feedback for products to a Chrome extension for user feedback.
  • A key innovation was making videos render instantaneously, allowing for efficient video communication.
  • Loom was launched in June 2016, aiming to revolutionize workplace communication with asynchronous video.

It all started in the Chicago suburbs. Fun fact is that Shahid Vinay and myself are all from a 20 miles radius of each other who are the co-founders of Loom.

Joe Thomas shares his background and the serendipity of meeting his co-founders in California, despite being from the same area originally.

The Evolution of Workplace Communication

  • The rise of visual-based communication in the consumer space influenced Loom.
  • Asynchronous video recording and sharing address the changing nature of work, especially with remote teams.
  • Video messaging is seen as an efficient, expressive, and effective way to communicate.
  • Joe Thomas highlights the speed advantage of speaking over typing, promoting Loom as a solution for workplace communication.

Beyond the comfort with video, the world of work is changing. Certainly during COVID but well before that.

Joe Thomas discusses the changing landscape of workplace communication and the role of video in facilitating this shift.

Remote Work and Hybrid Office Models

  • Joe Thomas advocates for working with talented people regardless of location, driving the hybrid company model.
  • Loom's user data showed a high percentage of remote communication, leading them to hire remotely.
  • Remote communication requires defaulting to asynchronous methods and thorough documentation.
  • These practices lead to a more resilient organization and flexible collaboration.
  • Loom maintains a hybrid culture to accommodate both remote workers and those who prefer an office environment.

Fundamentally, we want to work with the most talented people wherever they are, and geolocation tends to be the predominant limiting factor.

Joe Thomas explains Loom's approach to hiring and the importance of not letting geography limit talent acquisition.

Importance of Documentation and Long-Form Writing

  • Joe Thomas and Harry Stebbings discuss the significance of documentation and long-form writing in remote work.
  • Loom adopts a heavy documentation process to ensure information is accessible and to maintain continuity.
  • Long-form writing supports clear communication and structured thinking within the company.

On one element there, which is you mentioned kind of the heavy documentation process that you really adopt.

Harry Stebbings highlights Joe Thomas's mention of Loom's comprehensive documentation process and its role in their remote work culture.

Long-Form Writing in Business

  • Jeff Bezos popularized long-form writing in the modern workforce.
  • Clear writing is linked to clear thinking.
  • Joe Thomas has written various forms of long-form content including investor updates, fundraise learnings, and board letters.
  • Peter Reinhardt of Segment encouraged Joe to write board letters from the first board meeting.
  • Team charters and weekly CEO notes are part of Joe's practice, with transparency as a cultural value.
  • Writing is a skill that founders should sharpen early, using narrative form to make content compelling and evergreen.
  • Long-form content can be repurposed, such as sharing a CEO note with a VIP candidate or a board letter with investors.

"Bezos is the one to popularize long form writing in the modern workforce. He said something along the lines of clear writing and clear thinking go hand in hand." "My advice to founders is that writing is a skill. Start sharpening it early. Write in narrative form. Tell a story. Make sure that it's relevant."

These quotes emphasize the importance of clear writing as a reflection of clear thinking, a concept popularized by Jeff Bezos. Joe Thomas advises founders to develop their writing skills early on and to use storytelling to make their communication more engaging and relevant.

Structure of a Board Letter

  • The structure of a board letter has evolved with the business but maintains a consistent format.
  • It begins with an intro vignette related to the company's vision and mission.
  • Key metrics and progress over the last quarter are discussed.
  • Deep dives into topics the board has prioritized for the quarter are included.
  • Updates on special projects led by the CEO are provided.
  • A wrap-up leads to the board content, usually a slide deck.
  • The letter is typically sent 48 hours before a board meeting, often prepared on Sunday for big-picture thinking.

"There's an intro vignette. So what is something that's top of mind that's interesting that I feel like is very relevant to our vision and mission." "And then from there, you touch on the key metrics to the business."

Joe Thomas outlines the structure of a board letter, which begins with a relevant vignette and then covers key metrics, progress on prioritized topics, updates on special CEO projects, and a wrap-up that leads into the board content.

Being an Impactful Board Member

  • The best board members ask high-quality questions rather than mandating solutions.
  • Founders and operators need to believe in a path forward to execute with conviction.
  • Good board members help founders see around corners and reach conclusions through dialogue.
  • High-quality questions can lead to more momentum than prescribed solutions.

"I've found that the best board members just very simply ask the best questions." "It fundamentally boils down to just ask really high quality questions."

Joe Thomas believes that the most impactful board members are those who engage in dialogue with founders by asking insightful questions, allowing founders to develop conviction in their path forward, rather than dictating solutions.

Discerning Investor Advice

  • Good investors present their advice as a data point, acknowledging they don't have full context.
  • Investor advice is one of many data points in decision-making.
  • Founders should trust their intuition after considering all data, including investor opinions.

"Really good investors also caveat. Any suggestions that they provide with this is just a data point." "Your investor's perspective is an important data point, but fundamentally, you're never going to have perfect information to make a perfect decision."

Joe Thomas discusses the importance of considering investor advice as just one of many data points. He emphasizes the need for founders to trust their own intuition and make decisions based on the totality of information available, recognizing that no decision can be made with perfect information.

Fundraising Process and Efficiency

  • The fundraising process has traditionally been highly inefficient and mistrust laden.
  • Covid-19 forced a rapid change in how fundraising is conducted, with more firms willing to invest without in-person meetings.
  • Video conferencing and asynchronous tools like Loom have made fundraising more efficient.
  • Joe Thomas saved time by using Loom to share a pitch with potential investors, which was well-received and streamlined the process.

"The fundraise industry was very quickly and radically forced to change their operating procedures because some firms were willing to take that leap to make the investment during early Covid without meeting in person, and they won deals as a result." "I probably saved myself about 10 hours during this fundraise process because I had pre recorded a ten minute loom walking through the deck."

Joe Thomas reflects on the inefficiencies of the traditional fundraising process and how the pandemic accelerated the adoption of video conferencing and asynchronous communication tools, leading to more efficient fundraising practices.

The Role of Video Conferencing in Trust Building

  • Video conferencing is powerful for getting to know someone if structured properly.
  • Joe Thomas had a positive experience with CO2's onboarding process, which included deep and meaningful questions.
  • Even without meeting in person, video conferencing can facilitate intimate knowledge of others.

"It's a great question. And I do believe that video is specifically like video conferencing is an incredibly powerful way to get to know somebody if you are structured with your time together."

Joe Thomas expresses his belief in the effectiveness of video conferencing for building trust and getting to know investors, as long as the time spent is structured and meaningful.

Building Trust Remotely

  • Conviction from investors can be established without in-person meetings.
  • Zero Nine Capital demonstrated trust in Loom through a remote conversation and a term sheet was offered after a 145-minute discussion.
  • Remote communication tools like Loom can facilitate the building of meaningful partnerships.

Christoph and the zero nine team had a ton of conviction around loom after only meeting one of the co founders, Shahid, and after 145 minutes conversation, they put a term sheet on the table.

The quote illustrates that remote interactions can lead to significant investment decisions, emphasizing the power of conviction in a company's vision, even without face-to-face meetings.

Criteria for Selecting Early VCs

  • Conviction, support, and experience are key factors in choosing early VCs.
  • Early investors should be true believers in the company's vision.
  • Supportive investors are crucial for challenging times and to test the founder's logic.
  • Having former operators and founders as investors is beneficial for empathy and understanding of the startup journey.

I think that the three things that I thought about was conviction. So having true believers in the company that trust your vision is the most important.

This quote highlights the importance of selecting investors who share the founder's vision and belief in the company's future.

Overcoming Funding Challenges

  • Anticipating funding challenges is crucial, especially when the company has not yet generated revenue.
  • Investors can assist by packaging stories, making connections, and ensuring positive backchannel communications.
  • Anxiety can arise when preparing for a major funding round like Series A, especially when cash reserves are low and product revenue is not yet proven.

I think that there was an oh shit moment when we were going to raise our series A and we had not deployed our revenue generating product yet.

The quote reflects the anxiety and pressure founders face when approaching a critical funding round without the security of revenue generation.

Early Investor Selection Impact on Future Rounds

  • Founders must understand that investors aim to maximize their ownership without harming the company's trajectory.
  • Balancing investor ownership and allowing tier-one firms to invest is critical.
  • Early communication and expectation setting with initial investors are essential for smooth follow-on rounds.

Yep. So all investors, you have to, as a founder, see this with eyes wide open, because while your partners in the business, their business model is to maximize their ownership in your company while not harming the trajectory of it.

The quote emphasizes the strategic considerations founders must make regarding investor ownership and the impact on future investment rounds.

Benefits and Challenges of Co-Lead Investment

  • Co-lead investment rounds can offer benefits like validation and a "halo effect" for attracting talent and customers.
  • Co-leads can also present challenges, such as a lack of clear leadership and potential disincentives for pricing future rounds.

Yeah, I think that with our seed round being co led by 0.9 and GC, Christoph and zero nine were incredibly gracious with.

The quote discusses the dynamics and considerations of having co-lead investors in an early funding round, highlighting the complexities and strategic choices involved.

Sequoia's Unique Approach to Winning a Deal

  • Building relationships over time is key to successful fundraising.
  • Sequoia's team went above and beyond by recording personal messages to express their excitement about joining Loom's journey.
  • The personal touch and effort by Sequoia's team, including a memorable message from Doug Leone, was influential in closing the Series B round.

Andrew asked me to meet him for a drink. And I thought that this was just to spend a little bit more time in a casual manner... when we were about to leave, he was like, oh, I also have this for you. And it was a term sheet that he put on the table.

The quote captures the strategic and personal approach taken by Sequoia to secure a deal, demonstrating the importance of relationship-building in venture capital.

Quickfire Round

  • The quickfire round is a segment intended for rapid and engaging discussion.
  • The content of the quickfire round was not fully included in the transcript provided.

(Note: The final quote was incomplete and did not provide enough information for detailed notes on the quickfire round.)

Favorite Books and Their Impact

  • Joe Thomas's favorite childhood book was "Ender's Game" by Orson Scott Card.
  • "Ender's Game" appealed to Joe due to its science fiction genre, competitive elements, and the mental stretch of imagining zero-gravity scenarios.
  • The book also explored various aspects of humanity and had an unexpected major plot twist.
  • Joe appreciated that "Ender's Game" did not shy away from a sad ending, which made him feel mature as a young reader.
  • As an adult, Joe's favorite book is "Think on These Things" by Jiddu Krishnamurti.
  • Joe believes that the quality of life is influenced by the quality of questions one asks, and "Think on These Things" provides deep questions and thoughtful answers.
  • Joe revisits the book regularly due to its profound content.

"No, as a kid it was Ender's game, so ignore the movie. Unfortunately, it didn't turn out, but it checked all the boxes for me. I'm a big science fiction fan. It has a competitive component to it. It was really fun. It stretched my mind from imagining what it would be like to operate in zero gravity. It revealed different aspects of humanity. It had a major plot twist I didn't see coming. And as a children's book, I read it when I believe I was like eleven or twelve years old. It didn't shy away from a sad ending, which made me feel like a grown up. So I really, really love Ender's game. But then, as an adult, Krishna Maratis think on these things. I believe that the quality of life is largely based on the quality of questions that you ask. And this book is chock full of deep questions and thoughtful answers that I revisit regularly."

This quote explains Joe's favorite childhood and adult books, highlighting the reasons for his preferences and the impact they had on him.

Leadership Strengths and Weaknesses

  • Joe's biggest strength as a leader is authentic empathy.
  • Authentic empathy involves understanding and caring for the perspectives of customers, candidates, and coworkers.
  • Joe aims to find mutually beneficial solutions due to his deep care for others, which he sees as the key to life.
  • However, this authentic empathy is also Joe's biggest weakness.
  • The downside of empathy can lead to exhaustion and a tendency to become a people pleaser, sometimes at the expense of the company's needs.
  • Joe's executive coach has highlighted the need to balance empathy with company needs, and he is actively working on this aspect.

"I believe my biggest strength is authentic empathy, to understand where a customer, a candidate, or a coworker is coming from to genuinely want to find a mutually beneficial path forward because you deeply care about them. Finding win wins is truly the key to life, and that comes from a place of authentic empathy, but it also cuts both ways. It's my weakness as a leader, too. It can be exhausting. And in an extreme form of empathy, you become a people pleaser. And so sometimes at the expense of what the company needs me to do, I want to make an individual happy. So, this is something that my executive coaches highlighted that I really need to work on, but I also believe it's my biggest strength."

Joe discusses his leadership strengths and weaknesses, emphasizing the double-edged nature of authentic empathy and its effects on his role as a leader.

Personal Resemblance to a Cocktail

  • Joe's wife suggested that a Negroni cocktail resembles Joe's personality.
  • Joe agrees with the comparison, describing a Negroni as classic, colorful, flavorful, and grown-up.
  • He likes to think of himself in terms of these qualities, which he associates with the drink.

"So I asked my wife this last night when we were kind of, like, thinking about these questions, and she said, a Negroni. I think that she was a little bit influenced by our summer vacation that we took a couple of weeks ago. But I'll go with it because it's a classic. It's colorful, it's on the flavorful side, and it's still grown up. So I like to think that I'm a Negroni."

Joe shares the cocktail that he believes resembles his personality, as suggested by his wife, and reflects on the attributes of the Negroni that he identifies with.

Desired Changes in the Tech Industry

  • Joe would like to see a meaningful change in diversity and representation in tech, especially for the black community.
  • He believes leaders should provide equal opportunity and representation to address historical inequities.
  • Joe emphasizes the importance of examining one's role in promoting equality within their sphere of influence.

"And so I feel like it's our duty as leaders to look at ourselves and ask, what are we doing to provide equal opportunity and representation, particularly for the black community, to make up for historical inequities, and then for myself, personally, where I feel like I have control is within the tech sphere. So I think that generally, we need to be doing this across the board. And today I would like to see a meaningful change in diversity and representation across all aspects of tech, particularly for the black community."

Joe expresses his desire to see increased diversity and representation in the tech industry and highlights the responsibility of leaders to make a positive change.

Loom's Initiatives for Social Change

  • Loom has committed to donating 1% of their revenue monthly to organizations on the front lines of civil rights.
  • The company's leadership team, influenced by Salesforce's 1% contribution model, decided on this course of action.
  • Loom is working with organizations to ensure equity and inclusion within the company, such as equal pay and opportunity, and to eliminate bias in operations.

"Yeah, so we initially did a block of donations about three weeks ago, four weeks ago, when this all really picked up. But what we collectively discussed as a leadership team, and this was spearheaded by Salesforce, which is the 1% contribution. And so we collectively as a company said that we were going to do that 1% donation. Right now it's revenue. In the future, it'll be profit, and we'll kind of start to transition that over time. Is it 1% revenue? 1% profit? But we are committed to every single month donating 1% of our revenue to causes. And in the near term, over the next six to twelve months, it is going to be to organizations that are helping and on the front lines of civil rights. And I believe if you have consistent donations to certain communities or certain organizations over the long term, it means that you will mentally commit and invest yourself as well."

Joe details the actions Loom is taking to contribute to social change, including financial support for civil rights organizations and internal efforts to promote equity and eliminate bias.

Unconventional Beliefs

  • Joe holds an unconventional belief that dogs are much smarter than commonly perceived.
  • He also speculates that human consciousness may have quantum elements that could help explain its mysteries.

"So I believe dogs are way smarter than we give them credit for, and this is one that is pretty far out there, and it's not supported by any hard evidence. But human consciousness is one of the greatest mysteries that we have to this day, and I believe that we might have quantum elements to it that might actually help explain human consciousness."

Joe shares his unique beliefs about the intelligence of dogs and the potential quantum nature of human consciousness, acknowledging that these ideas are speculative and not widely supported by evidence.

Mentorship and Life Lessons

  • Joe's grandfather, Wally, was his mentor and taught him valuable life lessons.
  • Wally treated Joe as an equal regardless of age and instilled in him the importance of treating people well regardless of circumstances.
  • Joe learned from Wally to smile and spread joy, which he considers simple yet key to life.
  • Wally's influence has been foundational to Joe's development as a man and a leader.

"Yeah. So my grandpa on my mom's side Wally, he was my mentor and idol. I grew up only 15 minutes away from him. He was the one to have that printing business that I mentioned at the top. And he just always treated me as an adult, like there wasn't ageism in our relationship. And he taught me critical life lessons. And they're like very simple things, but life is relatively simple if you find out the keys to them. So one of them is treat people on the way up as you do on the way down, meaning, treat everybody equally and don't have an inflated ego and smile, because they're infectious. Just like, bring joy and happiness to the world. And I think that for myself, I don't have him in my life anymore, unfortunately. But in the 20 years that we spent together, I felt like he truly built the foundation for who I am, partially as a man, but largely as a leader."

Joe reflects on his grandfather's mentorship and the profound impact it had on his life and leadership philosophy.

Future Vision for Loom

  • Loom aims to accelerate information flow for the global workforce and empower effective communication regardless of location.
  • The company focuses on providing a disciplined, best-in-class user experience in video messaging.
  • Loom's goal is to address every knowledge worker globally and revolutionize workplace communication to be more efficient, effective, and expressive.
  • Joe believes that Loom is only beginning to tap into the potential of video messaging and its impact on global communication.

"We want to accelerate information flow for the global workforce, and we want to empower people to communicate more effectively wherever they are. I think that there's great examples of organizations that have remained incredibly disciplined, provided best in class user experiences. For us, specifically, it'll be video messaging, and from there, we can scale ourselves really, really far. I mean, we plan to address every single knowledge worker in the world. And what's interesting is, now that we have a mobile app in the space, we're starting to see not just knowledge workers, but people at work using video messaging to communicate with each other. So I like to say that we're changing the face of workplace communication. Fun little pun there. And that it's going to be a revolution in terms of percentage of communication that's happening over much higher bandwidth, communication that's more efficient, that's more effective, and most importantly, more expressive. And so if you can make workplace communication more efficient and more effective first, but also, at the same time, make it more expressive. So that way you build meaningful relationships with each other. With a globally distributed workforce, I believe that we're really just scratching the surface with where we're at with video messaging and how far loom can take it for the world."

Joe shares Loom's vision and strategic direction for the next five years, emphasizing the transformative potential of video messaging in workplace communication.

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