In this episode of the 20 minutes VC, host Harry Stebbings interviews Nabil Hyatt, a venture partner at Spark Capital. Nabil shares his unconventional path into venture capital, from founding startups to becoming a VC almost by chance. He emphasizes the satisfaction derived from aiding founders and CEOs in their growth and leadership development. Nabil and Harry discuss the importance of product-driven investment strategies and the challenges of modeling market size, highlighting Spark Capital's success with innovative companies like Oculus and Cruz. Nabil advises startups to maintain agility and to be wary of raising excessive capital too early. He also touches on the significance of the self-driving car industry, sparked by Cruz's acquisition, and the need for startups to have counterintuitive beliefs to succeed. Lastly, Nabil discusses his latest investment in Fig, a company revolutionizing the game development industry, and the value of mentorship in his career.
"And joining us today from Spark, I'm delighted to welcome Nabil Hyatt, venture partner at Spark Capital, where he invests in entrepreneurs at the intersection of design and technology to transform markets."
This quote introduces Nabil Hyatt and highlights his investment focus on the intersection of design and technology.
"Although I'm not sure I have such a linear story. I had basically no desire to be a VC before becoming a VC, so it was really happenstance."
Nabil explains his unconventional path to becoming a venture capitalist, emphasizing that it was not a premeditated career choice.
"The big thing I think he touched on, which has played out very well, is he basically said, look, when you look at your startups and the satisfaction you get from your startups, it's certainly to bring ideas into the world. But the thing that I feel from you is that you actually get just as much satisfaction from helping the people in your company become leaders."
This quote highlights the personal qualities and motivations that Bijan Sabet believed would make Nabil Hyatt successful and fulfilled in a venture capital role.
"The conversation I have a lot with CEO is that I don't think if you have not been an operator and you go into the VC life, I think the thing that you don't understand or can't really internalize is as a CEO, how many people give you advice."
Nabil outlines the disconnect that can occur when VCs give advice without the perspective of having been an operator themselves.
"I don't think there's any way a venture capitalist can know what they're going to invest in until they meet the battlefield."
This quote encapsulates Nabil's view that investment strategies in venture capital must be flexible and responsive to the actual opportunities that arise.## Investment Strategies and Market Approach
"And so my startup investments tend to be in things that are relatively risky, large bets like self-driving cars or building a last mile logistics company, which like 100 other people had failed at, and postmates has figured out these things that feel on their face, counterintuitive, not easy to grasp, especially at the stage that you're investing in, often with very large competitors that are coming right at you and then not doing the same thing again and again."
This quote explains Hyatt's approach to investing in startups that are making bold moves in challenging sectors, acknowledging the high risk and the unconventional nature of such investments.
"So it's not about kind of a top-down analysis saying, you know, now's the time for home ownership to get disrupted. It's more bottoms up. What's the technology that is creating a new opportunity?"
The quote emphasizes a bottom-up approach to identifying investment opportunities, focusing on technological advances rather than market trends.
"My first reaction was, like, cynical, right? It was, virtual reality is, no one's made that work. It was really not the reaction I would ever want to speak publicly about, quite frankly. But I'm just telling you the story right now, and to Santo's credit, and he has been a good mentor, and there's a reason this firm does what it does. Santo soldiered through and made sure that we all saw the demo."
This quote reveals Hyatt's initial skepticism about virtual reality and the impact of his partner's persistence on changing his perspective, leading to a successful investment in Oculus.
"And the second one is, I think VCs generally, despite whatever they say on their websites, are market first investors. So they want a market that they can model, that they can give to an associate, and an associate can say, this is a $1 billion market or a $1 trillion market."
The quote criticizes the common VC practice of prioritizing market size over product quality and innovation, suggesting that this approach may lead to missed opportunities.## Market Size and Competitive Deals
"the day that we invested, were very hard to actually model the exact market size of that company. And so there are a lot of firms that kind of had a harder time competing for them."
This quote emphasizes the difficulty in estimating the market size for certain companies during investment, which can lead to less competition among firms.
"Yeah, that is just an amazing piece of self awareness by Palmer Lucky as a founder to say he didn't want that job..."
This quote discusses Palmer Luckey's decision not to be CEO of Oculus, illustrating the importance of self-awareness and role suitability in a startup's leadership.
"Oculus, I think, had the benefit of being, I would call it like right sized, which is they obviously felt a tremendous amount of constraint."
This quote highlights Oculus's advantage in having a team size that allowed for both agility and the capacity to execute their ambitious goals.
"When he pivoted and decided to do what he's doing now and pursue fully autonomous driving, he reached out."
This quote explains the turning point that led to the investment in Cruise, emphasizing the significance of the company's strategic pivot to fully autonomous driving.
"And so we knew we needed a strategic partner. And so in many ways, Kyle viewed this as GM could have been investing a certain amount of money or they could have been acquiring the company..."
This quote reflects on the strategic reasoning behind Cruise's acquisition by GM, indicating it was a deliberate partnership choice to advance their goals in the self-driving car industry.
"Well, it's hard to talk about the material stuff because Cruz hasn't announced exactly what they're doing..."
This quote suggests that while the impact of Cruise's acquisition is significant for the autonomous car industry, specific details are not yet public, creating a sense of anticipation.## Self-Driving Ecosystem
A billion dollar exit means that all the vcs are now scrambling to try and put some money to work. And a whole bunch of entrepreneurs are now thinking that they can start a self driving startup.
This quote explains the impact of a major financial success in the self-driving industry on the behavior of venture capitalists and entrepreneurs, indicating a surge in interest and investment in this sector.
And so if you're starting a company in self driving today, I think you have to think back to how you operate in a way that isn't straight down the middle because you're likely to get, if you're today trying to start a company that is a consumer self driving car, you're probably going to get crushed.
This quote advises new self-driving startups to adopt unconventional strategies to avoid being overshadowed by established companies in the consumer self-driving car market.
Completely transformative. Not just about gaming, for sure.
This quote expresses the belief that VR will revolutionize multiple industries and not be limited to gaming.
And the challenge for sure is, I think finding a content model where creatives can get involved in the industry in a way where they can make good money, build good businesses, and think about experiences outside, hopefully of just gaming.
This quote identifies the key challenge for the VR industry as creating a content model that is financially viable for creators and encourages them to explore beyond gaming applications.
I think the best board member is like your outside co founder.
This quote suggests that the ideal board member acts as a partner to the CEO, offering external perspective and support.
I'm reading a lot of science fiction right now because I'm thinking about the future. So I would probably pick snow crash right now because it talks about where our society may still be headed, quite frankly, and was quite prescient.
This quote reveals Nabil Hyatt's interest in science fiction and its relevance to his contemplation of societal trends and future developments.
Fred Wilson's blog, he's just taken the time to know it's not a content marketing platform for him. It is a way for him to get his thoughts out into the world in the kind of true sense of a blog, and I respect that.
This quote explains why Nabil Hyatt admires Fred Wilson's blog, highlighting its purpose as a medium for sharing ideas rather than promoting content.
Bijean is easily my biggest mentor. He became my mentor because he helped recruit me here.
This quote identifies Bijean as Nabil Hyatt's most influential mentor, emphasizing the role Bijean played in his career development.
The last announced investment is a company called Fig. I said yes because of the founder, first and foremost.
This quote highlights the importance of the founder's role in Nabil Hyatt's investment decision, indicating the founder's vision as a key factor.
Fig is trying to reinvent, kind of take the best of crowdfunding, equity funding, kind of the whole thing, data driven approach to creative content and kind of rebuilding the way games get built.
This quote explains Fig's innovative approach to game development, combining crowdfunding, equity funding, and data to transform the industry.