20VC The Fundamentals To Creating A Successful Venture Partnership & The Optimal Investment Decision Making Process with Ryan McIntyre, CoFounder @ Foundry Group

Summary Notes


In this episode of the 20 minutes VC, host Harry Stebbings interviews Ryan McIntyre, co-founder of Foundry Group, a leading VC fund with investments in companies like Fitbit, SendGrid, and Makerbot. McIntyre shares his journey from entrepreneur to venture capitalist, detailing his early career co-founding Excite and his transition to VC at Mobius Venture Capital, where he met his future Foundry Group partners. The conversation delves into the importance of trust, communication, and self-awareness within Foundry Group's partnership and the broader VC ecosystem. McIntyre emphasizes the role of venture capitalists in serving entrepreneurs and discusses the disciplined approach required when investing in passion areas like music and developer tools. He highlights SendGrid as a particularly proud investment and touches on the impact of personal growth on his professional development.

Summary Notes

Introduction to Foundry Group and Personal Background

  • Harry Stebings introduces Ryan McIntyre, co-founder of Foundry Group, a leading VC fund.
  • Ryan McIntyre's career began in VC at Mobius Venture Capital, leading investments in Postini and Sling Media.
  • McIntyre co-founded Excite, which went public and merged with @Home in a $6.7 billion deal.
  • Thanks given to Brad Feld and Seth Levine for the introduction to Ryan McIntyre.

"Now. Ryan is a co-founder at Foundry Group, one of the leading VC funds of the last decade, with investments in the likes of Fitbit, Sendgrid and Makerbot, just to name a few. And prior to Foundry, Ryan started his career in VC at Mobius Venture Capital in January 2000."

This quote introduces Ryan McIntyre as a significant figure in the venture capital industry, highlighting his role at Foundry Group and his previous experience at Mobius Venture Capital.

Entrepreneurial Beginnings and Transition to VC

  • Ryan McIntyre started as an entrepreneur, co-founding the search engine Excite.
  • Transitioned from entrepreneur to VC after spending time at Mobius Venture Capital.
  • Foundry Group was started in 2006, and the team has worked together for 17 years.

"I started out life in the technology industry as an entrepreneur... ultimately led us to creating search engine Excite... I found myself becoming really excited about the investing side... that led to us starting Foundry Group in 2006."

This quote outlines McIntyre's journey from being an entrepreneur who co-founded Excite to becoming excited about venture capital, leading to the establishment of Foundry Group.

The Appeal of Venture Capital

  • McIntyre enjoyed the portfolio approach of VC, allowing him to engage with various interests.
  • The context switching and parallelization of entrepreneurial efforts appealed to him.
  • After Excite, he found it challenging to commit to a single idea, leading to angel investing and advising.

"I really became enamored with the sort of portfolio approach... I enjoy being able to parallelize, if you will, entrepreneurial efforts... being able to parallel process and context switch really worked for my interests and personality."

This quote explains McIntyre's affinity for the portfolio approach in venture capital, which aligns with his interest in managing multiple projects and his difficulty in committing to a single startup post-Excite.

Relocation to Colorado

  • Moving from the Bay Area to Colorado was a significant decision for McIntyre.
  • Jason Mendelson, a colleague, committed to the move more quickly than McIntyre.
  • Concerns about leaving the "center of the tech universe" and personal considerations delayed the decision.
  • McIntyre had previous ties to Colorado, including family connections and time spent there.

"I did have concerns about moving to Boulder... I had wife and kid, I'd been there for 17 years... so it took me a bit longer, both in terms of convincing myself, convincing my wife, et cetera, to make the move."

This quote captures the personal and professional hesitations McIntyre faced when deciding to relocate from the Bay Area to Colorado, emphasizing the weight of such a life-changing decision.## Relocation to Boulder

  • Ryan McIntyre expresses that moving from the Bay Area to Boulder to start an early-stage technology venture fund was somewhat contrarian and non-obvious.
  • Despite initial misgivings and receiving quizzical looks from others, Ryan is pleased with the outcome of the move.

"Catherine even remarked at one point, hey, if we were ever to move anywhere, and I know, we know Boulder would be on the short list of interesting places to go."

The quote indicates that Boulder was already a considered location for relocation, making the eventual move less surprising.

"I did have misgivings and just wondering, this is a somewhat contrarian or non obvious move, and I certainly got lots of quizzical looks from folks when I told them I was leaving the Bay Area to go start an early stage technology venture fund."

This quote reveals Ryan's initial doubts about the move and the skepticism he faced from others about leaving the Bay Area.

Foundry Group Partnership Dynamics

  • The Foundry Group partners had seven years of prior work experience together at Mobius Venture Capital, which provided a foundation of mutual trust.
  • The partnership is based on building lives together, integrating work with personal lives, and maintaining close friendships.
  • Commitment to transparency and efficient communication is key, with regular moderated feedback sessions to address strengths, weaknesses, and partnership dynamics.
  • Disagreements occur, but they stem from a place of trust, making difficult discussions more manageable.
  • The Foundry Group learned from previous negative experiences at Mobius and aimed to avoid similar issues in their own firm.

"We were very committed to really sort of building not just a partnership together, but building our lives together, really trying to integrate everything we do."

This quote reflects the partners' commitment to integrating their professional and personal relationships for a cohesive and trusting partnership.

"We disagree all the time. We have heated discussions, but it also comes from a place of deep trust, frankly, and I think that makes having those hard discussions easier."

The quote highlights that while disagreements are common, they are handled constructively due to the underlying trust among partners.

Investment Decision-Making Process

  • Foundry Group requires at least three out of four partners to affirmatively vote for an investment decision.
  • Investment decisions are typically unanimous, with significant consideration given to any strong opposition from a partner.
  • The firm is selective, making seven to ten investments per year from a larger pool of viable opportunities.
  • Skeptical partners are involved early in the evaluation process to address potential concerns and improve decision-making efficiency.

"Technically, three of the four need to vote affirmatively to make an investment decision."

This quote outlines the formal requirement for investment decisions within the Foundry Group.

"We do between seven and ten investments per year, and there's probably ten times that in terms of companies that we would invest in."

The quote emphasizes the selectivity of the Foundry Group's investment process and the high standards they maintain.

Qualities of Effective Board Members

  • Effective board members possess a high level of self-awareness, understanding their own strengths and weaknesses within a team.
  • Self-awareness contributes to a constructive team dynamic on boards, which are composed of individuals with diverse backgrounds and expertise.
  • Foundry Group values communication and self-awareness both in their partnership and when working with entrepreneurs and management teams.

"The bigger thing I think we all place a premium on is a high level of self awareness among ourselves and the entrepreneurs and members of management teams that we work with."

This quote underscores the importance of self-awareness for effective contribution to team dynamics, including board membership.

"Knowing where your strengths are, where your weaknesses are, that level of having an extreme level of self awareness, to me, is sort of one of the most important aspects of being somebody who can contribute well and constructively in a team dynamic."

The quote further emphasizes the value of self-awareness in contributing positively to a team, such as a board of directors.## Personal Growth as a VC and Board Member

  • Ryan McIntyre reflects on his personal growth paralleling his professional development as a VC.
  • Initially, he avoided conflict and was hesitant to deliver bad news or challenge others.
  • Over time, he has become more direct and comfortable with conflict, which he sees as essential for progress.
  • He believes that being genuine and direct is important in business and personal relationships.

"I think I would be the person around the table early on in my board days who would sort of be the last person who was willing to deliver bad news or challenge somebody or point out something negative."

Ryan is describing his initial reluctance to confront difficult situations in board meetings, which he later overcame.

"I've certainly become far more direct and comfortable with conflict."

This quote signifies Ryan's personal development in terms of communication and dealing with challenging issues.

Perception of the VC Ecosystem

  • Ryan acknowledges the stereotypes portrayed in media, such as in the show "Silicon Valley," and their sometimes painful accuracy.
  • He emphasizes that there is no stereotypical VC personality; each VC has a unique approach and skill set.
  • Ryan stresses the importance of VCs remembering their role is to serve entrepreneurs, not the other way around.
  • He warns against VCs overestimating their importance in the success of companies due to the nature of their job.

"I think it's easy to sort of use this stereotypical, know the kinds portrayed in Silicon Valley, which, by the way, is a great show and sometimes gets things so right, it is painful to watch."

Ryan is commenting on how the media can accurately represent the VC world, leading to uncomfortable realizations.

"But at the end of the day, you need to remember that without entrepreneurs, venture capitalists really have no purpose, and that really we're there to serve the entrepreneur and not the other way around."

Here, Ryan reminds fellow VCs of their fundamental purpose in the startup ecosystem, which is to support entrepreneurs.

Investment Discipline in Passionate Sectors

  • Ryan discusses the balance between passion and discipline in investment, especially in areas he loves, like music and developer-centric tools.
  • His experience as a software developer at Excite informed his insight into the importance of infrastructure tools.
  • Ryan sees his passion for developer tools as an advantage in identifying trends and opportunities.
  • He describes playing music as a form of meditation that requires being present in the moment.
  • When investing in passionate sectors, he still focuses on core investment criteria like total addressable market (TAM), go-to-market strategy, and team quality.

"That for me is much more a direct consequence of what I did at excite back in the day."

Ryan connects his past experience as a developer to his current investment focus, highlighting the value of personal background in venture capital.

"That passion and that hobby of ours, I find, is kind of my meditation."

This quote illustrates how Ryan uses his passion for music as a form of relaxation and focus, which benefits his professional life.

"How do you remain core to the true. What's the Tam, what's the go to market strategy? How brilliant is the team?"

Ryan is underlining the importance of not letting passion cloud his judgment and maintaining a disciplined approach to investment decisions.## Roley's Product Launch

  • Roley launched a new product called Roley block in London at an Apple store.
  • The Roley block is described as a new category of instrument.
  • It combines digital and analog music, allowing for expressive control.
  • The product is accessible due to its lower entry price point.
  • Roley's product aligns with the Foundry Group's core tenets and investment themes.
  • The platform vision of Roley and its potential impact on music making were key factors in the investment decision.

"launched their newest product, Roley did just this week, rather, just last week, actually, in London, at one of the Apple stores in London. And it's this sort of new category of instrument, the Roley block, which is a modular platform that sort of brings the best of digital and analog music together, really, and sort of enables this extremely expressive level of control and also does it in an extremely accessible way where it's a lower entry price point and the blocks are amazing."

This quote explains the launch details and the innovative aspects of Roley's new product, highlighting its significance in merging digital and analog music in a user-friendly and financially accessible manner.

Investment Philosophy and Decision-Making

  • Foundry Group is attracted to companies that redefine categories and have a platform vision.
  • Human-computer interaction evolution and computing beyond traditional devices are part of their thematic focus.
  • Roley fits within Foundry Group's core beliefs and investment themes.
  • Due diligence and self-imposed higher standards were crucial in the decision to invest in Roley.
  • The team's excitement about music and technology was balanced with thorough analysis before presenting the opportunity to colleagues.

"And again, that platform vision is right in sort of one of the core tenets of things we get excited about at foundry group. And also it's squarely in our thematic focus around sort of the evolution of human computer interaction and the trend towards computing becoming far more than just your laptop and your smartphone."

This quote outlines the Foundry Group's investment philosophy, emphasizing the importance of platform vision and the broadening scope of computing in their decision-making process.

Personal Preferences and Insights

  • Ryan McIntyre's favorite book is "Dune" by Frank Herbert due to its universe building and relevant themes.
  • He has been reading Revolutionary War era biographies and histories, finding inspiration in the founding fathers' ideals.
  • Ryan suggests building a solid career before entering the VC industry.
  • He enjoys reading "media redefined" by Jason Hirschhorn and also acknowledges Brad's blog.
  • Ryan's favorite investment is Sendgrid, proud of its scale and its alignment with his investment thesis.

"So, my favorite book, I'm a science fiction nerd, so I would have to say Dune by Frank Herbert."

This quote reveals Ryan's personal interest in science fiction and the reasons behind his preference for "Dune," highlighting its thematic depth and relevance.

Venture Capital Career Advice

  • Ryan recommends gaining experience in technology and entrepreneurship before entering VC.
  • A diverse background with technical and operational skills is valuable in the VC industry.

"Yes, I would recommend working in VC to my son, but I would say, don't do it right away."

This quote offers Ryan's perspective on the ideal career path for someone interested in venture capital, emphasizing the importance of acquiring a broad range of experiences first.

Industry Tools and Resources

  • Ryan frequently reads "media redefined" by Jason Hirschhorn.
  • He jokingly acknowledges Brad's blog as an obvious inclusion in his must-reads.

"The one that I read the most and enjoy the most and probably read pretty much every article that's linked to is media redefined by Jason Hirschhorn."

This quote provides insight into Ryan's preferred sources of industry news and commentary, indicating the value he finds in staying informed through specific blogs and newsletters.

Reflection on Investments

  • Ryan is proud of Sendgrid, an early investment that aligns with his thesis on application infrastructure for developers.
  • Sendgrid's success, profitability, and IPO candidacy in 2017 are notable achievements.

"But I would say the investment that I'm sort of proudest of and is at a really interesting scale right now, is one of the early investments we did back in the 2007 fund, which is Sendgrid."

This quote demonstrates Ryan's pride in Sendgrid's growth and success, reflecting on the impact of this investment in relation to his long-term investment strategy.

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