Breaking News Meet First Round Capital's Newest Partner, How To Approach Generational Transition as a Venture Firm & The Dangers of Attribution In Venture

Summary Notes


In this engaging episode of "20 minutes VC," host Harry Stebbings is joined by Todd Jackson and Finn Barnes from First Round Capital to discuss Todd's transition from an accomplished product leader to a venture partner at First Round. Todd shares his journey from growing Gmail's user base to 200 million, redesigning Facebook's newsfeed, and leading product management at Twitter and Dropbox, to angel investing and ultimately joining First Round. Finn offers insights on the importance of balancing learning with impact in new roles and the key qualities First Round seeks in a partner. The conversation also touches on the significance of product-market fit, the value of ideas, and the art of being a great coach to founders. The episode concludes with a look at the generational transition within venture firms and the team-based approach that sets First Round apart.

Summary Notes

Introduction to the Episode

  • Harry Stebbings welcomes listeners to the "20 minutes VC" podcast.
  • Harry is excited about having two guests for the first time, Todd Jackson and Finn Barnes from First Round Capital.
  • There is an exclusive news announcement in the episode.
  • Harry provides background on Todd Jackson's experience in tech and product management.
  • Harry also endorses the sponsors Hellosign and Hymns, and mentions Silicon Valley Bank.

"Welcome. You are listening to the 20 minutes VC with me, Harry Stebbings, and it'd be amazing to hear your thoughts and feedback on the show."

This quote serves as Harry Stebbings' introduction to the podcast, inviting listeners to engage and provide feedback.

Todd Jackson's Background

  • Todd Jackson has worked on transformational consumer products, including Gmail, Facebook's newsfeed, and Twitter's product management.
  • He was previously the VP of Product and Design at Dropbox.
  • Todd is joining First Round Capital as a venture partner.

"Before first round, he worked on some of the most transformational consumer products of the last decade, including as a pm at Gmail, taking it from zero to 200 million users to leading a major redesign of Facebook's newsfeed, to serving as director of product management at Twitter, and then most recently being Dropbox's vp of product and design."

This quote summarizes Todd Jackson's extensive experience in product management, which contributed to his new role at First Round Capital.

Todd Jackson's Career Path and Transition to Venture Partner

  • Todd Jackson started at Google in 2004 as an associate product manager and contributed to Gmail's growth.
  • He worked at Facebook on photos, groups, and Newsfeed, then founded his own company, Cover, which was acquired by Twitter.
  • At Dropbox, Todd helped transition the company from consumer to SaaS and prepared it for IPO.
  • After leaving Dropbox, Todd joined First Round as a founder in residence and contemplated his future career path before deciding to become an investor.

"I started my career in Silicon Valley at Google in 2004 as an associate product manager... And then ultimately I wanted to be a founder... And so at cover, I got the experience starting something from scratch... And then finally, most recently at Dropbox... And so at Dropbox, I got the experience of being on an executive team and of managing hundreds of people in product and design."

This quote outlines Todd Jackson's career journey from a product manager at Google to becoming a venture partner at First Round Capital.

Finn Barnes' Advice to Todd Jackson

  • Finn Barnes warns against the bias of shifting into 100% learning mode when joining a new team.
  • He advises Todd to balance learning with doing and to take risks by pushing for his beliefs.
  • Finn expresses confidence in Todd's ability to contribute positively to the firm from day one.

"And so I think for me, the piece of advice would just be to encourage Todd to balance the learning and the doing. So take risks by pushing for what he believes and to help us continue to evolve our product and our firm."

This quote reflects Finn Barnes' advice to Todd Jackson on how to approach his new role at First Round Capital, emphasizing the importance of active contribution and risk-taking.

Todd Jackson's Key Takeaways from Product Companies

  • Todd Jackson shares his insights on product development, business models, and company culture from his experiences at Google, Facebook, and Dropbox.
  • He emphasizes the discipline required to build high-quality products and the importance of a user-centric approach.
  • Todd learned about the bottom-up SaaS business model at Dropbox and the significance of company culture in driving success.

"So, there were so many. But I'll highlight three big takeaways, one on product, one on business model, and one on culture."

This quote introduces Todd Jackson's three main learnings from his experiences at leading tech companies, which he believes have shaped his mindset and approach to venture investing.## Carousel Shutdown and Dropbox's SaaS Pivot

  • Todd Jackson's initial task at Dropbox was to shut down Carousel, a consumer photo sharing app.
  • Carousel was popular but not growing sufficiently to impact company scale.
  • Dropbox faced a decision to either continue supporting consumer-oriented products or pivot to SaaS (Software as a Service).
  • The company chose to pivot to SaaS, which was deemed a good decision in retrospect.
  • From 2016 to 2017, Dropbox honed the SaaS funnel from acquisition to activation, retention, and expansion.
  • Dropbox achieved a high LTV (Lifetime Value) to CAC (Customer Acquisition Cost) ratio, which was in the double digits.
  • This high ratio contributed to revenue predictability, which was crucial for Dropbox's IPO in 2018.
  • The pivot to SaaS was essential for Dropbox to scale effectively.

"My first official task, actually, as vp of product, was to shut down this product called Carousel, which was this beautiful consumer photo sharing app... And so we had all these folks working on it internally, and it was just this key moment for us. Can we afford to support and invest in this consumer oriented part of Dropbox, or did we really need to turn the ship and focus 100% on SaaS? And we chose the latter, which was, in retrospect, I think, a really good decision."

This quote explains the strategic decision to shut down Carousel and pivot towards a SaaS business model, which proved to be beneficial for Dropbox's growth and eventual IPO.

Company Culture and Founder Influence

  • Company culture and values are a reflection of the founders' values.
  • Google, defined by Larry and Sergey, was engineering-driven, quirky, altruistic, and somewhat disorganized.
  • Facebook, led by Mark Zuckerberg, was more competitive, centrally planned, and embraced "move fast and break things."
  • Twitter experienced chaos, potentially due to founder churn.
  • Dropbox, shaped by Drew Houston and Arash Ferdowsi, focused on quality, details, and internal collaboration.
  • Todd Jackson advises founders to codify and communicate their values, ensuring alignment with the market they've chosen.
  • "Sweating the details" was critical for Dropbox due to the nature of their product.

"Last on the culture related takeaway, the thing that I've loved learning about seeing how these different companies operate internally, and one of the patterns that I've seen is that the way a company operates, its culture, its values, the way it makes decisions, it's really a manifestation of the founders and of their values."

This quote emphasizes the importance of founders' values in shaping company culture and decision-making processes, with Dropbox as a prime example.

CAC to LTV Ratio Importance

  • Harry Stebbings expresses skepticism about the emphasis on CAC to LTV ratios at pre-seed and seed stages.
  • Finn Barnes believes that early-stage founders should be aware of these metrics, but not necessarily predict them accurately.
  • Early stages are more about searching for product-market fit rather than defining specific financial metrics.
  • Finn suggests that an understanding of CAC and LTV becomes more relevant and clear as the business evolves.

"I mean, I think as we think about those things early, you want to think about the founder's orientation towards those things... But I don't think that if a founder came in at a precede or seed stage and said, when I go out to raise my series a, I'll have a CAC into LTV of three to one or ten to one, that we'd be more or less interested, and probably actually less interested given that they think they can predict that so far out."

Finn Barnes' quote indicates that while early-stage founders should be mindful of CAC and LTV, it is unrealistic and unnecessary to have precise predictions at the pre-seed or seed stage.

Assessing Product-Market Fit

  • Todd Jackson reflects on the importance of market choice for founders.
  • Josh Coppelman's concept of "the pick" is highlighted as crucial for startups.
  • Todd presents a framework for assessing product-market fit, which includes addressing functional and emotional needs, targeting large or potentially large underserved markets, and offering a unique user experience.
  • Cover's success as an Android-focused company is used to illustrate this framework.
  • Cover's focus on Android led to rapid growth and an acquisition by Twitter due to its unique positioning and market expertise.

"Yeah, so I think it's probably a good time to talk about my startup, which was called cover in 2013, and we thought a lot about this at the beginning. And honestly, when you talk about finding product market fit, in my opinion, the most important choice you make as a founder is picking a good market other than choosing your co founders."

Todd Jackson's quote highlights the significance of market selection in achieving product-market fit and the success of his startup, Cover.

Founder Experience and Investor Approach

  • Todd Jackson shares his journey with Cover and how it informs his approach as an investor.
  • Having experienced fundraising, product-market fit, organic growth, and acquisition, he aims to support founders through these stages.
  • Todd's experience with scaling and managing large teams is a resource for founders growing their companies.
  • As an investor, he focuses on coaching founders on product strategy, development, and effective team management.
  • Todd emphasizes the importance of listening and guiding founders to understand problems rather than providing direct solutions.

"So in our seed fundraising process for cover, we actually talked to over 50 investors... And I leaned so much on Josh during the most critical pieces of that journey. And so I just have a good recent feel for how investors can and should be helpful to founders."

This quote reflects Todd Jackson's personal experience with fundraising and the value of investor support, shaping his approach to assisting founders as an investor.

Role of a Coach to Founders

  • Todd Jackson discusses the transition from being an operator to a coach for founders.
  • He identifies the need for investors to listen and help founders understand their challenges rather than offering direct solutions.
  • Todd believes that great coaches facilitate founders' problem-solving processes.

"But I learned over the course of working with many founders that it's better to be in a listening mode, helping the founder themselves deeply understand the problem and the different approaches they might take to thinking through the problem rather than trying to answer the question yourself."

Todd Jackson's quote captures the essence of effective coaching, which involves guiding founders to find their own solutions rather than providing answers.## Team Dynamics and Evolution at First Round

  • First Round has experienced changes with founding partners Chris and Rob transitioning to board partner roles in 2018.
  • The team operated as a smaller group with four investing partners, focusing on gelling as a core group and optimizing processes.
  • Haley led investments in companies like Mirror and Studs and returned from maternity leave.
  • Bill had a successful investment with Looker and has refined his investment process.
  • Josh brings intensity to finding new investments and engages with the partnership daily.
  • The team looks for new partners that would complement the existing group dynamics.

"Since then, there have been some changes with founding partners Chris and Rob transitioning to board partner roles in 2018. And so the truth is, we've been operating as a smaller team for more than a year now with really only four investing partners."

The quote explains the recent changes in the First Round team's structure and the reduction to a core group of four investing partners.

Internal Discussion and Partner Selection

  • First Round has a rigorous internal discussion process when considering adding new partners.
  • The team looks for individuals that add value and complement the current team.
  • Todd Jackson was known to First Round, having been referred by a founder they partnered with, and his product experience at Gmail and Facebook's newsfeed was highly valued.
  • Haley, another partner, was brought on board due to her growth as a leader, company builder, advisor, and angel investor.
  • The firm values advisors who receive high praise from founders and those who align with First Round's interests.

"So first with Todd, we've known Todd for quite some time. We invested in a startup, as he mentioned, back in 2013, and similar to over half of our investments, Todd was referred to us by another founder that we'd already partnered with, Dave Gerard from Upstart."

This quote details how Todd Jackson was introduced to First Round and highlights the importance of referrals in their partner selection process.

Qualities First Round Looks for in a New Partner

  • The new partner should be a "founder magnet," someone founders are eager to work with.
  • Alignment with First Round's mission of being the best franchise for early-stage founders is crucial.
  • The individual should be dedicated to early-stage investing and see it as potentially their life's work.
  • The partner should bring a new element or dynamic to the team, be a systems thinker, competitive, have a unique network, and be a potential leader.
  • Kindness, not taking oneself too seriously, and being enjoyable to work with are also important traits.

"And so we think, will this person be a founder magnet? Someone founders are absolutely effusive about, someone that the best founders are dying to work with."

The quote emphasizes the importance of the new partner being highly regarded and sought after by founders, indicating their potential positive impact on the firm.

Todd Jackson's Transition to Institutional Investing

  • Todd wanted to join a fund for the partnership aspect, preferring to learn from more experienced investors.
  • He reflects on the importance of mentorship and how it has been crucial in his career development.
  • Todd plans to bring his mindset from angel investing to First Round and is excited about the accelerated learning from working with the team.

"So the biggest reason that I wanted to join a fund instead of starting my own fund or instead of staying as an angel is that I really wanted partners."

This quote explains Todd's motivation for joining First Round, highlighting the value he places on collaboration and mentorship within a team.

Generational Transition in Venture Firms

  • Generational transition is often challenging for venture firms and can be a leading cause of their demise.
  • Success in transition depends on the team's orientation, individual goals, and a culture that aligns team and individual success.
  • First Round operates with a team approach to decision-making, investing, and brand building, avoiding politics and power vacuums.
  • Consistency in product delivery and serving the entrepreneur is essential, with each partner contributing to the firm's collective success.

"Yeah, it's a great question, and certainly I've heard more than once that generational transition is the number one cause of death for venture firms."

The quote acknowledges the difficulty of generational transition in venture firms and sets the stage for explaining First Round's approach to avoiding common pitfalls.## Consumer Perspective in Venture Capital

  • Tod and Haley, as consumers of the product, have a unique perspective on what founders need from investors.
  • Their recent experience on the other side adds value to their current role.
  • They can contribute effectively from day one due to their firsthand understanding.

"What's really special about both Tod and Haley is that they've been consumers of this product. So they have the added benefit of being on the other side of things very recently."

This quote emphasizes the advantage that Tod and Haley have in understanding the needs and perspectives of founders, given their recent experience as consumers of venture capital.

Venture as a Product

  • First Round Capital is recognized for productizing venture capital.
  • They focus on building a community and content platform for founders.
  • The firm is known for its team-based approach, collaboration, and support.

"I think it's where first round really have innovated so well in terms of viewing venture as a product."

The quote highlights First Round Capital's innovative approach to venture capital, treating it as a product that includes community and support, not just funding.

Book Recommendations

  • Todd recommends "Creative Selection" for insights into Apple's design process.
  • "Trillion Dollar Coach" is suggested for its leadership lessons and early Google insights.
  • Both books are influential in understanding product development and leadership.

"The first one is Creative Selection... And the second is Trillion Dollar Coach..."

This quote is Todd giving book recommendations that have influenced his understanding of product design and leadership.

Team Importance in Venture Capital Success

  • A VC's success is defined by their team and partnership.
  • Investing in the team's growth yields significant returns.
  • Great partnerships earn the right to serve top founders.

"Your team will define your success. They'll make you better, and any investment you make in pushing them to be their best will come back to you sort of ten times over."

Finn explains the importance of a strong team in venture capital and how it contributes to a VC's success.

Reflections on Selling a Startup

  • Todd reflects on whether selling to Twitter was the right choice.
  • The decision-making process was thorough, like a fundraising round.
  • Despite challenges, the experience was valuable and provided learning for future advising.

"We ran a really good process... And so that allowed us to really control the timeline and get a great outcome on the acquisition, if I'm honest."

Todd discusses the structured approach they took when selling their startup, which led to a positive outcome despite uncertainties.

Defining Success as a Venture Partner

  • Success in the first year is about influencing partnership decisions.
  • It involves contributing to investment discussions and firm strategies.
  • The goal is to increase one's ability to engage the partnership over time.

"How do you move the room to make a higher quality decision is the critical metric."

Finn describes how influencing the partnership and contributing to high-quality decisions is a measure of success for a new venture partner.

Mentorship and Career Guidance

  • Todd has been mentored by several product leaders and Josh Kopelman.
  • Josh's advice on making the right career choices has been significant.
  • Mentorship has played a crucial role in Todd's professional development.

"Josh was my first call. And as we discussed, Josh is really big on this idea of the pick."

Todd shares how Josh Kopelman's mentorship and emphasis on making careful career choices have influenced him.

Disagreement with Common Advice

  • Finn disagrees with the notion that ideas don't matter in startups.
  • He believes ideas are critical and can drive a team through uncertainty.
  • Great ideas, combined with execution, are essential for startup success.

"The idea is the most valuable thing you have when you start, and the best ones are the result of a tremendous amount of work and effort, experience, insight."

Finn counters the common advice that ideas are not important, arguing that they are indeed valuable and foundational for startups.

Personal and Professional Investments

  • Todd discusses his involvement with Papaya Payments and Snack Pass.
  • Both startups have had successful funding rounds and offer innovative solutions.
  • His choices reflect a focus on user experience and potential for growth.

"First is Papaya payments... And then Snack Pass."

Todd shares his personal and professional investment choices, highlighting their innovative solutions and his reasons for excitement about their potential.

Venture Community Recognition

  • First Round Capital is respected for their approach to venture capital.
  • Their community and content platform are seen as innovative contributions.
  • The venture community acknowledges First Round's success in productizing their services.

"I think it's absolutely something where the venture community fully recognized and respects all that first round's done in terms of productizing venture."

Harry Stebbings expresses his admiration for First Round Capital's achievements in the venture capital industry, particularly their innovative approach to treating venture as a product.

Learning from Experience

  • Todd reflects on the lessons learned from selling his startup to Twitter.
  • He gained firsthand knowledge that is now valuable in advising other founders.
  • The experience, despite its challenges, was financially and professionally rewarding.

"It was a really good learning experience."

Todd reflects on the acquisition of his startup by Twitter as a valuable learning experience that contributes to his ability to advise founders today.

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