Scott Jacobson - Madrona Venture Group - What Fuels You

In this episode of "What Fuels You," Scott Jacobson, Managing Director at Madrona Venture Group, shares insights from his 14-year journey helping early-stage technology companies scale. He discusses his transition from Amazon, where he led product management for the third-party seller platform and the Kindle's launch, to venture capital, emphasizing the importance of learning and working with people you respect. Scott reflects on the challenges and rewards of investing, highlighting the significance of being customer-centric and data-driven. He also shares personal anecdotes, revealing his passion for cars and lifelong learning.

• Scott Jacobson is a Managing Director at Madrona Venture Group, focusing on early-stage technology entrepreneurs in the Pacific Northwest.
• He serves on the boards of companies such as Rover, Flex, and CommerceIQ, with a focus on consumer businesses or business technologies with a consumer component.
• Prior to Madrona, Scott worked at Amazon, leading product management for Amazon's third-party seller platform and the launch of the original Kindle.

"Scott is on the boards of companies like Rover, Flex, and CommerceIQ and focuses much of his energy on consumer businesses or business technologies that have a significant consumer component."

• This quote highlights Scott's role and focus areas, emphasizing his involvement in consumer-centric technology ventures.

• Scott humorously identifies himself as more of a creator of pet peeves rather than having them himself.
• He describes himself with three words according to his sons: fun, stern, and dad.
• Scott's hidden talent is washing dishes, a skill he honed during his early days with his wife, Karen.

"I'm more of a creator of pet peeves than a sufferer of one."

• This quote reflects Scott's humorous and self-aware nature.

"My hidden talent... I'm great at washing dishes... when Karen and I were in our first house, and it was just the two of us, that was my job."

• This quote reveals Scott's appreciation for hands-on work and his ability to find joy in simple tasks.

• Scott is an underdog fan, expressing a preference for sports where unexpected victories occur, like the American ice hockey team's win against Canada.
• If he could teleport, he would choose a sunny location like Hawaii with his wife, indicating a preference for warm, relaxing environments.

"I love teams that are not supposed to win who win... I'm a big underdog fan."

• This quote illustrates Scott's admiration for unexpected triumphs and his support for the underdog.

"It would definitely be with my wife... maybe Hawaii, you know, somewhere sunny and warm."

• This quote highlights Scott's desire for quality time with his family in pleasant, sunny locations.

• Scott grew up in Deerfield, Illinois, a suburb of Chicago, describing it as a safe and friendly place similar to Seattle.
• He attended public schools and later Northwestern University, developing a stronger focus on academics as he progressed through his education.
• Scott values learning ways of thinking over acquiring specific knowledge, a philosophy he attributes to his educational experiences.

"It's just sort of a nice, easy place to grow up... kind of like Seattle in that everybody's friendly."

• This quote provides insight into Scott's upbringing in a nurturing and safe environment.

"To me, it's more about learning ways of thinking... you can get a lot of knowledge from reading books, and I like to read."

• This quote emphasizes Scott's belief in the importance of critical thinking and understanding over rote memorization.

• Scott enjoys reading and listening to podcasts, balancing work-related content with leisure reading in genres like sci-fi.
• He prefers in-depth journalism and analysis, citing sources like "The Information" and "Stratechery" for their deep dives into technology topics.

"I really prefer the people who go deep... like the information is an example of a tech blog that does kind of deep."

• This quote underscores Scott's preference for thorough, analytical content over superficial reporting.

• Scott's interest in technology was influenced by his father, an engineer at Bell Labs, who valued hands-on work and personal satisfaction over career advancement.
• His career in venture capitalism was unplanned, stemming from a desire to build outside of Amazon's platform and serendipitously joining Madrona Venture Group.

"If you do what you love, you know, what fires you up, and you do it with people you like, everything else will work itself out."

• This quote reflects the life philosophy imparted by Scott's father, emphasizing passion and respect in one's career choices.

"I had not intended to be a venture capitalist... I was working on the original Kindle and thought it'd be cool to try to build stuff outside of this great platform."

• This quote reveals Scott's initial intention to explore opportunities beyond Amazon, leading to his venture into venture capitalism.

• Scott Jacobson's journey from Amazon to Madrona Venture Group highlights his passion for technology and entrepreneurship.
• His personal anecdotes and career insights reflect a commitment to personal satisfaction, intellectual curiosity, and the value of meaningful work relationships.

• Bi-directional agreements can provide a mutual commitment beneficial for both parties when exploring career paths.
• Such agreements allow individuals to gain valuable experience while providing employers with a stable workforce for a specified period.

"We kind of had this kind of bi-directional agreement where, even though I was interested in startups, it's not worth a firm hiring you for six months and then you disappear."

• The speaker highlights the mutual benefits of a bi-directional agreement, ensuring stability and learning opportunities for both the employee and employer.

• Consulting and investment banking provide a strong foundation for quickly adapting to new industries and opportunities.
• These fields equip individuals with skills in data gathering, analysis, and strategic thinking, essential for investment and business decision-making.

"People with investment banking and consulting experience have a really good foundation for kind of anything from there."

• The speaker emphasizes the versatility and foundational skills gained from consulting and investment banking, useful in various career paths.

• An MBA from a prestigious institution can significantly enhance a resume and provide networking opportunities.
• Business school offers a chance to learn new skills, experiment, and transition into different career roles.

"Business school is kind of a natural break, where you sort of get to learn and experiment and be curious, but then people hire out of there."

• The speaker describes business school as a pivotal opportunity for career transition and skill acquisition.

• Amazon's focus on customer centricity and raising the bar for hiring is integral to its success.
• The company emphasizes data-informed decision-making, while also valuing customer experience and narrative.

"The customer centricity element and focus on customers, not competitors, to me is sort of the golden rule."

• The speaker underscores the importance of Amazon's customer-centric approach as a foundational principle for success.

• The speaker contributed to the development of the Kindle and self-publishing platforms, empowering creators and expanding content availability.
• The work involved transforming digitally scanned books into ebooks, enhancing Amazon's selection and competitive edge.

"One of the things I wrote was the spec for what's now called KDP; it's basically the way that people can self-publish on Kindle."

• The speaker highlights their role in developing a platform that democratizes publishing, allowing creators direct access to distribution.

• Amazon is building strategic assets, such as its own delivery network, which positions it as a major player in logistics.
• The company's scale allows it to develop and expand these assets, enhancing its competitive advantage.

"Amazon is now the third largest deliverer of parcels, right, so between behind FedEx and actually sorry, I think between UPS and USPS maybe, and I think they just surpassed FedEx."

• The speaker discusses Amazon's strategic growth in logistics, emphasizing its evolving role in parcel delivery.

• Amazon's investment in drone delivery and autonomy signifies their commitment to innovation in logistics.
• Regulatory challenges, such as those from the FAA, impact the pace and scope of drone delivery implementation.
• Amazon's acquisition of Zoox and investment in Rivian highlight their focus on autonomous and electric vehicle technology.

"They bought a company called Zoox, which is an autonomous navigation, you know, car navigation thing. They're big investors in Rivian, which is not an autonomous vehicle company; it's an electric vehicle company."

• Amazon's strategy includes diversifying their logistics capabilities through investments in autonomy and electric vehicles.

• The speaker transitioned from being an operator at Amazon to working with entrepreneurs, which provided new learning opportunities.
• The role involves a significant amount of connecting with people and understanding their visions for the future.
• The speaker enjoys the dynamic nature of working with various entrepreneurs and the continuous learning it offers.

"I just fell in love working with entrepreneurs, you know, that was not something that I had the opportunity to do in my past lives."

• The transition allowed the speaker to leverage past experiences while embracing new challenges in the investment world.

• Venture partners add value beyond financial investment, including product development support and opening doors for entrepreneurs.
• The importance of personal chemistry and shared vision between entrepreneurs and investors is emphasized.
• Flexibility and openness to change are crucial traits for both investors and entrepreneurs.

"It's about the partnership, you know, and about the chemistry and the personal chemistry but also, you know, having a shared vision but not having a fixed mindset."

• Successful partnerships are built on mutual understanding and the ability to adapt to new information and circumstances.

• Madrona has grown its fund size and expanded its strategic focus from early-stage to later-stage investments.
• The firm's approach has shifted to maintaining long-term relationships with companies beyond their public offering milestones.
• Emphasis is placed on building a team where new members are seen as bringing additional strengths to the firm.

"We want to be there at the very early stages, but we want to help entrepreneurs through their whole journey."

• Madrona's evolution reflects a commitment to supporting companies throughout their entire lifecycle, enhancing both firm and client success.

• The speaker reflects on a missed investment opportunity with Twilio, highlighting the importance of recognizing innovative business models.
• The experience underscores the value of understanding market potential and the scalability of new sales models.

"We weren't sure about whether the kind of bottoms-up developer-oriented sales model and like going to conferences and kind of selling that way would be a way to scale the business, and that was 100% wrong."

• Learning from past decisions is crucial for refining investment strategies and recognizing future opportunities.

• Gut feel plays a significant role in assessing entrepreneurs and the potential of markets that do not yet exist.
• Building relationships with entrepreneurs before investing is preferred to ensure alignment and mutual understanding.
• Trust and empathy are key components of successful long-term investment relationships.

"Gut is certainly a big factor around people. It's like any close relationship; if you're going to be on somebody's board, it's going to be a five to ten-year journey in all likelihood."

• Intuition and personal connections are integral to making informed investment decisions and fostering successful partnerships.

• Discusses the company's resilience and adaptation during the pandemic, highlighting the importance of evolving business models to survive and thrive.
• Emphasizes the significance of turning near misses into exciting opportunities and the potential for companies to grow larger than before.

"It's not always about who's raised the most money or, you know, I mean, we've got lots of great stories about, you know, small to big and those are great too, but the, you know, near misses, you know, that turn into something really exciting, I mean, that to me is like the best exciting."

• Highlights the value of unexpected successes and the potential for growth despite setbacks.

• The pandemic accelerated certain technology segments and changed investment dynamics, with unexpected increases in investment activities.
• The shift to remote work highlighted the importance of technology and software, creating new opportunities in the industry.

"I wouldn't have predicted that certain segments of, you know, in the industry, certainly technology, would accelerate in the way that they did."

• Indicates the unexpected growth in technology sectors due to increased reliance on remote work solutions.

"In the technology sector, you know, people's productivity is driven by their ability to use technology, and so everybody's working from home. Well, guess what? Technology and software is that much more important."

• Emphasizes the critical role of technology in maintaining productivity during the pandemic.

• Describes the speaker's interest in classic cars and the entrepreneurial venture of electrifying old vehicles.
• Highlights the beauty and potential of preserving classic car designs while modernizing their functionality.

"I like the beauty, I'm, aesthetically, I enjoy like old cars. I just think there's something about it."

• Reflects the speaker's appreciation for the aesthetic and historical value of classic cars.

"Electrifying old vehicles to me is sort of a really neat opportunity. We're not, you know, we're just getting started on, you know, figuring out how to do, you know, vanilla, but that's another thing I'm super passionate about because I think that is the future."

• Shows the speaker's enthusiasm for modernizing classic cars and the potential market for electrified vintage vehicles.

• Discusses the importance of engaging in hobbies and activities outside of work to maintain balance and mental clarity.
• Highlights the speaker's involvement in hands-on activities like working with cars as a way to reset and recharge.

"It's also fun just to, you know, not have, you know, to not do that. I talked about like reading, you know, besides flinging wrenches which I'm not good at, but you know, like getting to sort of look at, you know, how does this work."

• Emphasizes the value of engaging in different activities to refresh the mind and gain new perspectives.

• Describes personal rituals and routines that contribute to productivity and well-being, such as making coffee and engaging in exercise.
• Highlights the speaker's preference for simple, rewarding tasks that provide a sense of accomplishment.

"One thing I've really enjoyed and I've got where investors a company called trade coffee which is like a really high quality like a craft coffee kind of membership club."

• Illustrates the speaker's appreciation for quality and ritual in daily routines, contributing to a balanced lifestyle.

"Running is kind of my jam, you know, I have a friend that I run with, Dave Glick, who you had on your podcast on this."

• Reflects the importance of physical activity and social connections in maintaining personal health and motivation.

• Emphasizes the role of curiosity in driving personal and professional growth, highlighting the speaker's commitment to continuous learning.
• Discusses the motivation to explore new ideas and envision future possibilities.

"I would say curiosity and, you know, I mean that I sort of talked about lifelong learning, but you know, it's, I get energy in finding new things and learning about new things."

• Highlights the speaker's belief in the power of curiosity to fuel innovation and personal development.

"I always wanna, I'm a continuous learner, I always wanna come up to speed on something, imagine what the future could be."

• Demonstrates the speaker's dedication to staying informed and proactive in exploring emerging trends and opportunities.