5th October 2022

Link to podcast. Link to transcript (organised by Sajith Pai, as Venture Unlocked doesn’t publish transcripts).

Sajith: Good listen / read for those on the venture side, though nothing exceptional. Aydin Senkut, an early ex-googler PM who became a super angel and then set up what has come to be a well-regarded venture firm with an exceptional track record (47 unicorns!). I found it interesting that despite raising a small $40m fund early in their history, they did not restrict themselves to preseed companies in the US. Instead they took surprising Series A and B bets as well as pursued international investments in Canada (Shopify), Finland (Rovio) and Australia (Canva). Their international strategy was cherrypicking the best co in a geography instead of opening an office and looking at all the companies (many subpar) in that market. I also loved the story he gave of the Michelin Chef whose strategy for the best food is “start with the world's best ingredients and then I try to do as little as possible”. This is broadly true of startups too - the best founders need the least help.

First show presence (in a great co) or logos, then optimise for ownership

Aydin: …in venture you have two step functions. One is you first have to build a brand and reputation of a track record and only after that you can kind of start capitalizing. So, we said, listen, first part of the firm, first decade, we're only going to optimize around track record of great companies and then we can go back and start optimising around ownership and other stuff, which experienced LPs will tell you these five things, but I will tell you from that you cannot optimize five things at once. You have to kind of make your choice. (Sajith: Similar to what Eric Tarczynski of Contrary says)

The second thing is I took a page from General McChrystal's book. We went from a solo practitioner, practice to a single team to then go to a team of teams.

Felicis’s international strategy was to cherrypick the best companies in a geo than set up a local office

Aydin: …we did some really creative, smart things internationally. Until then, every venture fund’s international strategy was to open up in Europe, in Israel, in Brazil. Every time they had a country, they would go open up and I am like, listen, this is the biggest, well, I don't want to say waste of time, but it was very ineffective because just for the sake of finding five or 10 companies in that country, now you have to look at 990 mediocre or subpar companies. And we said, listen, if we say we are going to do global reach, but only for the best companies, but not go specifically by country, when we invested in Rovio, the goal was not to invest in a Finnish company, we wanted to invest in the best mobile company and at the time that was the number one mobile app. When we invested in Shopify, the goal was not to invest in a Canadian company, but the best commerce platform and it happened to be in Canada, in Ottawa. When we invested in Canva, the goal was not to invest, you know, in an Australian company, but, hey, a company that can democratize the application of design beyond Adobe, right? It just happened to be in Sydney.

Venture is an outlier business. Only the bold win.

Aydin: which one of these companies got to be a winner and which one of these companies is its total lottery ticket, you know. I am going be very honest with you and confess more than 50%, maybe up to 70%, were companies I didn't expect. But I could see what the initial signs were of what made them successful. So venture is full of these rules that, while it might have made sense when you came up with it, absolutely do not apply to all the companies. Venture is an outlier business. And by sheer nature, you cannot put outlier companies into a formula. You can't just say, you had one bad experience, and you're, we're never going to invest in a company where the founders are in a relationship. Total scrap. It's totally random.