22 September 2022
Link to podcast: https://ventureunlocked.substack.com/p/discovering-talent-before-its-obvious#details
Link to transcript: https://docs.google.com/document/d/1XeMAn04_ah0ob-weMKI0-HZ2dAT4Ax9h/edit
Sajith: I thought this was an excellent podcast episode. Contrary is a very differentiated venture firm – they identify talent before they are thinking of starting out, creating a community of such talent, supporting them at various inflexion points and hopefully writing the first cheques into them when they are starting out. (Similarities with South Park Commons which also has this community → funding element.) It was interesting reading about their modus operandi, and how they have staffed their firms including engineers (interesting discussion about how having internal engineering / data science teams is becoming table stakes) to help them identify promising talent, and support them.
It is also a good episode to understand the challenges of fundraising – their first fund was just $2m, the second $20m and the present one $75m. One big advice from Eric for future fund managers – it is important to balance your thesis and desired stake size with some logo hunting, as many LPs didn’t find too many well-known names in their portfolio and this made the fundraising process slower than they expected.
Eric: Eric: There was no entity or organization or firm, whatever, that was focused on how can we systematically identify exceptionally talented people and then build this infrastructure that supports them for the entirety of their entire professional careers. I kept coming back to this idea and thought that there was an opportunity to build one of the most special firms of our generation, and I focused on just that.
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Our view at the very core is that venture as an industry has been slowly but surely moving earlier and earlier for much of the past six years, right?
I mean you think about a couple of different waves of venture. It is kind of version 1.0. This is a what a Sequoia has been doing for 60 years. It is finding companies that largely already exist or doing pretty well giving them a little bit of extra capital if they have.
Version 2.0. this perhaps is you know, what do I see YC pioneer 20 years ago where they went a little bit earlier and they said Hey, you know If you're sharp you have an interesting idea for a company. We'll give you a couple hundred thousand dollars and say see what happens.
But nothing existed for kind of this next chapter that we started thinking about, which was, well, what if you could actually use technology to kind of go one notch earlier than that. And build one of the best venture firms of our generation focused on, okay, how do we identify the brightest people in the world first. First meaning oftentimes before they even start their first company. And then how do you build the infrastructure that allows us to kind of relentlessly support these people for their entire professional career?
So, think about it as you are getting ready to graduate and we help you find your very first job at a hyper growth start-up. You're three, four years out of school and you're thinking about kind of riffing on a project, we connect you to the Denver co-founder. You're five, seven years out of school and you're raising your seed round and we're your first check, right? All the way through, you're 15, 20, 25 years out, maybe you've exited your first company, now you're an LP with Contrary, you are co-investing alongside us, you are mentoring the next generation of people in the Contrary community, right? And so, you are truly building this institutional lifelong affinity. And I think that is special, that is something that's not really being done today in the venture world. And I think maybe with the sole exception of YC, there's no real institutional loyalty in the venture world, right? You think about, pick a venture fund, right? Oftentimes that founder might say, oh, yeah, I really love Mike, right? Or I really love Samir, remember, right? But they don't really care that much about the venture firm, right? Whereas with Contrary, if you talk to the average person who's a part of Contrary, they love Contrary. That is something that's truly, truly special about what we're building is it's not about Eric, it's not about anybody else on our team, it's about building like an enduring lifelong kind of organization, you know, that people can be a part of for their entire professional careers in tech.
Eric: ….in a given year, we might add anywhere from 30 to 50 people, let's say, to what we call our fellowship community, which is our core community of folks that are part of the Contrary. And once you basically become a part of the ecosystem, we commit to supporting you for the long term.