EP16: Opportunities in Marketplaces, Future of Work, and Fintech, with Don Stalter, investor at Global Founders Capital and former Head of International at Airbnb & Groupon

Don Stalter is a Partner at Global Founders Capital (GFC) and has an incredible portfolio of investments including Brex, Deel, CultureAmp, Checkr, FamPay and many more. Before transitioning into an investment role, Don was a co-founder of CityDeal which he sold to Groupon, and subsequently led International at both Groupon and Airbnb.

In this conversation we talk about Don’s learnings from working on two of the most explosive marketplace companies of the last decade (Groupon and Airbnb), and trends/opportunities he’s seeing in Marketplaces, Future of Work, and Fintech.

In today’s episode we discuss:

1. Early career 
   1. What led you into investment banking and M&A work early in your career?
   2. Having worked on blockbuster deals like Google/YouTube, Google/DoubleClick, Disney/Pixar, what were your biggest learnings from those experiences?
2. Founding CityDeal and selling to Groupon 
   1. What led you to founding CityDeal and ultimately sell to Groupon?
   2. What was your approach to running international at Groupon?
   3. What did Groupon get right in the early days, and what could they have done better?
3. International at Airbnb 
   1. What was your approach to international growth at Airbnb?
   2. How did you prioritize what to focus on during hypergrowth?
4. Marketplace investments 
   1. How do you evaluate marketplace businesses as an investor?
   2. What are your thoughts on B2B marketplaces which seem to be a new trend?
   3. What have been some of your learnings investing in digitization of older industries?
5. Future of work investments 
   1. What was your original thesis that led to investments like Deel, CultureAmp and Checkr?
   2. In a pod covid world, how do you think about remote tooling opportunity for productivity?
6. Fintech investments 
   1. What are some trends and thesis you’re most excited about?
   2. What are your observations on crypto and NFTs?
7. Transition to VC 
   1. What do you think makes a great operator vs a great VC?
   2. Has your operating background helped you as a VC?
8. Closing thoughts 
   1. What are your superpowers that you like to lean on day to day?
   2. Who are some people that have given you a meaningful break?
   3. What books have had an outsized impact on your life?

Links

• Follow Don on Twitter
• Some companies mentioned in the episode: Blueland, Cedar.ai, Checkr, Deel, Brex, Karat

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Transcript

0:04  
Hey there, you're listening to paradigm shift, a podcast about people building the future and pivotal moments in their journey. I'm Ashish. And I'm joined by my co host, Zane. And today we're thrilled to speak with Don Stalter, who's a Partner at global founders capital, where he's invested in breakthrough companies like brex, deal, culture and fan pay, and many more, before becoming a VC. Don was VP of international growth at Groupon. And he also after that led international expansion at Airbnb during its hyper growth years. Don, thanks so much for taking the time to chat with us today.

0:42  
Delighted to be in touch guys.

0:43  
I kind of want to set the vibe for the listener because we may not upload the video, but I just want to call out that, Don, you've got a beautiful background behind you where Zane and I are super jealous. Were on this beautiful earth are you right now.

0:57  
Thank you so much. I'm on a ferry from Bainbridge Island, to Seattle, up in Washington State. I just had lunch with a friend with another investor. And he happens to be from San Francisco as well. But with remote work and everything else. So folks are visiting all sorts of beautiful locations right now.

1:13  
That's amazing. And that's actually a theme we're going to touch on later on in the episode. But why don't we start at the beginning of your career before the movement towards remote work and marketplaces. You started your career on Wall Street. Is that right? Tell us about that? What brought you there and what kind of things were you working on?

1:30  
So I started my career in investment banking in San Francisco, and Wall Street. Coming out of the University of Chicago, everyone went to New York City, I ended up on the breezy West Coast wearing flip flops, and was able to work on some really exciting deals at Credit Suisse, where we represented Google and did the Google YouTube deal. The Google double click deal, the Pixar Disney m&a transaction and a whole variety of others. And I'd say I was very fortunate to work in San Francisco because the Silicon Valley magic was very much at work. And then we worked on some of the most innovative and disruptive technologies as investment bankers versus maybe on more incumbent antiquated industries.

2:11  
So you work on these massive m&a deals, Disney Pixar, that changed the course of several major companies. Were there any takeaways from that time,

2:20  
I'd say the exciting and interesting thing about Silicon Valley, and mergers and acquisitions within the technology scene is that strategic acquisition, meaning an opportunity to buy something that would reinvent the tooling of a buyer or just improve the future of a buyer, it was something that we thought a lot about, it wasn't always one plus one equals two is a lot of one plus one equals five or 10. Or, you know, 20, in the instance of Disney, and Pixar really is pioneering a completely new way to make films, and is evolved into something that's incredible and moving in the direction of virtual reality. Google, YouTube was similarly epic, I think YouTube at the time was doing something in the realm of just north of a million in revenue, the acquisition price was something like 1.6 billion. And so if you were to put a multiple on that's, you know, pretty lofty multiple, but, and some people thought that acquisition was crazy. YouTube is one of the biggest cash generators for Google today, and really presents an absolutely incredible, you know, multi billion dollar opportunity. So who would have thought back in the day that these businesses could have been so disruptive and so innovative? So as a banker working in tech, we always put a premium on the future, which was super exciting. Yeah, that's such an incredible

3:38  
deal. I think YouTube's doing, like 20 or $30 billion a year in revenue. Now. It's just like crazy. And it happened fast. So it hasn't even been that long. I'm curious. Is it common for investment bankers to be part of tech m&a deals? Or was that kind of unusual? That's a part of the the acquisition story that doesn't get told, what was the behind the scenes of that like and how to how does the m&a part of it fit in with investment banking? Usually,

4:01  
yeah, there are a lot of investment banks with tech groups, but I feel like I was part of one of the groups that really pioneered it. In San Francisco. It was the group that Frank Quattrone, who founded catalyst partners actually founded, and I worked under George Boutros, who's a co founder of catalyst now. So I would say the top tech investment bank on the street course everything was in Silicon Valley process of getting these deals done of making these opportunities work. We're a product of having deep networks and relationships with all the best venture capitalists with all the best entrepreneurs and serial entrepreneurs who build new businesses, the senior bankers, the relationship managers on the team could see those opportunities coming up before anyone else so similar to a venture capital deal where we're looking at and making an investment in a founder who's covert leaving stripe or just a top person. relationships matter one heck of a lot. And I think in kind of the technology m&a scene, do they really matter as well, but on top of it, positioning and other Understanding that technology is not something that everyone can possibly do. So we had a lot of folks on the team who'd, you know, worked at incredible tech startups who were engineers themselves. So the approach the bankers on the team took and the knowledge bases of the bank were different from your white shoe finance focused folks that you'd seen in Wall Street, it was a probably more, you know, creative entrepreneurial batch than you typically see.

5:23  
And what's the biggest thing a banker brings to the table in that transaction? Because presumably, YouTube was already talking to Google, right? Because I think Sequoia invested and they'd invested in both companies was the main value of having an independent, like m&a team, like around the pricing, and like how you structure the transaction? How should one think about it

5:42  
is it's actually a really good question, pricing, structuring partially dictated by a big buyer like Google, for example. But when you've got a lofty valuation off the back of a de minimis revenue, is the strategic exit. If the exit doesn't actually work out, and the synergies that are described, don't work out, then in some cases, there's a liability. So banks will do what's called a fairness opinion, on occasion, meaning they believe that the valuations merited off the back of future cash flows, that assure the model is able to speak to that was a big part of that transaction, and is a big part of transactions that are more strategic and maybe less financial in nature. So you got to think about the future. And you got to think about the strategic imperative of an acquisition rather than, you know, purely the financial, which is pretty cool.

6:27  
So how did you think about what to do next, growing up,

6:30  
I'm from Minnesota, originally, my family lived in Belgium, and they lived in Germany live in the UK when I was just 12 1314 years old. And I love languages. I loved Europe. After Credit Suisse, I moved to London, I worked for a PE shop that invested in technology businesses. And while I was there, I saw a whole variety of really amazing entrepreneurs come up the founders of Klarna, we actually issued them a term sheet for their series, a founder of unity technology. In the very early days, that seed round, or that Series A round. She was done by Sequoia Karna was done by Sequoia as well. But we were very excited about my old fund. And left and right, I was seeing friends, I was 26 years old starting businesses. And I spent some time in Germany during college and met some really famous German entrepreneurs in London, named Sam were brothers. And you know, they were in the throes of thinking about building a whole variety of businesses, one of which surrounded Groupon, which was this massive success, all over TechCrunch billion dollar valuation, and so on. And I started moonlighting with them, and we pulled together a team very rapidly and built a business called City Deal. There was a daily deal site start started in Liverpool Street Station in London, on East London, built up a team hired a variety of stock brokers who wanted to work in stride instead of working on in finance, and developed a team that became very sort of KPI driven, leveraged my finance experience to do a lot of tracking in terms of the number of new customers that we could bring onto the platform per day. And just metrics orientation that helped us scale the business very rapidly, we expanded into a whole variety of markets across Europe, across Asia, we started acquiring businesses. And then Groupon bought us ultimately about a year and a half into the journey, where we ended up running international for Groupon, and probably 50% m&a, and then 50% Organic are building up offices, I was able to leverage my experience from Credit Suisse to help value businesses that we wanted to buy. One of the most unique kind of stories was buying a face book of Taiwan for a relatively cheap price, and actually turning it around and turning it into a Groupon like model. Facebook's got an AD team. Typically, we leveraged that sort of AD team to go out and to help acquire spas, restaurants, and all the other businesses that you feature on the Groupon website, we repurpose the technology team to be more of a Groupon type of thing. There was a total like refiguring of a business to be part of the broader Groupon organization. So many stories from those days. That was an incredible experience.

8:51  
That's really cool. I remember Citadel getting acquired action. I remember that hay day like it was a really special time in Tech where Groupon was just like writhing in a way that we hadn't really seen companies grow that quickly before. It sounds like a city deal. You had a really big emphasis on speed, because you scaled this business up super quickly. What were some of the key things that you did to help you move so

9:13  
fast, higher, extremely rapidly, be extremely KPI driven, and go into the little lower layers with the KPIs the tracking of the times that folks brought into the office, the number of calls that people made, the margin profiles of the deals that we did, the locations of the best deals, I mean, we had 30 Plus KPIs around, you know, everything that folks did, and that was the only way that we could imagine actually scaling that business. Every new person we brought in, we had a set of KPIs for and it just ensured that there was a trajectory towards the target. If we hadn't tracked things that way. If we hadn't pushed things that way, probably would have been a disaster. And were you setting like aggressive goals with these KPIs to we're setting aggressive goals, and every time we hit a goal, we increase the target and increase the goals and end up being sporting a lot have directions, we created something called the Champions League, where the best offices ended up winning prizes. And so there's a friendly kind of like desire to win that a whole bunch of managers had. And I remember at one point, we bought this business in Japan. And we weren't hitting our numbers in Japan for a minute. But the the leader of that office was given the incentive of a Ferrari if he was able to actually hit some numbers and any hit those numbers, and we actually brought a Ferrari into the office and put it on the sales floor. And that was his big prize. It's pretty freaking awesome.

10:31  
That's incredible. Yeah. So the company got acquired by Groupon, you joined Groupon, I think it was like months before Google made this massive $6 billion offer for Groupon. What do you think Groupon got right? In those early days,

10:44  
there was immediate product market fit, at least ostensibly, at scale, some of the deals and some of the kind of structuring could have been optimized, but from sort of day one, there was traction, which was Zillow, who doesn't want to get more customers, and who doesn't want to get more customers at scale and was coming out of the hole like financial crisis mentality a little bit. And every sort of mom and pops upstart wanted to acquire more customers, if

11:09  
that makes sense. And then, of course, like Hindsight is 2020. Groupon, I think, struggled to maintain the relevance over time looking back on that, do you think there were opportunities that Groupon you might have considered to better protect their market share?

11:22  
I think that you look at who paying for example, out of out of Korea, it's a different era, really, but they've built some really fantastic technology. And so I think that we executed very well with Groupon. I think if we were able to apply the same technology that exists today to the business, it might have been even more scalable.

11:40  
Can you elaborate on that? Yeah. So

11:41  
cou Pang is call it like the Amazon of Korea, but they've gotten they started out almost as like a as a local business ecommerce sites. And in that they evolved to a point where they're able to do a whole bunch of inventory tracking, and ensuring that they match the right customers with the right inventory, similar to what you with Amazon. So I think that, you know, if we were able to implement that same technology back in 2009 2010, we may have seen even more of a hit with Groupon. Right?

12:07  
That brings up an interesting contrast with where you ended up next, which was also like an incredible marketplace, which is Airbnb, but a very different international strategy. I think Airbnb did not do very many acquisitions. In fact, I think they like almost seemingly avoided them. So we'd love to hear a little bit about what did you learn at Airbnb? Or what did you see that that maybe worked differently, or better and worse, the

12:27  
Groupon experience was a fantastic one. And just rolling up your sleeves and tracking KPIs and acquiring customers and learning how to be charismatic and acquiring those customers and really putting elbow grease into all of it. With Airbnb, the business was growing virally, back in 2009 2010. Already, there are already hosts who are uploading their profiles to the website who were filling in descriptions, who were pricing those listings. And it was a business that, you know, didn't require that level of elbow grease, that didn't necessarily require that sort of level of intensity in terms of outbound. And when I joined, they were starting to see folks in Australia, and in Germany, and in a variety of different GIOS, I really started to appreciate the website and start to upload and you'd see listings, and you'd see travelers from all around the world, go to these different locations and write reviews. And so there was an inkling that there was really something there that was really starting I was enlisted really to help bring a little bit more operational acumen to the business back then, around maybe some of the stuff that we did at Groupon, where we would set up offices, and we would help acquire more listings or supercharge that existing virality. By doing community programs, ie getting folks together host guests, we call them activation teams, in cities all around the world, in educating them around Airbnb, and around the key KPIs of listings that would ensure that those listings would convert these of you guests were similarly KPI driven or metrics driven. When we looked at a listing, we wanted to make sure that the price was right, that the location was right, that description was well written and SEO optimized that the photographs were fo that were enticing, that would actually convert. So we were really like rolling up our sleeves and making sure that the listings themselves increased exponentially. And then the conversions across those listings also increased. In the case of listings that were less successful, we also deactivated those listings, because ultimately, listings that weren't rendering any revenue recording spent money on driving folks from Google to those listings, and just wasn't worth the money. And ultimately, I think that there's a lot of inertia and we just poured sort of more fuel into it and just really watched it explode. certain geographies were more exciting than others. And there were really interesting travel corridors that we discovered off the back of it on booking.com or you went on booking.com. Back in the day, sort of the majority of the inventory was in major cities like New York, San Francisco and LA whereas on Airbnb, certain suburbs of Phoenix, Arizona were exciting destinations for people from northern Minnesota. was covered that off the back of the data. And then we could, you know, implement more activation processes in both of those towns, so you get a more robust revenue pipeline. And so it was really a trial and error and revenue discovery process and a lot of ways with Airbnb. And I think press played a major role there as well. So in certain locations, so we'd go into local newspapers and talk about adventures, people would take on Airbnb and enlightened local communities around how nice it was to, you know, stay at someone's home, and really demystifying staying in someone else's bedroom and turning it into something palatable, and more human than living in the Tupperware container hotel. And I can tell that story reasonably well, because with Groupon, I lived in a heck of a lot of heights. And every single room look the same. I remember from living in southern Japan to living in Jakarta, every single Hyatt hotel room was just like 100%, the same. But with Airbnb, we always got a feeling of authenticity, we connected with local communities, and sort of those storylines really resonated in the media, but just also very personally. And I think Airbnb is a very unique business. From that standpoint. It's a very, you know, sort of human integration with how society is evolving. And with what really interests people.

16:12  
That's great. I actually was nomadic for two years. And I stayed in Airbnb full time. So I'm like an Airbnb power user. Cool fan. Yeah. What's interesting about this is it sounds like Airbnb was growing virally on its own, and you understood the happy path, the organic patterns, and then you were figuring out the interventions to add fuel to the fire and accelerate, maybe grease the wheels and make the virality happen. There's a lot of moving parts to this that you've talked about. You talked about, on the demand side of doing activation campaigns, you talked about supply side tweaks and SEO and you've talked about press. So there's a lot of interventions to choose from, how did you prioritize like what you would work on? Because obviously, you have a finite number of time and resources? So how would you choose exactly what buttons to press?

16:54  
Yeah, in absolute terms, the goal was as a marketplace business to acquire as much quality supply as possible. So that was, you know, really the first step. And, as I mentioned before, our whole variety of variables, metrics, KPIs around bought made quality supply, and we learned about those over time. And in order to build quality supply, we built activation teams, we hired people in local geographies, who could speak to members of the community and convince them of the value of listing their properties. We also had design teams, who would make suggestions around how to get out those properties. We established, you know, sort of super host program, which you guys might be familiar with, which its purpose was to educate those, those local hosts and those and make sure that those listings were maintained in terms of quality. And then off the back of that kind of supply machine, we built a demand machine. And that surrounded everything from press in the media, to kind of various types of paid campaigns, although it was very demand us affiliate marketing types of strategies. And really just being able to tell and share the narrative, having the host represent that narrative in the public eye referral, strategies, events, you name it, and we did a lot of really interesting guerilla marketing stuff in conjunction with a major events in cities like the Olympics in London, Oktoberfest in Munich, whenever we saw a significant sort of boom in population Airbnb was there and helped present inventory to that to that sort of visitor traffic overflow that the hotels weren't able to take on. And there's probably a little bit more flexibility in terms of Airbnb listing prices, and everything else. So you could entertain by an even more diverse audience, socioeconomically every which way your Airbnb is more flexible than that you can more easily share an Airbnb with five people then you can the two hotel rooms or whatever. I think the other interesting thing about that piece is that people view Airbnb as inventory to be or supply be somewhat elastic, it can be activated or deactivated within a heartbeat. And it doesn't need to be fully occupied at all times in order to substantiate its existence like with the hotels. So I think that was a really unique insight that we gained over time.

19:03  
Speaking of marketplaces, like incredibly fun to work on, like, I've worked on our marketplace to come back and like just like dynamic and fun and just like just like really awesome businesses. Now you invest in a bunch of marketplaces to so how do you evaluate a marketplace investment? Like having seen so many different perspective? What do you look for in

19:19  
this day and age? So there have been so many marketplaces across so many different verticals on the consumer side, and on the business side, you name a vertical or category and there's likely to be I think, one of the unique insights with Airbnb was that flexibility of the inventory or of the supply, we look for unique insights in marketplace businesses, we look for marketplace businesses that have an interesting twist associated with them to have an impact on consumer business affinity for them, or an impact on the unit economics of the business that superlative or that plays into social conscience that is a new and undiscovered territory. So if you look right now, for example, MIT has been a major focus for investors and for the population. And we were early investors in a business called Blue land in New York City, which, as a subscription marketplace that sells detergent pot, whether it's like a cleaning detergent, or a mouthwash, or whatever it is, instead of getting a jar or a bottle with that product in it, you actually get a pod that you then you're able to put in sort of a glass bottle that you have at home. So it cuts out the waste that's associated the plastic that's associated with kind of your typical liquid products. So the unique insight there was, so you only need one bottle. And in the unit economics end up being very exciting because you got a subscription model off the back end of the pods are lightweight, so the shipping costs are much, much lower, the logistics are less concerning and there's less operational troubleshooting. Ultimately, you don't need massive warehouses, you don't need significant stocking to to make all this work. That type of thing is what we get excited about.

20:55  
Yeah, there's a bunch of those early interesting. There's another one called bottomless coffee with a bunch of coffee roasters and so on the one side, it's in hundreds of roasters and the other side, it's immersed in coffee subscription. And they put the coffee on a scale so they know when it's about to run out. And they just kept you honest, he never. They don't really awesome. The other thing trend in marketplaces I've observed is there's a bunch of like b2b marketplaces. Now, what are your thoughts on that? Is that a real trend? A seeing a lot of like successes, there are not so much

21:26  
No, I think business to business marketplaces are absolutely crucial. And I think they're part of the future of transactions. Fundamentally, I think the categories that b2b marketplaces have worked really well in recent history are your more antiquated industries like your your chemical, your plastics industry, some of your heavy industry, mining, coal, chemicals, and so on, and so forth. And what you're doing there as you're pulling those categories kicking and screaming into modernity, because a lot of stuff that they've been doing has been on pen and paper has been on whiteboards. Oftentimes, folks are still using older computers. And there's no software that has enabled them to actually drive efficiency in their businesses. And certain b2b marketplaces are grappling with a union labor laws and just a lot of friction.

22:11  
Let's talk about that. There's a couple of teams here that we want to talk to you about two. One is these Old World Industries and digitizing them, we'd love to talk with you a little bit about future of work and a little bit about intact, because those are three categories. I know you've invested in quite a bit, and you're like a 200. So let's start with the first. So in digitization of like Old World Industries, what have been some of your learnings for some of the investments you've made, so

22:34  
one thing I would say is that the old world can sometimes be fearful of new technologies off the back of kind of union concerns. But once kind of these older World Industries are exposed to new technology, and the new technology improves their lives and, you know, actually drives more efficiency, they oftentimes become very excited or enamored with it, we're investors in a really exciting business. It's a vertical SAS business called sedar.ai, which actually helps drive more efficiency in the commercial rail space departures, arrivals planning in terms of like locations of trains, on tracks, ultimately, cargo loading, and all that good stuff that's tracked pen and paper on whiteboards is now being tracked through sort of AI software. And they're addictive algorithms that, you know, help operators determine where a train should be, so that they're driven more efficiently. And that costs are then lower, have really come to the fore through their software. And I'd say they're the operators, you're probably anywhere from 45 to 65 years old, we're concerned because would they be able to adopt the technology? How complicated would it be to use like, literally, that type of thing, and for these operators are in the Midwest, and there's some variety of you know, wonderful locations across the United States, but that aren't necessarily known for technology. So whereas someone developed something like that in house, and maybe it's harder to communicate the real value there, maybe it's not adopted. So sometimes we see these technologies become adopted more easily. If they come in externally,

24:04  
you've made a bunch of investments that might fall into a future of work bucket. So deal, checker culture. Yeah, they've all done extraordinarily well. Did you come into these investments with a specific thesis? And if so, could you tell us a bit about that?

24:18  
I think that as of four, five years ago, even before the pandemic, it was abundantly clear that people could more easily work from wherever they wanted to. And I think remote teams, you know, have existed for quite a long time, particularly on the developer side, Zoom has been around for quite a while Google Hangouts, etc. And we GFC at Airbnb at Groupon. Most of the organizations I've worked at over the past 10 years, and I'm sure you've worked out over the past 10 years have had to remote we're aware of that and have the sense that the future would be even more global and even more remote in a lot of ways and McGill's kind of the thesis around it initially was that payroll and compliance was a global issue and But it had to be simplified. There had to be a sort of plug and play approach to, you know, onboarding new people, new teams. And that was the founder vision, we spent a significant amount of time with them in Y Combinator, and they actually worked out of our office in San Francisco. It was neat, because we had global teams that GFC there were supporting global teams. So we traded a lot of notes, and saw the business evolve very nicely in the early days. But then when the pandemic hit, we actually closed our office, and a whole variety of other friends, closer offices, or a lot of our startups went remote and deal of course, had a field day, because people were global remote everywhere, all the sudden, and there was no other better platform for it was part of our future work thesis. remote work has been the crown jewel, we've got a variety of other businesses that have played well on our culture and our peers to help businesses maintain their cultures through its great HR technology remotely, as well as on site. But it creates a better stickiness to the culture through digitalization, as you say, and checker checker was a personal investment a very long time ago, actually back in I think it was 2013 2014. And it really was investment off the on demand economy thesis, where this is back when Uber was still in the early days, and I was advising Hani, the on demand cleaning business that was onboarding a ton of supply. At the time, it was like during it series A or something. And these ensure that their cleaners were background checked. And they evaluated Kroll, they evaluated a bunch of other Sterling platforms that charged 1200 1400 bucks for a background check. And checker was like to drag a passport or driver's license to into a little box and their products and bam, within 45 minutes, you got a background check. There's just so much better and in the vision was so much better. And what's interesting is that full circle, these of you remote work, but if you want to background check people globally, digitally, there's really nothing better than checkers.

26:58  
Yeah, I just want to call out that all of these investments happened before COVID, which is pretty impressive. And now I feel like people get the idea. Like, obviously, everyone's been working from home for two years. Do you think currently now looking like entrepreneurs and investors fully grasp, the impact that future of work will have on us,

27:17  
my perspective is that the world has changed very dramatically that people finally understand that they're able to collaborate and they're able to be productive, without all being in the same office under one roof at all times. There are a lot of requirements to be productive. But dedication is probably at the core of it all. And different tools enable that dedication, ensuring that people are paid on time, ensuring that people have a communication channel that they're using visa via slack, sharing that everybody's feel like they're part of a team, kind of visa V culture amp. And all these mechanisms that were in place when people were all under the same roof are now being, you know, digitized and, you know, create a completely new remote tooling. That's almost like a superstructure that sort of brings people together virtually. And that works. Fundamentally, accountability is what what drives a lot of teams and business scenes that solve for a problem. And if you're able to do that kind of all under one roof or remotely. And if remotely, you're living a better life, why not? Yeah, that

28:23  
makes total sense. And of course resonates with us people have evolved in experiencing this new normal for a while. Moving forward to a third trend we wanted to talk about, which is fintech. So, what have been some of your thesis around fintech.

28:36  
So one of the key theses is that the decentralization of finance via crypto has become just an absolutely fundamental aspect of people's work life. And we're continuing to examine opportunities there, you know, where businesses themselves are able to leverage the blockchain and don't have to deal with a lot of the kind of standard concerns of financial institutions. So that's a current area that we're digging in very deeply. And we've made a couple of investments there.

29:02  
Oh, just to stay on that for a second. What are some examples of companies that you've seen do really interesting things there?

29:07  
Yeah. Yeah. So I don't know if you looked at a business called tax debt, but it actually allows for accounting and taxation of cryptocurrency and crypto transactions. And it's done extraordinarily well. We've also invested in a business called breach insurance, which is insurance for crypto exchanges. So it's a picks and shovels aspect, I think of decentralized finance and in crypto are things that we really care about. We think there's going to be an equalization across the businesses where the margins will be more interesting, and there'll be just more productivity off the back of the fewer of these like checks and balances that kind of standard financial institutions have put in place over time, meaning checks and balances, maybe just more rigid, layovers from times past that drives driving efficiency. That's an area that we're really focused on right now. Over time. As you mentioned, we invested in Brexit in the early days, which we're super, super excited and we think that they're, you know, completely different During the financial services world, as they say, sometimes they're an operating system for finance. And we see them overhauling the entire startup business, finance environment. And they certainly do have sort of some incumbents or competitors who they've, you know, collaborated with slash switch people off of which are fantastic. But I think the new generation of startups, new generation of founders, new generation of business, needs something more nimble, more flexible, more innovative, cooler, like Brax.

30:27  
One observation about Fintech is a lot of the companies in FinTech tend to raise like crazy amounts of capital. Is there something about the go to market and the types of businesses that just makes them more capital intensive? Or do you think they're not really raising that much more than like marketplaces or like,

30:41  
I think that's a really interesting point, we I do think that their capital intensive and that you have to build out completely new infrastructure. But I think you're also you know, dealing with the switching costs and educating society on how to do things better, and then also, the profitability of financial institutions, the profitability of banks, means that you're contending with some, you know, very significant incumbents.

31:05  
Yeah. And with kind of like some business model constraints, right, because most fintechs, don't do lending. Yeah, just just interchange for the most part, whereas dealing with an incumbent that has multiple lines of business. Absolutely. Any thoughts on NF T's curious to hear where you guys come out of that.

31:19  
I'm learning so much more every day about NF T's. We talk about it a lot. And we're thinking about it a lot. And there's a category, I think NF T's that have significant engagement cost them where their actual use cases around them. And the case, for example, collectible soccer cards on so rare, might have a certain level of sustainability or logically will be more sustainable than one off entities have particular paintings or images that don't have sort of significant use cases associated with them. The collectible side of NF Ts, we're still really trying to learn more about the reception from some friends who I've spoken with, is there a good store of wealth, that they're also a good way of transferring specific types of assets. And there's been a thesis on the NFT front that because they're going to be around for infinity, because they're digital versus, you know, physical collectibles. So will they be around for 1000 years, even if you put them in a bunker, 1000 feet under the earth, NF T's will require significant storage over time. So if you'll get filecoin, for example, you'd pay a subscription to use filecoin storage. But if 1000 years from now, you're not paying that subscription for the NF T's that you're storing, there still exists, oh, shoot, no, you need to have a storage that's actually paid for through d phi through apps that are built on top of it. They're monetizing, actually paying for that storage through a Moore's Law type of concept, for example. So saying that their picks and shovels and rails and new infrastructure around NF T's that there were excited about? I don't know, there's so much ahead with it. There's just so much ahead with NF T's and crypto so much learning to do still.

32:52  
Yeah, totally. So we're getting down to the final bit here. We'd love to hear your thoughts on what working in BC has been like for you, especially when compared to the many years you spent as an operator. So how do you think about what makes someone a great operator versus a great VC and what that transition looks like? They're very different skill sets within boards and been successful at both

33:13  
I did operational work before getting back into Vc, I'm really glad that I went and you know, I've built a few businesses, because I feel like now, I can communicate with entrepreneurs on a level where I understand that I don't know what they're doing that I have not inside of their businesses, and I'm not building their businesses, but that I can empathize. And I can actually help them come up with creative solutions from an external standpoint, or if I spent enough time with them internally, I can build with them. Versus if I were just an investor, and I had just been an investor forever, how would I be able to really empathize? How would I be able to really give good advice, and that's been something I've been grateful for. I think the other piece of it is, it's really hard to build. And I'm able to, you know, understand the things that people go through a little bit better than I would have just gone out of banking and gone straight into investing. And that'd be my career

34:03  
over the last decade, the competition among investors is really heated up in there's a lot more capital, as you've seen a lot of late stage capitals coming earlier, a lot of public market capitals coming into private. So how do you all think about staying competitive in this current environment,

34:17  
I have a tendency to believe that kind of if you've got a you know, dollar of capital, it comes with substantial experience building, and really understanding entrepreneurship, that dollars worth a lot more than the dollar that comes from a bank as a as an entrepreneur. And so I think competitive venture funds and strong venture capitalists who will help founders be successful have good entrepreneurial experience, even to the point of not being great negotiators or asset oriented investors. I think that VCs who actually have entrepreneurial experience can bring a lot more to the table and can yield much bigger, more logarithmic outcomes, and aren't always concerned about downside protection.

34:59  
So We have a couple of questions we like to ask every guest on the show. And the first one is around superpowers. Everyone has something that they do that feels like play to them, but work to others. And we found that people often recognize what their superpowers are, and lean on them day to day. So I'm curious to hear from you, are there certain skill sets that you've learned over your career to lean on?

35:21  
I've learned to listen a lot better than I was able to before. And I think that listening is a gateway to empathy. And if you've got empathy, you're able to be constructive, and you're able to build and you're able to contribute to the success of a founder or to just people in your world. The second question is around people that have given you a break. Are there people over the course of your career have gone out on the limb for you that had an outsized impact on your career trajectory, so many people but you know, my thesis advisor at the University of Chicago, he made me feel like anything was possible, that ceiling of anything's possible. I've been able to bring through me through my career over time, but he served as a mentor and I talked to him two weeks ago, he graduated 18 years ago. So he's been incredible mentor to me.

36:04  
That's amazing. And last question is around books. Are there any books that have had an outsized impact on your personal or professional life?

36:12  
There's so many books, I think, in terms of professional life, I actually recently read the biography of the founder of Walmart and the fact that Walmart was started in restricted very small towns in the early days, and kind of the strategy around just going after kind of communities in locations that businesses typically wouldn't go after from day one, and kind of disseminating off the back of that to really own kind of the entire of, you know, the heartland of America and suburbia has yielded a meaningful competitive advantage in a very successful business.

36:46  
Don, this has been a enlightening and interesting conversation. So we appreciate you coming on. We hope to have you on again sometime in the future.

36:54  
Awesome, guys. Thank you so much.

36:55  
Thanks so much.