The GTMnow Podcast

VC: How a 2-Person Fund Runs Like a Startup (Memos, KPIs, R&D) | Vanessa Larco, Premise (ex-NEA)

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0:00 | 48:50

"Investing in companies that OpenAI won't kill." That's Vanessa Larco's thesis, and in this VC bonus episode of GTMnow she breaks down exactly how she decides what survives. Vanessa, founder and GP at Premise (formerly a longtime partner at NEA, where she backed Robinhood from seed to IPO), joins Max to get into the nitty gritty of how AI is rewriting venture, distribution, and the entire go-to-market playbook.

She makes the case for why "it's just a wrapper" got a lot of VCs in trouble, why she only backs technical founding teams, and why the old GTM playbook is breaking fastest exactly where you'd least expect it. She also opens up about leaving a big platform to build a two-person fund from a blank canvas, and why she treats the fund itself like a startup.

What you'll learn:
- The "OpenAI won't kill it" framework for spotting durable AI companies (and why not everything OpenAI ships actually wins)
- Why the "it's just a wrapper" dismissal cost VCs real deals, and the kayak/AWS parallels that explain why
- Why Premise only backs technical founding teams, and the shipping speed that becomes the real early moat
- How the old go-to-market playbook is breaking, especially in DevTools, and what replaces it
- Why someone on the founding team has to "nerd out" on distribution, and why no-playbook moments are where you growth hack
- How to run a conviction-based investment committee, and why big funds drift toward consensus whether they like it or not
- Why running a fund is just running a startup: fundraising, product, and customer success by another name
- The unanswered question Vanessa keeps circling: how to give experienced GTM talent space to rewrite the playbook

Chapters:

00:00 Intro & OpenAI Moats
01:12 GTMnow Intro
01:51 Technical vs. Non-Technical AI Founders
04:37 The Bottleneck of Hiring AI Talent
05:15 Do Old Moats Still Exist?
06:36 Cloud Era Lessons vs. Today's AI Layer
09:18 The Shift to the Distribution Era
11:38 Interview: Vanessa Larco (Premise VC)
12:40 Companies OpenAI Won't Kill
13:37 Consumer Habits vs. Enterprise AI
15:05 Moving Beyond the "Wrapper" Stigma
17:39 Thesis Building vs. Founder Curiosities
20:11 Sourcing & The "Surreal" Community
22:26 Learnings From NEA & Lightspeed
24:06 Rethinking the Investment Memo
26:43 Consensus vs. Conviction Investing
31:26 Running a VC Fund Like a Startup
35:04 Building Internal Automation Tools
37:35 Distribution Moats & DevTools
39:38 Sourcing New GTM Playbooks
41:12 Parallel to the AWS Boom
43:55 Human Psychology vs. AI Tools
47:06 SF's Best Cookie Spots
48:32 Outro

Connect with Vanessa Larco:
About the guest: Vanessa Larco is the founder and GP at Premise. Previously a partner at NEA, she backed consumer and fintech companies including Robinhood from seed through IPO. She started her career in product and engineering, was a computer science undergrad, and founded and sold her own startup before moving into venture.

Connect with Max: 
https://x.com/hackitmax
https://www.linkedin.com/in/maxaltschuler/

Connect with Vanessa:
https://www.linkedin.com/in/vanessalarco/
https://x.com/veelarco

About GTMnow: GTMnow is the media arm of GTMfund, sharing the strategies, tactics, and stories from the operators and investors building the next generation of go-to-market. This is the VC bonus series, where we host VCs and get into the VC ecosystem.

Visit us on: https://gtmnow.com
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The GTMnow Podcast
The GTMnow Podcast is a weekly podcast featuring interviews with the top 1% GTM executives, VCs, and founders. Conversations reveal the unshared details behind how they have grown companies, and the go-to-market strategies responsible for shaping that growth.

Visit gtmnow.com for more episodes and other interesting content. 

Max Altschuler

It's a crazy exciting time to invest, especially for you. Your bio. Investor in companies that open AI won't kill. Vanessa Larco, founder and GP at Premise, how are you seeing distribution as a moat in this day and age?

SPEAKER_01

We spend a lot of time on distribution. I think there's so much opportunity to have new playbooks. And the truth is, look at a lot of these like mid-to-late stage companies, the old photo market playbook is like not the thing a lot of people need.

Max Altschuler

You know, in 2023, when a lot of this AI stuff started really picking up speed tech, etc., the expression I think people use in BC was there still are some people that will say like there's no tech here.

SPEAKER_01

The product is amazing, but what I'm betting on is that you can keep shipping at a very rapid clip. Amazing features to blow your customers away better than anyone else. So it comes down to teams.

Max Altschuler

Have the playbooks changed so much.

SPEAKER_00

Doing well, Max. Doing well. Yeah, I'm excited for this episode. Vanessa uh was a really interesting conversation. Another uh set of compelling partners sort of spinning out from great firms and building an interesting thesis in the venture ecosystem. Um I it it is cool in the sense that founders feel like they have more options than ever for high quality partners, which is which is a good place to be.

Max Altschuler

Yeah. Vanessa Larco, previously at NEA, spun out with Mercedes Band from Lightspeed, started Premise VC, new fund. It was a great conversation. I mean, it was it was interesting to hear how anchored they are on technical founders. I think, you know, one of their, I guess the premise, a premise, um, you know, or the the big kind of thesis is that they are anchoring on these technical founders that they met over their, you know, many years doing venture capital. And um, you know, that that that network, especially now in AI, more than ever before, is kind of necessary to build behind, where you need to have a super technical founder. I think there's definitely room for the other side of that argument, which is like, well, in the age of AI, do you even need to be that technical? Um, you know, AI is building more than ever before. Can you hire the right technical people around you? Can you just be a really good recruiter and builder of teams and like you'll get the right people and and and um they'll drive the right product? And I think the answer is kind of TBD. I'm not I'm not necessarily sure that there's either like one silver bullet, one side's completely right, one side's completely wrong. But I did think it was kind of the certainly an east uh uh interesting thesis to to hold and uh narrative to drive and kind of way to invest, right?

SPEAKER_00

Yeah, I and I do believe to what to your point in a few years' time, I think both sides of that debate, not that you have to pick a side of the debate, but both sides of the debate are gonna have plenty of examples of successful companies that have either sort of visionary, non-technical founders that are great at painting the future, great at getting in front of customers, great at recruiting talent, um, and are able to bring the right technical people in the door as they go. And then to your point in in Tibinessa's, and we hear this quite often, uh, who are the best AI researchers of today, who are the youngest, smartest technical, potential founders of tomorrow? What are they thinking about? What are the problems that they're trying to solve? How can I get to meet them as early as possible? And and hopefully, um, if we get aligned, invest in their company as they grow. You know, the to the anchoring towards technical founders' side of the argument, I think the one part that we are seeing, at least today in the market, is one of the biggest bottlenecks in building a company is hiring great AI talent because the frontier model companies have incredible comp packages. There is young spin-outs from, you know, every great university and research lab at universities across the globe that are getting offered, you know, multi-million dollar packages of fairly liquid equity as well, um, just given how uh liquid the private and soon-to-be public markets are for some of these companies. And if you're a startup which has raised seed capital, you know, you almost have to have some connectivity to be able to hire your early talent team. Now, you know, we've seen this. Multi-time founders who aren't necessarily technical, they've got a roster of great talent and and uh cachet that they can lean on to hire that technical team. But uh if you look at it through the window of how do you solve for one of the bottlenecks of company building right now, which is great AI technical talent, there is there is an advantage to having some technical chops uh or at least a network to lean on in the early days.

Max Altschuler

Yeah, I mean, I I think staying on the topic of open AI and anthropic and and those folks in their and their massive comp packages and and uh you know making it really hard to compete with. You know, she did talk a lot about well, open AI won't kill this. And old moats still existing. You know, I think there were a lot of things that she was pretty accurate on where you know, if you still have a data moat, you still have a network moat, you still have a large user base, like those things are are certainly differentiators and fortify your company in a kind of a unique way. But you know, we're starting to see what was it, the uh CEO of Ironclad just took a job at OpenAI, you know, to start their legal product. Like, should Harvey and Lagora be worried about that? Like, is there are these model companies going to go after some of this, some of these last mile use cases? And if so, like what are the areas in which there are true defensibility for the the folks that are that are already there? I think it it's an interesting conversation and she she makes some good points. But you know, what are your thoughts on kind of this old moats and and and how these kind of last mile vertical companies are going to exist in the you know open AI anthropic can do that world?

SPEAKER_00

Yeah. I I I I thought Vanessa made some really interesting points on that front. And the idea of, you know, if you've been investing long enough, you remember the early cloud era and the cloud era, there was a lot of questions about, you know, why doesn't AWS just build this? Why doesn't Google just build this? And you could make that with you know the data products, Snowflake and Databricks, you could have made that argument about AWS Redshift. Like why wouldn't this just roll up to them? And the answer is this is a big enough market, and if you build a great enough product and are addressing an important enough pain point, like there's room for you to be able to build a huge business. Now, what's interesting about the anthropic and open AI and the you know, Gemini uh con parts of this conversation and and the difference maybe between AI and the cloud era and previous eras before that is they are distinctly investing go-to-market resources and product resources in attacking some of these early application layers. I mean, you've seen Anthropic release direct plugins for legal, uh, for cybersecurity. Uh to your point, you have you know people hiring talent to run specific verticals within, you know, what's an important app layer vertical which we can tackle right now and do a great job of, and they're going pretty pointly pointedly at it with talent and resources. I I think the historical comparison is instructive in the sense that this would be the first time in history in technology where there's this true monolith that covers every single they cover the infrastructure and the commodity side, which if you go back to cloud would be the compute, um, and they also do the application layer. The idea that there's not going to be some separation there, it's just from an execution standpoint, an incredibly difficult thing to do. And, you know, we've invested in some great vertical AI companies over the years. One of the things that I I I love to highlight when we talk to investors or operators about them is the difference between what the venture ecosystem is talking about and the foundation model companies are talking about today, and what the customers of our vertical AI companies are talking about. Those customers, if you're running an insurance business or a customs broker or a manufacturer, they're not waiting on the edge of their seat for what the next anthropic plug-in might be and the next model release. They know they need to adopt AI. They want it to work for their business. And if you're building something that takes that last mile that brings AI you know to their business in a really compelling and meaningful way, they're willing to buy and adopt. And so there's gonna be some verticals like legal, maybe cybersecurity, and others, which you know, the the Ferr Frontier model companies are gonna venture deeply into the app layer. There's just too much surface area, I think, for any single company to be able to cover uh to the extent that you know there's gonna be no value left for the startup ecosystem.

Max Altschuler

Totally agree. So, how does that transition into the article that Jip we just wrote on the distribution era?

SPEAKER_00

Yeah, um we had a lot of fun putting that together. Simple premise being as it becomes easier and easier and easier to build product to write code, as you know, nearly a hundred percent of the code written today is machine written, AI written generated code. Uh uh the technical motes, product motes of yesterday and generations before start to erode to zero, and you know, distribution becomes the advantage for the iconic companies of tomorrow. And we talk about a bunch of vectors of why uh that's the case and how that you know we expect that to play out. Um Vanessa touched on one part of it that I think is worth highlighting, which is the differential alpha of early adoption of technology. And we mentioned it in the article, but you know, if you were and you saw this firsthand at Outreach, but if if you were an early adopter of Outreach or SalesOff, you know, your outbound sales motion was far more efficient than your competitors. If you uh adopted that technology earlier than everyone else in your category, you were building a more efficient outbound playbook, you were able to get more customers, do more with less, and grow faster. If you were, you know, uh bringing on clay in you know, maybe the last couple of years uh ahead of you know their more market wide adoption, you were building again like data-driven outbound playbooks, uh agentic workflows within those. And as a technology becomes wider and wider uh in its adoption, the alpha that you are capturing versus the rest of the market starts to lessen. And so we're seeing the gap between AI native go-to-market teams and non-AI native go-to-market teams be a huge gap. Um, and if you are you know building point solutions specific to your go-to-market motion, scraping data, taking you know customer data and feedback and filtering it into agenc workflows and on the cutting edge of what's possible, you know, you are growing faster than your competitors. And if you're growing faster than your competitors, uh, you're getting data from those customers, and you just we're starting to see in the AI era this momentum and inertia of a snowball rolling down the hill. And if you can get in front of it, um, the value you're compounding and the speed in which you can do it is like nothing we've ever seen before.

Max Altschuler

Yeah, I agree. And the the response to the article was was was pretty amazing from the the VC industry and founders uh and you know and our GTM leaders. So uh if you want to check that out, it's pinned to my ex account uh under Hack At Max. And uh yeah, without further delay, let's get into the episode with Vanessa Larco from Premise VC. All right, welcome to another episode of the GTM Now podcast, the bonus series, where we host VCs and get into the nitty-gritty on what's going on into the VC ecosystem. Today I'm joined by Vanessa Larco, founder and GP at Premise, a fund she'll tell you a little bit more about when she's ready, but exciting stuff happening on your side, Vanessa.

SPEAKER_01

Yeah, thanks for having me. There's been so much going on.

Max Altschuler

I know it's a it's a crazy exciting time to invest, especially for you. So um your bio, investor in companies that open AI won't kill. Tell us more about that.

SPEAKER_01

Yeah, it's funny. Um most questions we get are like, well, isn't OpenAI gonna build it? Isn't well I don't get the anthropic, but mostly isn't open AI gonna build it and kill it. And I think for some things, yes, but for a lot of things, no. And that's becoming more obvious, I think, in the last like two, three months, right? Them deprecating Sora and yielding that space to others uh is now like not everything OpenAI launches hits. I think they also in the last couple of weeks deprecated their checkout within ChatGPT when you go to buy something. So they're all the partnerships that they announce, they're they're kind of like, okay, we tried it, and checkout turns out it's really hard and we're not good at it. So we're gonna yield that to others again. So not everything they've tackled, they've been able to succeed at. Um, so I think that that is uh less controversial take than before, but but the I still get that question quite a bit.

Max Altschuler

And at NEA, your previous firm where you were at for you know quite a while, you were involved in Robin Hood from seed to IBO and and quite a few other kind of consumer uh companies. So, you know, now you're now you're in this new fund. What are you focused on then from an investment standpoint? Are you looking for more Robin Hoods then, or is it types of companies like the Soras of the world, which are maybe a consumer product but can also be sold to enterprises?

SPEAKER_01

Honestly, I mean I would love to find another Robin Hood. I don't think there they will be another Robin Hood, at least not in the next decade or two. Um, but I still hunt around in fintech. I think there's some really cool stuff happening with stablecoin. Would love to find something there. Um I think consumer is gonna do some amazing things this year. We keep seeing consumers' behaviors changing, and that gets pulled into the enterprise. And so we're seeing amazing companies like Lovable and Gamma, where people try it out first for personal use or for like single use cases, and then they bring it into work and share it with their team. So honestly, I'm looking across the board. I would consider myself a generalist. I was a generalist at any eight. I will be a generalist moving forward. Um, there's too many exciting opportunities to just stay in one very focus vector for me at least. Um but I think this AI, this world of AI is feels overly hyped, but I think it's appropriately hyped.

Max Altschuler

How are you sizing up these companies? So like you bring you bring up a gamma, you bring up a lovable.

SPEAKER_02

Yeah.

Max Altschuler

You know, in 2023, when a lot of this AI stuff started really picking up speed, um, Chat GPT, etc. The um expression I think people used in VC was, oh, it's just another rapper. And that got, I think, a lot of VCs in trouble because they missed on things that, yeah, okay, so what it's a rapper. You know, Kayak was a rapper on a bunch of travel platforms. That was my argument. Massive company, right? Like, so how are you sizing up these companies as you see them now?

SPEAKER_01

Yeah.

Max Altschuler

And is there still a a stigma around you know what you're seeing as like the rapper?

SPEAKER_01

Um, there still are some people that will say, like, there's no tech here. And and even to me, I'm like, well, if you built this in a month, um, there's gonna be someone that copies you and will build it in a month. So I the product needs to be amazing, but what I'm betting on is that you can keep shipping at a very rapid clip, amazing features to blow your customers away better than anyone else. So it comes down to team. The most overused thing in venture capital, team, team, team, founder, founder, founder. It's true though. I need to believe that you can build and ship better and faster than everyone else who's gonna copy you because they will copy you. And then I believe that at some point you will be able to build some modes. And the moats are kind of the same old, same old, right? Do you have a network effect? Do you have proprietary data? Is it an integrations mode? Is it a change management? Like at some point, those old motes that are so circa, whatever, like they still apply here and they still take a while to build. You just have to stay ahead of the curve until they get built out. And that is harder than it's ever been. But that's that's where I spend a lot of time in figuring out like, do you have the right view, edge, perspective, capability, which is why we only back technical founding teams. There has to be at least one of the tech co-founders needs to be highly technical and accomplished. Because what we found is those are the people that are staying up to date with the latest AI frameworks, adopting the latest technology as it comes out and re-jiggering their roadmap based on like new things that they can deliver off the technology. And we found that teams that don't have a strong technical co-founder lag on that front, right? And you can't afford to lag. You have to ship quickly and better than everyone else. I think that's the edge that Perplexity had on others, that 11 Labs has had on others. You look at these great companies, they are just shipping faster and better than anyone else.

Max Altschuler

As a generalist, then, are you approaching, because you're so founder-centric, are you approaching investing with a prepared mind in certain areas that you've underwritten? Or are you uh I guess going into conversations with amazing founders hoping that they will enlighten you on a space and then you will then go find in diligence that they are either right about that or wrong about that?

SPEAKER_01

It's both, which is why I'm so tired. Uh it's both. There are some areas where I'll read about something, I'm like, oh, I wonder what's going on here. And then I'll just spurn my evenings and weekends just digging in and trying to understand the intrinsic, like, what are all the intricacies of that space and who are the incumbents and how does it work? And then, like, man, if someone comes up with this, it'll be great. And then I start hunting around to see like what startups are in and around the space and try to reach out to those founders. I still do quite a bit of that. I love thesis building. I think it's because I'm a nerd. Um, on the flip side, we get to meet incredible people through our networks and some of the event series that we run. And so you meet these impressive folks, and they're like, I think there's an opportunity in this space. I'm like, I have no idea how that works, but give me a week. And so the nice thing is that when I do diligence, I try to make it collaborative with the founders in a sense of like, these are my questions, or this, like I have very stupid, unprepared mind questions. Like, teach me, help me figure out. And then when I find things, I'm like, look, I read this, how do you think about this? How should I think about these papers that I've been reading? And so it's um it's collaborative. They understand, like as I build a memo, what I'm working on, why I'm working on it. Um, it's no surprise to anyone. And then when we get through it and I'm like, I believe in the space, I believe in you because I've done references and back channel references, and this is like the 360 view I have on you and on the market. And I think your roadmap is very compelling, whether you change it or keep it or whatever, like you have one of the most interesting takes on what needs to get built. And I believe that you will continue to have that and make the right decisions for your product. Um, and then we invest. Or like, I don't know, the references aren't particularly strong as as we would need, or this roadmap, like the trade-offs you made. I don't really understand why you chose this and not that. And so, like, we don't get there, but I'm still excited about the space. And then I just stay open-minded if I meet other great people working on it, then maybe we'll eventually do an investment in the space, or maybe it's just not ready yet. And in a couple of years, there'll be a much better time to make an investment. So it's both. It's both like top-down pieces-driven and bottoms-up founder-driven.

Max Altschuler

How do you meet then most of the founders that you start a process on?

SPEAKER_01

It's a great question. I've been trying to tag this so that I can actually have hard metrics on it. Um, I would say about a third come from other founders that I've worked with or that I'm on the board of who are like, this is a founder I know, or this is someone I've angel invested in that I think is amazing and you should meet them. Those are great because I already have a trusted source who knows me and knows them, who thinks it'd be a great match. They're typically right. And um they help me win the deal too. So if it inevitably becomes competitive, um, that founder can vouch for me and put me over the line. So it's it's likely a good match on entry, and it's likely one that we can win because of all the validation that we have around us with the founder. Um, another source is, like I mentioned, our event series. So um we run several different communities, one of which is called Surreal. It's application invite only. We get hundreds to thousands of applications every month to attend an event. And we only allow about 60 people in. Um, and these are like roundtable tech talks. Uh, we have like a very short panel, and then after that, we break on to pre-assigned seating tables and we continue the debates at those tables. And then afterwards, you get invited to our WhatsApp community um where people will share and exchange technical ideas and help each other out. Uh, through Surreal, we've met a lot of amazing people that are like, hey, I'm working at this great AI lab, but I have this idea and I've been building this on the weekends, and I would love for you to take a look and let me know what you think. Um, we've got a lot. I would say it's not quite a quarter yet, but it's getting there. Um, and so those are, and then people from that community will also be like, Hey, I have a buddy who's building. Building this, you should meet them. Um, so that comes from there, and then a lot comes from us like sourcing, reaching out to our friends that are angel investors, asking what cool things they've seen, us putting a lot of content out there, people we've worked with in the past will then be like, Oh, I read what you wrote about the space, and I have a friend who's building in that space. So it's always warm intros, um, or people that we've met through our outreach.

Max Altschuler

Is this uh so you know you had um extensive career at NEA previously, Mercedes was at Lightspeed. So, you know, are you what are I guess what are the key learnings that you brought with you to a new firm between the two of you? Like I'd I'd love to know like you sit down and put your heads together at some point and say, like, here's what we both loved from our previous firms. Here's some of the things we hated will never do. Are there things I mean, what what are in those do's and don'ts? I guess you can even say the don'ts, I don't know, or some of the do's, yeah.

SPEAKER_01

Yeah, yeah. Well, Mercedes and I met through this uh VC program called Speakeasy, which is Stanford's touchy-feely class, but for VCs, and is really small cohorted groups. So we're in a cohort of about 12 people who are in venture. And we started that five years ago, and we're still in it today, and we meet frequently. And Mercedes and I, over the years, we're like, here's what we love about our firms, but here's what we're struggling with. And then her and I were like, We're we like the same things and we're struggling with the same things. Let's let's let's chat about this. So over the years, we started just like this is what we'd want to do differently if we had our own fund. And it started as a joke through text message, and then over the years, we had more new ideas of like this is what we would do, just like white space. And Mercedes one day, I don't know it was a while ago, was like, hey, why don't we just sit down and actually hash this out? Like blank canvas, if we could build anything we wanted to build, if we wanted to build the VC firm of the future, what would we want to build and why? And then we did. We sat down multiple weekends and like puzzle piece things together, and we whiteboard and sticky notes, all the things we wanted to do. So absolutely, that was a huge part of us coming together. What we realized is the advantages from the big funds. We got to see so many amazing founders. Like I got, I would say, we're closely with the Robin Hood founders, but I got to see Plaid come in for every single one of their follow-on investments. I got to see Mercedes got to see Affirm and Snap, right? All these, and I got to see Databricks. So you get to see like all these companies, not just the ones that you work on, but the ones that come in for follow-on investments of the entire portfolio. And then you get to see like, what does top 1% actually look like? And you hear a lot of VCs talk about like the founder traits they look for, and they're like pretty broad, and everyone has some flavor of the same. But I think it's very different if you've actually worked with founders like that. And you can like, it's much more nuanced in those big like titles. And so what we've said is we want to keep the bar really high. We've gotten to see what greatness looks like. We want to continue to back greatness, and we want to keep our bar super high for founders. So, for that, like, I don't think there's a better place than to see the volume and the I would see, like, the exceptionalism of the type of founders you get to work with at the lightspeeds and the NEAs of the world. Um, I would say the diligence process at Lightspeed and NEA is top-notch and very similar. Um, I thought I'm like, well, I'm gonna show you my memos, and she's like, mine look exactly the same, just a different like font and format.

Max Altschuler

The first two to have left uh, you know, big firm.

SPEAKER_01

It turns out, yeah, the memos are almost identical, like same content, just different fonts and like colors, uh, but very, very, very, very similar. So the way we diligence a deal was the same. We just maybe sometimes use different words. Um, so we wanted to keep all of that, but we wanted to speed it up. We wanted to condense it. We're like, we we actually initially were like, do what do we both hated writing memos? Like, do we still need a memo? Could we do something different? And we came back to no, we do need the memo, but it's gonna be for a different purpose. And we're all we're gonna write down like the things we need to believe to make the investment. And this is gonna be something that like we use for ourselves. It's not meant to be like for show or to convince 20 other people that this is a good investment. This is us documenting everything we've learned throughout the process and how we've reached conviction. And when you frame it that way and you use it as a tool to organize your thoughts, it's way more fun to build a memo. It looks very similar to the memos we had at our last firms, but we got to the intent in a different way. Um, so there's quite a lot there.

Max Altschuler

How do you structure your IC in a two-person IC versus an you know, versus an NEA or or a light speed where there's a lot more folks around the table? I did you know, were those funds consensus or conviction?

SPEAKER_01

Yeah, I think both both funds want to be conviction and they encourage it to be conviction. The problem is when there's 20 people in the room, as a human, you six you seek consensus. And venture, you're working with so much imperfect data, and it's all truly qualitative, even the quantitative stuff is qualitative, um, how you interpret it is qualitative, that it's um you test your conviction, right? And so if everyone in the room is like, I don't know, I wouldn't do it if I were you, it's very hard to maintain conviction. And if the most senior person in the room who's been on MITIS list a hundred times over again is like, I don't get it, I wouldn't do it, you know. So there's the like that is hard to maintain your conviction through 20 people's different opinions. And it's also hard to maintain conviction when you're like, I may want to make a career out of this, and I may want to stay here for my career. And if everyone who's responsible for my career here is telling me don't do it, and I'm gonna do it anyway, my career may be very short-lived if I do it anyway, you know? And so while every fund I think is constantly trying to figure out how do we stay conviction-based, it's just gets harder the bigger they get. And it just eventually becomes, whether they like it or not, consensus.

Max Altschuler

You kind of like don't grow out of that when you spin out, too, because you have LPs that have mandates that take a look, you know, it's like if you don't pick the right company.

SPEAKER_01

But your LPs aren't in your but the LPs aren't in your IC.

Max Altschuler

No, but you also, if you pick the wrong companies, you don't get it.

SPEAKER_01

But that's post-investment. So the mess-up thing is you have conviction, you do the term sheet, you fund it, and then a year later, they're like, You shouldn't have done that deal. And you're like, oh, okay. Um, but they didn't unfortunately you're gonna maintain conviction for a very long time before that comes to fruition. Um, but no, we're we're conviction-based, we help each other think through the deals, and so we'll ask each other questions about it. Um, and we'll ask, How did you get to conviction? And we'll say, like, I'm worried about XYZ, but you seem to have this, so go for it. The way we um ended up here was let's debate the diligence process at nauseum. Let's really go through how do we score these sections and how we get to conviction. Let's like really debate it. And then once we reach consensus on that, on the process, on how we gauge how we rank from like top 1% to meets expectations to like big questions, then I may not agree with the output, but if I agree with the process you followed and how you graded these things, then like disagree and commit, right? Um, so that's that's how we landed on like getting to conviction and being conviction-based and not consensus. And I think the biggest question is gonna be as we eventually bring on other team members, how do you maintain that? It's really easy with two people to be conviction-based.

Max Altschuler

How do you maintain that? Also, you know, I think when you hire someone, you you give them the trust. Like the hiring process is the time where you build the trust, and once you make the hire, they come in with trust, and that trust is theirs to obviously fortify or lose, but they already have that trust. So if you do the hiring process right and it's somebody you you know or built a relationship over the appropriate amount of time, once they move into that IC, they shouldn't feel like, oh, I'm uh oh, like I'm afraid to make a decision here, otherwise, like what if I'm wrong and then I'm gonna get it ostracized, right? Like they should come in.

SPEAKER_01

Yeah, I mean, but my fear is that they'll come in and be like, well, Vanessa and Mercedes are like super tight, and I want to like get in and be like in in the in group, right? And so I'm just gonna do things that I think they like. And we don't want to wanna hire those people.

Max Altschuler

We don't want to hire them.

SPEAKER_01

But that's so hard because if they optimize for being likable, then I'm gonna like them, right?

Max Altschuler

So they're new founder.

SPEAKER_01

Yeah, yeah, yeah. No, no, for sure.

Max Altschuler

So and so, you know, uh new fund means you have to focus on a lot more than what you did at NEA. I guess you kind of get to share the responsibilities across a much bigger group, but right, there's firm building, there's fundraising, there's deploying, and then there's portfolio company support. So how are you thinking about that from going from an NEA to a two-person team?

SPEAKER_01

Yeah. Um so I was a founder before. My background's in software engineer. I was a computer science undergrad. I was in product engineering my whole career. I um worked at startups, I had my own startup, we raised a little bit of money and sold it. Mercedes also was had a founder journey herself. She worked at a lot of startups as a very early employee and then um started her own startup also. Uh and I think I could never have partnered with someone who didn't have founder experience because the way we see it is this is a startup. It's a startup. The product is a fund. And when you think about it that way, none of this is shocking, right? Like startups have to fundraise, funds have to fundraise. There's different timelines and different like dynamics of the fundraise, but fundraise is a fundraise. You start a company and you're gonna have to fundraise. And then whether that's take a loan from the bank, whether it's pitch VCs, whether it's pitch LPs, you have to fundraise most of the time, unless you're independently wealthy and can bankroll it yourself. So fundraising is part of starting a company. Um, and then investing and deploying, well, that's that's our that's our product, right? So it's no different than building features and shipping features. Kind of the same thing. And then portfolio support, well, you once you build and ship and you have customers, you have customer support and customer success. And so, like portfolio support is no different than customer success. So these things are like very known things that you do as a founder. I always find it funny when VCs are like, oh my God. And I'm like, you start a company, what did you expect? This is like parkour. Like, this is how it works. Um, and so Mercedes and I think about it very much as a startup, and we have KPIs and we have RD, and like we think of our management fees as RD fees, as RD budget. And so when you structured all like a startup, like a company, then it's actually really fun. We've been trying to like map CAC to LTV uh for founders. It's been really fun exercise. But um, some things apply really well, some other things are take some creativity, but then you start thinking about like where do we innovate and how do we do things differently? And where do we just follow a best practices playbook? And how do we measure things and know if we're on the right track? And how do we kill things or pivot when they're not working? Um, and it's been really fun, Max, to be a founder again. Like so much fun.

Max Altschuler

I I love when people ask me, like, where do I spend my time? It's usually LPs in the process, you know, how do you spend your time? And I'm like, oh, today will be different than tomorrow, and then the next day, and the next day, and it comes in seasons, and it's like you've got a a great portfolio company that's like one of your escape velocity companies, and they're doing a fundraise. Like, sometimes it's all right, this week, all hands on deck with that company. Like, there's really not a lot else going on. You've got another company, you got another week where you have to win this deal, you love this company, it's competitive. Like, you're kind of all hands on deck with that another week. There's there could be another week where you're doing audits and whatever else. Like I know there's it's just so many different things, and I love it too, because uh, you know, I'm founder through and through entrepreneur mentality, and I'm more of a jack of all trades than anything else. So it's uh it's a blast. I wouldn't trade it for anything, but it is it is so much, and then on the product side, you're right. Like we we built our own internal GPT called X Val, and we we've looked at every part of our our fund and said, like, where can we build technology to build some sort of infrastructure scaffolding that automates most of this away? And um, especially with AI now, we've been able to do so much and get so far. So I'd imagine with your product background, that's coming in in handy big time, right?

SPEAKER_01

Yeah, yeah. We are really lucky. We welcomed two EIRs a couple weeks ago to um build software with us, and they are very senior technical talent, and they're taking a bit of a career break, and it's not on their LinkedIn, so nobody would ever know. And they're we're just having a lot of fun, like ideating and shipping, and like the the best thing is we're brand new. So there's no like legacy code, there's no tech debt, there's no people debt, there's no process debt. It is just blank canvas. We have like a problem statement and success KPIs. And these folks are like, rad, I can work with that. Like, I want to pitch a bunch of ideas, I want to just work on my own. I don't want to have a PM. I don't want to have specs. Like, tell me what you're trying to accomplish. And I'm gonna like tell you some of the things we could build. We have a roadmap, but we're like, this is just this is guidance of like what we'd love to have as a tool set, and that's been really fun. I miss building software so much, so I'm finally getting to scratch that itch, which you can't do at a big platform. You can't just like no whip up a server and then just start stripping code like that. Yeah, that's not gonna work.

Max Altschuler

We kind of had the same thing I'm laughing as we had had the same thing happen. We had somebody who just uh we met through our networks, yeah, you know, senior technical talent, and said to us, like, hey, I'll build everything that you want me to build internally for you guys at like this crazy low flat rate, and the only stipulation is like I can productize it.

SPEAKER_01

Yeah, exactly.

Max Altschuler

And I was like, Yeah, okay, cool. Wants to build something in that space, fine.

SPEAKER_01

Internative athletes, yeah.

Max Altschuler

Don't use our, you know, as long as our data is our own, like you can use the rest of it. So um it's been working really well for us. You know, the the the fun thing about AI is like it used to be a year ago when we built X valve, like the GPT was like the interface, it was the text box, and now you can do bots in Slack and things like that. But then it's like, okay, we need them on separate servers because you don't want all of your Slack to be ingested, and then this thing is going broke anyway. Um we're learning a ton, and then it also helps us obviously with favorite companies too. So it's uh interesting on that front. Um what are so you know, b background in product? Uh we talk about moats. How are you seeing distribution as a moat in this day and age? We talked about network effects, data, etc. But um, is that something you're looking at, you know, in the early stages uh when you invest, or are you kind of hoping the the founder will kind of figure that out over time? How are you vetting them?

SPEAKER_01

No, no, we spend a lot of time on distribution. I think um there's so much opportunity to have new playbooks. And the truth is, I'm looking at a lot of these like mid to late stage companies. The old go-to-market playbook is like not the thing a lot of people need, especially in dev tools. I would say like the most disruptive go-to-market is being like the the it's being felt on dev tools. And everyone's like, I have to have a launch video on Twitter and go viral. I'm like, that's not the only way, but it is like we're getting really um competitive and the previous playbook isn't working, and it's reflected in a lot of these companies when they go to hire, they're like, I don't know who to hire. Because I historically I would just go for a CMO or a VP of marketing at a company that is similar product or similar uh ICP as us, and they know what to do. But now they don't know what to do. Most of them like haven't adapted and they're still working out the old playbooks. And I need someone who knows the new playbooks, but who's that person? How do I find them? What is their title? Where do they work? And so a lot of it, I'm like, I want it to come from the founder. I want the founder to have the curiosity to be spending the time to figure out by reading stuff on Reddit, by following growth hackers on Twitter, by like whatever it is. But as interested as you are in building the technology for your product, someone on the founding team, it doesn't have to be the CEO, it doesn't have to be CTO, it could be someone on the founding team, needs to be nerding out on like what it takes to win distribution. Um, because when there's no playbook is when there's the opportunity to growth hack and be most impactful. Once there's a playbook, it means everyone has figured it out. And it is harder to growth hack your way there. You're just gonna have to spend your way there. So I think now is this exciting moment in time where there's not a lot of playbooks, which means you don't need a lot of money to be able to break out. And the only way that happens is when the founders have an eye for that.

Max Altschuler

Yeah. The um the thing we're seeing is a lot of founders hiring failed founders as like the first GTM hire and saying, like, go you're the CEO of GTM, basically, like go tinker, go figure this out, right? And now you've got Cloud Code and you've got all these other apps at your disposal. You can get uh way more done further and faster than ever before. And there are there are folks to follow in those areas. Obviously, there are certain GTM platforms that are accelerating right now and things that are kind of phasing out, certainly, but um you can get really far with Cloud Code license and somebody who just has grit tenacity and uh you know the thinking hat on. So uh we've been seeing that that's kind of one of the most fun things I think about being in our shoes is you know, we'll we'll bring in somebody uh like a Jordan Crawford, who's probably one of the more um uh I don't know if he's Twitter popular, he's definitely LinkedIn popular, but he's the the Claude Code Clay guy, the go-to person for us, and we'll bring him into a portfolio company, he'll shine a light on some stuff to do, and then that portfolio company will take it to a whole nother level and like bring it back to us, bring it back to him. And all of a sudden, like they've taken it and brought it up a level, and it's like, oh wow, I didn't know you could do that. And then we're able to take that back to other portfolio companies. So yeah, there's there's a lot of interesting stuff going on in distribution um right now, especially like having um distribution as a moat in a world where you know AI is allowing pretty much everybody to build with similar capabilities at this point, right?

SPEAKER_01

Yeah, but I mean, like honestly, that was said with I'll never forget you mentioned this like code wrapper stuff. When AWS came out, everyone's like, well, now anybody can start a company because you just like got an AWS account and your whole infrastructure. So you don't need to set up a data center anymore. You don't have to like buy servers and put them in a closet and set up your own infrastructure. Now anyone can just whip up anything in the cloud. These aren't real companies, these are, and they didn't call it cloud wrappers at the time, but it was like in essence the same thing. And you know, anyone could like hack their way, like then SEO was the thing, and nobody really understood it. And how do you index this stuff? And how do you right? And so it um there's so many parallels to like historicals here. I think it's like no different when then when AWS became popular and anyone could build a cloud-based application overnight. Um, not overnight, probably like a year. Um, and nobody understood like the the playbooks of just you know pure outbound was like blown up. Now you could do Instagram ads, now you could do account-based marketing, you could do SEO, like there's all these things. Um we're kind of in that era again, it's like the wild all last on go to market. And anyone can spin up anything overnight, just like we were bitching about with AWS. And so it's uh I think this is like where great founders will really shine. Um, and then you know, the thing I think about the most though is like, what about all this talent that is excellent talent and they are experts at the old way of doing things? And we can't just discard that. So, how do we give them space to take all the experience that they had and all the learnings and apply it with all these new tools and rewrite the playbooks? But as I talk to them, a lot of them don't have time, right? They're just drinking from a fire hose. They're like implementing this and that and um talking to these experts and like just patching everything, but they themselves don't have the space to sit back. And so what I suspect is those who can take a leave of absence or those who can just like, I quit, I'm gonna take a year to just go like tinker, will. But what about the ones who can't? Because they're like the breadwinners of their family, and they just can't take a year off and not work and tinker. Um, so I I I think a lot about like how do we not just like say, well, I'm gonna hire the 20 year old who whatever can go figure this out. But what about the person who knows go to market backwards and forwards and all the systems that existed and can tell you what should be carried over and what shouldn't? Um, how do we give them space and time to go do that?

Max Altschuler

Yeah. I mean, so it is a question we get often. It's like, well, you know. Are the um have the playbooks changed so much where you know there's an entirely new crop of GTM folks and you know there's there's a lot of playbooks that are changing rapidly just because the tooling is changing, what's you know at your disposal is changing. But there's just a lot of strategy and psychology that's tried and true and it's not gonna go anywhere because at the end of the day, the end user and the end buyer is still a human, and so those things you know still exist. When we have companies come to us and say, Hey, I need help building our customer community, um, you know, we have the person who built the customer community from scratch at Atlassian, Salesforce, Gong, uh, GainSight, some of the best, you know, SaaS communities of all time, as LPs in the fund, all different people, but um the psychology that comes into play to build those communities, to get people to move on your behalf, to create evangelists, to run you know, um internal rewards programs, things like that, the that does not need a new playbook. Maybe the tooling has changed, maybe how you fit how you physically do it has changed. Maybe you don't do it on Salesforce communities or whatever the old platforms were, and now you do it on circle or something new or something AI enabled. Sure. But the psychology, the strategy, all that stuff, how to get people to move on behalf of your brand. All of them. Shouldn't you need to care? Yeah, a lot of those things are just psychology. They were here in the you know 1905, they're here in 2005, they're here in 2026. It's yeah, those things are it's just human evolution, it's how we like to do things, it's how we feel celebrated, all that type of stuff. That hasn't changed. So maybe one day when the buyer is an agent and all that changes, then we're in trouble. But for now, in in 2026 and 2027, and probably 2028, if you're at least mid-market and up customer and end user for most platforms, it's still human. And a lot of those things, you know, are still the tried and true methods of of doing it. So those those playbooks are super relevant. I do think you know, everybody needs to get a Cloud Code license and and get up to speed with AI as fast as possible. We we have our whole team, everyone on the team, hey, licenses for everyone. So um, we have got a couple different, you know, um YouTube videos and and uh fun actually check those out. We're we're we're we're we're trying to obviously be as AI forward as um as we can be if we're investing in this space.

SPEAKER_01

It's like you know, we have to be well, not just that everyone's like, oh, the one man billion dollar company, and I'm like, what about the two-woman top decile fund?

SPEAKER_02

I like that.

SPEAKER_01

You know, well, we'll have a team, but I think you can we we should hold ourselves to the same standard as startups. Like, how can we do things really efficiently? How about our go-to-market? And so we're doing all the same things and holding ourselves to all the same standards, and I think there's so much, and we we have the benefit of starting something from scratch at this moment in time, yeah. Right? Which is really exciting. Yeah, we could just set this up from day one.

Max Altschuler

Best time to do it.

SPEAKER_01

Best time.

Max Altschuler

Well, Vanessa, this was fun. I have one last question for you. So um, cookie connoisseur, what's the number one, what's the the favorite place to get a cookie in the San Francisco in let's call it City of San Francisco. So everybody who's listening when they are in town can go get this chocolate chip cookie or any cookie if you're choosing, I guess.

SPEAKER_01

Um, oh man, there's like there's so many good ones.

Max Altschuler

All right, hit us with like just top of the off the cup.

SPEAKER_01

The coffee shop. Uh, I don't want people to like swarm it though, because that's like the place I work from sometimes. Uh the coffee shop has this chocolate chip hazelnut cookie, and they always warm it up for me, and it is amazing. I love hazelnuts, and anyway, I love that. Uh, my co-founder does not like nuts in her baked goods, and so this is like a very controversial take, but Costco, the food line has chocolate chip cookies, and they're always like freshly baked, and they're bomb, they're so good, they're very underrated.

Max Altschuler

Costco's sneaky like that.

SPEAKER_01

If you ever get like a slice of pepperoni pizza at a Costco, which we do when we take the kids, uh get a chocolate chip cookie. They're so, so, so sinfully good.

Max Altschuler

There you have it. The coffee shop and Costco.

SPEAKER_01

Bougie hipster, mainstream affordable.

Max Altschuler

That's perfect. That's what we needed. That's what we needed.

SPEAKER_01

There we go.

Max Altschuler

Awesome. Thank you, Vanessa. That was great. Awesome. Thanks, Max. That was another fantastic episode of the VC series on the GTM Now podcast. Head over to Apple, Spotify, or YouTube and give us a like and subscribe, and we'll see you on the next one.