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Eric Hippeau discusses D2C growth, brand value and advice for early-stage founders
Eric Hippeau is the founding partner at Lerer Hippeau Ventures, whose portfolio companies include the likes of Axios, BuzzFeed, Casper, Warby Parker, Allbirds, DocSend, Fundera, Everlane, Giphy, Genius and the recently acquired fitness company Mirror.
It would not be an overstatement to say that Hippeau is well-positioned to discuss startups across a wide spectrum of industries, from media to D2C to telehealth to edtech. We spoke with Hippeau for a full hour on a recent episode of Extra Crunch Live to discuss all of the above and get his tactical advice for early-stage startups looking to catch their break.
Below, you’ll find a video of the entire episode and highlights from our conversation. Enjoy!
Advice for super-early-stage founders
As much as you can, in terms of timing and resources, build something. Don’t just talk about building something. Build it. It’s not gonna be perfect, and it might not work the way you might do, but build it because that will give me, as a VC, an indication of what you’re trying to accomplish. It also tells me a lot about you, and that that this is something that you really care about. You’re going to ask your family, and even ask your friends, and you’re going to get resources any way you can because it’s that important to you. And, the product that you build, while not perfect by any of stretch of the imagination, will go a long way for us to figure out what it is.
On the growth of direct-to-consumer
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Max Levchin is looking ahead to fintech’s next big opportunities
Max Levchin needs little introduction in the world of tech. As an entrepreneur, he’s been the co-founder of PayPal (now public), Slide (acquired by Google) and Affirm (reportedly about to go public), some of the hottest startups to have come out of Silicon Valley. And as an investor, he’s applied his power of observation and execution also towards helping many others build huge technology businesses.
We sat down with Levchin for a recent session of Extra Crunch Live, where he spoke at length about what he sees as some of the big opportunities in fintech. Here’s an edited version of the conversation. You can watch and listen to the whole discussion — which includes stories about Levchin’s coffee and cycling habits, and how many times he’s seen “The Seven Samurai” (hint: more than once) — here, also embedded below, and you can check out the rest of the pretty cool ECL program here.
How e-commerce failed to evolve since his days at PayPal
Even going as far back as PayPal I think the industry has devolved. I think fintech had the promise of really bringing simplicity, honesty and transparency to the customer. Instead, we ended up putting a really nice user interface on products that are not designed with the user’s best interest in mind. I’m a big fan of throwing shade on credit cards, because I think fundamentally, their business model is remarkably similar to that of payday loans. You are allowed to borrow some money and don’t really know exactly what the terms are. It’s all in the fine print, don’t worry about it and then you just make the minimum payments and you stay in debt. Potentially forever.
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Join Twilio’s Jeff Lawson for a live Q&A August 25 at 2:30 pm EDT/11:30 am PDT
As we race toward Disrupt 2020, we’re keeping the Extra Crunch Live train rolling with a big entry next week as Twilio CEO and co-founder Jeff Lawson joins us for a chat.
Lawson is well-known in the tech industry for helping institutionalize API -delivered digital services, a business model variant that has become increasingly popular in recent years. Twilio has become a giant in and of itself, worth more than $37 billion today after going public in 2016.
As always, we’ll take some questions from the audience, so bring your best material.
Considering Twilio, it’s position in the mind of API-focused startups everywhere is notable. You tend to hear API-powered startups mention Twilio and Stripe as the two companies that they are mimicking, albeit usually with a different focus: “We’re building the Twilio for X.”
The power of API-driven startups with usage-based pricing and nearly SaaS-like gross margins is something private investors have certainly noticed and are betting on.
But there’s more to Twilio and Lawson than just that one topic, so we’ll also spend time riffing on when is the right time for a private company to go public, how his life has changed since the IPO, and what advice he might have for the super-late-stage startups who can’t seem to get out of the wings and onto the public markets. And, why, odd duck amongst most of the tech-famous, he doesn’t appear to make many angel investments.
Details follow for Extra Crunch members. If you aren’t one yet, sign up today so you can join our conversation.
Details
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Extra Crunch Live: Join Anu Duggal for a live Q&A on August 20 at 11am PT/2pm ET
Rent the Runway and Glossier became unicorns within the same week in June 2019. That same year, only 2.7% of venture capital dollars went toward female-founded companies.
Silicon Valley’s disconnect between the monetary success of female-founded companies and funding them in the first place is disheartening. The conversation is there, but the dollar sign momentum remains missing.
Anu Duggal founded the Female Founders Fund before both were even a tangible reality. In 2014, the entrepreneur launched her first fund to invest in female-led startups. It took her 700 meetings over two years to make that first close, she said. Years later, venture capital has slightly taken note. But the Female Founders Fund, or “F Cubed,” has tracked female-led wins and bet big on the underestimated asset class.
Her early focus on female founders hasn’t evolved, but the landscape has. And in an unprecedented world of remote deals and democratization of venture capital, we’re even more excited to have Duggal join us on Extra Crunch Live this upcoming Thursday at 11 a.m. PT/2 p.m. EST/6 p.m. GMT
Those tuning in and taking notes are encouraged to ask questions, but you have to be an Extra Crunch member to access the chat. If you still haven’t signed up, now’s your chance! With the subscription, you’ll also be able to check out all of our stellar previous guests on-demand (watch those episodes here).
Female Founders Fund has provided seed institutional capital to entrepreneurs with over $3 billion in enterprise value. The firm has cut checks into women-led companies such as Rent the Runway, Billie, Tala, Peanut, Thrive Global and Zola. The fund has also attracted limited partners like Melinda Gates and Girls Who Code founder Reshma Saujani.
Duggal herself has a fascinating trajectory into technology investing. At 25, she started a wine bar in Bombay called The Tasting Room. She went on to get an MBA from London Business School, and co-founded Exclusively.in, an e-commerce company that got acquired by Indian fashion e-commerce company Myntra in 2011.
Hear from Duggal on August 20 about how the investment landscape has changed for female founders, what she thinks of as a success story and if 2020 feels different than 2014. And Extra Crunch fam, make sure to bring your thoughtful questions for me to ask her live on air.
You can find the full details of the conversation below the jump.
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Thoughts on ‘self-driving money,’ day trading and product development from Wealthfront’s Andy Rachleff
Andy Rachleff founded Wealthfront a decade ago to give investors a better and smarter way to manage their wealth, building on core academic research showing that a carefully balanced portfolio of low-fee ETFs outperformed more aggressive strategies. Since then, the company has taken in billions of dollars of invested capital under management and expanded into new banking services, including high-interest checking accounts.
Rachleff and I talked on Extra Crunch Live about where Wealthfront is heading as it speeds toward its second decade, how he sees the competition from other, more active trading platforms like Robinhood and his advice for startup founders looking to build enduring products and companies away from the daily status quo.
Self-driving money*
Rachleff began our conversation talking about the future of Wealthfront, which is increasingly moving beyond its wealth management app to new services.
“Our vision is to automate all of your finances — we call this self-driving money,” he said. That platform is expected to role out in September, and include features like easy direct deposit and automated bill pay, with any savings left over automatically moving to the right investment assets that meet a user’s chosen risk tolerance.
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Extra Crunch Live: Join our Q&A tomorrow at noon PDT with Y Combinator’s Geoff Ralston
From Airbnb to Zapier, and Coinbase to Instacart, many of the tech world’s most valuable companies spent their earliest days in Y Combinator’s accelerator program.
Steering the ship at Y Combinator today is its president, Geoff Ralston . We’re excited to share that Ralston will be joining us on Extra Crunch Live tomorrow at noon pacific.
Extra Crunch Live is our virtual speaker series, with each session packed with insight and guidance from the top investors, leaders and founders. This live Q&A is exclusive to Extra Crunch members, so be sure to sign up for a membership here.
Ralston took on the YC President role a little over a year ago shortly after Sam Altman stepped away to focus on OpenAI.
In the months since, Y Combinator has had to reimagine much about the way it operates; as the pandemic spread around the world, YC (like many organizations) has had to figure out how to work together while far apart. In the earliest weeks of the pandemic, this meant quickly shifting their otherwise in-person demo day online; later, it meant adapting the entire accelerator program to be completely remote.
While still relatively new to the president seat, Ralston is by no means new to YC. He joined the accelerator as a partner in 2012, and his edtech-focused accelerator Imagine K12 was fully merged into YC’s operations in 2016.
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Emergence’s Jason Green thinks some of the tech backlash is justified, but the B2B opportunities still outweigh the challenges
Jason Green, co-founder and partner at Emergence, is one of the leading VCs investing in enterprise startups at the moment. But even with the focus on B2B, many of their companies have become household names — Zoom, Yammer, Box and Salesforce among them.
Now, we’re all living in a climate where everything has been turned upside down. Meetings are virtual, the future economy and collective health of the world are unknowns, and being an investor — or a founder — comes with completely new parameters and rules of engagement.
We sat down with Green for an enlightening hour to talk about the challenges of all that, plus making deals, running a business, and suddenly finding your quiet, B2B name being turned into a verb. It was an interesting conversation, worth a read for enterprise startups and investors, but — similar to how B2B can spill into consumer — equally insightful for many more.
Extra Crunch Live is our new virtual speaker series for Extra Crunch members. Folks can ask their own questions live during the chat, with guests that include Aileen Lee, Kirsten Green, Mark Cuban and many, many more. You can check out the schedule here.
Below, you’ll find a lightly edited transcript of our recent chat with Green.
How is sourcing impacted in the current climate?
Sourcing is not much different. We follow the same due diligence process, so when we make an investment, the whole team basically dives in and does due diligence. So we make manager references and customer calls and spend time with each of the management team having one-on-ones. In some ways, it was better. First of all, we could very easily do breakout rooms with each of the individual management team members and then come back. So there was this dynamism to the meeting that we hadn’t had before. We were able to basically record it and share it with folks that couldn’t participate. So all of us had all the information when we were making the decision together. That was pretty special, actually. So it took a little bit longer, it probably took about 50% longer than we would have done otherwise. But I think actually, now knowing what we’ve done, we could probably compress it back to our normal timeframe. So I think in a lot of ways, we’ve learned like a lot of folks that we can do things remotely that we probably didn’t think were possible before. Hopefully, we’ll see how the investment turns out, but we’re super excited about it.
Are you considering more startups outside the Valley, and how are they viewing their own place outside the Valley?
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GGV’s Jeff Richards: ‘There is a level of resiliency in Silicon Valley that we did not have 10 years ago’
Earlier this week, GGV Capital’s Jeff Richards and Hans Tung joined TechCrunch for an Extra Crunch Live session. During our hour-long chat, we touched on startup profitability, the global venture capital scene, why GGV doesn’t have an office in Europe, how the venture industry is responding to its stark lack of diversity and other issues.
When it comes to useful bits of information, this was perhaps the most useful Extra Crunch Live discussion in which I’ve participated. One moment that stood out came early in the chat when we were talking about COVID-19-driven headwinds and tailwinds and how many startups might be in trouble. Richards said the following (emphasis via TechCrunch):
“You know, the one thing that’s been remarkable for me — I was in Silicon Valley as an entrepreneur in the ’99, 2000 dot-com bubble, and 9/11. I was here in ’08, ’09 — I think there is a level of resiliency in Silicon Valley that we did not have 10 years ago and 20 years ago. I don’t have data to point to that. But we have been saying now for a few months that we’ve been blown away at the level of maturity, calmness, perseverance [and] resiliency that our companies and the founders and management teams have. On an emotional level, it’s been very heartwarming, because you hope to back the kind of people that are building real companies that can withstand challenges.
I think the corollary to that is you’ve seen companies that raised a ton of money and were burning a ton of cash and weren’t building very good businesses, a lot of those frankly went under in Q1 or are going under now. They haven’t been able to raise more cash and they’re just kind of dead.”
Both Richards and Tung were positive about their own portfolio companies’ recent performance and financial health (cash position, really). But it appears that not only are their portfolios doing well, but other startups are a bit more solid than in previous downturns.
On the flip side, however, there is a separate cohort of startups that were running inefficiently before and are now perhaps unfundable. Reading both points in unison, it appears that the startup market is bifurcating between the companies that will come out of the COVID-19 era unwounded, and those that are suffering. And the companies that weren’t the most cash hungry probably have the highest chance of being in the first bucket.
There’s a lot more to get to. So hit the jump for the full video and audio, and a few more of the best bits from the transcript. (You can snag a cheap Extra Crunch trial here if you need one.)
Oh, and don’t forget to stay up to date on coming chats. There’s still a lot to do.
The full chat
Here’s the full video rewind. Our favorite bits of the transcript follow:
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4 months into lockdown, Eventbrite CEO Julia Hartz sees ‘exciting signs of recovery’
“Eventbrite is in the unique club that nobody wants to be in,” says CEO and co-founder Julia Hartz. “Which is the first affected and one of the most directly affected businesses of the COVID-19 era.”
Hartz, who co-founded the company with her husband Kevin Hartz and Renaud Visage, joined ExtraCrunch Live recently to discuss moving forward when your core business isn’t just threatened, but wiped out completely.
“You never as a founder — at least I never — ever wondered what would happen if the whole basis of our mission was tested,” she said.
The events world was one of the first industries to feel the pandemic’s impacts and will likely be among the last to be restored. For Eventbrite, which was built on a core business of in-person events and event ticketing, it meant making swift decisions to stay afloat.
External data show some bright spots. According to an operational update from Eventbrite, paid ticket volume on its platform increased 33% in May compared to April 2020. Eventbrite is down 82% in paid tickets in May 2020 compared to the same month year ago.
“A massive market and industry dislocation and disruption. I mean, we’re a living example of that,” she said. “It’s not a victory lap. Certainly, we’re seeing some really exciting signs of recovery, but it’s still very sobering.”
Hartz offered founders at all levels advice on how to work on culture during a crisis and offered tips on communication and transparency.
We also chatted about how open consumers are to paying for virtual events, how the company curates and moderates political events and how Eventbrite plans to address racial injustice beyond, in Hartz’s words, “episodic outrage.”
We pulled out a couple of highlights for you to peruse.
How she sees events changing in the next 18 months
Structurally, events are pivoting to in-person. So it’s not just pivoting online. A good example is the Beanstalk Music Festival in Colorado, a two-day music festival that pivoted to an in-person drive-in night concert. They were wildly successful in selling tickets to this new format.
It was a testament to the strength of their community and the pent-up demand to get together and listen to great music. But what we’re seeing beyond sort of those really creative uses of new types of space and venues that are outdoors are smaller events. Classes, workshops, seminars, small meetups are starting to come back. I think that as creators start to think about how to bring their community back in person, there’s a huge element of trust that exists in this new world.
We’re helping our creators establish that trust and be very upfront about what their event goers and attendees can expect in that moment as you bring yourself together in-person again.
When she knew the business would be materially impacted — and what she did next
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Superhuman’s Rahul Vohra says recession is the ‘perfect time’ to be aggressive for well-capitalized startups
Email is one of those things that no one likes but that we’re all forced to use. Superhuman, founded by Rahul Vohra, aims to help everyone get to inbox zero.
Launched in 2017, Superhuman charges $30 per month and is still in invite-only mode with more than 275,000 people on the waitlist. That’s by design, Vohra told us earlier this week on Extra Crunch Live.
“I think a lot of folks misunderstand the nature of our waitlist,” he said. “They assume it’s some kind of FOMO-generating technique or some kind of false scarcity. Nothing could be further from the truth. The real reason we have the waitlist is that I want everyone who uses Superhuman to be deliriously happy with their experience.”
Today, the app is only available for desktop and iOS. Superhuman started with iOS because most premium users have iPhones, Vohra said. Still, many users have Android, so Superhuman’s waitlist consists mostly of Android users.
“We don’t think that if we onboard them they’d have the best experience with Superhuman because email really is an ecosystem product,” he said. “You do it just as much on the go as you do from your laptop. There’s a lot of reasons like that. So if you’re a person who identifies that as a must-have, well, we’ll take in the survey, we’ll learn about you so we know when to reach out to you. Then when we have those things built or integrated, we’ll reach out.”
We also chatted about his obsession with email, determining pricing for a premium product, the impact of COVID-19, diversity in tech in light of the police killing of George Floyd and so much more.
Throughout the conversation, Vohra also offered up some good practical advice for founders. Here are some highlights from the conversation.
On competition from Hey, the latest buzzy email app
Yeah, I’m not at all worried. I used to get worried about this. You know, 10 years ago, even as recently as five years ago, I would get worried about competitors. But I think Paul Graham has really, really great advice on this. I think he says pretty much verbatim: Startups don’t kill other startups. Competition generally doesn’t kill the startup. Other things do, like running out of money being the biggest one, or lack of momentum or lack of motivation or co-founder feuds; these are all really dangerous things.
Competition from other startups generally isn’t the thing that gets you and you know, props to the Basecamp team and everything they’ve done with Hey. It’s really impressive. I think it’s for an entirely different demographic than Superhuman is for.
Superhuman is for the person for whom essentially email is work and work is email. Our users kind of almost personally identify with their email inbox, and they’re coming from Gmail or G Suite. Typically it’s overflowing so they often receive hundreds if not thousands of emails a day, and they send off 100 emails a day. Superhuman is for high-volume email for whom email really matters. Power users, essentially, though power users isn’t quite the right articulation. What I actually say is prosumers because there’s a lot of people who come to us at Superhuman and they’re not yet power users of email, but they know they need to be.
That’s what I would call a prosumer — someone who really wants to be brilliant at doing email. Now Hey doesn’t seem to be designed for that target market. It doesn’t seem to be designed for high-volume emailers or prosumers or power users.
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