Our guest today is a Founding General Partner of Mighty Capital, Jennifer Vancini.
Jennifer has been investing for 10+ years. Before becoming a full-time investor, she held executive roles in corporate and strategic business development, especially in the high-growth security and mobile sectors with companies such as Telefonica, Symbian/Nokia, and Certicom, which she helped take public in Canada.
Jennifer serves on private and non-profit boards and is currently the Vice-Chair of a Dean’s Advisory Council at the University of British Columbia in Vancouver, where she completed her MBA.
In This Conversation We Discuss:
- What drew Jennifer to work for Mighty Capital
- Looking for the right investments that “fit”
- The challenges of starting a venture capital firm
- The venture capital world is evolving
- What ways Mighty Capital coaches their clients to improve the success in their business
Resources:
Connect with Jennifer Vancini: LinkedIn
Mighty Capital – https://mighty.capital/
Products that Count – https://productsthatcount.com/membership/
Connect with Cameron: Website | LinkedIn
Get Cameron’s latest book: The Second in Command – Unleash the Power of Your COO
Subscribe to our YouTube channel – Second in Command Podcast on YouTube
Get Cameron’s online course – Invest In Your Leaders
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Our guest is the Founding General Partner of Mighty Capital, Jennifer Vancini. Jennifer has been investing for ten-plus years before becoming a full-time investor. She held executive roles in corporate and strategic business development, specifically in the high-growth security and mobile sectors with companies such as Telefonica, Symbian/Nokia, and Certicom, which she helped take public in Canada. Jennifer serves on private and nonprofit boards and is the Vice Chair of a Dean’s Advisory Council at the University of British Columbia, Vancouver, where she completed her MBA. Jennifer, welcome to the show.
Thank you. I’m pleased to be here and looking forward to the discussion.
This is going to be interesting. You’re the second person from a VC firm that I’ve had on the show. We’ve done almost 200 episodes now. The only other one that I can remember having is from Backstage Capital, a group out of the US that only invests in women-owned businesses and predominantly minority-owned businesses as well. Tell us a little about your firm, your role in the firm, and how you fit because people may be unsure how VC firms act.
I’m happy to lay that out. It is a little bit different, with some similarities. I’m one of the original founders of Mighty Capital. We have three general partners and venture capital firms are a partnership structure. I was with it from day one and one of our managing partners, SC Moatti, came to me with an opportunity. We had been co-investing together, SC and her other third partner, Alan Kramer.
We all had a lot of opportunities, but she had actively grown this huge network of product managers called Products That Count and always thought, “There’s an opportunity to invest in these companies. Let’s try it out. Let’s build a fund and do it that way and invest that way.” She laid out a great vision for something that would be differentiating, which was key to me to get great deal flow and help portfolio companies move towards a profitable exit.
Mighty Capital was founded in 2017 to test that thesis with our first fund. We found it was successful and went on to raise our second fund, which we closed last 2021. We’ll start raising our third fund this 2022. We focus on early growth stage companies, a lot of Series A and some Series B. About 70% of it would be B2B tech software plays, companies like Amplitude. We’ve invested in Digitalocean, Ascern, and about 30% in high growth opportunities, more regulated spaces where data’s super important. Healthcare with an AI focus or personalized medicine, FinTech, and blockchain has a unique set of facets at this moment in time.
We invest at those stages and when we make an investment, we look at how we can add value by leveraging this huge network of some 300,000 product managers to help our companies sell to those enterprises with PMs. Hire people and meet partners that can lead to acquisition. We’ve found over the last few years, the journey of the product continues to accelerate in terms of its access to the C-Suite with chief product officers now growing into these strategy roles as the CMO did many years ago. It was a bit of a mouthful about Mighty Capital and where we’re focused.
I need to ask about this whole 300,000 product managers. That was the first data point that came out. Is it a LinkedIn group? Is it an actual organization or an association? Is it a paid membership? Is it
It’s a not-for-profit. I love that you compared it to LinkedIn because every venture capitalist will say, I have a fantastic network. We all have our LinkedIn Rolodex, but we wanted to go beyond that. This is a living organic ecosystem of companies and product managers and it started out as a place for them to go and learn how to improve their craft.
Product management is a tough, critical role, especially as we’re in this age of product now and things change so quickly. The best products are winning by and large. Zoom is always a case in point. They wanted a critical time when some mega players had not broken that inflection point for video communications.
It’s an active organization, not-for-profit. Mighty Capital is the exclusive venture capital sponsor. We’re a sponsor of the organization and we work closely with that team, even though they’re two separate organizations to be able to leverage that benefit for our portfolio companies. Early on, we found it’s a great source of deal flow and we’re increasing that as we sponsor product awards and CPO mastermind circles and other fantastic programs that they put on. We’re also finding on the incoming side, we’re winning deals. In 2021, about 80% of the deals we’ve been in have been upgraded or maybe deal terms have been extended in a closed round, for example, because the CEO wanted to leverage that value.
Even if it was $100 a year, that’s a $30 million company in and of itself as the product management business.
It’s huge. Amplitude, which when public in 2021, said we were the best value per dollar invested in their company and they made room for alongside Bessemer and others on their cap tables.
What is that product management group called?
Products That Count. I recommend any growing product managers to check it out. There certainly are a number of executive VPs and CPOs in that network as well, or starting to leverage it more and more to train their teams because that’s a big job. The VP of product management has to mentor and teach people how to do good product management because it’s not taught in school yet.
It’s interesting. My two core focuses, I’m growing something called the COO Alliance, which is the only network of its kind in the world for seconds-in-commands. I also launched a course called Invest in Your Leaders and took a look at something like Products That Count. That would be a natural fit for me to speak with them. Let’s go back into the VC world. What was it that attracted you to this space and started Mighty Capital?
I’ve always loved investing. My profile says ten years and back, though, when I was in high school, I marched myself down to Dean Witter and opened a stock account. If anyone remembers Dean Witter, it’s now Morgan Stanley or part of Morgan Stanley.
Mine was Richardson Green Shields at sixteen years old.
I was probably about twenty in San Antonio, Texas. I went down and found a broker. He helped me open an account. He was gracious, knowing I was never going to make him a ton of money and started buying stocks, pre-internet. We’ve got the Wall Street Journal, but I’ve always been interested in investing. My first degree was in Finance.
I ended up spending twenty-plus years in operator roles in the technology industry, in the high-growth security industry, then in the high-growth mobile industry, culminating in strategic business development and corporate development executive roles, which was similar to investing. I decided to focus on it full-time because I’d been doing some angel investing. Going back to my background and fundamentals, if you want to make money at it, which I did, you have to build a diversified portfolio. You got to invest the time in it.
I love that and I love working with startups. I’ve always worked in startups or the entrepreneurial side of a large corporation, trying to transform. I love working with the teams and seeing the growth. I love the technology. I worked in cryptography before that even meant money and it was super challenging. Technically for me, I’m not a cryptographer. I then built a mobile networking product, not an engineer even though I studied it a bit. I love the innovation, the growth and then, of course, the opportunity to make money and diversify my own family’s net worth out of public markets, real estate, and other things. It’s a profession that one develops when you go into the venture capital world.
It’s interesting when I think about the VC world, you don’t have to look for companies to invest in. You’re spending 99% of your time saying no to 99% of the deals that want you to invest in. The sales and marketing on a VC firm or in your group are finding capital, aren’t they? That’s where you spend. If you’re selling, you’re looking for capital.
Mighty Capital: In the VC world, you don’t have to look for companies to invest in. You’re spending 99% of your time saying no to 99% of the deals that want you to invest.
We do two things. We’re always fundraising, LP relationships. When you’re an emerging fund, those first couple of funds, people have to put their trust in you and get the vision. You then have a performance track record, and we have a great performance track record. When we go to raise the next fund, we’ve got that to lean on. Concurrently, that performance only comes from the quality of your investments.
We look at 4,000 things a year. We’ve put standard operating procedures in place for how we do that. We can manage that pipeline from that screening to deep meetings to due diligence to the investment and then the ongoing management of those portfolio companies. We do get a lot of incoming deal opportunities, but we’ve increased over the years our outbound efforts where we look at an investment thesis for a particular space, say cyber security.
It’s an easy one to wrap our heads around. Market map it, look at companies coming up that should be raised in a Series A, Series B, leverage our networks to reach out to them and it A) Increases the hit rate from 1% and b) It’s within the framework of, “This is an appealing market that fits for Mighty Capital’s thesis and we can see great potential outcomes.”
Is that more the Series B rounds that you’re going out prospecting for? Are you looking for that after angel investing going for a Series A?
We’re about 70% Series A and then a little bit before and a little bit after. Because of that value add we discussed with Products That Count, even early on, we were able to write that smaller check in the later round. Normally, new funds and smaller funds are relegated to proceed and seed. We like that risk-return profile being able to get into slightly later early growth rounds. There’s already a product market fit customer traction. I’m in the right direction.
I’ve been coaching companies now for many years since leaving 1-800-GOT-JUNK? I coached. The CEO was a client. I coached the Second in Command at Sprint, so I coached at a high level. I coached the team at Hootsuite for a bit. I’ve worked with lots of tech companies, but I get called by these companies that are so early stage and it’s not the right zone for me. That makes sense. You’re looking for ones that already have product market fit and then are looking to grow and that’s where you’re looking to get in.
That’s where we’re able to get in. Our earliest bet was on the blockchain company, a company called ICON, which is a developer store. It’s a developer tool for companies wanting to add blockchain to their products. It’s probably our riskiest, but it also may be the highest earner at the end of the day and we wanted to learn about that market. That’s where we fall and we would always look at the same things no matter what stage of company’s at, the team and why they are uniquely qualified to solve a big and hard problem.
There better be a big and hard problem and a big market. Also, the business, the traction, the business model, and the go-to-market. How are they getting leverage? What are the margins? What’s their funding history and funding plan? What’s a fair amount of capital for them to raise to get to certain metrics and then what does the exit opportunity look like? Is it an inquisitive space? What are the comps? Does it have to be an IPO? The last thing I mentioned is fit with Mighty Capital and why us at the cap table.
That’s interesting that you talk about the whole, “Does it need to IPO or not?” That’s intriguing because you’re right. You can get a huge return pre-IPO in an acquisition, not just on organic.
We had three IPOs in 2021 and it’s been fantastic. It’s understanding what the founder expects the outcome to look like. If they start from the end and work backwards, do they have a strategy to get there and does that make sense? Honestly, most of the companies we meet with even early will say, “This is an IPO opportunity.”
Statistically, it’s impossible. It’s become more and more difficult. Sometimes that’s their ambition. Sometimes they think that’s what the VCs want to hear. It doesn’t matter to me. I don’t care if they do an IPO or have a fantastic M&A as long as they understand what the path is to an exit in terms of what they need to achieve to get there.
Is it a flag at all in a good way or a bad way when the founder is already so focused on an exit? Do you need one that is focusing on that?
It depends on the stage of the company. We want to hear their thinking behind it and to understand that they understand as investors. This is what everybody should know before they pitch a venture capitalist. We want to know how we’re going to make money for our investors. Occasionally, we will have somebody come in who says, “I might not ever want to exit this business.” They’re building a great lifestyle company, as we would call it, which means it’s yours and your families and you keep growing and you’re not thinking about how you’re going to return capital to your investors.
Essentially, you mentioned the blockchain. We had the Second in Command for Blockchain.com on the show. He’s episode 182. I had to do a quick search to figure out which episode he was, but the fascinating business model for them too. You talked about looking for investments that fit Mighty Capital. What’s that mean? What does the fit mean? Is it a culture thing? Is it an aptitude? Is it speed or the types of businesses? Is it everything?
It’s many things. We have what we call our contrarian thesis. Every VC should have a contrarian thesis because that’s where you find the opportunity that the best products win and we’re in the age of product. Fit with Mighty Capital is, how can we bring value to this company? First and foremost, leveraging the Products That Count network. Is that company selling directly to product managers?
When we rank it 1 out of 5, that would be a 5 out of 5 if Amplitude sells directly to product managers, or are they leveraging? Do they need to make the product manager their champion to get that enterprise sale? It could even be outside of that. We have deep expertise in different areas across our GPSs and our venture partners. How else can we help this company?
Some of it is culture fit. We believe very much in conscious leadership, growth mindsets, and coachability. Are we aligned in our thinking about an exit? Not that we can crystal ball it all the time, but when we build a portfolio construction, we needed a mix of investments for that diversification, and for where we’re at, where we sit in the market, we don’t want to go for those decacorns every single time. We have fit with them in the portfolio, which the entrepreneur doesn’t always know. That’s not their decision. That’s ours.
With your investment thesis and with the fact that you’re based in Canada, do you invest?
I’m sorry. I’m in the San Francisco Bay area. You’re thinking about my Canadian experience before we get on this. I’m in Silicon Valley.
The question was twofold. One was, do you only then invest in Canadian companies, which would then be a no. The second one was, had you heard of the C100? Are you familiar with the C100?
Before Mighty Capital, the family office fund was invested in Canadian companies. I’ve had some great success with that. Our fund can only invest in US companies, but as we scope out our next fund, we’ve got our eye on Canada partly because we do have some proprietary deal flow with my experiences there connected to C100, UBC, and the Creative Destruction Lab you might be familiar with across Canada. Toronto is a fantastic hub for AI and machine learning and BC has that, as well as life sciences and anything climate-related. Alberta is also quite strong, growing in its strength, and Quebec. There’s a lot of opportunity.
Canada’s become what they call the PayPal Mafia, the whole group coming out of Canada. I coached the Founder of Influitive and Eloqua for about two years as well. It’s a strong business. I got introduced to the C100 many years ago. I spoke at a couple of conferences that they had called Metabridge up in Kelowna. I learned that there were more VCs in the Bay Area from Canada than there were VCs in Canada. That can’t be true anymore, is it?
I can’t speak to that. It might be. It’s growing in Canada. The funds are still buying larger down here. One of the things we look at closely is the investor syndicate. We like to see sometimes a VC from the East Coast, a VC from the West Coast, or a strategic. Canadian VCs often look at that as well and how their portfolio companies can tap into always tap into the US market or the European market to leverage growth.
I don’t think it can be true anymore. The Canadian scene has gotten so strong now with some of the brands getting so big. We’ve got Shopifys and the Hootsuites and there’s been enough money now that’s starting to circle in that group. It’s a pretty flywheel effect. That was the term I was looking for. Flywheel, Jim Collins. If we look at the team you’re building inside of Mighty Capital, how many people work inside the VC firm?
That’s one thing to keep in mind. Starting from the ground up, building a VC firm is like building a startup. It’s not about, “Let’s get together, raise a fund, and go spend it.” Although there is some of that out there, it’s, “How do we build a firm with legacy and the lasting ability to keep going?” Scaling up the team has been important from day one. We have three general partners, although one of them is moving into an emeritus status and will continue to be with us.
Mighty Capital: Building a VC firm is like building a startup. It is not about getting together, raising a fund, and spending it. It is about building a firm with a legacy and the lasting ability to keep going.
Allen, who founded Bridge Bank, was one of the first board members of the Silicon Valley Bank. We have at any given time, 6 to 10 venture partners. Three of whom are actively on our board bench. We have a couple of associates, one principal, and senior associates. We’re going to be hiring another senior associate. That team is always growing. We then have affiliates, a CFO we’ve brought on who’s starting.
We’ve mixed up the back office with best-of-breed externally with the internal management of that. One of the ways we build and manage this is we’re big on standard operating procedures. How do you move through the pipeline? How do you do an investment thesis? How do you do due diligence so that we can train people quickly? Make sure we’re consistent that if me or a managing partner, SC Moatti, gets hit by a bus, somebody knows what to do, and there’s no single point of failure.
We’re also muffling about creating career paths for our team members, expecting to expand the GDP bench one day. As they learn how to become great investors by working with us in portfolio companies, those opportunities will be available. It’s been a constant growth and trying to do it in a way that’s efficient because we’re stewards of our LP’s money and when they pay us fees, we want to use them judiciously so that we continue to have great performance metrics.
Is one of the harder parts of starting a VC firm starting a company?
It’s something people didn’t expect, but yes, it’s a lot of work. It’s operational and it’s not fun work. It’s not glamorous work. I’ve certainly had friends who have gone off and started a fund and then they’re like, “Geez.” As with any entrepreneur who starts their business, they’re like, “I got to find an office, get a photocopier, bring in TriNet or some payroll provider, and file a bunch of paperwork.
I hired my first person over in the Philippines and they started talking about all the different comp and the payroll tax stuff. I’m like, “Can I pay you over there to deal with that for me? I don’t want to have to learn this.” They’re like, “Yeah.” “Okay. Good. Take it.” It’s interesting because it’s like a dentist, a doctor, or a lawyer who decides to go off and start a firm.
It’s like a lawyer’s office or an accounting office. It’s very similar PR. You still have to have your foundations to run a business.
A close friend of mine started a company in Toronto called Wildeboer Apps, and he got his LLB from Notre Dame and his MBA from Ottawa U. He didn’t want to go work for a law firm. He wanted to start one. He got three of his buddies together and they started, but they led the public offering for rim. How they stumbled onto that many years ago was crazy. What’s changing in the VC world?
It’s always a dynamic world. As much as it changes, it also stays the same. Investing is for the long run. We believe much in sticking to the fundamentals. We’re valuation sensitive or at least reasonable, for example. We look for companies that are capital-efficient and cost-efficient so that there’s always that. You can’t always predict the waves when things are going to go up and down.
Invest in good businesses, good products, good teams, and good markets. That should stay the same. We’ve seen in the last several years the megafund aspect. There’s fragmentation, which is healthy in the industry. There are different types of VC firms and different types of startups. The mega funds have their own dynamic pile of lots of cash. They have to invest a lot of money, have to return a lot to the LPs, and tend to have a high number of failures and some great successes. That model works for them.
We’re more on the, “Try to make everything a star.” We have opposite metrics, maybe three challenged portfolio companies out of now. We keep making investments in twenty-something portfolio companies. We’ve had a number of stars and a number of rising stars. We don’t believe you have to have a huge degree of failure, but we’re also not writing 100 million checks. It’s a different thing.
There are different kinds of VC firms that fit different kinds of companies, investing that fit for different kinds of LPs and what they’re looking for when they diversify their finances. A lot of good fragmentation to meet different needs. We’ve seen a big emphasis on ESG and diversity and inclusion in the last few years. That’s true. We mentioned the flywheel effect. A lot of that has to do with time and flywheel. We’re seeing so many more diverse teams come in to present and some of it is demographic and age, to be honest.
People are entering their 30s and 40s. It’s a lot more diverse than it was many years ago. People entering their 30s and 40s that want to go start a company and have that kick at the can. You have that impact and then you have the second time around CEO impact. It’s so much easier to get funded if you have a successful exit in your background, as more underrepresented people have successful exits.
The tech space is 25 years old now in 2022, so we’ve got a bit of that history for a lot of them.
NBC firms have gotten more diverse. Two out of three of our GPS are women. A lot of our venture partners are in a much more diverse mix. We have to explain to people, “We’re not an impact fund. We’re about making money, first and foremost. “
It’s like Justin Trudeau’s. They asked Justin Trudeau, “Why are half your cabinet women?” He said, “It’s 2017. I don’t even understand the question.” You don’t do it for impact. It’s called normal. I don’t understand why it wouldn’t be. You said something that hit me because I was about to ask the question, “Was your model the typical one?”
What is it 1-2-7, the 1 home run, 2 do okay, and 7 fail, or whether it’s 1-7-2, whatever it is? I hate the model. You said that you focus on all of your companies being a star, all the investments. What does Mighty Capital do to support, help, and grow them? I’m not even going to lead you with the questions. What do you do to help them be successful?
Help them help themselves because they’re the ones running their companies but a number of things. After we make an investment within weeks, we sit down with them and have a meeting to say, “What are your objectives over the next 6 months to 12 months? What do you need? What kind of introductions to who? Are you hiring? Do you need to finish this investment round?
We come up with concrete action items right off the bat. We usually schedule them to do a podcast that Products That Count within the first month or two. We invite them to our monthly LP dinners, which are Zoom events now. To talk to our LPs about what they’re doing, that’s been successful for some of them to form a new partnership with somebody that one of our LPs may have.
One of our companies signed Neiman Marcus as a customer after an LP dinner. Somebody had a great contact there. Concrete things to help them out. We take board seats or board observer seats, whatever is appropriate on a large number of our deals. They want us there so that we can hear on a regular basis what their needs, challenges, and opportunities are.
We help them with their next fundraiser. We’re preparing for that. What should it be? How much? What form of raise, like a bridge or a price round? What’s your ideal syndicate look like? Come and pitch us and we’ll give you feedback. Those are some examples of what we do to help them. We’ve correlated their engagement level with the Products That Count network and there’s what we expect to be their success trajectory. It’s been strong.
I love that you started with some of the operational things and plans and got fairly tactical even with some of it because a lot of these C firms tend to migrate quickly to help them with the next round, financial issues, or tech issues. They forget that these are businesses that don’t know how to hire people yet. They don’t know how to build a team yet. Maybe they have a team of 20 or 30 people, but it’s not the right team. They don’t know how to build a leadership team. They don’t know how to grow. They don’t understand how to run meetings. They don’t run know how to run a company yet.
Sometimes we have to tell them how you run. Most of them are past those learning phases but set your board calendar for the year, set the agenda, think about having your council there, get the slides out early, cover these things, and governance.
I was coaching the CEO and the Second in Command of Sprint for eighteen months. I was sitting with Marcelo Claure in his boardroom at Sprint and he was asking for advice on operational things. I’m like, “I’ve never run a telco. I’ve never been inside of it.” He goes, “No, but you’re going to run companies.” These are businesses that you’re investing in. You’re getting success because you are focusing on that stuff. many DC firms could have a much greater focus or greater results if they help them build those foundations. You’re doing great stuff there.
We do have to prioritize it. We can’t white glove service everybody all the time. We do quarterly reviews of the portfolio and rank them on how’s their cash, how’s their leadership, and how’s execution. We look at what their long-run potential is going to be. Sometimes we have to prioritize, focus on the winners, and be there for the more challenged ones to help where we can, but we can’t. It’s so easy to put all the burden of the struggling ones on your shoulders and dive into that, but you can’t do that.
I learned that back at a company called College Pro Painters, which is where I first started out in business years ago from Greig Clark, the Founder. He said, “You give your brain to your best horses. When your A players are racehorses, your B players are workhorses, the C players, you go to the glue factory.” We end up giving all of our time to the C players and we miss out on the A players. You’re doing that right.
You got to portion out the right amount of resources. Even the challenged ones will do whatever they can to recover or get something back for the investment. We don’t ignore them, of course. That’s the shifting that has to happen as you grow.
You mentioned the board observer seat. Can you explain what that role is? I don’t think a lot of people have heard of that. They’ll hear board of advisors, board of directors, and board seats, but I don’t know if they heard that term.
I can say most companies have them now. It’s not a voting liable, full board seat. It’s something we negotiate in maybe half of our deals as part of the terms that we want a board observer seat. That means we attend the board meetings, get the board materials, and get the information rights. It is what it sounds like. It’s to observe.
By and large, we’re treated as openly as board members in terms of the information flow. In some cases, we will be asked to leave the room or whatever. For the most part, we’re treated that way, but we don’t necessarily have the legal governance obligation. By being there and getting the updates, we’re able to help steer.
That’s what I was wondering. Do you do the skip-level meeting? Do you skip over the board and give them advice on what you’ve seen? Is that part of or they can come to you with questions?
Sometimes. It depends on the situation. I often have a one-on-one with the CEO or with other board members to talk about how we are going to manage this next fundraiser or this issue. Building rapport with the other board members, which is the other investors for the most part, and whoever’s independent is part of the job of being the observer.
Without giving away your entire hiring criteria to work at Mighty Capital, if somebody wants to go work for a VC firm or for you guys, what does your firm look for in terms of less on the skill side? That’s probably already a given, but maybe on the behavioral traits, what do you look for?
Grit is important, adaptability, growth mindset, hustle, good interpersonal skills, and the ability to understand where an entrepreneur is coming from, yet think about the investor, what we need as an investor, and what’s important to us. It’s those sorts of criteria. They’re not easy jobs for entry-level. It’s similar to many years ago when everyone wanted to go work for Goldman Sachs on Wall Street. A lot of fantastic candidates for a few slots want to get in on the inside. This is the younger people more entry-level.
Mighty Capital: Grit is a really important behavioral trait. Adaptability, growth mindset, hustle, and good interpersonal skills. The ability to understand where an entrepreneur is coming from yet think like the investor.
Is this the new investment banker track? That was what it was when I was growing up at the university in the mid-80s. Everyone wanted to go work on Wall Street and be an investment banker. It does seem that people now would rather work for a VC firm and don’t want to go work for the big banks.
I agree or it’s at least on par. If it’s not one of those, they want to go be a CEO of a company right out of the gate.
We didn’t know what an entrepreneur was. Entrepreneurship was not cool until around “97 or ’98, with the rise of the first dot-com era. I remember I had to do a call. Kimbal Musk was one of my employees in 1993. I was a reference for Elon and Kimbal in their first round of funding for Zip2. They only wanted to raise $600,000 and they wouldn’t back Elon because he’d never done anything. He dropped out of aeronautical engineering. They wanted to back Kimbal based on his College Pro Painters’ experience.
Kimball called it a merchant bank at the time. I’m like, “I don’t know what a merchant bank is.” I think it was Kleiner. I had a call with this guy and explained College Pro Painters and I didn’t understand what the internet was because it was only ’95. If anyone had said, “Do you want to work for a merchant bank or a venture capital firm?” I’d be, “No, that sounds like a horrible job.” Now it’d be like, “Yeah, I want in.”
We do see a lot of that. People come from one of two directions. Either they’ve been an operator in the startup, usually the tech world, or been on the operational side, having to build businesses. Functionally, maybe they were sales, product, or they come from the investment world and they bring that set of skills, which is fantastic to have a mix of both. Analytical spreadsheet skills are sometimes underutilized in some BC firms, not universally, but so many people come from the operator side. You do need that analytical side as well. My partners and I look for those complementary skills amongst ourselves and where to focus.
You’re a quant. You can spell it right from you’re one.
I’m more analytical.
The second last question I’ve got is about your skillset. As a second in command and growing this VC firm, where do you focus in terms of your growth? What are you working on?
We’ve got SC Moatti, the partner. She’s a contrarian and more creative person as well, wickedly smart, Stanford GSB, and she’s teaching at Columbia and Stanford various things. She’s a superstar. I’m more analytical, looking at the numbers and the contracts. I work a lot more with the portfolio companies and am involved in the deal screening, the early part of the analysis, and heavy on due diligence as well. We make it a point not to have all partners on any one diligence because you have to have a conscientious objector to ask the questions. After you get attached to the people, you get attached to the vision and the idea and bias is a huge challenge for groupthink.
We have those complimentary abilities, but we make sure we all have to tie ourselves together with conscious leadership as one of our commitments. We love self-books and coaches, and it filters down to our venture partners and associates. We’re talking about modeling that for our portfolio companies and CEOs who should have conscious leadership.
The culture within a VC firm is huge. Culture everywhere is everything. It’s super important. For us, at our first LP meeting, we asked our LPs, “What culture do you want us to have at Mighty Capital? How do you want to be involved in that?” I was surprised how much they dove into that and how important it was to them to understand why we’re doing this, how we work with each other, have this growth mindset, and challenge each other.
I have a second last question that I had to ask because we always talk about our home runs. Have you guys had any big misses that the company’s been a home run and you missed on the investment side?
I used to obsess with following companies we didn’t invest in to see what happened to them. I stopped spending a lot of extra time on that because I, honestly, didn’t find many. Not yet.
I told the Founder of Uber in the summer of 2008, Garrett Camp, six months before he hired Travis. I told him it was the stupidest idea I’d ever heard. Of the five people sitting with him at Burning Man, only Tim put money and the other four said no. I was out.
Regret. I made one. I’ll tell a funny story. Before even being a venture investor, I made one bet on the stock market, and this would’ve been 2009 or “10 or maybe even earlier. I shorted Apple. It might have been pre-iPhone. It was that long ago. It was probably my bias having worked for Symbian and Nokia and some of the arrogance.
Nokia was huge back then.
They were number one. We had a huge market share and smartphones, hundreds of millions of devices. Nokia was one of the owners of Symbian who I worked for building an open OS. This was a case of the early guys who paved the way got creamed and we knew that was coming. We were yelling over the pond, “Don’t ignore the Americans.” It’s so hard to build a smartphone, but that’s what happens with innovation. You can be a success now. It doesn’t mean you will be tomorrow. You got to keep the product. The best product wins.
We saw it. We’ve heard the story that the early bird gets the worm, but my dad always said the early cat gets the bird. Sometimes you want to be second or third. Let’s go back to the 22-year-old Jennifer. What advice would you give yourself? You’re graduating college. You’re heading out on your career. What do you wish you’d known back then that to be true now?
The dynamics were quite a bit different then. Early on, I’m past us now, but it would’ve been asked for more sooner.
More responsibility?
More responsibility, more title. Things have changed. There was less fake until you make it back then. Not that I advocate always doing that, but my mindset then was I had to already be operating at a certain level to then ask for the salary and the title, but no. You have to balance that with not being seemingly crazy and arrogant.
That’s changed because when I was growing up, you never would’ve marched into the CEO’s office and asked, or you certainly wouldn’t have asked for equity.
No way. You waited for it to come to you. Don’t wait. Be more of a self-starter and I don’t know what else. I would’ve said, “Bet on tech early.” I mentioned going to Dean Witter. I bought an oil stock. I should have bought tech stock. What was I thinking? I was in Texas at the time.
My dad would not let me buy Apple stock around 1987 or ‘88, and he made me put money into a mining company, a junior spec of a mining company. I’m the same. We’ll wrap up the interview. Thank you so much. I appreciate all the time. I want to ask you a quick question offline about where we are. Jennifer Vancini, the Founding General Partner of Mighty Capital, thanks so much for sharing with us on the show.
Thanks.
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- Episode 182 – Past Episode
