In one one of my favorite Startup Grind interviews, Ann Miura-Ko partner @ Floodgate, comes and sits down to speak about one of the most important issues every entrepreneur faces. Time management. Being a wife with two children, professor at Stanford, partner at Floodgate, and advisor. Ann has a lot to share about hot to manage your time wisely without overdoing it. Watch to learn more about how she does it and how you can do better.
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[00:05:39] Okay, so Ann Miura-Ko is a co-founding partner at Floodgate who has made investments in companies like Digg, Twitter, and Chegg, she is focused on e-commerce, security and big data, she sits on eight boards including Zimride and she is a graduate of Yale university. She has her PHD from Stanford where she also teaches. Forbes named her the most powerful woman in startups, that's pretty good, huh? So let's give a big Startup Grind welcome for Anne Mirua-Ko, here we go.
[00:06:30.15] ANNE: I love it.
[00:06:31.27] DEREK: That's the first roof we've had raised, I like that, that's a good start.
[00:06:37.28] ANNE: I'm good with positive reinforcement. More hootin and hollering the better.
[00:06:43.24] DEREK: Well, thanks for coming.
[00:06:45.06]ANNE: Thanks for having me.
[00:06:47.08] QUESTION: We like to start off a lot of our events with just getting to know you a little bit if you could tell us a little bit about where you grew up, tell us about your parents, and what they did.
[00:06:55.01] ANNE: I feel like I should sing something. We just had karaoke night at Floodgate, you don't want to be there. Let's see, I grew up in Palo Alto, so you know I went to high school at Pally High right across the street from Town and Country back before it was so fancy. My dad's a rocket scientist so he works at NASA. He's going to retire this year after thirty years there and I used to baby sit for a serial entrepreneur. So I remember when I was in seventh or eighth grade -- this guy that I was baby sitting for -- I realized he was on his ninth startup and it was just the thing to do back in the day. So I went off to college and I came from a family of mechanical engineers. My big rebellion was I became an electrical engineer and I had this moment in college where I realized I was actually pretty interested in business as well. It was an interesting experience because I was giving a tour to this guy of an engineering facility because one of my professors told me to do that and so I'm telling him about my lab and he sort of asks me what I'm doing for spring break and I said well I think I'm going to go home and visit my parents and I was feeling really uncool about saying that. The guy says well I'm the CEO of HP, do you want to come and hang out with me for a week? I'm like... okay that sound cool. So I did that for a week and it was one of these life transforming events where Bill Gates also showed up and was making this dot net announcement and after I got back I told some of my professors this was a life changing thing and I get this set of pictures from the CEO Lou Platt and one's a picture of me sitting in this chair kind of chatting with Lou Platt and the next picture is Bill Gates sitting exactly where I was talking to Lou Platt and I was like showing my mom – look Bill Gates can be like me some day. There was this first moment where I was like wow maybe there is something else out there for me. I had always thought I'm going to be a research scientist. That's sort of the family path -- the noble family path – and so they said well there's two options, this is at Yale, and they said there's two options – investment banking or management consulting. So I said okay so I went to investment banking for one summer. I didn't really like it so I ended up at Mckinsey for three years after college and I actually really loved it. I learned a lot. They let me do a lot of crazy things that most young people wouldn't get to do. Then after that I decided a lot of people had always been telling me venture capital is something you should look into and so I looked into venture capital and I met this partner from Charles River Ventures by the name of Ted Dintersmith and our interview was just we sat around talking about books and music that we really liked and I'm kind of a geek and I really like classical music and I like modern American literature and I was reading all this stuff and I was telling him about it and he happened to like the same kind of books and he listened to opera so it was a meeting of the minds. He sort of offered me a job on the spot and I remember I didn't even ask about you know compensation or benefits. I was like yeah, I wold love to move out to Boston and work for you and so I did that. My second day of work was 9/11 and so then we spent two years – he only made one investment that I found but we spent a lot of time analyzing the venture industry and I had always wanted to go back to graduate school and so I went and I told him I was going to go to law school and I did the whole application process, got in and then my husband was going through law school at the time and I realized that was really not what I wanted to do. No offense, I don't remember who the lawyer is here, but I really didn't want to do it. So I escaped and then applied for a PHD program which was clearly the better option and so I ended up at Stanford for a while and started a PHD program and mouth modeling of computer security and was teaching entrepreneurship as part of a way to pay for my PHD program and it was all in the engineering school.
[00:11:37.14] QUESTION: This is with Steve Blank, is that right?
[00:11:38.15] ANNE: Yeah, one of the classes that I ended up in was with Steve Blank.
[00:11:42.12] QUESTION: How did you get connected with him initially?
[00:11:44.03] ANNE: So he was one of three professors teaching a class that I was starting to teach as a TA and it was a really fabulous experience and we got to meet all these luminaries. I think Diane Green from [00:12:01.03] INAUDIBLE was a mentor in the class – one of like eight mentors – and the partner that I work with, Mike Maples, also happened to be a mentor. In the class so you would have all these real industry luminaries as mentors to these teams and so if you didn't like really corral them they would sort of either not come in and help the students or the students would start bickering and they wouldn't realize then the students wouldn't do well. So my job as TA was to corral these people. Mike wasn't paying attention to his team, so my first interaction with him was me yelling at him for not corralling his team and it was actually received really well. He was like oh you're really straight forward. That started this really great dialogue that in the future, when two years fast forward, I was starting to think of starting my own company, one of the reasons why I thought it would be a good idea to go back and get my PHD was I wanted to be more technical again and potentially startup a company. I went and talked to Mike and my old mentor Ted had said why don't you find one of these angels maybe they'll let you look at their deal flow and you'll be able to asses whether or not your ideas are any good and so Mike was really generous and I was saying I don't know if I want to start my company if I want to join a company what role would it be so he said just come on in and take a look at some of these companies I'm seeing. So I would go in every Wednesday and stay for the whole day and I would give him sort of my honest opinion about what I thought about the companies he was seeing and there was this moment where I realized a lot of what I'd seen from 2001 to 2003 around this idea that you know large funds they would have trouble unless they were you know one of the top ten firms they would really have trouble generating great returns for their investors. So I had talked to Ted about what is a really optimal size for a venture capital firm where would it actually be not easy, but it would be easier to provide awesome returns and we talked about a 100 million dollar firm somewhere around there. It felt like it would be much better for the current exit climate and so Mike was talking about how five hundred thousand was the new five million and I had seen my students also in that time period.
[00:14:34.27] QUESTION: This is what year again?
[00:14:36.22] ANNE: This was back in from 2005 to 2007. I had noticed within my own students in 2003, servers were still a big deal it was cheap commoditized hardware and you could stick it in your closet and start a business, but you'd still have to pay for certain things. There was still a few thousand dollars to get things started. By 2007, 2008 cloud services were up and running. You could literally start something with your credit card with not much credit and so there was a game change. Sort of a real amazing movement. Between Mike and I and within Floodgate, we call this democratization of entrepreneurship and we really think this is a really big deal. We compare it to the Gutenberg press or when the Ford model T came out and what kind of revolution that created not only within that technical field but within society as a whole and so I think you know this movement of how inexpensive it is to become an entrepreneur and develop a product is something that's potentially huge and so when Mike offered me a partnership opportunity to co-found Floodgate he specifically said you should drop out of the PHD program. But I didn't because I'm Asian in case you didn't notice. So I ended up sort of finishing it off on the side, but I also just sort of devoted myself to this opportunity because it was in 2008. One of those periods where there weren’t that many super angels. There weren't that many angels at all. This is 2008 when like the financial collapse is happening. So my timing going into VC is really great. I'm coming in and my parents are asking me what in the world I'm doing. My advisers are like what is this company you've decided to join? But to me it was like this thing that I could see and Mike could see and a few other people could see but no one else could see this opportunity and was like this carrot that just kept dangling in front of me and I couldn't help myself. I just had to go after it.
[00:17:00.09] QUESTION: So you spent those years analyzing venture capital firms. You spent this time analyzing what makes a good firm and a bad one. What were some of those things? What makes for a great venture capital not just the size of the fund, but what are the other key characteristics that you saw.
[00:17:19.20] ANNE: One of the things that we've realized within Floodgate is when we asked our LPs about data around venture capital firms and particular GP the general partners, the individual investors, one of the things we asked was what does it mean to be world class. So my dad has always told me no matter what you do, you should always be world class and so one of the first questions we've asked is what does it mean to be world class as a general partner. Well it turns out that if you want to return three X of the invested capital that you're investing if you can return three X on a regular basis you are top three percent of all investors, which I think is you know it's kind of a scary number that only so few investors can return three X and so at the end of the day I think that's the number we think about. Can we as individuals, general partners, return that kind of money back to our limited partners because ultimately that's what we're in it for. Roger Mackmi has a different way of looking at it.He looks at it from a waves perspective. He says in every given wave you have to be in one of the top three companies and you have to have one additional investment in the top ten and I think that takes you beyond three X. You'll be an epic investor if you can do that over and over and over again, but if you look at your investments through that lens because it's really tough to justify all of your investments so it's a good way of thinking about it and retrospectively looking at all of your investments.
[00:19:02.20] QUESTION: What are some of the metrics that you see a lot of funds talk about or go after their vanity metrics for VCs like there are for startups.
[00:19:11.28] ANNE: For themselves and how they evaluate themselves or with their startups? For themselves I don't know. Number of re-tweets. You know, I think it's funny because we're in a stage where you know you could be a celebrity entrepreneur. You could be a celebrity investor and I'm a ham I love the camera -- hi -- but you know that the end of the day that's not the way you get into the best investments. It's not the way you return money to your investors. There are really you know fifteen companies in any given year that started that achieve two real metrics. One is a hundred million dollars in profitable revenues within five years or if you think about it another, way you know five hundred million evaluation and that's an exit.That's not when someone gives you a piece of paper and says you're worth X hundred million dollars it's X what is your value what do you return to your investors. There are really only fifteen companies that really actually achieve that and so one of the questions is how many of those companies are in your portfolio at any given time.
[00:20:42.08] QUESTION: As you see some of those entrepreneurs and you guys have invested in some of those, what do you see that's different about those guys that end up running the companies that are in the top fifteen or in the top three. What makes them different from the hundreds of other entrepreneurs that you see come through the door?
[00:20:58.08]ANNE: I mean I've only been doing this since 2008, so it's still a question mark which one of my investments will get there, but if I were to take a look at our entire portfolio since 2005 and see which ones have been successful and which ones haven't been I think the things that we're starting to identify is that, number one you have to be going after huge total available markets. The surface area that you're attacking has to be really big and this is not from even the tops down approach. A lot of people will say, well mobile advertising is going to be a trillion dollars and therefore if I even have a toe in mobile advertising I'm worth a hundred billion dollars. I'm talking about sort of a bottoms up assessment to the land grab that you're taking part in. If you look at how much you're going to charge your customers and how many people are out there and how big is that opportunity I like to see something that's really big. The second thing is actually something that I think is under appreciated and that's an authenticity about the entrepreneur and this is the factor that I think gets us past entrepreneurs who are entrepreneurs because they want to be entrepreneur hero worshiped and I think that becomes harder in sSlicon Valley because there is this notion that being an entrepreneur is this romantic ideal and what I think the movies the tv shows don't recognize is that it's like what they call it it's a Startup Grind. I think you know there's nothing romantic in working hundred hour weeks and not seeing your family and throwing out code you've been working on for two years because your co-founder decided that you're going to pivot, there's nothing romantic in that and yet we romanticize it and so the authenticity of that idea to that entrepreneur is really important because it gets you through those moments.
[00:23:22.24] QUESTION:Yeah, what other qualities do you see, I know you've got authenticity there's one that we talked about the other day this very extremely driven you want to talk about that?
[00:23:35.24] ANNE: Yeah, I mean it's sort of this notion that you know when our best entrepreneurs when you present them with these obstacles it's almost like they don't see it. My brother works in F1 car racing, chassis design, and one thing he was telling me was on the race track you'll have these. If you look at the obstacles you're not going to get through the race track. You have to be able to see past them and through the path and I think the best entrepreneurs are like that. They don't actually see obstacles, they see a path through those obstacles and they’re continuously adjusting their path and they aren't even thinking about it and sometimes that means breaking walls, breaking boundaries, breaking people, it's just sort of it can be a very ugly scene and yet it's sort of this notion that they have to get to the end zone and it's that singular focus and drive that gets them to this end and that could be a very you know ugly person in some ways, right you've read I'm sure many of you have read the auto biography of Steve Jobs it's not a pretty person at the end of the day but it is that singular drive that vision drives that person we really like to see that.
[00:25:03.18] QUESTION: Can everyone hear okay? Is everyone good? Okay, can we talk a little bit about flipping companies? As a founder with the perspective of you know I'm sure you see this every day – founders that come and say hey what's the exit on this well hey we'll do this, we're going to build this product and so and so is going to buy us. You guys kind of have a unique take on entrepreneurs that try to flip companies. I wonder if you could talk a little bit about that.
[00:25:37.08] ANNE: Yeah I mean so nothing against them but I just – I do feel like entrepreneurs should be very aware of what their investors want and I think you should always be really totally aligned with your investors because the lack of alignment is what creates a lot of heart ache between investor and entrepreneur. So when we say at Floodgate we invest in thunder lizards we invest in those fifteen companies that want to crawl across the pacific ocean and take over Tokyo and eat buildings and trains and generally disrupt markets. We are looking literally for Godzilla. That isn't the type of company that believes that you know you're not going to say Godzilla we invest in Godzilla and that Godzilla is not going to sell for five million dollars to Facebook that same week and it's just a self awareness and I've talked to you know at Stanford at some of my students if I say to them... if I say to my class how many of you ...if I said I'll write you a check for five million dollars that you could direct deposit into your bank account how many of you would take that and sail off to the Bahamas for a few weeks or you know how many of you would take that money and believe that you could that into a billion dollars.
[00:27:06.18] QUESTION: Is this an offer that you're making? I just got a big checkbook in the back.
[00:27:11.18] ANNE: But 99 percent of the class if they were really honest with themselves they would say I'm going to take that five million dollars and go to the Bahamas and that's not a value judgment on that person, but it is a risk profile that they need to be very well aware of and you know I was just giving advice to a friend of mine about just general career things and he was saying you know should I found a company or what should I do? One of the things I was pointing out was you know if you don't have an idea that's screaming out to you that needs to be birthed at this very particular moment you got to remember that the hundredth employee at Facebook did better than 99.999 percent of all entrepreneurs right? So, if it's sort of a financial motivation then there's like great companies that you can join that are a rocket ship and you should just get on, but if you know there’s an idea that's screaming to get out that's an indication that maybe you are a founder, but it's that there's a threshold for that I think.
[00:28:19.07] QUESTION: Mike Arrington's talked about that before. There's a class of people that do this. They'll be a Google pre ad PO and then they'll move to Facebook and then they'll move on to whatever else is next and they seem to live pretty great lives but they're not founders. So you all make investments that range from correct me if I'm wrong from 150 thousand to roughly a million.
[00:28:41.14] ANNE: Yeah, I mean our core bets are from five hundred thousand up to more recently we've done slightly bigger bets around three million dollars but really our core bets five hundred thousand to about one or two million dollars.
[00:28:55.22] QUESTION: And what would you consider is flipping your company, does it threshold at five million does it threshold at ten because you all have talked about this as well. Hey if a company has a fifty million dollar exit you are getting in at a point that could still be an incredibly great outcome for you all.
[00:29:13.04] ANNE: I think that flipping is actually more psychology. So flipping is not you run out of alternatives so now you've gone through all your hypotheses as to how to make this a successful business model and everything has worked up against you and we've all run out of ideas and now we're going to go and try to sell the assets of the company and make some money for the investors and for the entrepreneur that's a different mental model than you know I haven't even started yet and someone gave me five million dollars to join their company. That's just like an expensive career fair and it's just a very different model and so if you're in it and you've exhausted all of your resources, you've been working hard at this and you have no idea how to turn this into a company anymore and now you're going to go out and figure out how to sell the assets of the company and hope that some part of this lives on, it's very different than saying that this is not the right exit. I think there's also some entrepreneurs that say we don't want to take this company public and so we have to figure at this point do we really go for that billion, two billion, ten billion dollar IPO or are we going to try to find a great acquirer. We've gone to a hundred million dollars in revenues where do we go now that again I think that's not flipping they didn't just sort of say five million dollars first offer I'm gone.I think it's more of a mental shift.
[00:30:56.20] QUESTION: Why are first time founders sometimes better to invest in than someone say on their second or third company?
[00:31:05.23]ANNE: Because they're not jaded. You know I think that's the thing that I love about our job is that we get to work with people who are totally unvarnished like you know sees the whole world through rose colored classes and everything is about to go their way and that's just a way of staying forever young. People always ask me how do I stay so young and beautiful and I say, It's a lot of expensive skin care products but also staying close to really young talent and it's not young in terms of age it's young at heart and I see this in entrepreneurs who just have a dream and you get sucked into it so I think that I mean that's what I see and this actually is not just for first time entrepreneurs you can actually have a second and third time entrepreneur be that way and I think that's what's the joy of being an early stage.
[00:32:12.11] QUESTION: So, I've spoken with some people that know you quite well and I said what about Ann should know that people probably don't know and the thing that I heard several times was that you are extremely competitive.
[00:32:31.04] ANNE: I am, but I thought everyone knew that.
[00:32:35.19] QUESTION: People don't know that. I read all the blogs, all the forum posts, no one mentioned that. So, tell us where does that competitive fire come from and how does that serve you in what you're doing with companies and what you're seeing.
[00:32:48.25]ANNE: I think it's innate. I mean I remember when I saw three years old playing some board game probably Candy Land it's like a deterministic game and I'm screaming because I'm losing and I see it like I wasn't as aware of it until I saw it in my daughter and it's like a mirror being held up to you and I used to do speech and debate in high school and as a funny joke we had coaches who came from Stanford for their all undergrad so they were like 20 years old. They would say hey Ann if you can make your opponent cry in cross examination we'll buy you a slice of pizza and like that was incentive to me. So, it was horrible and I still feel that way if there are points associated with anything. I remember when tap tap revenge came out I would get these scores and then I would mail them to my partner and be like hey Mike beat this score and then I didn't realize it was like a text message you can edit so he could edit his score and text message me back and I spent all night trying to get a better score but I think that's you know it's good for me because I like to keep tabs on myself. I'm most competitive against myself right so I set goals for myself and I try to beat them and I know inherently that I am competitive from that perspective so I try to harness it in a pseudo positive way. We had karaoke night the other night and my associate never told me he was in a singing group he just confessed to me before this event.
[00:34:50.22] QUESTION: You have a you know, talking about work life balance, you have quite an interesting way of working and goals. Walk us through your typical day. I know it stats at about 4:30 or 5.
[00:35:04.29] ANNE: So I wake up around 5 in the morning I have three kids and --
[00:35:13.13] QUESTION: Under the age of five, right?
[00:35:14.14]ANNE: So five, three, and ten months and so.
[00:35:19.27] QUESTION: Would you like to be the CEO of Yahoo?
[00:35:21.17] ANNE: Why is everyone making such a big deal she has one child, she's pregnant it's not a big deal yet, have three, have four then I'll be impressed. Right? Or twins, twins or triplets. Then we're competing. But I wake up early and I think one of the things that we talked about was you know I look back on my time and I try to figure out how much time I'm spending on things and Mike and I have talked a lot about what's a sustainable sort of work week and a lot of our coaches and mentors have told us somewhere around sixty to seventy hours a week is the magic number. It's sustainable, but it's really hard. I don't think hundred hour weeks are sustainable, but I think that having done sixty to seventy fairly consistently, that's probably a pretty good core number and so you know actually these days I'm logging exactly what I do with my time. I'm trying to hit under two hours a day on email which is actually really hard to do and how many awesome people do I meet in a week is also a metric that I'm measuring. I also am trying to keep certain parts of the day clear so that when my kids are with me that I actually am present for that moment. So 6:30 to 8 in the morning I'm off the grid. 6 PM to 9PM I try to be off the grid and then weekends I work when they nap and other things are non-negotiable – doctors appointments and parent-teacher conferences and then you know I try to throw in like one hour every month volunteering in my kids classrooms, but you add those up and it's actually hard to say where do I fit in those sixty to seventy hours and that's why you end up back tracking and you have to wake up kind of early, but it's I think that's where people talk a lot about work life balance. I think it's really hard to even think about balance from that perspective because balance implies you get home and everything is quiet and in order and dinner is cooked and kids are really well behaved, mine aren't and my house is usually a crazy mess and someone's screaming and before I got here like my ten month old had a fever and I was like handing him off to my husband saying good luck and so it's never a balance. It's never a moment when you actually feel good about everything so there's all these articles about can women have it all I don't think men can have it all either right? It's like there's a partner on the other side who has exactly the same challenges you know. So I just work to try to keep it together and hopefully no one gets hurt in the process we have a really low baseline.
[00:39:05.29] QUESTION: What do you see with founders who deal with the same issues. You're a venture capitalist, typically you seem to work very very hard. You work much harder than the average venture capitalist that I know and what do you see with the founders, do they work equally as hard? Do the best founders that you have in your portfolio companies is there a correlation with work ethic and success in the company?
[00:39:32.04] ANNE: This is an interesting question that we've been thinking a little bit about even within our portfolio. We see a wide range. One of our companies, they work hundred hour weeks. It’s kind of insane and I was asking the founder like how do you even do that, right? And it sort of new employee came, they forgot something, they came back to the office at 11PM, the whole team was there so they were like, oh, guess I'm supposed to be here too. I think that you know you can't really blame any particular institution, but I do think that pivotal labs with their notion of coming at 8:30 and you know working, having the hour lunch, leaving you know putting your pencils down at 5:30 they've been in a lot of startups and that work methodology has had a bit influence on engineering culture and the only thing I would say is I can't say ;like how many hours should a startup engineer work I don't know. I know everyone works really hard. The only thing I would say is I've never done better like even going back to my competitive speech and debate days I never did better because I was smarter it, was just because I worked a whole heck of a lot harder than everyone else.
[00:41:00.09] QUESTION: Well when you had that crying thing it was like a huge advantage, right?
[00:41:03.16] ANNE: It was, yeah, plus I had a mean streak. But I think it was just sort of you people win because they work harder. That's 90% of it and so I think you know a startup if you are in a competitive environment and your competitors' engineers are working five percent or ten percent more there's an advantage there. Even if they're working less efficiently if they fix their processes and they continue to have that work ethic there’s an advantage there. So I would just push on that. I mean, I don't actually look or drop in on my startups at 7 o clock to see whose around, but that's something that you know you want to think about as a culture. Microsoft definitely thought of that as part of their culture they said working hard is one of their cultural cornerstones and you know you should have a discussion with your team as to whether or not that is your corner stone and it doesn't have to be, but then what is. We think that's really important in our companies.
[00:42:15.02] QUESTION: Yeah, I had been thinking about the last few days you know these times in my startup career hey we worked six days a week or we worked whatever it was 70 hours or you know 80 hours or the times where we didn't and I had somebody one of the guys that's working with us w were talking about scheduling a meeting and he said well I'll probably leave at about five and you're usually gone about then anyways and it was this I feel like I work pretty hard, but it was kind of this mental thing that I felt like was basically pulling our whole company down, I might go home and have dinner with my kids and I'm on from whatever eight to whenever, but I think that kind of being aware you know those cultural things and saying hey we're going to work harder than our competitors it's not just hey they went to Stanford we can't beat them but we can out work them and we can out smart them and if we put in the time you know that's as good as a chance as we're going to have to actually come through with that.
[00:43:21.18] ANNE: I think that founders actually have a huge role to play in that I think it's also communication because a lot of times with engineers and then they're like coding at home in their dungeon and nobody knows right and so the marketing folks they're like the coders are going home five I'm out -- peace out and they go home and maybe they do do some work, but it's sort of what does that mean? How do you talk about what is work ethic to you you know what do you showcase what do you not showcase does it even matter is it about end product if so how much are you pushing yourselves how you verbalize what's too much because I think there is such thing as too much I think it's more about communication and making sure that everyone's on the same page more than more than a time sheet you know that's definitely not the point here there's no time sheet involved it is about how do you harness that energy and passion that you have and make sure that you're going a hundred and ten percent.
[00:44:32.13] QUESTION: I'm going to ask just one or two more questions and then we'll take questions from the audience so maybe if you'd like to ask a questions just start getting lined up down here in the middle unless you're right in the front I'll bring the mic down there. You're one of the youngest general partners in the valley and talk to us a little bit about what do you see as you think about your career over over the next ten or twenty or thirty years, what do you think about you know what are your goals what are you trying to set yourself up for what are your thoughts of the future of where this industry is heading.
[00:45:12.20] ANNE: Yeah, I mean I think for us it comes back to you know twenty years from now I want to look back and I want to look out my window and see all the stuff that I was a part of, right? That sort of my competitive streak is that I want to see how the things that I invested in changed people's lives and that's the thing that gives me goosebumps when I think about it and the founders that we've backed we get to see that journey that they go through you know whether it's Leah at Task Rabbit or Eric Coger and Susan Koger over at Mod Clothe the guys over at Zimride I've worked with [00:46:07.03] INAUDIBLE of Refinery 29 all of these people who are just sort of going through this point from some of them are Stanford students one guy was a Stanford grad student I chased him down to his classroom and I had a check in my hand and was like please take this check from me and going from that to seeing the product and having you know the military buy a contract those are that's where you start to say hey you know the things I believed in now people are starting to see and people are stating to believe as much as I do it's cool to have done it before other people did and and hopefully that turns into that three X return on our full portfolio but more than anything like I definitely don't want to do it anyway I think that integrity is so important and it's the one part of ourselves that you know you sell it off you never get it back and we as a culture within our firm we really believe in being an entrepreneur’s advocate and going to bat for entrepreneurs and staying on their side throughout the entire process and I take a lot of pride in the fact that every person in our team from administrative person to our CFO to our associate everyone is on the same team when it comes to that and if they're not they're out of here right and we take that really seriously and at the end 20 30 year career I want to look back and be proud of every single moment along the way while being able to say you know we helped make really great stuff happen because we aren't the ones making it I fully admit that but also we were there for the ride and we ere there for the low moments as well as the high moments ad if I can say that I think I'll be pretty proud of myself.
[00:48:26.05] QUESTION: The venture capital industry is as I've talked to people about it and these things have happened the feedback I continually get is the venture capital industry is kind of like being in a boy's locker room most of the time and it's just you're talking about ethics and morals and I wonder who prevalent do you see that? Is that unique to Floodgate is it unique to a small group of partnerships or do you find that the majority of venture capitalists have those same kind of goals.
[00:49:03.11] ANNE: I think we're like we get to work with the people we want to work with and like I think that you know we've been really privileged the people we get to work with in this industry have been really awesome people particularly in the super angel crowd whether it's josh complement Rob Hayes, Michael Dearing, Steve Anderson, I mean these are righteous people and I think you know one of the advantages that we have at floodgate is that we started off gender balanced and there is this question what's the highest percentage of females in a VC firm, and I said that's us we're 50 percent and that led to something very unexpected and I don't think Mike wasn't looking for a woman we just kind of met and we hit it off it was awesome, but because we're balanced you know our first initial thought of when we're going to do a company off site it's not to hit Vegas and go to the strip clubs it's let's do a cooking thing and go paint pottery or sing karaoke so it's just like it's ingrained in our culture and I remember mike at one point before we had Tommy on board as our associate who said you know I walked into the bathroom and the women's bathroom was taken because the CFO or our admin person was in there so i went into the men's bathroom and I was like the toilet seat is up and I went back out and I said Mike this is not a place for barbarians and he said how did I end up in an industry male dominated surrounded by women and it was you know we laugh about it but at the same time I think that was it was lucked into it so it's never been a really thought for us we never actually carefully constructed a culture that's that way it just sort of happened in terms of the integrity component I think a lot of that has to do with Mike and if any of you know him he is just an amazing guy and you know I will you know go to bat a billion times because he took a chance on me when no one else probably would have but also you know when I did my due diligence on this guy because we are going to be a two person firm there wasn't a single person who would say anything bad about him and I was like clearly I'm not digging deep enough but I’ve yet to meet anyone who says anything bad about this guy and so I'm just extraordinarily proud to work with him and because i get to work with someone like that I feel like it makes myself better we attract amazing people and that's you know not only the people who choose to work with us but then the entrepreneurs who will take our money form us and we've just been really lucky along those lines the people who surround us is just extraordinary.
[00:52:29.04] DEREK: Can we give an a big round of applause. Okay, let's take a couple of quick questions.
[00:52:42.27] QUESTION: Well it's more of a comment, I was going to ask a question about if there was any kind of intimidation factor in a male dominated world but after hearing you speak I withdraw the question.
[00:53:02.04] QUESTION: I have two quick questions one is when you saw that democratization of entrepreneurship through clowd computing and other technologies what made you decide to become a VC versus an entrepreneur and the second question if in reality female founders have a harder raising money and if so what is your tips for female founders.
[00:53:24.24] ANNE: Yeah, so you know with all things it was sort of the reason I ended up at Floodgate wasn't I had this moment where I said you know what I'm going to be a VC I'm going to go look for that job in fact I said when Mike first brought p the idea to me I said whoa big fella you know I'm going to be a technical co-founder of a company and you are asking the wrong gal and I'm like and I have to finish my PHD and so I didn't have any intention of going that path but there was this moment where you're seeing all these entrepreneurs walk through the door to meet with Mike and they're asking for somewhere between five hundred thousand and a million dollars and you're asking them what other alternatives they have and they literally have no where else to go they have first found capital they have Steve Anderson and they have Mike Maples right? And it's just sort of it's not like today where you have five hundred different opportunities you have Angel List you have all these different places to go it was literally what I believe every other entrepreneur must feel that moment where you're like wow no one else sees this it's either I'm like being visionary or I'm having visions and I don't really know which one and it was and I think you know that that's moment where you're just like you can't stop yourself from doing it even though every logical person around you is like will you know maybe you should go talk to the big firms and be an associate there and follow the partner track position or maybe you should go work in an investment bank and they're giving you all these very logical career advice and none of it makes sense to you that's how I felt so it was really just an opportunity as far as the women go women founders we actually have a bunch of women founders within our portfolio and we haven't actually made a concerted effort to go find female entrepreneurs but they come to us and you know we pit them against the sane exact standards as male entrepreneurs and so we think that you know they pass exactly the same rigorous tests and so we're particularly proud of the female entrepreneurs that we've backed so I can't say from my perspective is it more difficult there are things that I think that women need to be coached on in leading companies and being leaders and participating in business but I don't think that that necessarily should hold women back and I think that you know at the end of the day we have more and more female entrepreneurs Bill Campbell, mentors like a bunch of female CEOs there are people wh are really interested in seeing this eco system thrive and you know I just think that we just need more participation and that's the thing i would think about would just you know be a part of that community learn from other people, seek mentorship and there are people who are willing to give it.
[00:56:58.26] QUESTION: Hi, my name's Josh I'm really interested in big data and I think big data is one of the most fascinating things that we deal with on a daily basis you work with big data and venture capital and try and do a sort of figure out trends from the large pool of available data, my question to you is that I thin the most insightful information that people gather from big data are the questions that we're not asking yet that we should be, how do you find the questions that you're not asking yet that you should be asking.
[00:57:25.25] ANNE: That's a great question. That was fundamentally behind one of the investments that I made, it's a company called Ayasdi one of the observations I had at some point was gosh data is so big that it's not about finding a needle in the haystack that presupposes you know what the needle looks like and you can actually figure out what the haystack also looks like, big data is such that it's not really the size of the file it can be just extraordinary complex data sets right three hundred patients you see their entire genome sequence how do you find two patients that are correlated in that that's very difficult and so you know I Ayasdi has this technology where they're looking at providing a mathematical technology that creates a visualization of how data is correlated when it's extraordinarily highly dimensional and so those are the types of investments I think are really interesting today I do believe that the infrastructure behind big data a lot of those questions around is it map produces what kind of data base should you be using is it [00:58:49.29]INAUDIBLE we haven't made investments in those spaces I'm looking a lot at what happens at the analytics layer how do you figure out what to make of that data because i believe fundamentally as data becomes more complex and there's just huge quantities of it you're going to have to figure out what to do with that data that's an area that I'm really interested in.
[01:02:09.11] ANNE: We say like visionary versus having visions, right? I do think that it's a really fine line but at the same time some of the best entrepreneurs that we've funded end p being really hard negotiators and so sometime sin that negotiation process you're like who is this person, right? And sometimes like I think that's a good thing other time sits distracting so what I'm looking for is the person the woman or the man who is kind of delusional in the right ways so they can't be talked out of what they really believe so there's a difference between everyone's talking bout the lean startup and taking data and really observing it and using that data to determine what strategy you should have I actually think it's more you should have your strategy and allow your data to help you inform whether or not you continue to believe your hypotheses or if you're getting talked about if and so I think you know the thing that's important part that might be a little bit delusional is the entrepreneur who chooses to ignore some of the data and knows when to ignore it and when to listen to it and if you're completely rational you're going to listen to the data every single time as if it were whispered words of the future to you and I think the best entrepreneurs take it and interpret it and do what they want with it.
[01:04:07.16] QUESTION: My name's Andy I just had a question of or you about in the deals that you're seeing now you mentioned that you look for waves of kind of areas and try to invest in the top companies can you give us some sense of the waves that you're seeing now from companies that are coming to you for capital and second question would be since you mentioned lean startup and customer driven development how do you push that idea within the companies that you fund or is it a requirement and where have you seen I succeed really ell and where have you seen it not successful.
[01:04:41.23] ANNE: I'll take the second question first it's interesting, when Eric was first starting to think about lean startups and Steve Blank was teaching with him I still teach with him they came to our office and they were talking about the Ooda Loop and this fighter pilot guy and they were talking about manufacturing and it was just sort of their coming up with this name lean startup and this is back in 2008 and today it's just interesting to see this notion become so prevalent and in our culture and startups but in large corporations as well and I think that's been a really great thing we still are huge proponents of hypotheses and it's something that I teach about Stanford it's this notion of business model development that I think is really critical for a lot of statups at this stage and the way I use it is a lot of entrepreneurs when they first come to us they're very product focused and I think that's great but immediately you need to move beyond that you need to move to who are your users who are your customers you need to think about how to do demand creating you need to think about what channels you're using you need to think about your price you need to then revisit what is the product, how big is this opportunity and just the frameworks that we've develop alongside what Eric teaches and what Steve teaches has been really helpful for us and how do we coach our startups in that initial stage what parts are they paying attention to what parts are they not the parts that we don't talk about as much alongside lean startup is the whole company development component and to us that has a lot to do with what is the culture you want to define within your company who do you do compensation within your company who do you do reviews how do you hire and fire people all of that is about how you build a great company and that's totally separate from product and business model and unfortunately a lot of times very much ignored right now and people talk about culture like it's motherhood and apple pie they'll say oh we want you know environment that's about meritocracy and individualism and then you find out they're giving team based bonuses right and so it's really about what is your core values but in that moment when you declare value what is it that you're giving up and so as a firm we're really thinking about what does it take to build the next generation of amazing companies and how do you do it at the ground level and that goes far beyond product and engineering cycles and it moves into what do you do as a leader and how do we build great leaders in the future.
[01:08:01.29] QUESTION: Cool, I actually have two questions early on you said the opportunity to work every Wednesday to just go and hang out for a bit can i ask really nicely can I score something like that in your firm?
[01:08:18.15] ANNE: I think the problem is we're not organized anymore so it used to be Mike had all of the startups come on Wednesday and now Tommy will vouch for the fact it's hard to corral us.
[01:08:34.26] QUESTION: Okay so my second question is I run an online social site, we have about a quarter million people, I shouldn't say we it's just me I kind of built it out of a passion for a certain industry that I do and I 'm dong a million of other things and I really have no idea how to monetize this thing or even what to do next because I'm totally burnt out because it's just by myself and I’m also starting a tv show in Puerto Rico and I just opened a tattoo shop down there and I'm doing all this other crap, but I need help and I don't know who the hell to ask so I'm going to ask you.
[01:09:06.16] ANNE: I think this is a one founder problem I think you need to find a co-founder i think so often being a founder is very lonely i think that's what you're discovering and part of it is we like to fund at least two founders usually mostly because it gives you someone to bounce ideas off of you don't get stuck and also when you feel like quitting you can't because you're going to let this other person down, that's the part we don't really mention all the time but I think that that’s sort of what you need you need to find someone who can be your yin to your yang.
[01:09:49.23] QUESTION: It's hard to find a smart person I feel like everyone I deal with is a retard.
[01:09:53.03] There's smart people in this room.