April 4, 2019
Ep. #37, Web Analytics with Ben Schwarz of Calibre
In episode 37 of JAMstack Radio, Brian is joined by Ben Schwarz, founder of Calibre, to discuss the shortcomings and frustrations of the mod...
In the latest episode of Venture Confidential, Peter is joined by Bubba Murarka, angel investor and former Principal at DFJ. Bubba recounts his journey from Microsoft, to an Entrepreneur in Residence role at Bay Partners before becoming a Product Manager at Facebook, and finally Partner at DFJ. He explains how he learned to examine problems through a business lens and shares insights into how he cultivated successful mentoring relationships to continue to learn and advance his career.
About the Guests
Bubba Murarka is an experienced early stage investor and former Partner at DFJ, where he led 7 investments and worked closely on DFJ Growth’s investment in Unity Technologies. Prior to DFJ, Bubba was Product Manager at Facebook, responsible for Product, Growth & Revenue partnerships.
Peter Chapman: Bubba, welcome to Venture Confidential.
Bubba Murarka: Thank you, Peter, I'm excited to be here.
Peter: It's mutual, I offer all my guests either a cup of coffee or beer and I notice you're drinking neither of those things. Do you want to tell our audience what you're drinking right now?
Bubba: That's an excellent point, I did not get offered a beer before I took this drink.
Peter: We can go back. Beers are available, if you want a beer.
Bubba: It's good to know we can always renegotiate.
Bubba: I am drinking a shrub, which is made of a coffee cherry, vinegar, water, and some simple syrup, which I appreciate you buying me, thank you.
Peter: Oh, it's my pleasure. So, first pro tip of this episode is you don't have to get a caffeinated beverage at Sightglass where I feel like I live these days.
Bubba: Are they our sponsor?
Peter: They should be. I spend, really, a disgusting amount of money on Sightglass drinks for our guests. At this point, they might as well be part of the show. I'm going to just dive right in here because you've got such a storied history.
Bubba: Oh, wow.
Peter: BS in CS, spent some time at this internal Microsoft, almost startup. Was an EIR, and in 2008, you landed at Facebook doing business and corporate development. And I think that's where I want to start diving in because this seems like a really fun time to be at Facebook. It's like the three years leading up to the IPO, so I imagine you're pretty well capitalized, but have less scrutiny than a 2013 Facebook has. What is Facebook like, what is business development like at Facebook in 2008?
Bubba: Yeah, well, it was a great time to be there, to your point, and I was very lucky because I got there after failing at getting my startup off the ground. And one of the points of feedback I got from the ecosystem was, "You are really great at product and engineering, and you're personable, and we want to work with you, but you're a terrible business guy."
You should work on your business skills, and it took me a little while to understand exactly what that meant. And it turns out it meant a lot of things. But primarily that
I didn't initially have the lenses to look through problems from a business perspective.
Peter: Wait, back up, where is this feedback actually coming from, are people telling you this? Or just the fact that your startup didn't get off the ground is telling you this?
Bubba: Both. Yeah, so I was the CEO of my startup, so my job was to make sure the company succeeded. That generally breaks into two or three things. One is have capital to pay for things, two, have the ability to improve the value of the company, so you have more interesting people coming to help you solve the problems you think are important and worth solving.
And I had recruited a great co-founder, we have been building lots of products, but none of them were getting traction, and therefore, we weren't really in a place to either raise capital or recruit employees, saying, "Hey, look at how great this thing is." And we were not, from failing to execute and ship product, write code, or put together a website, or any of those things.
But it was rather from coming up with building something that if it worked, it would be valuable. Or showing that it worked really quickly in a way that people could get excited about what the possibilities were for it.
And so that ultimately, through direct feedback when I would try to recruit people, or when I would ask people to give me money to help pay for these experiments and this work, was the direct feedback that I got. "Well, what could this be?" And I'd show a chart, the canonical series A financial plan, the up and to the right, my up and to the right went to the trillions in three years.
Peter: Ambitious, I like it, yeah.
Bubba: It's very ambitious because I thought that was the game. I was like, "Ah, I just have to show up and to the right."
I didn't understand at that point in time that building a financial model was like building a prototype.
I would never invest six months of time as a product manager, as a engineer, or as a group leader of those types of functions, saying, "Let's build production quality code and invest design resources to build something of high visual quality and polish before we build a prototype." And I'll have conviction like, "hey, this feature should exist. This is a valuable thing to either ship as a product, because it's big enough, or ship as a feature that will improve customers' lives."
And it turns out, a customer for a CEO is, especially if you want to raise venture capital is venture capitalists. And the thing that they are investing in is the size and potential of a business, ultimately. And so, a financial prototype or financial projection is really a prototype for them to say, "Hey, we don't know if this will be right or wrong, but what are the things that could get us to feel comfortable that we understand the variables and if this thing works, it will create enough value such that we can bring more capital in?"
It was a very subtle thing to learn because it's the difference between taking something serious and doing something because it's what everyone tell you you're supposed to do.
Peter: What exactly went wrong in these conversations, what feedback do you get when you show someone a curve that ends at a trillion dollars?
Bubba: I blocked out those memories. Yeah, no, it was just sheer panic. No, you know, it would be like, "This doesn't seem credible," or, "how did you come to this assumption?" Or, "Hey, maybe you should consider a more realistic scenario." You know it was all delivered in either nice ways but direct that it was stinky, or it was you know, kind of dismissive and like kind of proof that you weren't really using the investor's time well.
And I was lucky enough to have people that cared about me that kept me from doing that for very long I'd certainly shown some unrealistic projections. In truth, a trillion dollar projection in three years might be in a bit of a exaggeration from 10 years of life since I've looked at those graphs, but they certainly were not realistic.
Peter: Okay, so, you've got this dawning realization that you need to get better at "business stuff". Finances and modeling, how does that lead you to Facebook?
Bubba: That was, I guess, not as obvious as I thought it was in my head. Facebook at the time seemed to be the most interesting company at scale. Now that was opinionated, I had many friends who said, "No, you know, it seems like it's as big as it'll ever get. You know, Myspace is really big, is it going to get much bigger?" But I had kind of seen three personal things through the journey of trying to build my own company.
One of which was I used the Facebook Platform in pretty much everything I was doing to either acquire customers, or to quickly get feedback on ideas because I would post it out to my friends, or to try to recruit people. And everything came back to Facebook and a lot of the people I wanted to work with were going to Facebook as their option.
And so, I had all this signal from my network, my personal day-to-day experiences saying, "Hey, this Facebook thing is really accruing interesting value both from a I'm using it to try to get customers as a start up, I'm using it to learn and grow my ideas and get better at them, and all the most interesting people I really want to work with are also choosing to go there above other things they could be doing."
And so, that was kind of the signal I had then that I guess was not the most obvious signal to everyone. And then on top of that, when I went and talked to them, they were very open to the idea of me doing something I had no right to do, which was business development and corporate development. I'd never done that role, and the most natural fit was for me to go somewhere in the engineering or product world.
And I was really clear that, "hey, Facebook was a big enough company that my motivation for going was to learn something, was to learn a new skillset." Get an MBA on the job, I think I might have even used in one of my interviews, which may or may not have been a good sell. But, luckily it didn't sink my battleship.
You know, and the alternatives I really looked at were companies that were much smaller, that I would have kind of run product and engineering and worked with a business leader, work with the CEO, or work with the board of directors, and that was how I would absorb "business stuff".
I thought the opportunity to actually do business stuff as opposed to absorb business stuff seems pretty interesting and the signal I had on Facebook being so interesting of a company made the decision fairly straight forward.
Peter: What was your purview at Facebook? I know you struck up some big partnerships, what was the goal of M&A in business development back in 2008?
Bubba: In 2008, Facebook I think, there was about 100 million, maybe 110 million users when I joined. So, you know, 20x smaller than it is today. And at that time, on the business development side, we had Facebook Platform, or they had Facebook Platform, they had Facebook advertising, and they had the core product, Facebook.com. I don't even think there was a mobile product then.
There might've been, maybe for Blackberry, actually, if I think hard enough. But you know, the deals for each of those three areas were different. And so, on the Facebook Platform, it was about finding great app developers, or for app developers that were building products that were very popular, figuring out how to work with them. The first project I actually worked on was kind of with an app developer called Oodle, that took over running the Facebook Marketplace, which was an app that Facebook had originally built in house and then said, "Hey, you know what? Now that we have Platform, why don't we use Platform and let other companies do this?"
But we have all these users using it because we shipped it as Facebook.com. And so, someone who had been on Facebook longer than I had worked out the deal with them and then I was tasked with helping them work and launch and be successful as an opportunity to both learn Facebook as well my knowledge of the Facebook Platform would help me kind of navigate some of the issues that they were going to encounter.
And so, that was a great first project to learn from and kind of gave me experience and built on the experience I had from working on Facebook Platform. And that was the kind of things gaming companies like Zynga and many others talked to the team about their needs and were kind of key customers of the Platform and ultimately, also needed special things from a business level, or at least wanted special things, whether they needed them is up for debate.
And then, on the Facebook.com side, that was really kind of the product integrations. And so, over time, it wasn't the first stuff I worked on but the stuff I got to work on were things like we need to put maps on Facebook, right? And should we use Google Maps, should we use Bing Maps? Why or why not, what's the right answer from a product perspective? Okay, if we know what we want to do from our product perspective, what can we get done from a business perspective?
And then you know, working with the legal team on what are the legal constraints because we've made a deal with our users and what we're allowed to do with their data when we use a third party site, or anything like that. Those are all questions and were things that gave me broader understanding of how to bring another lens to every problem, right?
The right product answer may be obvious to all the product people. The right business answer may be 180 degrees different from that. And then the legal answer might be something else.
And then you have to kind of suss all that out and then be able to synthesize and say, "Hey, here's the trade-offs?" What trade-off do we want to make most? Do we want to optimize for the product? Do we want to optimize for the business concerns? Do we want to optimize for the legal concerns?
And oftentimes, that meant going and getting all that information, putting it together, and then getting it super clear and then presenting it to Mark or Sheryl. And so, that experience was something I got to do a lot of, whether it was maps. Or "we want to really work with Netflix, and what's a product that we could build that would get Netflix excited?" Because they're not excited about kind of necessarily using just the platform, they are interested in, you know, can they show movies on Facebook? Is that something we'd want to do?
Peter: What's an example of a business goal that is antithetical to a product goal? When did that come up for you?
Bubba: A good example of a business goal may actually not be one that Facebook's business, but maybe the partner's business goals. So, we'll go back to Microsoft, a Microsoft example. I had worked at Microsoft early in my career, and so, it made natural sense for me as I got more credibility and comfort and understanding how to get things done with Facebook for me to start to taking over the Microsoft relationship.
Which was a great opportunity to help both sides because I understood how Microsoft worked, you know, I'd worked with Satya Nadella before I left and then he was, at that time, not the CEO of Microsoft but rather ran Bing for Microsoft. And that was a big collaboration around specifically web search. And so, Microsoft really wanted to get web search put onto Facebook.com.
Much like it was working in that period of time, they powered web search on yahoo.com. This is their strategy, their business strategy was to say, "Hey, we may never be as popular as Google.com, but we can be everywhere else." And so, Microsoft's goal were to get Facebook to feature web search more prominently, more strategically, and that was their business goal.
Facebook's goal was like, "We don't know how to think about this. We're not sure if it's important enough to think about, but Microsoft is an important partner. Our business need, or our business goal is to make sure that we're a good to Microsoft because they are very strategically important to us." They'd recently invested in Facebook.
There was a lot of collaboration on bunch of areas of interest, but this was one area where there wasn't actually mutual interest as much as it was clear that it's something Microsoft, it was a priority for them. So, the business goal was then to work with a product team saying, "Hey, what can we do for web search?"
They're like, "We don't want to do anything, we don't have enough engineers to build people search. We don't have enough engineers to fix these thousand bugs that our users have reported. I can't take an engineer off of this and a product manager off of these important user problems to solve a business problem. That isn't a priority right now. Can you ask Microsoft if they can wait a year?"
And then kind of navigating the timeline, resource constraints, and then ultimately, when it was the right time to collaborate with them out of the partnership dynamics and the priority to be a good partner to them, it was now, well, they of course want to get as prominent of a place as possible. If they could have a web search box on the middle of the homepage, they would like that.
They were never going to ask for that, but that was the mentality, it's like, their goal was to get as many searches possible and Facebook's goal is not necessarily that. And figuring out, again, what would be a win for users, that was also serving a business need. So ultimately, we came up with the solution that was, "Hey, if you search for something that we didn't think was your name, wasn't the person's name, when you hit Enter, we would land on a Microsoft-powered search results page."
Peter: I had no idea.
Bubba: I don't even know if that feature's available today, but at the time, we worked really hard to make that possible, and explained why we thought that was a good scenario for our product team, explain why they thought that was the right product experience. And then again, the only trade-off for making is we wouldn't actually do that today, we would maybe do that in a year, or two years, or three years.
But if it's important for the business to do it today, we think this is a good product experience to ship so we can reorder the roadmap, let's make sure that Mark, Sheryl, Chris Cox, Schroepfer, the CTO now, the people that were in charge of these specific priorities for each of these teams, they all understoond that we were making a trade-off, and why.
Peter: I feel I'm missing something. Why was it important to Facebook's business to have web search embedded in the product?
Bubba: Well, the business goal for Facebook was to maintain a great strategic partnership with Microsoft.
Peter: Ah, okay.
Bubba: And therefore, Microsoft was saying, "Our most important business priority for the partnership, and our most important product priority for the partnership is to figure out a way to get web search integrating into Facebook.com." And so, you spend a lot of time saying, "That's not important to us, are you sure? Can we do anything else?" And at some point, it's not a negotiation of like, "No, no, this is the only thing." And then you're saying, "Okay, well, then we can change the order of things," because of the value of the partnership.
Peter: I take it you also worked on some M&A stuff when you were at Facebook.
Bubba: I did, I did, and that was a very awesome learning opportunity because M&A can, you know, at the time I was on part of the BD and corporate development team at Facebook. We pioneered an idea called, acqui-hires.
Peter: You came up with that?
Bubba: I did not come up with that, the team came up that, actually, the press might've came up with that term more than even anyone internally. But the idea that it was very important to Mark, and the leadership of the company, to keep entrepreneurial drive, to keep product vision and to take risk on these ideas, and to have people that were going to continue to push more of the roots of Facebook, which was move fast, break things, you know, very much a entrepreneurial mentality.
We were not worried about something going wrong, we were worried about not trying a big enough idea.
Which is similar to some of the feedback I got from some venture capitalists when I was kind of able to understand why they may not want to give me capital. But I digress, the whole idea that "hey, just because an idea or a startup didn't work doesn't mean that it isn't a great leader or a great team, a great set of insights, that perhaps with Facebook's resources, they can make it work."
Or they could take everything and learn the painful way, the hard way and then grow and have a new hypothesis or a new direction that they want to run in. And so, this idea that you could leave your day job, raise 500 thousand, a million dollars of what would be called seed capital today, at that time, people just said early money, or small money, small amount of money.
Try your idea quickly, and then get feedback back to say it's going to work or it's not going to work, what do we do? Created a lot of optionality for those companies because now all of a sudden with only a million bucks into them, you know, the idea that you're getting a world-class team of people and you have to maybe pay them, and then you maybe pay the investors something.
But you get a cultural trait of someone who's already proven they want to be an entrepreneur, that they want to kind of move fast and break things, as well as someone that is highly motivated to take everything they've learned and worked hard at and flip it into something bigger, so their motivation, it didn't work, it doesn't actually mean that their idea was bad, they know that and you know that.
And then finally, you had investors that at the time were clamoring for Facebook shares. No one knew how big it was ultimately going to get and that turned out to be much bigger than I think maybe people would've predicted. But that allowed this idea of acqui-hires. And the buying of a startup, and it almost got overplayed. Like, "I'll just sell the company if it doesn't work." You know, "Facebook will buy us."
And that was almost a negative repercussion of giving people a path just to taking the risk to start a company, maybe without really understanding the consequences of how hard it is to start a company, and frankly, how hard it is to even get an acqui-hire done. Because the company may or may not decide that you're the right person, the right team, or you know, they may have just done an acqui-hire the day before and they're like, "We just have to finish this one."
So, over time, you've also seen the pendulum swing back for a little bit of, "Oh acqui-hires, they're not really a thing."
And I think at the end of the day, there's no constants in startups or venture capital, or even company building when you're on a rocket ship. Company, but rather, there are these pendulums.
Peter: What does Facebook look for in an acqui-hire?
Bubba: Well, it's been almost 10 years since I was there in that seat looking at that stuff, so, I don't know what they would look for today. But at the time, it was really exceptional founders that really could have a hypothesis that they could become leaders at Facebook. And have a lot of impact on the trajectory of Facebook's business, ideally, in an area that they already knew a lot about.
Peter: You know, I'm thinking about this from my own sort of limited viewpoint. We have a pretty fast set of filters we apply to companies, right? Like, "Are you building a developer tool? Are you between this stage and this stage?" This feels like a really broad purview. Like, good engineers that are possibly great leaders. How do you find those companies? Are they coming to you or are you actively scouting for potential acquisition targets?
Bubba: Yeah, I think at that point in time, once it became known it was something that was done, incentives for the ecosystem were to show Facebook all of these. And in fact, it became much more of a triage situation as opposed to a hunting situation. That said, it was obviously still the best teams and the best people probably also had a little bit of never-give-up mentality.
And so, there was outboundness to it, but you know, that was probably because, "hey, maybe you knew that person or someone at Facebook knew that person from a previous job or by reputation for the content they published, or the way they use social media." Or just from, frankly, their academic work in some cases. I'd say it was actually not unlike venture investing, right?
There is a larger number of people looking for money and they'll com potentially ask you if you're interested and then that could be a very valuable way to find a deal or to ultimately invest in a company. But maybe sometimes people have an opinion, the most interesting deals to consider are the ones you outbound and you go knock on their door, saying, "Hey, I believe the same things you believe. I believe you are someone that is great, and I would like to work with you. Is that possible, what would it take? What would make it a win for you? What would make it a win for us?"
Peter: So, you joined Facebook looking for this, we'll call it an MBA experience, you're learning a lot about different lenses you can apply to problems, right? You're not just thinking about the product side, but you're also thinking about legal repercussions, sort of the business framing. What else is in the Facebook MBA for Bubba?
Bubba: Yeah, I mean, finance and you know, we talked a little bit about financial modeling and just getting to work with the finance team and see how revenue and revenue recognition, and all these concepts that you probably need to be a certified public accountant to truly understand at the level of being able to legally comply to the IRS rules. But there are very important concepts to understand that can really shape the trajectory of a business or the way you have to capitalize a business.
Or even just the way you want to approach a negotiation because it might be really important to get money in sooner than later because of some of these issues. Or, it may not be that important and you may be able to create value. So just learning how the finance team would think about something was valuable. Learning how the marketing and PR teams would think about something.
Again, you know, the story you can tell, the people you tell that story to initially and how they then should tell it to the world, can really shape the perception of something. Can really shape the chance of success or failure for a new nascent idea that might be very scary, right? When Facebook started, it was scary, the idea that you would put a picture of yourself on the internet, and you'd put your phone number on the internet, right?
Nowadays, people don't think about those questions. They think about who has access to those things. But not necessarily the idea of doing it. And I think, you know, getting to understand, "hey, how do you think about all the ideas of a communication plan, a go to market, of the press outlets you can use, of the story you want to tell and what the trade-offs are because there's no perfect to anything."
There's only trade-offs. So, that was very interesting. So, let's see, we talked about legal, we talked about general business considerations, which I would say really is resource prioritization, the business trade-offs were really like, what is the most important thing we could do? We have a lot of problems we can solve, what do we think is the most valuable one to do?
The other one was strategy, which is a very amorphous term and I almost shuttered at trying to put myself in the position to try to define it. But I'll take my lack and that is again deciding there's plenty of good opportunities out there. Which one is the best one for this company and the resources and the assets we have and why? And then kind of looking for signals over time as you execute against that strategic framework you've developed to say, "Hey, we should do more of this, or maybe we're on the wrong strategy for our organization and we need to adjust it."
And that's a really interesting whole conversation that we can unfold if we want to go there. But I do think that just that idea of like, you know, very tangibly, I'd say I remember I was very excited, I'll leave the details a little murky. But I found a way to make $100 million, and no one was excited about it. That was a very, a very big moment of development for me in my lenses because all of a sudden, you know, it put into perspective $100 million is a lot of money.
But if the alternative is you can make $1 billion, right? And there's all the jokes about the movie and what's cool, "A billion!" But you know, the trade-offs are when you're a company like Facebook, or Google, or you know, nowadays, Airbnb or Pinterest, you have these decisions where you're like, "We only have so much time in the day." We can't do everything, so how do we pick what to do?
And our users are going to dictate a lot of that at the product level, but the reason we have a strategy and a business conversation is to understand sometimes we have to make an investment that isn't as obvious to them, or we have to pick to do some things that they want us not to do some things that they want us to do.
Peter: We could probably spend a whole another hour talking about strategy. I'd love the quick and dirty set of heuristics. Was there a framework that you developed, or an approach that you kept applying to these problems?
Bubba: You know, the nice thing about Facebook was Mark was always very clear that the size of the network, the number of active users at Facebook was the thing that was going to drive the most value for the business. And so, the strategy really could get down to is this going to increase the network or not? Or if we don't do this, is this going to give someone a chance to build a network that could take away from out ultimate size of network?
And so, those questions, you know, that framework was ultimately what it always got down to. And then the next one was, the kind of metric or the thing that Sheryl defined was like we an advertising business, and how are we going to make money in the advertising world, given there's lots of ways that advertisers spend today. They spend on TV, they spend it on print, they spend it online, primarily at Google.
How do we increase the amount of revenue and the number of people who could potentially want to advertise on Facebook? She was very clear on that, which is also frankly a network question, right? What is the size of the advertising network?
Peter: I want to close the Facebook chapter and fast forward to 2013 when there's sort of a pivot in your career and you step into investing full time as a partner at DFJ. What lead to that jump, why go into venture at all?
Bubba: Yeah, as a point of context, I would say I grew up in Silicon Valley, and was around technology, was around startups, was around even some investors, venture capitalists, for as long as I can remember. And so, I always knew I kind of wanted to do stuff in technology and then kind of startupy stuff.
But the leap to going away from building products or building companies into investing in them came personally when I left Microsoft to start a company and I got my first taste of the venture business as an EIR, an entrepreneur in residence.
And briefly for those who don't know what an entrepreneur in residence is, it's really this idea that you spend time in a venture capital firm, you go to some meetings with them to meet some of the companies that they're looking at and give your opinion to them if you're a subject matter expert, or sometimes even if you're not a subject matter expert, just someone smart that they want an opinion from. So it's really an opportunity to get to see a little bit of the VC business from the inside, you get to hear their discussions.
Two, you start working on your own ideas, at least if you have the goal of starting a company. Some people do an entrepreneur in residence which they'd actually more appropriately call an executive in residence, where they're really trying to find their next big opportunity as a CEO, or a COO, or you know, Head of Global Sales. And so, they know the firm, they also know themselves well.
And so, they add a lot of value because they have subject matter expertise, but they're clearly trying to find the next great company to join, maybe as part of them joining the venture firm that they're an EIR and an executive in residence will also invest in that company.
You know, that exposure to trying to start a company, befriending a bunch of people that were also going through the journey, and lending supportive shoulders to each other because many people who've started a company, while it's both the most exciting and can be the most rewarding thing you'll do with your professional career, it can also be the hardest thing.
And it is the hardest thing to create something from nothing at many levels. And so, I think that cohort of folks I met through the EIRship, the venture capitalists I saw, the business I learned put the idea in my head that maybe someday I'll be a VC. Probably more likely I'll start a company or maybe I'll do something crazy and start my own venture firm, which is combining both ideas.
But along the time I was at Facebook,
I started Angel Investing, advising companies, just trying to be as helpful as I could to the startup ecosystem because I just felt like they were where I'd come from.
And I had so much more respect and revere of people that were putting it all on the line to start a company, after having done it myself and realizing how hard it was and how painful it could be.
And so, if I could help them in some small way, I'll always try to do that. And that lead to developing a network, developing a perspective on how to think about companies and opportunities. Ultimately, it lead to some interesting startups that I got involved in that became valuable in their own right, and the experience of Facebook I had, we talked a lot previously about the business and the reason I went there.
But after I got kind of that business learning, I actually flipped back into maybe my native habitat of product management and actually got to learn mobile. And I was able to talk my way into a mobile product manager role when I really didn't have any particular skillset there. But found myself in 2010, 2011, and 2012, really focusing all my time on mobile. And that was a very interesting time in mobile.
Facebook was trying to pivot to mobile, Android was coming out, it was one of the biggest and continues to be one of the biggest secular shifts in platforms, ever, right? As we see mobile devices both get attached to more humans than ever before which then is also getting to get more people on the internet.
So now we have more interconnections, and then finally, because of the number of phones, the fact that they're all connected to the internet and the cost of the internet has come down as a result, and people have access to it 24/7 on their body, you have all these new apps that have gotten developed overtime, that we all now regularly use, whether they're for entertainment, or for utility.
And ultimately, that's eating away at TV and all discretionary time that is getting funneled through a mobile device. And so, getting to be at a point in time where Facebook pivoted from a desktop web business to a mobile business gave me a series of insights and a perspective that was very unique. And so, all those things combined into the thought process that maybe I should become, or try to be a VC, or maybe I should start a company in mobile.
And so, I started talking to the network when I was ready to leave Facebook about, "Hey, I have this idea for starting this mobile company, and it's pretty exciting, if I could get the right team together." The right unfair advantages, if I was to say it, like besides the insight, besides the knowledge I had, but the right people, the right partners interested in investing, all of the things that it takes that I now had all these different lenses to say, "Hey, you know what? This is a complicated idea."
In short, the idea was could we build a new mobile carrier? Very crazy, big idea, something that lots of people were also equally interested in thinking about at the time. And so, it lead to a lot of fun conversations, and along the way, people said, "You know, you also talk about businesses really nicely now, you have this great network from Facebook, you clearly understand product engineering, and you're fun to hang out with! And we'd love to get to know you better as a human."
And some of that ended up with a very kind of amazing opportunity to join DFJ as an investing partner, to also have their support to finish starting this idea, this company that I wanted to do, and it was like, "Ah, I'm getting to do both things I really want to do, that's amazing!" And on top of that, my mentors, the people that I knew deeply cared about me, were also like, "Hey, you're interested in this investing thing, you might good at it, you might not, but you've never done it.
"Why don't you go learn from somewhere great? Why don't you get to see how it's done and see if it's a right fit for you as well? And maybe that could be, you know, that's also a nice thing about joining somewhere that like already knows how to do it, it's been in business for 25, 30 years."
And so, it all kind of added up to say, "Hey, you know what? I'm going to make this leap, even though I have no clue if I'm going to like it, I have no clue if I'm going to be any good at it. I have any number of questions to answer, but it just felt like such a great way to spend time, and to learn something new and to get to be a part of the ecosystem in a whole new way."
Peter: I want to go down a brief tangent here. This is the second time you've mentioned the Bubba Council of Elders. Who are these mentors?
Bubba: That's funny. I think the first time was when we were walking around before we were on the microphone. But yes, mentors played a big part of my life. So, some of the people that have been really impactful in my life, I'll start with a gentleman named Blake Irving. He most recently was CEO of GoDaddy, was a VP at Microsoft, when I first met him he became my mentor.
And more importantly, he became my friend there. We had a very funny life coincidence where he lived in San Luis Obispo, which is where I went to school, and when I left Microsoft the first time, I left Microsoft and ended up rejoining, there's a longer, a side there that we can talk about. But I went back to San Luis Obispo to finish my masters. And so, he and I got to spend time together and just kind of really became a great, positive impact in my life.
And was also very thoughtful about, "Hey, you know what? "You're very driven, you're very capable of a lot of things, "but also, you want to season yourself. "You want to be ready for big challenges, "and know that they're how you want to spend your time "because they're not going to be easy." And so, he was a great example of someone who said, "Hey, you've never been an investor. "Do you want to think about it, or learn about more of it before you commit to it?" And I thought that was a great point of view.
Peter: I'd love to dive a little bit deeper here because the quest for mentorship seems to be a big theme for people in this business. How did you go about cultivating that relationship?
Bubba: The quest to find mentors is, is actually a sign of someone who wants to learn and grow. And I think that's what makes up a lot of the DNA of the Silicon Valley, right? And there's a culture of forgiveness. If you try an idea and it doesn't work, it's not your fault. It's what did you learn from it? So, it's not even a culture of forgiveness as much as it is a culture of curiosity.
And I think part of that curiosity then gets people to seek out mentors and say, "Hey, you've done something that I think I might want to do someday." And, "Can I learn from you about it?" And then if there's chemistry, which is ultimately, to answer the second question,
How you cultivate a mentor relationship? I don't think you can force that relationship. I think you can lean in on chemistry.
You can say, "Hey, you know what? The way I think and the words I choose to express the way I think match the way this person would choose to express that idea that is in their brain." And it's imperfect transfer of knowledge because we have to take ideas and make them into words, but the words I choose and the words they hear, or the way then they react to those words with their own, is very helpful to me, and that's chemistry, right?
There's a communication shortcut, there's a secret code, so to speak. Not that we're using secret language, but rather that our brains maybe have some commonality in the way they decipher or encode information. And then there's obviously the other part of chemistry which is like, do you have a natural style, kind of an enjoyment of each other's style? Some people are very warm, some people are very analytical, some people are very jovial, some people are very juvenile, I happen to be all of those. Sometimes.
Mostly when I'm with my children. But people, the style side, the UI so to speak of someone and the way your UI interacts with another person's UI is the other element of chemistry, which maybe has less substance and more intuitive, and that's actually a risk, right? That can lead to people seeking out people that are like themselves, or have similar interests, or reinforcing preconceived notions.
That's actually something as a community, as an ecosystem we're grappling with right now on a lot of different levels, which is a heavier, longer conversation than maybe today, but certainly something that I think a lot of people, including myself, are reflecting on. But once you have kind of identified maybe that chemistry, as I try to define it, I think it's about making it important, it's about saying, "Hey, I really think I can learn from you, and I'm going to make it really easy for you to teach me. Where's easy for you to meet?"
You know the thing we talked about last time? Hey, I acted on it," or, "I decided not to act on it and I'm not scared to tell you that because I know you respect me and you're not telling me things " you're my manager. You're telling me things because you're trying to help me figure it out for myself. And my formula's going to be different than yours." Cultivate has a calculating word to it, and
I think there's something much more organic to great mentorship. I do really think it's if you're looking for a mentor, talk to as many people as you can until you find a mentor.
And you and they will know it when you're like, "I don't want to talk to anyone else, I want to ask this person the question."
Peter: I think what you're telling me is that finding a mentor is analogous to falling in love.
Bubba: I think many things in life are analogous to falling in love.
Peter: So, organic process, you just gotta take a bunch of swings with a bat and you'll know it when you have it.
Bubba: I like it.
Peter: Okay. Let's go back to DFJ. It's your first job as a professional investor and I love this, you've like vaulted into one of the best firms out there. What is that entry like?
Bubba: Oh, man, it was a steep curve. All of a sudden, I was in a whole new part of the ocean I'd never been in before. I'd obviously spent a lot of time with them before I joined, looking at deals, talking about philosophy, sharing everything I could about my working style, getting to understand their working style. But, turns out a venture capital firm is a business, and it also has a bunch of unique terms of art, characteristics, patterns, rhythms, processes that I had zero familiarity with.
And so, that was a deep dive of just kind of information and just like being in meetings and saying, "What does that term mean? Why is everyone opening to this page of this packet of information? How did you all know that was the thing we were going to talk about next?" And it's, that's the pattern of the meeting. Or just like as a product manager, you quickly get in the habit of like, "okay, whatever our issue tracking or bug tracking system is, everyday I look at it." As a VC, there is a set of information you want to look at everyday.
Peter: What is that?
Bubba: Oftentimes, it's the news about your existing portfolio companies, the news about kind of areas of interest that you're trying to learn about, and then kind of finally, you're also looking at public markets, and saying, "Hey, you know ultimately, the public markets do impact the private markets," and those are all things that you may want to start your day with. Or at least you make sure you have a good grasp on everyday so you understand kind of the mentality.
If a company's thinking about going public and a bunch of companies have just gone public positively, that might mean there's more interest when you're talking about the company to do it. If a bunch of companies have failed to go public recently, there might be more resistance to that idea and that might change what you think your opinion should be on the right answer for the company because as a board member, you don't get to make the decisions, the CO does.
But you get to help hopefully shape that decision by sharing your point of view and the data you have. And so, you never know when you're going to have one of those conversations. And then kind of the final, not surprising venture capital information you're looking at is also the performance of the fund, the status of the kind of money that's coming in to invest in companies.
There's a variety of operational details that maybe you don't have to look at daily, but certainly weekly is wise to look at. But all those things were new, and getting up that curve was just, that was tactically just so I knew which way was north. I had a joke, it took me about a year to find out where the bathrooms were. It was metaphorically bathrooms, so to speak, right? Just kind of getting comfortable with the way the business operated.
So that was new because I never really made such a big leap. You know, the second was just getting now used to the work. You ultimately, as a venture capitalist, as a investor in early-stage technology companies, a large part of your job is meeting new companies. Learning new things, assessing teams, assessing opportunities, figuring out if there's a pattern, you're starting maybe to detect that maybe the world hasn't detected that's unique.
We talked a little bit about how I detected maybe a pattern around Facebook, based on being in the ecosystem and seeing the people that were going there and realizing it was at the core. That was a good hint to me, and ultimately worked out that it was a very valuable, interesting company to be a part of. Investors are looking for that kind of signal on a much smaller scale with companies that are much younger. That's almost a learn-by-doing thing, you have to meet, sometimes
There's a idea that you have to meet a 1000 companies before you know what you're doing as a venture capitalist.
Bubba: Is something someone told me once and someone else said, someone else told me the exact opposite, which is like, invest in the first company that you have conviction in because at some point there's always a reason not to invest in any company. And your judgment and your thought processes that you developed over a career, over a lifetime, are what are going to make you unique as an investor or not.
Now, if you have obvious reasons not to make the investment, that's where your partner is, that's why you talk about it with people you trust before you make your first bet. But at the end of the day, don't make your first bet too late because then everything then doesn't look that good. And part of the job is learn by doing.
Peter: When did you make your first bet?
Bubba: I made my first investment relatively quickly after joining DFJ. I would say within the first six months of being there, it was a company called Math Camp, it was a product called Highlight, but they built a location-based social network.
Peter: Oh yeah!
Bubba: And that was, one of those insights that I had for Facebook was, "hey, I think there are opportunities for additional social networks, location fields, there will be one that exists" and Highlight, the founder, a gentleman named Paul Davison, was a great storyteller, had built this very compelling product that had taken off at South by Southwest, and then didn't sustain that takeoff, but it'd shown the ability to build something great, and interesting and unique that people would get excited and interested in.
And so, I took a pretty, a very high-risk bet on a pre-traction consumer mobile app startup company, but in an area that I had the feeling, "Hey, if this worked, "it would be very valuable." Ultimately, I learned a lot through that and look at the experience as such a great formative opportunity to learn how to be a VC, whether it was to learn how to even negotiate a venture capital term sheet, which was I was doing with the help of my partners, but I had never done before.
And you know, I remember a moment where Paul and I, I had to call Paul and I said, "You have a convertible note, I don't know how that's going to work. Do you know how it's going to work?"
Bubba: And he was first-time founder and he said, "I'm not sure, I'll call my lawyers." And I think that might be a new one for both VCs and founders, a founder to find themselves having a conversation about, but you know, it was a great example of even just the approach to take in kind of being curious and understanding the idea of does a convertible note convert into the pre-money, or the post-money of a deal? And how that affects my ownership as the investor or the dilution for the founder's perspective.
Peter: Uh huh.
Bubba: And so, you know, those kinds of lessons are almost comical to share as we're having a nice laugh right now about it, but at the time, that was a great honor to be allowed to negotiate something on behalf of DFJ, to be entrusted with that and then to have my first deal be a founder that was equally committed to working together and not to solve things that wasn't into bluster and wasn't into kind of gamesmanship, it was rather like, "Yeah, we don't know the answer to that, let's go get an answer."
And then for us to be able to talk very openly. "This is a financial negotiation at the end of the day and obviously, my goal is to get it as low as possible, your goal is to get it as high as possible, how do we want to solve it?" And we just did the most classic, I think, human instinct in those situations which was to split the difference, if I remember correctly. Although, maybe Paul will hear this podcast and chime in on a comment telling me something completely different or telling us all something completely different. But that's how I recall it.
Peter: So, a lot of year one for you is just sort of figuring out the mechanics, like the structure of venture, the vocabulary of it, what are some other things that shifted for you in that first year?
Bubba: The other thing that I really learned in the first year was consumer product investing is a very difficult sector to invest in, that's where I made my career. I had tried to do startups in that space. And ultimately,
The thing that makes consumer investing so appealing to many people is, or to investors abroad is the amount of value that can be created. Look at companies that have consumers or individuals as customers have potential billions of customers.
Companies that have businesses as customers may have tens of thousands, millions, maybe tens of millions, and then in the off chance, you know, maybe there's hundreds of millions, but it's definitely never probably going to get into the billions. And so, the value that can be created in a company that attracts a lot of consumer interest or has a lot of consumers ultimately can be so high and so fast that it really attracts a lot of capital.
And also becomes very hard to know what will work until it starts working. At that point, then you're in a different game, which is the companies that are working, you're now trying to get the right to invest because lots of people want to invest in them. And so, then it's about the conviction of like, "I think this company will be worth so much I'm willing to pay this price to invest." And the market figures out the right auction price for a company.
But the downside of that is you never know how consumer sentiment may change, or how things will play out in the long run. And so, it's a higher risk reward no matter where you enter into the point of consumer. And that lesson was really interesting to me and my curiosity and my interest and all these lenses that accrued over my career from these different experiences, some intentionally, some the hard way, I realized I was like, "You know, I think I really want to have a broader purview of investment areas."
And learn new, not just investing consumer, and so that was a big learning and a big thing to start to discover and ultimately lead to me invest in my second company, which is a Heavybit company called CircleCI.
Peter: Great choice.
Bubba: And that was actually the thesis of the time was I invest in founders named Paul. So, I had Paul Davison, at Highlight Math Camp, and I had Paul Biggar at CircleCI. And the interesting thing there was that was a B2B company. But it was selling to developers, like all the companies at Heavybit do, kind of something that, I'd come up as an engineer, at least, I knew how to write code.
Maybe it's aggrandizing myself to call myself an engineer. But I understood from my time at Facebook how writing code and building products and shipping software was just changing fundamentally.
I remember being terrified of the way Facebook shipped code when I got there from my Microsoft experience, which was a waterfall methodology. It would take 60 to 90 days for your checked-in code to appear in a gold build of Windows.
Because it had to go through so much rigor. Breaking something in Windows was very offensive.
Bubba: Could be very dramatically negative for the company, and so they had to put that level of rigor in. But you know, that was the context I came from. And not every team was like that, but you know, Facebook was, "Our goal is to have you ship code on your first day, or your first week, fix a bug." It was just a much faster pace, but more importantly, a much different kind of infrastructure to ship code at that rate.
And CircleCI was basically making that as a platform, making that as a service for any company that wanted to do that. And so, I got really excited about, "Hey, the secret I learned at Facebook, this new way of writing code, this new way of kind of increasing your velocity of software development, of working as a software company, or working as any company that had to write software, could just be made easy."
And we have the whole team of Facebook working on it, and CircleCI's like outsourcing that for any company that wants to do this. And so, that got me really excited and then at the time the momentum and the people around the table, I have great respect and admiration for the seed investors in CircleCI, Steve Anderson and Michael Dering, and another Heavybitter, Jesse Robbins was an advisor.
And Jesse also started a company that DFJ backed earlier, called, Chef, which was also in somewhat of an adjacent, you know, how do you increase the velocity of software development, you know, that much more from an operational infrastructure point of view. Maybe a little less from the pure individual developer proactivity, but rather from an automation of infrastructure and data centers.
Although, they also now have CI and CE components that they fulfill, so. Like any good big opportunity, lots of different way to enter into it. But it got me excited and my partnership, the DFJ partnership was very comfortable and familiar with SaaS businesses after having investing in a bunch of SaaS companies. Some very iconic ones, of course like Box and Twilio.
And so, it was a great way to get to invest in an area that I would have never predicted I would invest in if you'd asked me the day I became a VC or if you'd asked me any day before that. But it's been such a wonderful way to learn about a whole different set of things and I think the intellectual curiosity and the journey of a startup, there are some similarities regardless of the sector.
Peter: I ask everyone the same closing question, which is what do you wish you knew going into this?
Bubba: It's a great question that bears some reflection. I reflected for a bit on it before and so, I think if I had to answer it now, at least for this moment in time, I'd say
The questions you ask an entrepreneur are the most valuable thing you can think about ahead of a meeting, during a meeting, and after a meeting.
Peter: Ooh, and that's, it's so juicy and I'd love to get a little bit explicit.
Peter: What is a question that you weren't asking when you first became a partner that you now ask consistently?
Bubba: So, I think the question that I asked more explicitly and routinely now is what are the things that you don't control that could help you or hurt you? Because that tells you so much about how much the entrepreneur's thought about, the things that are out of their control versus in their control, and then also it gives you an insight into the way they're going to allocate their resources.
Peter: Bubba, thank you so much for joining us.
Bubba: Thank you for having me, Peter, this was fun.
Peter: I'm glad you enjoyed it. Where can our listeners find you?
Bubba: I have a very easy twitter handle to follow. It's @Bubba, B-U-B-B-A. I also have a relatively easy website, it's Bubba.vc, and I'm pretty sure if you search the internet for Bubba, you will find me quickly.
Peter: And who should be getting in touch with you?
Bubba: I love helping startups. So, anyone that's on the journey or trying to create something new, I'd love to hear from. I tend to spend the time and be most helpful in companies that have already built a product and have started to bring it to market but maybe don't have traction.
I obviously have an interest in developer-facing technology, I would maybe frame it as software velocity, but you know, we could call it developer tools, or DevOps, and I love things that are consumer-oriented, whether it's a software product, a physical consumer product, or even just something that helps people do those two things better.