In this post Dea Wilson, Lifograph founder, is doing an interview with Jeremy Liew, Partner at Lightspeed Venture Partners.
He was named twice in Forbes’ Midas List.
Jeremy’s investments include Snapchat, LivingSocial, Bonobos, Kixeye, PetFlow, Slice, ShoeDazzle and The Honest Company. He was also responsible for several Lightspeed investments which have had successful exits including Playdom (acquired by Disney), Flixster (acquired by Warner Brothers), Kongregate (acquired by GameStop) and Serious Business (acquired by Zynga).
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What are the most important traits an entrepreneur needs to have?
1. A deep understanding of her customer, their problems and their needs
2. An infectious passion for her company and product
3. A maniacal desire to win
4. Some extraordinary talent that is core to the success of her company
What are 3 things people don’t know about you?
1. I used to be a hooker. Of the rugby variety.
2. I eloped.
3. Sometimes I try to do Math Olympiad problems for fun since I was on the Australian team for the International Maths Olympiad in high school. Either I've gotten dumber since then or the problems have gotten harder though, as I don't have much success with these any more.
What was your first job? What did you learn from it?
I worked at McKinsey & Co, the consulting firm, as my first job out of college. It was a tremendous business grounding for me as I had no exposure to the business world at all from my undergrad degrees in mathematics and linguisitics. I learned everything from how to break down a business problem to its key drivers to how to build a spreadsheet to how to communicate effectively. It was terrific for me.
What sparks your immediate interest when listening to a pitch? Why?
Evidence of real customer or user engagement. I've got a pretty good sense for what average user engagement looks like across many different categories, from e-commerce to games to mobile apps to social media. If you're showing engagement that is a couple of standard deviations better than the mean, then you've got something interesting. Whether it is going to be a valuable company or not depends on a whole host of other factors, from market size to competitive landscape to team, but you've definitely got my attention.
What would you consider the biggest mistake you've ever made?
One of the biggest professional mistakes I made was not to hustle harder after Yelp. I had spent a bunch of time with the CEO, had built what I thought was a good rapport, and demonstrated some good product intuition and some relevant experience from my time at CitySearch. I wrote a termsheet and then left to attend a friends wedding over a long weekend. Over the course of the weekend the Benchmark guys really hustled and won the deal. It was a mistake I won't make again. When I find a company and an entrepreneur as compelling as I found Yelp and Jeremy Stoppelman, I won't be outhustled again. I may not win all those deals (after all, Peter Fenton and Benchmark are great investors), but it won't be because I didn't try hard enough.
What was the best piece of advice you’ve ever received?
Let go of the wheel. I came into venture capital from an operating background, and it was hard for me to let go of the wheel and let the entrepreneur drive. If I saw something wrong, I wanted to jump in and help fix it. But I learned over time and with help from my partners that ultimately the CEO has responsibility for the company. We can support him and give him guidance, but we can't do his job for him. If he lets you take over, that's a bad sign too! Ultimately a CEO needs to make his own mistakes and learn from them, and become a better leader for it.
What was your first deal as a VC and what did you learned from it?
My first investment was in a company called Santa.com when I was still at IAC. The company was building gift registries based on the letters to Santa concept in 1999. It was a great idea, but the problem is that Christmas only comes once a year. That meant that any product iteration took at least a year, and that was too slow. I learned the importance for short product cycle times so that a company can quickly learn and improve its product to get product-market fit.
What was your smartest career move?
Following great people. When I was early in my career I didn't really know what I wanted to do when I grew up. But I had had a great boss at McKinsey, a guy called Charles Conn, who ended up leaving the Firm to start CitySearch. At that time I didn't know anything about the internet, or about selling to local businesses. Plus CitySearch was in LA and I was living in South Africa at the time. But I took a leap of faith and joined CitySearch as well. Great people create upward volatility, and if you're young and smart, sometimes you can get caught in that slipstream and pulled along upwards as well. That happened to me with Charles Conn, and again with Dara Khosrowshahi (now CEO of Expedia) and Jon Miller (ex CEO of AOL and head of Digital at Newscorp) which led to my jobs at IAC and AOL. When you spot greatness, in any field, it's good to hang around it.
Where do you like to go on vacation?
I like to travel in the developing world. It can be incredibly cheap if your'e willing to backpack and stay in hostels most of the time, and save your money for special memories. Some of my favorite moments include cresting the last rise on the Inca Trail and finally seeing Machu Picchu, flying in a hot air balloon over the alien landscapes of Capadocia and watching a cheetah and its cub kill and eat an impala in South Africa. But now that I have two small kids, I don't get to do that any more. I'm more likely to found splashy around by a kiddy pool these days, at least until they are a bit older.
What was the fastest deal you’ve ever done?
Earlier last month, I found out about a fast growing smartphone app on Monday, met them on Wednesday, had another partner meet them on Thursday, gave them a termsheet on Friday, shook hands on a deal on Saturday and got the termsheet finally signed on the following Tuesday, 8 days from having found out about the company. We aim to close within two weeks of the termsheet being signed. This is extremely unusual for us, but we were primed to understand what the company is doing and why it is being so successful because we had been looking at the broader space already. We had a thesis for what would work, and we recognized it in this company. And their growth, retention and engagement metrics were off the charts. When we met this company we were able to lay out our thinking and the founders were attracted to our deep understanding of the space and our product intuition. The fact that we could explain their business to them before they told us anything gave them great comfort that we saw the world in similar ways.