Episode #3: Consumer Tech Napkin | Building great teams in consumer tech

Speaker A: And when we look at a consumer company, if it's live, even before we speak to the founder, we look at the reviews and we're particularly looking for evidence that that founder goes above and beyond.

Speaker B: You want some sort of a superpower in the team and that can take different, different formats. Like for example, you can have a team that's really strong in distribution, you can have a team that's really strong on brand. And that superpower sort of forms the base of sort of your early growth and the right to exist in the marketplace, at least in technology product. Like there's so much change that's happening that you're sort of looking for that steep slope of learning, right? Like what have you done in the last three months, six months, nine months?

Speaker A: What we're now seeing is there's like a generation of AI native entrepreneurs that are just able to get out there like a little bit quicker and they're able to use the tools a little bit faster. They're able to iterate like in a way that's like resonating with that audience and allowing them to still come out the gate super fast.

Speaker C: If they're able to do more experimentation and build stuff and use both data analytics as well as qualitative data when they're speaking to customers, then their feedback loops are just quicker and that means you want to be able to have a conversation with someone, ask them a bunch of questions and then every day they're going to be like getting stuff back from their, from their users and it's that like speed of iteration and

Speaker D: so welcome back to the European VZ podcast. Consumer investing is supposed to be dead, yet the three investors with me today are still doing it and with conviction. When I asked what keeps them coming back, none of them set market size. The all set team. So that's today. What does a great consumer team look like? First up, Camilla Dolan, founding partner at EcoVentures, the UK's largest early stage impact VC. Hot off winning impact leader of the year at the EUVC Awards and an oversubscribed 80 million fund to close backing brand led consumer and health wellbeing and sustainability since 2013. Next, Rishabh Kaul, venture partner at Hoxton Ventures, co founder belong backed by sequoia and matrix. First ETM hired Absmith where he 10 XED users from series A to series B and an active angel in 25 companies and runs the community for Indian tech founders. And finally Mark Martin, director of investment at TRU, a 1 billion pound consumer and retail platform investing early Venture through growth before true 15 years at Sky8 running their CVC arm.

Speaker A: This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured.

Speaker D: Let's start broad. Aside from all the user things, mission driven, big ambition, strong market intuition, what do you look for in consumer teams? Specifically, what's the thing that's unique to consumers that you wouldn't weigh as heavily in a B2B environment? Rishabh, I want to ask you first.

Speaker B: I think I look for a spike often. You want obviously a unique insight and all of those things that you mentioned, but you want some sort of a superpower in the team. Uh, and that can take different formats, right? Uh, like for example, you can have a team that's really strong in distribution, uh, you can have a team that's really strong on brand. And that superpower sort of forms the base of sort of your early sort of growth and the right uh, to exist uh, in the marketplace. And so I think uh, that's what I look for.

Speaker A: Our uh, superpower is customer obsession. We think it is the sole, the sort of single most important thing in consumer founders. And when we look at a consumer company, if it's live, even before we speak to the founder, we look at the reviews and we're particularly looking for evidence that that founder goes above and beyond. And I really learned from one of my early investments in this. So very early in my career I worked with an incredible founder called Aaron, the CEO and founder of Bloom and Wild. And he sort of drilled it into every board member, every person in the team, that customers come first. And you always had to be obsessed about making sure they had a great experience. Just before this call I just went and checked that was still the case. Um, looking at trustpilot reviews and one of the most recent reviews, um, actually sort of said full marks to Aaron for taking responsibility and being so gracious. I, um, used his company because I like the founder story and I hope it goes from strength to strength. And so that type of session that business does hundreds of millions now and the founder is still answering trustpilot reviews and customer calls. So we think that's really, really key. And then the second thing we look for as a manifestation of customer obsession is, is engagement outside of review channels. So how are they, how are the founders actually like engaging with their end consumers? And I think Runner is a really great example of this. So an investment that we made at eca, a running training app, um, and the founder of that or co founder of that, Ben Even to this day, having exited to Strava is all over Instagram. And you know, recently ran the London marathon, got over 30,000 likes. And for that on the sort of runner page, um, and had comments like, runner changed my life after my second daughter. Runner helped me so much to find myself and my goals. Thank you. And that's the type of thing that we're really looking for, like brands and founders that like, create this emotion in their end, consumers.

Speaker D: Mike, you often talk about mercenaries versus missionaries. I don't know if that's where you want to go here, but I'd be curious to hear your take as well.

Speaker C: Of course, yeah, for sure. I'm actually, um, I'd say I was pretty aligned with Camila on this and linked to kind of. That customer obsession is, I think in particularly important in consumer is the ability to delight users and go beyond their expectations. Because obviously it's important in B2B as well. But in B2C, you are competing with so many other things for consumer attention. There's a million things that people can do, whether it's family, whether it's work, tv, gaming. There's so many things that a consumer can do other than open up another app. And there's obviously limited inventory on somebody's phone. It's a really high bar for consumers. And I think that that customer obsession that a founder can exhibit, I think it directly impacts and is reflected, I guess, in how they build the product, what features they put in there, and then their speed of iteration. So I think that the kind of customer obsession and the ability to make people open an experience and think, wow, that is either solving a problem for me or it's. It's kind of making today better, I think is like really, really, really important. On the missionary versus mercenary point, I guess, um, yeah, it's not to say that, you know, if you're a mercenary and what I mean by that is maybe you don't have like a core central mission to the, to the company. It's just, I think this is an opportunity to make money. You know, that is fine. And there's not necessarily like a massive red flag, I guess it's just, I think an acknowledgment for us that consumer to the previous point is a hard category. It's hard to get people's attention. And so if a founder has a real affinity or an attachment to a problem they're trying to solve, whether it's because they've experienced something personally themselves or they've seen other people be affected by Something, uh, and that can be across any category, really. Um, for consumer, then when stuff gets hard, which it will, because it always does at different points in a journey, you want people to be really committed to that cause and that mission, um, and know that they're going to keep going. And obviously, if somebody's, if someone's intrinsic driver is just to make money, then, you know, why, why are they not just going to move to OpenAI next week when, you know, when they get a job offer from them? So it's less of a. Has to be missionary, but it's more like in the mental model of thinking how you're building conviction around a founder. And an idea is very helpful when that comes with a real core mission to the business. And it's also really helpful when that founder is able to help portray and convey that mission to talent as well, because there's a real reason why people might want to join their company versus somebody else's.

Speaker D: Rashab, I want to ask you, because now we have two people talking about consumer, uh, obsession. You're obsessed with distribution, as you said. Why do you think that distribution is so important? Can you talk a bit about. And I remember from our prep call, you spoke about this case where you had four people with $10 million a month entirely on paid social for a women's, uh, wellness product. And it just absolutely took it, you know, went absolutely ballistic. I'd be curious to dive deeper in that case study to understand how distribution can be an absolute superpower.

Speaker B: Yeah, um, distribution is really important because in consumer, that's how you sort of grow. Right? Uh, whether it's word of mouth and there's different ways of doing distribution. But I always look for someone in the team who has that superpower, ideally the founder. And there's enough examples of where one of the founders was really strong in some form of distribution, uh, and then they ended up growing the consumer company because it's such a big part of whether you're successful or not. Like, the product can be great, but, like, you need to be able to take it to the masses, especially in an environment where there's so much competition. And so this particular example, the reason I like it is because in some ways it's a little contrarian. Right. Uh, and the contrarian bit is normally in a lot of cases in consumer, you hear that there needs to be word of mouth and there needs to be a brand. And those things are absolutely true. But there are also cases where things like paid marketing, like, normally when people think of paid marketing, they Think of it like a waste of money, right? Like hey, don't spend too much money on paid marketing. But if you have someone who really is good at paid marketing, like the top 1%, it can be a massive, massive superpower. Right? Right. Because you are able to bring down the cost of customer acquisition drastically and it becomes a flywheel, right? Where every user feeds into it and as long as your sort of LTV numbers and all those things are fine, it works out. So like the example here is there's a founder who's a friend and this guy spent a lot of time doing paid social. This guy was in Hong Kong but grew up sort uh, of learning from companies in the US and was working for a bunch of health care brands. While he was doing this, he decided to start a company in the sexual wellness space. Right? And this is from Hong Kong. Starts uh, running the business just using like powering through with paid ads. And last, when I, when I caught up with him I was like, it's just been around for like less than two years. And I was like, how is business going? He's like yeah, we are doing about 10 million a month and we were almost profitable. I was like what? How did you manage that? And so I thought maybe they've raised funding, they've sort of you know, uh, done a bunch of like no, we just bootstrapped, uh, we did like a tiny friends and family round. Rest uh of it has just been literally just you know, pushing out through both organic and inorganic stuff and primarily uh, through a lot of paid ads. I ah, was like how big is your team? Is like four people because everything else else has been outsourced. The key. So there's one person that looks at the product, there's one person that looks at sort of ops/ community. So like customer support +ops community, all of that stuff. And then there's the founder who spends a lot of his time on distribution and then everything has been outsourced. I was like, wow, that is, that is incredible. Right? Because you're building sort of like a D2C brand doing 10 million a month and it's sort of a niche category, uh, it's not like a mainstream category. So I was just like, I was like wow, if you can find a really good paid marketing person, like there is nothing better than that for a, for a consumer, uh, startup who really thinks of it uh, at a granular level and is able to like, you know, just look at all the tweaks and buttons instead of just throwing money or going to an agency, uh, it's, it's, it's an amazing superpower too.

Speaker C: I'm curious Vishad, um, how much of that do you think is, is in their kind of like trading ability and ability to manage those channels, those acquisition channels, versus there being an element of the product being great or them being really good at brand as well? Like do you have a sense of all that?

Speaker B: Uh, I think the product is. Obviously the product needs to be good because while you can do the acquisition, you know, people do talk, uh, and so you want the product to be good. But I would say that initial push is a lot of it is paid marketing. And then that's the first phase. And then over a period what happens is that the paid proportion just starts going down because you start investing in other things like influencer marketing or stuff like on day zero, you can't really do influencer marketing, right? There is no product to sort of, you know, I mean you don't really have any brand or anything. Uh, you don't have users and stuff like that. Uh, and in their case, the best influencers would be their users. But I think like a big chunk was, a big chunk was paid.

Speaker D: I want to ask you all, and we're going to get to AI later. So for that reason, anyone who's sitting there waiting and saying, when can we talk about AI? We're getting there. But hold on for another five minutes, maybe seven, because now I want to just touch on the, not the pre seed stage or the super early stage, but rather what happens to consumer teams later on. When does it change from being you looking at only the founding team to actually looking at the entire executive team or the entire senior team or even the entire company. Uh, Rishabh, I know you're investing at a bit of a later stage. Once in a while maybe you can start off and say, okay, at series A, what do you think is the most important?

Speaker B: I always feel that it's always good to. So your early team, right? Your first sort of hires are going to be people who are just going to take a bet on you unless you're a proven founder, which often in the case of consumer you're not. We're sort of probably going to discuss later how they come from random backgrounds because they were founders. Uh, and so your initial first hires will be people who just have hustle, right? Like they put in their heart, they resonate with the product and they're going all out running a bunch of different experiments. I think as you start reaching Series A, I've always Felt that you want to hire people that are, that have maybe seen one stage above, maybe not too many stages, but like one stage above. So if you're at series A, you might want to hire somebody who's seen series A or series B and then you have a conversation saying, you know what, let's see if this person grows beyond that, right? Like at every stage you're sort of evaluating. Um, because I feel like one of the things with consumer is that it can grow so fast. Like when, when it works, it can grow so fast that you quickly start sort of growing through these stages. Unlike in B2B where you have a little bit more time, right? Because sales cycles are long. So you always want someone who understands the next stage just a little bit more, right? Whether it's on the op side. For example, if you Suddenly now need 4x, the larger, you know, warehouse or even on tech, right, you Suddenly are seeing 10x the amount of load. Like these things can happen a lot in consumer and we're seeing that in the AI led startups, many of which have, even though they might be B2B, they are starting off with the consumer angle. Like if you look at ChatGPT or granola and all these companies, right, like these are consumer companies and so you start seeing that sort of growth very quickly. So you need people who, who've seen uh, some semblance of it to be able to figure out but not necessarily too many stages later because then that brings its own challenges, right, in terms of being able to relate to this stage.

Speaker D: Mike and Camilla, how do you think about the later stages and uh, the importance of the core team and the more uh, expanded team?

Speaker A: Yeah, 100% address. It's a great question, um, and something we uh, think about a lot. I think the really key thing is to, to maintain that high level of customer obsession and service. As you scale, teams need to build out sort of tier one operational and finance layer. And so what we often see in consumer, as Rishabh said, is things grow like extremely fast. But if you've got inventory in the physical product space, logistics warehouses, if you don't build out the layer underneath it really quickly, that can keep control, like operational control of that whole machine. It's very easy to skid off the road. Um, and personally I have experienced that. So we had a business which I won't name, uh, very early in my career, uh, where it was scaling exceptionally fast. It was 30 million revenue run rate, very well funded, really good customer reviews and they tried to do a warehouse, uh, transition over peak trading and they didn't have the sort of financial control in place to be able to manage that. And that business sort of spun out and went into administration and so learned very early that you can scale to 10 million extremely uh, easily without a huge amount of financial control. But when you make the jump from 10 to 30 and then 30 to 100, you need to be operationally tight. Uh, people talk about retail as detail and I think that is a real thing. And we really encourage people to invest extremely early uh, into those sort of functions, even though sometimes they appear like overhead. And I think you've seen it some of like the most talented consumer um, founders in the uk, uh, people like sort of Ben, the CEO now and founder of Gymshark. Um, he was coming out of Aston University when he built that company and he brought in a really experienced CEO called Steve Hewitt who helped train him up and then he took over the CEO role again. You know Huell just had a billion dollar exit very similar. Julian the founder is still in the business and brought in someone called Jay M. McMaster that had like operational scaling experience before and they sort of co scaled that business uh, together and sometimes the founder spikes on that area and then um, was able to compliment themselves to Aaron at Blue and Wild had an amazing individual called Phil, he was the COO in that business and you know, really knew like every single detail of where everything was at any point in time. Um, but that's the thing we think is totally, totally critical. Build out operations and finance early and have really the best people in that, in those roles.

Speaker D: Yeah. Mike M. You're investing from the true platform which as I mentioned in the beginning, invest all the way from the early stage to growth and even the, a lot with, with the more established companies as well. What would you say that you're seeing is super uh, imperative in the later stages of a consumer company?

Speaker C: I don't disagree with anything that um, Camilla said on that front. I mean from the perspective of, because we're often back in teams at pre seed and then also at seed and potentially looking to follow on into companies that we think are going to be successful in the future. And, and often you know, like people have said you're at the start, you're just backing one or two people. But I think what we, how we think about it is like what signals are we seeing from the founders? And I think it probably falls into three things for me. One is like do the founders have the self awareness and enough of a low ego to hire people who are better than them. And I've seen that in the past where that's not been the case. And people are almost worried about bringing in more talented people because they're worried about them not being the center of the shit anymore. So you want people to recognize where their weaknesses are, where gaps might be, and sort of just be fully all in to say, I want to bring in people who are better than me, who can take this company to the next level. The second thing is, is looking at who they've been able to hire, so what talent they've been able to bring into the company, what opportunity has that hire given up to be part of this team? Because I think that gives you a really great insight into the founder's ability to sell their vision to talent and future talent as the company scales, which I think is really, really important. And you obviously don't have those data points at the pre seed. And I think one that's really, really important given particularly how many companies probably don't work because of founder fallout, uh, is the kind of ability for people to have really, really difficult conversations, um, whether that's with other founders or with employees they brought on and being, having the awareness to, to notice when something isn't working and actually do something about it. And so that's something which we have seen, which we really like people to lean into is like super difficult conversation when you're really close to someone. And, and fundamentally one or two founders don't think that the other one is actually working out. And I think it says a lot when they're able to deal with that quickly and in the right way. Uh, and we've definitely seen that with a couple of companies in our portfolio whereby that's really helped because actually in some senses the person where it's not working out, actually they're also relieved to leave as well. And so I think being able to deal with those talent situations at the early stage is like really, really critical because having those, those frameworks early on are only going to be exacerbated, um, as the company gets bigger and bigger.

Speaker D: We spoke a bit about pedigree before. I think we should just touch on that point again now that we move into the AI segment here because pedigree in consumer is historically not as important as in many other uh, uh, traditional VC sectors, especially B2B and enterprise. But it's probably getting even more pronounced now, I could imagine, given that AI is sweeping away all installed base in terms of knowledge. Can you talk a bit about that, how you're Seeing AI transform what you're looking for in consumer teams.

Speaker C: I'll maybe just mention that we did a bit of analysis on European um, successful companies that have been venture backed across Europe and like what the founder's backgrounds were, um, and whether they had any previous either entrepreneurial experience or sector experience. And actually from like 100, 120 founders, I think in both cases only 50% had experience building a company before and also 50% had some relevant sector experience. But it just kind of shows that you know, maybe it's particularly in consumer. Like successful founders can kind of come from anywhere. Um, so we try not to. Obviously if someone has a specific insight into something then that's what we latch onto rather than specifically have they got any prior experience. I think where it's difficult for particularly a first time founder when it's consumer, when it's pre launch. I think that's quite a challenge for us when we don't see uh, uh, we don't say how they've built the product and the kind of product workflows. That's quite challenging for us. And I think particularly in today's world with AI, I'm not sure there's really an excuse for not having like a product to be honest. It's so easy to pull something together with almost nothing and be able to explore that thing in the real world and get feedback from customers. So I think that's something which has probably helped a lot of people, I mean, uh, if they don't have a background in something to be able to say, okay, well this is my vision of the product and actually I've built something even though it's not polished and perfect. And actually I've spoken to 50 or 100 people and, and, and validated that this has a place in the world. So I feel like technology is only helping people be able to prove, you know, that there's opportunities for them um, as founders, which I think is great.

Speaker A: Every time there's a sort of technology platform shift or a new technology arrive that provides like a plethora of opportunity for people that sort of native in that skill set to get an edge. In the early days, so you saw it with the Instagram brands that grew up, the Facebook brands that grew up. And I think what we're now seeing is there's like a generation of AI native entrepreneurs that are just able to get out there like a little bit quicker and they're able to use the tools a little bit faster. They're able to iterate like in a way that's like resonating with that audience and allowing them to come out the gate super fast. I think within our own portfolio we have an example of that, um, a business called medleyai which is an education tutor business. And we backed Fallen Cavie, the founders of that whilst they were still at university so they were finishing up uh their degrees and they have managed to like hat together this uh, sort of app together get it into market, had tens of thousands of users and now that sort of scaling really successfully and recently closed around for Felix. And so you're seeing these people that are just able to do so much with so little because they really understand their audience and how to use these tools in a way that sort of resonating. Um, so super excited about that. Feels like uh, there's a new generation of consumer founders coming out the gates.

Speaker B: Yeah, I heard this. I was talking to another investor yesterday and uh, she said something very interesting which was she's like you know look for domain depth and not domain expertise. So domain expertise would be somebody who's worked in a space for you know say 20 plus years. Right. Domain depth would be somebody who has not worked for that long but for the last few, whatever time frame is, have just fully gone into it and if you bring up anything they have an opinion they're at least aware they've thought through. A lot of those kinds of people are really likely to uh, you know do really well. I mean I wasn't, I wasn't part of Hoxton then but like we were the first check in Deliveroo and I mean Will was a banker, uh he's working in like you know, finance and like schlepping food uh to people so like I mean they can come in all sort of forms.

Speaker A: Uh oh, a great example of customer obsession. I always remember his story of cycling to see his first customers and still going there.

Speaker D: We can all kind of imagine these super vibe coded consumer apps that just take off to the sky and you are three people and a dog to build that business. You almost had a similar case with four people reshaping building UM10 million ARR business. Tell me is this a fable that can be done? Is this definitely not VC backable this type of company, how do you think about seems like it's something that truly taking off but I uh think it's also something that a lot in the VC world are saying. Well the fact of the matter is that once you then have traction you're just going to scale all the more quicker and you're going to be Spending just as much money, but maybe your team might be smaller. I'd love your take on this.

Speaker B: Yeah, I think it's about how people are thinking about it, right? Like on one hand, one can argue just because the team is smaller doesn't mean your OPEX is any lesser. Like you're spending the same amount. It's just that a lot of that might be going to tools and API calls and your full time team might be smaller, but like you're spending a lot of time, maybe not a lot, but you're spending a considerable amount on this ecosystem of consultants and partners and things like that. So if you look at the OPEX side of things, um, there's two ways I look at it and especially in the context of AI, um, there's a bunch of things that companies are doing with their teams which is around reducing costs. This is where you have customer support tools and all of these things. And for consumer, these make a meaningful difference because it's such a big part of their, uh, overheads. I think there's a lot spoken about that, right? We've all sort of known the things that people are doing. The part I find more interesting is how teams are using it to increase revenue. If you can use AI and your teams are equipped to use AI in a way to increase revenue, then it becomes really interesting. And it doesn't matter who the investor is, they will take notice and they'll be like, if you're making money and something is working, let me put in more money. And at that point you might decide, I don't want that money. Right? Uh, and we see enough of that with this whole seed strapping trend and all. But like on the, on the revenue making part, I think the part I found interesting, two things that I found interesting that I see consumer companies do. One is obviously around marketing, right? Like there's enough of how AI is empowering the marketing teams in startups, right? Whether it's in terms of creating copy, like ad copies, images, all of that stuff, right? Like that whole brand blah, blah, blah that's been again spoken about. The part I found interesting, which is more recent, is especially around experimentation. This applies a lot to consumer apps, but can apply to D2C and things like that as well. But like typically, you know, the really large companies, if you think about companies like Airbnb and Spotify, they have world class data science teams, uh, which are working often with product and marketing teams to run like thousands of experiments, right? Like every little thing is being tracked and typically early stage startups earlier did not have that capability because it requires a really strong data engineering function. There's a lot of plumbing data and like it's. So instead they do things like AB tests, right? Like, hey, I'll show two options. Summary. What I've started seeing is a lot of early stage companies have started having the same rigor to experimentation that a Spotify does. And obviously there's an ecosystem of companies that are allowing them to do that. I'm an advisor and investor in a company called Pavo AI, uh, which is ex Spotify, sort of, you know, machine learning leadership. Who's, who's trying to sort of bring in this kind of rigor to a lot of consumer companies. So when I was asking them like, hey, what are you seeing in your customers? They were like, you know what? Here you have a small team, uh, but they have quickly grown to a lot of revenue. And imagine being able to do things like if you have to figure out what notification to send to your user earlier, you would either do it in a very dumb way, you would use some mobile analytics thing, create a workflow and say, if not, then this. What if you could look at all your historical data and then come up with a bunch of predictions and what if those predictions can get really good and you can now run thousands of simulations even without touching the end customer and sort of destroying that consumer experience, but you can do a bunch of that sort of simulations on your side and now you're at a point where a, uh, 30, 40, 50 member team can actually think about doing that. Uh, this wouldn't have been possible without AI. So you have companies which are in the 10, 20, $30 million range, which are able to bring in the same rigor that a Spotify and uh, Airbnb is able to bring in terms of experimentation, which is, which. Which eventually leads to increase in revenues, right? Because like, if those notifications increase your conversion rate even by, you know, say in one example, it went from one and a half to 2%. That's a massive increase in revenue. You basically Increase your revenue 30% through some of these tweaks, right? Like so, so that's the kind of stuff which I find like, really, really interesting. And it's, it's, it's starting to happen.

Speaker D: Mike, I know that you, uh, agree very much with what Rishabh just said, because we're doing another episode together where we're founders who talk about product development. And one of the core underlying learnings from doing that episode was that product is very much about experimentation. Um, so I'd love to ask you, Mike, the question. If you convert this experimentation mindset into being about the teams, so how do you see it? How do you test it? How does a, uh, founding team show to you that we are very, very good at this and this is how we think about it? How does it come as an expression to you?

Speaker C: I think probably the best place that comes through is like, if, if a founder is obsessed with the customer and obsessed with solving that problem, then all this does is give them more tools and abilities to, to create a big product and get more feedback. If they're able to do more experimentation and build stuff and use both data analytics as well as qualitative data, when they're speaking to customers, then their feedback loops are just quicker. And that means you want to be able to have a conversation with someone, ask them a bunch of questions, and then every day they're going to be like, getting stuff back from that, from their users. And it's that like, speed of iteration and so the ability for people to leverage these tools, uh, only I think gives that founder extra superpowers around helping to solve that customer problem and customer pain point. So I think for me, when, uh, it's assessing a founder, it's like, how are they utilizing that to like, go faster? And it's like all about speed and intensity effectively, because, I mean, everyone else has these tools as well. And so that just means that your competition are doing it as well. And so quicker you can ship product, the quicker you can get feedback, the quicker you can iterate, then the better chance you have. So I think for us it's about seeing that kind of velocity and speed of learning with a founder. Uh, and what you want to see is you have a conversation with someone and then they're messing you the next day saying, we tried this thing last night and I spoke to somebody this morning and like, this is what we've done about it. Like, that's the kind of like intensity and obsession that you really, really want to see.

Speaker D: Camilla, you invest across segments, not only consumer. Is what Mike is saying here, because it is clearly true. Is it more true for founders in consumer than the other sectors, or do you see it across the board? No. AI is having this impact everywhere and it's more or less the same.

Speaker A: Yeah, it's a really good question. I think it's being applied everywhere, but its application is different. So in the consumer space, a bit like what Mike and Rashad have been talking about, we are seeing it most heavily applied in terms of the marketing Generating of content and then sort of analyzing consumer reviews. Whereas in some of the B2B cases we're seeing it as like a core driver of the underlying product. And so for example we've got an AI regulated healthcare provider. So it's like ah, delivering healthcare services delivered through AI. So obviously that's a core of the product rather than being used as sort of a marketing message. But in consumer, we're definitely seeing it used to just accelerate the sort of the learning curve. Um, and I actually think it's, in some ways it's going to make it even harder for consumer companies to build long term brand love because I think all of those tools can be used to get out the gate fast, scale fast, but they still don't mean that you're providing a product or a service that customers love. And they're generally not used for brand building, they're generally used for sort of performance marketing and early awareness. And then you still need to thumb out the sort of brand and product love behind that.

Speaker D: I'd love to ask the three of you, um, and Rishabh, we had this conversation at the summit on stage together with Serenglobal founder as well about how hiring is changing in the era of AI. And I'd love to ask the three of you how you think about hiring in this era and whether you should optimize for AI nativeness in your hires or you should optimize for characteristics like curiosity and that's kind of where you need to just go. And then um, the nativeness is what you bring to them, so to say. Because in the end the limiting factor is what you as a company give as tools and freedom to act to your employees. Or is it all about pedigree in your old space and in that way what you want as a CFO that just knows the CFO business and then automatically AI will be adopted into all companies because it's such a powerful force so you don't have to optimize for it in your hiring process at all. Either of you go first, I guess.

Speaker C: Uh, I'm not sure there's like necessarily one, one capture or rule necessarily. I think it depends on the type of company, the stage of company, the mix of the team. I definitely think for AI, uh, native companies, so people starting today is probably much easier just because you're building from scratch. And I do, I do think whether you're AI native or a little bit more mature, you need people in the business to have that curiosity about how can I utilize technology to help me just Because I think otherwise you're going to get left behind. Um, because new companies today, everyone is doing that. Um, so I think you have to. I think a big challenge that more mature companies have is how they instill that kind of culture of experimentation and utilizing technology, like utilizing AI, when they haven't maybe been doing it for five, six, seven years. Um, so that I think is a challenge for companies which obviously is the CEOs, the founders roles to help try and figure that out. I'm curious to understand whether Rishabh and Camilla, how you're seeing founders deal with that in some more mature companies. Like whether they're pushing it down on people and saying you have to use AI or you're fired or whether it's a little bit softer.

Speaker A: Yes, it's such a good question. I think a lot of our companies are still working through that. Um, and I think there's probably a combination of upskilling and then prioritizing people that are AI curious in the next wave of hiring to try and sort of shift the balance towards teams that are sort of AI native in their thinking. Yeah.

Speaker B: I'll also say that a lot depends on what kind of business is it. Right. Like you're much more likely to find hardcore AI native in some of the new investments with some of the younger folks that you're backing. Uh, versus if there's a business which has been running successfully for 10 plus years, it's more about can they figure out the change management, how do they do it without disrupting the existing business. I will say that in some of the early stage startups, what I am seeing is I think a lot of people are trying to prioritize for the slope of learning and so there'll be certain roles where they do want expertise. Like for example, if you're doing enterprise sales, for example. Right. Relationships matter. Or if you're doing something in compliance like that expertise is important, but increasingly they are looking at, well, at least in technology, product, like there's so much change that's, that's happening that you're sort of looking for that steep slope of learning.

Speaker A: Right.

Speaker B: Like what have you done in the last three months, six months, nine months, and how is that sort of change? That's something that increasingly people are looking for because I just feel like we're also sort of entering an era of contradictions. So everything that we thought didn't work. There are enough cases where something like that is working. And so like two or three places where I'm seeing that. Right. Like for example, I Invest a lot in developer tools now in developer tools earlier people would invest in. You would either build a product which would have a PLG consumer ish kind of a thing, or you would build an infrastructure. Right. There are companies which are now building both at the same time because you don't know which one is going to work. Will ChatGPT work or will the OpenAI API work? We don't know. So let's go with both in the market and figure out. Right. That requires a very different skill. Right. It's almost a skill of. To be able to zoom out and zoom in at the same time. So to be able to zoom out, to run the whole experiments part of it. But then the moment something works, to be able to quickly zoom in and then double down. Right. That's, ah, a. That's. It's. It's always been required, but I just feel like it's now on a treadmill. And so I think things like that is, is how I'm seeing some of the companies think, uh, about it.

Speaker D: I want to close today's podcast with a difficult question for you. I want to ask you if you should name one trait that most often make you not back a consumer company. What is that trait?

Speaker C: For me, um, it's obviously like a thread through the podcast, but I'm not sure how to define it as a trait. But it was, it was like the opposite of customer obsession. Right. And it was almost like lazy, like a laziness in it. And they were so, they were so sure about their vision of the product that like, we were asking questions and asking about specific work, sort of user journeys in the product. And they're like, very dismissive about it, uh, and sort of as in like, I know what I'm building type thing. And I don't know whether it was arrogance or overconfidence, but it was just like the opposite of taking on feedback from potential consumers. Right. And I just think, you know, maybe that works for some, but like, it's kind of, um, the opposite direction of like, what we're, you know, what we're looking for. And not to say that people should be taken on just feedback of one. Um, but you can tell in the way people are answering questions about the product and the workflows and how they've, what they've learned from customers, whether they're actually even talking to people or not. And so that's something that is like a, just a massive red flag for us.

Speaker D: Yeah.

Speaker A: In a similar vein to Mike, like, disrespect towards Your customer. You only have a business if you can retain customers. Build trust over time. Any inkling that you're sort of disrespectful towards your customer, uh, we're immediately out.

Speaker B: I mean, when you're the last one, all the good points are taken already, right? Come up with something else. I look for two things, right? One is if I walk away from the conversation learning something new, that's great. So the reverse of that would be like, imagine I've had a conversation and I've not learned anything new, right? I, um, might have read a bunch of reports, I would have spoken to other folks, and yes, you're doing the right things as a founder, but you haven't told me anything different. I haven't walked away learning anything I didn't already know. That's a bit of a red flag, right? Because, I mean, I want to meet people who've thought of something and that I can learn from, because then that tells me that, okay, they're constantly thinking about it. I think that oftentimes ends up becoming a reason to say no, if I walk away not learning anything new. I think the second thing, which is, again, a bit more subtle, is, and this happens a lot with younger founders, but it can happen with anyone, is over a period of two conversations or three conversations, is the quality of conversation going up. Like, have you in that interim time, because I would have given some feedback, right? You would have spoken something else. You want that conversation quality to go up as opposed to it being something like, yeah, you know what? We've spoken to 10 other investors, we have a term sheet ready and put you in a corner, right? I would much rather be like, you know, be honest about where you are in the process. But, like, really, you know, like, I want that first, second, third conversation. I would write the transcripts down. You've taken that feedback, something new has come up. Because you don't get too much time to decide with some of these things. And a lot of cases, you won't even have enough metrics. So what do you go by? You go by things like these, right? Uh, and you can't necessarily always rely on ref checks either, because most of the founders will have terrible ref checks, right? Like, because they'll be horrible. So, like, what do you go by

Speaker A: most of the founders? We back that pretty amazing reference check.

Speaker B: I don't know, it could be mixed, right? There could be cases where, like, what I'm saying is, if they have a great ref check, that's great, but I wouldn't disqualify a founder if they have a terrible ref check, uh, good chance they would hate authority and things like that. Right. Like, it's known to happen.

Speaker D: So it's a super great point and it's even codified. I think it's Sikora that tend to say that if this person is likable and they seem to go along well and like, they almost want them. Want the founders to. Like, it's been said that the founders should, should be people that you don't want to be stuck in the airport with because they're so intense and they're so controversial. Like, is there some truth to that? Or do you think that that's people doing hyperbole?

Speaker C: No, no, I think there is some truth to it. Um, like, fundamentally, we're trying to find outliers, right. And people who are kind of going against the grain. So there is an element to that. I do think there's a balance. Um, like, I don't think you have to be a bad person or, you know, um, or behave in a certain way. But yeah, I think, I think that there's definitely an element to that, for sure.

Speaker B: And, you know, often the companies that have that kind of a founder, you need almost a balancing act. Maybe your CEO or some. Like, you need somebody else in the or who can absorb that intensity. And so, I mean, there is some truth, but like, yeah, we, we definitely don't want to back people that will go to jail. I think let's start from there and then from there onwards, you can talk about intensity and, um, all the other good things.

Speaker A: That's a good clarification.

Speaker D: Well, I search for it. At the same time, it's, uh, Don Valentine that was known for saying that you want someone who's exceptional and perhaps not always easy to get along with. And that's then been discussed by Marc Andreessen as high disagreeableness. And then there's again, similar to what you also just said. Now, it's not that you want someone who's difficult for the sake of it, but because they are decisive and they stick with their opinions and so on. I think it's so important to draw out the nuances. Right. And I think you did in your conversation here as well. So well. Thank you everyone for joining me on the podcast. I really am thankful that we have people like you helping the ecosystem think about this very interesting moment in time for consumer tech in Europe.

Speaker C: Thanks, everybody.

Speaker A: Thank you. Thank you for having us.