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Mark Suster - Upfront Ventures
24 segments available
On this week's episode of the LA Venture podcast, hear from Mark Suster, managing partner at Upfront Ventures, as he explains why he thinks the best time to talk to founders about fundraising is three to four months after their last fundraise. Mark Suster is the managing partner at Upfront. He previously was the founder and CEO of two successful enterprise software companies, the most recent of which was sold to Salesforce.com where Mark became vice president of products. Prior to being a founder, Mark was a software developer at Accenture where he lived and worked in Europe, Japan and the U.S. Mark is a graduate of UCSD and has an MBA from the University of Chicago. To listen to the full interview visit : tenoneten.net/podcast
Segments Timeline
Introduction to the Podcast
In this opening segment, the host, Minnie Ingersoll, introduces the LA Venture podcast and its sponsor, Strategic Law Partners. She sets the stage for the episode featuring Mark Suster, highlighting the focus on venture capital and the Los Angeles tech scene.
"[Music] thank you to strategic law partners for sponsoring this podcast strategic law partners was formed to provide the highest quality common-sense legal services at reasonable rates over its 25-yea..."
Mark Suster's New Role
Mark Suster discusses his recent transition to co-managing partner at Upfront Ventures alongside Karen Norton. He reflects on the significance of this change for women in venture capital and the broader LA tech community, emphasizing the importance of representation and leadership diversity.
"brad and team [Music] [Applause] hello and welcome to the la venture podcast this is minnie ingersoll host of the podcast and partner at 10 110. 10 110 is a seed stage fund here in la all opinions exp..."
Challenges for Women in VC
Suster shares his observations on the historical underrepresentation of women in venture capital, citing statistics that reveal only 7% of general partners were female. He recounts a personal experience of facing skepticism when trying to recruit a qualified female candidate, highlighting the biases that persist in the industry.
"thank you very much i appreciate it if i could just say briefly minnie um you know my observation about the industry we know that just a few years ago only seven percent of gps were female right so 93..."
The Need for Change in VC Culture
Mark emphasizes the need for a cultural shift within venture capital firms to promote women into leadership roles. He argues that the industry must change its model to support internal promotions rather than forcing talented women to leave and start their own funds.
"the great women of our industry whether you know i look at you know aileen at uh you know kleiner perkins or even mary meeker it seems somehow that women had to quit their firms and go raise their own..."
Mentorship and Cognitive Diversity
In this segment, Suster discusses the importance of cognitive diversity in mentorship. He shares a story about Kevin Zhang, a partner at Upfront, who came from a non-traditional background and how his unique perspective has contributed to the firm's success.
"cara is not only more qualified on paper she's more talented than even than i are and i just look 15 years from now when i look back and say what did she achieve i'm certain it'll exceed anything we'v..."
Building a Diverse Team
Mark reflects on the importance of building a diverse team within Upfront Ventures. He discusses how different backgrounds and perspectives can enhance decision-making and lead to better outcomes in venture capital.
"really you know about apprenticeship about power sharing about inclusion how do you approach the apprenticeship and um i did ask cara for questions for you um and one of her questions was really good ..."
The Evolution of Upfront Ventures
Suster shares his journey at Upfront Ventures since joining in 2007. He discusses the firm's growth, his rise to co-managing partner, and the importance of fostering a collaborative and inclusive environment.
"a principal i just thought what a great resource to do the quant work but i started realizing over time that he was you know also very good at um you know building his network so he was getting access..."
Hiring for the Future
Mark talks about the recent hiring of a new female partner, Molly Wall, and the strategic decision to prioritize diversity in hiring. He emphasizes the need to actively change the gender dynamics in venture capital.
"you know willing to do the work you know willing to do whatever it takes to help founders and being founder-friendly like seth sternberg once when i did a podcast a decade ago he he said to me short p..."
Contextualizing Knowledge in VC
In this segment, Suster discusses the importance of contextualizing knowledge and information in venture capital. He shares insights on how to develop frameworks for decision-making and the evolution of funding strategies over time.
"so you asked about me i joined the firm in 2007 i was one of six partners when i joined when i came in i had already worked with eve for seven years uh almost eight and eve said to me even before he h..."
Funding Strategies: Then and Now
Mark contrasts past and present funding strategies in venture capital. He explains how the landscape has shifted towards pre-revenue funding and the implications for investors and startups in today's market.
"the last 20 years and being able to put ideas into a framework into a box and contextualize them and be able to reference them and say okay now i have a decision framework and i can i can deviate from..."
Identifying Product-Market Fit
Mark Suster shares his framework for evaluating startups, focusing on product-market fit and founder-market fit. He illustrates these concepts with examples, including a company he funded that aims to solve sustainability issues in fish populations. This segment emphasizes the importance of intrinsic motivation in founders and the long-term vision necessary for success.
"our median first check is 3.5 million dollars and our median ownership on first check is 21 and we know that and we look we studied the data so if i want to hit that i have to look for three things an..."
The Importance of Differentiation
Suster discusses the significance of differentiation in venture capital, arguing that simply providing term sheets is not enough to add value. He critiques the notion of competition among VCs and stresses the need for unique insights and knowledge that can lead to better investment decisions. This segment highlights the competitive landscape of venture capital and the necessity of having an edge.
"have a great team of engineers working on a problem and like iterate iterate iterate but like from day one it's not like really solving a big world problem and it's like they haven't spent years build..."
Building Practice Areas for Success
In this segment, Mark Suster explains how Upfront Ventures encourages its team to develop practice areas to gain expertise and edge in specific sectors. He shares examples of team members focusing on cybersecurity, fintech, and marketplaces, illustrating how specialization can lead to successful investments. Suster emphasizes that the ultimate goal is to serve entrepreneurs effectively while achieving financial success.
"you know currency and all the like the big dollars and they always talk about edge like if you're if you're a public quant person and you're investing against everyone else you have to have edge and i..."
The Entrepreneur's Journey vs. VC Goals
Mark Suster explores the tension between the goals of venture capitalists and the needs of entrepreneurs. He discusses how VCs must navigate their responsibilities to return capital while genuinely wanting to help entrepreneurs succeed, highlighting the potential conflict between passion projects and financial viability.
"your ultimate goal you're in the wrong business right like no that no it's your proximate goal not your ultimate goal your job and this is what vcs don't understand your job is to return capital you n..."
Google's User Experience Dilemma
Suster critiques Google's approach to user experience, suggesting that the company's optimization for shareholder profit often compromises the quality of user interactions. He reflects on his time at Google and the challenges of balancing user needs with business objectives, raising questions about the true intent behind their product offerings.
"if you define your passions wrong or your priorities wrong you can chuck i could chuck half a million dollars into a whole bunch of passion projects with entrepreneurs i want to work with and feel gre..."
The Reality of Google's Business Model
In this segment, Suster discusses the complexities of Google's business model, arguing that while the company has admirable goals, its practices often prioritize profit over user satisfaction. He shares personal anecdotes to illustrate the challenges faced by users when navigating Google's search results.
"time i think if you're fooling yourself if i could say so does google do what's best for the user you know hold on hold on let's answer that question what google does is they optimize ads so that you ..."
Regulation and the Role of Government
Mark Suster delves into the historical context of regulation in the U.S. economy, discussing the balance between necessary oversight and the potential for regulations to stifle competition. He reflects on the evolution of consumer protection and the government's role in ensuring fair practices in the marketplace.
"it is well you know my pushback there is i can't speak to your bike shorts or really to the past you know decades go to find a hotel go to find like a flight go to find a doctor go to fun like go find..."
Navigating the VC Landscape
Suster shares insights on the importance of timing in venture capital, emphasizing that the best opportunities arise shortly after a startup has secured funding. He stresses the need for VCs to engage with entrepreneurs early in their journey to foster meaningful relationships and successful investments.
"movement half public company and like i heard that over and over and like i greatly admire google i greatly admire them as a company and i think they have the best and brightest people out there so i ..."
Understanding the Entrepreneur's Needs
In this segment, Suster reflects on the importance of understanding the entrepreneur's perspective and the timing of investment discussions. He argues that VCs should aim to connect with founders before they are in desperate need of funding, ensuring a more collaborative and supportive investment process.
"and for what facebook has done um i i i don't know i guess i would struggle to be an employee at facebook um and i don't understand how there's not a bigger mass exodus um but mark also has a really t..."
The Importance of Early Engagement
Mark Suster emphasizes the critical nature of early engagement with entrepreneurs, advocating for VCs to be proactive in their outreach. He discusses the implications of waiting too long to connect with startups and the potential missed opportunities that arise from delayed involvement.
"like oh my god the world has become awful and we're finally having these fights these are like political fights that we've been having for hundreds of years but but if you read about it they talk a lo..."
Understanding the Fundraising Cycle
Mark Suster elaborates on the fundraising cycle, detailing the importance of timing in approaching startups. He explains the risks of waiting too long to engage with founders and the advantages of being involved early in their funding journey. This segment provides a framework for investors to effectively position themselves in the competitive landscape of venture capital.
"this all up i have like the power or keynote slide showing this which is the best time to go out and hunt for a deal and play offense is right after they've they're funded it's probably like three or ..."
The Importance of Share of Mind
Suster discusses the concept of 'share of mind' in the venture capital space, explaining how it is crucial for investors to establish their presence and influence among entrepreneurs. He shares strategies for building a recognizable brand and the significance of sharing informed opinions to attract attention in a crowded market.
"so when people come to me in month nine or month 11 or month 13 and by come to me i mean my partners and they're like we have to rush they already have two term sheets i don't know maybe we this one u..."
Navigating Public Perception
In this segment, Mark Suster reflects on the challenges and benefits of being a public figure in the venture capital industry. He shares his experiences with public criticism and the importance of maintaining a positive approach in discussions about companies and trends. This segment highlights the delicate balance between sharing opinions and managing public perception.
"vc relationships and so they're like okay we wrote 500 750k into this deal we're doing a lot of these do we trust the series a investor who's going to take the board seat because they're going to have..."
Future Trends for LA's Tech Scene
Mark Suster offers his perspective on the future of Los Angeles as a growing tech hub. He discusses the ongoing migration from San Francisco and the potential for LA to rise as a significant player in the tech industry. This segment captures Suster's optimistic outlook on the long-term structural trends shaping the market.
"uh i know i'm out of time so um do you like that though do you like being a fairly public person like i feel like a lot of people you know you're you can be a target if you if people disagree with you..."