This is the first installment of my series on young VC’s in New York. I’m interested to learn what processes, frameworks and mental models these new VC’s are adapting and using to evaluate early stage companies.
The goal of this series is threefold. First, understand the mental models that each young VC has developed for him- or herself. Two, learn from them. Three, showcase their ideas and insights for others to learn from.
The first interview is with Nina Stepanov.
I met Nina on Twitter. She’s a go getter with a lot of good ideas about venture and entrepreneurship. She currently works at Acceleprise as a Principal and Director of Partnerships. Highly ambitious and great with people, she’s not to be underestimated.
Let’s get started:
Jaap: Let’s start with the basics, can you tell us a little bit about yourself?
Nina: I went to college at Northeastern University and had a handful of roles at tech companies including HubSpot and Intuit. After graduating I joined Hubspot, where I got to work on some exceptional projects. After that experience, I wanted to try a smaller company, so I moved to a govtech startup called ViewPoint. Soon after, I realized I wanted to move into Venture Capital where I could work on a lot of different companies at once. It aligned with what I wanted out of a career. Up to that point, everything I did was startup-oriented and I was part of the venture tech ecosystem, but I hadn’t put two and two together. Venture Capital was a means for me to bridge the gap. A few months later, I was offered a role at TechStars IoT in NYC. There, I fell for the accelerator model and soon after the IoT program ended, I was introduced to the team at Acceleprise, the B2B SaaS accelerator. I joined Michael Cardamone on the east coast to launch our NYC program and in doing so, found the most fulfilling job I’ve ever had. Now, about a year and a half into this role, I feel like I can finally focus on being more intentional about where I spend my time, which makes it an interesting period for me.
Jaap: What has been surprising about working in VC?
Nina: The most surprising thing is just how much I like it. I’ve had a lot of work experience for my age because I went to a co-op college. Most of my jobs have been just jobs. I’ve enjoyed them but venture is different and I didn’t think it would be so much fun. It feels like a really awesome privilege to be able to do this for a living. You get to wake up every morning and dictate who you talk to, how you spend your time, with whom, and all the while, you’re learning and helping others. What more could you ask for?
Jaap: What, if any, mental models do you use to evaluate and work with new companies?
Nina: Funny that you ask, I’m reading through the second half of Ray Dalio’s book, Principles, so I’ve been thinking about mental models a lot recently. I thought: how can young people have principles or mental models? At our age it’s hard to define those as we still need to put in more repetitions to discover the ones that work for us.
That being said, I do have a couple of frameworks I apply when working with early stage founders. They generally fall in two buckets: pre-investment and post-investment.
I focus less on evaluating a market opportunity and more so on how well the founder understands what they’re building and the industry they’re building for. One of my strengths is my ability to connect with people, so I lean on that when interviewing a founder. I try to understand: how coachable are you? How personable are you? How likely are you to know enough or find pleasure in learning enough to be successful in building your company. A big focus of Acceleprise is sales, so I want to know if you can convince me what you’re doing is the next big thing. I’m looking for a founder to convince me using factual information, not just elaborate story telling. Sell me by educating me. You can tell when someone is just selling you on something. It’s different when someone is explaining their idea so clearly that you’re sold. It’s a different kind of selling.
I will credit some of this perspective to Whitney Sales, our West Coast general partner. She’s very much a believer in coachability and founder market fit. What’s important is: how do you as a founder build, sell and grow your business? I learned early on at Hubspot that sales should be an educational process. They called it inbound sales. I try to look out for that mentality when talking to founders pre-investment.
I’m still learning this part, still getting my reps in. With the pre-investment process I’ve seen hundreds of companies, post-investment, only about a dozen. We only invest in ten per program, so it’s a pretty small sample size as compared to the ones we evaluate. What I have come to realize again and again is that there’s a lot of emotion in early stage companies, because there’s so much ambiguity. Very often you just don’t have the answer to all the problems.
I don’t know if I have a mental model yet, when it comes to managing companies. I consider myself the node between companies and the rest of the network I’m connected to. People to people is hard and important. Most people don’t factor in the importance of the people you’re connecting having a good connection. If you’re going to connect a really aggressive and forward founder to a very shy and timid developer, you have to consider how successful that introduction will be. It might not work out because of personality fit, rather than it actually being based on the relevancy of the product itself, which is the case in later stages as more people take over the sales process.
At the accelerator stage the value swap is giving up part of the business for the accelerator network and connectivity. I double down on people rather than doubling down on understanding markets, which might change over the years. The older you get, the better you are at understanding people, so then you can double down on markets. They’re both important, I’m just focused on the people side for now.
Jaap: Who has great mental models and who do you look up to in VC?
Nina: Definitely the partners at Acceleprise. First, there’s Michael Cardamone, who founded the fund. Our entire team is former operators, nobody has a finance background, which I think is a big plus and something I admire about the team.
Mike’s big strength is understanding market dynamics. He can look 10 years from now and say relatively confidently whether or not he thinks something will take off. He can say this industry will be big or will move in that direction. He’s also seemingly good at this in the short term. You can be ahead of the curve by 2 years and ahead of the curve by 10 years and I believe Mike can do both. I admire that ability, to look at something and understand it deeply in a short amount of time and then be decisive about it.
The other partner, Whitney Sales , is so good at sales for tech startups. I don’t know a single person who is as good as she is at teaching tech companies about selling. Every time I spend time with her, I’m blown away. It’s amazing how much information she can store in her brain and then teach others, including me how to utilize it. She can meet with you and your company and immediately tell where the weaknesses are and what challenges you’ll have in the long term. After a week she knows: this founder will have issues with this or will be really good at that. I never know if she’s right, until it all of a sudden happens. For the record, she’s right a lot.
The two of them together are unstoppable, which is a great place to be in the middle of.
Nina: I’ve thought a lot about this because it’s hiring season in venture. It’s a strange world to be in and once you’re in, you’re in. A lot of people will credit the ability to network as the skill to pull you through venture for the rest of your career. However, in retrospect, I don’t think that’s actually the most beneficial thing.
I genuinely believe that being successful in venture over the long term is really understanding the industry you invest in. Really doubling, tripling, and quadrupling down on something that you think is going to be big. It doesn’t have to be what others think will make waves. It’s about picking something good and being confident that that space or industry will move mountains. Eventually, you want to be the single person people turn to when people think of X. (Ex: Jason Lemkin for SaaS) The super successful investors, if you strip away the fact that they make good investment decisions, they’re also frequently someone who really really knows a specific space.
Recently I was talking to the creator-turned-VC of E Ink. He was in that space for 10–15 years. He started E Ink, built the company and sold it to Kindle. Now he’s a VC. I just think people place too much importance on network, (don’t get me wrong, it’s important) but if you’re really good at what you do and make good bets, people will gravitate towards you. That network will grow organically because you are the person people turn to when it comes to your topic.
Adding a note on FOMO here. Everyone chasing the same deal predicates the fact that everyone gets the same tip for the same deal rather than thinking for themselves. Getting rid of FOMO would mean people would have to focus on their specific industry and what they’re interested in rather than just making enough friends to hear about the next opportunity. There are funds like Lux Capital, who make bets on out-of-this-world opportunities. It takes guts to do that and it’s harder to fall back on trends and hype, the way many other investments seem to go.
Jaap: Bill Gates famously said:
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”
What are people overestimating over a two year horizon, but underestimating over the next ten?
Nina: I’d like to look more internally to answer this question. I don’t think people talk about the impatience of highly ambitious people. These are the people who overestimate how much they want to get done in the next two years and underestimate what they’ll accomplish in the next 10. I think it has to do with impatience. A lot of people have depression and other people have impatience. It’s overwhelming and crippling at times. Sometimes it impedes my progress in doing the things I need to do today, tomorrow, next week or next quarter because of the monumental goals I’ve set out for myself. That’s my weakness and that’s what causes myself and seemingly many others I know to overestimate and under-deliver, at least by our own standards.
To answer you more directly, I think diversity in the US is underestimated over the next ten years. There’s a massive opportunity to mobilize and empower many diverse groups of people as consumers. There are massive swaths of people who are ready to participate in a revolution of product and services built by people like them, but we’re not funding them and we haven’t been for decades. We’re starting and will continue to see an uprising of non-white and non-male founders building for a forgotten and neglected community of consumers. I can’t wait to see it come to life.
Jaap: Who do you really enjoy following on Twitter and what book do you recommend?
Nina: The book I’m reading right now is great: Surely You’re Joking Mr Feynman!. It’s the memoirs of the Nobel Prize winning physicist, Richard Feynman. It’s a hilarious book and has loads of hidden life lessons. It’s a really fun read about not taking yourself seriously while working hard on what you’re passionate about.
It’s really difficult for me to name people I enjoy following on Twitter because I’m constantly finding new people. I’ve enjoyed Nikita Singareddy (@singareddynm) quite a bit recently, as well as Bo Ren(@bosefina), Alex Iskold (@alexiskold), Semil Shah (@semil), Hunter Walk (@hunterwalk), and Sarah Ownbey Chipps (@sarajchips).
Thank so much, Nina! This is an insightful interview to kick off the series. Readers, if you’re young, hungry and interested in VC, here are some key takeaways:
1. Connect with founders
“I try to understand: how coachable are you? How personable are you? How likely are you to know enough or find pleasure in learning enough to be successful in building your company. A big focus of Acceleprise is sales, so I want to know if you can convince me what you’re doing is the next big thing.”
Founders first. Try to understand their universe and what their space is about. Also, test them. See if they can sell you on their market and company by educating you. Connecting with them on a personal level will be valuable over the long term.
2. Personality fit when making intros is important.
“People to people is hard and important. Most people don’t factor in the importance of the people you’re connecting actually having a good connection.”
Second order thinking when making intros is key. Don’t make intros to just make intros. Try to make ones that will have real value to the people being intro’d. It’s an art, but if you master it, it’s extremely valuable.
3. Stick to your guns. Go deep in one or two industries.
“Eventually, you want to be the single person people turn to when people think of X.”
Build a brand, experience and knowledge in one specific area and everything in that space will naturally flow towards you. This focus is so important when investing as you otherwise get FOMO from deals you’re not involved in and look great from the outside. If you stick to your space, you will at least see important deals and even better, you’ll probably be the one to spot them first.
Thanks for reading! If you have questions, insights or comments, please send them my way. My Twitter is @jaapvergote.