A Love Letter to Floodgate
Reflecting on 2.5 years at an extraordinary seed stage venture capital firm
After several years at Floodgate, it’s time for me to say a very bittersweet sayonara to the best team of Thunderlizard startup hunters in the world!
I’m spreading my wings and moving on to a new adventure, which I’m super excited to share more about soon. Before I do, I wanted to pause and reflect on the transformative years I spent with the Floodgate investment team — truly the greatest mentors a young venture capitalist could have ever asked for.
It feels like it was only yesterday that I started my journey here.
Mike Maples was kind enough to publicly introduce me to the rest of the startup community on my first day on the job. From that point, I was given free rein to join virtually every board meeting, strategy discussion, founder pitch, networking coffee + lunch + dinner, etc that he and our other partners Ann Miura-Ko, Arjun Chopra, and Iris Choi attended themselves. That entire first year felt like drinking out of a fire hose, but it gave me a phenomenal education on what “exceptional” looked like in an early stage venture capital context. I count my lucky stars to have been in the orbit of these amazing investors, who pioneered the concept of “seed stage” checks nearly 15 years ago when the standard first investment looked more like $5M for 50% equity ownership of a founder’s company (wild terms given today’s environment). The Floodgate partnership has seen just about every important startup that’s been built since then, and I’d like to believe I’ve inherited some of their pattern recognition when it comes to investing in entrepreneurs.
My mental model of what to look for in an early stage startup has expanded significantly.
Many of the foundational lessons I learned are captured in Mike’s Starting Greatness podcast and his Backcasting workshops on startup ideation, which I had the great honor of helping him refine on a weekly basis (alongside Professor Pete Ziebelman from Stanford). It started with understanding the right questions to ask — e.g. what is the inflection that answers “why now”, what is the earned secret, and why does the founder consider solving this problem their life’s work? I eventually graduated to more nuanced frameworks — e.g. understanding best-in-class benchmarks for customer love, distribution, defensibility, capital efficiency, TAM, etc. Ultimately, as I step back, the constant amongst all the great companies is the tenacity and intellectual capacity (both speed and raw processing power) of the founder. Arjun tends to cite the often quoted saying, “starting a company is like chewing glass and staring into the abyss”. Evaluating who is actually capable of this is definitely an acquired skill.
Building a breakthrough startup is certainly more an art than a science, but I had the privilege of partnering with the team to guide many wayward founders onto the path towards product-market fit.
It’s not lost on me that the greatest companies that Floodgate ever backed are the result of major pivots, from Twitter to Lyft to Twitch. That critical period of time in the -1 to 0 phase before you can even build 0 to 1 is company defining, and I’m still convinced that there’s a role to play for investors who can serve as a guide and sounding board through this valley of doubt. I’m obviously biased, but I think Mike, Ann, Arjun, and Iris are some of the best in the business when it comes to this task.
Founders are a special breed of changemakers, and I was fortunate to have seen how some of the very best have built their companies.
Different entrepreneurs taught me different things. Qasar Younis from Applied Intuition gave me a solid blueprint for what it takes to build an A+ talent engine and how to inspire a team to continuously run at an Olympic level. Alex Ma from Poparazzi is perhaps one of the best consumer product thinkers of our generation, and he offered a masterclass in iterative design thinking. Matt George from Merlin Labs taught me the value of a really good demo (in one of the crazier chapters from the last few years, our intern Amin and I were sent into the Mojave Desert on a few days’ notice to check out their live test of autonomous planes, which was *awesome*). There are truly too many amazing founders in the Floodgate portfolio to name here, but suffice it to say that they all inspired me in a way that got me excited to get out of bed in the morning every single day.
As a generalist seed investor, I learned to lean into my gut instincts.
As I review what went right, 75% of the companies I pounded the table for with the Floodgate partners have now ended up crossing over a $100M valuation (at an average starting post-money valuation of $13M). It helped to think in bets geographically and thematically. Geographically, I took a special interest in the startup ecosystem in Los Angeles, which has increasingly produced more and more unicorn startups during my tenure (as well as case studies experienced first-hand on how outrageously far Series A firms will go to win deals). Thematically, there are two main spaces that energized me over the last several years — the future of commerce (mostly collaborated on this with Ann and Iris, e.g. Popshop’s livestream video platform, Emotive’s conversational messaging platform, The Zebra’s insurance comparison engine) and the total overhaul of American infrastructure to meet the challenges of the 21st century (what Mike calls “America Next”, e.g. Hadrian’s automated manufacturing for spacetech, Living Carbon’s bioengineered plants designed to fight climate change). That doesn’t mean I took my eye off the ball for some of the more traditional industries (I definitely worked on enterprise software with Arjun, e.g. Fieldguide’s workflow SaaS for auditors). In any case, we’re nowhere near the finish line on any of these companies (as First Round’s Josh Kopelman once said to me, celebrating Series A rounds is a bit like getting excited about completing the first mile of a marathon). However, I’m excited to have played a part in helping each of these founders build towards a more ambitious future.
I curated a number of non-obvious insights on navigating a successful career in venture capital over the years, and honestly, it’s a tricky endeavor.
At this point, I have strongly-held opinions on breaking into venture and setting yourself up to win internally. I even ended up joining the board at NextGen Partners and began mentoring a small circle of junior investors as a career coach! Every venture capital firm is its own unique universe with its own set of politics, rules, and culture. However, if I could leave folks with only a single piece of advice: strive to become totally indispensable to your partnership. I think the straightest path to staying power in venture is to bet on a contrarian thesis and be right — if it goes your way, you become the person your partners want to call first in a very hot market. For instance, I am almost certain that anyone in venture that held firm on their convictions in crypto and web3 before the current hype cycle is the most sought after hire in the ecosystem today. If I had to take a hard look and admit what went sideways over the last few years, it’s that I didn’t quite get there on going deep enough on a thesis roadmap that put me in this position. It requires focused intentionality and I wish I had spent more time on this rather than where my natural inclination towards network-centricity took me.
I’m convinced that early stage venture capital firms need to build powerful platforms to win going forward.
The startup ecosystem, and the world of venture capital along with it, underwent fundamental changes with the advent of the Covid-19 pandemic, (eg normalization of remote work, influx of capital into private companies, etc). How do you stand out amongst a sea of founders in a world where they can take their pick from a thousand other institutional funds, solo GPs, and angel investors whose cash is as green as yours? Floodgate’s answer was to ramp up a number of proprietary networks, such as our Reactor incubator for promising students (run by Ann and our newest team member Tyler Whittle). My contribution here came in the form of launching and running the Anchor List, an annual honor roll of the very best startup operators and advisors. Mark my words, venture funds that only rely on the personal brands of their partners will not win forever. I believe the right questions to now ask are — what are the “products” that founders want to “buy”, how do I effectively build them, and how do I create compounding advantage at scale?
Venture capital is about people. For that reason and a million others, I’m really going to miss Floodgate.
The word I use when I describe Floodgate is family. I mean, I got to know my partners’ spouses, their kids, and even their dogs! This team is full of heart, and they care about the people around them. I still remember getting trapped in an elevator near the top floor of our SF office for 4 hours and getting minute-by-minute texts from Arjun to make sure the cables hadn’t snapped (some too hilarious to post publicly). I’m going to miss my long running spat with Ann over Asian food and the perennial banter with my colleague Leeor over the Stars Wars vs Star Trek debate (I find his lack of faith disturbing). Looking back, most days were just plain fun and it never felt like a job. On top of all this is the beautiful fact that they’re all true believers in what Silicon Valley can stand for — this idea that a few ragtag builders with a good idea can actually still make a dent in the universe. They’re not out just to make a buck. For these reasons and more, I would vouch for any of them to founders, co-investors, etc until the end of time.
To Mike, Ann, Iris, and Arjun — thanks for taking a chance on me and giving me my start in this business.
You’ve created such a special place, full of the best humans and the most insightful investors. I became the best version of myself here, and I’m so proud to have walked through the Floodgate halls. I’ll do my best to make y’all proud.
If you want to get a deeper download about anything I’ve mentioned here, send me a note at shawn@floodgate.com! Will still be checking this email periodically for at least the next month. Happy holidays and happy New Year y’all!
