Andrew Braccia Wins Academy Award of Venture Capital: 2020 Forbes Midas Investor
Harvard Ventures had the chance to interview Andrew Braccia, the leading investor in Slack, Accel partner, and 2020 Forbes Midas recipient.
Venture capital investor and Accel partner Andrew Braccia is busy to say the least. In 2020, Mr. Braccia ranked as the #2 investor on the Forbes Midas List, an accolade in the investing world equivalent to winning an Academy Award at the Oscars. The concept of the Midas List is an allusion to King Midas, a king remembered in Greek mythology for turning anything that he touches into gold. Mr. Braccia certainly has the golden touch as a leading partner at Accel, a top-tier venture capital investment firm known for funding companies such as Facebook, Slack, Spotify, and many others. He began his career at the beginning stages of Yahoo, where he met several star entrepreneurs he partnered with such as the founders of MyFitnessPal and Slack. Braccia is known for leading the first investment round of Slack in addition to every subsequent funding round for the unicorn startup which went public in June of 2019 with a market capitalization of $19.5 billion. Mr. Braccia has a history of executing successful venture capital investments during his time at Accel, including investments in Cloudera, Squarespace, Vox Media, and much more. Braccia compares venture capital investing to golf, explaining how in a high risk investing scene, there can be a lot of bad shots, but it’s the great shots that keep him coming back for more. Braccia has certainly made various great shots in venture capital, attributing his success to spending a significant amount of time on the entrepreneur front in addition to thorough due diligence on market trends.
Virginia: What have been the most defining moments of your career?
Andrew: Venture capital centers on the creation and formation of companies that naturally have their own stories to tell and their own journeys to travel down or travel through. The destination of those journeys are rarely obvious on day one. There are a lot of moving parts, and it takes a long time to figure out whether or not an investment you made in an early company is going to end up being an investment in a great company, and thus, subsequently a great investment.
I’ve been at Accel for close to 14 years. It’s been an incredible journey and one where I’ve been so fortunate to work on an awesome platform that’s also global — in addition to our team here in the States, we have partners in Europe and India, enabling us to invest in exceptional teams everywhere.
At Accel, I’ve been able to work with some incredible entrepreneurs, who unequivocally deserve 99.999% of any success in the companies that they form and that they build. In many cases, we’re just very blessed to be a part of the ride.
Virginia: What is your investment philosophy, and what are the top three attributes you look for in startups?
Andrew: What really drives technology, investing, and value capture in venture capital is being able to pick the right market — the market that has the right tailwinds that will enable a really interesting company to be created and then to also find the right entrepreneur to guide that journey. You could have a great market and just not the right go-to-market approach or the right products or the right people around you to be able to deliver the success that’s required to build a really large company. So I would say, I am not a contrarian investor.
I tend to make sure that it’s a market that I like and I understand, and I think has a lot of momentum behind it. And then I spend a lot of time getting to know the entrepreneur and understanding the elements or ingredients that I think are going to be required to be successful. I’ve been so blessed to work with some of the greatest entrepreneurs in technology such as Stewart Butterfield at Slack — multiple companies that he’s created are defining companies in their categories in their timeframe. Anthony Casalena at Squarespace is just a force of nature. Lynda Weinman at Lynda.com is a creator and someone that had a dream and an incredible imagination of how people should learn creatively with software — she was at the forefront of that. And it took her 17 years to build the business through many ups and downs.
Overall, for me, it has got to be a great market coupled with a great entrepreneur. In my role, I spend so much time on the entrepreneur front because that in the end is to me, the differentiator. 20 years ago, capital was harder to come by. It was expensive to build technology companies. And thus the number of new companies in any one segment was somewhat by definition limited: how many new companies were going to be created when there’s a limited amount of capital or a limited amount of entrepreneurial activity? That’s not the case today. You take any sector and you do your consulting 101, 2x2 graph around whatever, in terms of the different players in the market, the market map, however you want to characterize it — and there’s hundreds of companies. So what is required for one of those companies to break out? What’s required for a business messaging product to break out and become Slack? It’s obvious in hindsight, but at the moment in time, it can be very daunting. You have to really trust your instincts and deeply get to know the entrepreneur and understand what’s unique about how they’re going to approach the problem.
Virginia: How do you go about developing and maintaining relationships with founders, and how can investors best support portfolio companies like the ones that you engage with at an early stage?
Andrew: What it really comes down to is connecting with people and understanding what motivates individuals, what intimidates them, and their fears. I think where I thrive and where I do really well is on that human aspect of the job and really connecting with people and understanding them and having empathy. Also, not being afraid once you’ve developed that relationship of being completely honest and not having to beat around the bush when there’s issues, and to be able to challenge them in their thinking and not having them take it personally because they know that we have a strong relationship.
Virginia: What noteworthy trends are you currently paying attention to and how they shape the VC landscape?
Andrew: If you think about Cloud software, for example, I think there’s still hundreds of billions of dollars that are spent in IT around on premise software. As you can imagine, probably over the next 20 years, the vast majority of that is going to transfer its way to Cloud enabled solutions. And some of that’s going to be through existing software companies and much of it’s going to be developed and delivered through new companies that find new ways of addressing old problems. I think the movement of enterprise software and moving on premise to Cloud and every vertical and every horizontal platform that’s going to require that, is still very much an underestimated opportunity. Remote work, internet security — those are a couple areas that are illustrative of just how much room there is and gradual growth of Cloud software.
Financial services is also going to continue to go through a lot of evolution. I don’t talk about it so much to the extent of cryptocurrencies and that world, but more from whether it be banking, insurance, real estate transactions, investing, payments or how you procure goods. I think we’re still very much in the early innings of innovation for financial services and as infrastructure grows and the capabilities of that infrastructure grow, I think there’s going to be a lot of innovation in those spaces.
Lastly, if you look at e-commerce in the rise of a lot of these direct to consumer brands, whether it be brands like Away Luggage in the travel space or Harry’s in the men’s space, or even Robinhood right now in investing, I think we’ll increasingly see new brands being created that put the customer first and build great experiences for consumers.
Virginia: How do you traditionally source startups?
Andrew: I think that question can be answered in different ways, depending upon the firm that you’re in. But given that Accel has been around for nearly 40 years, we have a really strong network — it’s a people business. So much of it is driven off of people that you’ve made a positive impression on through the years and people from the companies that you’ve invested in who are now either starting companies, or are friends with people that are starting companies. I think much of Silicon Valley is driven off of that. It’s the first order, second order network effects where everyone sort of knows one another because we’ve worked in companies together. I mean, just look at a lot of the investments that I’ve made: Slack, I worked with Stewart Butterfield at Yahoo. Yahoo bought Flickr, which was his first company. And then when he left, Stewart took a year off, came back and started a company. We had a discussion, I wrote him an $800,000 seed check and said, “Go for it.” And that was because I had a relationship with Stewart for five years prior. I invested in MyFitnessPal, founded by brothers Albert and Mike Lee. I worked with Albert at Yahoo for many years. Cloudera was also founded by one of my former colleagues at Yahoo, Amr Awadallah. He ran all the data science for my group there. And then these other investments that I’ve made in many cases are some node that’s connected to another person that I know.
Virginia: The bottom line is that Andrew Braccia is not only a luminary in the venture capital world, but also a firm supporter in the journey of each entrepreneur. He takes the time to understand all markets that he makes investments in, offer invaluable and honest feedback to founders through the ups and downs of their scaling process, and advance innovation not just through the capital he provides for each firm, but also through extensive contributions to each startup team. It is safe to say that Braccia holds the “Midas touch” because he loves the process of investing in great people with ideas that are innately bound to highly impact the world.
