Loom: Love at first sight
There is this idea in the VC community that investors usually know after the first meeting (or maybe even after the first five minutes) if they want to invest in a company. According to that view, everything you do after that first meeting is to selectively collect evidence that supports your opinion (AKA confirmation bias).
There’s some truth to that logic, but it is an exaggeration. More often than not, it takes much longer to understand a market, get to know the founders, and develop the conviction needed to make a large bet. And obviously, it happens all the time that investors are initially excited but end up passing based on their DD findings.
Every once in a while, though, you see a deck, try a product, or talk to a founder, and you know immediately that you just have to invest in this company. For us, one such case was Loom, which has just announced an extremely impressive ~ $29M Series B led by Sequoia and Coatue. Have a look at this Forbes story covering the news.
When we found out about Loom in February 2017, we knew almost immediately that we wanted to invest. Spectacularly impressive founders. An awesome product. Strong early traction. Potential for B2C-style virality combined with B2B SaaS monetization (which could get them into the holy grail quadrant on the CAC/LTV 2x2 matrix). It almost looked too good to be true. It took us more time to convince Joe, Vinay, and Shahed that they should take money from us than it took us to convince ourselves that we wanted to do this investment.
We’ve been using Zendesk as our deal-tracking system since early 2011, which gives us the benefit (and often the embarrassment) of being able to go back in time and take a look at our notes on every company we’ve looked at in the last nine years. By now we could probably fill a book with “famous last words” on cases that we got epically wrong. ;-)
But back to Loom, a case where we got it right. Let’s take a look at our Zendesk ticket for Loom (ticket #17389). Here are some notes from that ticket:
As you can see from the timestamps above, we were actually quite slow initially. It took me a week to get back to Robin after he flagged it as “super interesting” (sorry Robin Dechant 🤷♂️🤦🙈). And truth to be told, there are about 50 comments in this Zendesk ticket that I have not pasted above, we did do some DD.
But all of us got super excited the moment we saw the product or talked to the founders. In that sense, it was true love at first sight.