The Inquisitive VC: Cédric Waldburger — Tomahawk.VC
Cédric Waldburger is the Founder and General Partner of Tomahawk.VC, an early-stage venture capital firm based in Switzerland, investing in global-first companies. Prior to this, he has been an angel investor in a range of companies and has built companies in the agency, consumer and blockchain sectors. Most recently, he co-founded DFINITY, a Silicon Valley unicorn.
We talk about how he got into crypto, his work with DFINITY, how he approaches hiring and more!
NA: Thanks for taking the time to have a chat. To get right into it, I read that you started your first business when you were 14, what was it and what motivated you to start that business?
CW: That was an agency business, and it was around 2001–2002. I was here in Switzerland, and it was when everyone felt like they needed a website, but didn’t really know why. That was a great opportunity for a friend and I. I have been coding since a very young age of 6–7 years old, and he was a graphic designer. So we started working on websites for fun on the weekends. We did one for our boy scout chapter, and then for friends and family. From there it kind of just grew organically, and more and more people wanted to buy our services. That is how that first business came about.
NA: It’s quite an early age to state coding, so you have been coding for quite some time now. How did you get involved in the crypto space and how you got involved with DFINITY?
CW: I first got introduced to bitcoin and the concept of blockchain, and blockchain-based currencies in 2011–2012 when I was working at a company called SumUp. SumUp is kind of like the European version of Square. They are a payments company that allows you to receive payments through your phone. Some of my colleagues in the tech team, we were pretty small back then, maybe five or six people, they were fans of bitcoin from the very beginning. Some of them, later on, went to work on Ethereum. I remember my colleague Gustav sometimes asked me if he can use my laptop over lunch to mine some bitcoins (laughs). This was when it was still possible to do with a MacBook Pro.
We had lots of conversations about how this could impact and change the world and potentially the lives of millions of people. So, I decided to stay in touch with that space, read on it regularly and write about it to capture some of my thoughts. Later when I started to build my angel portfolio in 2014–2015 I actually first wanted to invest in blockchain-based companies only, but at the time I didn’t have the right access or the right process. I couldn’t really find companies that I deemed investible. There were a lot of interesting concepts but nothing that really felt like a company that was set up well enough to be invested in.
In 2016 I got introduced to Dominic and Tom who had been working on the idea of DFINITY. I think it even had a different name at the time. This was the very first, few months that they had started to work on it and they asked me if I could potentially help with setting up the foundation for DFINITY here in Switzerland, which I was intrigued by. The team looked great, I really liked the idea plus I was fascinated with Dominic’s technical innovations which he had uncovered in the space. I decided to help them set DFINITY up and that was the first venture where I took a not so technical role, but more of a operations and legal role.
I helped first set up the foundation, helped with operational things in the beginning. Later on, my role always shifted, the last project I worked on operationally was setting up the Zurich office in 2018. When we hired a group of researchers out of larger research companies in Switzerland and we wanted to set them up with an office in Switzerland. That office by now has grown to 40 or 50 people.
NA: Wow, so it has been quite a journey for you with DFINITY. You probably would have also been involved when the token sale happened. What was the thinking around the DFINITY token sale, because I imagine it was quite early in the days of ICOs and token sales, and how did that all happen?
CW: That was definitely an interesting time, that was the beginning of 2017. Looking back I think it’s interesting that we were very conservative when it came to raising funds from the crowd, suppose you could say. One thing that we did implement back then was, we wanted to cap it, and not raise one of these huge ICOs. So, what we did is we implemented a mechanism that would let it run till as long as 24 hours after the first million Swiss Franc equivalent had been raised.
I think, all in all, it was a very exciting time in 2017 to be in the crypto market. That’s when the mainstream, the general public became very interested in cryptocurrencies and blockchain-enabled technologies.
NA: I got involved in early 2017 as well, it definitely was a very interesting time seeing that whole run. You have had experience in startups and I heard you had experience raising from VCs in Europe and VCs in the US. How different are VCs in Europe compared to VCs in the US?
CW: So I wouldn’t say there is a difference between Europe and the US. What I would say is there is a difference between the Bay Area and anywhere else in the US and Europe. What I would say is that in the Bay Area there is a lot more capital and investors are more aspirational, meaning they are going for these moonshot projects. Things that can potentially grow extremely big. On the other side, investors in the East Coast in the US as well as Europe, are a bit more business focussed. So they care a lot more about how are we going to get this off the ground, how is this going to be a profitable business at some point, what are the growth rates, what are the KPIs, I’d say those are the main differences that I see and the two main groups of investors that I talk to.
NA: Very interesting that the major difference is the Bay Area compared to everywhere else. You mentioned you started angel investing in 2014, what led you to angel investing and what was your first investment?
CW: What led me to it was my curiosity to learn about how to build young startups and create an environment with process and systems that can make them successful early on. Instead of learning about that process and set up one by one by founding a startup, growing it, either succeeding or failing and then moving on to the next one, I thought it would be more interesting to be involved with different startups at the same time. That is why I started angel investing.
My first investment is an eCommerce company here in Switzerland that sells sex toys online with the vision that everyone should be able to live up to their full sexual potential. So, it’s a website that is aimed at couples and women. Very mainstream, fun and educational about anything that has to do with sex toys and sexuality in general.
NA: I imagine not a lot of people would start off investing in that space. What changes did you notice in crypto and blockchain companies over time that led you to start investing in the space after not investing in it initially?
CW: What we have seen is that leading up to 2017 there’s been a lot of aspirational projects, a lot of foundation projects, a lot of protocols. I think 2016 is when I first met a lot of projects that I felt had a good chance of becoming real businesses. They were a lot closer to reality than a lot of the other speculative businesses that I have seen before. In 2017 with hype, brought a lot of scams and overestimates and a lot of not so serious founders into space. When the prices dropped in 2018 I felt the whole space matured quite a bit.
In 2017 from where I stand, I see that as the year of stablecoins, there is a lot of protocols and base layers designed to provide stablecoins with less volatile assets on blockchain. I think every year had its theme and general movement or direction. I think for me the turning point was in 2016 when there were a lot more serious approaches, in 2017 I think there was too much noise, 2018 and later is when it got very interesting again to speak to DeFi apps and founders of companies that really identified a niche problem and something that can come to the market within the next couple of years.
NA: Yes, I imagine that 2018 onwards would be where a lot more serious business could be identified. You seem to have quite an interest in remote work, according to you what is the best way to hire remote team members and what is your favourite interview question?
CW: So because you have access to a much larger talent pool when you hire remotely, meaning you can basically hire from anywhere, or at least a few different timezones. One of the things we do in the job briefing that we put out is we add a tripwire. The tripwire is one sentence at the end of the briefing. The briefing is about two pages, it takes you about five to seven minutes to read, and at the end of that we say “Hey, if you are really interested in this job then start your application with exactly this sentence: Hey Cedric, I am the marketing rockstar you’re looking for.”
We have seen that 10–15% of people that apply get it right. So roughly 90% of people do not have the patience or are not diligent enough to read that briefing from start to finish. So, that’s been a huge help. Its not an interview question but that’s the one thing that has really helped efficiently process applicants for us. I have a longer blog post on my website where I describe the steps. We do a step with Google Forms, where we evaluate a persons ability to communicate because in a remote team we think that independent from the role that you are taking, one of the key things you need to be good at is communicating proactively, so that’s how we assess that. The third test is a test task because I believe that working together on a small well-defined problem tells you a lot more than past experience on your resume. Then we do reference calls, and then we get on a call. On that call, I don’t have one go-to question because a lot of the key qualities we try to check for in the process before this. During that call, I want to understand what the person is excited about. How does the company’s mission overlap with the person’s personal desires and passions?
NA: That tripwire is a really interesting method, and I see how you would filter out a lot of people with that. What changes do you see COVID19 accelerating in the venture and startup environment?
CW: I think one development that is pretty clear is that lots of people have now gotten the taste of what it means to work from home or work remotely for the first time. Even in pretty conservative, well-established corporates, if they haven’t worked remotely before, pretty much everyone has now and has gained some experience. From what I am personally hearing most people have had a pretty positive experience, communicating and working remotely with each other. I believe that’s definitely something that is going to stick, I think there is going to be a lot more work from home policies, there is going to be lot more opportunities to work from anywhere. And of course, in the startup world a lot of startups, even if they had a remote work policy before, it’s probably cemented now.
NA: I agree that is definitely something which has accelerated. What emerging technologies are you most excited about, apart from blockchain?
CW: So apart from decentralised finance/blockchain I would say I am very excited about productivity. I think productivity tools are still something that hasn’t been figured out. There’s huge companies, Asana, Trello, Atlassian and more than a handful more, but still, I feel there are so many areas where machines should be configured to make us more productive and not take our time but help us make more out of our time. I think there are still so many products we are going to see in the next few years to help us be fully operational and efficient even in a remote setup, where we have nothing but our laptops and phones.
NA: Is there a productivity tool that you just couldn’t do without?
CW: Well I’m biased because I started a company called SendTask, and SendTask is a productivity tool that allows you to share tasks as easily as you can send an email. So that’s definitely one I use a ton. Other than that, I would say Zoom is one that I use many times daily, other ones would be WhatsApp, Missive. Missive might be one that your audience has not heard yet. Missive is an email client that allows you to collaboratively share and work on emails. It’s something we use in our team to share deal flow, discuss it, prepare proofreads for each other. That has been a huge productivity booster for us.
NA: That’s interesting, I haven’t heard of Missive either. Finally, what is the latest publicly announced investment you have made and why?
CW: We just invested in Lano.io. Lano is a dashboard for all your freelancers. So Lano is a software that allows you to manage your freelance workforce and takes care of all the regulatory and payment hurdles that you would otherwise encounter. Let’s say someone is in a country with a different currency to where you are headquartered, Lano takes care of that. They also make sure that the person provides all the documentation to make sure that they are a freelancer, and you as a company are not liable for their Social Security and other taxes that you might have to pay.
We invested in them because obviously, we think that in the future there are going to be a lot more freelancers and companies will get used to working with a more distributed and more freelancer based workforce and Lano fits right into that vision.
NA: I appreciate your time and it was great to get an understanding of how you will be investing with Tomahawk.VC.
CW: Thanks for having me. It was a very interesting chat!
