My guest today is John Zeratsky who is a co-founder and general partner at the VC firm Character. In this episode, we discuss the following: - John Zeratsky Bio - Why start a venture capital firm as a designer - Why start your own venture capital firm compared to joining an existing one - How does Character decide which companies to invest in - How to avoid FOMO when working in venture capital - Unplugging from work - How to deal with missing out on investing in a unicorn startup - Risk associated with investing in early stage venture - Dealing with pressure of managing other people's money as a venture capitalist - You don't have to go to Harvard Business School to learn about business - Limited Partner composition for Character - Hardest thing about startup investing - Leaving San Francisco and rise of remote work - How to get in touch with John Zeratsky For show notes, guest bio, and more, please visit: www.designmba.show
John Zeratsky is a co-founder and general partner at Character, bestselling author of Sprint and Make Time, and former design partner at GV. Previously, John was a design leader for YouTube, Google Ads, and FeedBurner, which was acquired by Google in 2007.
ARE YOU A FOUNDER LOOKING TO PARTNER WITH A DESIGN FOCUSED VC FIRM?
Check out Character - https://www.character.vc/
CONNECT WITH JOHN ZERATSKY
CONNECT WITH ME
Namaste and welcome. I am Jayneil Dalal and you are listening to the design MBA which is a real-life MBA program for designers. You will learn how to launch a side hustle and level up your design careers from the interviews rock star designers.
Jayneil Dalal: Today's amazing guest is John Zeratsky who's a co-founder and general partner at the venture capital firm Character. He's also the best-selling author of Sprint and Make Time and former design partner at Google Ventures. Previously, John was a design leader for YouTube, Google Ads and FeedBurner which was acquired by Google in 2007.
John, it's truly an honor to have you on the show. Welcome.
John Zeratsky: Thank you for having me. Looking forward to this.
Jayneil: I know, right? You just got a very chill, very calm vibe as if you just came out from a meditation session.
John: That's really good to hear because it's been kind of a crazy day.
Jayneil: Well, I’ll make sure not to make it even more crazy.
John: Yeah, I don't expect this to be a real source of stress or anxiety.
Jayneil: Absolutely. All the stress is on me.
John: Yeah, right. Exactly, yeah. As long as I don't say anything I regret.
Jayneil: Absolutely. You worked for a long time at Google, right? Then you also worked in Google Ventures. So, you consulted with so many startups. And then what's amazing is that after that you took some time off like literally unplugging to figure out just, I guess, life, what to do next. And I’m kind of interested like after that phase, what made you come back into a venture capital firm or just come back into the venture capital world and especially start your own VC firm as a designer?
John: Yeah. Nothing made me do it and it wasn't like I was struck by lightning and had some moment where I thought “Oh my god! I have to do this.” It was pretty gradual and, honestly, it was unplanned. I’ve never made grand plans for my career or my life. I usually try to create a really interesting context or set of possibilities around me. I like to see what happens, see what opportunities arise and then, hopefully, be just smart enough and just fast enough to seize the ones that are really good but basically what happened is my wife and I took some time off, about 18 months in total, without really doing too much work. I mean, I love working on stuff. So, I always had projects going on but for the most part not focused on professional work. Then as we wrapped up that sabbatical, I just got pulled into lots of different stuff. There were requests from startups to advise or to consult or to invest. There were large companies, corporations that wanted me to come in and either run sprints with them, design sprints or teach them how to do design sprints. I had written this book with Jake Knapp about time and energy and attention called Make Time. And so, I had some people interested in learning about that but I found that after about a year of doing that that it just wasn't as satisfying as I had hoped and specifically, I missed the alignment and the incentives and the long-term nature of venture capital. So, when you invest in a company, you're connected. It's not buying a stock where if you change your mind, you can sell it. It's hard to get out of an investment. So, you have to be really sure. And then the way that the investment is structured and the way that VC firms are structured, incentives for the most part are pretty well aligned. There are not a lot of shortcuts or hacks to juice the numbers. You just really can't do that stuff. So, it encourages, I think, this really long-term view of working closely together of helping companies be successful to hopefully create value for everybody. So, I’d had a really great experience with Google Ventures. This was late 2019, early 2020. I just kind of missed that stuff. And so, when my friend Eli Blee-Goldman approached me about this idea of starting a firm together, I was pretty interested, I was pretty open to it and honestly didn't even really look around, I didn't think about joining another firm.
Jayneil: Yeah, I was about to ask you that. Why start your own firm? I mean, you could have tried or go the route of just joining an established name brand.
John: Totally.
Jayneil: What is so fascinating about having your own firm? Is it an ownership mentality, kind of does that play in there?
John: It does although one of the great things about VC firms is that pretty much everybody is an owner, everybody who works there. And I was an owner, I had equity, I had ownership at Google Ventures as well. So, I felt that way there but I think the key thing was that we knew from pretty early on in talking about starting our firm Character that we wanted to not just have design as a value-add but really to base the entire strategy of the firm around the Design Sprint, the sprint method that we created at GV. And I didn't see a path to doing that unless we were doing our own thing. I had been a design partner at GV for six years and had been there basically like Braden Coates was the first design partner at a VC firm anywhere … I joined as the second one. Then Jake joined us. And then over the years, there have been other firms that have had design partners. There's been other design-oriented VC firms. And so, I’ve talked to a lot of people who have been in those types of roles and explored those types of roles. And there's like … it's very, very hard to find like a DNA level fit because a lot of VCs, they don't know what to do with design like it's just not … they're not cut from the same cloth. And so, I think, probably in the back of my mind was just sort of a recognition that it was going to be really, really hard to go and join a pre-existing firm and create sort of a relationship and a structure that would be as aligned as I wanted it to be. And so, I think, the calculus was sort of like “If that's going to be really hard, why don't I do this other really hard thing and start my own firm and just be able to like set it up exactly the way I want to?” So, again, it wasn't 100% conscious. It's not like I made this map of all the options.
Jayneil: Your vision board and like …
John: Yeah, exactly right, but I think those were some of the considerations that led to the decision.
Jayneil: And now, you and Eli are the main partners of the firm, right? You got two of you at the helm. Now, what happens if you or Eli like a startup or a company but then your partner doesn't it? So, is there a tiebreaker vote? Is it just like “Oh, 50% of the capital, you get to decide where to put your 50%.” How do you figure that out?
John:So, the way that we operate is that we have to be unanimous because we're too small, we're too new to have these bifurcations, I think. At a bigger firm, you can have certain deals that are led by certain partners and other deals led by other partners and it’s kind of okay because a lot of firms, especially more traditional firms and larger firms, they don't operate as teams so much as they operate as sort of a collection of individual partners who are kind of all running their own businesses, their own practices but we're not set up that way and I don't think we should be and I don't think we want to be. So, yeah, it has to be unanimous. And in fact, the way that we sort of internally do our process is we have all these checkpoints built in. So, one of us meets with the company first, we use kind of this structured scorecard to record our evaluations of the company and then we make a recommendation for the other partner to meet and then he does the same thing and then he makes a recommendation to move forward and then we both meet with hopefully multiple of the co-founding team from the startup together and we do this evaluation again. So, we kind of have these checkpoints built in so that we don't get really far down the road where like I’ve been spending three months talking with this entrepreneur sort of building a case, pitching us and then the last second Eli says “Nope, I don't want to do it.” We don't want to be in that situation. We want to be very collaborative. And then we also … it's just the two of us as the full-time the general partners but we have a third co-founder who's Jake Knapp and we do have a couple of other advisors working with us. And Jake, he's like our fresh perspective and like our fresh eyes. So, on several occasions, when we're feeling a little bit at odds with each other or just conflicted on what we want to do, we'll bring in Jake and it's like turning on the floodlight and just shining light. It just gets so much clearer to have him come in with a fresh perspective and we both, obviously, trust him a ton and I’ve worked with him for many years.
Jayneil:He’s amazing.
John:Yeah. So, that's kind of like the secret sauce or the tie breaker if we do need a third voice.
Jayneil: So, I’m going to paint a scenario for you, maybe it happens, maybe it doesn't happen, but you are on a lovely date with your wife, you're enjoying the evening and boom, an email comes through on your phone or a call comes through, a text, whatever that might be. And this could be a founder involved in a hot funding round. Everyone's trying to get a piece of that startup. Now, you had planned this. And mind you, you also wrote a book on productivity, the bestseller. One, so I’m kind of wondering how much of that advice is applicable in the field like yours where it seems from the outside that FOMO drives a lot of things. So, how do you tackle that kind of situation?
John: That is a really good question. And there's a lot … there are many answers. There are a lot of details within the answer to that question. I’ll start with the really tactical ones. I don't have email on my phone. So, I wouldn't see an email on my phone. I get texts from founders from time to time but I think that that's not a game that we want to play, making those quick last-second decisions. I think that founders who are a bit more measured and a bit more thoughtful tend to be drawn to us and vice versa. So, I have to say it's very rare that those types of crazy things pop up and certainly not in the evening. Again, on occasion, sure, yeah, I hear from a founder, they want to jump on the phone real quick, but I’ll respond quickly and say “Hey, can we chat about this tomorrow? I’ll give you call when we get home” or whatever. It's usually not an issue. I think that the sort of shift from being really focused on deep work, on focused work, on creative output to now being in a role where a lot of the work is really administrative in nature, it's emails and calls and meetings and stuff like that, it's been an interesting challenge for me. And I think that in writing Make Time and then sort of developing that framework, honestly, I was probably a little bit dismissive of more administrative work because I think I failed to recognize that in many roles, what looks like sort of this shallow low-value work, responding to emails, is actually the work, right? If you're building a relationship with somebody, if you're supporting them, if you're giving them feedback, if you're getting to know them, being on calls and being in in messaging and emails, that is the work.
Jayneil: You can't outsource it.
John: Yeah, exactly. You can't outsource it. You can't streamline it. You can't efficient it away because then you're not doing it. And also, I think have come to really recognize that speed, it's not a differentiator because I think it's easily copiable but it's a very simple way to express to somebody that they are important to you. And so, if anybody's listening to this and I haven't responded to your email quickly, it doesn't mean you're not important to me, but if a founder reaches out … let's say it's somebody that I’ve worked with for years, somebody that I’ve known since early days at Google or whatever and they say “Hey, it's been a while since we chatted. You know, I’m working on this new thing. I’d love to catch up,” I think it makes a difference whether I respond in three hours versus three days. I think it sends a different message to that person. So, all of that is to say that I have absolutely continued to use the framework in Make Time, specifically being very deliberate about when and where and how I engage in different types of information feeds and different activities, having blocks of time for reviewing companies and new opportunities, having blocks of time for email but also not completely giving in to the FOMO and not completely giving in to the sort of fast twitch responsive nature because at the same time, there are a lot of parts of this job that are creative. Certainly, when I’m working with portfolio companies, running Sprints with them, that's totally creative but even writing a newsletter for our LPs or working on our website or doing an announcement post about an investment that we make, I mean, that's all stuff that's … it's fun, it's good, it's real creative work that requires focus. So, the balance of time is a little bit different than when I was working as a designer.
Jayneil: A normal job. And that's why I asked you that question because when you are working a normal job like 9 to 5, after 7 o'clock in the evening or 5 o'clock, you turn off everything, you're with your family, you're just zoned off. And here, I’m just trying to figure out do you get to unplug or not or is it just always continuously just like …
John: No, I get to unplug. And one of the nice things is I can push as hard as I want like I can go as fast as I want but I can also slow it down. There are external forces. There are people who are asking things or want things or telling us things but, I guess, it's another advantage of running our own firm is we get to set the pace and there are definitely times when we push really hard and we work a lot and we are responsive into later hours but there are other times when we're not. I mean, this week I had my first cold since before COVID and it hit me pretty hard and I was able to reschedule stuff and push stuff back and really focus on rest. So …
Jayneil: In fact, you're doing better now.
John: Yeah, thanks. Yeah, I recovered just in time for this interview. So, you're getting not quite a 100% version of me but at least 80%, 85% version.
Jayneil: The interesting thing here is that my brother works in finance and me and him talk a lot about managing money and the responsibility that comes with it. And I’ve heard that a lot of VCs have some … they call the anti-portfolio, like companies for whatever reason, they said no to and those companies went on to become like huge billion-dollar startups sometimes. How do you deal with that fact that you're a human being after all? Despite your best judgment and all the processes, you could say no to a company and that company goes on to become really big. How do you come to peace with that?
John: It's still something I’m trying to figure out. I think the two hardest things about this job are saying no to founders that are great that I like, I like their business, and the second thing is FOMO, dealing with it. And the one thing … there's a couple things, a couple things that help me deal with it. And, again, it's not solved. It's an ongoing battle but one is just the recognition that we can still be really successful and miss some big companies. There are so many companies being created in the world. You look at the number of unicorns that exist today versus 10 years ago, I don't even know what … there are a thousand of them at least, there's so many of them whereas there used to be like 10 or whatever. So, think about what that's going to be in five years, 10 years from now when this first fund is, our first Character Fund One is sort of wrapping up. And the way we've constructed our portfolio is to invest in about 20 companies, right? So, we don't need to fund …
Jayneil: Per year.
John: No, no, no, period. Out of this fund, 20 companies, yeah.
Jayneil: Okay.
John: So, roughly like six per year over the next three years, six, seven. So, we don't need to find all the best companies or all the hottest companies. We need to find about 20 really, really amazing companies. And so, knowing that gives me some comfort. And the other thing that gives me comfort is that core to our strategy, our edge is that we run design sprints with every company that we invest in, right? We actually … we spend time together, we work together hand in hand helping them solve their biggest scariest challenges on product and go to market and figuring out what they're building. And in order to do that, in order to be able to deliver on that promise and maintain that edge, we can’t invest in everything, we can't work with every company, there's just not time, but we also need to feel like … we need to feel a resonance with the team and with the problem that they're solving, with the opportunity, with the product that they're building again because if we invest in a whole bunch of companies, we're like “It seems like a cool company but we don't really … we're not that interested by what they're doing.” It's going to be hard for us to lean in and run those sprints and actually have the impact that we can have. So, again, it's the alignment. It's like I can say no to a company that I … even if I fear that I’m missing out on the next billion-dollar company, I can say no if I know that intuitively I don't want to spend the next five years thinking about that problem, whatever it might.
Jayneil: Yeah, I was going to say the personality alignment like I’m watching super pumped right now and I’m yeah what if you had a personality alignment issue? You're like “This person's not coachable.”
John: Yeah, totally. So, I think all those things would be very different if we were trying to invest in 200 companies or something like that but given our strategy, given our scale, we do have … I guess it's a luxury. We have the ability to be very choosy which means that it's easier to be okay with the ones that we said no to although … it definitely stings when already we're starting to see companies who we said no to or we had an opportunity to meet but we didn't and then we see that they raised a nice round you, a big markup from some really top-tier firm. Those are hard for sure, it stings for sure, but those are some of the ways that I try to process those feelings.
Jayneil: Wow! And a lot of these questions I’m asking you because I’m learning from you how to like deal with these emotions. I had my own small like my personal fund that I put into crypto NFT and stuff. And when you're dealing with money, it just has a very different level of feeling. For example, I’m trying to put myself in your shoes and maybe I’m not doing it correctly but one of the things I’m thinking about is your first fund, you've decided to invest only in 20 companies. And you do the best, you put your money in … it's illiquid, so once you put in, it will be some time before you can cash out. It's not a public market like “Hey, you put money in a certain stock and you just sell it and you get it right away the same day.” You can't do that. At the same time, once you put in the money and you try your best to help them, there's so many market forces, things that can happen, competitors will come up, things will happen that are not really within your control. So, you made the best judgment call but then something happens out of your control and things don't go as planned. So, I’m trying to figure out how do you also make peace with that because you did the best you could but then it's like there's a lot of things that you can't control.
John: Yeah. I think that's true of life in general. That's true certainly of investing in general. That could happen with a stock. That could help happen with a token, a crypto token. There are always … there's always the category of things you can control and the category of things that you can't. And the things that you can't control, that category is way bigger. So, we try to focus on what we can control and we try to focus on the insights that we can generate primarily from running sprints with startups and using that to inform our decision on whether to put more money in, whether to double down, whether to continue investing but also, early stage venture is risky.
Jayneil: Yes.
John: You have the potential to make a lot of money because you're taking a lot of risk. And I understand that. It's a small part of my personal investment portfolio. It's not like I have all my net worth riding on this one fund. And our LPs understand that. It's a part of … venture investing serves a very specific purpose in investment portfolios, which is to provide this low volatility and low liquidity, obviously, but low volatility, high risk, high reward segment. It's a counterbalance or it's a diversifier against other asset classes that have different purposes and different advantages. So, I think where people get in trouble is when they get too far in or they have too much money exposed but it's sort of the nature of the game, I think.
Jayneil: Yeah, it seems to me that when I’m talking to you, you're, I wouldn't say the word at peace, but you're very comfortable managing other people's money. I’ve never had to manage other people's money but when you manage other people's money, they have an expectation that “Well, we gave you 60 million. We hope that you make it 10X or we want some kind of multiple on it.” And I’m just trying to wonder that John's lying in bed, it's 9 o'clock and I’m just wondering does it come to your mind like “Oh my god! I got to return them this multiple. How am I going to make the investors happy or the LPs happy?” Do you have those thoughts or you just found a way to deal with them in some way?
John: Yeah, I have those thoughts for sure. I think the responsibility, it's ever present, it's very real but, again, venture capital is a very specific asset class where we're not reporting out real-time returns, we're not reporting net asset value every month or every quarter. It's that there is this … there's an expectation that it's going to be a long time before you see returns, before you see results. I think, even though … you could look at it the other way it. It really helps that I have my own money invested in the fund and my own time, perhaps more valuable, invested in the fund, I don't think maybe as much about the LPs and certainly there's a big responsibility there but I think I’m motivated by the fact that I have skin in the game and that I don't want to lose their money or fail to return their money but I certainly don't want to fail to return my own money.
Jayneil: Yes.
John: That's also a huge deal. And I think that the potential pain of that is maybe greater, maybe more. So, I think that helps a little bit but we also do a lot of … we're very particular about the amounts that we invest into companies. We do a lot of kind of scenario planning around what do we think this company can be worth, we look at other companies similar to it, what are they worth. We try to operate so that every investment that we make could return the fund on its own. And so, I think that we are practicing a somewhat conservative form of … we're being somewhat conservative and measured about how we invest our LPs’ money even though we're doing it within a very risky type of investing. And whether or not that actually helps, check back with me in five to seven years, but we sort of … again, because we have our own skin in the game, we're kind of doing the things that we would want to do if it was all our own money, the things that give us the comfort and the confidence to be able to sleep at night. Those are the decisions that … those are the factors and the steps that we try to bake into every decision that we make.
Jayneil: I just want to let that I never went to Harvard Business School, nor do I think I’m going to go but this is the closest I’ve gone to an MBA literally from your mouth like you're just walking me through just the things, what goes behind running a fund and it's just very fascinating to me to just learn about this.
John: Well, I didn't go to … I didn't get an MBA either and I didn't go to Harvard. I went to the University of Wisconsin. I studied Journalism. I’ve learned about business through talking to people, reading books, reading articles, papers. And I’ve been an investor myself basically since I had money to invest, which was a couple years after graduating from college, so 15 years ago now. And yeah, just … I’m sure there's probably some finance people listening to this who are just shaking their heads like “What's wrong with these guys?” but yeah, I’ve definitely taken a very much applied practical intuitive approach to learning this stuff. And my co-founder and partner Eli, he also didn't go to business school but he's been in sort of the world of traditional venture capital for his whole career. He was a Math major in college. So, he's that kind of brain and he's taught me so much. I mean, he's taught me a ton about all the stuff I’m saying, I mean, about portfolio construction and how to decide how much to invest and planning out scenarios and all that kind of stuff.
Jayneil: You mentioned earlier on that, all the startups that you consult with and invest in, you kind of run them through the design sprint methodology that you co-created. I’m wondering during the fundraising journey, did you proactively seek out LPs or people who are going to put money in the fund that understood a little bit of design, what the design sprint methodology is because then they get it like “Hey, this is a value-added differentiator versus” it was like “Ah, doesn't matter. They've got a big check.” Was there a balance between that or you proactively wanted to get design specific LPs or maybe designers themselves?
John: There was a blend. A good chunk of our LPs, some of them are designers, some of them are design sprint fans, they know about the book and the method and sort of the community around it, they know about the work that we did at GV. Many of them were founders or employees of GV companies and we've run design sprints together before but a lot of them are not. A lot of them are purely financial investors. In fact, I’m sitting here at my house in Milwaukee, Wisconsin, which is where I live. So, I left San Francisco five years ago. And a lot of our LPs work in the financial field. They are investors, fund managers, things like that here in the Midwest. And so, they're financially driven. They're also really just curious people who want to learn and they love being exposed both financially and just intellectually to interesting companies and ideas. So, it's not purely financial for them but they're not design people, they're not product people, they're not even tech startup people. So, for them there was a different … the process of kind of pitching them and getting to know them and bringing them into the fund was very different but I think the thing that all of our LPs understand that I think anybody who's investing in startups or investing in funds needs to understand is that the hardest thing about startup investing is seeing companies and then getting access to invest in them because the best companies, they have more investor interest than they know what to do with, right? It's so weird. It’s like if there were 100 startups in the world, 99 of them, they need to raise money from anybody just to keep the lights on to keep going but one, the top one has the exact opposite problem. They have all the investors in the world lining up to give them money and they're trying to decide who do they want to partner with, who do they want to take money from. So, a) you have to be able to see those 100 companies and you just have the opportunity to evaluate them because there's no list of all the stocks, it's not like the stock market and then b) if you want to actually make that investment, there needs to be a reason for them to choose you. And so, people who invest in VC, they understand that access is super, super important. You could make the smartest decisions ever, you could be the smartest investor ever, but if the entrepreneur doesn't want your money, it doesn't matter. And so, even though they may not deeply understand design, the design sprint, they understand … and we have a track record, we have evidence that our approach to supporting startups gives us an edge, it gives us the ability to earn that access to invest, earn that ability to invest in a company and I think that's the thing that they recognize, which is most important in their decision to invest in us.
Jayneil: You mentioned that you, and I love the analogy about the access and you can spot the best company that's going to be big but you can't invest and it doesn't matter …
John: Yeah, you can't just call them up and be like “Hey, I want to write you a check.”
Jayneil: But at the same time, you mentioned that you moved away from San Francisco. And I was talking to … I was at South by Southwest just by random luck or whatever, I ended up hanging out with a bunch of VCs and one VC told me about this kind of poker tournament that happens in the Bay Area that they used to go to or still go to and a lot of the big shots used to come to that. So, now that you're not in the Bay Area, do you feel you're missing out on those impromptu connections or growing your network or, I guess, maybe because of the pandemic everybody being open to remote collaboration or jumping on a Zoom call you think it doesn't matter for you now?
John: I’m not going to say it doesn't matter but I think it matters way less than it did when I left San Francisco five years ago. I think even before the pandemic, just the culture of work was changing. I think the startup ecosystem in the United States and around the world was changing. It was becoming much more diverse, much more distributed. And then, obviously, the pandemic just blew the doors off. So, I’m sure that at this very moment, there's a couple of investors sitting down for coffee in San Francisco and sharing tips and maybe if I was in that coffee shop, I’d know one of them and I’d ask what was going on and I’d learn something. No doubt. No doubt I’m missing out on things like that but I do think there's been a really meaningful shift in terms of people's interest and willingness to engage remotely but probably even more important than that for us is two other things. One is that we're sort of building off of a compounding base of existing relationships with founders. So, most of the investments that we've made have not come from other VCs. They've come because we already know the founder, we have a direct relationship. And if you think about in the years I was at Google Ventures, Jake and I, mostly the two of us together, we ran about 150 design sprints. And let's say that there were 10 people in every sprint. That's 1500 early startup employees. And every single one of those people could be a founder. And then think about all the people that they know, their first-degree connections where if they say “Hey, I’m raising money. Who should I talk to?”, we might be top of mind for them. And so, that's been one of the key ways that we've connected with founders is through those types of existing relationships that really were seeds that were planted over many years. And we're continuing to plant those seeds, right? Because somebody who was in a sprint with us at a GV company, they put us in touch with their friend and then we get to know them and then we invest in their company and then we run a sprint with that company and then there's 10 more people and then we fast forward five, seven years from now, each of those 10 people is going to be out doing something interesting. So, that's been … I think that's significant. And the other thing that's really significant, even more important than sort of the shift to remote is that we have we have the sprint brand. We have the book. We have all the other content out there, articles, videos, Miro templates. Jake is an advisor to Miro. So, he creates design sprint templates that get put into their gallery, their community. And so, we get a lot of people who reach out to us because they read the book because they are part of our … we have a Slack community for design sprint facilitators. And so, it basically feels like we know … or it feels like a lot of people know us even if we've never met because of sprint, because of that whole brand and community. So, that's another thing that transcends geography.
Jayneil: 100%. I’ve read your books and ever since I read those books, I’m like “Maybe one day, you know, we'll meet or chat” and then it's happening right now.
John: Yeah, exactly. Yeah, imagine if we had to wait until we bumped into each other at a coffee shop in San Francisco.
Jayneil: Oh my god!
John: It just would never happen.
Jayneil: No, I remember very early when I was talking to a VC and they just told me that “If you don't move to the Bay Area …” this is again a couple of years ago, even before the pandemic and they were like “If you don't move to the Bay Area, you can forget about the VC stuff.” And I get it. At that time, everybody that wanted to do anything with VC was going to the Bay Area and you kind of had to or they would tell me that you have to go the traditional route, go to business school and I don't want to do either one of them. I did try to come to the Bay Area but just … I don't know, I just didn't feel the vibe of the city, shouldn't say it up, but that's what I felt like and I’ve been in Dallas since then and I’m just doing all this thing remotely as much as possible, just going to those places, meeting people and coming back.
John: Well, I also think that in addition to founder, meaning an investor, there was also the … well, it still is to some extent, there's the talent side of it, right? There's the need to be in San Francisco, New York, Seattle, Los Angeles, Austin in order to be able to hire talent but now, it's actually the opposite. Now, if you only hired from one city, you'd be limiting yourself, right? Every single company that we've invested in so far has a remote team. People ask us like “Oh, where's that startup based?” It's like … I don't know, the internet. It's like the team is everywhere. I can tell you where the founders live but that's not where the company is based really. It's not like they're all showing up at the office together. And so, I think that's the other really important change is that the norm in the startup world at least has shifted from you hire geographically and people gather in an office every day to you hire remotely, people work together in a distributed way and it just gives you access to such an amazing talent pool that now you don't want to go back. Nobody wants to go back to only hiring the people who live within 20 miles of them.
Jayneil: Absolutely. I cannot … I think this is my first job where I’m remote 100%. Before this I didn’t do remote. And having done this for six months, I can tell you, John, I am not going back to a full-time office space model, maybe hybrid but definitely not the whole commute and stuff. How can potential future founders or design entrepreneurs, they're listening to the podcast and they're like “You know what? Maybe this is something I’m going to do. Maybe I want to get some funding or just want to pick your brain,” how can they find you or how can they get in touch with you?
John: Yeah, before I answer that question, I will say that if you're thinking about building something, you should get in touch. Don't wait until you're raising money. Don't wait until you're sort of in that fundraising process. We like to talk to founders early and I think a lot of our best investments so far have actually come from nurturing those relationships, having multiple conversations and really helping out, really coaching entrepreneurs on “Here's a prototype you can build. Here's a test you can run, an experiment you can do to validate some of the big hypotheses to answer some of those big questions that you have.” So, I would say don't wait until you're fundraising but probably the best way is just to go to Character.VC which is our website. One of our principles is to be not just okay with but to really encourage and love cold inbound. So, we have a really nice form where you can submit your info. We respond to every submission within two weeks. And you can also find me on Twitter. It's probably the best place. My handle is @Jazer. You can look me up on LinkedIn. I’m the only John Zeratsky on LinkedIn. I’m sure you'll include links in the show notes as well but yeah.
Jayneil: Thank you so much, John, for coming on the show. It's been a blast.
John: Yeah, thanks for having me. This is great.
If you made it this far, you are what I call a design MBA superfan. And I’ve got a gift for you, my superfan. Head over to designMBA.show where you will find my email address. Email me one thing you learned from this podcast episode and I will get on a 30-minute call with you and help you in your career goals.
See you in the next episode.