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A look inside VCs’ tech secrets

Protocol Pipeline

Hello and welcome to Pipeline. This week: $SEQUOIA’s new motto, the tools VC use for their jobs and whether 1,000 Y Combinator companies means YC is thriving or it’s the end of times.

The tech VCs use to invest in tech

The tools of a venture capitalist used to be a notebook, a rolodex and an expense card. Now the industry that invests in tech has gotten its own tech upgrade as I wrote for Protocol this week.

Here’s a peek inside the tech stacks at some firms:

  • Addie Lerner, Avid Ventures: Lerner automatically tracks all her connections in Affinity, a CRM service beloved by the venture industry that acts like a deal tracker and measures the strength of relationships. Other favorites include Superhuman for email, Zoom for video, Slack for board chats, WhatsApp groups with founders and LinkedIn for sourcing and diligence.
  • Alexis Ohanian, Seven Seven Six: He launched his fund with the idea that it was a startup built to deploy venture capital. His entire team works inside Cerebro (a deliberate nod to the "X-Men" series). The software allows Seven Seven Six to search their networks and help make connections for founders. Everything is tracked, from interview notes and deal memos to the number of introductions made, and shown in a timeline so the firm’s employees have an idea how they’re spending the time. The added bonus is that the firm also has the receipts to show founders they’re actually doing the work when it comes to helping a portfolio company.
  • Dale Chang, Scale Venture Partners: After repeatedly crashing his computer trying to build benchmarking sets in Excel, his firm built out Scale Studio to help its partners and its portfolio benchmark a startup’s progress across the industry. Now it’s also a marketing tool for the firm, with a simplified version available to all startup founders. It still buys software too, including tools like Zoom, PitchBook and both Affinity and Salesforce.
  • Jules Maltz, IVP: Inspired by “Minority Report,” the firm built an Early Detection System that spits out “red alert companies” so the partners know which companies they can’t miss. Feeding into the system are a bunch of data sources, including Second Measure, GitHub, Clearbit, LinkedIn and two of its investments, App Annie and G2. “Twenty years ago, that signal was a lunch with another VC and you'd ask him or her, ‘What are your best companies?’ That doesn't scale, and obviously is no longer how the industry works, so we now use technology to help us get those same signals about what's growing quickly,” Maltz said.

Venture-as-a-service is probably not a trillion-dollar market, but don’t count out venture firms as a growing customer class. “Especially as venture firms grow, and especially as having access to data and speed and efficiency become competitive advantages, I do think that there will be more demand and budget for buying additional products,” Avid’s Lerner said.

Have your own favorite tools? Email me at biz@protocol.com with what your tech stack looks like and I’ll try to include some tips in future Pipeline issues.

Overheard

“My work calendar and to-do list are startled to hear this.” Marc Andreessen clearly disagreed with a Bloomberg report on how the founders are supposedly starting to slowly step back from their firm. “I am happy to hear that Bloomberg Business week thinks running a 300 person firm, sitting on 11 boards and working 80 hours/week is light work,” Ben Horowitz shot back. “Those people must work really hard!”

RIP Y Combinator? The idea of Y Combinator moving to 1,000 companies a batch has some predicting the incubator’s demise. Unless you’re on the side that argues it’s thriving and there’s never such a thing as too much startup capital.

Sequoia’s new tagline? “We help the daring build legendary DAOs from idea to token airdrops.” Beyond a website refresh this week, $SEQUOIA had some fun updating its Twitter to cater to the crypto crowd.

#siliconvalleyproblems: When you get a redwood seedling from Laurene Powell Jobs and don’t know what to do with it, you hide it in a drawer and fear receiving another one. I guess it’s Christmastime in Silicon Valley.

“2022 will be the year that we burn $25b in VC funding to decide which company can get groceries delivered to your house in 8 minutes vs 10 minutes,” tweeted Laskie founder Chris Bakke. I’m ready for “Delivery Wars: The Sequel.”

A MESSAGE FROM FIREWALL

This month, Bradley Tusk is hosting a special podcast series focused on understanding the changes happening in six key industries: finance, health, media, climate, transportation and gaming. Each episode Bradley interviews a leading expert to discuss the pandemic's impact on each industry and offer predictions for 2022 and beyond.

Learn more

Inside track

I’m not much for future prognostications, but Benedict Evans’ presentation on the future is one I always pay attention to.

Crypto is one of a16z’s largest funds, and the needs of its founders are very different than what an enterprise startup needs, says a16z’s Katie Haun in a must-read interview into how she’s viewing the crypto world.

What if instead of everyone resigning from their jobs, they were leaving to start new things? Fred Wilson predicts that this era might actually be the Great Formation and not the Great Resignation.

Need to know

RIP Tyson Clark. A former naval submarine officer, the GV partner is remembered for his generosity and kindness. He died at age 43 from sudden complications with a health issue, the firm said.

VC-backed IPOs are underperforming, at least compared to the S&P 500 this year. HashiCorp had a good week though after it went public at a $15 billion valuation.

That could’ve gone Better. After laying off 900 people in a terrible Zoom call and losing a string of execs, Better.com’s CEO Vishal Garg is now also “taking time off.” It’s probably not good to call one of your top investors “sewage.”

Should VCs personally invest in startups? It’s complicated, as Bloomberg showed in a story on the ethical minefield when it comes to personal vs. professional investing.

New fund watch alerts: Twilio is joining the CVC game with a $50 million fund. Freestyle VC founder Josh Felser and former Lyft CSO Raj Kapoor teamed up on Climactic.

This week in Theranos: What Elizabeth Holmes didn’t say is becoming just as important as what she did. Stay tuned for closing arguments next week.

On Protocol: It’s now a race to under 15-minute delivery.

Also on Protocol: This DAO wants to buy an NBA team. It’s a long shot.

Your weekend reading: Maybe try one of these 10 books to rehabilitate the tech doomer in your life.

Five questions with … DFJ Growth’s Jocelyn Kinsey

Jocelyn Kinsey joined DFJ in 2014 from JP Morgan’s Alternative Investment group. She’s been involved in the firm’s investments in companies like Ring, Giphy, Mapbox, Splice, Collective Health and Patreon.

What is the biggest issue that your partners are thinking or talking about at your Monday partner meeting?

We talk a lot about what the next 10-plus years will look like — where are the next big leaps in innovation. People often think of growth investors as momentum chasers, but we take a thematic approach and view ourselves as futurists with a growth lens. People thought we were crazy when we invested in electric vehicles, space launch and crypto as one of the first growth investors. Three areas where we see the biggest potential over the next decade are blockchain/crypto, climate tech and health and life tech.

What was your first job, and what’s a skill you still use from it?

My first job was as a summer research intern at the IU Cancer Center. The researchers were very happy to have me as I took over all the daily mouse blood draws (their version of the intern getting the coffee). After eight weeks, I learned that I am way too extroverted to be alone in a lab, but came away with so much respect for scientific research and the potential it unlocks. This experience planted the seed for investing at the intersection of tech and life sciences, which is a focus of mine today.

What product or service are you totally, even irrationally, loyal to?

I am obsessed with Archer & Olive dot grid notebooks and live by the bullet journaling method. They are so beautifully crafted that I am motivated to journal daily. I track everything — to-dos and priorities, random insights, health and habits, gratitude journaling. It helps me organize my thoughts and is great for brainstorming when forming a thesis on a market or a company. The best part is looking back on old journals and seeing where I was right or wrong.

What’s a piece of advice you were given that you’re glad you ignored?

My husband and I got engaged shortly before lockdown in 2020. So many friends and family said to wait until COVID was over and “have a big wedding.” My husband is in the military and was deploying to Afghanistan, so we decided last-minute to elope, just the two of us. We planned everything in 48 hours — the venue, dress, photographer — and it was magical. I wouldn’t have changed a thing.

What’s your favorite question to ask a growth-stage founder?

I love asking a founder about their master “everything goes right” plan — their vision beyond the current business. As a growth investor, we’re investing in a business that has been validated and scaling quickly. That’s where most of our diligence is. But nothing beats a founder’s enthusiasm when they’re mapping out their grand vision and seeing into the future.

A MESSAGE FROM FIREWALL

This month, Bradley Tusk is hosting a special podcast series focused on understanding the changes happening in six key industries: finance, health, media, climate, transportation and gaming. Each episode Bradley interviews a leading expert to discuss the pandemic's impact on each industry and offer predictions for 2022 and beyond.

Learn more

Thanks for reading this week’s Protocol Pipeline. Send story tips and newsletter feedback to biz@protocol.com.

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