In this insightful conversation, host welcomes Mike Maples, founder and partner at Floodgate, a prominent seed investment firm with successful bets like Lyft, Twitch, and Twitter. Maples, a seasoned investor and Forbes Midas list regular, shares his venture philosophy, highlighting the importance of identifying and investing in startups based on breakthrough insights rather than current market trends. He emphasizes the critical 'why now' factor, asserting that true startup success often stems from technology inflections and adoption inflections, as seen with Lyft's ride-sharing model. Maples also discusses the challenges of excessive capital raising and the potential pitfalls of skipping essential developmental steps. Additionally, the conversation touches on the changing venture capital landscape, including the rise of operator and angel funds, the re-entry of multistage funds into seed investing, and the strategic importance of maintaining focus and resisting the fear of missing out (FOMO). Lastly, Maples introduces Common Stock, a social platform for verified stock trading insights, exemplifying the type of innovative, future-focused venture he champions.
"Mike Maples, founder and partner at Floodgate, one of the leading early stage firms of the last decade, with investments in the likes of Lyft, Twitch, Twitter, Okta and Sonos, to name a few."
This quote introduces Mike Maples and highlights his significant role in seed investing and the success of his firm, Floodgate.
"Mike's own incredible podcast starting greatness, that really is a must."
The quote emphasizes the quality of Mike Maples' podcast, which is recommended listening for insights into entrepreneurship and venture capital.
"Hello Sign is an effortless esignature solution used by millions to securely send and request legally valid digital signatures and agreements."
This quote describes the services provided by HelloSign, illustrating the importance of user experience in product success.
"I decided if I was going to be in venture, I needed to do it in California."
This quote explains Mike's strategic decision to move to California, a hub for venture capital and startups, to advance his career in the field.
"A startup isn't a company because it starts out dead and has to prove it's alive."
Mike Maples explains that a startup must achieve a series of breakthroughs to demonstrate its viability, distinguishing it from an established company.
"Insight development is about getting out of the present."
This quote highlights the forward-thinking nature of insight development, where entrepreneurs must envision the future to identify opportunities.
"If you invest a lot of money to grow before you're ready to grow, you'll waste your money."
Mike Maples warns that premature funding can lead to inefficient growth and hinder a startup's long-term success.
"You got to have an insight before you do customer development."
This quote emphasizes the sequential nature of startup development, where each phase builds upon the previous one.
"The product defined the market."
Mike Maples explains that in the context of startups, innovative products create new markets rather than entering existing ones.
"It's not investing in a business, because it's not a business yet."
This quote clarifies that seed investing focuses on the potential of an idea and the entrepreneur's vision for the future, rather than the present state of the business.
"And entrepreneurial and persuasive and technically deep is the founding team. And if you can get those things together in one place, usually it's a pretty good bet, even if you're not sure how the dots will connect in the future."
The quote highlights the importance of having a founding team that possesses a blend of entrepreneurial mindset, the ability to persuade stakeholders, and deep technical knowledge. These attributes together increase the likelihood of a startup's success.
"The first is sort of the why now? And it combines a few thoughts. So I like to say that almost every startup idea you can imagine has been tried before."
Mike Maples introduces the "why now?" question as a critical part of evaluating a startup's potential. It involves assessing why a particular idea is likely to succeed at the current time, as opposed to past attempts.
"The technology inflection was the GPS locators in smartphones were ten times more accurate with the iPhone three GS and beyond... The adoption inflection was, we believe that within a few years, you'll be able to assume that all riders and all potential drivers will have smartphones."
This quote explains that technological advancements and widespread adoption of new technologies (like smartphones with accurate GPS) were key factors that enabled the success of ride-sharing platforms.
"Well, the way I look at it is it's a good idea to calibrate an inflection... What I see in too many startups today is statements like, well, society's just changing and they're ready for this and they weren't before."
Mike Maples stresses the importance of identifying and measuring technological shifts rather than making vague statements about societal readiness. Successful startups often ride the wave of a technological inflection point.
"When we spoke before, you said, also when it came to kind of calibrating your own bet, to bet on a present improbable because time travelers see a mispriced potential future."
The quote introduces the idea of betting on outcomes that may seem improbable at present but have the potential to manifest in the future due to mispriced expectations.
"Yeah, and I think probably more often than not, an insight will be wrong. But I guess to me, the important thing is to get into the right frame of mind."
This quote recognizes that while insights may often be incorrect, the process of developing insights is important. Thinking beyond the present can lead to breakthroughs that others may not see.
"The first is that a lot of these plans that I see founders making right now, they ask questions like, should I increase my 2021 forecast by 30%? Should I drop it by 50%? How should I change my forecast?"
Mike Maples critiques the tendency to make overly specific long-term forecasts and suggests focusing on the immediate future, where predictions can be more accurate.
"We've seen every VC on Twitter bluntly say open for business. I've done three deals this week, term sheets going out, and then I speak to them behind the scenes and it's a different story."
The quote points out the contrast between what venture capitalists publicly claim about their investing activity and what is happening privately, indicating a potential mismatch in the perception of the funding market's liquidity.
"So we've just come out of a world where people raise money, assuming they can raise money again within twelve to 18 months in an upround, and the money would always be available. If you met certain milestones, that may be true, that may not be true on a go forward basis."
This quote highlights the shift in the VC funding landscape where the previous norm of readily available funds for startups meeting milestones is now uncertain.
"I found that the VC tweet stuff doesn't contribute to my understanding very much."
Mike Maples dismisses the influence of VC tweeting on his investment decisions, suggesting that actions behind the scenes are more indicative of true market movements.
"Generally, I like them, and so I try to do everything I can to be helpful."
Mike Maples expresses his support for the emergence of angel and operator funds, indicating a collaborative approach to ecosystem development.
"Usually I tend to believe that the best long term strategy is to be more focused and not less, and that if you're not positive you're focused, you're probably not."
Mike Maples suggests that a focused long-term strategy is more beneficial for investment firms, rather than diluting their efforts across too many areas.
"The thing that bugs me most is actually not that. It's like when I see greatness and didn't realize it."
Mike Maples shares that his FOMO stems from not recognizing potential in great companies rather than missing out on deals in general.
"I just think it was more of a match with my personality."
Mike Maples attributes his choice of maintaining a smaller fund size to a personal preference aligned with his investment philosophy.
"I think that you can win either way, right? I think either strategy works in series a."
This quote reflects Mike Maples' belief that both multistage and focused seed funds can be successful with the right strategy.
"Most of the work I do with founders I like to do outside of board meetings."
Mike Maples emphasizes the value of working with founders beyond formal board meetings to address key challenges and opportunities.
"What's your Herbie? What is the number one thing between us and strong product market fit?"
This quote highlights the need for startups to pinpoint the central problem hindering their progress towards product-market fit.
"I didn't really look at it as much, though as a marketing strategy. I mean, I hope we get positive attention for it."
The quote suggests that while the podcast was not initially a marketing strategy, positive attention from it is welcome.
"Whoever needs help now, you just try to do the best you can, and some are going to work out, some won't work out."
This quote reflects the pragmatic approach to supporting portfolio companies based on their immediate needs.
"It's really hard to know without some time who's made the best investments and who's not going to work out."
This quote conveys the difficulty in assessing the success of new fund managers without the perspective of time.
"Are we being proactive enough in thinking about original ideas that will help create great companies and really good returns?"
This quote questions the proactive nature of venture capital firms in generating original and successful investment ideas.
"It's gotten a little bit too self promotional, I think."
This quote reflects Maples' view that the venture landscape is becoming overly focused on personal branding.
"I would say that Bill Gurley at benchmark was impressive on the demand force board."
This quote signifies Maples' respect for Bill Gurley's performance on a specific company board.
"What they are is a social platform for people to trade ideas and insights about stocks and the markets."
This quote describes the core function of Common Stock, highlighting its innovative approach to stock market discussions.