First Funders

Andre Charoo, Maple VC - Before Clay Was a Unicorn: The First Check, the Thesis, and the Long Game
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[00:00:00]

Shaherose:

Welcome to the First Funders podcast. We are in season two, episode two. Uh, and I'm so excited to have my friend

Andre Charoo

Of Maple VC.

Like me, he's a fellow Canadian and I wanted to start about how we know each other and then I'll hand it over to him to do an intro. So how do I know Andre? I know Andre through a mutual friend Shair, who introduced us when he had just moved to San Francisco.

And my visual of Andre is him running around San Francisco, getting shit done, hustling hard for the startup he was working at, whether it was Uber or hired. He was just always physically running around because he [00:01:00] was a go-to market guy. That's what he does, he gets things done. And as a founder operator, I had mad respect for him.

Coming in ground zero and growing these companies, and I'd love for him to share about some of his journeys in that. But when I heard that he became an investor, I got even more excited and with the focus on my home country, Canada. So with that, I would love for Andre please to introduce yourself and also share if you can share with us, like when you realized the moment when you were more than just an operator, that you actually had an investor lens that led you to being, you know, led you down the path to become a fund manager.

Andre’s journey from operator to investor
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Andre: I'm excited to do this with you 'cause of, uh, our history and, uh, I love that image that you shared with [00:02:00] me. Uh, it's exactly the same image today. Uh, interestingly, I think people would describe me the exact same way. Um, uh, perhaps just running around on planes maybe might be the difference, uh, the background and to, and to share and to answer that question.

Um, yeah. Look, I, the, the high level is I parlayed, you know, a, uh, an operating experience of joining four companies at the seed stage. Two of which worked out one that, uh, was fortunate, to be Uber and I. Parlayed that into venture. But ultimately during that experience, I don't know if I actually felt like an operator.

Um, and it wasn't until, [00:03:00] so this was in a span of about seven to eight years of me joining those four companies. And towards the end of that, that term, my network would often say, like, I didn't stay at any one company longer than one to two years. And, and people were like, you just, you hop from company to company, go find the next seed stage company, the next seed stage company when one's working, then you'd leave and you'd join the next one.

Um, perhaps venture might be the best, uh, form factor for you. And that's when it started to click that. Maybe I was always a vc. It just so happened to start, um, as me joining companies in many ways up today, I feel like I'm joining these founders on their journey the same way. And so, [00:04:00] um, I just realized that venture is the best form factor for how I move through the world, running around helping these companies.

Um, uh, it's the best form factor of, of the spikes that I believe I have when I was an operator, let's call it. Um, and, and it's mainly around sales and believing in founders before and their opportunities before other people do. And like I was hired as their first. Not technically salesperson. These roles were marketing growth, product marketing, but they were all in the form factor of like, let's go tell the world what we're doing and no one believes us.

No one sees it, and this guy could help other people see it. [00:05:00] And so, um, I'm just now doing, I get to do that with 40 companies now that Maple has

Shaherose: Wow. Uh, thank you for that. That is, I can deeply resonate with that personally as well. Uh, while you were physically running around, I too was hopping around, not, not, not as fast as you, but hopping around from company to company as a first time advisor or FA first advisor to many companies. Um, during my time at Woman 2.0, during my time running the incubator founder labs and I too felt like I was joining those companies on that very, and my stage was really like idea to first prototype. Right. And so I also felt like I was doing the job also like building with them, but being a VC and like giving them feedback and guidance and then introducing them to, to investors and then giving them feedback on their pitch and all this kind of stuff [00:06:00] that I'm doing today. And I, it takes me back 'cause I was doing the same thing way back in the day.

And so to hear you say that, I didn't reflected on that for my own journey, that I had always kind of been doing parts of the job. And it's very cool for me to land, uh, in this, in this space as well, formally and finally. Uh, and so thank you for the reflection. You've helped me see this in myself. Um, but back to you.

So now you're investing out of your own fund, uh, for some time you were at another fund as a venture partner, but you took the leap and said, I'm gonna form my own thesis. And I have some idea of how this happened, but I'd love for you to share how did you get to this investment thesis and what is it? Is there any other focus you wanna share?

This stage, which we talked about earlier, and really like what makes the perfect, what makes a maple company a maple company?

Why Andre will always bet on Candian expats
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Andre: Yeah, absolutely. So one, one correction. While while I [00:07:00] have, um. Been a venture partner at Innovia. It, it was while kind of incubating, um, uh, ma Maple, um, in, in some respects. And so Maple's always been the, the core focus, uh, what people don't know is that it started in 2016. So to to, to take you back at that point, um, when my network was like, how are you able to, you got two out of four companies you joined, were wins.

Uber hired, as you mentioned, you were there. The times, you know, my smartest friends and family laughed at me when I joined Uber as an example. Um, and uh, and you know, I got questions like, what did you see? What was the patterns? Um, I, I truly believe you, you learned from wins and. [00:08:00] The one pattern that stuck out that effectively became my, my insight after realizing that venture might be the best form factor as we described, uh, as we talked about, uh, for me, um, you know, the next step was why you and, and why does the world need another vc?

And, um, you know, where would you focus to your last question around fit and the pattern that struck me that initially I thought was weird Shaherose, like, like I didn't think people would resonate with it. And I think founders had the same thing when they, when they come across an insight and it was both Uber and hired, had founders from Canada, and while I wasn't in Canada, um, and these companies weren't built in Canada, the founders hailed from.

The country, uh, you know, we're, we're [00:09:00] from. And I started to pull on that thread. That thread led me to the C 100, uh, which I know you're familiar with as well, and became the co-chair over time. But it led me, I started to notice, um, an even greater pattern, which was that in any category you can name in tech, one of the biggest winners, one to three, maybe top three biggest winners in that category happened to have the same DNA pattern.

It's like you can't make this up like you, it's not a coincidence Uber, Slack, Instacart, Notion, Faire Databricks, CloudFlare, Roblox, Ethereum, Moderna Health, frigging Open AI like you, you just can't make this up. And this was a time, at a time when my peers were spinning out to create funds to [00:10:00] back other networks, take the OGs at Uber, let's back the Uber alum, uh, let's back the Airbnb alumni and we're gonna all create this like PayPal mafia type idea.

And I was like, I see a network that I don't think other people see that I happen to be uniquely part of and can understand that is produces wins that are bigger than any one company's alumni network. Alumni network. And that kind of possessed me, that insight and, um, as I would, you know, started to talk to that network and uncover their stories.

I basically realized that the common thread was the talent coming out [00:11:00] of the Canadian schools. Let's even take it one step deeper than just from Canada, particularly folks graduating from the Canadian universities and colleges. Um, they, I realized that they produce Ivy League quality education effectively, but when they move to the United States, they are not viewed that way.

They are overlooked and underestimated at the earliest stages. And reflecting on my own journey, leaving Canada, don't hold this against me. I started my career as a douche investment banker. Start before I into hired in. I was only Canadian and at the time, maybe it was 22 years ago, like no one had heard of University of Toronto, unfortunately, and I was instantly overlooked and underestimated [00:12:00] until my, I shipped my work product.

When they saw the work product, all of a sudden it was like, whoa, wow, you're good. And years later, I just learned that that was the same for founders from Canada, from these schools. At the earliest stages, they were overlooked and underestimated and until their work product showed up, until they shipped a product, whatever, then like then the market got to consensus and I was like, gosh, I know the quality coming outta those places.

I could underwrite those people faster than my peers. And so that's when I asked myself in 2016, what if there was a fund that was waving the Canadian flag, hence the na maple bc. But what if it was ironically not based in Canada? [00:13:00] Could I capture the, this, this pipeline of expats? Almost as like truly, uh, you mentioned this about me earlier and I appreciate this description.

Like is effectively my go-to market strategy. Like at the end of the day, I just wanna be the best VC that I possibly be at the earliest stages where I think I spike. Um, but I had this insight that was unique to me and this pipeline that. That I could use as my go-to market. That was like my wedge in like any business, right?

You're like, what's your go-to market? What's your wedge in? What's your niche? Where are you gonna get a monopoly first? And then you can use that to matter to a larger audience or expand beyond that. And that was my edge. It was like, okay, let's back these Canadian expats and they're gonna lead me to the promised land.

They're gonna, and there's just, there's, there's a high [00:14:00] probability, even a high at bat to home run ratio, uh, over other networks that like, which, which is I think important in venture in this sport, um, that, that, that could get me to the next important companies. And so I'm, I'm proud to say, right, like my first unicorn with, with clay, um, was a one out of nine in that first fund, as, you know, 11% CT unicorn rate, which hopefully puts me in a different class.

But it wasn't, uh. It was all part of the strategy. Um, and which we can get into. And, and so on a high level, to answer the last question around fit, we aim to be the first believer, the first check VC at a pre-seed or seed stage that believes in founders before the world does. And our, and our go-to market was, let's start with founders from Canada because [00:15:00] we can uniquely underwrite them and we know how to believe in them 'cause we're from there.

Shaherose: But we think those characteristics apply to a whole host of other pipelines and, and areas. And we believe, I believe I'm a global citizen and, I will eventually start uncovering other networks which we can, talk about a few that are starting to emerge, uh, in the Maple story.

Oh my. Wow. That's juicy. Um, on the Canadian thing though, uh, I went through the same thing, of course. Right. I landed and I'm like, I went to the University of Western Ontario. They're like, where? I'm like Harvard of the north. Have you heard that term for Ivey?

Andre: You know, I actually heard McGill is more of the Harvard of Canada, but, but I don't know, like this is, this is, this is the challenge. This is the challenge we have in Canada. No one cares,

Shaherose: No one cares. No one cares. Exactly that. And that was it. [00:16:00] Like I literally saw people's eyes glaze over. They're like, where are you from? Like, and that's nice. And I'm like, I went to a case-based business school. I know a thing or two. No, it doesn't matter. In those early days,

Andre: In the early days,

Shaherose: a lot. And I felt the same thing that when I finally produced people were like, oh, okay.

You know what to do. And I also remember in my first year being here, uncovering the similar thing Garrett Camp had put out, stumble upon during that time. And I was like, that's amazing. If he can do it, I can do it. Then I met Michelle who was starting CloudFlare, and I was like, if she can do it, I can do it.

This is amazing. Right.

Andre: many, there's so many examples.

Shaherose: so many examples in those early days that I, for me, were huge inspirations to come and to stay, by the way. Um, so good job uncovering an overlooked and highly alpha driving, Cohort of, or even like pool of talent. What is [00:17:00] it about Canadians? I know we're, you and I are obviously amazing,

Andre: Yeah.

Shaherose: but what do you think it is that makes us such alpha drivers in the most important companies of our time?

Andre: So one, I, I do think it's that education piece. I do think, um. Just imagine the whole country is educated at the Ivy level like they really are. Um, so that's, so education's a baseline that is actually really incredibly important. And also I think not looked upon as much or talked about, but like the quality of the education coming outta these institutions can stand the test of time against others.

One quick example, I taught, I I, I, um, one of my last courses at University of Toronto was a course called the Economics of Entrepreneurship, taught by a gentleman by the name of Reza Statue who started something called Next Canada Aligned Vest. And, um, sold it, you know, went to the [00:18:00] us, was educated at McGill, went to the us, started a career in banking, and then ultimately went to HBS, started a company, sold it $4 billion, came back to Canada and was like, man, if I can influence entrepreneurship at the undergraduate stage, you know.

What, what, what could be the possibilities? Um, he today is the most popular professor at HBS, um, and teaches 22 years later, effectively the same course. It's called the Founder's Mindset Now, and an executive fellow at H Bs.

You wouldn't think founders from Harvard are overlooked and underestimated. But let me tell you, at the earliest stages, they very much are all into the podcast, literally shitting on founders coming out of HBS. And I am now backing founders out of HBS because of this Canadian [00:19:00] professor who is effectively teaching the exact same course.

Andre: How is that possible? And so, and so, and, and it really influenced my, my entrepreneurial journey. I owe that to him. Um, he says he owes, uh, the fact that the class went well and the fact that he's now at HBS to, to his first 36 students, which I was proud to be one of. Um, but, uh, that's like an example that like the quality of the course material like is the same.

That's one. The second is, you then have a cohort of folks. Maybe you could think of it as like double immigration. We all kind of know in the United, like the immigrant mentality is like crazy founder, DNA, that's a good signal, let's call it. Um, but you have that twice because most of the population in, um, Canada, the highest form of immigration, I would, I would argue in, uh, as a country.

And then you get the cohort of folks who leave. And while [00:20:00] we are physically close to each other and our neighbors, it's equally as hard to get to the United States than someone in another country that's much farther away on the other side of the world. people don't know that. Um, and and so the grit required to, to decide almost to like's like a mentality shift, right?

Like I. Um, almost like net net a better country, um, to go to, pursue this dream, you know, drives a chip on one shoulder. That I think is, is it starts, you can, in, you can, you can quickly check the boxes around the soft skills that you would wanna be underwriting as an investor to a founder, that drives them.

And then maybe the last one is, I think Canadians are some of the most ambitious, um, people. And there is a narrative [00:21:00] inside Canada that we're not as ambitious. And I just think that's not true. I think the challenge is

our job as investors, and I believe my job is, it's, it's. Bridging the gap of ambition. So like, can you find someone as ambitious as you to go on this journey together? That is hard to find and this is why a large part of them leave to go find their counterparts in all center centers of ambition.

Hollywood biggest directors of all time, we know the names James Cameron Actors Ryan Reynold. Like there, there's, there's like a plethora in finance. I dunno if you know this. Warren Buffett's successor is gonna be a guy named Greg Abel who went to the University of Calgary from Calgary, right? Like he's gonna be Warren Buffett's successor.

You have academia, uh, the highest chancellor, the vice [00:22:00] chancellor of, of, of, of Cambridge, I believe. Uh, Stephen Tu like, like it was Canadian. Like, so they'll find their in whole industries. And of course we listed the tech ones. They are in search of meeting. Someone equally as ambitious to them on their journey.

And, and if they met those people in Canada, then, then they would stay. Right? Um, uh, and that's the, the, the pursuit that they're on. And I believe ambition is a competitive asset. Um, and it's purist at ironic, like at the earliest stages when they're actually overlooked and underestimated. So finding someone to match that ambition is hard.

And that's the, that I believe.

Andre’s check size and how he manages Maple VC
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Shaherose: Wow. Yeah. Uh, that is why I left everything you described. Right. Um, there I wanted to look for the ambition and the big vision. And when you think of the industry, right, that during our [00:23:00] time when we graduated from college, yes, there's tech in, in available in Canada now, but not in the same way. And there's hardly any venture capital to match the ambition that you're talking about.

Like, who is going to fund me, right? And who is going to back my ambition to, you know, it's starting to bubble, but the system is ingrained here. It started here, the culture is here, the risk taking, you know, comfort is here. And so yeah, when I landed in, in the Bay Area, I immediately felt at home, like the way people were talking to me about possibility and trying things and then actually doing them right, and then following that up with growth like.

I saw people make things happen, and that's what I wanted to be around. So, um, I feel it. I love it. Um, tactically, you come in at what stage, what size checks do you write? Do you have any industry focus or not?

Andre: industry [00:24:00] sector, theme agnostic, geo all agnostic. I will write checks to global founders. Um. And, uh, from a check size perspective, we are now writing checks between 500 k and one and a half million. The average is about 1.25. And, you know, we are collaborative. We, we wanna be that first believer that can catalyze you.

What I realized in the journey since 2016, even when the checks started small, because my first fund was small, I was the first believer, and you start to get confident and comfortable in that, even when the check was small. But you realize that you couldn't make that much of an impact in terms of getting them into business, et cetera.

And so now I can get [00:25:00] a founder into business who needs to raise 500 K to 3 million, is sort of from a round size perspective. I can put them in business and, and. I ultimately wanna play up to, up to like, it sounds like these seed rounds aren't, aren't changing a folk from like a $5 million seed round.

And so that's, I wanna be able to put someone in business and some folks do raise the pre-seed. Some folks just go to the seed. And I wanna be able to, again, be the first believer before the world is, and it means I'll have to play in both buckets. Um, uh, but, but yeah, that's the general, uh, gist of.

I love it. Um, and then we're totally, uh, I wanna keep going, but you hinted on something, you're like uncovering new areas. So the current focus is the, this range of Czech size being the first believer in teams that have at least one Canadian founder. What are you uncovering about the [00:26:00] next group of people that we should know about?

Just like any business, right? Our first go to market was let's focus on, um, this pipeline of Canadian expats. Anyone who went to these schools, who left, um, um, and, and even who stay, like some of, some of our companies are in Canada. What I did notice about the ones in Canada take Shopify, which I didn't mention and should get, should get airtime, right.

Andre: It should be listed in that, in that list, but it's the obvious one because it's homegrown and built inside the country. But when I studied that one, like at the earliest stages, there were no Canadian backers, you know, at the seed stage. And that surprised me when I learned that. I learned that those backers came from the valley as well.

And so I realized by positioning Maple outside of Canada, we actually might see the best inside Canada. And that has turned out to be in our results in a company called Neo Financial in Calgary, where we were one of the first as [00:27:00] well. And while it's serving a Canadian audience, it's building Canada's next big bank.

Um, there are no Canadians on the cap table. And, and it's, fascinating that it's still playing out to this day. Similar to the Shopify story, uh, they come in a little bit later, uh, and, and, and that, that's great. But again, um, they're even overlooked and underestimated inside their own country, which is, which is fascinating.

And so while that will always be. The, the core pipeline and, uh, of talent that we're most familiar with. Um, and, uh, it's where our roots are. Um, the network of Canadian expats has given us wedges into other markets and networks, right? I think a basically a network based investor in many ways. And, and, and I'm like mining these networks that I believe are overlooked and underestimated.

And I think there's a lot of gems of those networks and, [00:28:00] but you gotta get to know the network. I happen to know the network because of birth, um, and growing up, uh, in the Canadian network. But as I alluded to, I am mining the Harvard Business School and Harvard network in general at the moment as well.

We've written some checks there because of this Canadian, uh, expat professor that has given us access. And, um, I didn't go to Harvard. I have a cousin who did. But I'm getting to learn what it's like to back that pipeline of founder at the earliest stages, which sounds strange, but because of the brand that Harvard represents, but I think are also overlooked and underestimated in a tech industry perspective and starting a tech company.

Um, and so that's one pocket. Um, we've written some checks globally and, uh, [00:29:00] um, I'm actually calling you from Korea. Uh, my wife happens to be Korean and, and while a personal, um, connection is to the country, when, when we first set out to back Canadians, um, I. Uh, uh, expats, while the initial focus was the United States, we, we were still open to this idea, like, we'll back Canadians globally, and one of our LPs wanted to test me on that and was like, how far would you back a Canadian?

I've got a Canadian, a Korean Canadian, um, and I was like, send them my way. Like, what do you mean? I married a Korean? Like I'm even more interested. I like, I'm like married into the culture. And, um, yeah, we backed this, this Korean Canadian founder, um, actually well before I physically moved to the country.

Um, and, and that's turning out, it's a 10 x in the portfolio at the moment. It's turning out to, to potentially be a really important [00:30:00] company in the Asia Pacific region. And again, it's like proving the thesis that in any market we can wedge ourself in through the Canadian, uh, expat network and story. Then that those companies, when we hopefully, um, uh, the wins that come out of that network will earn us the right to partner with the best founders in that network regardless, period.

Right? And so we're starting to see some of the best founders and some of the best engineers, some of the best folks coming out of Korea. We're starting to see some of the best stuff out of HBS. Um, we could talk about our, my, my first unicorn with clay, but like Clay's earning us the right to partner with any AI application founder, like period.

Like I don't care where you're from, they're just like, you're the first tech of clay. Like, what? Right. How do I partner with you? And so that was always the thesis. Um. The [00:31:00] go to market, the wedge focus on the Canadians, they're gonna get us into the most important companies like the next Uber Slacks Open.

And then those companies are gonna earn us the right to partner with whoever we wanna partner with in the future.

Shaherose: Brilliant. It's so brilliant. Um, and would you say that the Canadians, like, I don't know about you, but when I think about that, what you said, like Canadians, wherever they are, and then following that thread and earning the right to just, you know, make investments in that region. Like what are we like, like I know that I, when I meet another Canadian, there's automatic trust and automatic desire to help each other.

Are you, do you experience like I get excited. I'm like.

Andre: yes. And by the way, this is, it's, it's a good point because in pitching this insight to LPs our funders. Who, might not appreciate or understand it. it is something that people see that, that, that we have, that people don't see and understand unless you're part of it. And [00:32:00] so it truly is a belief that I have that other people don't have.

And it's been a journey to convince them, uh, that, that there is instant connection. That there's many levels that I can skip to connect with a founder the way that you need to connect with them to be their first believer and for them to want you to be their first believer. Um, and oftentimes I think when the best businesses start and they break out, when you look at where they started, they actually just happen to start in an area or a place that is unique to the founder.

where you can establish trust fast, where you can get sales off the ground where like just there's like some unfair advantage and we have this unfair advantage as Canadians when we meet each other to just get to that [00:33:00] place that a lot of people would die to get to and it would take a lot longer to get to.

We could just get there a lot faster. And that helps. And it was like an unfair advantage that I leaned into, um, to, to get may pull off the ground. And, and, uh, it is real. We'll always have it, you gotta always find other unfair advantages, but you start to earn other parts of that, the story, you know, the wins, the, the results start to earn you other unfair advantages that you can unlock.

Right? Which I'm starting to unlock with HBS and Clay and Korea.

The 7-year story of the unicorn, Clay
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Shaherose: I wanna talk about clay. Okay.

Andre: it.

Shaherose: So I wanna talk about Clay and spend the rest of our time on where you see opportunities in ai. Okay? Tell us the story. How did you find this company? What made you invest? Like everything. Okay. Maybe not everything 'cause we don't

Andre: Yeah. No, no, no. But through, so through through the Canadian Expat [00:34:00] Network, right? So a guy named Michael Hirschfield, you might even know, um,

Shaherose: familiar.

Andre: from Vancouver, we've now backed his company, but he was at a company called Sail Through, um, which the founders of Clay had sold their first company to. And he's like, dude, you gotta spend time with these cats.

They're gonna leave and start another company. And I'm like, duh, thank you for letting me know. Like, that's how I met. I met them through and how I meet any company that I frankly.

Spend time with them and a lot of time, and they, they shared this ambition around and, and really the, when I now think about the three top things I'm looking for in any opportunity and founder to join them on their journey and even when reflecting [00:35:00] on the companies I joined and why, right? A lot of reflection defined these patterns, but it's just like a big ambition.

Something they see that other people don't see, and like some new, new thing that wasn't kind of possible before. Like, like there's a bunch of sub things we look like we gotta get to conviction around, but at a high level, those are like the three areas that seem to be a common thread in anything that I get excited about.

And so they had this ambition to make programming accessible to all and basically give superpowers to non-developers context. I was working in a company called Hired, which we believed we could train and we could help more engineers be hired in the world. And they were telling me the opposite, the world will not produce enough engineers.

And I was like, [00:36:00] wow. Like this is just like so opposite to the bootcamps that were being created generalists. There was so much in 2016, like so much around like,the world, just this gonna need to produce all these engineers. And they were like, the world's not gonna be able to. And um, that captured my imagination.

Um, they were like, look, the what the black terminal is to a developer who we are, we're engineers, we believe the spreadsheet. And what do you think you were a banker, the spreadsheet is to a non-developer and we're gonna connect that to the internet for the first time. And I was like, whoa, that's so, and, and give these superpowers.

Andre: Like, and then maybe, 'cause I was an analyst, I'm like doing monkey business, like doing all these an like, like models that I used to have to do. Like, you, you felt like you were a developer but you weren't. [00:37:00] Um, uh, and they were saying that, that like, we could give these same powers that we believe we have to like an audience like you to automate all sorts of things.

Like who, who knows in the enterprise. And they were telling me, which went over my head at the time, that there is this new way of doing this called low code, no code to like do it and. And, um, on a high level, that's what got me there. The, the, I have like these seven questions inspired by the zero to one Peter Thiel book that I have to get answers to on every investment that I make.

And one of them is a defensibility question. And, um, when I asked that question like, well, you know, the way I frame it reflecting on my Uber experience was like, what's like the strategic asset? You think you're sitting on that in [00:38:00] aggregate of that asset, there's a lot of value that would accrue and it would be kind of hard for others to compete at some point in the journey.

Their answer verbatim was, we're building a marketplace of API functions that can instantly run. Um, and, you can instantly call them. And maybe being a marketplace guy from both Uber and hired, like light bulbs went off in my mind around like, well, if you build the largest API marketplace in the internet, like there's crazy network effects and like, it will be hard for anyone else to compete.

and that's probably the part that has stayed the most true through the entire journey today. It's a marketplace of data providers. Maybe not called API functions, but they, but they're data providers that give [00:39:00] access to users of Clay to basically enrich anything they want to on the internet. Um. And that flywheel has started to spin very, very fast.

Um, and while folks might view it as an AI sales company today, that's just a layer on top and an accelerate that has given in the concept of these superpowers that they believed that they were creating. Well, now we have a new technology that helps you give those superpowers. And, and so it, you know, there is still a low code, no-code con function of it, but there's now like AI that can, um, whether it be ag agentic work or AI research work that like can, uh, that can do a lot of the work for you, but on this foundation of [00:40:00] a marketplace of data providers effectively.

And so, um, uh, while I invested in something very. Big, bold, and broad. Um, it took years to find the right, uh, niche, um, to go after. And to my earlier point around where I think founders tend to find success, even our own in venture, like I think of us as a business, you've gotta find a niche to start that the, the ones that work the best are the ones that happen to be unique to the founder, um, where there's some unfair advantage or it solves one of their pain points and their problems, just like it just happens to be their own, right?

Like, if I think about Uber at Limos or Facebook at colleges, like they're just, those are amazing niches and wedges into these big businesses, but I think they were just solving their [00:41:00] own desires. You know, Travis and Garrett just wanted to get limousines like. For their own personal interest, like it turned out to be an amazing wedge into their ambition.

Um, me with Maple one day, we will be saying Maple's, one of the best venture capital firms in the world, but we started in this niche that happened to be unique to me. Um, and, and something I saw that other people didn't, that just served my unfair advantage. Clay got success by this go to market wedge, and when I reflect on it, like the founders didn't have a go-to market bone in their body, and so they were solving, using their own product, their own need, their own problem, their own pain.

It turned out that that was the right wedge to like wedge into something that we believe can be even bigger than just the [00:42:00] go to market engine that they built today. And so, um, that's a little bit about the early, you know, conviction. That takes time, takes, it takes, you know, that was 20 17,

Where Andre thinks AI stands and where it might be going
---

Shaherose: That's insane. Right? When you think 2017, and you think about today, right? So you know, when you think about making any investments today in ai, like where are we, are we in still in the inning of AI investing where there's tons of opportunity ahead? Do you think that we're maturing or do you think we've saturated?

Andre: Or is it just game over? We've, it's overhyped. There's no need to invest in the space now.

I'm pulling up a tweet that I recently shared that I think might be relevant. It's from Fred [00:43:00] Wilson in his book. back in 2015, he had said like, he, he or he said, a friend had told him that nothing important has ever been built without irrational exuberance. Meaning you need some of this mania, right, to cause investors to open up their pocketbook and finance the building of railroads, automobiles, aerospace, like whatever, to ai.

Andre: And so while it feels crazy, and maybe even the dotcom era felt crazy. We all know like, great stuff. Come outta it. Right? And you, and you do have to play to take the words out, Bill Gurley's mouth, the game on the field. And so I think this insane amount of opportunity, shes, oh my God, like this is a very rare moment.

It's probably closer to the PC area, right? Like this is a new form of a computer, but with [00:44:00] a more connected world than ever before around it with like built-in distribution channels that like make the speed at which the change happen is happening is gonna be faster than ever before. And so this is like a venture capitalist's dream to be in business at this moment in time.

Uh, because the current giants we all look up to were frankly created during, um, a previous moment in time with an inflection point that. You know, and so, and so where it comes from. I'm not smart enough to tell you that cheer rose like I will, as we've described, like I am not a thematic industry, um, sector, uh, focused investor that I think if you're, if you're smart enough to know where those are, then you should be the founder.

my job is to follow the minds of these founders and they, um, have historically [00:45:00] carried these investors into the promised land. I, what I do know is that it usually happens on, there are patterns, it happens on the edges. when you talk about industries, like there's edges of industries where like maybe the winners end up winning that industry, right?

Because we're in the business of exceptions. So it's not gonna be super clear to anyone in any given space sector industry that like that is the winner. it just can't be by definition in the, in, in the business that we're in. So I constantly think about that. I look back to those previous eras and like, I realize that the last movers won, not the first movers off.

So like, I think about that, right? And so, um, I think about that almost everyone on stage at these giant of a companies, giant companies have these stories where everyone said no at the earliest stages. Like everyone said, [00:46:00] no open ai 20 50, 20. Like everyone said, no. And that warms my heart because I don't think we're necessarily like in these competitive deals or processes at the early stages, if you're working on something and backing something that can be truly transform, transformational and enduring at, at the stage we talked about that we play in.

And so that warms my heart that like the pockets that I believe I'm uncovering, uh, with my thesis is, is generally overlooked and underestimated. And that pattern has produced, um, some of the biggest winners, winners in, in any category. So I just stay focused on, on that. Um, um, I think the framework I have allows me to just give a first principles lens to any idea.

Um. And again, when you're at the early stages, I think that's the [00:47:00] kind of lens and mindset that's best to have versus going deep in any one particular area. Um, and then as you have wins like Uber early for me in one era now Clay in the next era and a few others that I think are budding in the portfolio, you, not that any success is created equal, but you start to see the patterns that emerge, that help you identify, um, uh, give you clout and access to even a greater pool.

Um, so that our job is to, we gotta see enough of these things. Um, and, and so I, I'm, I'm very grateful to be in a position where seeing all of the AI application. You know, stuff. We've, we've made some infra stuff too, but, and I don't know, like where Sure, there's a narrative that like generally [00:48:00] some of the biggest companies in the world are application, uh, layer companies.

But like Amazon is also an infra company. Like,

Shaherose: Well over time.

Andre: over time, right? So, so, um, I don't, and some of the biggest companies are hard work oriented companies and software, so I don't shy away from like any of it to, to say that oh, one layer or one area is gonna derive the most value. Um, it's just who knows who, like, yeah.

Who knows what we do know. And that gets me excited for the work we do. The tams are gonna bigger than we ever could imagined in 20. We could have imagined Uber at 150 billion. I'm sorry. Just like, just couldn't imagine it as a limousine service, like the stage for investing in, and so, and so while tough times with liquidity right now and the crunch and all of that, um, you just, we're investing in a 10 year horizon and, and [00:49:00] we just do, cannot fathom what the tams will look like

Shaherose: I agree. Yeah. Yeah. Because we're creating opportunity that wasn't there before.

Andre: with a tech, with a, with a, with something that didn't exist before, like, you know. Yeah.

Moats still matter in the AI era
---

Shaherose: Which is exciting. So in, as you think about this unique time though, and you particularly focused on the application layer, do you from a first principle standpoint, or not pay attention to, at this super early stage, knowing that you're betting something that's highly transformative and it in itself will transform because pivots, right.

Do you at all think about or worry about the lack of moat at that time? If they're leveraging existing foundational models to create the value that they're trying to create or not? Because you're like the, the application layer is the value and what's below it doesn't matter.

Andre: No, no, no, no. Have we read a book? Shy Rose called The Seven [00:50:00] Powers?

No.

Oh man.

Shaherose: Bring it, bring it.

Andre: I just believe the book called Seven Powers, Hamilton Helmer. I think it should be taught in every business school. But, um, there's a podcast acquired the podcast, which I'm sure you're familiar with. At the end of their analysis, they talk through the seven powers that these companies either have or don't have.

I deeply believe these things stand the test of time.

Shaherose: Wow.

Andre: so, um, they are, uh, to bring it up. So one is,

Shaherose: economies?

Andre: network effects, scale, economy, switching costs, counter positioning, cornered resource, branding, process, power. What's amazing about that book too is that there are different of these powers that are associated with the stage of the company, like a founder saying, we're gonna win on brand.

And it's an early stage start, like, come on, brand is built over time. Like, like it doesn't care how great your company is, right? It's just [00:51:00] that's the last stage of defensibility. Um, process power as well. You have created a process. You have no systems in place that like one can not copy because you've just been doing it over time, right?

And so that's usually, uh, associated with the later stage. Um, counter positioning. Clay had this at the early stage where we're going up against, say your, um. Zoom, right? That are seat based and all of a sudden this guy comes in with a, like a usage based model. Like we don't actually care about any seats use clay.

That's not something we care about. And like, that's just really hard to compete against. And so, um, that's an example of something really early that I might look for in hearing how the founders thinking about the strategy of the business. Of course we talked about life network effects. I think, I think, you know, something that people don't realize with network effects is they usually start off as a nice to have, you know, this [00:52:00] idea that you gotta, we we diligence with customers.

Is there a really big pain point here? Not with network effect businesses. They start like, like people didn't need to get a limousine. It was 50% more than the taxi. Like, it was hard to get people to like use it even in the demo niche that we like thought would use it. It was a nice to have, but, but with a net, with a flywheel business, as the spin, as the flywheel spins and it gets faster and faster and faster, uh, network effect, businesses often move from nice to have to, to must have.

And so again, just having that insight, um, has helped me underwrite some of these companies that they could have it. Obviously these are, these are just ideas, but I love to bounce those ideas off of, um, off of founders. And so from a moat perspective, when you ask that specifically, um, seven Powers is one of my go-tos of, of like, what could.

What, you know, cornered [00:53:00] resource is another, sometimes cornered resource is just pure talent, like this talent, literally there's no one like this person on the planet that could go produce this. So like I'm writing the check, um, that could, you know, sometimes it shows up at as ip, uh, at some point in, in their journey as well, switching costs based on like, you know, how, uh, in the weeds your product or service gets into, into a business, maybe more on the B2B side.

And so I just think those things will stand the test of time, ar, ai or not. And, and this is actually where in this phase of technology where we're have tools to automate all the technical pieces. I do wonder

Shaherose: Yeah,

Andre: if taste strategy. Operations execution [00:54:00] start to be the competitive advantages more so than, oh, you just don't have the technical people to create this. Like we have, I have a company that's an AI software engineer. Like, like they're just gonna, like, the AI is gonna write the code. Do I really need someone that has that particular skill set now, and this is kind of why I'm leaning into the HBS grads, and some of them are technical, but, but I think like that layer, which in the last, era might've been deprioritized because you really focus on people who could build the stuff.

Because there was just a whole set of people that could only build it. Now AI will build it. It's just, it's strategy. It's strategy, it's taste. It's it's gonna come down to some of those. They're not softer areas. I think strategy is like a hardcore skillset. Like you, you do not win in business, in this sport, like without, without deeply thinking about strategy and when to turn right, when to turn left and, what, you [00:55:00] know, leveraging what you think you're sitting on.

and, that might not necessarily be a technical, um, uh, it might not show up as a technical moat or, or, or competitive advantage as it was in the past. Um, because I think if you deeply look at the biggest companies in the world, it probably came down to taste strategy, execution, operations.

Um, then just like the technical thing they built.

Shaherose: Yeah, for sure. For sure. I, there is so many parallels to previous. You know, tech booms, right? The cloud era, the launch of the app store that remind me of this, the question, this question came up then too, right? And the same answer came up, right? Solve a pro a actual high value problem that matters to the customer.

Do it well. Think about the future. Be strategic, right? Execute on it. You know, we always, early days we always used to say like, you know, ideas are nothing but execution is [00:56:00] everything. But now I do think there's a little shift there too, because I do think the idea does matter, and I think the idea is rooted in strategy.

Andre: I think the idea is rooted in unique insight and taste, and it has to show up in, you know, the, the expectations of the users are so high. This has to show up in a tasteful way that's easy to use. If there's any friction, we're gone. So like, it's the same things, but I think at a higher bar, a different bar than before.

And, and, and this is why the zero to one framework to me stands excess of time. Surprised. I'm like surprised more people don't leverage it now. Now I've made it my own, but. You know, what's the 10 x thing that you're, you're solving what's the why now, but I've broken that down to tech, economic and culture.

Andre: what's the monopoly? Like, you gotta get a, you gotta own a niche to matter to a large, a smaller audience first, and then like a large audience out of the gate. What's the distribution? What are some creative thoughts of how you're [00:57:00] gonna distribute this thing? Right. Um, what's the defensibility, we talked through that with the clay example and, uh, beyond the team, which is of course, which is one which I'm happy to share a framework that I use to, to think through that.

But like, lastly to your point, like, what do you believe that other people do not believe as it relates to this opportunity? Because if it's not, if it's like, if it's, if I go, I, I tell founders, I, I'm gonna go talk to 10 people that are related to this area in this space that are smarter than me in this area.

And I want nine of them to like disagree with you. That's how I know you actually have. A belief that other people don't have. So I will share my, and I often go to the like downstream capital now you and I can call anyone we want in the industry. Um, and it's interesting to help me think through the downstream opportunities, but I'm actually looking for the signals where they don't see it,

Shaherose: Yeah.

Andre: where they're like, dude, I don't agree.

And I'm like, yes, because if you did, you probably would've already [00:58:00] invested in something and it would've been consensus. So that was helpful that you kind of disagree with this point. And that is a checkpoint for me with, with testing whether the founder's belief is truly not. Um. That people don't see it, uh, yet.

And again, it reflects to like how I lived the journey through the, my operational journey of when I was at these companies. People didn't get it. People didn't see it. And I was constantly like trying to sell and convince. And so I'm just looking for that same thing, uh, with the founders that I, that I partner with.

Shaherose: Yeah.

How do you get them over the line then, if they're doing something so con contrary, how do you get them over the line to the next funder

Andre: That comes down to obviously the, the founder. Yeah. The founder. The founder, um, with their superpowers making something happen that, that most people didn't think could happen. yeah. It, [00:59:00] yes. And I think the answer to that question, what I guide my founders to think through is our job is to show. The next funders something they've never seen before.

Shaherose: Yeah, totally. Yes.

Andre: it. That's all we're looking for. So there's no magical a RR number not gonna tell you to get to that number. We are, we've left that era. I'm really happy we've left that error. So we, we,

Shaherose: But have we, I feel like that's still coming up.

Andre: no, I think it's, I think people are forcing it to come up, but there, there was like funders that would just back things in a spreadsheet if it hit a certain milestone and it was just like guaranteed to go up into the right. No, there's seed, there's series A, there's B rounds done with companies with zero error.

And that we've let, like, so there takes some intellectual honesty and capacity to, and, and no patterns for you to really try to uncover [01:00:00] what could be great, which I think is venture capital. And I'm excited that we've entered that phase again. and the only common thread amongst any of them that get funded or the best ones in my opinion, are the ones where like, whoa, I've never seen that before.

And it could show up in all sorts of ways.

Shaherose: Yeah.

Andre: It could show up in an NPS, it could show up in the product experience, it could show up with the numbers. Sure. Or the error. Like it could show, uh, I'm not gonna give you the prescription of how it shows up, but our job, if you are working on something really special, that is a big ambition with a unique insight that wasn't possible before, the output of that should be something we've never seen before.

And, and at some point it will arise.

Shaherose: now.

Andre: Yeah. that's what we're that's what we're doing. Yeah.

a hundred percent. Okay, so then what is something that. Something, what's a belief that you hold about AI that you think most people would disagree with?

At the moment, it's the question you [01:01:00] asked, which is there are no moats. It could be, it can be, it could be copied. Like, you know, you fund something today and like you're out of business tomorrow. Um, if you're, if if you're applying these seven powers, one of them like if you're thinking through taste and strategy, like that's not true.

Andre: Um, there are moats, um, and it is the companies with those moats that deeply thought through them that will win. and I take the clay example, a lot of people are currently believing and thinking they can build a.

Shaherose: Yeah.

Andre: Um, and they're just like not seeing the network effect at the base layer. They're not seeing it, and it's spinning relatively fast, but it's going to spin faster over time. And [01:02:00] that piece, no one's talking about, like, no one talks about the, like the, the MO piece in any of these applications. Um, uh, because what's getting the headlines are the, top line figures, which are growing at paces we've never witnessed before.

And that's why they're getting funded to my earlier point. But the ones that will win are the ones that like, there's lots of different moats, like, and the seven powers are just, it's like a very clear, wide, widely held example and case study of, of, in. Granted, it documents a, a previous era, as you mentioned, those, that era could be comped to this era too.

And the, the ones that end up being standing, I think they do a deep dive into Netflix in the book. And it's just fascinating to learn like, why did Netflix like exist and, and stand the test of time, right? Um, and so, uh, there's, there's some awesome lessons learned there. So that would probably be the one that comes to mind that like, there are, there actually are modes, [01:03:00] uh, you just have to look deeper.

Andre's take on the inventor-builder-operator trifecta
---

Shaherose: Do you believe that we are coming to a future where not only are companies growing faster than ever before, and tams are expanding bigger than ever, but that the teams are gonna continuously get smaller and we will end up with the one or two pizza person, billion dollar company?

Andre: While I do subscribe to this idea, I also don't at the moment, and the re and the re and the reason is. I have a framework to think about. The best companies in the world end up having three profiles of founders, but you need all three in order to actually build a very large and enduring business, um,

Shaherose: And they are.

Andre: inventors,

Shaherose: Mm-hmm.

Andre: builders, and operators.

Shaherose: Mm-hmm.

Andre: And when I think about to just, [01:04:00] um, bring the point home, when I think about building a company, think about it in a five step process from zero to five, five being like the visions realized, zero being like the prototype. Um, inventors, superpowers are around the prototype and are around actually bringing that future from a technical perspective to to, to light, um, uh, to fruition. Builders. And then when I mean builders, I mean, company builders are really good at going from zero to one, getting you to step one in a unique way. And I think their superpower is capturing your imagination of what step five could be, because often step five isn't linear, um, to where step one is. Um, and they're really good at the ambition to cap capturing imagination.

Um, and then operators are really good [01:05:00] at steps two, three, and four. And so in my opinion, you don't get to step five from zero without all three. The trick though is that 50% of the battle of building anything enduring is the talent you gotta track, which I will address to your point on this, on the AI in a second on why I kind of hold these beliefs, contrarian beliefs.

I hold. Um, in parallel together in my head of believing yes to that one person, billion dollar company, but also, no, um, we're attracted to people like ourselves. So if you're an inventor starting a company, you're generally going to, I'm gonna generally see a lot, a lot of other inventors. And the tricky is that they could build some awesome stuff, but if you can't go to the right one, uh, step one, you might think you're at a step one.

But that step, it's like, are you the right step one to wedge you into the, to the, to the [01:06:00] process, to building, to step five. Um, and then operators dance around zero to one 'cause that's not their superpower. So they like, they skip it and they're like, really great on this execution stuff. And so company builders also attract people like themselves.

So you got a bunch of people who go from zero to one, right? But I found something unique with the company builders where, because they aren't technically the person that could create the prototype themselves in, in a certain, in a prior era, like they can give this lane to the, they attract the inventor type to their journey.

'cause they're like, look, I can even do this. Like, you go, here's your lane. And they're also not the best operators either. And so they're like, here's your lane. And I found that, and to bring this home, like I think a Larry Page is a builder, a Sergey brain as a, an inventor and an Eric Schmidt is a operator.

You don't get Google without all three. Sometimes they come at different parts of the journey. Take like a, Travis Kanick is a company [01:07:00] builder. Garrett Camp is an inventor. And, and a Dara right, is a, is an operator. They just came at different points in time. Um, and so I believe this framework, it both informs how I invest and, um.

And the type of architect that I'm looking for. Um, but to your point on, on what AI could enable, could I, could AI enable an automated operator and an automated inventor

Shaherose: Right.

Andre: where you might not need those archetypes to get you to these other stages? And that's where I am. It messes with my framework. Because, because it might be a, it might look on the outside as a team of one, but you actually built this team.

They just came in a different form factor.

Shaherose: Yeah.

Andre: It's like an AI inventor, if you will, and an AI [01:08:00] operator if you will, that like come maybe in the form of services and like empower you to go build from zero to step five, like build your business. And so that's why I am, I struggle with it at the moment where may, maybe that could be true.

If, if you can automate those other roles in the world that you fully can't, um, then I think you need the, I think you need the people. You just might not need as many people. Yeah.

Shaherose: think, yeah, I, I've been coming, right now I'm at the ladder where you might not need as many people after that, sorry. After that zero to one stage where, you know, there's so many companies with fewer engineers getting 10 x more done. Um, and even the idea of automating all these work processes, whether it's HR or marketing, or even go to market, um.

With clay, right? That these things just mean more efficient companies. But, uh, I'm still at the place where the starting line, the starting lineup, [01:09:00] I'm not, I don't know how much of that will be automated just yet. 'cause we need to invent something new. Right. And I think AI can be a companion,

Andre: Yes.

Shaherose: but, you know, I'm not ready, I'm not ready to replace the inventor.

Um, okay. We're gonna wrap on this last question. We're totally over time. What would you tell your past self before you wrote that first check in that first company, whatever that company was?

Andre: Ooh. Um, that you'll see success in 10 years. You'll see inklings of it in year seven. Anything before. Crap. Shoot.

Not that that changes your conviction. And the journey that I've joined and the sales motion that I've gotten on this boat with them to go convince the world of what we are gonna go [01:10:00] change and do not, nothing changes there. And my motive, you know, my enthusiasm and conviction around that, nothing changes.

Shaherose: Um, but you just won't know, uh, when you write that check of whether it will endure and make the impact you hope it can. When you first write that check, you won't really know much until year seven and then you won't know whether it's successful, uh, until year 10. And I wish I appreciated that. I mean, I was a student of the craft and I think I heard that. But until you live it and now I have it with Clay in year seven, I'm like, oh, or year eight. Yeah. Like, it's like, oh, okay. That is true. There's something magical about year seven to 10 in venture capital and this sport that we play.

Yeah. And it is absolutely a co a competitive sport that [01:11:00] we'll only build with time. And so thank you for that insight. This was so fun, Andre.

Shaherose: Absolutely. Same here. Thank you so much. Loved your questions. I hope your audience, uh, en enjoyed it. It was, it was lots of stuff to get my mind thinking as well. Sore. Appreciate the opportunity.

No, likewise. It, it's my favorite thing to spend time with people from the true north. We are the best. Um, and I hope we get to invest together.

Andre: Yes, let's do it. Thank you.

All right. Welcome back. That was another great episode. Hope you enjoyed it as much as I did. So typically, I listen to the episode soon as we record it. Take some time to reflect, do some thinking, do some writing, and share back my takeaways. Many of you have said how much you enjoy the takeaways, which I appreciate because this is why I'm doing this.

I'm doing this too. [01:12:00] Take the time to think and reflect and have my own thoughts about what other people are saying. So it's, it's, the real reason for doing all this is to have some takeaways. However, I'm gonna change the format of how I share my takeaways, and there's two reasons for that. One is. I wanna hear from you.

Uh, I love recording my thoughts, but it's also great to hear what you all think the listeners. So whether you're an angel investor, a venture capitalist, or a founder, I wanna hear your thoughts too. If you agree or disagree or have new thoughts or have questions, I'd love to hear what those questions might be.

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