#Exceptions 8: How First Round Capital Bet on Brand to Change the VC Industry

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This is a podcast episode titled, #Exceptions 8: How First Round Capital Bet on Brand to Change the VC Industry. The summary for this episode is: First Round Capital is one of the most widely loved venture capital firms in tech -- no small feat for a VC firm to claim. Through their platform (VC for brand marketing and value-add projects), they've built the Harvard Business Review-of-Startups, hold 80+ events per year for their portfolio companies, and even help founders pitch them through a program called Pitch Assist. Today, host Jay Acunzo talks to First Round partner Bill Trenchard and how and why FRC bets on brand (and how that changed the VC world for good). We also hear from the founder of a growth-stage startup, Lloyd Tabb of Looker, who describes his experience with Bill and the First Round brand. Before you go leave a ⭐⭐⭐⭐⭐⭐ review and share the pod with your friends! Be sure to check out more insights on the Drift blog at drift.com/blog and find us on Twitter @davegerhardt, @dcancel and @seekingwisdomio. In This Episode: 1:00 - Overview of #Exceptions 2:02 - First Round Capital 4:40 - What do entrepreneurs think of First Round Capital? 7:30 - First Round’s alignment with entrepreneurs 9:00 - First Round’s programs & network of professionals 11:30 - Good behavior under stress: living out brand values 13:20 - Today’s big idea: Thinking long-term 15:11 - “What’s in it for the customer?” 19:20 - Shared experience & empathy 23:00 - Evaluating investment opportunities through empathy 24:33 - Companies with the best customer experience 27:28 - The ugly duckling vs. the swan 28:39 - Hacks vs. the long view 32:00 - Two tactics for handling the hard times in a VC 35:00 - Bill’s hard conversation with a founder 36:00 - Key learning points from this episode

Jay Acunzo: The brand is really built over time. It's built as a series of interactions in my view over many, many years where you're building trust with a customer, and you're really building that trust based on what you offer to them, and what you promise, and what you deliver on. Hey there, and welcome to Exceptions, the show about why brand matters more than ever in B2B. I'm your host, Jay Acunzo, author of the book, Break the Wheel, and I'm going inside some of the world's best B2B companies to understand both how and why they're actually building better experiences than their competition. See, in this world of infinite choice where the buyer has total control, our buyers expect, and more importantly, choose to spend both time and money with good experiences. Brand makes or breaks how others feel about you. You're either a forgettable commodity or an exception. To bring you this series I've partnered with Drift, which offers conversational marketing and sales software. Drift believes that the way businesses buy from other businesses is broken and they're trying to put the human touch back into all this stuff. They, too, believe that brand is the differentiator today, the moat around your business. Today we're mixing things up again for the second straight episode after last time was so well received. If you did listen to the last one, thank you so much. If you didn't, go back and check out your podcast feed that you're listening in, hopefully right now. If not head over to the Seeking Wisdom podcast feed from Drift, and scroll to the Exceptions episode about Grado Labs. Because we went outside the B2B echo chamber to talk about a consumer business, an electronics company, and we went inside their recent rebrand. Today we're taking one step back into the B2B bubble, but we're still talking to an atypical type of B2B brand, a venture capital firm. This firm funds many companies in the seed round or the first round of fundraising. Their name appropriately, as many people know, is First Round Capital. Not only does First Round have one of the strongest and most modern brands in all of venture capital, they can offer us some key insights on how a strong brand is developed because they've seen the evolution of B2B companies from the very beginning, and they invest in plenty of them every year. But it's not their impressive list of funded companies that make them an exception, it's their customer centric brand, or in their words, entrepreneur centric, which up until recently was an anomaly in the VC space. You didn't really build your brand aside from investing in good companies and being staffed by successful former entrepreneurs. But first round started to change all that. They build what they call in VC platform. Platform is basically the function of building the brand and adding value or what they say as value add- in venture to entrepreneurs. Whether it's the first round review, a sort of Harvard Business Review for startups or the 80 events they hold every year ranging from intimate dinners to large summits or their pitch assist program which we're going to hear a little bit more about later today, they develop projects to provide a great experience to entrepreneurs. That, in turn, builds the first round brand. Of course, if you're in tech at all, you know about their hilarious and viral holiday videos. Let's just take a listen to these videos feature both the First Round team and their entrepreneurs. This is from the 2015 video,

Speaker 2: True grit, not going to fall, that pat pat is still a goal. Another year was still here, new unicorns, big press releases, styling, thriving inaudible

Jay Acunzo: Here's a clip from 2016.

Speaker 3: You should really join us RC, be a part of our community. You know that we are stronger together, not alone. If I were you, I'd want to fund me, too. I'd want to fund me, too. I'd want to fund me to. If I were you, I'd want to fund me, too. I'd want to fund me, too. I'd want to fund me.

Jay Acunzo: Corny? Yes. Cringe- worthy? You betcha. Lovable? Sure. Words normally associated with venture capitalists? Not often. Last year, in 2017, to celebrate their 10 year anniversary of doing these holiday videos, they donated their video budget to nonprofits who work to improve diversity and inclusion in tech. What do entrepreneurs think of First Round? Well, we're going to start where we always start these episodes, with the voice of an actual customer or in this case, since it's a VC, a founder who raised seed money from First Round.

Lloyd Tabb: I'm Lloyd Tabb, and I'm the founder and CTO of Looker. Looker builds data tools that let basically large organizations understand everything that's going on with their data.

Jay Acunzo: Can you give me a sense for either size of team, number of rounds you've announced publicly, just trying to get a sense for the size and growth of the company today?

Lloyd Tabb: Looker's about six years old and we're about 600 people now. We've had quite very steady growth. We've raised$ 180 million or something like that at this point. We started in a very crowded space and basically worked our way to the top of it.

Jay Acunzo: Lloyd knew First Round partner Bill Trencher from their work together at another company Live Ops. When he was looking for investors during his seed round for Looker, he immediately thought of Bill and First Round. For someone who has not met Bill and maybe they're interested in either mentorship or actually our fundraising as an entrepreneur, knowing that all investors are smart, all investors say they care about entrepreneurs, what are two or three things you'd say about Bill that it's like," Hey, you know what, he does this either better or differently." What are those unique identifying qualities that you'd flag to someone who's never met him?

Lloyd Tabb: Like I said, he's totally straightforward. What he says he's going to do, he does. He's super well connected so if you need to meet somebody, you can do that. But from a personality point of view, when we raised our first round of funding... The first round actually was Bill and another investor that I went with, Tim Connors, from Pivot North. The second round, we were like," Oh, we really need to do a round." He coached us in a way that was super direct and was the best game plan I've ever heard for fundraising

Jay Acunzo: Bill told Lloyd things that he'd never heard anywhere else from other investors. That's just part of First Round's brand. They offer that kind of advice all the time. They do it publicly with their blog content, semi- privately within their community of portfolio startups, and privately in closed door interactions between the investment team and entrepreneurs.

Lloyd Tabb: The advice was so spot on and so clear and I'd not heard it anywhere before. I mean, Bill routinely tells me things like that that I haven't heard before, about the best way to execute. He's also, I think he went to early stage investing because he wanted to be aligned with the entrepreneur. I mean, he's a naturally an entrepreneur. First Round generally doesn't come in for the follow- on rounds so their incentives are exactly aligned after the first... After the first round, it's a negotiation; but after that, they're completely aligned with the entrepreneur on everything.

Jay Acunzo: This alignment with their entrepreneurs is something that most investors would claim, but First Round actually allows this belief to affect everything they do. Their brand feels more like the startups they invest in than what many VC brands felt like around the time investor Josh Koppelman started First Round in 2004. The word I would use to describe those VC brands back then? Stale. Like many B2B companies well beyond VC, those firms didn't have to care about their brand for very many years. They had a supply of something, in this case capital, and they could simply set up shop and promote both their own dollars and their partners' expertise. They could win on competency. Experience didn't quite matter. But as the cost of capital started to decrease because there was way more early stage firms and as the cost of starting a company started to decrease because there were way more free tools on the internet, suddenly early stage VCs had to differentiate on more than simply competency. They had to provide a better experience, just like every other B2B niche we've explored thus far.

Lloyd Tabb: The brand is amazing. I mean, there is so much to know about being a good entrepreneur and that they work really hard at upleveling that art. Actually, particularly at being a tech entrepreneur. I've been involved in a lot of their CTO summits. I've been on the review. The events that they hold, they hold a CEO summit and a CTO summit every year. They're basically seminars about how to do this well. If you're a CTO, it's a seminar on how to be a great CTO. If you're a CEO, it's a seminar on the best practices in being a CEO. That information is super hard to come by. It's not readily available anywhere. And the networking part of that is great. They recognize that they don't know the answers, but they know the people who know the answers and so they set up a situation of cross mentorship and it's an amazing thing to do. I've never seen it done successfully anywhere else.

Jay Acunzo: Was there any experience you've had with that firm that you didn't expect coming in that added significant value to your career?

Lloyd Tabb: When we were first getting started, we sold to a lot of First Round companies because we got introductions through the CTO summit. We would go into the CTO summit, and I'd talk about data in a seminar. People would come up and talk to me afterwards. We'd end up showing them Looker. They'd go," Oh, we want that for our company." In later years, when we showed up, there were all these people who were using Looker, who would come talk to me, and then other people will be standing around saying," Oh, maybe we should be using it too." It helped us in our early bootstraps stage to get started and to get our initial customers and get good customer feedback.

Jay Acunzo: Something that came up again and again in my conversation with Lloyd was the importance of relationships and of acting with integrity during the most high- stress, high- stakes moments, when building your startup. If you've listened to exceptions before, you know that we've defined a brand as a sort of cause and effect phenomenon. The cause of your brand is the collective behavior of your team. The effect is how others then feel about you. For First Round, nowhere does this become more important than during the tough times, during the hard talks, the moments where things are uncertain or maybe even close to failure. Moments where you expect somebody to look out for number one, look out for themselves instead of the person or people that they serve.

Lloyd Tabb: With Bill, right before Looker, we spent two years trying to make a company go. We had helped get it funded and we had tried, and it wasn't going to plan. The behaviors during those times are the times that you really want to pay attention and care about because things don't always go to plan and how do people behave then. For me, I've seen bad behavior at bad times, and I've seen good behavior at bad times, and that tells me who I want to be with.

Jay Acunzo: What does good behavior look like?

Lloyd Tabb: I can tell you what bad behavior looks like. I remember being on the board of a company that I personally, Angel invested in and things were not going well. A bridge note with horrible terms that wash out all the other investors, that's bad behavior, in my opinion. I watched how the founders that basically totally destroyed the cap table because there's the opportunity to do it because it's a tough time right now. That's when an entrepreneur is most vulnerable and is your venture person going to take advantage of that? Generally, it's not a good move because what ends up happening is, okay, so they may have recovered some of the money they put in, but that makes the entrepreneur not want to work with them next time.

Jay Acunzo: When I talked to Lloyd, he used this word to describe investors during tough times with their founders: opportunity. When things get tough, VCs have the opportunity to take advantage of founders because they're running out of choices and capital. But there's also another less obvious opportunity that's still present when things go downhill. The opportunity to live out your brand values. You can actually strengthen your reputation the most during the hard times, by acting in your customers, or in this case your founders' interests. You can do that, you can act in their interests, even if that doesn't make sense for you in your business right now. Because even if you take a short- term loss, you set yourself up for long- term success. That is our big idea for this episode: thinking long- term. As marketers and entrepreneurs in B2B, we get so caught up in the day- to- day and so much of our work feels focused on short- term gains. But eventually, something we do today has to enable greater results tomorrow. That might mean taking that initial step back right now, whether to better understand our customers before we do anything intended to serve them, which is what our work is for, by the way, or we need to take that step back because we're okay not seeing immediate results today and instead we're setting ourselves up for better results later. It's like those toy cars that we used to have as kids. Do you remember these things? You would wind them up if you pulled them back and then when you'd release them, they would speed away. What most of us seem to do in B2B marketing today is we put that car on the table and we just declare we're going to make it go far and fast. Then, we just start flicking it forward little by little. Then, when it doesn't go far or fast, we declare," Well, it must be the car. This thing was over promised. It's not working." But there is a way to make it work better. Because if we'd only be willing to pull that car back to take on that little near- term debt, building a great brand, doing what's right for customers instead of just ourselves, we would then go faster and further than anything we'd imagined. But it's that little moment of pulling back that so often deters us. It doesn't feel like forward progress. Now, no amount of monologuing in this episode is going to change the culture of your business. Instead of imparting any pithy advice that might fire you up but doesn't actually lead to any change, why don't we focus on the actual change? I want you to try something and I'll do it too. Grab a fresh notebook. On that first page, write the following question: what's in it for the customer? Then for the next week, all I'm asking for, one week, every time your team, your company, or even you make a decision at work, just write down what that decision was under the headline. We published this article. We sent this email. We chose to promote the brand with this tagline. All these marketing decisions you're making, just write them down under that headline: What's in it for the customer? Then, at the end of the week, circle the decisions you feel were made in the best interest of the company or maybe other stakeholders, but not the customer. Then, try to understand what would be different had you made that decision another way, focused on the customer. I'm not asking you to do anything differently. I'm not asking you to overhaul the work, convince a boss or a peer or a team. I'm not asking you to take action quite yet. The first hurdle to taking better action is just to see plain as day, how very many decisions we make at work without considering what's in it for the customer. If we could answer that question every time we made decisions, we'd be living out today's big idea. We would think longterm. Now, let's hear from Bill Trencher, one of the partners at First Round.

Bill Trencher: We focus on, I mean, as the name says, we focus on the first round of capital that the company takes in. The first institutional round. Typically, this is beyond where we're founders or friends and family have put money in, and they're going out and raising money for the first time from institutions. It could be a pre- seed, it could be a seed, it could be an early aid. That's sort of the zone of where we play.

Jay Acunzo: One thing I've learned from doing this first season of Exceptions, and by the way, season two is coming next year. Anyways, one thing I've learned from season one is that most CEOs and founders are obsessed with something and that something drives their decisions and their thinking about their entire business. Bill was no exception. I mean, he is an exception because we're talking about exceptions on Exceptions, but he's one of the group of exception. Let's just move on. His obsession is the thing that creates that long- lasting thriving brand we all seek, deeply understanding and empathizing with his audience. His focus on walking in their shoes was one of the things that made Bill want to work at first round to begin with.

Bill Trencher: There was just this tremendous sense of collaboration. Then, I think there's also a tremendous sense of trying new things and being a startup ourselves. That was the other thing that I really tried to is this culture of experimentation, which I didn't see in most venture firms. Structurally, there was a reason why, I think, First Round, has that, which is that early on that the founders of the firm had decided to effectively take most of the fee income and put it towards services to help founders and not put it in their own pockets. That created this budget to do new things. It's very hard to go around the table and ask a bunch of GPs at affirm to take money out of their pockets literally to go fund some speculative new thing. Here was a culture of affirm that already it started doing that from day one. I just have tremendous admiration for my partner, Josh, and my former partner, Howard, for what they started and then quickly brought on Chris and Rob, who sort of embodied the exact same values and the same attitude and what they built over the many years before I got here.

Jay Acunzo: Because First Round operates more like a startup than other VCs and because they embrace the culture of experimentation endemic to startups, they're able to develop a deep understanding of their founders, which then translates into building a strong brand because they know from their own experience, what their founders are going through. Then, they supplement their past experiences or their own unique experiences with ongoing conversations about what's happening with founders outside First Round's walls. In both cases, they want to understand one thing above all else: a founder's pain. Just think, if you're going through a breakup, would you rather talk to a friend who has been married to their high school sweetheart for 30 years or one who has recently gone through a divorce or a breakup themselves and somehow got over it? Probably the latter. Sure, the married friend has what you want, a long and successful relationship, but the single friend has what you need, which is empathy. In First Round's case, they have both. They have the want and the need. They're a VC firm and a brand that is well- known and successful, which startups want. They also invest in dozens of wildly successful startups, which startups want. But they also have what founders need because like entrepreneurs, they iterate and experiment within their own business, and they listen. They actually care about their founders. It's evident in their actions, not their words. Whereas so many VC websites claim that they actually care, that they build community, First Round actually delivers. I mean, they really spend time and money to build community. You can't fake 80 events every year. Instead of building that portfolio of individual companies, they create community. Even their blog, the First Round Review is different than what other VC firms typically publish because it leans so heavily into the wisdom of other founders. Operators helping other operators, rather than focusing on what the firm and its partners believe about tech and raising capital. The latter two are the topics that you typically find on a VC block. One of the projects that Bill worked on that exemplifies his firm's willingness to experiment is called Pitch Assist. It's a program to help founders raise capital.

Bill Trencher: It further improves the brand if you do very high quality work and you create a high quality service. It creates more brand awareness and a strength of brand for you in the ecosystem. As a venture firm, we're often in competitive situations with other firms and we have to compete to win deals. When they can talk to five founders that have been funded by us, and they could talk about the experience they've had, not only with us as individual partners but some of these other things that we do like Pitch Assist or the many other services we provide or the community that we connect to each other, that's where we win or lose that deal, is in that conversation and in those five conversations. That's sort of a long- term effect of this is over time as you do more and more work, and you effect more people with programs like this, and with services you provide, you're improving that customer experience. You're raising the bar for the industry. You're doing what the iPhone did for the Enterprise, increasing the expectations of the customer and building a brand along with that. For us, that's the longterm impact we hope. It's through, as we talked about earlier on, it's the hundreds of interactions you have with a founder across every touch point that you have. That's how we think about it. We think about the whole founder experience from the day they hear about First Round or they read a First Round Review article, or they hear about us somewhere in the market to their exit, whatever that may be, good or bad.

Jay Acunzo: Unsurprisingly, that empathy, that deep understanding of the customer experience and their problems, that's one of the first things bill looks for when evaluating whether or not to invest, because it's a key predictor of whether or not a company will be successful over time.

Bill Trencher: What I'm looking for four at the earliest stages is how the founder is really understanding that customer experience. What are the things that they do? I typically ask a founder a lot about what they did to come up with the idea or the insight. If I'm seeing a founder that's going out and living sort of with the customer, so to speak, they're living, they see the pain one- to- one... I have one founder that was, his company is building Enterprise security cameras and he spent the first several months setting up other people's Enterprise security cameras, getting up on ladders and understanding everything that went into the install process of that and all the pain that was involved in building those cameras. When I see that type of obsession with understanding everything that the customer has to go through to experience your product and what that experience is like with the existing products out there, and sort of understands and sees a gap in the market, that's what I'm looking for. Those types of insights on the product. I could many, many examples from investing for many years, but that's the type of thing I'm looking for first, because it's someone who understands the problem deeply. First, if you understand the problem deeply, then you can start to build a much better experience and a better product to solve that problem.

Jay Acunzo: Do you have any examples that you've invested in, or that you just admire in B2B of a founding team that really seems to have understood from the beginning that like a true great customer experience?

Bill Trencher: As you know, and everyone thinks customer experience is how a product looks. Like the UI or the UX and even user experience is sort of in the word user experiences, but it's actually really understanding your customer and their pain point deeply. That's the most important thing. It's not always just pretty looking web pages that is going to get them over the line. It's really going deep into trying to understand their pain points. A good example would be Lloyd Tabb who started Looker.

Jay Acunzo: He's the founder that I talked to earlier about Bill and First Round, the founder of Looker.

Bill Trencher: Which has been a very fast growing Enterprise company in the business intelligence and analytics space. He understood at a very deep level what data scientists, which was when he started the company, it was sort of an emerging new title for people in the Enterprise who focused on analyzing the data of the company. He understood what they needed, how they were thinking about the company in a very deep level, because he had done that previously at many other companies, including one that we worked on together called Live Ops where he built a analytics stack for us that was really better than everything else in the industry. We were competing in the call center industry and he had sort of felt the pain deeply because he had lived it. He had seen all the business problems of managing a very operationally complex business. Then, he went to go do it to two other companies after that. It was after that, that he said," There's a general purpose tool to be built here. I've seen this problem now many, many times." He built a platform to go do that. I'll tell you, the first version of Looker was not pretty, very contrarian, and sort of it was ignored, I think, by competitors for many, many years. Yet, customers loved it. Customers love the power that it gave them and the ability to see their company in a different way. They've had tremendous market traction as a result. Only over time, of course, the user interface improved, but the initial product, I was looking for the fit with the customer and the experience that they were having with it and I couldn't get that from looking at the UI. It looks terrible. It was just lots of things all over the place from a UI standpoint. But the core of the product, with the language that he built, was actually incredibly powerful. He had half a dozen customers when we invested. When I talked to them, they were effusive in their praise of the product. One of the things you kind of look for with product-market fit is you ask them what they would do if the product went away. They say," Well, I quit my job," or" I'll try to find another company where I could create this." That's the type of thing that you're looking for is that kind of early love of the customer and it doesn't always just come from a beautiful UI.

Jay Acunzo: Lloyd's company, Looker, didn't seem that great in the beginning, but because it was built on his in- depth knowledge of his customers, people loved it and it grew into a very successful company over time. It's kind of like the ugly duckling story with an added twist. In reality, duck eggs take 28 days to hatch while swan eggs take 42. Two full weeks longer. While duck eggs hatch pretty quickly and produce your standard garden variety or maybe pond variety ducks, swan eggs take their time. When they hatch the swans, don't look all that great. But over time, these beautiful majestic birds form. On average, mallard ducks live just five to 10 years while swans can live to nearly 20. By taking the time to incubate, Lloyd made a Swan company instead of a duck company, and Lloyd worked hard to bring on investors who fully understood that he had to make these longterm decisions to build this beautiful business. He could do exactly that with First Round or a Bill who wouldn't nag him or demand too much too soon. As early stage investors they fully understand that stage of growth, and as First Round the brand, they fully empathize with their audience. Now, despite the popular dialogue around growth and business today, Lloyd did the opposite of looking for a hack or a quick fix. He didn't try to maximize profits in the short term or do whatever it takes to just juice the numbers and then maybe raise the next round at a higher valuation and so on and so forth. No. He started by spending years with other companies developing insider knowledge of his customer's pain points, and then came out an initially ugly platform. Those are Bill's words, not mine. That platform, by the way, had the potential to become incredibly successful, but only if you were thinking long- term. In the VC world, investors have no guarantee what their startups are going to become: a duck, a swan, or maybe just some roadkill. I think I've killed his metaphor, but a VC can focus on the short- term or the long- term. The short- term is to try and recover as many dollars from that investment as possible pushing for decisions in their best interest, pushing for the optics to look great so that they never really take a loss. And they're doing things in their own interest, not the founders' or the team that the founder has built. On the other hand, VCs can also take the long view. They can do things that can optimize for returns later, choosing to support that founder by giving them honest and correct advice, making the right intros at the right time, helping them make the right decisions for them during a tough time.

Bill Trencher: Where you're measured is where things aren't going well and when you're going through a particularly tough time. The toughest of times for founders is when they have to shut down their business. That's where, at least my sort of playbook as a venture capitalist and my thinking has always been to invest long- term in the people, but be willing to take short- term pain as a result of that, which would be the loss of money. Not trying to manage every penny coming back to me, but to think about this is someone who I backed for a reason and I'll likely want to continue to back them in the future. It's often that one company doesn't work out, but the next one will, and I want them to have a great experience with this whole thing. I know how painful it is to go through a company that isn't working and it's so hard. So often, other people get up and leave. I think that's a sort of example of long- term thinking of a customer experience where you're, I'm trying to think about reinvesting in that person in five years and ultimately having a very successful outcome down the road and taking this pain, this short- term, where my sort of dashboard is telling me don't do this. But I think that it's the right thing for the sort of long- term nature of our business.

Jay Acunzo: With respect to any sensitive details and names and things like that, I totally understand that, but could you articulate an example of when a company was shutting down, these are the types of things that you went through with them to provide that good experience? Because I think way too often, especially in tech, we misinterpret things like experience, brand, customer centricity as these bubbly, excited, culture centric things, but wrapped up in that has to be how you handle, in your words, the painful moments, that negative time, the hard times. I'd be curious if you could paint a picture for us, what that actually looks like in reality.

Bill Trencher: The biggest thing is having a tremendous amount of empathy, realizing that this is for someone who feels that they have failed and they failed everybody. They failed their employees, they failed their spouse, if they're married or in their family, and they failed their investors, and they've failed them themselves and what they wanted to accomplish. Having been through the failure of a business myself, I totally understand those emotions. I think you have to be able to put yourself in their shoes and understand what they're going through, and they're now grappling with something that is, in most cases it's an aqua hire, which is where a company like a larger company, a big tech company, a Google or Amazon or something like that, is going to sort of come in, swoop in with some few million dollars to acquire the team and bring them over to work on something inside their company which may or may not have anything to do with the original product that they were building. I think you need to sort of look at, okay, this is what they're faced with, and realize that it's during that time that they're feeling probably the most lonely, the most isolated. They don't know what to say to their team about what's going on. They don't know what to say to their family and friends. There's just nobody there for them. I think the number one thing is you have to be proactive and be there, call, check in, text, and see how kind of just be a voice for them and to talk through it with them. That's sort of number one. It's just understanding there's a human being here who's going through something very difficult and everybody is, other investors are, generally, not going to spend time there. I try to spend more time there in those cases. It's because they're not getting that support elsewhere. They're feeling completely isolated from the world. That's number one, it's just understand the human being. The second thing is to help them think through tactics that can improve their chances during the sale process to hopefully land them in a spot where they're happy with the outcome. What I try to help founders think about is think about what team you're going to work on. If they only have one option, it's sort of that or nothing. Then, we could talk about how they make the decision, whether or not to do that, or to wind down the company. But usually they go with that one option. But if they have multiple options, I try to help them think through, where do they really want to? What are the problems they go want to go solve for the next few years? Where do they feel most excited about going? And try to get them more oriented towards the future and what they're going to be building and what they're going to be creating.

Jay Acunzo: Just to interrupt, Bill, really quick here. At this point I asked him if he could give me an example of a conversation that was really tough to have with a founder where he felt like First Round's brand values helped him, Bill as an investor, add value during that conversation. With respect to some of the sensitive details, we chose to remove the name of the founder, but here was Bill's response. This founder was looking to sell his company to a large HR. Well, he's looking to sell his company and we didn't know where would be a potential place to land. They did what most founders do in this case, which is they make a list of potential acquirers and they start doing outreach. This was a case where I happened to know the CEO of a large public HR company. I Reached out to him and said," Listen, I think this is a very special team. I think they're very excited about what you're doing. I think you'd be very lucky to have them." He got right back to me and said," It sounds interesting. Let me get one of my guys on it." Few weeks later, they did end up buying the company. The reason I had reached out specifically to that CEO was I knew him and how he operates his company and I knew the culture there, and I knew how important culture was to this founder. The last time Bill checked in, that founder and his team are still happily working for that HR company. Bill, well, he can't wait to back that founder whenever he starts his next business. In the end, what could have been a total failure in the eyes of the founder ended with a moment of actually feeling kind of good about his investors. See, doing what's right for the people your business serves is doing what's right for your business. B2B businesses exist for one reason: solve a problem for the customer. For Bill, that's an entrepreneur, not a customer, and maybe you serve somebody different. But no matter the case, no matter who we serve, we can all take a long- term view of the work. If we refuse to keep shifting our beliefs and our decisions based on whatever we think will drive a result right now, we'll create a brand that has staying power. Solving For the customer is solving for the company. The good news is that most people don't embrace that. If you do, well, you'd become the exact type of brand that people actually love. You'd become an exception. Thank you so much for listening to another episode of Exceptions. If this is your first time hearing this show, it's one of several shows that Drift runs in it's Seeking Wisdom podcast feed. So pull up your favorite podcasting app, head over to Seeking Wisdom and subscribe to get this show and several more about getting better every day in the B2B world, whether you're in marketing, product, sales, you're an entrepreneur, you name it. That's Seeking Wisdom in your podcast feed. Drift has asked me to ask you to give us six stars in your podcast player. Six stars as a rating. We're almost at the end of season one, and I still have no idea how they do that. Here's the deal. Give us five because that's physically possible, then I want you to mail Drift a sixth star with the hashtag Exceptions written on it. My gosh, if people actually mailed Drift a six star, can you imagine what a ridiculous impact that would be? All right. I don't know how much of a community we're building around this show right now. It's super hard to tell with the podcast, but mail Drift a six stars. Sure, why not? Go to the Drift website, find their address in Boston, mail them your six star. Anyways, whether you mail them a star or you're just sending it to me in theory, thank you so much for listening to this show, and I'll talk to you soon. See you.


First Round Capital is one of the most widely loved venture capital firms in tech -- no small feat for a VC firm to claim. Through their platform (VC for brand marketing and value-add projects), they've built the Harvard Business Review-of-Startups, hold 80+ events per year for their portfolio companies, and even help founders pitch them through a program called Pitch Assist. Today, host Jay Acunzo talks to First Round partner Bill Trenchard and how and why FRC bets on brand (and how that changed the VC world for good). We also hear from the founder of a growth-stage startup, Lloyd Tabb of Looker, who describes his experience with Bill and the First Round brand. Before you go leave a ⭐⭐⭐⭐⭐⭐ review and share the pod with your friends! Be sure to check out more insights on the Drift blog at drift.com/blog and find us on Twitter @davegerhardt, @dcancel and @seekingwisdomio. In This Episode: 1:00 - Overview of #Exceptions 2:02 - First Round Capital 4:40 - What do entrepreneurs think of First Round Capital? 7:30 - First Round’s alignment with entrepreneurs 9:00 - First Round’s programs & network of professionals 11:30 - Good behavior under stress: living out brand values 13:20 - Today’s big idea: Thinking long-term 15:11 - “What’s in it for the customer?” 19:20 - Shared experience & empathy 23:00 - Evaluating investment opportunities through empathy 24:33 - Companies with the best customer experience 27:28 - The ugly duckling vs. the swan 28:39 - Hacks vs. the long view 32:00 - Two tactics for handling the hard times in a VC 35:00 - Bill’s hard conversation with a founder 36:00 - Key learning points from this episode