Village Global's Venture Stories Village Global

Graham Duncan (@GrahamDuncanNYC) is a longtime investor and author of a legendary essay on reference checking: https://grahamduncan.blog/whats-going-on-here/ He was interviewed by Village Global co-founder and partner Ben Casnocha (@bencasnocha) during a special masterclass for Village Global founders and friends of the firm.

Takeaways:

- Be aware of how your own mindset and mood affects your analysis of a candidate as well as how it impacts how the candidate shows up in the interview. For example, you might be anxious and stressed yourself and that makes the candidate nervous — you may end up experiencing them as nervous, but in fact you are the one that has created that dynamic in the interview.

- Ask the candidate: “If you were hiring someone to fill this role, what criteria would you use?” When someone is particularly good, they are skilled at capturing the essence of what makes someone good at it. This also lets you see how they respond without initial priming and framing.

- The ideal reference check call should take longer than you might think (e.g. 45+ mins). You sometimes need to wear them down over a long period of time before they open up about their real concerns.
- If you aren’t aware of or can’t imagine the downside of working with this person, you haven’t done enough reference checking.


- Ask: “How strong is your endorsement of Jane on a scale of 1-10? (If they answer 7, say actually sorry 7s are not allowed, 6 or 8? If the answer is an 8, ‘What is in that two points?’)”


- When someone comes from a prestigious company, we often fail to control for the weight that the reputation of the company carries when we form our impression of them.

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Sebastian Mallaby (@scmallaby) is the Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations and a contributing columnist for The Washington Post. He is the author of five books, including most recently The Power Law: Venture Capital and the Making of the New Future. He joined Olga Serhiyevich, head of investor relations, for this conversation.

Takeaways:

- Sebastian wrote a book about hedge funds prior to The Power Law and he contrasts VCs and hedge fund managers by saying that VCs are much more extraverted. VCs and others around the startup world are eager and willing to make introductions and actually follow through where others say they will make an intro and don’t follow through.

- Venture is a fun and exciting business to be in because you’re dealing with bold visions of the future, highly talented and optimistic founders, and you get to see the progress and outcome of each startup that is trying to do something novel and ambitious.

- Sebastian says that bubbles are inevitable in venture capital because of the nature of the business. He says there’s no “off switch” or equivalent of shorting a company. There are also so many connections among venture capitalists that no one is willing to say anything negative about anyone else’s investments.

- He predicts a significant expansion of startup funding outside of Silicon Valley post-pandemic. Being able to deals over Zoom significantly expands the scope of where a VC can invest.

- He is bullish on Europe especially because it has a consumer market that is even bigger than the US and the entrepreneurial mentality is growing among prospective startup founders in Europe.

- Sebastian says that AI is the biggest development on earth since humans first developed the capacity for abstract thought. Some compare it to the printing press and he says it will be way bigger than that.

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Julio Vasconcellos (@JulioV), managing partner at Atlantico, and Ana Martins (@martinsg_ana), partner at Atlantico, join Anne Dwane (@adwane), co-founder and partner at Village Global, to discuss Atlantico’s 2023 report on digital transformation in Latin America.

Takeaways:

- If Latin America was its own country it would be #3 in the world in terms of population and GDP.

- Brazil and Mexico combined make up over half of the population of all of Latin America.

- In the US about 60% of public market capitalization is made up of technology companies but in Latin America that proportion is only 1.8%.

- Latin America is about 10-15 years behind where China is, which is itself about 5-7 years behind where the US is. There is a ton of catch-up that will happen over the next couple decades and that presents a huge opportunity.

- Latin America has some deep scars from hyper-inflation decades ago. They were some of the first countires to quickly raise rates in order to tame the inflation that we've been seeing globally in the last few years. That has paid off with some countries in LatAm starting to lower rates already.

Check out the full report here: https://www.atlantico.vc/latin-america-digital-transformation-report-2023

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Gurdane Bhutani and Zeshan Muhammedi are co-founders and GPs at MBX, a VC firm investing in early-stage bio/healthtech companies tackling major public health threats. Prior to that they co-founded healthcare and life-science venture capital firm FundRx, where they championed the firm's build-out of its community-driven investment infrastructure, modeled on the scientific peer-review process.

Takeaways:

- Pharma companies have realized that it makes sense to develop drugs that will have a population-level health benefit rather than developing drugs for small numbers of people that cost exorbitant amounts.

- Noise pollution is actually a big public health issue that is linked to various diseases. Companies are working on making society less noisy using things like concrete that is quieter when cars drive over it.

- Gurdane and Zeshan have learned from working together for a long time how to engage in productive disagreement well by acknowledging what their respective strengths and weaknesses are and weighing the strength of one person’s enthusiasm against the strength of the other person’s skepticism.

- Genomics has been a huge story in medicine in the last several decades but hasn’t lived up to its promise because we’ve been missing an understanding of how environmental triggers drive diseases that our genes prime us for.

- In the future, given changes at the FDA and EPA, drugs and chemical products will be tested on “organoids on a chip” or high-throughput systems that can give us higher fidelity data than actual tests on living animals.

- Studies are often powered to look for benefits of a drug rather than find rare long tail side effects. It often takes years and years for the downsides of a treatment to become apparent.

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Lee Hnetinka, founder and CEO of Future and Darkstore, joins Olga Serhiyevich, Head of Investor Relations at Village Global, on this episode. Lee and his companies are building innovative solutions in retail and e-commerce and have worked with world’s most admired brands like Nike, Adidas and Disney where they enabled same-day and 1-hour delivery for customers nationwide. They’ve also worked with tech companies like Snapchat, Shopify and Stripe to enable next generation payments and loyalty program solutions.

Takeaways:

- Lee says cities will look completely different in a few decades. Retail has been the backbone of cities for a very long time but as more and more commerces goes online, physical stores will transform into more of a place to go to have an experience.

- In the old days loyalty programs used stamps to provide a potential discount on a future purchase but now provide the customer with more convenience and a better experience.

- Loyalty programs have been transforming into tiered programs where a customer can pay for status. Lee predicts that every single loyalty program will turn into a tiered program with multiple paid options in the future. For example, there may be multiple levels of Amazon Prime in the same way that there are multiple tiers at American Express.

- Dark stores were pioneered in the UK and leveraged existing stores that had excess space to carry products from many different retailers in one place. Lee partnered with companies like Office Depot, Mattress Firm, and Iron Mountain to make Darkstore a reality. Fun fact: 90% of the population of the US lives within 5 miles of an Office Depot, and on average only three people a day walk in to a mattress store.

- FastAF, the consumer-facing brand at Darkstore, provided high-end versions of the products that someone would typically find in a convenience store. A lot of the core value was the curation that went into which products to carry.

- One of the keys to success for a business like Darkstore is to consider unit economics on a per-building basis and to make sure that there is enough population in any one place to support a physical location.

- Running two companies has made Lee better at both of them as compared to running only one. He says that many insights are transferrable between them. Also, when making decisions, Lee asks whether a decision is reversible or not and spends most of his time on the irreversible decisions and errs towards moving quickly on the reversible ones.

Thanks for listening — if you like what you hear, please review us on your favorite podcast platform.

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Cameron Dawson, Chief Investment Officer at NewEdge Wealth, joins Olga Serhiyevich, Head of Investor Relations, on this episode. Prior to joining NewEdge Wealth, Cameron was the Chief Market Strategist at Fieldpoint Private Securities and a Senior Equity Analyst at Bank of America.

Takeaways:
Cameron says that wealth management firms can provide the next chapter of growth for VC. There’s a notion that clients at wealth management firms are less sophisticated but in fact managing their assets is often much more complex than managing money for an institution. At wealth management firms, each client is very different and each one is managing their own money rather than that of other individuals, which adds a new dynamic. The law of large numbers is a drag on funds. As they get larger the alpha that they used to be able to get decays into beta when they become less nimble. Being a jack of all trades is key to succeeding as a CIO. The last 16 months have been a whirlwind but have also provided a huge amount of learning and have helped Cameron expand an already large skillset. Cameron doesn’t expect interest rates to fall anytime in the next six months or so. She says a recession is still a possibility but they usually take you by surprise and people have been expecting one for a long time and it still hasn’t materialized. Cameron has done a number of media appearances and says that the key to public speaking is practicing over and over again. She says that she works on distilling concepts down into simple explanations and practices them out loud in the mirror all the time. Both Olga and Cameron love ballet and Cameron explains why she loves it and how practicing ballet has helped her career. She says that there is a powerful artistry, history, and beauty to it and that the gruelling training regime prepared her well for other pursuits in her life. Thanks for listening — if you like what you hear, please review us on your favorite podcast platform.

Check us out on the web at www.villageglobal.vc or get in touch with us on Twitter @villageglobal.

Want to get updates from us? Subscribe to get a peek inside the Village. We’ll send you reading recommendations, exclusive event invites, and commentary on the latest happenings in Silicon Valley. www.villageglobal.vc/signup