Riding Unicorns

S4E6 - Paul Murphy, Partner @ Lightspeed Venture Partners

June 08, 2022 Riding Unicorns Season 4 Episode 6
Riding Unicorns
S4E6 - Paul Murphy, Partner @ Lightspeed Venture Partners
Show Notes Transcript

Paul Murphy (@paulbz on Twitter) is a Partner at Lightspeed, a global venture capital firm focusing on multi-stage investments in the enterprise technology, consumer, and health sectors. Prior to his stint at Lightspeed Paul worked at Microsoft, Betaworks, Giphy and Northzone to name but a few. Paul also has extensive experience as an entrepreneur having set-up several companies namely Mobile Games Studio, Dots and calendar app, Katch. Paul is now sharing his knowledge of what it takes to build a successful business with the next generation of founders and helping Lightspeed identify the game changing businesses of the future. 

Paul spoke to Riding Unicorns to shed some light on the decision making process behind his career moves, the lessons he has learnt from incorporating businesses and how his experiences in business has informed his approach to investing. The guys also go on to probe Paul on why Europe is becoming attractive to U.S funds, what common traits successful founders share and what he aims to achieve moving forward. 

Make sure to like and subscribe to the Riding Unicorns podcast to never miss an episode. Also don't forget to give Riding Unicorns a follow on Twitter and LinkedIn to keep on top of the latest developments.

[00:00:00] James: Hello. Welcome to the riding unicorns podcast. This is the podcast all about growth startups on James Pringle. I'm a technology entrepreneur and investor and founder of Pringle capital. My co-host is Hector Mason. Hector is a partner at B2B investor episode one ventures. This podcast is all about uncovering what it takes to build a unicorn business. 

[00:00:36] We speak to some of the best founders and investors. Many from unicorn companies, and ask them about that journey, operational insight, tips, lessons, stories, and the thing that can help uncover what it takes to build a high growth business.

[00:00:52] This week's episode is with Paul Murphy partner at Lightspeed venture partners, Lightspeed, one of the world's top venture firms, having that unicorn such as Cameo, Carter, snap, epic games, and many others. Paul is a fascinating person to interview as he's been part of multiple exits on the founder operator side of the table, including Giphy, the gif search engines, exit to Facebook. And he's also been a successful investor, backing businesses in his roles at north sewn and Lightspeed. So without further ado, let's get started. 


[00:01:25] James: Hi, Paul, welcome to ride a unicycle and thanks for joining us.

[00:01:28] Paul: Thanks so much for having me guys. 

[00:01:30] James: So Paul you've had an amazing career really, as an operator, founder and investor, maybe we could start by just getting a run through from your perspective of your career today. 

[00:01:42] Paul: kind of going back to the beginning when I was in high school. , I used to hack video game consoles and I would sell modified consoles, with a bunch of pirated games, to a bunch of people in my school, including some of the teachers. but I sort of like just thought that was fun and.

[00:01:59] Got me into tech and I kind of went from there to go new websites. And eventually I studied computer science at university, but I built a company, while it was there and, actually left university to work on that. So I always felt like I never really thought of myself as an entrepreneur, but I always kind of was in the building mindset.

[00:02:17] I always wanted to build things. so I went through that journey as a founder, at university eventually sold the company, nothing glamorous or as exciting by today's standards, but, thought it'd be good to learn how to do it bigger and better next time. So I went to Microsoft and Microsoft at the time.

[00:02:37] Was the company. I just usually admired very technical, but they knew how to sell a market. I was supposed to go there for two years and I worked on super interesting projects and got moved all over the world. So I stayed there for almost eight years, total. And then I finally left and, made the leap back into kind of the entrepreneur side and, joy.

[00:02:58] first to accompany that sparked capital backed called aviary photo editing company that we sold to Adobe. And then, I co founded a few companies, from scratch. so one was called Giphy, which Lightspeed invested in, and then another was called dots, which the game studio that my prior fund north sun invested in, anyway, went through this journey is that both companies sold.

[00:03:20] To Facebook and take to, respectively. Uh, and then I went into investing it wasn't something I was seeking out, but I, I was approached. I thought it'd be fun. so I give myself nine months. I thought I'd try it out. And I just fell in love with investing. I felt like I was able to get a lot of the stuff, not everything, but a lot of the stuff I loved about being a founder, the sort of the ability to kind of move between lots of different industries and topics. And so I've been now investing for just over four years.

[00:03:49] Hector: It's a brilliant story. And notable that you've been successful at picking which companies to join as well as which companies invest in it. I always think. Interesting thinking about, you know, talking to my friends in startups, about their thought process for joining a company. And usually it's just like, oh, well I saw the job and they look kind of cool, but actually, if you're going to be really smart about it, you do a VCs job before, deciding to join a company.

[00:04:16] were you very deliberate about which startups, which companies, you joined.

[00:04:21] Paul: Uh, I'd love to say that I was, but the honest answer is when I left Microsoft, I kinda, you know, was leaving and I was in a pretty senior job. I had risen really fast within a couple of years at the company. I don't think of myself as an overly confident person, but I left thinking I can take, you know, any of these little tiny startups I want to, to join.

[00:04:43] the truth is no one wanted to touch me. I was branded a corporate guy and they didn't know if I was, you know, one of the good, a hundred thousand people at Microsoft or one of the bad ones or one of the mediocre ones. so the company had joined, I mean, it's an amazing team and the investors are incredible, but they had 10 months of cash left in the bank, their product head stalled.

[00:05:04] so I came in and it was very much like, see what you can do. I don't want to say it was the last in the list, but it was like 20 companies I had approached. And this was the only one that gave me a shot. So I'm incredibly grateful for them for doing that. but was not in the, uh, in the driver's seat.

[00:05:19] James: the Giphy story must been, you know, wild journey. So, maybe you could explain where that idea came from and how the exit came about as well.

[00:05:30] Paul: Yeah. So the story there is, pretty cool. These two incredible technical. Designers developers. I don't know what you want to call true. Polymaths, Jace cook and Alex Chung started hacking away at this idea. they just felt like gifts were tribal knowledge. Like you had to find your tumbler page and you would keep your tumbler page.

[00:05:50] And you knew where there were some cool gifts here and there and you'd have all these bookmarks and I thought this should be accessible to everyone. It should be easier to find these things. So they started hacking away on this product. Over. It was new year's holiday, in 2013. And they sort of did that as a side project.

[00:06:06] At the same time I was in this group called beta works and we started this new program. It was a cohort of, we call them hackers and residents. So they were basically people like Alex and Jace who were just technical design, could build products on their own. We started this cohort of eight different people going off in eight different directions.

[00:06:25] and meanwhile, they had this thing brewing in the background. And we often just would stay, late in the office, in the studio, just building stuff, go there on the weekends and, days would turn into nights and have drinks and everything. and then eventually we just, you know, we all saw that what they were building.

[00:06:40] We said, let's just put it out there and see what happens. And so we pushed it live. I think it went live or like a Friday afternoon and then Mashable picked it up and they, all of a sudden the servers basically melted, like everything stopped working because there's so many people on the site. So this gifted, if was not actually part of beta works or part of the hackers in residence program.

[00:07:05] but Alex, Jason and I had sat down over a few drinks Friday night. With John Borthwick, on the other end of a phone call who's the beta works founder and just said, like, how do we turn this idea into a company? And we decided that night to fund it, staff, it incorporated all the things that you'd want to do.

[00:07:24] And by Monday we had a team of think it was six or seven people working on it. We had the site backup by Saturday morning. and that was sort of the unconventional start to get the, it was not an intentional, let's go build a company and then it just, it just kept growing from there.

[00:07:38] James: it's so interesting because. Quite a few stories about companies that almost don't really incorporate until they've got like product market fit. It's like delaying admin until, you know, you've got something. How much of a lesson is that just for founders that have maybe done it before?

[00:07:55] You know, I think a lot of founders think I need to incorporate registered for that is like, do all these administrative things before they build anything. So how much of a lesson is that in, the experience from different.

[00:08:06] Paul: I think, it's a really good lesson. I mean, truth is I don't want to sound like the kind of suddenly old, older negative guy. but I think too many companies today, you know, they come out of the gate with this reverse engineered program, to kind of build a company that they can sell for X, billions of dollars.

[00:08:25] And they have all this sort of data to back it up. I just don't think that's how you build a great company. I think you build a great company by starting with a product that you feel like, you know, should exist. You want to use it yourself? Maybe your friends or your colleagues or business professionals want to use it?

[00:08:42] And then you, create the simplest version of that thing to see if there's any validity to that hypothesis. I mean, I built so many products and companies in my time and the best ideas, you know, just perfectly executed, fall flat, you know, it was great thinking, but like didn't work.

[00:09:00] People don't really want that. Or maybe the problem is not as big as you thought it was. so I'm a huge fan of just build something and then figure it out later. I mean, maybe we'll talk about this in a bit, but like Johnny had Hoppin was kind of the same, he had incorporated, I think.

[00:09:16] But he just started building and he sort of cobbled together this thing, and there's so many great companies, I feel, have been created that way. And then, you know, you have this like real authentic, origin story behind it, which is motivating for the team and, even customers or partners down the line.

[00:09:33] Hector: Yeah, I completely agree. I mean, there's like a beautiful simplicity with, with something like GIF in. with Johnny or hop in your Hopkins, it's a simple idea. And it when it started taking off, everyone was like, what the hell is that? How did I think of that? Um, it was kind of a simple idea and it was just, more fit for purpose the zoom or whatever else was out there.

[00:09:52] And it's just exciting when, you know, as a, as a VC, you come across a company, that's actually doing something really simple, but just such a need. So, Paul, do you feel like you're an entrepreneur at heart? 

[00:10:04] Paul: I think it's a pretty loaded. description or phrase to give someone these days? you know, I think people can be entrepreneurs that come in as employee number 20 of the company. It's, it's more of a way of, you know, how you think and how you operate. So I guess I have some of those characteristics, but what I feel is I like to build things and I'm, inherently a builder, you know, whether that's, companies, teams, products, I just see things that are.

[00:10:31] could be done better. And I have this instinct to kind of go after it and try to improve it. but obviously I'm doing a lot less of that these days, a bit of it, but a lot less of it than I used to.

[00:10:40] Hector: Yes. So on that topic of building, I really share, your feelings. I love building, I kind of thought I would be an entrepreneur, but wound up in VC somehow and luckily feel like I'm doing some building.

[00:10:50] Cause I got this, the podcast got a couple of other things going on. certainly made me feel like I'm building. And I felt like we're building episode one, but I wonder you've been at a number of funds. do you think there's a playbook for building a successful VC fund and what might that look like? 

[00:11:06] Paul: I mean, BetterWorks did a lot of investing. They were probably one of the most successful, you know, seen investors in New York for a while and now they've and they did that off balance sheet. So now they've actually created a fund that's doing really well.

[00:11:19] so I got to see that even though I wasn't primarily investing. I was obviously at north stone, but also before that, one of my investors at my game studio was Greycroft and they were incredibly kind as I was exploring, making the leap into venture capital. They invited me to come into their Monday meetings.

[00:11:36] So I would pop up there, every Monday and just learn, see how they did things. and then before I joined north stone, I spent time with a number of funds that I really respected, general catalyst Excel, Atomico, I saw how many different flavors of VCs there were not only in how they represent themselves to the market, but also.

[00:11:59] How they internalize and operationalize their, you know, their team internally. and so I think that there are many different ways to build a venture fund. And obviously now I'm at Lightspeed and it's yet a different way. ultimately we present ourselves to the market, the founders, you know, as kind of we're selling other people's capital and just kind of like I think the core of what we actually do, but then how we support founders.

[00:12:24] You know how we make ourselves efficient. I've seen lots of different ways to do that. And I have seen, you know, when you do it well, it can be a huge competitive advantage for.

[00:12:34] Hector: just to, um, see if we can draw a little bit more out of you on that. what are some things that you guys feel you do really well at Lightspeed that differentiates. 

[00:12:43] Paul: one of the main attraction points for me. I mean, I absolutely loved my time at north stone. There was literally no other fund in the world that could have pulled me away from that, perhaps, except for Lightspeed. And the only reason why. Was really able to do it is I saw what it was like on the founder side, when they invested in a company and they brought this incredible platform to bear.

[00:13:05] it's becoming more table stakes, but helping you not just recruit your team, but also think about how to structure your team. How do you think about incentivizing the first 10 engineers in your team and how do you know what are best practices for building out technical teams that are either all in one location or just.

[00:13:23] That's kind of one area. I think the other thing is, you know, just internally, you know, the way that we operate is we have these really incredible partners that we can lean on, that can help us do things better than we could do on our own. So things like, marketing and data science, even in some cases we use data to help us source companies or do research on companies.

[00:13:47] that's incredibly powerful because ultimately what it means is that I can spend more time with the founders that I, I back. And when I talk to them, I can actually give them things that are helpful for them, not just my, opinions. obviously it has different degrees of relevance at different stages for the company. And we invest in, every stage, business. So, it's not kind of doesn't mean the same thing to every founder, but I think there's a lot there at all.

[00:14:12] James: Yeah, it's really interesting. That probably leads me into the next question. You've maybe slightly answered that with the amount of support that you have around the organization. But the question was going to be with someone with your experience and track records, you could go and launch your own funds.

[00:14:31] I'm sure you'd be able to attract capital and build a decent brands. Why haven't you done that yet? As someone who's a self-confessed builder and what's the attraction to sort of being part of that organization. Resources and established in.

[00:14:49] Paul: So the honest answer is am not that excited about building a venture fund. I mean, the day I resigned from north. I called, two people. that I had been talking about this problem with, and we set up a company, I founded it, and then we ultimately raised capital.

[00:15:07] And that's what I did during my non-compete period with north stone. So if I kind of have a spare moment, that's where I would send it. You know, companies that solve problems for people as opposed to building the venture fund. That's not to say I have lots of friends that have built venture funds and I have incredible respect for them.

[00:15:25] It's probably one of the most difficult things to do. and I truly mean that, it's just, you know, it's not, if, when I thought about it, when I would have spend, you know, 12, 18 months raising capital, trying to upgrade that capital for the next time. then try to differentiate myself from the market and then go out and compete with all the people that I consider friends on deals.

[00:15:44] It just felt like a difficult journey that I didn't think it'd be as rewarding for me. whereas it, with Lightspeed, it was like, literally on day two, I gave someone a term sheet. I was able to kind of get to work right away. so that was the appeal.

[00:15:58] Hector: I get the appeal. So, what appeals to you about the different stages of investing? if you've done seed, you've done late stage, what are the things about it? If each of those, that kind of, draws you in.

[00:16:07] Paul: So most of my investing is very, very early stage. It goes back to kind of my time. I probably, as a, founder. I get really excited about amazing founders, people that, you know, you look in their eyes and you can tell that they desperately want to solve this problem. whether it's a really serious problem or something a bit lighter, they have that kind of passion.

[00:16:31] so that's always the first thing that grabs me. even if I'm not that excited about the market, again, going back to happen. It's a great example. I remember when Johnny came in, I was like events. Like I could not think of anything more boring to talk about from a market perspective.

[00:16:45] I used to do events at Microsoft, so I really didn't like that set space. and then I was in me, you know, I would say within five minutes, I was just like mesmerized by Johnny's passionate. Okay. Well look, holy shit. There's something really interesting here. And then we've got into product and then product bells are going off and I love talking about products.

[00:17:04] So if I could sort of spend all my time on founders and product and invest early, that would be what I would do. Some cases there's so many great companies. I don't get the luxury of seeing them that early. And so, you know, we build relationships and we start tracking. I do struggle like as the company gets more progressed.

[00:17:24] and I know that this is a company that I would probably have invested in at seed. And they're now raising a series B, perhaps it's still a conviction that there's not tremendous amounts of data that say this is going to be a winner yet. But you're looking at a really steep price. I do it and we do it as a fun the time, but I do struggle a bit more with that, especially if I know I would have back then.

[00:17:48] Hector: we had a similar thing with. It's kind kinda my miniature claim to fame at the moment, which is that I sat down one to one while he was just, you know, he was at London tech week giving product demos and no one was crowding around him. and we, we gave him a term sheet within like three days.

[00:18:03] I think it was 2 million at 10 pre or post maybe. then you guys came in where the bigger amount of high evaluation and. We didn't kick ourselves too much. Cause you know, we can't compete with that. But, our steak on paper would be massive now. 

[00:18:19] Paul: it speaks highly of what you guys did because I don't think that was an obvious one. it looks obvious going back on it now, obviously there was no pandemic. There was none of that stuff that, anyone expected to happen and a few of the funds that ultimately competed quite hard to come in.

[00:18:34] Initially passed. so there was a lot of whiplash, I think, on that deal. But I think we shared your conviction very early, right after we met him. So we can all feel good about that at least.

[00:18:45] James: so Lightspeed's have seen massive fund in the U S and your growing here now. We've seen some of the big funds sort of doing the same from the U S what is it about Europe and maybe in particular, the UK that is attracting the big us funds to set up shop here and actually put boots on the ground to take this market really serious.

[00:19:08] Paul: Well, I think if you step back, I mean, this is, not news certainly to you guys, but your, uh, is as a market, as big as the U S in many dimensions and some dimensions it's bigger. You've got more technical talent. but you also have more challenges because it's a heavily fragmented community, 750 million people.

[00:19:30] There's I think 20, some odd languages spoken across 44 countries. And so like, with that comes all of this complexity that makes things fairly inefficient to sort of operate as one overarching body. Right. So, if you think about the role that technology can play in solving some of those pain points, it's sort of feels obvious when you really think about it.

[00:19:52] Whereas if you had a fully homogenous environment where none of this barriers existed, you know, technology might play a role, but it wouldn't maybe play as vital role. So I think on one hand, you've got, big industry, big consumer population, fairly affluent, all the characteristics you might want from a demand.

[00:20:11] Side, on the sort of supply side of challenges, you have more challenges, I think that you have, and probably any other, large market in the world. So, so anyway, that's like macro view. I think there's, it's not a surprise that there's founders going after big problems in Europe.

[00:20:25] I think the second thing is, you know, there's always been the talent pool there. Hasn't always been the ecosystem to really encourage founders, to go out and take risk and start building stuff and give them capital to kind of maybe leave their job and, you know, try something new. and. Thankfully moving away from Silicon valley across the us and spread right through the rest of the world.

[00:20:50] Uh they've once people got a taste of that drug in Europe, it wouldn't matter if any of us were here as ambassadors, like founders would be doing it regardless. so that's a nice, like, you know, just sort of tailwind, I guess, courtesy of Silicon valley kind of moving away from Silicon valley.

[00:21:07] and then I think what has happened is. You know, you now have a lot of our funds, you know, initially it was like, it was a bit of a cost arbitrage. Like you give back a great series that company for half the price of the U S that was going after just as big of a market.

[00:21:22] I think that's pretty much gone and maybe there's elements of it, but I think it's pretty much gone. now it's great. It's. We can see huge outcomes in Europe. And so we can't afford not to be invested in here in this market.

[00:21:37] James: Yeah, I think H when I said, if we'd started this five years ago, we wouldn't know necessarily know who to interview because there weren't as many people that actually been there and done it. So it's great. That that knowledge is now being recycled back into the space.

[00:21:51] Paul: Yeah, it's nice to see. Second and third time founders in Europe as well. I think that's where it gets really special. They maybe they've spent some time in the states or other markets, or they've been part of a Spotify story or an audience story, and then they're going out and starting their company and they've learned a bunch of stuff, but they're also kind of trying things that are.

[00:22:13] I think that's part of the reason that accelerated in the past couple of years.

[00:22:17] Hector: Yeah, I wanted to ask you. She specifically around the kind of repeat founders thing, because valuations are going up. Right. And lots of people talk about that and people worry, is it a, bubble? Is it gonna burst all that? And while that could be true, I think it's. I think it might also be true that actually people are just getting better, uh, founding businesses and the playbook is developing. the talent is developing. People have more experience. People have seen what works, people have seen, what doesn't work. so do you think that's a possible explanation for higher evaluations and perhaps a reason why, even public markets or late stage.

[00:22:54] valuations can be sustained because actually companies are better and bigger companies will be built.

[00:23:00] Paul: I think there's some truth to that. going back to my comment earlier most thoughtful plans, you know, will usually fail. And so I think a company can kind of come out of the gate really well prepared and maybe have a lot of support. But the likelihood that the thing that they're building is ultimately going to take off, I think is still quite low.

[00:23:24] The odds are, are always stacked against us as founders. And so I think, that there's some irrational pricing has, entered the market early stage, you know, before there's any sign of life for a product. Now, some of that's justified because obviously amazing founders build amazing companies.

[00:23:42] So I think there's certainly a premium you could describe to a great founding team. but ultimately I don't, it doesn't really matter to the VCs. I think ultimately there'll be fine. maybe there'll be a few more losses, a few bigger losses where I feel like just not enough attention paid to high valuations is the impact that could have on.

[00:24:01] Companies is everyone thinks it's good. but if you've ever been part of a great startup that had to go through a recap, you know how toxic that company becomes you can't, you can no longer attract the best investors, the best employees. there's, frustrated angel investors as frustrated employees that have options that are underwater.

[00:24:23] it's very difficult to turn a company like that back into. Uh, high flying, super high profile talent attractor. long-term so I just think founders should be aware of that. I, I don't, you know, certainly think about dilution and everything else, but, I don't think anyone should ever go crazy.

[00:24:42] It should always be rational. because I have been through that and it's extremely painful when you have to recap.

[00:24:49] Hector: It's a really hard message to get across to founders, especially when it comes from the VC. you know, also not to, focus on having a huge, great valuation, you know, that's often kind of what they're focused on. It's, what they can tell their mates about. but yeah, it's not always the right thing.

[00:25:05] Paul: I don't ever aspire to be the highest. When I'm competing a hotter on a deal. I really hope we don't ever win because of price. That would be a really bad reason to win a company. in part, because it would maybe tell you a bit about how the founders thinking of your value. And it also, I think it shows like that's the, cheap tricks, you know, like ultimately you should decide that you guys want to work together for a decade.

[00:25:29] and that chemistry is strong and then it's just a, it's just a matter of all right. What kind of deal do we need to do to make that happen now? I think that's true. Early stage. I think you made the point about later stage mean that's tactics, different calculus for later stage investing in evaluation.

[00:25:43] Hector: so Let's talk a little bit about, a company called Barnett because.

[00:25:46] I think someone told me that that was a thesis of yours that ended up in Lightspeed, leading that seed round. Is that right? 

[00:25:53] Paul: that's a really fancy way to put it. the reality is it was a frustration of mine as an ed car owner in the. just being bombarded with the complexity of apps out there, and very rarely do they actually work unless you're at like a Tesla supercharging station. so I, you know, I think I was just ranting about that and that rent led to a bunch of people saying, Hey, have you tried this, this, this, and then someone had mentioned bonnet.

[00:26:20] so that was kind of where, how it kind of hit our radar. We lifted the product and we're like, okay, this is amazing. What they're trying to do. This is amazing. And then my partner read us, was separately doing a deep dive on the market and was looking at kind of infrastructure plays for EVs given how fast the market's growing.

[00:26:39] So we partnered up on that one. You know, basically kind of worked on it together, and convince those guys to let us invest. So we're, yeah, we're really excited about that one.

[00:26:50] Hector: I run a, demo day called the seed stage and they pitched at the seed stage. And so, 50 or a hundred attendees of the seed stage actually invested in Barnett through an SPV that we span up.

[00:27:02] and of course, everyone was delighted to then hear that Lightspeed was leading the seed round. So really excited about that and have access to one of their dashboards. And it just looks like things are already flying there. So very excited, but I mean, the re the reason for asking was a new might've slightly answered it, but.

[00:27:17] Was whether you like investing based on theses and I get the impression that you're more of a kind of opportunistic investor, you know, come across founders who you absolutely love, or perhaps a market that you absolutely love or both. but do you think there is a, place for thesis based investing?

[00:27:34] Paul: I definitely think there are, And there, there are great investors that Lightspeed that really kind of specialize and focus in and operate that way. I think it's difficult to be a thesis driven investor as a generalist. I mean, if I just think about the deals I've done since I've joined audio ad tech platform for gaming, a fast pharmacy kind of quick commerce play for the dock region, bonnets, there's a few others that are game studios that I've invested.

[00:28:06] We haven't announced yet. there's no way that I could develop a really thoughtful thesis. Right on all these different sectors. but I'm really, really glad that we invested in those companies. So I think generalist investors, I do feel like you have to be prepared. You have to do.

[00:28:23] Your homework, about what trends are happening in the world generally. And part of that is about just seeing what frustrations you have as a consumer on the enterprise side, what frustration challenges in the enterprise, and then being super curious. So when people come to you, you know, you just want to learn as much as you can about the auto industry or the pharmacy industry or the construction industry or food tech.

[00:28:47] you know, and then, like you said, I think if you're early stage generalists, you have to let founding teams and products drive you. I think for, if I look at some like my colleagues that are specialists, I'm amazed at what they can do and they can actually get to the point where they are talking to people embedded in big companies, convincing them to go after a market and with like a term sheet in hand that will fund it on day one.

[00:29:14] And we've had like multiple billion dollar outcomes from that process. And so like, I think that's incredible to do, but it's, and I wish I did that, but it's not something that I I'm able to do.

[00:29:25] Hector: I can't even believe that idea is just so not how. Think about investing the idea of investing time in building a relationship with someone who might then go off and build a startup in a space that I like. It's just crazy.

[00:29:39] what are some of the sort of common things you see between the most successful companies? And I think probably it varies between the stages obviously we've talked a lot. Founders and, product and maybe a bit about the market, but dive a little bit more detail with companies, you know, is it, that those companies that go on to raise like a unicorn round or whatever, have they hired amazingly?

[00:30:06] Have they built an incredible culture? Have they hired a couple of, senior people? what is it that they do?

[00:30:13] Paul: I look at the founders that I've invested in that have achieved that status. And usually in the case, for me, I haven't been investing that long, but the ones that achieved it quite quickly, if I go back through my own portfolio, it would have been tear mobility, hop in flank, quick commerce company out of Germany, address consumer health business, 30 Madison in New York.

[00:30:41] There's some others that are, I think, on the cusp of getting there. but just if I look at just those four, from my time at Nordson, when I put my founder hat on, I am totally just blown away at what these songs have done and how much better they were at building their companies than I was when I was operating.

[00:31:01] They move faster. They have more clarity. I think there, they have that sort of perfect balance of being, not ruthless to the point that they don't care, but they know that the right decision, has to be made. It has to make quickly. And so they move with urgency when those decisions, whether it's like, you know, maybe changing out some of their executive team or, breaking the products so they can make a core change.

[00:31:26] You know, feel like. The founder version of myself would have sat on that decision and debated it with my team for months and the best founders that back make those decisions and hours. And so I think that's a huge difference. And then the other bit is they just break the rules. They, you know, any, any kind of norms that you can throw onto a business.

[00:31:45] They sort of like, say it doesn't apply to me, you know, we're going to do it differently. and they do it well, and it works. So I think that. Those are the kinds of characteristics. They also, I think there's like always that mix of like, you need some good fortune along the way. And they've all had some nice tailwinds, which you would like to believe is part of why you invested in the company.

[00:32:07] but I think that that, that does help.

[00:32:09] Hector: maybe it's a bit of a hard question to make you think of an answer on the spot, but what are some of the rules that these founders have broken what are some examples of things? Just throw out the window. 

[00:32:19] Paul: three European companies, if I think about the rules that they broke is they did acquisitions very early on in their journey. And I used to work on the strategy and M and a side at Microsoft, and I know how hard it is to make acquisitions succeed.

[00:32:36] but these guys said we've got. We've got an opportunity. We need to make this acquisition, whether it was entering a new market or extending the product, and they pulled it off and, you know, worked super, super well. So that's one, I think that I would say I'd never expected to be successful.

[00:32:53] James: So again, trying to get to know you a little bit more, what are you looking to get out of your career? Have you got like a goal for your career or are you just building stuff? Like how do you see your career evolving and what would you like it to look like when you look back.

[00:33:13] Paul: I just, love spending time with really great founders. And so if I can be in the company. Um, amazing founders. And if I can help them, as much as possible or even just a little bit along the way, I will feel really, really happy. I think there are so many more founders and so many more great companies out there to be built.

[00:33:36] then there are sort of investors and capital to, fully take advantage of them. So, you know, I love trying to find founders in kind of less obvious pockets maybe from like, Less privileged backgrounds, you know, do whatever we can to sort of not only help them build great companies, but also give them like tier one access to resources, to give them as, as much of a shock.

[00:34:00] So I think that great companies will literally will come from anywhere. I would like to believe that the companies I invested will be net positive to the world. so if I can look at. You know, companies and on backing and saying, Hey, we, you know, we helped play a small role in this thing that, reduce carbon emissions or helped get people access to healthcare that they wouldn't have had that technology.

[00:34:23] you know, that's super motivating for me. So that's kind of where, I guess where I am.

[00:34:27] James: we've learned so much there from your experience on both sides of the table. And it's so interesting, and it's great to see a big fund, like Lightspeed kind of making waves in, Europe, which is really exciting. as you know, we like to end off podcasts with our dinner party guests game.

[00:34:45] So if you were to have dinner with three people, Anyone in history, who would they be? 

[00:34:50] Paul: I kind of knew this question was coming. I'd been thinking about. Who those people might be. There's a book that I just absolutely love called factory illness by Hans Rosling. he unfortunately passed away a couple of years ago, but I would love to have him at our dinner table, he uses data to basically explain why the world.

[00:35:13] This terrible place that many of us think it is today. I mean, there are a few areas that are tough, but otherwise it's actually improving quite a bit over time than at faster rate. So I'd love to have him, 

[00:35:23] Hector: test on that. If you like that book, you should read enlightenment now. by Steven Pinker, which is just it's he's controversial, but the book is amazing and it's the same thing it's using data to. bust what we hear in the media. And it kind of talks a lot about if we live by what we see and read in the media, then we get a massively walked with you.

[00:35:41] And actually, if you look at the data and each chapter kind of breaks it down, you know, there's health care, life expectancy, happiness, poverty, wealth, all of these things. And it's just a really encouraging book.

[00:35:54] Paul: I think that's great. It sounds right up my alley. I think we, tend to forget how bad the world has always been, and so it should be better and we need to make it better. But I think we also have to accept that something is, have actually gotten, have improved. So that's cool. I'll check that one out.

[00:36:11] yeah, the next one would be, maybe a bit odd for like a tech geek to say, but beyond. not only is she an incredible artist, but I'm just always blown away by artists that are clearly phenomenal, you know, business people as well. and just sort of inspiring. And so, you know, I can guarantee I would learn so much by, just having her around.

[00:36:32] and then I think for a good dinner party, you always need to have someone that's a little bit crazy and also quite fun. So. There's this guy, a puzzler man who you've probably heard of we got very close to working on a game together in my game studio. And he he's definitely got that like perfect balance of like a little bit crazy, incredibly eccentric and creative, but also insanely smart.

[00:36:57] so I think that, you know, if I could get those three people in a room and just sit back and watch them talk, I think I'd have a great time.

[00:37:05] Hector: Paula, it's been an absolute pleasure having you on the show. We've learned lots about, both your experiences as an operator and how you've used that experience to help you as an investor and vice versa.

[00:37:16] And, yeah, it's been fascinating. I mean, we could have covered a huge amount more, but we only have limited time. so we have to close things off, but, Thanks so much again for coming on the show it's been.

[00:37:25] Paul: Really enjoyed it, guys. Thank you. Thank you both for all the questions and for taking the time to talk to me. And, hopefully there's something there that, that others can use.

[00:37:32] Hector: For sure. Thanks a lot.

[00:37:34] James: That's it for this week. Thanks very much for listening. To stay up to date with the latest episodes, please follow or subscribe on your favorite podcast platform. We also have a newsletter called reading unicorns, which is another great way to get every episode direct to your inbox. Please tell your friends about it and engage with us on social media And we'll see you on the next episode.