Riding Unicorns

S4E9 - Kevin Diestel, Partner @ Sapphire Ventures

June 29, 2022 Season 4 Episode 9
Riding Unicorns
S4E9 - Kevin Diestel, Partner @ Sapphire Ventures
Show Notes Transcript

Kevin Diestel is a Partner at Sapphire Ventures, a venture capital firm that primarily invests in Series B technology companies. Before moving into private equity Kevin worked as an Analyst for Merrill Lynch. After two years working for the Investment Bank Kevin began working for Shamrock Capital Advisors, a Los Angeles-based private equity firm. During his time there he was responsible for evaluating investments in the media, entertainment and communications sectors. Having joined Sapphire in 2012 Kevin now focuses his time primarily on innovative consumer businesses and vertical software applications. Kevin holds a board seat at a number of companies including Culture Amp, Current, Degreed, project44, and Sun Basket. 

In this episode Kevin starts off by explaining his role at Sapphire Ventures, his approach to investing and how he and his team deal with downturns in performance. Kevin also goes on to detail how he strikes a balance between intuition and data when investing. Finally James and Hector quiz Kevin on how he avoids bias during the decision making process and what the ultimate goal is for his career. 

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.

[00:00:09] James: Hello and 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 the founder of Pringle capital. My co-host is Hector Mason, Hector, as a partner at B2B investor episode women ventures. This podcast is all about uncovering what it takes to build a unicorn business.

[00:00:31] We speak to some of the best founders and investors, many from unicorn companies and ask them about their journey, operational insight, tips, lessons, stories, and anything that can help us uncover what it takes to build a high growth business. This week we have Kevin Diestel Partner at Sapphire Ventures. Sapphire is a leading VC firm, partnering with veterinary teams and venture funds to build companies of consequence. They've backed companies like box charge B LinkedIn, cazoo square, and tonal. Kevin has been at Sapphire for over 10 years. So he's got a lot of experience. This is another great episode.

[00:01:04] So let's get started.

[00:01:06]

[00:01:09] James: Hi, Kevin. Welcome to the riding unicorns podcast. Thanks so much for joining us.

[00:01:13] Kevin: No, thank you for having me. Uh, it's my, it's my pleasure to chat with you folks. Very excited about the podcast and, uh, I've been a long time.

[00:01:21] James: That's awesome to hear. We love that. Um, so Kevin, maybe you could start by just giving a description of what Sofar ventures is for anyone that doesn't know. And maybe also explain your role at

[00:01:32] the.

[00:01:33] Kevin: Sure. Uh, Sapphire ventures is a global venture capital fund. Um, we operate across three primary strategies. There's a growth stage direct investment arm where I spend most of my time, we have a fund to funds effort. and then also an earlier stage sports media entertainment focused fund. but where I see.

[00:01:53] all of my time is on the direct investments. So we are looking for what we call companies of consequence, globally, and, typically play a little bit later stage than some of the folks who may chat with. So it's really more series B all the way through IPO writing checks anywhere from 10 to 60 to a hundred million dollars over the life of an impact.

[00:02:16] we're very heavy in, B2B land. but uh, certainly sprinkle in some consumer, and really looking for category, defining businesses and entrepreneurs are gonna really change the world, over the course of their. And then my role I'm one of the partners I've been with the fund for 10 years now.

[00:02:33] Uh, I was actually based in San Francisco for the majority of that. And then I moved to Europe at the beginning of last year to really help double and triple down on our efforts in Europe and Israel. And it's been incredible ride. this is a very exciting.

[00:02:46] Hector: Yeah, Kevin, I've been looking forward to speaking to you, given what's going on in, in late stage private markets and I'm sure it's what it is filtering down to earlier stages as well. But I was, you know, looking at a few of the Sapphire portfolio and, you know, sorts or kazoo bunch of others without going to the others.

[00:03:02] But, um, yeah, just interested to hear kind of how you guys think about. investing in what, you know, three months ago, maybe everyone had their suspicions about it being a toppy market. And now that's kind of looking like the suspicions were correct. And, how do you guys handle that? You have to keep investing.

[00:03:21] Right. but everyone's kind of investing in the knowledge that some of their investments might just go a little bit bad due to the market conditions. So how, how do you kind of think about that and how do you advise companies now that things have got a little bit.

[00:03:36] Kevin: Yeah, the, the, the market was certainly frothy over the last couple of years, but I think that's what happens in a 12 year bull market. it was a really long run there. things certainly have changed, from like a, a day to day. and just looking at the public markets for sure. Um, we see that starting to ripple into the growth stage, uh, all the way down to the earlier stage investments.

[00:03:58] But key part is that that actually doesn't change the way we view our investment strategy. I'm sure there are some tactical elements that, that may change, but we're investing in companies that we hold for anywhere from three to 10 plus years. And so we're definitely riding through macro highs and, and macro lows.

[00:04:20] and we're looking for businesses. I mentioned that companies have consequence where these businesses are going to be the next. $10 billion plus businesses that define decades and generations, in our lives. And we're still actively looking for those. So we're supporting those from our portfolio and we're certainly active on the new investment front.

[00:04:39] So Pace valuations terms, check sizes. All of that may fluctuate slightly from where they were six months ago. But we're still looking for the absolute best entrepreneurs who are creating the absolute best companies, across the globe.

[00:04:54] Hector: just internally, I'm interested in how, Very interested in how you guys support each other internally when an investment goes back. Cause you know, it happens to all happens to all investors or most investors.

[00:05:06] and you know, it'd be easy to lose your nerve and take less risk going forward. So how do you, at Sapphire and, with other investors that you speak to, how do you kind of keep each other's, morale up when a investment goes to.

[00:05:21] Kevin: Yeah. W w we manage 10 billion us dollars across all of our fund strategies. there are partners sitting across the globe. It's one fund it's one investment committee on the growth stage side of what we do. and that support and camaraderie is is a huge element of the success of our platform.

[00:05:41] We're obviously looking for companies and most of our investments will be incredibly positive and successful. they certainly aren't all like that. That's just the nature of the beast. companies do start to slip or go sideways at all, we are very supportive of those businesses.

[00:05:59] there's a financial side of things and there's a real financial argument to being supportive of businesses. because we've had some. that have gotten a little Rocky for a few quarters. it looked bleak. We helped support those businesses and then they became multi-billion dollar outcomes. And so, definitely a financial side of the, equation there.

[00:06:19] And that make real sense from an ROI perspective, but there's also, there's just the mentality and the culture that we have built at Sapphire. And that goes from the very top, all the way down to the bottom of we want to support. Individuals and teams who are creating these companies are consequences.

[00:06:37] And, we are very committed to doing that. And so, there's both. the sort of objective empirical side, but there's also the more qualitative side of, that. and the reason I'm at Sapphire is we have a group that we are all aligned in supporting those businesses. Uh, it'll be interesting.

[00:06:53] You know, the things certainly have changed now, but companies are still performing well, there are still there. Huge macro tailwinds behind. Digitization of previously analog solutions. So, um, while yeah, the public markets may be off, right now, uh, we're still very bullish on just tech in general, pushing forward.

[00:07:13] James: Yeah, absolutely. And then company of consequences, really interesting phrase I'd like to understand a little bit more about, so what are the elements that qualify a company for that title? And also as a later stage investor, how much is art and how much is science? Because. Yeah. I think a lot of the people think that late stage investing is basically just like, do these numbers fit into my spreadsheet.

[00:07:38] And so it gets a green tech, like how much of it is that and how much of it is also just believing in markets, people, business models, et cetera, that maybe you can't read through it.

[00:07:50] Kevin: Uh, yeah, maybe I'll answer the second one first. Um, and then I'll roll into the, the other, uh, so yeah, there's always a balance between art and science. I am a firm believer that, a lot of the ultimate success. Almost anything in life, but certainly on the investing side, there is an element of luck that is unavoidable.

[00:08:11] Knowing which company is going to be Facebook and which company is going to be my space. Like that's a really difficult call at the time. And so there are absolutely a hundred plus criteria that we look at from a science perspective, like a numerical, very deep diligence, articulation of the merits of, the business, financially.

[00:08:31] And that can even go into more of the qualitative side of things around just like. The entrepreneurial spirit and the drive of a, team and, their experience and things like that. So it's not all just numbers. but, I do believe you need to be smart, hard enough, hardworking enough, put yourself in enough situations, like good situations for that luck to play out.

[00:08:53] So I, by no means, think that it's just arbitrary when people are successful or not. But I do think that all of the work we do. It's to put us into those situations where some of that luck can play out, on our side, but it is a, it's always a delicate balance. And then being later stage numbers, we certainly can corroborate our underlying theses.

[00:09:14] Some of the numerical, data from customers and feedback and, net dollar retention and growth and things of that nature. but always, always a balance of art and science. Um, no matter what anyone else tells you, uh, on the company's a consequence, this is it's really the, single most important mantra at Sapphire ventures.

[00:09:33] The reason w what that actually means is we're looking for companies that again, can be category defining businesses, and the entrepreneurs who have the drive to go build those, But we also want to make sure that with that success, that these companies are doing it in the right way, and these individuals are doing it in the right way.

[00:09:52] And that is both how they conduct themselves as, business people, uh, how they build teams and the culture that they drive throughout the, the organization. so it really hits on two sides. That we're looking for very successful businesses. That can be extremely large. I mentioned like defining generations, but also that people are doing it in the.

[00:10:14] Hector: Yeah. Yes indeed. So I was looking at your, I think your own, portfolio at Sapphire. And, I have a bit of a fascination with quantified self and I have a feeling that you're kind of interested in that stuff as well. with like investments in 23 and me and Fitbit and, a couple of others that I saw.

[00:10:32] I don't know how long ago those investments were made, but those companies were kind of set up. A fair while ago now, and really at the kind of outset of the quantified self movement and it was probably a very niche thing back then, but I think the whole movement around closing the loop on health and wellbeing seems to really be, coming into its prime.

[00:10:56] And, um, it feels like we're only just at a point where you can actually begin to do that, where the data is available. draw causal relationships between your behavior and how you act and you know, what you eat and what you do, and actually health outcomes. And I wonder if you have a kind of thesis behind that and whether you have a view on what the future of quantified self looks like.

[00:11:18] Kevin: Yeah, it's an interesting question. and I certainly want to answer this specific question, but. To me, it all comes down to data. And then what you do with that data and that, that wouldn't be inclusive of, not even like quantified self, like this would be for any sort of enterprise software B2B, solution that we invest in as well as that it does come down to data and then gleaning insights from that day.

[00:11:42] And then ultimately creating action from those insights. And so with Fitbit and 23 and me, it was more specific around, around health, but it's really Fitbit was able to aggregate data that people otherwise either couldn't or wouldn't do in mass. And then determining via that data, what the key insights worst.

[00:12:02] What appropriate levels of activity were, or identifying that if you're sitting idle for a certain amount of time, someone should be notified of that. that then goes into diet and everything like that with 23 and me, you're talking about an almost endless amount of genomic and phenotypic information that you can aggregate.

[00:12:21] so not only identifying what is, what is creating, a genetic. Condition, but also the phenotypic, like how that, how that genetic condition represents itself from like symptoms and things of that nature, coupling those together. And so taking huge amounts of data to then glean insights of what could be a potential cause of this.

[00:12:42] And then the action of what could you potentially introduce to change? how that's represented in the body. Those are like two enormously large, uh, and very close to home issues for me. But that spans even too, we do a lot of work around HR and employee empowerment and things like that. And so.

[00:13:01] Other investments in that where it's more of capturing data, of like an employee within a firm. And then how that, correlates to, uh, an ROI of whether you train that person, whether you ensure that they continue to be engaged, whether you provide a coach or mentor, that it really spans the gamut.

[00:13:18] and we've made a number of investments, whether it's culture amp or degreed, or better up, around those, similar themes. And then even into like the hardcore infrastructure, like deep, deep, tech stuff, it's very similar mentality of how do we take all of this data that either it was either siloed or unavailable or wasn't available in mass and connected to then glean those same insights and actions.

[00:13:43] So it's a, I'd say it's a common theme. that's throughout our entire industry.

[00:13:48] Hector: In better up, I think is interesting as well, because know, I've kind of always felt like the, the business that kind of, you know, maybe maybe ends up kind of being a category leader in quantified self. But I've always felt it's going to, there needs to be a B2B angle to scale up because I think going by consumers for something like that, certainly for the next few years, it's going to be pretty niche.

[00:14:08] Will people really pay for it? Are people just hacking together their own tools if they're keen enough on optimization and stuff like that. so I've always felt like being able to provide dashboards to HR and being able to say, well, you know, if your employees are working too hard and they're this kind of employee in this kind of department, then.

[00:14:25] They're going to quit unless you do X, Y, and Zed. And those kinds of insights feel super valuable. And I wonder whether that's, something that you've been seeing with Bastrop and the backdrop have been seeing, you know, whether they're able to have a real positive impact on, on like employee retention and ultimately the bottom line.

[00:14:44] Kevin: I'll answer this for better, but it's representative of Volvo, those investments I had mentioned, in the past. Uh, a lot of those things, even if you, to your earlier question on like Fitbit as an example, like there was no concrete ROI between, whether someone does get that coaching and mentorship or whether someone is like more mentally healthy, quote, unquote, mentally healthy at work or engaged at work too.

[00:15:11] Then the actual outcome from a business perspective, it's very. To do that historically the beauty of these businesses and the reason why we made these investments is really because now you can have. Connect those actions. So, to have a more engaged employee, you can now make that connection via data, to like a performance review and see that they're actually, the more engaged employees are performing better.

[00:15:35] the case of culture amp with degreed, you have upskilling and learning and development. which creates a more engaged in a more productive and honestly, a longer retained, employee with better up, providing that coaching and mentoring. You up level individuals and managers within all the way down to the rank and file, Uplevel these people to be more productive, take on bigger roles and titles within an organization, which we can now show actually has bottom line results.

[00:16:04] so, connecting that ROI, I think was the big kind of chasm that people jumped over the last few years. And it's really. being able to capture that, data, that was one siloed and then representing that on a more numerical way. I think, uh, COVID in the pandemic, certainly catalyzed a lot of just the idea that, oh wow.

[00:16:25] the employee is not a cost center. The employee is actually a huge component, if not the most valuable resource of a business. and so we're, we're very excited about all of those, macro tail.

[00:16:36] James: Yeah. It's so interesting to hear those little nuances and how it all works. And it. What you're talking about there as being quite early in the market, but then seeing where there's opportunities will really get the scale and traction. so Kevin, you mentioned you'd been out stuff off like 10 years.

[00:16:56] What is a red flag for a company now that maybe you didn't recognize as a red flag earlier in your investment career?

[00:17:06] Kevin: Oh, uh, that's interesting. I almost have a, an answer that's like in reverse. when I was first starting, there were these two phrases. one was like board dynamic. I always thought it was ridiculous that, the success or failure of a company could be determined by, the members of the, of the board.

[00:17:23] but now having been on boards for, many, you know, dozens of boards for a decade, plus the board dynamic is actually really important. So I used to think of it as like, not a big issue, but now. a real big red flag. The other one was pattern recognition. I used to think that was ridiculous when people say, oh yeah, you know, I, I have this pattern recognition cause I've seen this movie play out for the last 15 years.

[00:17:44] that actually is really important too. Especially in a time like this. A lot of people have been in this business. and haven't seen, something that isn't up into the right and having folks who have lived through the.com bubble and the financial crisis, the housing prices, have seen this stuff before, or even board members or entrepreneurs who have gone through this before.

[00:18:06] Um, we certainly look for entrepreneurs who are experienced and, you know, more of the serial entrepreneur because. Even if they failed, they know which bear traps to avoid going forward. So, both of those, I would say are, maybe not totally answering your question, but sort of things that I've noticed have changed in my, my career, uh, over the last 10 plus years.

[00:18:28] in terms of like more recently given the way the market has turned, I'd say red flag is just, if an entrepreneur isn't able to. understand. It's not that you have to like cut costs or get the profitability, but, to not grok that you need to at least be, nimble enough and, and ready enough to change levers.

[00:18:50] and that's both from like, if the market turns poorly or if the market goes incredibly well, you want to anticipate and be proactive. How to change your business on a weekly basis, and that can be stepping on the gas or taking your foot off the gas. And so if, people just are sort of blind or oblivious to that, that's certainly a, a red flag.

[00:19:09] James: that's really interesting because I think, some founders might worry about communicating too many kind of multi-strategy. You know, like options to the board without sort of distracting them or thinking that that, that founder's lacking focus or whatever.

[00:19:26] So what is the best way for a founder to say, here's plan a, this is what we're all subscribed to, and this is what we want to do. But if this happens, here's plan B. If this happens, there's plan C what's the best way for them to communicate that to you as a board.

[00:19:42] Kevin: I don't want to dismiss the importance of a board because I do think it's really important and, board members can really help, given their experience in these things. My job as a board member is to, is to be an advisor and provide advice and guidance. But I ultimately am investing in the management teams to manage the business.

[00:19:59] Like I don't want to manage the day to day. That's why I'm investing behind these individuals. There's a lot of trust in that and mutual trust going both ways. so it's not that you have. I don't think people need to be beholden to coming back to the board or worried about having an open and honest conversation with them about where the businesses today are, where the market is today and where you want it to be in the, in the future.

[00:20:21] More specifically around, having that agility and that nimbleness and flexibility, to change things, across a number of dimensions is really difficult, but really important. I tend to leave it to the managers and operators of the business to, do the sort of iteration on the 10 underlying, plans and levers to pool, and then report up to the board of what the overall strategy is given.

[00:20:45] they have to make a move, but we often look at scenarios, even in good times, like over the last couple of years when things were just fully up until the. you'd have a budget and then you'd have, you know, a forecast and that that's an ongoing forecast and that can have numbers going up.

[00:21:01] It can have numbers going down. It can have, if we see this, um, then we'll do this. So there's a bunch of if then statements throughout. and that's something that as, as a board, we try to work iteratively with these businesses. so it is, it's a delicate balance between just. You know, drinking from a fire hose and, um, and then being the most effective and efficient with that decision making.

[00:21:23] But it really does come down to the CEO on the CEO's team, to guide those decisions and then the board to provide advice and guidance on, um, how they feel given their experiences, on whether that's the right path.

[00:21:35] Hector: You mentioned, uh, an important point and an interesting point about pattern recognition. I mean, I think about that a lot because I kind of think it's, And one of the most important things in investing. you know, if you think of it in a very unromantic way about humans being kind of really advanced AI, which is kind of what we are, then, you know, w we're basically scooping up data from our lives and what we see and experience and, building models to that, and base our decisions on going forwards.

[00:22:05] And, and that basically, I think is what we mean. What can it be what we mean by pattern recognition? but I think it's super important to recognize the biases that come into that, because I mean, as investors were looking for our guys and by their very nature, they don't fit into the models often. So, so I think it's, it's not fail safe, but I wonder how you've, kind of spent your investment career, building those mental models and, and how you think about, making best use of them while being careful to avoid biases that, perhaps would lead you down the wrong path.

[00:22:40] Kevin: I don't want to get too disparaging on the investor side, but like one of the biggest ways people can get into trouble is, almost touting something as fact when it may not actually be fact.

[00:22:51] And so, entrepreneurs are going to rely, um, this is now from the board perspective, we'll often rely on the board for that advice and that, that pattern recognition. to determine what the best next steps are, for the business, that's a huge onus, and responsibility for the board member.

[00:23:10] And so you really need to be intellectually honest. What, you know, what, you don't know what you've experienced, whether things have gone good or bad, but you also need to realize that you have biases, whether conscious or unconscious, not every situation is the same. And so just because something went well last time or something went poorly last time, it doesn't mean it will be the same.

[00:23:32] In this particular situation, I try to bring a very, very open. open dialogue and, and honesty to board meetings. we just had a situation recently where something had come up that I didn't have personal experience in. And rather than like, pretend like I did, I just said, look, I don't know the answer to this.

[00:23:51] Let me go find the answer. Let me go talk to a bunch of other people internally and externally to try to get you some of those data. but that isn't always the case and you can get into real trouble there. again, whether it's biases or just being wrong. but I do think that pattern recognition is important because entrepreneurs in many cases are doing this for the first time.

[00:24:11] maybe it's their second or third time. I don't want to like overplay my hand here, but I've seen this hundreds of times. I've been intimately involved with dozens and dozens of companies where they've had to like. Step on the gas more, um, and maybe, maybe stretch efficiency, a little to capture a market or Hey things aren't going quite as planned.

[00:24:32] Do we need to look at revising the cost structure of a business and what are the consequences of doing so, there's just a little. Th there's a lot that's going on. And, never ever tout, anything I say as being like gospel or fact, it's more of, let me provide you with these experiences and this information so that we all myself included can collectively have a conversation around it to determine what we believe is the best path.

[00:24:59] It may not always turn out to be the, right or the optimal path. It's similar with investing you take all of the information and you try to make the best decision at the time. And then we live with those decisions and we can certainly be nimble and dynamic and change and learn from those mistakes.

[00:25:13] but it's all in the spirit of pushing forward and doing what's.

[00:25:17] Hector: Yeah, I think it's, it's been one of the things that I've actually liked about VC is that a lot of the people I meet are, not too, stuck in their own ways. And hopefully lots of them are aware that you have to be aware that your opinion might not always be right. And there's very little black and white, which I really like actually.

[00:25:34] Cause, you know, it's quite annoying coming across people who think they're always right.

[00:25:38] Kevin: I will tell you those, there is nothing more exciting to me than when someone, whether it's an entrepreneur or a board member drops some experience that I have not experienced myself, in a situation or a dialogue, because I I think of experiences as, as like arrows that you can put in your Quill to use later.

[00:25:56] And so it's just like every experience and the consequences and ramifications of those experiences. To me, it's just adding more skills to my skillset that I can ultimately call upon when needed. And so in like the case, I mentioned where I, I had to go and speak with, other people. I now have those experiences that in, when this presents itself in a future situation, I can then call upon those experiences.

[00:26:21] So I, I love learning from other people in that respect.

[00:26:24] Hector: Yeah, , there was a good example of this actually the other day where I was just in the office and we were looking, we were having a discussion about, well, the companies that were having a horrible time with this. low evaluations and all that. And we looked at, um, layoffs.xyz, layoff star FYI, which is a website where all the layoffs are listed and, um, Damien episode one was like, you know, you might look at these companies and think, oh God, these are all the ones that are doing really bad.

[00:26:49] And he was like, oh, that's a good list of all the best run companies. And it's like, actually, it's quite an interesting way of looking at it. Like there are a whole bunch of companies out there doing really badly that haven't had any layoffs because they're poorly run and said, it's just an alternative kind of viewpoint.

[00:27:04] Kevin: yeah, I'll look out. I'll say that. in any business at any time in whether it's a bull or a bear market, and you want to make sure that you're moving forward most effectively and efficiently, and, re-evaluating the people you have and the, the solutions you're using and the tech architecture, and all of that.

[00:27:20] We're always trying to make that we're always pushing teams to make that as, as optimal for the success of the business and all of its stakeholders and shareholders. and so. Yeah, I think you'll see people will take a bit faster action than, than others, but it's not, I don't know if it's necessarily good or bad or indicative of, whether a businesses well-run or not.

[00:27:43] If there's just, there's so much that goes on behind the scenes, in these decisions. And, and then remember these are real, real life decisions. This doesn't, you know, there was, uh, the numerical side of this, but you're also talking about people's occupations in their lives and those of their families and things.

[00:27:57] And so these are like, those are, these are real decisions that people take, real thoughtful.

[00:28:02] James: Yeah, absolutely. And Kevin, you mentioned another sort of big human aspect a couple of times, which was about COVID. And so it seems like coaching is a big part of how you think founders need to develop. Do you guys use internal resources or do you ever use external resources to kind of help founders with some codes?

[00:28:21] Kevin: Yeah, we, we try to do anything and everything to be helpful. Um, and we certainly don't, make that mandatory or anything of that nature for the entrepreneurs and their teams. it's not just the CEO, but it's like the full C-suite. And then down into more of the management roles, um, we also try to provide solutions even like a better up.

[00:28:39] Everyone all the way down, throughout the ranks of, an organization. like some of this goes to pattern recognition, I guess, but it's just being able to build that skillset. Over the course of a, of a career in a lifetime to me is just so important. Like that learning element is so important, that we try to provide that to our, to our teams.

[00:29:00] Um, so we have internal resources. So, in addition to just providing capital, we have a full, what we call portfolio growth team. That portfolio growth team is a value added team that does things like anything from customer introductions to go to market partnerships, to international expansion, to exact level of recruiting, helping find, coaches and mentorships.

[00:29:19] We have, advisory councils, where, uh, there were like friends of Sapphire that we then can put into businesses. Sometimes those become full-time roles. Sometimes those are more advisory. Uh, we provide exact level of coaching. We are more than happy to facilitate external. Uh, exact level coaching. so it's really the full shebang.

[00:29:40] Um, some people really take us up on that and use that in spades and, others, not as much, uh, on the coaching specific advisory side, but that I will tell you, despite managing a $10 billion fund, like our CEOs look at that portfolio growth effort and just all of the value we can add through that, that is above and beyond just a.

[00:30:02] that is why people choose Sapphire. That is how we differentiate ourselves in market. So it starts, yeah, it may start with some of that, that advisory level stuff for the CEO, but it really spans throughout the gamut of the entire business to help move the needle for them.

[00:30:15] James: And as stuff I always offered that portfolio growth piece, or is that something that's developed over time where you started with one thing, then you added another, then you added another, then it became a sort of department. How has that evolved in the 10 years that.

[00:30:28] Kevin: It's interesting. It's one of the things that's evolved more than anything else. So I, I started with Sapphire and there were, seven or eight of us. Um, there are now over 90 of us, when I came on this, what we now call portfolio growth. Yeah. it was sort of, an element of this like brain child of the team of what we wanted to do to really differentiate ourselves.

[00:30:48] and now everyone tries to tout some sort of value add, but 10 years ago, that was absolutely not the case. part of the reason I joined with Sapphire among it being a great group of individuals who all think differently and come together to make this, what we think is the right decision at the time.

[00:31:03] Um, a great culture and an ability to help build something from, eight people to 90 plus people on top of that, this like value add piece was really important to me. I, from the very deco, wanted to be able to walk into an entrepreneur's office and tell them why they needed to take Sapphire's money or why they would be much better off taking sapphires money than they would taking someone.

[00:31:28] Else's it's not like an ego thing or, or anything of that nature. It really. I want to help you be as successful as, possible. My success will be a by-product of that, but I felt very, very passionately about that. Again, it wasn't even in place, but the idea was in place that we, collectively wanted to build out this effort.

[00:31:47] We then started that team, which is now, eight or nine years ago. And that team is, one of the largest contingents of that 90%. global fund. So it's over 20 people sit there and just day in and day out, add value to the portfolio that has expanded. And a single individual trying to like work a Rolodex to, we now have a whole team for talent, for marketing, for go to market.

[00:32:14] We have centers of excellence around, sales, around marketing, around, international expansion. Um, we're building some in-house like real high level former exec, Advisement, and counsel for, for organizations and business models. There's a whole slew of what we do. and that's where frankly, our largest investment has gone from a head count perspective.

[00:32:35] So it's a big, big focus for Sapphire. And again, what really differentiates us.

[00:32:41] Hector: it's always great to hear how, how busy he is, seek to differentiate yourselves, but I'm going to put it out there. The, the VCs, get it pretty easy. Um, and.

[00:32:50] Kevin: I will, I'll tell you. I will never, I will never cry for a venture capitalist.

[00:32:55] Hector: but I, I wonder, whether there've been any times in your career where you've, you know, tough times, tough times in your career, where you've had to dig deep and come through the other side. And I wonder if you can talk about any of those times.

[00:33:07] Kevin: I would say the hardest, for me and probably for, even for our entrepreneurs have been around. Frankly having to make some decisions on like head count stuff. Um, this is not doesn't pertain to anything recently. This is more around the course of my 15 year career. I personally take those Not only seriously, but there's like a really real emotional component to it. And you probably got a little of this from what I was alluding to earlier around that these are people's livelihoods and their family's livelihoods and things. I even had one entrepreneur who we proactively we're looking at, cutting costs, even though the business was doing really well.

[00:33:47] Right. He wrote, a full like manifesto for the board and actually broke down during the board meeting. Like that's how important it was to that C. That he had to even part with one person on his staff, type of thing. And that is certainly felt, at least from me at the board level, we're one step further removed from these decisions, but it's just as, personal and those have definitely been the hardest moments of, my life, even within Sapphire and previous.

[00:34:19] jobs like anytime you're parting ways with someone, whether voluntary or involuntary, that's always tough because it really is the cohesion of the group and the culture of the group. And, we certainly pride ourselves on continuing to have a very strong cultural foundation, but it's, it's almost like losing a family member.

[00:34:36] and so those would certainly be my hardest, hardest at times.

[00:34:40] James: Yeah, , it's interesting. Cause I think a lot of people think VCs are very cold because we have to say no quite a lot, actually, when you're on the inside, it is a very human role and it is dealing with founders who obviously have a lot more going on than just necessarily that business. They have the pressures of that team and the human connection, everything managing boards, et cetera.

[00:35:03] So it, there's a huge human element to, to VC as well. Unfortunately, having to look at numbers and markets and say no to a lot of people

[00:35:12] Kevin: I will say the one that the other flip side to that is you also ride the highs, right? Like when things are going well, and you close a big deal or you land a, a great, uh, executive, those highs are just as high as some of those lows are low. Um, and so it goes both ways, but it really, it, the way we approach these things are.

[00:35:32] It's one family. You are, you're a part of the Sapphire family. And from day one you're it's it's as if you were a, like a sibling of mine. And so, you ride all the greats and, and all the bats.

[00:35:41] James: we've covered so much. but we'd like to get to know you a bit as well. And you know, I already asked her about, you know, some of the low moments, but do you have a goal for your career? Do you have like any sort of mission statement or anything? What are you trying to get out of your career personally?

[00:35:59] Kevin: Yeah, this is probably a little bit loose, but like, honestly, I, couldn't ask to do a better job. I talked to the smartest, most creative people doing the. Outrageously interesting things, on a daily basis. I wouldn't change that for the world. My ultimate goal is, and I think if you've taught, like if you were to get my mom on this or something, she'd probably say this from me from like a young age is I've just always wanted people to be as successful as possible.

[00:36:31] And that definition of success can be a thousand different shades of gray. and it can be financial, it can be professional, it can be personal. any of those I've just always loved. Using whatever I can to help empower others, to ultimately reach their goals. And venture has been an incredible conduit to do that through and medium to do that through.

[00:36:54] and so my goal is really just to continue doing that. I don't have a like, oh, I want to invest in a company that becomes a hundred billion dollar market cap business, or I want to have. 12 IPO's and 10 M and a exits. It's not, not like a quantified element of that. but it really is. You just continue doing what I'm doing so that others can be incredibly successful in what they.

[00:37:20] James: Yeah, well, I think that's not so great mission fee for you. and the people around you just as importantly. So Kevin we've covered quantified self board management, pattern recognition, coaching portfolio growth, where we've covered some amazing topics. It's almost been. Mentoring session for Hector. And I just, as much as it will get amazing for our audience to listen to.

[00:37:44] but we like to wrap up our episodes with our dinner party guests game. So if you could have dinner with any three people in history, who would they be?

[00:37:54] Kevin: it's always such a good question. I guess I'll go alive there. I'd like, I there'd be hundreds. historically that I would love to spend time with and pick their brains. Uh, but given that I'm living in the here and now I will, I will choose some people that are here.

[00:38:08] I don't know, these probably won't be the most, uh, unique or creative, but, I have always just loved the idea of. Outside the box, but really outside of the constraints that the world seems to create for itself. And in that realm, not surprisingly Elon Musk would a hundred. Pop into mind, like if there's anyone and however you feel about Elon Musk, if there's anyone who's going to ultimately change this world and for the benefit of our species and other species, he can do it.

[00:38:39] He's certainly showing that he's at least trying to do that. so just thinking on a different plane, like I even get stuck into my sort of like what life is supposed to be. And he seems to just think on a totally different plane in a similar vein. I would love to chat with James Cameron, the producer and director of like, Titanic.

[00:38:56] And I'd say more of like avatar, just because he's been pushing boundaries. At some point, there, the technology wasn't there for him to properly make something like an avatar. And he created technologies in order to do that. And just thought of, I just, again, love people who take themselves out of the constructs of life and create new ones.

[00:39:19] The third one, I would, I would love to spend time with Serena Williams, the tennis player, and the reason for that is that she just has like such unbridled competitiveness to her. So despite being incredibly successful, it's just like that mentality of like, I will not, I cannot lose and I will not.

[00:39:40] Coupled with the fact that, she has a very successful sister inset instead of sisters. But if you think of Venus, when she was younger, like growing up, sort of in that shadow, but also being incredibly supportive, even playing together in doubles and things like that. I I'm one of five, but I have a twin brother.

[00:39:58] And that question of like, The balance of competitive and cooperative is always one that people ask me about and we are incredibly close. We've never had like a real competitive stick. We've always wanted each other to just be as successful, whether it was sports or school or, career. But I would love to pick her brain on some of that dynamic of.

[00:40:19] Overcoming some of that, but also being an incredible partner and incredible sister to someone who's similarly competing against you at the highest level. So, I don't know if those are very original, but, but certainly those three would be a great dinner.

[00:40:33] James: Awesome. great dinner party. Well, Kevin, thank you so much for coming on and telling us your writing unicorn story. as I said, amazing insight that into how you think about venture, how Sofar thinks about venture, some of the highs and lows along the way. Um, really amazing. So thank you again.

[00:40:52] Kevin: No. Thank you both for having me. Uh, this is great.

[00:40:55] 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.