Venture Capitalist, James Currier: Mastering Network Effects to Scale Your Startup | E102

Summary

Leap Academy with Ilana Golan Episode: Venture Capitalist, James Currier: Mastering Network Effects to Scale Your Startup | E102 Release Date: May 6, 2025

In this compelling episode of The Leap Academy Podcast, host Ilana Golan engages in an insightful conversation with James Currier, a seasoned entrepreneur and founding partner of NFX, one of the most active venture capital firms in the United States focused on seed and pre-seed startups. Currier brings a wealth of experience as a five-time founder and angel investor in notable companies like DoorDash and LiveHeteron. Together, they explore the intricacies of entrepreneurship, the importance of network effects, and the lessons learned from scaling startups.

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Early Entrepreneurship: A Lifelong Passion

James Currier's entrepreneurial spirit ignited early in life. From the age of six, Currier was already launching his own ventures, selling everything from worms and seeds to shellfish and T-shirts. By the time he was eighteen, he had founded eighteen companies, driven by a dual fear of financial instability and a desire to avoid a mundane life.

[00:55] James Currier: "Don't become an entrepreneur if one you haven't been an entrepreneur since you were 6 or 12 and it's just part of your DNA or you have an idea in your head that you can't not do."

This early immersion in business laid the foundation for Currier's relentless pursuit of creating impactful ventures, a trait he emphasizes as essential for true entrepreneurs.

Education and Career Path: From Princeton to Venture Capital

Currier's academic journey led him to prestigious institutions like Princeton and Harvard, following a conventional career path initially. However, his innate drive to innovate eventually steered him away from corporate roles. After graduating, Currier briefly worked at GTE (now part of Verizon) but soon realized it wasn't his calling. His adventurous spirit took him sailing to Tahiti and then to Asia, where he briefly worked at StarTV before facing unexpected challenges, including a misdiagnosis that forced him to return home at 24.

[04:26] Ilana Golan: "Wait, wait, wait, wait, wait. How old are you at this point?"

[04:29] James Currier: "24."

These experiences underscored Currier's preference for entrepreneurship over traditional employment, reinforcing his commitment to building and scaling startups.

Founding and Scaling Ventures: Navigating the Dot-Com Crash

Currier's first major startup, Tickle, launched amidst the late 1990s dot-com boom. Despite raising a Series A round just before the crash, Tickle survived due to strategic financial management and rapid iteration. Currier highlights the pivotal role of network effects—a concept that would later become central to his investment philosophy.

[13:10] Ilana Golan: "So at this time, I was struggling between the fear of having no money and the fear of living a boring life."

Tickle's journey through the volatile dot-com era taught Currier valuable lessons in resilience and adaptability. The company's eventual acquisition by Monster.com for approximately $110 million was a testament to its success, albeit with mixed feelings about the integration and lasting impact.

Understanding Network Effects: Beyond Viral Growth

A significant portion of the discussion revolves around network effects versus viral effects. Currier defines viral effects as strategies to acquire new users quickly, while network effects focus on retaining users by creating substantial value that discourages them from leaving.

[13:10] James Currier: "There's a difference between viral effects and network effects. Viral effects are to get new free users. Network effects are to have retention, where the network effects create so much value in the product to people that they never want to leave."

Currier recounts how Tickle initially relied on viral hooks, such as a dog breed test that attracted millions of users, but only later realized the importance of network effects in sustaining long-term growth and user engagement.

NFX and Venture Capital: A New Approach to Investing

Transitioning from entrepreneur to investor, Currier co-founded NFX with a focus on network effects as the cornerstone of their investment strategy. Unlike traditional venture firms that may emphasize cautious, negative investing or overly optimistic projections, NFX intertwines both perspectives to identify startups with the potential for substantial impact.

[18:42] Ilana Golan: "Now to NFX, which is really fascinating, right?"

[18:50] James Currier: "NFX stands for Network effects, of course."

NFX differentiates itself by leveraging Currier's extensive entrepreneurial background, enabling them to provide hands-on support to their portfolio companies. With over 200 investments and growing, NFX has established itself as a significant player in the seed and pre-seed funding landscape.

Advice for Aspiring Entrepreneurs: Passion Over Status

Currier offers candid advice to listeners contemplating entrepreneurship, emphasizing the importance of passion over the allure of status or financial gain. He warns against entering the entrepreneurial arena without a deep-seated drive, likening it to an intrinsic part of one's DNA.

[28:48] James Currier: "If you have a question you shouldn't. If you're worried about it or wondering about it, just live your life."

He underscores that true entrepreneurial success often involves immense personal sacrifice and resilience, qualities that go beyond mere business acumen.

Lessons Learned and Technology Windows: Timing is Everything

One of the episode's key takeaways is the concept of Technology Windows—periods when specific technologies are ripe for innovation and adoption. Currier emphasizes that understanding and aligning investments within these windows can significantly enhance a venture's probability of success.

[41:22] Ilana Golan: "Technology windows. I'll definitely take it out."

[41:56] James Currier: "It's the idea at the right time is kind of everything."

By recognizing and capitalizing on these windows, both entrepreneurs and investors can better position themselves to ride waves of technological innovation, as evidenced by NFX's strategic investments in companies like DoorDash and Lyft.

Building a Robust Founder Network: The NFX Community

Currier highlights the importance of community and shared vision in building successful ventures. His partnership with Gigi Levy-Weiss and Stan Chidnovsky was pivotal in shaping NFX's collaborative and forward-thinking culture.

[29:36] Ilana Golan: "Technology windows. I'll definitely take it out."

[30:25] James Currier: "We sat there for six hours and we talked about Ender's Game and about Star Wars and about all the things you're not supposed to talk about like religion and politics."

This alignment of values and mutual respect among co-founders has been instrumental in NFX's sustained growth and ability to attract top-tier startups.

Closing Thoughts: Embracing the Venture Capital Ecosystem

Throughout the conversation, Currier reflects on the complexities and rewards of venture capital, advocating for a balanced approach that values both innovation and community. His insights offer a roadmap for aspiring entrepreneurs and investors alike, emphasizing that success is as much about timing and network effects as it is about perseverance and vision.

[41:56] James Currier: "The reason the Bay Area keeps winning is because we don't really care about the money. We care about the process."

Currier's journey, from a child entrepreneur to a leading venture capitalist, encapsulates the essence of what it takes to leap to bigger things—resilience, strategic thinking, and an unwavering commitment to creating impactful ventures.

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Notable Quotes:

• James Currier [00:55]: "Don't become an entrepreneur if one you haven't been an entrepreneur since you were 6 or 12 and it's just part of your DNA or you have an idea in your head that you can't not do."
• James Currier [07:13]: "That's exactly right. Especially if you're going to raise venture capital, which most companies shouldn't."
• James Currier [13:10]: "There's a difference between viral effects and network effects. Viral effects are to get new free users. Network effects are to have retention..."
• James Currier [41:56]: "It's the idea at the right time is kind of everything."

James Currier's experiences and insights provide listeners with a nuanced understanding of entrepreneurship and venture capital, making this episode a valuable resource for anyone looking to scale their startup or navigate the complexities of the investment landscape.

Transcript

[Ilana Golan]

Wow. This show is going to be incredible. So buckle up and I'm sure you're going to enjoy it. But before we get started, I want to ask you for a favor. See, it's really, really important for me to help millions of people elevate their career, fast track to leadership land, dream roles, jump to entrepreneurship or create portfolio careers. And this podcast is all about enabling this for millions of people to see a map of what it actually takes for big leaders to reach success. So subscribe and download so you never miss it. Plus, it really, really helps me continue to bring amazing guests. Okay, so let's dive in.

[James Currier]

A lot of people are considering entrepreneurship because they want status, not because they're actually entrepreneurial.

[Ilana Golan]

James Currier is a five time founder and angel investor in Doordash Live Heteron and a founding partner of nfx, one of the most active venture capital in the US Focused on seed and pre seed stardom.

[James Currier]

I was really an entrepreneur from the time I was born. When I was six I started sell worms and then I was selling seeds and then I was selling shellfish and then I started a T shirt company and I started a boxer short company. I started 18 companies before I was 18. I was struggling between the fear of having no money and the fear of living a boring life. Don't become an entrepreneur if one you haven't been an entrepreneur since you were 6 or 12 and it's just part of your DNA or you have an idea in your head that you can't.

[Ilana Golan]

Not do, what do you think makes a really good founder? And if somebody's like debating should I be an entrepreneur, should I not be, what would you tell them?

[James Currier]

Here's my advice to your crowd.

[Ilana Golan]

I am so excited about this episode because I've been following James Currier for a while now. So James Currier is a five time founder and angel investor in Doordash Live Patern and a founding partner of nfx. NFX stands for Network Effects, one of the most active venture capital in the US focused on seed and pre seed startups. James, I'm really excited about this conversation.

[James Currier]

Thank you for having me.

[Ilana Golan]

Let's take you back in time. Let's rewind. You studied in Princeton, in Harvard and I'm sure a lot of people in that area took the traditional path. Consulting, finance, all the accolades. Why did you decide to be an.

[James Currier]

Entrepreneur in a way I didn't decide. When I was six I started selling worms and then I was selling seeds and then I was selling shellfish and then I started A T shirt company, and I started a boxer short company. I started 18 companies before I was 18 as a way of making money. My dad was an entrepreneur. My mom was a music teacher. We lived out in New Hampshire. If I wanted money, I needed to start businesses, and so I did that. And then when I was in college, I started the loft agency, and I took a year off and started a company and then went back and finished up at Princeton and whatnot. So I was really an entrepreneur from the time I was born. I grew up in a place where you had to be an entrepreneur, sort of in rural New Hampshire. And so it was chosen for me. What was sad was that at Princeton, they didn't have anyone to slap me in the face and say, dude, you're an entrepreneur. Get out to California, get out to San Francisco where the entrepreneurs are. Took me 10 years from graduating from college to actually getting out here and realizing, ah, these are my people. This is where I was supposed to be the whole time. And I just hadn't known. And so right after school, I went into the normal path. I applied for an associate position at GTE, which was now part of Verizon. It was a 180,000 person company with a big headquarters in Stamford, Connecticut. And I traveled up there with my little coat and tie on the train and got a job. And they gave me six different jobs over three years. So I learned all about the corporation and all the people. And then I was just like, this is not for me. And a friend of mine had reminded me that my dream had been to go to Asia. So he called me up one day. He had just gotten back, and I was like, I went to my boss. I'm like, I got to go to Asia. So I sailed. I took a sailboat and I sailed to Tahiti. And then I flew on to Asia and I got a job at StarTV because they had. Anyway, they were doing technology and media and whatnot. Then I got fired from there and I went to Beijing and I was studying Mandarin. And then I got misdiagnosed with a heart disease and sent home.

[Ilana Golan]

Wait, wait, wait, wait, wait. How old are you at this point?

[James Currier]

24.

[Ilana Golan]

Wow. Okay, so first of all, are you afraid at any point or you just eating the dream?

[James Currier]

I think what was happening was this might be interesting to your audience, which is I was struggling between the fear of having no money and the fear of living a boring life. And I was grinding up toward the realization that I was more scared of living a boring life than I was of not having Any money or anything to eat.

[Ilana Golan]

That's incredible. And that's exactly our audience, by the way. Every single listener here is right now getting aha moment.

[James Currier]

That's the thing. I felt like I want to live an amazing life, and I'm willing to die for that. So when I got back to Boston, I went and took a job at a venture capital firm. And then I learned all about venture capital and how that all works. I was smiling and dialing, trying to sell money for battery ventures. And then they came to my room and said, here's your recommendation at Harvard Business School. Go to Harvard Business School. They had all been to Harvard Business School. So I applied and I got in because they said I should, and I had done all the things, and then I got in. I went to that. But that, again, wasn't quite the thing. Again, this was the normal track. This was safety. This was the fear that I grew up with of not having enough to eat. And by the time I was done with hbs, I felt like I had turned over enough rocks. I knew that I could always get a job for $60,000 somewhere because I had this HBS degree. And then I had to decide, do I go back into venture capital or do I become a startup founder? And this guy named Mike Zach at crv Charles River Ventures, he said to me, I'm listening to you here at dinner. It's our sixth meeting. We're ready to make you an offer. But I can see that you need to be an entrepreneur, and you need to go do that. You'll be a better venture capitalist later once you've done that. And he was the one who finally slapped me in the face and said, dude, you're an entrepreneur. I was 31 at the time. And so that's when I started my first startup. And then we almost went out of business twice.

[Ilana Golan]

And wait, wait. So let's go there. Let's go there. So he gives you this, like, aha moment, and you're saying, okay, maybe this is what I need to do. But between that and actually knowing what to start is a very different story, Right?

[James Currier]

So here's the thing. Here's my advice to your crowd is don't become an entrepreneur if one. You haven't been an entrepreneur since you were 6 or 12, and it's just part of your DNA or you have an idea in your head that you can't not do. And both things were true for me at that time. I had been a little entrepreneur since I was 6, and I had an idea I could not do. I couldn't sleep. I was so excited about it. I was having visions about filled my soul. And so I had to do it. And Mike Zach, thankfully saw that and he said to me, you need to.

[Ilana Golan]

Go do this and I'll tap into that. And I want the listeners to listen in because don't go there just because you think it's easier than finding a job. Go there because it's a passion. Entrepreneurship as far as I'm concerned, James, correct me if I'm wrong, it's always going to be hard. But if it's your passion, it's going to be the thing that you have to do.

[James Currier]

That's exactly right. Especially if you're going to raise venture capital, which most companies shouldn't. But if you are, it's a prison. You have to exit that company and give the investors their money back. You're just in the prison. You've got a sentence until you exit.

[Ilana Golan]

It's a different kind of prison. Yeah, yeah.

[James Currier]

But it's very tough. And there are many, many nights where you're just not sleeping and you're totally suffering and you have to remind yourself, I chose this. And my wife would remind me and I would remind me. And it was still very, very hard. That, look, I chose this. I chose this. I chose it because it's very painful.

[Ilana Golan]

So let's go there for a second, James, because I agree with you. That was said with Leap Academy. I decided not to raise capital and not to have the prison, but I still want to go there for a second. So you have this idea. It's keeping you up at night. You're like, oh my God, is that Tickle that you need to start?

[James Currier]

That's Tickle, Yeah.

[Ilana Golan]

So you know that you need to create it.

[James Currier]

The basic idea was that the Internet was going to be about us and our friends, not about Nicole Kidman and Tom Cruise. Because all the other media technologies were for one to many. Radio, one broadcast, 100,000 listeners. Television, same thing. Magazines, same thing. The Internet was the first media technology that was many to many. And so I realized it's going to be about us. We're going to consume media about us.

[Ilana Golan]

That's brilliant. And that's really early on.

[James Currier]

That was like 98, 99. Yeah.

[Ilana Golan]

So you had this idea, you're jumping all in. You decide that you're going despite fear, despite money, despite it all. Was there fear? Like, am I crazy?

[James Currier]

No. I had been at a venture firm, so I had seen how you fund these things and I had seen many people Take this leap and live this life. And I had interviewed hundreds and hundreds of founders who were living this life. So for me, I was already acclimated to the cold water.

[Ilana Golan]

Okay, okay. But then the dot com brought very, very cold water. How did you do with the 2000s?

[James Currier]

We were 80% lucky and 20% good. The 80% luck was that we raised our Series A round one week before the crash, actually, excuse me, during the crash. The crash started on a Monday. We got the money on a Friday afternoon. That same week, the venture capitalist actually sent the check. And so we were very, very lucky. And so by the time we could even gear up to spend any of the money, it was very clear what had already happened. So we didn't overspend, so we were able to extend long enough to survive. But the 20%, where we were good was that we iterated really quickly. We were one of the first companies to do AB testing, and we took ourselves off salary for about six months leading up to the financing. So we had 13 people, and I think seven of us were on salary and six of us were off. And we were working 12 hours a day and iterating and iterating and testing and trying and breaking old paradigms and throwing out old stuff until finally something hit enough. And the other part that we were good at was I talked to 43 venture capitalists before we got funded. And remember, these are all my friends. These are people I had known for years working in the industry, and they all said no to me.

[Ilana Golan]

And I want to go there, James, for a second, because I think one of the things that I hear very, very often is like, but I tried. And what they mean is that they went to seven and they got rejection. I'm like, yeah, I mean, look at my spreadsheet for the podcast. Do you know how many thousands said no initially until I got, you know, a few big names like that is it.

[James Currier]

That's right. And I think for people who have succeeded at school and for people who've succeeded in large corporations or succeeded in government or succeeded in the military, it's hard to imagine how many at bats you need to get one hit, how many ideas you need to have before you have one good idea. And it's just a benchmarking exercise. And so for people who are saying, I'm not the right height, I'm not the right color, I'm not the right gender, I'm not the right nationality, therefore I'm not getting funded, that's mostly bullshit. Because the white guy from New England who Went to Princeton and Harvard, who knew everybody in the industry had everyone say no to him because it was not a consensus idea. It was not an easily digestible idea. And I had no traction yet.

[Ilana Golan]

And at that point, like, you had so much conviction in the idea that you just continued, or was there like, what the heck am I doing?

[James Currier]

No, I just continued. I knew this was coming. I knew I just had to figure it out. And I just needed enough time to.

[Ilana Golan]

Figure it out at that point. Are you in a relationship or not yet?

[James Currier]

I was. I had a girlfriend at the time.

[Ilana Golan]

Okay, and she's not slapping you and saying, james, get a job?

[James Currier]

No, not at all. Not at all. She was fantastic. I stopped sleeping on October 3rd, and we raised money on April 9th, I think. On October 3rd, I woke up in a cold sweat, realizing I didn't know what I was doing, that I was going to have to go off salary, that I was leading these 13 or 14 people into the abyss. I hadn't learned nearly enough working at the venture firm, watching people do this. I needed to know much more about product and all that stuff. And so I just grind it. And my girlfriend, who's now my wife, she couldn't care less about money. She couldn't care less about technology. And so for her, she just cared that I wasn't sleeping. And she was like, well, if you're happy not sleeping and being stressed all the time, then that's you being happy. Fine.

[Ilana Golan]

Which sometimes we do take it on the spouses for my poor husband, But I have to say, he has so much patience. Okay, so at some point, you're starting to see these seeds of viral loops that are happening, and you're starting to understand this network effect, that thing that is happening. Can you explain a little more what just happened?

[James Currier]

There's a difference between viral effects and network effects. Viral effects are to get new free users. Network effects are to have retention, where the network effects create so much value in the product to people that they never want to leave. And. And no competitor can get them to leave. Okay, two totally different things. And there's an article on NFX.com, which Everybody should read, called Viral Effects are Not Network Effects. So what was happening at this time was that we had a massive viral effect, meaning we sent out our latest iteration of the product to 400 people on an email, and within eight days, 1 million people were trying to hit the website, and it crashed the website. Luckily, it was a very clear signal. Had it not been clear, that would have been harder. A Clear Signal is a 0 or 100. But if you get like a 43 or a 37, that's the worst. Because if it's a 0, you just move on to the next experiment.

[Ilana Golan]

The maybes are the hardest. Yes, the maybes are the hardest.

[James Currier]

And so luckily it was a big viral effect. We started getting millions of people hitting the website. Basically, we put up a dog test. Which breed of dog are you? Answer these 16 questions and we will give you this beautiful, cute little dog type with four paragraphs about who you are as a personality. And this went crazy. I think in the end we had 100 million people take that test. So it took us four hours to make. It was another experiment. We just kept experimenting and then we were able to raise the money. And we didn't understand network effects. This was the big aha. Network effects didn't come until 2004. So we took off in February 2000. And then we didn't really understand network effects until 2004. And that's a whole different story.

[Ilana Golan]

Right, because then you need to also monetize and make it sustainable, I assume.

[James Currier]

Right? Right.

[Ilana Golan]

So tell us about that, because that's hard.

[James Currier]

You need retention. So we were building self assessment tests. So you had to put out a new self assessment test every week. And this is the business of fresh produce, like being an E commerce vendor or something like that, or your job. You have to put out a new podcast. This is what we call the business of fresh produce. And it's a manufacturing line and it's a business, but it's a hard business. But it was working for us because a lot of people were coming and so we could just put up ads. You know, we got profitable for one month and then we moved out to San Francisco because I couldn't hire anyone in Boston. We started this in Boston and we just couldn't hire anybody who knew anything about anything. And so we had to move out here for hiring. And so of the 14 people, 13 of them moved. The 14th person who did not move is a woman named Mel Schneberger, who changed her name to her husband's name, Mel Robbins, and she's now the number one female podcaster in the world.

[Ilana Golan]

That's really cool.

[James Currier]

Right? She was the one who didn't move with us. Anyway, she kept iterating too, and now she is where she is. So she's fantastic. And so we moved out to California, we got an office, and then the fresh produce kind of started running out. There was no network effect, there's no retention People would come, they would enjoy, they would send to their friends, we would get new users, and then everyone would kind of leave. The Internet only had 600 million people at the time. We registered 150 million of them.

[Ilana Golan]

Incredible.

[James Currier]

But they would only come and stay for one or two or three hours and then they would leave. So then we're like, okay, let's build out a matchmaking site where at least people will come and stay for three, four or five months. Okay, now let's build out a social network. And there was no name social network for. We called it a member directory where people could see each other and comment and share and that kind of thing. And then we built out an ad network, which was like a marketplace, which had a network effect. But we still didn't understand what we were doing. There was a moment we were running out of money again and we were 60 days away. So the first time we literally got the money on a Friday, we would have missed payroll for the final seven people. On Monday, we were 48 hours away from running out of money. And then we were 60 days away later and we saw another website that was non competitive with us doing something and we just copied their feature onto our website. And we made $88,000 in one month, which doubled the revenue of the business. And we got profitable and we never looked back. And then we were profitable every month for 36 months. And we got up to about 32, 40 million in there. And then Monster.com offered to buy us out. And we sold to them for about 100 million.

[Ilana Golan]

Right.

[James Currier]

For 110 million it was 90, but with the earn out, it ended up being 110 because we did really well after the acquisition and it was five years to the week since we started the company. So we went through the downturn, came out the upturn, and then we sold at that time. So here's a story about network effects. So we get to monster. Horribly run company management doesn't know what they're doing. There's bureaucracy, they have 600 people building the monster.com website, which we could do with three or four people. It was a mess. And I was like, why are they worth 7 billion buying me for 100 when our team is better, our products are better, etc. And I was like, oh, they got a network effect back in 1997, 98, where the employers and the employees are all coming to their marketplace and so nobody can really leave and so nobody can really compete with them. And that's why they were 7 billion, is they had this network effect, and that's 2004, is when I fell in love with Network Effects. And I really started to understand, ah, if I'm going to do anything going forward, I got to have a network effect because I do not want to be in the fresh produce business.

[Ilana Golan]

Ooh, that is powerful because you're bringing this back to every single one of your ventures. And now to nfx, which is really fascinating, right?

[James Currier]

NFX is the name of our venture firm. It stands for Network effects, of course.

[Ilana Golan]

So after that, you, for some reason not going on the beach and I don't know, and having fun, you decide to start more ventures. First of all, why?

[James Currier]

Because I never did it for the money. And this is the big reason why 90% of the exits in technology come out of the Bay Area, is because the culture here doesn't care about the money. The culture here cares about ego, cares about impact, cares about changing the world, cares about basically being a graffiti artist. Like, you go out with a graffiti and you paint your tag and then as you go by on the subway, you see your tag on that wall. We're graffiti artists out here. And so once you do one graffiti art, you want to do more graffiti art.

[Ilana Golan]

Never thought of myself as a graffiti artist, but okay, I'll take that. James, that is awesome.

[James Currier]

So that mindset means that once you get money, what do you do with it? You use it to build more things, more stuff.

[Ilana Golan]

So tell me, so you found then Wonderhill in 2008.

[James Currier]

So what we did was we decided that at Tickle, we had built a testing business and a matchmaking business and a social networking business and an ad tech business. We had seven different P and LS inside of Tickle as we were doing consumer stuff. So we're like, let's just build that endemically into it. Let's create an incubator. Let's get 30, 40, 50 people in here. We'll work on three or four products at the same time. Most of them won't work. That's okay. We'll just iterate. We will iterate faster and cheaper than anybody else towards successes. And when something takes on, we'll jump on it. And so like, if you look at venture backed companies at that time doing other consumer things, like where we were able to build things 10 times faster and 10 times cheaper, we actually measured it. Like, how much venture capital did those six companies take? How much did we spend? So they would spend 6 million each. We'd spend 600k, 1/10 and they would take 4 years to go through it, we would take 4 months. It was literally a 1 to 10 ratio in terms of figuring stuff out inside the incubator. The problem was, once you get a hit and something's working, the only person capable of running that business is you, because you're the one who came up with it. You can't install a CEO or co do it with someone. Which is why incubator models don't work. There's a soul to these things. Now it can work a little bit with spreadsheet businesses like Himss and Rocket Internet I think has Alanda. But in general, these incubators do not work unless they're spreadsheet businesses where anybody can run it. Somebody from BCG can just buy traffic, sell traffic, that sort of thing. But if the business has any amount of soul in it, incubators don't work.

[Ilana Golan]

Okay.

[James Currier]

And so we tried it for three years and during that time we built 24 different products. We ended up venture backing three businesses, but I ended up being CEO of each one in turn. So it wasn't really an incubator. It was just a way of finding the next business that I was going to run. And so that's what we did next. And the first business that came out of that was a gaming company called wonderhill, which had started as something different and then it pivoted into gaming and then we merged that with Kabam, another gaming company. And then we took the growth analytics engine from that and spun it into a company called Iron Pearl. And then PayPal bought that and then we started an enterprise HR software company for benefits called GIF. And this was the biggest mistake of my career because I was really good at consumer stuff and I wanted to sort of cure American healthcare with basically bringing Facebook platform, but making it for health and then letting all the apps sit on top of it. That was the idea. It's still a good idea and still has.

[Ilana Golan]

It still makes sense. But why was it such a mistake? Because I heard you say that before. Take me there for a second.

[James Currier]

Because healthcare does not want to be cured. The American healthcare system is so frozen, so broken. It's so locked in bad behavior. Everyone in the system is behaving badly. The doctors are behaving badly. They don't really care about patient health. They care about revenue. The patients are behaving badly. They just over consume health care all the time. Particularly as we age in the United States. Like entertainment, oh my God, that's insurance companies. They just increase their prices all the time. They're just Rapacious. They're not actually trying to lower costs or improve. They say they are, but they're not. They don't behave that way. The pharma companies are just. The people at the pharma Companies work from 10am to 2pm they just use their IP to just milk money out of the system. They're unbelievably profitable. Nobody is behaving well and it's hard to get anybody to try to behave well. And the only way you can help is make someone more money, not save costs, not improve care. The only thing that the system responds to is making more money. And we were trying to improve care and reduce costs and the system does not want that.

[Ilana Golan]

Nobody wants that. So take me there for a second James, because you have tried for a while like you did, basically put your head down and try to make it work.

[James Currier]

In the end I did hire a person who knew the healthcare sector because it took me about seven or eight years to understand a bunch about the healthcare sector. It is very deep, it is very complicated. There's a whole set of new terminology you got to work on. And so I just didn't know what I was doing. I came in naive and the healthcare system just spits up naive people like me. And I had already had three successes but I was not naive about how you finance things or how you hire people or how you build good product. But I was naive about how the health care system worked. And we weren't getting bashed around, we were just getting ignored. Nobody cared. So for the first three years we were just ignored. It was very hard to fundraise and it was very hard to get pilots. So we grounded out. We grounded out and we actually built the product. And then suddenly one person liked it and then three and then 10. And we were then on the stage and we were the hot thing for about six to eight months and I was like, my God, we waited them out. It took three and a half years but we are the hot thing. Everyone's talking about this new hub strategy. Every self insured employer needs to bring on one of these big pieces of software that we've built to manage all of their employees healthcare. And this is awesome. And then in the end what happened was we had nine salespeople and we had all this pipeline and the consultants who consult to these self insured employers in the United States, there's three of them, Towers, Watson, Aon, Hewitt and Mercer. One of them had even invested four and a half million dollars in us. One of the people in their organization Told other software companies, this is what's selling, this is what everyone wants. You should sell this. Here's Jif's deck. Because if you have the same product Jiff does, then I can make money by running RFPs against all four of you. But if Jif is the only source of this, then I don't make any money because they just buy you. And so for those people in those organizations to make their living, they needed to create competition and create fear and uncertainty and doubt in their customer's mind so that they would continue to need the consultant. And if the hub strategy had gotten implemented, no one would have needed Towers Watson because all the data would have been right there. They could have added something or removed an app at a click of a button, no contracts needed. It would all have just been electronic, all the data would have been there. We would have desiloed the information. Everyone would know would have been working. And so to protect their business, they ultimately ensured that the hub strategy has not been implemented. And the four companies that then raised between 150 and 300 million dollars each to compete with us and then started giving out the same deck, none of those have done very well because the system itself is resisting improving. It resists change because it reduces costs, it improves quality of care, and nobody wants that.

[Ilana Golan]

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[James Currier]

But we raised 68 million and sold it for 144 to a public company. And it was a massive waste of time when I could have been doing something much better with my time to make the world a better place or put more graffiti on the wall.

[Ilana Golan]

So when you sell gif, does it make you decide you know I'm done. Or I mean, again, the graffiti thing just makes you decide to start nfx. Because I feel like that should also be traumatic to some extent. Like, I can't do this.

[James Currier]

It was traumatic. And I had put in millions of dollars myself to get Jiff going. That's how we survived the first three years. And so when we sold for 144, I barely got back what I had put in. And I had spent months not sleeping over Jiff as well. So a lot of heartbreak, no reward, a lot of risk and no impact on the American healthcare system either. So a lose, lose, lose. So this was all taking place around 2016 17. We had decided in 2010 that we were going to do a network effect venture firm and the model for that was an accelerator. The more companies you have in the class, the more alumni you have, the more leads you have, the more your brand gets out there, people are loyal to it, blah, blah. Venture firms don't have network effects, but accelerators do. So we started as an accelerator in 2015 and did it for two and a half years. And in 2017 we decided that we weren't going to continue with that model, that we were just going to become a venture firm. We invest an average of $3 million for an average of 18% of a company. We're very hands on. We try to help them if they want, if they want us to leave us alone, then we are also completely leaving you alone. But we have been in your shoes multiple times. And so that's what we're doing with NFX and we've made over 200 investments now and going very well. One of the biggest seed funds in the world, I think us in first round are probably the biggest and it's going very well. But it's the sense of the PTSD of being a player. It's much better being a coach. When you're my age and you have all this ptsd, you got to move from being a player to being. I'm like Steve Kerr. I want to be like Steve Kerr who played for the Bulls and won championships, but now he's winning championships coaching the girls.

[Ilana Golan]

First of all, how did you meet Gigi, by the way? Gigi Levy.

[James Currier]

I was living in Switzerland for a year and a half, having an adventure with my kids and my wife. And I was looking for companies in Switzerland to coach and I couldn't find any. And so I decided to go to Israel looking for some because we knew that Israel was just this awesome place to find startups. And I emailed four people and I said, who should I meet with when I go to Israel? And all four listed Gigi Levy Weiss on their lists. I emailed Gigi and the guy's got three kids and he's the biggest investor and he's everywhere. He's like, I can meet with you at 9pm on a Wednesday night. I have an hour long slot. I was like, that would be fantastic. I'll take it. So I meet him on a Wednesday night at 9pm and we're still sitting there talking at 3 in the morning.

[Ilana Golan]

Oh my God.

[James Currier]

We sat there for six hours and we talked about Ender's Game and about Star wars and about all the things you're not supposed to talk about like religion and politics. Politics and money and all the things that, you know, no one you're not allowed to talk about. And he and I just talked about all those things. We had the best time.

[Ilana Golan]

Well, you know that Israelis don't have these walls of things that you can't talk about. You know that, right?

[James Currier]

Maybe some have the walls, but not G with me at least. And so we just got to be good friends. And then he and my co founder for all of my companies, a guy named Stan Chidnovsky, who's here in the Bay Area, he had also met Gigi a year earlier at some event in England or something. And so when Gigi came to the Bay Area to have dinner with us, he's like, hey, I want to dinner with you guys. Stan and I had been looking for a third person to start this NFX thing with. And Gigi came to dinner and he said, I don't know. Stan and I had talked, I don't know, 60 people and said no to everybody. We just couldn't find the right vibe. We couldn't find the right soul, the right spirit.

[Ilana Golan]

I mean, it's almost like marriage that's not easy to find.

[James Currier]

He said, well, if you guys are still going to do this in effects thing, I would do it with you. And so Stan and I just glanced at each other and were like, let's do it. And we thought we would love to have a foot in Israel. But it was mostly about spirit and soul. It was about karma.

[Ilana Golan]

And this is around what, 2016? 17.

[James Currier]

This is 2000 and this is December 2014.

[Ilana Golan]

14. Okay. Wow.

[James Currier]

And then we started up in June of 2015.

[Ilana Golan]

So you're starting NFX. I mean, starting a VC fund is even harder than, I think, a startup to raise the capital.

[James Currier]

We had a Bunch of capital ourselves, right? Because we'd all built and sold businesses successfully.

[Ilana Golan]

A lot of businesses.

[James Currier]

A lot of businesses. So we had plenty of capital ourselves to use. And, you know, it's better to use your own and screw yourself than to screw somebody else while you're learning. And then we had a bunch of venture firms who wanted our deal flow, and so they put in a little bit of money into our fund as well. Greylock, crv, Shasta and Mayfield. Great funds, great guys. And they had known us for years and invested in our companies and been successful and whatnot and supported us in this. But again, it was the vibe. It's like, do you trust the person? Do you love the person? Do you believe in the person? And we just got that community together. And then we got going. And then when we went out to raise a bigger venture fund of the first fund was 150 million. Pete Flint had joined us, and Pete had built and sold Trulia for three and a half billion. And so between the three of us, we had built and sold 10 companies worth over 10 billion. And that's twice as much as Horowitz and Andreessen when they started that fund. So the fundraising wasn't too difficult.

[Ilana Golan]

That's incredible. But let me ask you something, and I'm curious what you're going to say. I mean, clearly NFX has done really well and you have some really amazing companies under your belt. But one of the things that I'm curious about being an operator or even a CEO of a company is very different than gauging if something will be good for investment. And I almost feel like sometimes it's almost opposite because we tend to be very optimistic. At least I am. So I suck at investment. Like, I just invest with others because I'm too optimistic. And I love the founders and I just want to say yes to everybody. So, James, how do you bridge that gap and learn to be a really good, solid investors?

[James Currier]

It's the daily, constant battle between negativity and positivity. So I originally never wanted to be a venture capitalist because I'd worked at Battery Ventures, and Battery is a negative investing firm, which is why I think the returns are the highest and most consistent of almost any venture firm in the world. They will only invest when they can't not invest. They will only invest when they've gone down all the risks and check them all off and there's no reason not to exist. Oh, fuck. We have to. Excuse my language. Oh, crap. We have to, you know, we have to invest. We don't have any excuses not to. And that's just a very negative process. And it makes you very negative as a person. And that's not a great way to live. On the opposite end of the spectrum, you have firms like Benchmark, where they're constantly thinking, how big could this be? How could this be massive? How could we look at our optimism and see what's going here? And I hadn't realized that there was that type of more optimistic investing, and that's why I never wanted to be a vc. But now we are bringing that sort of optimistic, almost naive approach to the investing, which doesn't work very well at Series B, but it kind of has to work at Pre Seed and Seed, where we operate, because there's not much.

[Ilana Golan]

To go on, there's not much data.

[James Currier]

And you have to think about what can go right. Because in the end, what matters to the venture capital fund and what matters to your life and your ability to paint graffiti on the wall is the big outcomes. Like, I will be associated with my Poshmark investment and with my DoorDash investment and my Lyft investment got big. You won't associate with my Rapleaf investment, even though I made 35 times on that. Or maybe you'll associate with my Goodreads investment or not really with my Flickr investment, because they weren't massive. And so in the end, this is a power law business, as everybody says. But you have to understand you're really looking for the big outcomes. So at Seed, you have to just be optimistic and you have to be realistic. You have to have looked at hundreds of thousands of plans. You have to have invested in hundreds of companies and failed with most of them. You had to have a few successes where you see the patterns of success, and then you try to throw that all in and not get too negative all day long and not too cynical, and keep swinging and just keep swinging. Our first fund at 37 investments, second fund at 55, third fund at about 80. So we're taking a lot of swings per fund, looking for the three or four that are going to be worth two, four, five billion dollars. And that's where we make our returns. That's where we have the most fun in terms of returns. But in the end, that's how you balance that negativity and positivity.

[Ilana Golan]

Thank you for sharing that, because I think that's the piece that is always interesting for me to see. But then when there's ups and downs for founders, I feel like one of the big things that investors are looking at is yes, you want the big thing, but you also want to know that the first time there's a dip and that near death experience, they're not just going to give up. Is there a way to ask, is there a way to see if they're going to just give up?

[James Currier]

No. We were just talking about this last week. It's one of the more difficult judgments to make about a founder. Are they smart? Are they fast? These are easier things to figure out in interviews. Are they ambitious? We have a list of 48 attributes we're looking for. And most of them are easy to. Not easy, but you can figure it out in three or four or five meetings. And looking at their track record and seeing how they respond to emails and seeing how the people around them behave and et cetera. There's lots of tip offs. But this issue about will they sell out when someone offers them 80 million bucks for their company, which matters not to our venture fund. Even at 400 million, it's really not that interesting. If you exit for 400 million, it's fine for our venture fund, but it's not going to really move the needle. You've got to get to 2 billion for it to move. It's a crazy business model. I mean, the venture capital model is crazy. That's why I say most businesses shouldn't raise venture capital, because most businesses don't have a shot to be 2 to 4, $10 billion company. But this is one of the hardest things to suss out. And what I will tell you is that one of the big things you can suss out is geography. So if someone is in San Francisco and they get offered $400 million, the guy they were sitting next to at the soccer game sold his company for 2 billion. Or just raised at 4 billion for 400 seems like a loss. If that person is in Toronto, they're going to be the king of Toronto for the next 20 years. And so someone's willingness to keep going and their craziness to keep going is influenced by how crazy the people around them are. And Europeans are really reasonable people. And most people are really reasonable. It's the crazy ones that are kind of out here, which is why most of the big exits are in the Bay Area and increasingly why they're in Israel, because there's enough crazy people in Israel that are now there. So the people who are trying to decide if they're crazy or not can be influenced toward the crazy end of the spectrum, which is what we as venture capitalists want and which I think is the most fun.

[Ilana Golan]

In the end, I definitely heard some of the criteria that is important for you guys and effects. I would love for my listeners to also hear. I know speed and ambition are really big ones, but I would love the listeners to hear a little bit. What do you think makes a really good founder? And if somebody's like debating, should I be an entrepreneur, should I not be? What would you tell them?

[James Currier]

If you have a question you shouldn't.

[Ilana Golan]

Be, that's a good answer.

[James Currier]

If there's a question, if you're worried about it or wondering about it, just live your life. Just take your job, enjoy your days. Most entrepreneurs are not going to affect the world. And if you're working in a big company, you will not affect the world. That's fine. Most of us won't affect the world. There's just a few people who will. So just enjoy your personality, enjoy your family, and enjoy your community. And don't stress about it. Look, what happened was in 1994, before we had the browser, entrepreneurship was not high status. The people who had come into battery and pitch us, they had maxed out 16 credit cards, they had a mortgage, and they were already doing 3 million of revenue and they were hoping for 2 million of investment for us and we could buy like 30% of the company. They had dandruff on their jacket, they had bad glasses. They had like a $90 suit on. These were autistic people mostly. These were people who couldn't work anywhere else. They were being driven into being entrepreneurs. They were very awkward, most of them. That is not the case anymore because being an entrepreneur became high status.

[Ilana Golan]

It became the cool thing to do, right?

[James Currier]

And so a lot of people are considering entrepreneurship because they want status, not because they're actually entrepreneurs. They want to be successful entrepreneurs. And you can't be naive about this because we look at 10,000 companies a year, we invest in 20, 25. So a tiny fraction, 0.2%. So we reject 99.8. Now let's say we invest in 20 good ones. Of those, how many will be successful? Maybe two. So only two of 10,000 will be successful. Now, of those 10,000, did we miss some of the others? Probably. So let's call it. There's a total of 50. We invested in 20, the best 20, but actually the total best was 50. So let's call it four or five successes out of 10,000. That's the numbers. The chances are really, really slim. So if you're doing it, it's something you kind of have to be doing the success of it can't matter into the equation. It's the doing of it that is the reward. The reason the Bay Area keeps winning is because we don't really care about the money. We care about the process.

[Ilana Golan]

And if you have to do it. At this point, I don't see myself doing anything else. I just love what we're doing. It's just incredible to see people change their lives. But with a gun in my head, I'm probably not going to be an employee again. But I think it needs to come not because you can't be employed, but it has to come from this passion that this is what you want to create. Yeah. So first of all, I love what you guys are doing. I love nfx. Huge fan. And if you look at what would be some advice that you wish somebody told you way back when they could.

[James Currier]

Have, the advice I'll give to your listeners is not self promotional. It's actually what I think would be helpful to them, which is to go to nfx.com and read the content there. It's the second or third most popular VC website in the world after Andreessen Horowitz, and they've just got 600 people and we've only got nine, so we're batting above our weight here. The articles there are really evergreen, thoughtful. It's like getting a startup entrepreneur business degree. I wish someone had told me about Technology Windows. So there's an article on the website called Technology Windows. And also you should read Venture Capital 3.0, which lays out what has happened over the last 50 years with venture capital and like, where we are and how the whole ecosystem works with the startup industrial complex and all that stuff, just so that you understand the waters that you're swimming in as an entrepreneur. But the technology window's way of looking at the world is something I wish I had known 20 years ago. And they haven't taught this at HBS or at gsp and hopefully they'll start soon. I'm trying to teach it on campus, on both those campuses now, but these technology windows open and like I said, we were 80% lucky and 20% good. It's probably 90% timing and 10% effort. And everyone says, oh, it's sweat. It's not the idea. I'm like, actually, I disagree. It's actually the idea at the right time is kind of everything. And so what you'll see is people being really great venture capitalists for like a decade, and then they stopped being a great venture capital. How Is that? Well, because they were investing in a particular type of company when that technology window was open. And now that it's closed, they don't have a network in the new technology window and they can't get into the best deals. And so it's time for them to retire. So becoming a great venture capitalist and you were saying, I'm a horrible investor. I'm like, no, you're not a horrible investor. You just haven't picked a sector at the right time with the technology window. But once you start to be able to read these technology windows, you'll be able to place yourself in the flow of energy and then you'll just get more lucky than not. And if you just stay in the game, you eventually get lucky. And everyone says, wow, you're a genius. You're so smart, you're so talented. And as the great Sar Gur from CRV said, he said, the most important decision I ever made was just living in the Bay Area like everything else he said, because when I came to bay area in 2003, like, all the energy was moving here. I was just like floating on it, moving with it. And then he led the seed round in doordash and, you know, returns, and now he's running the firm and he's just so humble and he's like, ah, I'm just here, you know, great, great guy.

[Ilana Golan]

I love it. Technology windows. I'll definitely take it out. James, thank you for everything you guys do. Totally enjoyed this conversation.

[James Currier]

My pleasure. Thanks for having me on.

[Ilana Golan]

I hope you enjoyed this as much as I did. If you did, please share it with friends now. Also, if you're feeling stuck or simply want more from your own career, watch this 30 minute free [e-mail] training. That's leapacademy. Com training. See you in the next episode of the Leap Academy with Ilana Golan. Show.