Footwork’s Secret Sauce | Mike Smith and Nikhil Basu Trivedi

Summary

Podcast Summary: The Peel with Turner Novak Episode: Footwork’s Secret Sauce | Mike Smith and Nikhil Basu Trivedi Date: March 26, 2026

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Episode Overview

In this candid and tactical episode, host Turner Novak sits down with Footwork co-founders Mike Smith and Nikhil Basu Trivedi to unpack the founding story, investment philosophy, and daily realities of building arguably one of the newest, most human-forward venture firms in Silicon Valley.

The conversation is a masterclass in firm-building, venture decision-making, and how to leverage both operating and investing backgrounds to win deals in a highly competitive environment. The trio explores the accelerating impact of AI on entrepreneurship, lessons from backing companies like Canva and Stitch Fix, how Footwork seeks out and supports founders, and the nitty-gritty of partnership dynamics. Insightful, loaded with candor, and filled with immediately actionable advice for founders and investors alike.

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Key Discussion Points & Insights

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1. The Genesis of Footwork: Complementary Skills + Shared Values

• Founding Story ([00:24–03:11]):

  • Nikhil sought to build a new kind of VC firm after eight years in venture; Mike was “the wildcard” partner, coming from an operator (not investor) background at Stitch Fix.
  • Their introduction actually began with a funny text about a Twitter rumor for Mike as CEO of Patagonia ([01:40]), but swiftly pivoted to building a fund.
  • Quote: “I was thinking about going off and starting a new firm… Mike was basically the wildcard on that list. He was the only one not already in venture.” – Nikhil ([00:24])
  • They had already built trust on a startup board together (Imperfect Foods), where Mike respected Nikhil’s “truth-seeker” approach in board rooms full of chaos ([02:32], [03:11]).

• Public vs. Private Board Experience ([03:14–04:50]):

  • Mike explains key differences: “A public company board deck is 250–300 pages; for startups, it's 10–15 slides.” ([03:23])
  • Everything is narrower in public companies, more specialized; early-stage boards require breadth.

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2. The AI Wave: Driving Change in Startups, Incumbents and Venture

• How Enterprises Are Buying AI ([04:50–07:48]):

  • Real enterprise dollars are going into AI (“not just experimental ARR”), especially in customer service, coding, marketing, and supply chain ([05:00]).
  • Mike: AI’s adoption is “faster and more valuable” than the internet, mobile, or cloud waves—“We need to lean into that wave.” ([05:00])
  • AI is now 20–40% of public board meeting content; even older board members are early adopters ([06:23]).

• Footwork’s AI Investment Playbook ([07:54–10:37]):

  • Focus: “Vertical-specific AI products”—Life Sciences (Elicit), Financial Services, CPG, etc.
  • AI is disrupting finance, legal, and operational orgs. Mike predicts, “There will be fewer people in those orgs going forward...it will be more disruptive than we’re ready for.” ([10:17])
  • Memorable moment: Both see AI enabling a new wave of entrepreneurship but also accelerating job churn.

• AI-Enabled Startups & “Business in a Box” ([10:58–13:53]):

  • Nikhil: “AI also just enables people much more easily to be an entrepreneur.” ([11:06])
  • Tools like Lovable, Anything, etc., reduce the friction—now a real estate agent can turn an idea into a side business, then a main business ([12:34]).
  • Mike: Cost structures are fundamentally shifting—way fewer engineers/marketers can now build meaningful companies ([13:04]).

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3. Building a Strong, Enduring Partnership

• The Famous 37-Question List ([15:00–18:45]):

  • Inspired by Pace Capital’s internal due diligence, Nikhil & Mike each independently filled out 37 brutally honest questions about partnership, goals, values, attribution, etc. ([15:24]).
  • Quote: “We answered independently and saw that we were aligned on core principles, but very different in experiences. It just clicked.” – Nikhil ([17:48])
  • They stress the importance of “differences as a feature, not a bug”—micro (detail, fit) vs. macro (market, founder, big picture) ([18:45]).

• Testing the Partnership in Practice ([19:27–23:08]):

  • Made six joint angel investments to simulate decision-making and style alignment ([19:30]).
  • Example: Table 22, a B2B2C subscription business for restaurants—Nikhil loved the thesis, Mike drilled into the founder and physical ops ([20:07]).

• Transition from Operating to VC ([23:19–26:25]):

  • Mike: "The rhythm and pace is radically different. Suddenly you have to hustle not just against one competitor but all the best, instantly."
  • Learning: fast, “now” mentality is essential. “If your instinct is, 'We should go today,'…the answer is: Go today.” ([25:13])

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4. Why Do Founders Choose Footwork?

• Secret Sauce of Footwork ([26:41–32:30]):

  • They’ve won over 2/3 of their term sheets against top firms because:
    • Speed: “We’re often the first to conviction and with a term sheet.” ([26:41])
    • Thoughtfulness: Share their thesis, have ‘mock board meetings’ pre-investment to test fit ([27:58]).
    • Both GPs join every board early on: “Founders actually get both of us—every deal is collective.” ([28:00])
    • Human-first, not transactional: “The better the founder, the more secure they are, the more they want you to meet the team.” ([33:19])
  • Share a customized “why Footwork” doc with every founder, including concrete ways to add value ([30:16], [31:04]).

• Getting to Know the Whole Team ([32:29–35:40]):

  • Most firms don’t meet employees beyond the founder; Nikhil and Mike insist on it.
  • Quote: “There’s a level of diligence…getting to know more people on the team…They see we care about the company, not just the founders.” – Mike ([31:04])

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5. Navigating Partnership, Attribution, and the Long Game

• Firm Structure and Decision Process ([37:03–42:34]):

  • Footwork is intentionally just the two of them but hopes to grow to three (the bar is high for the third partner) ([37:24]).
  • Every deal: at least one “4” (on a 1–4 excitement scale) is required; they are comfortable disagreeing and committing if one is a “2” ([39:44–41:19]).
  • Quote: “We never talk about who was a four and who was a three after we invest. It’s a Footwork investment, we’re all in.” – Mike ([41:47])

• Founder Advice: Do the Diligence on the Individual, Not Just the Firm ([44:44–48:34]):

  • Attribution inside firms governs politics & stability—founders should ask, “How is attribution handled?” ([45:27])
  • “Firm matters less than individual. The best founders do backchannels and references on the partner themselves.” – Mike ([47:10])
  • Candid stories of firms with messy internal politics, and the consequences for founders ([44:28], [45:29]).

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6. What Footwork Looks for in Founders

• The “Footwork Founder” ([53:11–59:03]):

  • Three long-standing traits: hungry + humble, known business inside out, magnet for talent.
  • They’ve added: “a premium on slope of learning”—in AI, the founder’s ability to truly learn and change fast is critical ([54:36]).
  • Questions they use to find that:
    • What’s changed about your business in the last few weeks/quarter? ([54:44])
    • What will your Act II and Act III be? ([55:44])
    • Simulate a board meeting and ask for challenging topics.
    • Test founders’ ability to go off-script and think; adaptability ([57:03]).

• Example—Backing Canva Early ([57:32–60:32]):

  • Nikhil: The ambition was clear (even as a yearbook software from Perth). “They were talking about taking on the whole design market…more Google and Microsoft than Adobe.” ([59:20])
  • You want founders who are “crazy enough but not delusional.”

• Example—Joining Stitch Fix ([62:13–66:40]):

  • Mike joined when it had just four people, citing "intellectual honesty, clear vision, and raw smarts" of founder Katrina Lake as key reasons ([64:28], [65:47]).
  • The growth challenges: scaling ops with thousands of stylists and warehouses, achieving profitability with capital efficiency ([68:49]).

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7. Lessons from the Trenches: Fundraising, Grit, and Scaling

• Stitch Fix Fundraising Reality ([69:46–73:39]):

  • Raising the Series A was brutal: “We met with 65 firms, 60 I didn’t want to be in the same room with. We failed to raise and had to bridge, cut costs, and get efficient.” – Mike ([70:48], [71:18])
  • Skeptics didn’t understand or believe in the data science piece; but the team persevered and eventually attracted Bill Gurley and Benchmark ([76:54]).

• The Power of Customer Signal ([78:52–79:38]):

  • Employees at Facebook raved about Stitch Fix; early “6 employees in a room try on their fixes together”—great companies often have pockets of rabid early users.

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8. Life, Family, and Building an Enduring Practice

• Balancing Family and High-Performance Careers ([86:13–90:38]):
  • Nikhil reflects on the “incredible joy” of family, but the job “takes everything out of you.”
  • Mike: “You don’t realize at younger ages how much kids are picking up. Ambition and work ethic can inspire, especially if your support system is strong.” ([88:48])
  • The importance of “finding recharge moments” to sustain over decades.

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Notable Quotes & Memorable Moments

• Serendipity:
  “You have to maximize the surface area for serendipity.” – Nikhil ([51:40])
• Deal Process:
  “If your instinct is 'We should go today'…the answer is: Go today.” – Mike ([25:13])
• Partner Diligence:
  “Firm matters less than individual. Do backchannel references on the partner.” – Mike ([47:10])
• AI’s Impact:
  “I think it will be way more disruptive than that, in a shorter period than we're ready for.” – Mike ([10:18])
• On Founders:
  “They have to be crazy. There’s a spectrum between crazy and delusional…most of the best founders, you see that.” – Nikhil ([61:42])
• VC vs. Operator:
  “This is not a retirement job. I knew that—I'd worked with people who busted their tails.” – Mike ([24:57])
• Internal Firm Politics:
  “Too many firms have such a short-term view of performance and who gets the credit; versus realizing this is such a long-term game.” – Nikhil ([43:18])
• Stitch Fix's Investor Skepticism:
  “People would be late to meetings, ask not that great a question...I was disappointed by what I was seeing on the other side.” – Mike ([69:46])

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Key Timestamps (by Topic)

• [00:24] – Footwork’s founding origin story
• [03:14] – Mike on public vs. startup boards
• [05:00] – How real enterprises are buying AI
• [07:54] – AI verticals Footwork is focused on
• [10:17] – Job disruption and AI, the coming change management problem
• [11:06], [13:04] – AI as an enabler for more entrepreneurs
• [15:24] – The 37-question doc that defined the Footwork partnership
• [19:27] – Simulating partnership through joint angel investing
• [23:19] – Mike’s transition from COO to VC, “now mentality”
• [26:41] – How Footwork wins deals
• [32:29] – Meeting the whole team, not just the founder
• [37:24] – Their stance on expanding the GP/partnership team
• [39:44] – Decision process: 1-to-4 scale, “disagree and commit”
• [44:44] – What founders should look for in a VC partner (attribution, politics)
• [53:11] – What makes a “Footwork founder”
• [57:32] – How they vet and find high-slope founders, “Act 2 and Act 3” questions
• [59:20] – Early ambitions at Canva
• [62:13] – Deciding to join Stitch Fix
• [69:46] – The grind raising Stitch Fix’s Series A
• [76:54] – Bringing in Bill Gurley & Benchmark, “under the tent” approach
• [84:08] – Excitement about consumer health
• [88:48] – Balancing family and high-growth careers

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Tone

• Candid, Warm, Tactically Precise: Direct, open (often vulnerable) about challenges; practical about how to support founders and build a differentiated firm.
• Collaborative & Human-First: Emphasis on the relational, not just transactional, side of venture.
• Optimistic but Realistic: Clear-eyed about the game and its politics, but always focused on enabling the best founders.

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For Founders and Aspiring VCs

Actionable Guidance & Takeaways:

• When picking investors, prioritize the individual over the firm. Diligence their long-term intentions and backchannel.
• In early days, build partnerships on radical honesty and test decision-making in the real world, not just over coffee.
• If you strive to be a great founder, focus on learning speed (“slope”), not just expertise or vision.
• Great partners move fast—and if you want to win, “the answer is: Go today.”
• Expect the role of AI (and future waves) to only accelerate—be ready for rapid disruption, and let your fund, company, and thesis evolve with it.
• Build a firm or company that is “human, not transactional”—it’s a strategic edge.

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For anyone building a startup, seeking an investor, or launching a new fund, this episode offers a rare behind-the-scenes look at the realities—grit, judgment calls, wins, and hard lessons—that define success in modern venture capital.

Transcript

[Turner Novak]

Welcome to the show.

[Mike Smith]

Thanks so much, Turner. Thanks for having us.

[Turner Novak]

Thank you, Tim. This will. This will be really fun. We were just talking about how you guys recently started, or actually, actually not that recently started your firm, footwork. It was 2021. What was kind of the thinking around starting this thing, coming together, building a fund together?

[Nikhil Krishnan]

Yeah. Today's actually the fifth anniversary of us setting up the management company for Footwork, January 20th of 2021. And the story of how we came together is I had been thinking for some time about going off and starting a new firm. I'd been at this firm, Shasta Ventures, for eight years, had a great chapter there, but for a number of reasons, was thinking about going off and starting a new firm. And I had a list of questions that I wanted to go through with potential partners, a blueprint for what a new firm could look like, and a set of potential partners to go work with, all of whom I'd been on boards with before, who I'd gotten to know pretty well over the years. And Mike was basically the wildcard on that list because he was the only one that wasn't already in venture investing. He was at a company stage fix. And I think what we thought was that we were pretty aligned on a number of core values, but also very different skills, skill sets. And so I texted Mike, I shot my shot, and he and I started texting back and forth. This was kind of at the beginning of the pandemic in 2020. 2020. And. And then one thing led to another, and we decided to go do this together.

[Turner Novak]

Like, do you remember the text? How was the text?

[Mike Smith]

Well, I remember the text, and what's amazing about it is he actually, he texted me about a tweet that a reporter, Jason Del Rey, had tweeted that I should be considered as the next CEO of Patagonia. And he asked if I wanted him to amplify it on Twitter. And I said, no, I don't. Because I was in the middle of having a conversation with Katrina and the board about sort of my plan for when I was going to leave Stitch Fix. And so I was like, no. And then his next text to me was like, would you consider chatting about starting a venture firm with me? Which I thought was a unique bridge to the first question. Yeah, but because we had known each other for a while and had so much, I think, mutual respect, it was super intriguing to explore that. And so we kickstarted that process in June of 2020.

[Turner Novak]

Nice. And it was Imperfect Foods. Was that the board you were on Together.

[Mike Smith]

Yes, we were on that. Yeah, we were on that board. I joined as an independent board member and he had led the investment with Shasta at the seat in the Series A. And it was a unique situation because we had a number of venture firms that were involved in that company. There were lots of people in that boardroom. The company did really well and then had some challenges and we had different transitions of leadership. And I think the thing that I really respected most about Nikhil during that time was that he was a truth seeker. He was super high yield in that boardroom amongst sort of sometimes the chaos that was in the boardroom. And I just had a tremendous amount of respect for him.

[Turner Novak]

And I know you're on a couple different boards, even some public company boards.

[Mike Smith]

What is that?

[Turner Novak]

Like, what's the difference between startup, two people maybe and like the venture investor versus public company?

[Mike Smith]

I mean, it couldn't be more different. I would say there are some things that help me be a better investor as a result of being on these public company boards. I'll start with the board deck is typically between 250 and 300 pages of material for public company board. So that is very different. Yeah, you want obviously our private companies to be focused on 10 to 15 slides.

[Turner Novak]

It's like actually building a product, not a board.

[Mike Smith]

Yes, right. And so it's just very, very different. And I think there's also, you know, each board member has kind of one or two specific skill sets that they are bringing to the table at the, you know, on the public company boards, private company boards. I think both as an independent board member as well as an investor, you have to be way more broad in what you bring because the stage of these early stage companies, there's needs in go to market and there's needs in leadership development and there's needs in branding. And so I prefer the early stage boards and the way that we get to work with founders. But there are benefits where, you know, being on the Ulta Beauty board and the Miller Knoll board as examples, all of those buyers and the leadership team are basically buyers of enterprise software. And so being able to kind of actually talk to a buyer of like, what are you doing in AI? You know, helps us make better decisions, helps us support our companies in ways that is, I think, differentiated in the marketplace.

[Turner Novak]

Interesting. I mean, it begs the question then, how are enterprises buying AI right now? Like we all see it.

[Mike Smith]

Yeah.

[Turner Novak]

You know, everyone's talking about it. What's actually being bought?

[Mike Smith]

Yeah, I mean, I think that the things that are being Bought very directly are in customer service and in coding. But the, the breadth of buying that's happening in marketing, in supply chain, it is not just experimental kind of ARR, it's real ARR. Now I think the bar to get into an Ulta beauty and actually become sort of something that actually changes the way that an end worker in an operation works or a marketer works. The bar is really high and so product needs to be great. And of course, many of those buyers are looking at somewhere between five and 10 different options that they have. But it's a very serious wave. I mean, one of the things that I've talked about is I've been around long enough that I've seen sort of the wave of the Internet and wave of mobile and wave of cloud. And I think the things that are different in this case with AI, one, the speed obviously in which it's being adopted, and two, I think the value that it's creating at that speed that makes it feel very, very different to me than any of the other waves that we've experienced before, which is investors. You know, we need to sort of lean into that wave. And obviously lots of people are. But I think understanding sort of the buyer's mentality and what the buyer's actually doing helps us a lot at footwork

[Turner Novak]

and it, it flows up to the board level sometimes on these decisions.

[Mike Smith]

Oh yeah, no, there's. I mean, one of the things that's been really fascinating over the last year is, is somewhere between 20 and 40% of a board meeting's content is talking about AI. And it's not just like two members of the board that are sort of leading the conversation or leading the questions. It is every board member is using product, trying product. They're pushing the leadership team to go faster. It feels very different. I wasn't on public company boards, obviously during these other kind of, you know, big shifts in technology. But I think sort of the knowledge, the understanding, the push that's happening kind of in those public company boardrooms is very different than what we've experienced in the past.

[Turner Novak]

That's fascinating. Yeah. Because you'd think of like the average board member is probably an average age of like in their 50s or 60s.

[Mike Smith]

Yes.

[Turner Novak]

And you just don't think of them as being like early adopters of new technology.

[Mike Smith]

These board members typically have like made their careers being rebels in some ways and made their careers sort of being sort of building amazing different differentiated category defining companies or being parts of those companies. And as a result, I think they just have A different mentality around technology and they're like act just actively using this stuff in ways that I think help the companies themselves hear what a broader group of people are and how they're experiencing AI.

[Turner Novak]

So then how are you guys investing in it right now at footwork is probably begs the next question.

[Nikhil Krishnan]

One lane that we've been very interested in for the past couple years is vertical specific AI products. And we've made a number of investments in verticals such as Life Sciences with a company called Elicit Financial Services, in agencies and consulting firms and brands as the customer. And I think Mike's experience has partially informed these investments. We've been excited about verticals that we think will not be the earliest adopters of AI, but we'll have to get there.

[Turner Novak]

So there's almost like the, it's still interesting from like an early stage investment standpoint versus like yes, co generation is like it's already here, everyone's doing it

[Nikhil Krishnan]

legal, you know, there's so many products, there's so many businesses that are already far along. Legal ended up being I think one of the earliest sort of vertical adopters in AI. Yeah but we think that there are several verticals where huge businesses will be built such as the ones I just described. CPG is another one and we tried to go early into companies into several of those. And so that's one way that we've attacked the AI opportunity in the last couple years.

[Mike Smith]

I'd say the thing I'd add to it too is Nikhil referenced it sort of. I was a CFO of a bubblegujerated company. I was a chief operating officer of a company. I was the buyer. And what I understand sort of with AI and vertical software and AI today is I had a finance team that was 100 people and I got to actually see what work they were doing day to day in you know, sort of disciplines like accounting and then FPA and then tax and SEC reporting. And you know, much of that work still is pretty rote and repetitive that are you know, sort of perfect use cases I think for LLMs and for AI to like better the experience of people that are working on that. I do think though that there will be fewer people in those orgs going forward. And I think that is something that the ecosystem is not talking enough about. It's just like this huge change management

[Turner Novak]

that's going to happen.

[Mike Smith]

I just, I still am in too many conversations where people are talking about, you know, sort of oh, you know what's going to happen is they're Just going to get jobs in other areas or they're going to do the part of the job that they love versus the rote part of the job. And I just think it will be way more disruptive than that in a shorter period of time than we're ready for.

[Turner Novak]

Do you think that it will enable more people to start businesses? Like if you just think about how technology's evolved, there's like throughout these different eras, like the Internet, so many more people are able to just like spin up a Shopify store and sell coffee mugs online. Like does it get even more pronounced with AI? And maybe, or maybe you have to, you don't have a choice. Like you have to start a business.

[Nikhil Krishnan]

So I've been a little bit delinquent on publishing my key themes of the year that's going to come out soon.

[Turner Novak]

Let's get a preview.

[Nikhil Krishnan]

I'll give you a preview. One of those is AI enabled entrepreneurship. And what I mean by that is to your point, we think more and more people kind of have to become entrepreneurs as a result of where things ahead in the economy and kind of how AI will disrupt jobs. AI also just enables people much more easily to be an entrepreneur. And so I think that's one of these mega trends under the surface of what's unfolding that hasn't been as publicly discussed. And I think it's an amazing thing. You know, that's, I mean, part of why Mike and I just love this job is that we get to spend time with entrepreneurs every day. And you know, we are entrepreneurs ourselves, all of us having started our own firms. And so the fact that more and more people are going to be able to pursue something that, you know, is an idea for them to make it a reality I think is pretty amazing. And of course most of those ideas are not kind of venture backed businesses. But that's the matter. You can build an amazing business today just as a, as a single person by typing in a few words and having an app be created. And so I think we're going to see a lot more of that.

[Turner Novak]

They just go, open up lovable. Build me a, you know, B2B SaaS for water bottle manufacturing companies. Make no mistakes, go and spins it up and then you got your software totally.

[Nikhil Krishnan]

In our case, we love anything, which is a way to build an app that actually you can publish to the app store. Lovable, of course, more for prototyping. But the stories out of anything are incredible. Like real estate agent who is suddenly making thousands of dollars a month with an idea that she had for an app. And that's gone from being like a sort of side idea, side hustle to now being her main thing, which is pretty incredible.

[Turner Novak]

Yeah. It's just like the barriers to entrepreneurship just can, like the friction continues to go down.

[Mike Smith]

Yeah, well, and I think what is happening with AI is that the cost structures of running these businesses is completely changing the number of kind of engineers that you need to sort of run these businesses, the marketers that you need. It's just likely and is already showing significantly fewer people, which means you have a cost structure that allows for, you know, people to take more chances to start a business and actually have it be profitable and work.

[Turner Novak]

You can shift a lot of that fixed cost because you have to hire an engineer.

[Nikhil Krishnan]

Yeah.

[Turner Novak]

Hire a marketer. People are not like, oh, sure, I'll give you the try for a week and if it doesn't work, like, I'll go get another job. I guess it's like, I'm probably going to be here for a while. You almost like shift that from being a fixed cost to starting a business to it's variable if it works right. And if it doesn't work, then there's no cost. Yes, totally.

[Nikhil Krishnan]

Much lower upfront cost.

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[Turner Novak]

So one thing you alluded to a little bit earlier that I really want to talk about, you talked about. You had this list you made of 37 different things you thought about when Starting a firm. And Mike was the wild card on the list or wildcard candidate to talk to you. So what exactly was the list? Like, what were some of the biggest kind of things on there that someone should think about when starting a venture firm?

[Nikhil Krishnan]

So we dropped it off of a list that Chris Pack and Jordan Cooper published about when they started Pace Capital together, that they had these 33 questions they went through. And so our list became 37. There were a few that we took out, There were a few that we put in, a few that we modified, but credit to those guys for having kind of written the blueprint for this. So what we did is we had that list of questions. I think Mike and I actually chatted on a Friday about those questions. We opened up Doc together, and then Saturday morning, Mike texted me, being like, hey, I'm done with the questions. And I was like, whoa, that was really quick. And, you know, I think that having started that exercise with a few people, we could tell from, you know, that Saturday that there was something unique about our potential relationship together. You know, it just. It just clicked in a way that it didn't with a lot of other people. And I think when you do anything like this, you want to see kind of both sides being super excited about diving in together. And that's what we had from the get go. Now, what was on that list? Questions such as, how do you make investment decisions? How do you learn? Who are potential other partners that you would do this with? Who likes you in the market? Who doesn't like you in the market? What type of brand do you want to build as a firm? What are your economic goals and over what timeframe? How do you think about attribution? How do you think about generational transition? So a number of questions about us as individuals and then about what we wanted to build together and what we found even in that, you know, in that first volley where Mike had answered the questions and then I pieced it in my answers. So it was sort of independently that we. We. We answer the questions and we stared at those answers together. We saw that we were aligned on so many of the core principles of what we could do together and just values of who we are as people. But then we also saw that we were very different in a number of skill sets and experiences. And so it's that combination that we got really excited about.

[Turner Novak]

So you got excited with some of the differences?

[Mike Smith]

Yeah, I think so. I mean, we both, you know, he was an investor for his whole career, and I was an operator for my whole Career. We felt like for early stage investing and being able to support founders at this stage, we had very different skill sets, but we felt were accretive to helping founders in their journey. He grew up in the UK for the first 13 years of his life and then lived in the Bay Area. I grew up in Virginia and then moved to the Bay Area. But there were like this underlying sort of, you know, excited and inspired by the tech ecosystem and the innovation and the learning and the risk taking that comes from specifically being in the Bay Area as long as he had been. We both had coded before and so there were like these, like continue to find these through lines of consistency in some of the things that we thought were foundational principles in starting the firm. But, you know, very different there than

[Nikhil Krishnan]

operating experiences and just styles in general. Like, I think one of the things we realized is I am quite micro in decision making, so I like to dig into the data and to gauge product market fit and maybe kind of that's my initial instinct on every opportunity. Whereas Mike is perhaps more macro thinking about the market or the founder, the bigger picture. And so from the questions to then simulating investment decisions by making angel investments together and sort of treating every conversation with the founder as if we had a firm together already. Before we decided to do this.

[Turner Novak]

Were you guys like tag teaming calls joining at the same time?

[Nikhil Krishnan]

Actually, I was thinking about it. I wish we'd made a few more investments now in that window because we saw some amazing company during that period, even ones that have survived kind of the craziness of 2020 and 2021. But yeah, we made I think six angel investments together that year as we were experimenting. And we could just tell that we had different styles, we asked different types of questions, but that the whole was greater than some of the parts.

[Turner Novak]

Do you remember an example maybe of one of those times where you kind of really unearthed that maybe when you invested in Banana Capital Fund 1, you might broke that in. You saw how amazing you work together.

[Nikhil Krishnan]

Well, obviously Mike had known about Twitter for a while as being the biggest stitch fix bull out there.

[Turner Novak]

Yeah, we need to talk about that.

[Mike Smith]

We're talking about that. Sounds good.

[Nikhil Krishnan]

I think I remember when we. So we made our first investment in the fund together during that period. I mean, the first company that we decided to put into the fund, a company called Table 22. And what Table 22 does is it enables merchants such as restaurants, bakeries, wine shops, to offer memberships to their patrons. So it's sort of a B2, B2C platform.

[Turner Novak]

Why is a membership important for something like that?

[Nikhil Krishnan]

Yeah, you know that concept of patronage of, of. Of having sort of a member that comes to your, your shop, maybe get something every month, but has some special benefits from, from being a member. You know, maybe you remember their name every time they walk in the door. You give them something special every time they, they show up. That's kind of been the way a lot of these merchants have worked for many years. But they haven't really, many of them haven't actually monetized that and formalized the relationship with their patrons. And then it can actually be the best part of the P and L for these businesses.

[Turner Novak]

Usually like a subscription stream as a restaurant.

[Nikhil Krishnan]

Exactly. And so Table 22 has built a really great business in that, in that concept. We had actually written a few blog posts around this thesis area kind of business in a box. Had invested in a number of consumer subscription businesses, so had a very prepared mind for this company. Actually reached out to the founder. I realized I'd known him in his prior company and then Mike and I came together to get excited about it. And I think even in that analysis we got excited about different things. I probably got more excited about the thesis and Mike got more excited about the founder Sam. And so that's one example that jumps to mind of kind of how we make decisions.

[Mike Smith]

I think that the other thing in using Table 22 is the continued example which is, you know, I had been in physical businesses with Walmart.com and Stitch Fix for a number of years and obviously running a restaurant and then having this kind of new revenue opportunity show up in doing things outside the day to day restaurant hours and having people pick up or having table 22 delivery is a physical business that I sort of understood the risk with that and also the kind of upside with that can come if you do that extremely well. And so to Nikhil's point, I think we approach the conversation, the diligence, the decision making from different angles. But hopefully these things make us better and help us make better decisions about whether it's a great investment for footwork.

[Turner Novak]

Are there still things you guys are kind of working through in terms of how you work together? Because it seems like you totally different. Just like everything you explained, like there's no overlap. Almost. Maybe there is, but.

[Mike Smith]

Well, I mean I think the overlap is the core values and principles and aligned on sort of how we want to individually show up, how we want to show up as a firm.

[Nikhil Krishnan]

Kind of.

[Mike Smith]

One thing, you know, I had to work through, I feel like I'M starting to get some rhythm to. This is just. This is a very different pace and very different rhythm than operating a company. It is not as process driven. It is, you have to hustle. It's extremely competitive. Like I woke up Every day for 18 years competing against one of the biggest competitors out there in Amazon. But I think what is interesting about this job is you're competing against not just one competitor or one style. You're competing against all sorts of very, very talented people, amazing firms. The people that we want to compete against are the top tier firms. And that is a different rhythm and different kind of way. I had to show up every day and so stylistically I had to pick up the pace and really understand sort of the rhythm of venture. And, you know, I was lucky enough that I had, you know, folks that had been doing the job for a long time. They happened to be sort of more famous folks like Jeff Jordan that had spent time with me as I was making the decision, and Bill Gurley and James Slavitt and Alfred Lynn. And you know, they had been at amazing firms. Many of them had shifted from operating to investing. But, you know, they can tell you all that is required to kind of understand sort of the pace and rhythm of venture versus operating. But until you do it, you don't really understand.

[Turner Novak]

Some people say it's like retirement, like when you become a vcr.

[Mike Smith]

I knew that wasn't true. I was like, you know, I had one of those four said to me, you know, this isn't a vacation or retirement job. I knew that that wasn't true because I'd closely enough with him and the people that I respected the most, I knew were busting their tails to do the job.

[Turner Novak]

Yeah.

[Mike Smith]

So I wasn't that naive or even walked into a thinking that. But I just think that there is like, you know, I remember early in our relationship where, you know, we met a founder that we both really liked. And Nikhil's like, hey, we need to go visit this founder at their place, like, you know, in, in San Francisco today. And I was like, I don't think we need to go today. Like, why today? Like, why don't we just do it on Monday? And he was like, no, today. And I couldn't move things around. So he ended up going today, that day. And you just realized when your instinct is, this is a really interesting founder, an amazing business, the answer is now and go today. And that just isn't like something that I had had practice with or sort of muscle building for that. I do now, because you just understand like this, you cannot wait. When you hear some of the best firms and the best investors and the way they operate and grateful for podcasts like yours and where people sort of share, like, how they operate, you're like, wow, if we want to be competing with and against the best, we need to sort of have a now mentality.

[Turner Novak]

So is there a reason you feel like founders usually pick you guys if you're truly like, what are the most consequential term sheets being signed this week or next week? Why do you think people pick you versus, I mean, probably thousands of choices out there, really?

[Nikhil Krishnan]

I think both of us have actually been pleasantly surprised about our ability to win in this first four and a half, five year period. I think we've won more than two thirds of the times that we've given a company a term sheet where the founders have decided to work with us. And almost every time we've competed against great firms. And so what are some of the reasons? I think one is because it is just two of us. We can move really quickly. And so we're very often the first to have conviction about a company, to give the company a term sheet. And I think that independent conviction does matter to a set of boundaries and shows up differently than the many firms that are kind of waiting around for something to become competitive before they dive in. Second, we actually really showcase our thinking on the business as we get to know it. And so we will share our investment thesis with the founders. We'll tell them, hey, here are the questions that we're debating internally. Here are the things that we're getting excited about, but here are the things that we're doing we see as the risks. What do you think? We have a version of a mock board meeting that we do with almost every company before we invest so they can get to see.

[Turner Novak]

This is before you even give them a term sheet.

[Nikhil Krishnan]

Yes, yes, and sometimes after we give them a term sheet, but usually before, because it's a great test for us, what will they be like to work with? And we think it's a great mutual test for them to be able to see what we'd be like to work with. I think another thing that really resonates with a set of founders is that they get this combination of both operating and investing experience when they work with us. And both Mike and I, because we don't make that many investments every year, we can actually show up for every single one of our portfolio companies. We will both join the board meetings of the companies for the first year after we invest, which is a unique thing that you actually do get both of us, we. We never think about is it Mike's investment or my investment. We don't even know how to delineate the portfolio internally. So every investment is our collective investment, and they do get both of us. And again, that matters for a set of founders. And then I think finally, fourth point here. So first was speed. Second, thoughtfulness and showcasing our thinking. Third, they get this combo, both of us. And then fourth, I think so much of this business ends up being about the human aspect of it and the relationship between founders and investors. And we've always met a company in person before we've invested. So we've tried to really get to know the founders and other people on the team as people, and so very often just found is opting into the kind of the trusted relationship they feel like they've already built with us. Feel like we're the people that they want as part of the journey for the next many years. That's what kind of puts us over the edge. Would you add anything else, Mike?

[Mike Smith]

No, I think. No, I think those were well covered, but I think all four of those need to show up with intentionality, with kind of thoughtfulness. And I think we do have a pretty good job of. Of all those things, but nothing I would add.

[Nikhil Krishnan]

Yeah, there's a few other tools in the toolkit. Maybe we don't have to disclose publicly, but we do also, you know, we. We try to actually add value to the business before we invest and showcase that.

[Turner Novak]

You can't say there's other things than not, because, I mean, give. Give us at least one thing.

[Nikhil Krishnan]

Well, one thing I'll just share is we. We have a document that we write up, you know, about how we'll work with. With the company that usually we end up sharing with the company. And so that's kind of our, Our.

[Turner Novak]

Our.

[Nikhil Krishnan]

Our one pager, our sheet on sort of why footwork. And we tailor that to every single new investment.

[Turner Novak]

So what's usually on the.

[Nikhil Krishnan]

On the list? Well, it includes some of the things I just tried to discuss. And then, you know, specifically to that company, are there people in our network that we think will be very valuable? Potential customers, potential hires? Based on the conversations and the back and forth that we've had as we've gotten into the business, here are the things that we think are going to add it to you and where we can actually be additive.

[Mike Smith]

I think there's a level of diligence even in these kind of Fast processes like of getting to know, as Nikhil referenced, more people on the team, what are their strengths, where do they want to develop? And then are there people in our ecosystem that would do anything for us that honestly would also be mentors? Potentially not on a monthly basis and generally it's like a couple times a year. But being able to articulate, hey, we care about you both as founders in this duo, but we also care about the development of your team and we care about sort of being able to map people in our ecosystem that we think could be good thought partners and good mentors for them. And I think that's gone over well because as Nikhil referenced, they end up sharing the doc with the broader team and the broader teams gets to see, oh wow, this firm really cares about us as a company and not just the founders.

[Turner Novak]

Yeah, it's really interesting how when you talk to maybe just like an engineer, they're like the 10th employee of the company. The investors are kind of this like mystical like investors, like I've only met them once or something, or like they were in the office the other day, but like you didn't actually get to know them. But one thing I found is I just, anytime I find someone like an employee joins a portfolio, I just add them on LinkedIn. I'm like, hey, like heard like, you know, Jacqueline mentioned you're joining next week. Like, I'm an investor. Let me know if I can help you. Just like try to meet him if you can.

[Nikhil Krishnan]

Yeah, love that idea.

[Mike Smith]

Yeah, we've met. I mean we, we are very involved in hiring key folks on, on teams. And I think the feedback that we get consistently is, you know, for that candidate, even if they've been at an early stage company before, they're like, this is the first time I'm ever meeting an investor and I appreciate that the investor cares enough about the company building side and cares enough about me as a person to actually spend time sort of in the interviewing process. There's, you know, bidirectional benefits to that. We're evaluating that candidate, but we're also able to sell the candidate with a broader portfolio of what we've seen with works and doesn't work. And we're intellectually honest about sort of the strengths and the opportunities kind of of any opportunity that they're joining. And I think they really appreciate that. And it's different than a lot of other firms.

[Turner Novak]

Do you guys know why more investors don't meet the employees of the companies that they're investing in? Like, it kind of Seems like a.

[Mike Smith]

Probably should.

[Nikhil Krishnan]

Totally. I don't know. I'm constantly shocked by how few investors spend time when they're thinking about the investment. Getting to know more than just the founder. We see it even in our portfolio companies that go out and raise the next round that the investors are not asking to meet with more of the team. Whereas we met all three, four co founders, we met a couple other people on the team in a very short period of time. Maybe it's just that so many folks have a bunch of different priorities and I think each slot for us is so precious that we think really carefully about each decision, the opportunity cost of each decision. And so it does seem that other firms treat those decisions and then treat how they help the portfolio after they invest a little bit different.

[Mike Smith]

Yeah.

[Nikhil Krishnan]

Yeah.

[Mike Smith]

I mean, I. I think it's just a different level of diligence. It's one. But one perspective I was also going to share is, you know, I think on the company side, having been on the company side, there's, you know, many founders that are like, you know, they just want to run their process. They don't want to involve the broader team. They just want to sort of like, hey, I'll be in charge of fundraising. You be in charge of, like, doing your job and building product or helping run the company. But in almost every case, when we asked to meet with broader people on the team, like, we get granted that.

[Turner Novak]

And they're usually free. Because no one else is asking.

[Mike Smith]

Yeah, I think because no one else is asking. And again, I think the founders, the smarter founders, also see the benefit of having, like, the team feel like, oh, it's not just me, the founder that cares about them. It's this broader group of people that are all going to help me be better in my job and, and help us succeed. And so I'm surprised people don't do it also. But I do think, like, there were people reasons on the company side why you might look at it as like, well, why would I want to waste that engineer's time? I want them just to code.

[Turner Novak]

I've had a. I don't know, probably like a third of the companies I've invested in. The CTO will be like, you're the only investor that has to meet me.

[Mike Smith]

Amazing.

[Turner Novak]

I'm always just like, that's kind of sad. I feel like. I don't know. But, yeah, it definitely feels like a level of trust. There's definitely cases where you go and get dinner with them and you've already met the CTO before and they're excited that you're the investor that they've met and that they know.

[Nikhil Krishnan]

Totally. I think in general, the better the founder, the more secure the founder, the more excited they are about getting an investor. Having an investor meet more of the

[Turner Novak]

team, it might be. Also, maybe I'm like hyping us up. Maybe we're just in a privileged position where the founder's like, okay, introducing us to the co founders. Maybe some investors are like, I don't know about that. Maybe, I don't know.

[Mike Smith]

Well, I mean, I do think a superpower or strength of ours, maybe not superpower, is that we do care and we are human. And one of our pillars of the firm is relationships that are human, not transactional. And I do think in, in, in cases of meeting people, we hopefully show up that way. And I think that that then earns us the right to get broader access and hopefully make better decisions around, you know, as a result of that broader access.

[Turner Novak]

And one thing I wanted to ask you guys about, so when you first started the firm and you announced it, it seemed like pretty clear we're doing this equal partnership. It's, there's going to be, there's two of us, there might be more people in the future. It's still just the two of you that are the gps. How is this kind of like evolved over time that, yeah, we're both nodding

[Nikhil Krishnan]

your heads like, so our entire investment team is still just Mike and me. We have five people in the company, so we have three great folks on the operations side, but investment team is just, is just the two of us. I do think that that is also shown up differently in the market and helped us move more quickly on decisions, helped us win, decision, win over companies in a number of instances. The fact that it is just the two of us, but our original vision was to build a firm that is more than just the two of us. And we continue to think about that every week. Since we started the firm, we've had several people who we've gone really deep with to see whether or not they should be the third GP here. And we just haven't quite gotten there with anyone. But that is still our hope. What we've realized is in the same way that Mike and I got to know each other really well before we did this, we have to get to know that person really well. They also have to be entrepreneurial, excited to go, kind of refound the firm with us. And so the bar is very high for who that person is. But we're hoping that it does come together with somebody else in the next several years.

[Turner Novak]

Is there anything in particular you really want to add or that you haven't quite gotten there on some of the people you've looked at?

[Mike Smith]

I think the thing we want to add is someone that is accretive to the firm that pushes us in different directions, that has either the way they invest or the way they think about markets increases the surface level and surface area of where we can invest. It doesn't. It's not particularly helpful to have someone that thinks, you know, like us and, you know, sort of. We want people to kind of push our thinking and. And so I think that's the most important thing to sort of seek is like someone that's going to sort of take us from what we think is on a track of being a really great firm to actually being a really great firm.

[Turner Novak]

Do you run the risk of. I know there's like this whole. The more people are in the partnership, the more you might disagree on something. So it maybe begs another question of how do you guys actually make decisions? Let's say I'm like, hey, you guys should meet Footwork. They're awesome, fun. You should talk to them. I intrusive some founders. What happens from there?

[Nikhil Krishnan]

Yeah, practically one of us has to get really, really excited about every investment that we make. We actually rate companies on a one through four scale. Four being strongly supportive, very excited to make the investment. One being strongly, not supportive.

[Turner Novak]

I will leave the partnership if we

[Nikhil Krishnan]

do it very unexcited. What we've said is that at least one of us has to be a four, obviously, and we are okay with one of us being a four and the other being a two and still making the investment. In reality, in the last four and a half years, in most cases, both of us have been a four. In a number of cases, one of us has been a four, the other has been a three. And we've still moved forward with the investment. But we are very comfortable with disagreeing and committing because we respect the other's judgment. The person who's super excited about the spikes in the investment feeling like we have to make the investment. And I think that that approach fits in nicely with the idea of having three or four gps one day versus just the two of us. There are things, though, that would have to change as we grow the partnership. Right now, we can just call each other and make a decision. And what you realize going from 2 to 3 is it's harder to have that happen because suddenly it's a three

[Turner Novak]

person Group call that same day. We gotta go meet these guys. That continues to get harder.

[Nikhil Krishnan]

Exactly. And the node between each person has to be really strong for it to work. And so that's why the time that we've spent with potential people has been a lot of time, it's been intense time and will continue to be to hopefully find the person that we want to do this with longer term.

[Mike Smith]

One thing I appreciate sort of connecting two dots about sort of as you're talking about sort of this idea that we would do a 4, 2 investment where someone does a 2 is even though there's only been a few where we've been four threes after the investment, we do not talk about who is the four and who is the three. We don't talk about like if something's not working in a company, like, hey, why were you a four in this case? Like it is a footwork investment and whether it's working or not working, we are all in on sort of helping that company figure it out. And so I think sort of appreciate that about sort of the core values of the firm. Yeah. Of the idea of teamwork and no attribution.

[Nikhil Krishnan]

So in fact I would say we're sort of accountable in the other direction and we probably spend more time thinking about ones that we didn't do and which one of us was less excited about that company and why we therefore didn't do it.

[Mike Smith]

Yes.

[Turner Novak]

So thinking about like how you not make the mistake in the future. Exactly.

[Nikhil Krishnan]

And so but for sure, every time we've done something we have been all in and you know, I think you're right. Like barely ever talked about.

[Mike Smith]

Well and I think that's what where other firms like it's more challenging for firms to behave that way. It's like, you know, if something's not working and I said it was the best investment ever for sure. You know, I think it's hard for you to trust my judgment. It's hard for you to support me in helping that company.

[Nikhil Krishnan]

And so too many firms have just such a short term view of performance and who gets the credit versus realize this is such a long term game to ultimately have returns.

[Turner Novak]

So why do you think that is?

[Nikhil Krishnan]

Well, I do think there's just a lot of incentives that lead to that. Right. If you, if you gain more power in a firm, you can bring more people aligned with you into the firm. You can have more economics in the firm. You have the ability to do it for a longer period of time. And so a lot of these dynamics show up within partnerships over time, unless you are very intentional, I think about trying to be a certain way, it's very easy to slip into a different.

[Turner Novak]

So you think that politics, like internal politics you might think of for a large corporation, like a big company, is actually much more prevalent in venture capital firms than most people would kind of appreciate or realize 100%.

[Nikhil Krishnan]

I mean, just look at how many changes have happened within venture partnerships in the last couple years as one proxy for that. And not just bigger firms where people have left, but even small firms, duos that are now single managing partners.

[Turner Novak]

For somebody who's never. Who's hearing this for the first time, like, what usually plays out in some of those situations, like, how do these things kind of develop? Like if maybe if I'm a founder navigating this, like, ooh, this. There might be some things bubbling below the surface that I should keep in mind when I'm choosing who I should work with for the next decade or two. Like, what are some, maybe some things to just think about and try to observe and kind of keep in mind as I'm making a decision?

[Nikhil Krishnan]

Yeah, I think that's a great question. I mean, I think looking at asking questions, as a founder, how do you do attribution? How do you decide who gets credit for something internally? Is that the system that you have? How do you decide?

[Turner Novak]

So why is that one a big deal?

[Nikhil Krishnan]

Well, because that typically governs someone's longevity at the firm. And so if you know that someone at the firm is the person who did the cursor investment, and cursor is working incredibly well, then it's very likely that person is going to be at the firm for a longer period of time than someone who doesn't get credit for that investment. And so I think understanding how attribution works, how the firm thinks about whether or not someone's going to be here for many years, the challenge is that everyone puts their best foot forward in the sales process as they're trying to win an investment. They're going to tell you everything that you want to hear as a founder versus the truth. And so you kind of have to look at their actions over time to really judge them. Or you have to talk to someone who's more unbiased. Maybe it's one of your existing investors who has the intel. And so I think those are some things that you can do. But I think it's a great question because not enough founders have probably thought through this, especially for the person that they're going to have on their board. And Sort of the relationship they're going to have with the firm if in a success scenario, it's 10, 15 years of working together.

[Mike Smith]

Yeah. I mean, I think that, using Nikhil's language from earlier, I think the best founders have other founders that are further along that they ask questions of like, how did you pick that board member? I think the best founders do back channel references on the partner themselves, like,

[Turner Novak]

not just the firm.

[Mike Smith]

Not just the firm. Because honestly, the truth is like, you know, I have a, I don't know if it's like a spicy opinion on this, but I do think firm matters less than individual, to Nikhil's point. Like, is that person going to stay at the firm?

[Nikhil Krishnan]

Like, especially the way most firms work where you're working with the individual.

[Podcast Sponsor/Announcer]

Exactly.

[Nikhil Krishnan]

Versus, you know, we actually do both work. Every company.

[Mike Smith]

Yeah.

[Nikhil Krishnan]

That. That's very rarely how it was.

[Mike Smith]

Very fair. And so, you know, I think, you know, I, I once took a call from a founder who was making a very big decision about who was going to lead their Series A. They were lucky enough that they had term sheets from three amazing investors and they wanted to know what a particular investor that we had worked with. What's that person like over the five years that you've worked with them? What are they like in the boardroom when you're having a bad day or you don't make numbers? What is their behavior? And I think those founders that do like that kind of bidirectional diligence and are really trying to figure out do I want to be in a marriage or in a relationship with this person for a decade, or they're doing that kind of work because they understand the gravity and the importance of the decision of who they're going to allow on their cap table. And I would encourage all founders to do that because it is a big, big decision. So I, I think not enough founders kind of take that process as seriously as I think they should.

[Turner Novak]

Yeah, it's probably like what sort of, I guess, help you'll get from the group of individuals or what sort of, you know, support or care focus you'll get. Because there, I mean, there might be some cases where we can think of like the biggest, most politically bureaucratic firm you could possibly think of that actually you do get a lot from. And they have a big team that they, you know, they add all this value in all these different ways and the firm will actually throw the support behind you. But that's probably like, if they know they're going to make money from helping you I feel like it's pretty transactional in that sense of like, we know that you're doing really well and want to invest more, so we'll help you because you'll let us.

[Mike Smith]

I mean, very few companies have this up and to the right, very linear journey. And so you go through these periods of being in a trough or going sideways. The other thing I was thinking about coming into this is, you know, founders get pretty, you know, worked up and I understand about sort of valuation at each stage. Very few companies have like this perfect valuation. Like, every round they did was something that they were excited about.

[Turner Novak]

Facebook did a 40% down round 2008.

[Mike Smith]

And so what you have to, as a founder, really think about is like, what, you know, who are the people around the table when I'm going through these troughs? Like, what is their behavior when I'm going through these troughs? Trying to really understand, you know, are these people that really have my back and have the company's back versus are thinking about either their next fundraise or thinking about their own position within a firm. Like, that's not particularly helpful to the founder or the founding team. And so I think, you know, you can't obviously uncover all of those questions as you're making decisions about who you're going to, you know, sort of allow to leisure series A, but you can do more work to try to figure out, like, again, what are they like on their most challenging day. That's a question that I encourage founders to ask about us and also ask as they're considering other investors are sort of inviting onto the cap table and treating it like it's an invitation on the cap table without too much ego. But like, again, it's, you know, we are lucky for the best founders and the best companies to be a small part of their journey. And the founder needs to sort of understand again, the length of time and sort of making sure that they're inviting people into the kind of party and onto the cap table that they actually want to spend time with and actually can add value in these moments when they're trying to be great.

[Turner Novak]

This maybe begs the question, talking about challenging moments, what's been the most challenging moment or period or thing about either starting your own firm or footwork? Is there anything that's just way more challenging than you would have expected?

[Nikhil Krishnan]

I would say the thing that first comes to mind for me is because it is just two of us, we can't possibly see every company that we wish we could see.

[Turner Novak]

It's kind of random and Lucky. Just someone thinks of you in a certain moment and you don't know what's going to show up sometimes.

[Nikhil Krishnan]

Well, sure, we try to do the input work that leads to it being less random, but you're totally right. There's like a massive amount of serendipity and luck that goes into just sourcing the next investment. And you kind of actually have to like maximize the surface area for serendipity for it to happen. Yeah, but I think that's the area that keeps me up the most. Now we, we do calendar audits to figure out, like, are we spending more than 50% of our time on finding the next investment? And we've been pretty consistent for a long time now of actually hitting that input metric.

[Turner Novak]

About 50% of time is on sourcing.

[Nikhil Krishnan]

Okay. Yeah. So the principle behind that is we're only as good as our next investment. We need to be spending the majority of our time finding the next one. And we can't just get bogged down in firm building related stuff or portfolio work. We have to always be thinking about the next one. So we have little analyses such as that to try to drive the right inputs. But it's still, I think, the hardest thing about starting a new firm, about it only being two of us, about us wanting to be a great firm. That many founders put on their list of the 10 firms they want to go to for their seed or series A is just kind of that top of funnel.

[Turner Novak]

Yeah. And I think this might be an interesting time to talk about like what is a footwork founder that makes sense? What's kind of the things you guys think about. And I know you have a pretty big track record of greatest hits. Like Mike Little less. Just because you weren't doing it full time. I was not as much. But maybe there's certain things you guys think about today throughout the course of your career, like what you've picked up on, of what makes some of them great.

[Nikhil Krishnan]

There's several characteristics we look for. I think when we started the film we had these three characteristics that we publicly talked about. Founders that are hungry and humble. Founders that know their business inside and out. Founders that are magnets for talent. I think some of the things that have evolved over time are this premium that we place today on a founder's slope of learning and how quickly they are able to learn and iterate on the business. Because in this AI era and obviously the ChatGPT moment happened post us starting footwork. And so the last three years, majority of the investments that we've Made have been AI first companies, but we think because of how quickly that world of AI is moving, founders that are able to learn and adjust more quickly, you could say kind of have really strong footwork themselves is just a super important gene for them to have. And so that's something we probably face a premium on today.

[Turner Novak]

How do you gauge that? Because you're meeting someone, you've got to move quick, make a decision. In a week, is it? Oh, they got so much more in the past week.

[Nikhil Krishnan]

Honestly, it's a little bit of that. I mean, you can tell if someone seems like they're growing and sort of changing, evolving, even in the span of a couple meetings that you have with them. Yep. There's questions that we try to ask about, you know, what has changed in the business or changed in your thinking about the business even in the last couple weeks or let's say in the last quarter. Actually one of the benefits of getting to know more than just the founder is sort of understanding the founder better in the lens of the people they've recruited to the company and what they're like and sort of as a proxy for the broader team and as a proxy for the things that the founder cares about.

[Turner Novak]

Yeah, I've definitely had that before where you maybe like meet the co founder and you get a little bit colder just based on how the conversation went.

[Nikhil Krishnan]

We've had the opposite, which is we actually get warmer. Like we get. I can think about several examples in our portfolio today where we were impressed by the founder CEO, but we got super excited off to spend time with their co founder and then yeah, Mike, what else would you say are some

[Mike Smith]

of the, I mean, I love a couple of the questions that you've introduced which is, you know, sort of, you know, this is act one of your business today. What is act two and act three like the fact that you actually are sort of asking the founders to think about, you know, you might have some product market fit today, but to build a, you know, category leading company that actually has a chance to go public, you will have multiple acts. And I think the best founders have given some thought, even though it's not super cogent like to what those future acts will be. So that's one I think is a, a tactical question we ask. Another one we ask is, you know, if there were a couple challenge topics and we're going to, as Nikhil referenced before, we're going to sort of simulate a board meeting, what would those challenge topics be? So what we're looking for is sort of vulnerability and actually think things that aren't working in the business, but also that they've already thought through some of the ways, you know, that they are going to fix this thing and they want just some thought partnership along the way. That's another question or set of questions that I think help us evaluate slope. And the third one I say and you have to be careful because you about this one but you know, most of these founders have a deck and they've presented a lot and they are

[Turner Novak]

very kind of script.

[Mike Smith]

Yeah. And so what you want to do is to like test some of the script, like not be rude but sort of ask a question as they're going through the script to kind of see how they adjust to that question on a slide that you have on go to market or, or on the financials just to see are they able to kind of shift out of the script and into kind of really thoughtful, you know, sort of point of view. And so that's another, a third thing that I think we try to do to just evaluate against slope.

[Turner Novak]

And it's kind of interesting when you think about the evolution, how you get stronger as a founder. Nikhil, I know Canva, you invested in our seed round. This was 2013, 2014, 2014. I mean LLMs weren't a thing. It was like 8 years pre LLMs totally. But when you use Canva, there's quite a few AI generation features inside of it. They've obviously benefited from it. And it's like you first off don't even know that AI is like a thing. Like AI wasn't invented in 24, like it didn't exist in the same context. But then being comfortable of like, oh, they are appropriately taking advantage of and continuing to evolve over time.

[Nikhil Krishnan]

I mean, I think that founders that are just so obsessed by the product about making it better, about sort of continuing to have some sort of a competitive advantage, not just resting on their laurels and resting on things that are working. That's the type of founder that we just absolutely love working with. And the hard thing is that

[Turner Novak]

I

[Nikhil Krishnan]

think many of the best founders that we've worked with, it was very difficult to tell from their resume that that would be the case. Right. You look at Mel and Cliff at Canva and there was nothing in their resume, having grown up in Perth, having started a yearbook company and then a software company around design, that they would be that way. You have to actually spend time with them and understand them and sort of question them to get that out of them.

[Turner Novak]

Do you remember what kind of Spiked back when you first met them and were making the decision.

[Nikhil Krishnan]

I think the thing that was pretty amazing about them in retrospect is the level of ambition that they had from the early days.

[Turner Novak]

Even as a yearbook design software.

[Nikhil Krishnan]

They were talking about taking on the whole design market going after more companies like Google and Microsoft than Adobe.

[Turner Novak]

Even from like enterprise design tools. Like in the sense of like we're gonna. You're instead of using Google Slides, you'll use Canva.

[Nikhil Krishnan]

Yes. You know, so, so being the design software product for non designers and. And how big of an opportunity that is much bigger of an opportunity than Adobe. Like people always put Canva and Figma and Adobe in the same. In the same breath.

[Turner Novak]

Yeah, I don't even think Figma and Canva they have like maybe 1% customer.

[Nikhil Krishnan]

Exactly.

[Turner Novak]

The use case is like not the same.

[Nikhil Krishnan]

Canva is a much closer business and total addressable market to Google and Microsoft. It's the everyday person's sort of work suite much like the G suite or Office.

[Turner Novak]

They have video editing tools like when I like I actually the intro for this podcast episode. My wife made it in Canva. Love that it has such a. And they have documents also like it's literally like the, the productivity suite you would use for doing professional work. They have it all at this point

[Nikhil Krishnan]

and they were thinking that way in 2014. So did people just despite, you know, having you know, gotten no's from a lot of investors worked on the thing for a long time already. Now what they had is they had six months post launch where things were going pretty well and users were growing 30 to 40% organically every month. They were at about a hundred thousand monthly active users when we invested. So something was working. But the level of ambition they had for what it could become was pretty amazing. And it was almost. I mean we talk a lot about founders have to be crazy to go build something really big. What you don't want is for a founder to be delusional, but they have to be crazy. And there's a spectrum between crazy and delusional that Mike likes to talk about that every founder is on. And so what I remember vividly from that first meeting actually is they seem kind of crazy to me. Like two founders who are here from Australia who dug surfers. Yeah, a bunch of people have passed on kite surfing. But huge ambition.

[Turner Novak]

So Mike, that's maybe begs the next question is just how do you decide? Because we all, all investors see these decks where it's like the TAM is, you know. Yeah, it's crypto, it's $10 trillion TAM. Like how do you decide? Like maybe that's a little too, too crazy. But this design software that competes with like a Google and Microsoft or this box that shows up with a bunch of clothes like it's going to, you know, compete with in commerce. Like how do you just like delineate between too crazy and like truly ambitious that could actually.

[Mike Smith]

Yeah, I mean I don't, I think on sort of the market and the product, I'm pretty wide, a wide spectrum on what can be crazy and like actually delusional because you do want people that are creating sort of like these category defining companies.

[Turner Novak]

That's how you build a big business that is exactly half behind the market.

[Mike Smith]

Yeah, big business. And so I like to hear it all. I mean there's certain areas where we don't have certain expertise or interests or can add, can't add as much value. But for the vast majority of companies in technology, specifically in AI, we actually think we have a right to sort of be good partners to those businesses. And I think we're looking for almost the craziest stuff in terms of like what their ambition, to Nikhil's point, what their ambition is for what they want to build and sort of the why they want to build it. I mean it can't just be, you know, I was doing some market research and read this McKinsey report on how there's white space here. It needs to be seen some acute challenge that they really wake up every day thinking about why they deserve to be in the world. And you can kind of feel that in a meeting with a founder it's like, are they gonna wake up every day and say this is my mission and this is my reason for being and can they attract similar enough people to that mission and that craziness to sort of build a huge company? And I think most of the best founders, you see that. I mean one of the things people ask me about is like, you know, why did you join Stitch Fix when it was just four people? What was so special about Katrina Lake the founder and that Katrina shows up that way? She shows up on, in on a good part of the crazy delusional spectrum. She knew her business like throughout. She wanted to have a completely different shopping experience. It felt like data science was an amazing way to do that efficiently and effectively. And you know, she built this amazing company for nine years that she was the CEO and founder of. And you could just tell in spending, we spent multiple cycles together before I decided to join that she was like a very, very special founder.

[Turner Novak]

So why. Why did you decide to join? Was there a certain thing that tipped you over the edge?

[Mike Smith]

I think it was, like, 75% her. And what I appreciated about her is that she was, you know, intellectually honest about what she was good at and where she wanted help. She was super clear on the vision. If I think back to the first conversation I had with her on the vision for Stitch Fix and what transpired over, again, a decade of working with her, it was pretty aligned. There weren't, like, bumps in that vision road. She was, like, super clear on what she wanted to build, which then, you know, as you kind of get hit by fundraising challenges or, you know, just the growth, it went from, you know, sort of zero to $2 billion run rate in nine years. In a physical business, that is very hard to do. And there's challenges with growing that fast. But she stayed super consistent on the vision of what she wanted to build. And that consistency was something that showed up early in, you know, sort of in my conversations with her. And the last thing I'll cite is slope. I mean, I didn't call it slope back then. I just, like, sort of talked about it as raw smarts. But, you know, when you talk to her about the business and you kind of talked about what was working and what wasn't working, and when you talked about, you know, what's the contribution margin today, what's the gross margin today, what's the gross margin going to be, you know, five years from now on the red $50 million, which is what we thought we would be five years from now? It was a very different and higher number than that.

[Turner Novak]

Yeah.

[Mike Smith]

You know, she just had, like, amazing answers for, like, what was going to drive margin expansion and why this was a great, natural business to build. And that was something that I got very attracted to, like, try to work with her and partner with her on achieving that vision.

[Turner Novak]

And so what did you do because you joined your. You had joined Walmart.com I had [e-mail]

[Mike Smith]

I was Chief Operating Officer, Walmart.com and I had been. I picked up my head to kind of see what else was out there for, you know, opportunities. And there were some CEO opportunities, but there are a decent amount of COO number two roles with these amazing founders. And I met her and just was blown away by her and was lucky enough to join. I think she was dating other people, like, Nikhil was dating other people and building a firm. But fortunately, I won and was able to work with her For a number of years.

[Turner Novak]

So what's the biggest challenge or what was the biggest challenge with Stitch fix specifically?

[Nikhil Krishnan]

Are we going to get to.

[Mike Smith]

Yeah, we are. We are going to get appropriate time to ask him, like, why are you

[Nikhil Krishnan]

guys actually talk about Turner and your leadership team and how she was.

[Mike Smith]

We did because Turner, like, had an amazing following on Twitter and it was very loud and meme ish and thoughtful, honestly about it, to try to throw out all those. We had a good. A bunch of leaders that sort of knew of Turner and we would talk about Turner and his leadership and like, how, like, this guy's so bullish on us. And it was inspiring to have someone that was like, in your corner. Like, you. You had boxing games, I think that you used to. And did feel like you were physically in our corner.

[Turner Novak]

We still. We still use it. I mean, my. My daughters, their favorite thing is going and getting the Stitch fix box. I think we get a quarter. Okay.

[Mike Smith]

Right on.

[Turner Novak]

Yeah, they like the app where you can like pick what you want. It's like their favorite thing to do with grandma.

[Mike Smith]

It's an amazing business. I still am really proud of kind of what we. What we were able to accomplish. I think the biggest challenges in the business. One was just scaling that quickly is hard. As I referenced before, it's like we had at the peak when I was there, 5,000 stylists. Those were the people that would pick the last five things that would go on your fix. We had 3,000 people in warehouse operations across five different warehouses in the US and one warehouse in the UK when you're managing that large a team, it's like definitely not easy. I managed somewhere between 12 and 15,000 people at Walmart. And, you know, it's like when you're managing that many people, things break or it's hard. So it's just managing that level of scale, that many, that much, you know, those. That many people. And just the growth. I mean, when the sales numbers, just so you know, before we filed were a million. My first year, eight our second year. Then we did 75, then 345, then 760, then 960 and file. So, like, that kind of growth in five years is not normal.

[Nikhil Krishnan]

With a ton of efficiency too, right?

[Mike Smith]

Yeah. We had only. We got to cash flow positive on $17 million of capital, and we only raised in private capital, $42 million of capital. The last $25 million we raised was. We didn't. We didn't touch. And so, yeah, it was very efficient. I mean, Part of the efficiency gets to the second point of like the challenge is people didn't really want to fund the business we were in. Well, I think part of it, I get it now being on the other side, some of it. Most of what I still get salty about on the salty side. I feel like there were times when people dismissed her or dismissed kind of the team. You know, they. This is where I do think going back to, you know, how we want to show up of engaged and ask good questions. I was a little to a lot disappointed by what I was seeing on the other side. You know, we'd go to these meetings, people would be late to meetings, they would ask not that great a question,

[Turner Novak]

what if Amazon does this?

[Mike Smith]

Or I mean, that was one, you know, another one is like trunk club's just going to do this. And like they wouldn't listen to the data science, machine, machine learning aspect of it. They wouldn't ask like additional questions to try to understand how is that differentiated.

[Turner Novak]

So it was, it was real. Like it actually was some like machine learning.

[Mike Smith]

Oh yeah. We had at the peak 152 data scientists. And you could see in the data, like how getting more data and getting more scale and the way that the algorithm seems sort of understood information that we were getting in the style profile and a checkout was driving differentiated performance in the business.

[Turner Novak]

So you were like people were buying more things.

[Mike Smith]

Exactly. So you could see like if they figured out this algorithm and made it work more effectively, the contribution margin would go up, LTV would go up. So you could drive direct impact from ROI of the investment you're making in data science and machine learning to actual business results. And so people didn't really spend the time to sort of get that in private markets or sometimes in public markets when we talk to investors.

[Nikhil Krishnan]

So.

[Mike Smith]

So anyway, we, we're, we failed to raise our Series A as a result of people not liking the business. We met with 65 firms, 60 of them I didn't want to be in the same room with after I left for some of the reasons that I cited earlier. And we had to like develop, do a bridge and like figure things out. But to the efficiency point. We were forced after all of those meetings and being really close to the edge and like a few weeks from not making payroll to like figure it out, how do I get this business?

[Turner Novak]

Yeah, how did you bridge those like weeks of cash?

[Mike Smith]

I mean, we bridged it by having plans to reduce the team by significantly. We were able to get a million and a half from one of Our existing investors, that allowed us to like, extend that a little bit longer. But the most important thing is we get really focused on gross margin and contribution margin. And what we needed to do to sort of kind of own our own destiny. Were they, like, same kind of stories that we tell some of our teams that are struggling now. It's like, you can do it. You have to make very, very hard decisions, but you can do it.

[Turner Novak]

Were these like, periods where the top line wasn't growing? So it wasn't.

[Mike Smith]

No.

[Turner Novak]

Or was like the contribution growth margins, like, kind of messy? So people were like.

[Mike Smith]

It was just when you're buying inventory to fuel the growth, when you see the growth, that is capital that goes out to buy stuff, that you wait for customers to buy it from you to get that capital paid back. And so we had great turns and it was a super working capital efficient model. But you still had to buy the clothes in order to ship clothes to people. And that was the biggest issue is, like, you needed capital to do that.

[Turner Novak]

So people are, like, concerned, if this is a bad run, you just run out of money.

[Mike Smith]

Well, there's that. But I. Here's the reason where I did respond to respect certain firms and people in particular's opinion about the business is on two. Two dimensions. One is, you know, we're a venture capital firm. We're writing checks between a million and $15 million. If we're going to write a $15 million check, it isn't easy to write. Have half of that, you know, $15 million go to inventory versus developing product. And we had some investors be like, I just. That's not a business that I'm interested in. I'm interested in $15 million going to engineers and data scientists and not proc. So I get that. And the second one was, you know, this is just not a business that I wake up every day super interested in, like women's dresses. It's not a business that I'm super interested in as a business. And you want investors, having been on the other side, to intellectually be super curious about the business and wake up every day sort of thinking about how can I be helpful and where can I ask questions to help advance their thinking. And so those were two reasons that I totally could sleep at night and be fine with why someone passed.

[Turner Novak]

Yeah, because I. And I remember. I mean, I don't know if I've. I probably told you this story at some point, but the way this kind of like, came about me tweeting about it, I remember I was just in Like a group chat, like people sharing investing ideas. And someone was like, turner, what's your like craziest idea of like what could be a massive company that no one's thinking about? And I don't know, stitch fix, maybe it could be. And so I think I was going to share it in this group and I was like, I'll just make it a thread and tweet it out because people might find it interesting. And it got really popular and it was basically just this thesis of you have the permission to just ship things to people and they just buy it. And it's like Amazon doesn't have that and no other e commerce provider really has that and I think has nailed it. And so I kind of was like, well if this does work, it could be as big as Amazon or bigger, you could displace them. There's a ton of questions around. You got to get there to do that. That's a pretty big opportunity. And I just remember my mother in law, when she goes clothing shopping, she's kind of freezes, doesn't really know what to get. There's just so many options. And when she would get stitch fix, she would just get most of it. It was kind of crazy. It's like, wow, you've solved that problem for her and she likes most of the stuff. And then now with my kids, I mean they're younger but they just get it all, they just buy all of it. And maybe it's like you solved the problem or maybe you snuck in below the parents and the kids. It's like a way for the kids to just spend and get new clothes and they maybe wouldn't have otherwise. But it was just so fascinating that I kind of always thought of it as like the recommended bar on Amazon or any retailer. And you convert very highly on this recommended bar that you're like shipping to the people.

[Mike Smith]

Yeah, yeah. I mean, I think people, I mean we sat in a very privileged seat of being invited into someone's home, not really knowing what you're going to get in a category like apparel that's very emotional. And so you get invited into kind of that home, but you have to deliver. And so I think there are entertainment brands that get invited in the home, there are other food brands that get invited to the home, but there's not a list of a hundred companies that naturally get invited into someone's home. The home is a very special place and it creates hopefully memories for your kids of opening those fixes. And so we were very privileged to be able to Be invited in there and worked really hard to deliver an amazing experience from that invitation.

[Turner Novak]

Yeah, I mean, you can expand into other categories. You started with clothes, but I think you guys also do jewelry. I believe in, like, men's kids.

[Mike Smith]

Yeah. Jewelry, shoes, tops, bottoms. Like, are you doing makeup yet? I not on the board or involved in the company, so I don't believe they're in makeup. But yeah, there's like, a lot of

[Turner Novak]

stuff you can do.

[Mike Smith]

There's a lot. I mean, we would talk about a lot of different aptitude and beyond apparel, because we felt like this idea of building trust, where you could get data from the customer of, like, where their interests were and then delivering an amazing experience on the back end could be applied to a lot of different categories.

[Turner Novak]

So I think maybe one more question on Stitch Fix. I think Benchmark ended up investing. I mean, they're pretty good firm. Was that in the Series A or is that the seed or.

[Mike Smith]

That was in between. So when we failed to raise our Series A, we changed the model of how we were going to do fundraising after we got the bridge. And it was Katrina's brilliant idea, which was, let's identify three partners that we would want to be in a relationship for the next 10 years. Let's make sure that we felt like they had the superpowers that could help us in our journey. And then, like, let's bring them under the tent and treat them like they are existing investors, treat them like they are board members, do mock board meetings where we talk about these challenge topics that we were, you know, having in the business. And then we would evaluate sort of how what their thinking was, like, not that dissimilar to sort of the way we ask founders to evaluate us or the challenge topics that we sort of ask them to weigh in on. You know, we had these three famous, more famous investors that we had picked. And Bill Gurley at Benchmark got very excited about the model and very excited about Katrina. But his lead, the investment, did he

[Turner Novak]

kind of like pass in the traditional sense before that?

[Mike Smith]

Not passed. He and I have this funny back and forth on this over the years where I sent him because I'd interviewed with him for the Uber job with Travis, and I sent him a note when I landed at Stitch Fix and said, hey, I think you should take a look at Stitch Fix. And he said something like, we're over 33 on all E Commerce investments, so no thanks. And I'm clearly not a good salesperson in that case. Because then, like, six months after that email, could he Met Katrina and I ran into him on Market street and he was like, oh my gosh, she is so amazing. Why didn't you tell me this? I'm like, I clearly tried but failed. So I'll take that, I'll take accountability for that. And then he got so excited about it as he got brought in under the tent and decided to lead the round.

[Turner Novak]

Wasn't there some story about like their EAS started using it and actually like convinced the team or something like that?

[Mike Smith]

I never really talked to them about that. But that is the story that's out there that I think Bill has talked about a little bit, which is, you know, he was seeing, you know, end customer love. Same reason I joined is I met a friend of mine who was at Facebook at the time and she's like, oh, you're interviewing at Stitch Fix, there's six of us that get our boxes, our fixes on a certain day and we all try on clothes together and we do like trading during that day and we love, we love the brand. And this was early. There were like a hundred customers or something. So to have like six at a company that were loving the brand was also like, good quote, unquote signal for that. The company could be pretty interesting. But Bill was getting similar signal from, from his cohort.

[Turner Novak]

So actually Hunter Walk at Homebrew brought this up to me. He said, your, your office is right next to yc. Have you guys in any interesting stories with YC companies just being so close? I don't know if there is one, but.

[Nikhil Krishnan]

So we moved to the dark patch and got our office I think two and a half years ago, maybe just after YC also landed in the neighborhood. We have hosted YC companies after the batch at our office. So we've got to know a handful of them pretty well. And then we have just seen in general a number of YC companies walking back and forth on our street and peeking in. And. And then I think probably each of us has overheard some interesting chatter from these companies over time. I would say the most interesting thing is just sort of getting to know this handful of companies post batch and understanding kind of the pressure cooker environment they're in during yce and then sort of how that changes post yc. And you know, actually we've made an investment in a company Confido that was a completely different idea during YC versus what it is today. And so our belief is there'll be a set of companies that like during the YC batch take off and work really well. But we're more interested in the companies that kind of grind it out post yc and maybe they find something that's actually different to what they were working on during yc because a lot of YC companies end up pivoting and we're very excited about that characteristic of company.

[Turner Novak]

Oh, interesting.

[Nikhil Krishnan]

And so, yeah, you know, but. But it is. It's a fun. It's a fun neighborhood to be in right now.

[Mike Smith]

Yeah, I want to give him some credit on this too, because he. I don't remember. It must have been, you know, three years ago where he was like, hey, we need to stop meeting at Farley's and like, actually get our own office space. And, you know, I think you felt really good about this space and how it was going to develop. And it is really central to sort of AI and innovation and it's nice to have like physical space as you see the neighborhood developing.

[Nikhil Krishnan]

Yeah, we didn't realize that OpenAI was also going to move in pretty close to us, four blocks away from us.

[Turner Novak]

Do you guys do any of those? Like someone's leaving OpenAI and you just give them like a, like a blank term sheet to sneak in. You guys don't do that.

[Nikhil Krishnan]

We haven't done that yet, but we have gotten to know Several people at OpenAI well, so who knows what's in our future?

[Turner Novak]

Yeah, that's fair. And one thing actually maybe is in the future. You talked a lot about consumer health earlier. You were kind of mentioned that's something you've been thinking about is maybe like a new area footwork kind of been exploring. What are you kind of thinking about on consumer health?

[Nikhil Krishnan]

So I think rightfully so, the world is obsessed with what's happening in AI right now. But I think if you were to press me and perhaps us on what's sort of a non AI first area that you're really excited about. First thing that comes to mind for me is consumer health. When you look at what's happened in the last five years post Covid, many more people sort of are thinking more preventatively, more proactively about their healthcare. We kind of all got educated in Covid by vaccines and masking and just I think understanding our health at a different level. Secondly, you've had this wave of new drugs that have come out in the last five years that people have started to see a lot of benefit from, such as GLP1s. Thirdly, you've got now a number of companies that have gotten pretty quickly to a level of scale in consumer healthcare. I'm thinking about stuff in blood testing like function health, rhythm health. I'm thinking about telemedicine plus prescription services like HIMSS and ro. And so there's a set of ingredients now in consumer healthcare that I think can yield a really interesting crop of new businesses. Not to mention the intersection of AI and healthcare you saw in the last couple of weeks. ChatGPT has now got a specific ChatGPT for Health product. And so we think there's a ton of opportunity there. And we've made several investments in consumer healthcare. Few that we've publicly announced, companies like Honeydew, which is in virtual dermatology care, but a few that we also haven't yet announced that we're very excited about and that are growing exceptionally quickly.

[Turner Novak]

It's interesting, I think healthcare is like 20% of GDP. I mean some of it's in insurance mixing around, but it's basically like can you just go direct to the consumer and can they make decisions? And maybe it shouldn't be 20% of GDP but it should be like 10 or something. It's still a massive chunk of what people spend money on.

[Nikhil Krishnan]

For sure, in some ways you want people to spend less money on it because they are more proactive and competitive. But in that is an absolutely enormous opportunity economically. And then just for our society, more importantly.

[Mike Smith]

And you can watch just we're all, I mean this is what, what's great about it is we're all consumers of it too. And so when you go to the doctor and you see like how much work they're doing, that's not care work. And I don't feel like they're getting as much joy out of the non care work. They became doctors to do the care work and there's so much of administration, administrative things and insurance things. It sort of takes away from their joy in the job. And I think technology, there's still a ton of opportunity I think for technology and AI to have the jobs be more effective and more efficient and also have people get more out of their jobs as a result of where we can make investment there.

[Turner Novak]

Is it true you guys once organized a flash mob to win a deal?

[Nikhil Krishnan]

I think what happened is a flash mob came around us, around us when we were trying to talk through the term sheet.

[Turner Novak]

It was amazing what happened.

[Nikhil Krishnan]

It was the only time I think that we've ever we, for a number of different reasons, we were out in Salesforce park in San Francisco and we were trying to give this company heard a term sheet and suddenly people started dancing around us at the tables that we were at.

[Mike Smith]

So Andrew and Vic felt like we had sort of, sort of engineered this to help our sales process and we did not. But I wouldn't say it hurt. You know, it helped us like sort of lighten the mood and bring joy and. But it was a, you know, maybe an inopportune time of talking about terms.

[Nikhil Krishnan]

Yeah.

[Mike Smith]

So. But fun.

[Turner Novak]

Yeah. Nikhil, what's it been like being a dad, two young kids. How's it changed just your views of the world, how you think about things, getting time for doing things?

[Nikhil Krishnan]

Yeah. Yeah. I think it's an incredible joy to get to have kids and I feel really grateful. My wife Chanrika and our two daughters. I think what is difficult is if you want to be a good spouse and dad and to sort of show up the family plus do this job at a really high level, it just takes everything out of you. And so there's been barely a day since we started footwork that I haven't been working. I still feel like I don't have enough time for the deep, proactive work that I want to have. When we are really excited about something, I can still go very deep very quickly. In some ways I feel like I can move even more quickly with having a family because I just have to. I don't have another option but to sort of drop everything and work on it. But. But yeah, there are trade offs and that's life. And I think this is a ridiculous season, especially when you have two kids that are both small. We were talking earlier about you have a nine year old and a five year old now and sort of out of the really physically intense times. But I'm also trying to savor this time because it only happens once.

[Turner Novak]

Yeah, it's kind of like these weird phases where now for me that's like a little bit easier to like you usually sleep through the night or whatever. But it's more noticeable like when dad leaves or when dad is not giving you attention. I mean if they're eight months old, they don't know in the same way when they're nine. Right. Like you're. I'm trying to like send an email. My daughter like wants to play. Like we made up. Our new thing is making up games. So what we did like two days ago we were. We made up charades and she just came up with the idea for the game. Like she would draw a picture.

[Mike Smith]

That's amazing.

[Turner Novak]

And then we'd write the word together that was on the picture. And so I was like trying to finish something and she was, like, talking to me. And it's probably looking back on it, I just should have, like, closed my laptop because it wasn't, like, that important. It's just, like, balancing of, like, just, you know, there's like, so many different demands for your time, and, like, you got to prioritize stuff at the right time. So that's been challenging. I don't know, Mike, what advice do you have for us?

[Mike Smith]

I mean, it is hard. I would say, you know, I'm on, as we talked about, a little bit on the other side of that. But I think, you know, sort of I always had. I felt lucky that my better half supported sort of my ambition and work. And now I have a daughter who's a young adult who, like, knows I worked really hard to get to sort of where I was and really appreciates sort of that work ethic that's needed to be great. And so you don't realize, you know, at these younger ages, like, how much these kids are picking up. And some of it, you know, you don't want them to think that you're not, you know, dad, but they also recognize that you're dad plus worker plus, you know, husband, and they really do pick up all a lot of these things. And sort of, you know, in my case, she's appreciated how hard I've worked and has her own ambition as a result of it. I mean, she got to meet Katrina Lake when she was 10 years old. And so to meet a founder who's like, looks like you, looks like you is young, like you, ambitious, like you want to be, it's like, super inspiring. And so she wouldn't have gotten that privilege had she not had a dad that was, like, pretty ambitious for, like, what do you wanted out of this career? But you need the right support system. And you also have to find time to, like, reflect. And you also have to find time to take a little break here and there. Otherwise, it's very hard to do sort of the pace for, you know, 40, 50 years. There are people that do it. I think it's very unique to be able to do that. And I think you just get. Find these recharge moments where you actually end up being better on all dimensions as a. As a dad, as a partner, and as a worker. When you find these small recharge moments. Moments.

[Turner Novak]

Anything else you guys want to talk about? Things feel like we missed?

[Mike Smith]

I don't think so. This is great. Yeah.

[Nikhil Krishnan]

So much for having us.

[Mike Smith]

Yeah.

[Turner Novak]

Yeah. This is a lot of fun.

[Nikhil Krishnan]

And this is the first time. I think that we've done both of us on podcast.

[Mike Smith]

Yes.

[Nikhil Krishnan]

On video as well in a podcast. So special moment for us.

[Turner Novak]

Yeah.

[Mike Smith]

Thanks for watching together.

[Turner Novak]

People that are still listening at this point, hopefully like this is, they realize how important this moment was in time.

[Mike Smith]

Yeah, totally.

[Turner Novak]

Well, cool.

[Mike Smith]

Yeah.

[Turner Novak]

Thanks again for doing it and thanks everyone for listening. Thanks, thanks and thank you for listening.

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