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The Studio Model

April 13, 2022
Episode 18
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34:30

What’s a startup studio? Is it just “venture capital” with another name?

Tom and Vivek dig into the startup studio model being deployed at super{set} and working with co-founders on new data-driven companies.

It’s still early for the studio model — case in point, people still are asking “you have a fund right? Aren’t you just a venture capital firm with a different label?”

Tom and Vivek detail just what we’re doing at super{set} — what the model is, how we’re different from VC, craftsmanship versus critique, what’s in it for LP’s, and most of all what’s in it for co-founders?

Learn more about how we at super{set} found and fund data-driven companies at superset.com

Transcript — Season 3 Episode 1

Speaker 1: Welcome to The Closed Session, How to Get Paid in Silicon Valley. With your hosts, Tom Chavez and Vivek Vaidya.

Tom Chavez: Well, here we are. Episode one, season three, and you know we’re not just on the radio.

Vivek Vaidya: We’re not.

Tom: We’re all the way three dimensional video.

Vivek: That’s right.

Tom: A lot of people. And here’s the thing, the reason we’re doing this is a lot of people are saying, look, we love the sound of your silky radio voices, but we need Vivek live. I don’t…

Vivek: In 3D.

Tom: Yeah.

Vivek: They want to see me in 3D.

Tom: And can I say…

Vivek: Yeah, right.

Tom:… You look fabulous because you got a haircut.

Vivek: I did get a haircut.

Tom: You got a haircut.

Vivek: Yes.

Tom: It was looking a little shaggy.

Vivek: I got a haircut on Wednesday. In between two meetings, I had 30 minutes. So… You know

Tom: To Supercuts.

Vivek: Of course. Of course, I went to Supercuts.

Tom: Go to Supercuts like you do. Say I’ll take a $7 haircut. Hold the self respect.

Vivek: It’s $25 Tom.

Tom: 25. My bad.

Vivek: We’re not in the 1990s anymore.

What is the Studio Model?

Tom: Got it. Well, so here we are. Very, very exciting season three, episode one. We wanted to talk today about the studio model, the venture studio model. What the heck is it? Because there seems to be a little bit of confusion out there. I was talking to one of our mutual investor friends. This coming year, we’re contemplating maybe raising a follow-on fund. So he had just gone through his own fundraising and I was saying, “Well, you’re a venture capitalist, that’s one thing. We’re a venture studio and that’s really, in our minds, quite a different species.” And it was instructive when he said, “No, you’re wrong.” All the investors out there are going to look at this and say, “Has a venture in front of it. It’s the same thing.”

Vivek: And he’s not totally wrong, is he?

Tom: He’s not totally wrong. And we can’t protest too much when it comes to this stuff. But we think there are some pretty significant differences, right?

Vivek: Yes. Before we get to the differences though, let’s just quickly address the similarities.

Tom: Okay.

Vivek: Right. So we do, to an LP, we do appear like any other fund because we have the 2 and 20. What does 2 and 20 mean Tom?

Tom: So 2 and 20 is, we didn’t make that up. That’s the standard structure for a venture capital fund, wherein 2% of the capital in the fund is used as a management fee. And the 20% is that we take 20% after having paid the fund back in full, by the way, there’s something called the American Waterfall versus the European Waterfall. But we don’t have to worry about that. The essence of it is you pay back capital and then if you’re successful, as we are going to be, you take 20% of the returns from the fund. That’s what venture capitalists have been doing for decades. So you’re right. We have a similar structure. Well, let’s examine whether or not there are any other similarities we need to know, because that’s really the core one.

Vivek: I think so. I think so. So Tom mentioned the management fee, which is the 2%, and then the 20% is called the carry. You’ll hear these terms from venture capitalists or fund and stuff. 2 and 20, 2% management fee, 20% carry. I think that’s it.

Tom: I think that’s really it. So look, if you fixate on that, as some people might, you say, well, walks like a VC, quacks like a VC, must be a VC. But there are these really fundamental differences and I think if you fixate on that, it’s like looking at a horse buggy. Well, it has two seats in the front, two seats in the back. You look at a Tesla, oh it has two seats in the front, two seats in the back, but come on, it’s a completely different species. So we’re going to come at this with our own bias. Our listeners and viewers can calibrate however they like, but we’re going to show up with a strong point of view here today as to how this is different. I think it starts with, look, we’ve both been lucky to work with some really terrific venture capitalists.

Vivek: We have.

Tom: What do venture capitalists do? They invest capital. There was this really formative moment early on in our first company, Rapt, where I was a puppy. I didn’t know what I was doing. I think it was the third or fourth board meeting. I walk in and I have these issues that are vexing me. So I want to raise them with the investors.

Vivek: Of course.

Tom: It just seems like these only smart people around the table, let’s get their input. So I’m waxing on and presenting these issues. One of these prominent venture capitalists with actually a good amount of gentle concern, takes me aside right after the meeting and says, “Hey, Chavez, you seem to be confused. We’re professional critiquers. See, you craft, we critique. That’s how this works.” And that’s really, I think, one of the fundamental differences. It’s important to have intelligent critique as you’re building a new business from scratch. How do we show up? How are we different in this regard?

Vivek: So if you think of that intelligent critique as advice from the control tower, as we know from our experience and other entrepreneurs who’ve been on the journey now, company building, especially early stage company building, is a dogfight.

Tom: It is a pride swallowing, soul sucking.

Vivek: You got kicked in the head so many times.

Tom: Every day. And venture capitalists aren’t there receiving those blows.

Vivek: They’re not.

Tom: They feel it, one degree of separation away.

Vivek: Correct.

Tom: They get vexed and angry and concerned at board meetings. But that’s very different from being down here on the ground, getting kicked in the head.

Vivek: Correct. So that’s one major difference is that we stand shoulder-to-shoulder with our entrepreneurs, with the co-founders we bring on, and build the company with them. And we craft. We craft, we are standing on the whiteboard drawing pictures, designing product, architecting solutions, selling software, the whole nine yards. That’s one way in which we are significantly different.

Tom: Let’s build on that now. Because one of the things that we don’t do, which is the prime function of a venture capitalist, we don’t chase or source deals.

Vivek: That’s right.

Tom: Everything that comes out of our studio, we have a really key hand in crafting and forming from scratch.

Vivek: We incubate companies.

Tom: That’s right.

Vivek: And by incubation, you’ll find a lot of incubators.

Tom: That’s a dangerous word. So what do you mean by incubation in the form, or in the sense in which people are used to hearing the term incubator versus how we incubate?

Vivek: So we’re not like the traditional incubator where we provide space. Although we do, we provide space and snacks and okay, now you go and build your company. We’re actually building, developing the hypotheses that we’re going to go test out in the building of the company. We hire people, we design solutions.

Tom: We build the product.

Vivek: We build the product.

Tom: We find the early customers. We sell the early customers. We develop the contracts. We create the backend infrastructure for these companies, not just finance and legal, but technical infrastructure, on and on and on.

Vivek: So we show up as co-founders.

Tom: That’s right.

Vivek: And we do everything that you would expect us to do, like we did at Krux, in these companies that we start.

Tom: Right. Now, notice as we talk this through. So we’re the first money in and that’s one of the commitments we’ve made to our LPs. There’s still a really important role for VCs to show up in those later rounds…

Vivek: Absolutely.

Tom: … And help us continue the journey. So think of us as this extreme, everybody likes to talk about stage two, stage three companies. Not enough people talk about, okay, how about stage zero or stage one, however you want to define it? When there’s nothing to a company except blank space on a whiteboard, that’s where we show up.

Vivek: That’s where we show up.

Tom: We set up the sockets for successful financings with other VCs at the table in follow-on rounds.

Vivek: And then, like you said, the intelligent critique from VCs, the perspective from the control tower is definitely very useful sometimes, because what we don’t see…

Tom: Sometimes.

Vivek: Yeah. But you have to admit…

Tom: Not always, right?

Vivek: Not always, sure. But oftentimes it is, because we don’t end up seeing the patterns. Good VCs, like the ones that you were talking about that we worked with, they’ve been able to see patterns across multiple companies they’ve worked with and they’ve given us useful advice along the way.

Tom: That’s worthy of another podcast. Let’s examine that in a future episode. What defines a great VC? But we’ll get to that later. In this context, we’re looking for VCs who can come up with the pattern matching experience that you’re talking about. That’s valuable. A great VC asks provocative questions at just the right moment and the right context, that catalyze the answer where the management team is after. So that’s really key. They do get a little, I said, they’re not always useful because sometimes, and here’s the curse of the VC, is to be so frequently wrong and never confused. We’ve seen some of that too. So the tricky, tricky part is to show up with a strong opinion and we always show up with a strong opinion. I’m quite proud of the way in which we reserve the right to change our mind always. Great company building requires, especially at this early stage, requires continuous course correction. So that’s something we take pretty seriously. Should we dive into what we mean by craftsmanship versus critique?

Craftsmanship versus Critique

Vivek: Yes, let’s do that. Let’s do that. So what do we do? What do we mean by craftsmanship? Actually, let’s start where you were just the thing you were just talking about, which is we show up and we ask questions. Even before we’ve brought on co-founders to work with us, we follow that approach ourselves. We ask questions open-endedly, how would we go into a new space like healthcare?

Tom: That’s right. Let’s use that as an example, because that’s a formation that’s reasonable.

Vivek: What do you know about healthcare Tom?

Tom: I know nothing about healthcare, it’s got to be said.

Vivek: Exactly. But we’re seriously contemplating a new company in healthcare now. So how are we doing it?

Tom: So we start from scratch and we ask, we have hypotheses, we ask open ended questions. First, we educate ourselves as to the status of the market. Who’s on first? Who’s on second? What are the core dynamics at work? Let’s manage the distinctions between payers, providers, industry, pharma, companies and the like. You start setting up that scaffolding to scan the whole space. You start, and this is where actually I was joking. Well, I don’t know anything about healthcare. Neither do you. Turns out to be a really useful thing.

Vivek: Yes.

Tom: Because we’re not encumbered by the 20 years of bad habits, the 30 years of bad habits that somebody who’s just been doing healthcare for so long, is going to bring to this undertaking. So we’re asking these questions. We’re assembling panels of people. We’re unabashed when it comes to calling people who might know people who are smart.

Vivek: Shameless, even I would think.

Tom: We are just ridiculous. We’ll call these people, wrestle them to the ground out, bug them with a lot of pesky questions. We start to formulate and sharpen those hypotheses. And this is where we start to develop a strong point of view that can be revised at any moment. But it’s a strong point of view as to how we can plug in. And let’s talk about that now, too. Look, there are a lot of companies out there that are useful and they should exist. We’re very clear about the kinds of companies you and I are going to be involved in building.

Vivek: And not building also.

Tom: So if you’ve followed some of our prior episodes, we’re all about this data-driven thesis. Our businesses at the core, we’re product guys, all of our businesses at the core are in some form or fashion, capturing, generating, analyzing, pipelining, orchestrating, activating data. So we stick to our knitting in that regard and we bring that posture to healthcare.

Vivek: And this is one area where we apply the concept of pattern matching as well. Like VCs do, but we do it in a very different context. But we have established over the last 20, 25 years, certain patterns of building. Not just building data-driven software companies, but recognizing problems and matching them to, oh, that’s an instance of X that we saw earlier. So we do that. We do a lot of that and that starts to create a product strategy for us.

Tom: That’s right. People have asked what’s the strategy for Superset? It’s people, product, customers in that order, as we’re engaging in this, we’re also scanning the horizon for breakthrough co-founders who can join up, typically, as there’s you, me and one other person in the boat.

Vivek: Correct.

Tom: So we’re trying to stand up a small team with a product oriented co-founder, who in this case, comes from the domain. We’re starting to formulate hypotheses and this is different from what other groups do. Some other venture studios, let’s note this, will start with a more outside in premise. For example, in a consumer driven context. How are women approaching matters of beauty and how do they buy their beauty products? Let’s go examine that and work backwards into a potential solution. That’s not what we do.

Vivek: That’s our approach. I think it’s largely because of the space in which we’re operating. You mentioned consumer. It’s possible for, these days especially, for people to get feedback on whether a direct to consumer product is going to work or not. You can stand up a landing page and buy some advertising on Facebook, Instagram, TikTok, et cetera. And then see what interest you get from people for the product that you are trying to build. We unfortunately, can’t take that approach because we’re operating primarily in the B2B space, and it’s more involved and we have to seek out these people who could become potential adopters and advisors and customers for us, which is where the interviews and the conversations that we do with the industry come in.

Tom: Now, to that earlier point you made about curiosity and question asking, and let’s use the pharma as an example. We came into this and there is a data management thesis that took hold of us fairly early. It was really quite similar to what we did at Krux, our prior project.

Vivek: Yes.

Tom: It was interesting, because I especially, you probably got there a lot quicker than I got there because that’s just what happens every day. But it took me a while to recognize, because it looked so similar to Krux. And I said, “Nah, nah. It can’t be that easy. There’s got to be another thing here going on. We can’t get stuck smoking our own stash here and just seeing what we want to see. It’s got to be harder than that.” So it was powerful for us to go through that process and realize, as Snoop Dogg says, “YXY.” It’s the structure of the product is going to be quite a lot like Krux. It’s not going to be a perfect copy, but the scaffolding is the same.

Vivek: At Krux, we used to say data in, data out, something in the middle. The simplest way of explaining what a DMP did, we found that there was a very similar pattern over here, especially when we were exploring clinical trials and pharma. That’s something that we do. What more do we do, Tom? We’ve done that, but then now, the nitty gritty of company building, how do we multiply value?

Tom: Well, okay. So we have a product theses, we start to build prototypes and actual working software that we’re pedaling now to pioneering customers, that we smoked out of the bush, through friends, our network, all kinds of interesting means. Many of these, by the way, in early stage formation, I see a lot of companies breaking their pick on trying to get nickels, every nickel off the table with these early customers. We want to co-innovate with these early partners. Of course, money needs to change hands. By the way, we’ve had deals where there’s…

Vivek: Where money hasn’t changed hands.

Tom: … $0 license.

Vivek: Yes.

Tom: The main thing is to get early customers who are going to help you fire test and build the product. They’re going to be tolerant and flexible. We’ve also seen a number of people who say, “I’m a pioneer. Get me in there.” We’ve also, no, you should not be in, you’re not a pioneer. You’re the middle majority. You’re comfortable adopting later. So we have to find those early customers. And it’s just maniacal focus with a small, early team of how many developers?

Vivek: Anywhere from three to seven, I think, depending on the breadth of our stage one product and how quickly we want to bring it into market.

Tom: And really ideal, the Jeff Bezos line, feed them with a single pizza.

Vivek: Correct.

Tom: So that’s effectively what we’re doing in this early stage. We start to get proof points. You have a single customer. By the way, let’s also pause for a moment, because we do talk to a lot of people who, and we congratulate them. They’ve taken a company from whatever, 10 to 40 or 10 to 50 in the parlance of the VCs. Zero to a customer.

Vivek: Zero one.

Tom: Zero to three customers. That’s just another thing and it’s really hard. I see a lot of people poo-pooing it. Oh, that’s adorable. You got a couple of early customers. No man, get up in here and close a single customer. When you have nothing, it’s a big leap.

Vivek: I think people underestimate how hard that is. And they also underestimate the people who are closing these deals, these early first customer, second customer deals, are the founders.

Tom: That’s right.

Vivek: There’s no salesperson whom you can hire, who will close these early deals for you. Founders, especially tech founders, are not natural born salesmen. It’s difficult. That’s why it’s even more difficult to go from zero to one or zero to three.

Tom: Have you had some sales training along the way?

Vivek: I have had zero sales training.

Tom: Okay. I’ve had zero sales training too. Have you seen Ferris Bueller’s Day Off, where Ferris Bueller playing the clarinet? Remember that scene, where he’s playing the clarinet honking away? And then he proudly turns to the camera and said, “Never had a single lesson.”

Vivek: Yeah.

Tom: That’s us. But guess what, and this is important as well.

Vivek: You’ve sold some software.

Tom: Sold a lot of software, because it doesn’t feel like selling.

Vivek: That’s right.

Tom: I’m just so passionate about this thing, and I now know a good amount about it. Let me explain to you how this is transformative.

Vivek: We were talking about this with someone the other day. You were talking about someone and this came up and we said, “Look, if you just talk about what you’re doing passionately, then the sale just happens.”

Tom: You have to be an organized thinker. We’ve gotten better at it. There’s ways to structure the conversation as opposed to just hurtling in like a over eager puppy.

Vivek: Sure.

A Message from Our Sponsor

Tom: Asking lots of questions by the way, is also key. Before we move on to what’s in it for our investors, should we take a little moment for our totally unpaid for a promotion? We haven’t done one of those.

Vivek: You want to do that, huh?

Tom: Yeah.

Vivek: So what’s the one product Tom, in these last two, two and a half years, that you’ve been using a lot of?

Tom: Okay. But here, see it’s hand sanitizer. But let me tell you something, and you were there for it.

Vivek: Here we go.

Tom: 20 years ago, you remember our first company and I think, well, of course you remember the company, but you probably also remember that I was always running around with some kind of flu.

Vivek: Yes.

Tom: And it took me a while. First, my kids were younger at that age, so they’re little Petri dishes bringing home bugs all the time, but I’m also shaking a lot of hands in the context of sales. And so I had the bright idea, I think I’m just getting sick from shaking everyone’s hand and then capturing all those bugs. So I started to get some hand sanitizer on my desk and other employees used to tease me like, okay, that’s crazy. Who is this guy using hand sanitizer 20 years? Nobody did that. And I started to put hand sanitizer in my cars and I started to use it regularly. So this is not a recent development. I’ve been doing hand sanitizers…

Vivek: For you, yes. It’s not a recent development.

Tom: … For a long time.

Vivek: That’s right. That’s right. Did you ever have any embarrassing moments where you shook hands with someone and then suddenly you’re…

Tom: No, no, no. Like Trump, right? Apparently, he’ll shake your hand and then somebody here on the side. No, I’ve never done that. Okay. But I do have, I don’t have it here, but I have a little form fact tiny little form factor, hand sanitizer in my pocket that I can pull out at any time. What’s the winning brand?

Vivek: Purell. You just told me. Purell.

Tom: Purell is the winning brand.

Vivek: That’s right.

Tom: Now, here’s one of the things that vexes me. There’s been so much bad hand sanitizer produced in the last two and a half years. It’s very alcoholy.

Vivek: Liquidy.

Tom: Yeah. It sticks like a sheen on your hands or whatever. I hate that. People…

Vivek: Use Purell.

Tom: Purell.

Vivek:

Use Purell. There you go.

What’s In It for LPs

Tom: There’s no substitute. Okay. Thou sendeth our totally unpaid for promotion. Should we talk about what’s in it for our investors?

Vivek: Yeah. So, as we talk about this, it leads me to think, we’re not a VC, we’re doing something unique and different. So is this what? Is this another asset class then? Where does this end?

Tom: Let’s come back to where we left off. If you are investing in Superset, this is a direct caffeine shot to a from scratch pharma company, the example we’re using. Very, very different from what most LPs, Limited Partners, the guys with the money who put their money into venture capital funds. So, at first glance, you’d look at that and say, it seems quite different. The astute investors and the ones that we have are like, “Okay, I’ve made venture capital investments. This is not that.” What propels them into an investment with Superset, and I’ve seen this, is a little bit of frustration, because they’ve told me. A little bit of frustration as to whether or not the VCs are actually really earning their keep. The 2%, especially on a big fund, turns into a lot of money. So it starts to feel, in some cases for LPs investing in less successful VCs, feels like a tax. So they want to get closer to the action.

Tom: We had an investor at Krux, who was a large sovereign wealth fund, and they insisted on putting money into the company. I always found that strange. And I finally asked them, “Why are you doing this?” I mean, these are I don’t know, $180 billion sovereign wealth fund. $2 million or whatever it was, in our, like why would you do that? They explained to me that it was the learning benefit.

Vivek: Access. The direct access.

Tom: The access. It was just $2 million is a drop in the bucket for an $180 billion fund. But they felt like the learning benefits that they get from that small investment. And so maybe there’s a piece of that at work here, but that was whatever, 10 years ago. What else has changed in the intervening 10 years, as we see Tiger, Coatue and all these guys piling in money? These rounds that are happening now in an afternoon with no diligence. Maybe a subject for another podcast. But the point of the matter is that a huge amount of capital from people who used to just stay put at later stage, is now coming into early stage. That puts a little bit of a squeeze on conventional VCs.

Vivek: Yes.

Tom: Because guess what? Their money is green too.

Vivek: Because it’s just the value add they have, is ostensibly, just advice and critique.

Tom: Right. The really good ones with great brands and established franchises are going to keep kachunking along.

Vivek: Yes.

Tom: But there is this delicate squeeze…

Vivek: In the middle.

Tom: And we’re not going to get too precious about it. But what we’re seeing so far is that, that does heighten people’s interest in early stage, because this thing that we’re talking about feels quite different.

Vivek: And people have told me. Friends who are LPs in other funds, et cetera, they have told me that they would like to get access. Our model is appealing to them because it’s a way for them to get access at formation. And in the seed stage rounds, which are more valuable than when they get in at series B or C.

Tom: So let’s unpack that. And we’ll talk about it in the context of Superset. You and I aren’t just investing other people’s money.

Vivek: Correct.

Tom: We have a lot of our personal…

Vivek: Capital.

Tom: … Sweat and capital in Superset. So the alignment that we have with our LPs is perfect.

Vivek: Perfect.

Tom: To your point about the returns, we’re also engineering their portfolio. We’re not trying to caffeinate these rounds at outlandish prices, we too want to see a nice, steady up and to the right journey. So for our LPs, and I don’t really know how the other studios do it. But at least for our LPs, we’re perfectly aligned because of the structure of our fund and the way that we build these companies, we’re perfectly aligned with our LPs. That generates very attractive returns from scratch. Because to your earlier point, if you’re in early and then you take that long ride, the returns can be outlandishly huge.

Vivek: So I think that’s another way in which we’re different. And perhaps, who knows, this might turn into, as we’ve been discussing, its own, perhaps it’s ambitious, but its own asset class down the road.

Tom: Well, I’m going to put a stake in the ground on that one.

Vivek: All right. Here we go.

Tom: Because I think, look, there once was upon a time where PE didn’t exist. And a few pioneers, I guess Henry Kravis and others, I wasn’t there so I just read the story secondhand. But PE didn’t exist. And then a small new police of people started to do it. Fast forward 40 years later, we all know what private equity is about. I pause it that we’re at a similar juncture now for venture studios. I’m not saying it’s going to happen in a year. But 10 to 20 years from now, I think formation, venture studio, whatever you want to call it. Let’s not worry about the names. Formation is going to be a thing in the same way that PE became a thing.

The Studio Co-Founder

Vivek: In fact, even in the same way that venture capital became a thing, because it wasn’t that long ago that venture capital didn’t exist. So let’s examine one more topic. We’ll examine the topic of where our ideas come from in a separate episode, but who do we work with, Tom? What kind of people are we looking for?

Tom: Well, we touched on it briefly. Where we start with at the very, very beginning, we’re looking for a product minded co-founder. You want to dimensionalize their personality traits and the things that matter. I would say, we want somebody who can show up and is resilient. They can do take a punch. This is what we call grit. Because this company building stuff from scratch is not for the meek of spirit. You’ve got to be able to bend and flex and revise. You’re going to be told no dozens of times by customers you’re trying to get in the boat. But you have to be fierce in the face of that.

Vivek: You do have to be fierce, but you also have to be humble to recognize that you don’t have all the answers. So you have to almost be shameless in your approach to asking people for help and saying, “I don’t know this. Can you help me understand this?” That humility has to be there, but it has to be accompanied with fierce resolve.

Tom: See, and that’s that dance. That’s that tension. Because it sounds like we’re talking out of both sides of our mouths, and we are. Because you need to have somebody who is Socratic in the way they just look at this broad picture and say, “Oh my gosh, what do I know?” You must know something. Let me try to create the intellectual process that captures what you know, such that we can integrate it into our big learning organism and do the right thing. We’ve seen a lot of people, who show up with a very high certainty to knowledge ratio. They take strong positions and dammit, this is it. And they don’t course correct, and it never works.

Vivek: It never works.

Tom: It never works. So you have to have somebody who’s humble in the way that you describe. They have to be very organized thinkers.

Vivek: In their thinking.

Tom: Let’s dwell on that for a minute, because I’ve seen a big shift in Silicon Valley in the last 20 years. 20 plus years ago, I think there was a premium placed on hackers. And in the last five to 10 years, especially, everyone’s talking about product. I want a product guy. And there’s a very well understood distinction between a great engineering leader and a product guy. How do you think about that?

Vivek: I think the ability to put things in places, categorize things, name things. Oh, my flux capacitor is called Fu and it gets these inputs and these outputs. The ability to describe how things work in a way that’s accessible, I think has taken on significantly more importance than the technical wizardry that goes on under the covers in the last five to 10 years.

Tom: I’ve said to friends, if I had lived in a different time, it would’ve been amazing if I could have been one of Darwin’s understudies. I wouldn’t be smart and come up with evolution like Darwin, but I would be a very enthusiastic understudy who was saying, “No, no, no, no, no. That’s a duck. That’s a flat billed platypus.” Things in their places is just so core.

Vivek: You do irritate people sometimes.

Tom: I know it. I know it.

Vivek: You’re just pushing people like, “Well, let’s thingify this.”

Tom: To thingify it. Got to name it.

Vivek: Got to name it.

Tom: So we can refer to it later.

Vivek: And sometimes we just come up with kooky names because we can’t name the thing in the moment as well.

Tom: That’s right.

Vivek: So we just call it baba ganoush sometimes.

Tom: Stupid names, but at least we can map our brains back to the thing…

Vivek: Back-to-back.

Tom: … If you call it baba ganoush. Clock speed.

Vivek: I think…

Tom: You change your mind a lot on this one.

Vivek: As we just said.

Tom: I think you change your mind too much on this one actually. Tell us what about clock speed? What do we mean by clock speed? When does it matter?

Vivek: I think there is a certain amount of ability that you need to have in order to process new information that is being thrown at you. Because when you’re collaborating with multiple people, everybody has different ways or different speeds at which their brains work and their thought processes work. So sometimes, one person will reach an endpoint much faster than the other person. So you have to be able to keep up, but it works both ways. The person who’s reached there first, also needs to, and this is where the organized thinking comes in. The person who’s reached there first, also needs to be able to bring other people along, because these roles get reversed quite a lot. So that’s what I think we mean by clock speed.

Tom: That’s right. That’s right. Now, let’s wrap that up with the boat. The reason we dwell on that is because you can’t decouple these qualities, these traits in the people we want to work with from the formation task itself.

Vivek: Yes.

Tom: These are the core must have capabilities.

Vivek: According to us.

Tom: In our view.

Vivek: In our view, in our model, according to us.

Tom: It’s like princess… Unless we’re wrong.

Vivek: And we’re never wrong.

Tom: And we’re never wrong.

Vivek: That’s right.

Tom: Okay.

Conclusion

Vivek: All right. So can you wrap this episode up Tom, with above? What did we talk about?

Tom: Well, we talked about difference between VC and venture studio slash formation. We talked about how we approach it in our shop.

Vivek: Craftsmanship versus critique.

Tom: We talked about the what’s in it for LPs, and the kinds of capabilities we’re looking for in those early product co-founders. Hopefully this helps give people a sharper sense as to what’s going on. It’s a little mystifying for many.

Vivek: What is the studio doing? What do you do?

Tom: What the hell are you guys doing? So that’s a quick flyover picture and it’s all consistent of course, with our broader vision to advance entrepreneurship across the planet. We do believe that it is a learnable craft. Now, this is where we get a little neater. That’s not to say that it’s teachable. I’m not telling you that I can diagram it all out for you. But what we’re trying to do at Superset is create the soil conditions for great entrepreneurs to come in and get the job done.

Vivek: There’s a lot of learning by osmosis, I think. There’s no class of people, oh, today we’re going to learn about this class and chapter one, whatever. We’re not doing that.

Tom: Which is why I’m so skeptical of the accelerator incubator. And a lot of people have come through our shop, like yep, I did those programs and…

Vivek: Didn’t work.

Tom: … It didn’t really get me where I needed to go. All right. Well, that’s us. That’s what venture studios and formation is all about.

Vivek: We’re going to dig deep into a lot of the topics that we’ve covered today briefly, and hoping to generate a lot of interest in this new asset class that we’ve hope we have kick started. So thank you for listening.

Tom: Welcome to season three. Go buy yourself some hand sanitizer.

Vivek: There you go.

Tom: Cheerio.

Vivek: All right.


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