Season 1 Episode 3
December 11, 2019

[Step by Step] How and When Do I Raise Venture Capital?

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Welcome to Step by Step, a 5-part series from Future Commerce to help walk you through how to launch and grow a successful business. This season, we're talking about funding. Today is episode 3. Robin Li joins Phillip & Brian, Principal at GGV Capital, to talk about discuss the process of raising venture capital and an initiative called Evolving E.

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Show Notes:

Main Takeaways:

  • Robin Li from GGV Capital joins Phillip and Brian in the third episode of Future Commerce's Step by Step.
  • New York is becoming a hotspot for DNVB and retail portfolio companies, and GGV is leading the charge
  • "Founders have to have their own vision and you as a Venture Capital partner are there to help them execute and make things happen."
  • Is Shopify the new Main Street?
  • Robin has some pretty amazing advice for brands who are thinking about finding a venture partner

Introductions And Career Changes: Meet Robin Li From GGV:

  • Fun fact: Robin actually started her career out as a special education teacher with Teach For America before going to business school.
  • Then while interning at Qiming, one of the top venture capital firms in China, Robin met Hans Tung, who happens to be one of the most prominent VC's in the world, with a spot of Forbes's Midas List.
  • This led Robin to learn everything she could about venture capital in both the United States and China, as she spent that entire summer stationed in Bejing.
  • Robin stayed in venture while being back in business school, leading her to work at Flextronics for the last quarter of business school before ultimately returning back to GGV, where she has worked for the last five year years.
  • Robin was originally located in Silicon Valley, which was the heart of venture capital for a long time, but is now in New York (since last year) because New York has become the center for DNVB brands and retail portfolio companies.

New York's Ecosystem is Changing: GGV is Leading The Charge:

  • New York has long been associated with industries like finance and real estate, mostly massive legacy brands, but according to Robin, this is all beginning to change, and New York is being rebranded as a hub for retail, entrepreneurship and tech companies.
  • In fact, just a few years ago, GGV only had three or four portfolio companies in New York, and now, that number is over thirty.
  • These companies include fitness brand Peloton, lingerie, and lifestyle brand Lively, and GGV's portfolio companies in New York and everywhere span multiple industries.
  • Brian says that while New York has always been a bit of a retail hub, GGV has become very invested in DNVB's, or "new retail".
  • Robin says that retail, especially in e-commerce are massive categories right now, and those tend to be very big in New York, especially because social media, and the talent to power it is very big in New York.

Eevolving E: The Bridge Young Brands Need to Move Forward:

  • One of Robin's ways of helping brands and entrepreneurs is an initiative called Evolving E (Evolving E-commerce) that she founded Ryan Darnell who is the managing partner at Max Ventures, as a way to connect all the moving parts in entrepreneurship, and the entire thing started as a meetup.
  • Evolving E has since expanded and has become a bridge for entrepreneurs and young brands in multiple aspects of e-commerce.
  • Now, Evolving E hosts multiple online and offline series, masterclasses, and events, like the recent summit Evolving E held that is in it's fourth year.
  • An example of a recent masterclass: Recently Evolving E did a masterclass on TikTok which is one of the fastest-growing social media platforms, and this can really help younger brands with in-house marketing that don't have access to the massive marketing largesse that legacy brands do.
  • Evolving E has morphed into a massive community consisting of everyone in the e-commerce ecosystem.

Marketplaces Are Changing: Serendipity Can Now Be Found Online:

  • One topic that Phillip points out that has been discussed on Future Commerce is the idea that malls are dying off and that the old idea of the marketplace is dying.
  • But new marketplaces are forming, especially in some of GGV's own portfolio companies like Poshmark, and StockX, both companies which host internal communities as well.
  • And speaking of marketplaces, we are seeing a reemergence of neighborhood-esque shops, both online and in-store thanks to platforms like Shopify.
  • Brian wonders if Shopify has become the new Mainstreet?

Landing on Venture Capital: Aligning With Portfolio Founders:

  • Who are the founders that GGV as a firm are looking to work with?
  • "In many ways, we are the believers behind the believers, we  are looking for globally-minded founders who are looking to change the world"

Brands mentioned in this episode:

Poshmark

eBay

StockX

Lively

Amazon

Peloton

As always: We want to hear what our listeners think! Are you at the stage where your brand is looking to partner with a venture capital firm? What are you looking to gain from building a relationship with a venture partner?

Have any questions or comments about the show? You can reach out to us at info@futurecommerce.fm or any of our social channels, we love hearing from our listeners!

Phillip: [00:00:01] Welcome back to Step by Step, a five part series from Future Commerce. In this series, we walk you through all the things that you need to know to launch and to grow a successful retail business. In Step by Step Season 1, we are talking about funding. And if you're jumping in midway through, I suggest that you go back and listen from the very beginning. This is episode three of a five part series. Brian, who's on the show today?

Brian: [00:00:24] Today we have Robin Li from GGV. Robin is quite the connector in retail. She puts on an interesting initiative called Evolving E, which we'll hear more about and is just a true connector among the retail funders and founders and in this industry. Very excited to have her on and hear her insight into the subject today.

Phillip: [00:00:43] Really excited to learn more about what venture capital is. So why don't you sit back and relax, grab something nice and cold to drink and settle in as we learn more about venture capital from Robin Li.

Robin: [00:00:56] Hi, I'm Robin Li. I am a principal at GGV Capital. I am actually from Hong Kong. I grew up there. But I spent most of my childhood after we immigrated to the US and so grew up in New York and New Jersey for most of my life. And now I kind of stumbled into venture and have been in venture for the last five, six years.

Brian: [00:01:19] How do you stumble in the venture? What does that mean? {laughter}

Robin: [00:01:24] Yeah, actually, I have a very different path, I think. Maybe somewhat unique. Before I was in VC, I was actually an educator, so I spent three years in Teach for America. I taught special education at a middle school. I taught all subjects and really loved it. I actually ended up going to business school without, you know, 100% clear vision of what I was going to do afterwords. Perhaps in the nonprofit space in the education space. But I knew I wanted to do something that could make an impact on a much larger scale. And so I started volunteering right when I moved to Chicago, which is where I went business school, University of Chicago. I started volunteering in just a local Chicago community at these startup accelerators. And I really didn't know that much about startups at that time. And Teach for America actually had an entrepreneur program. And that's kind of how I started to get involved. That was in 2012 and it was really fascinating to me. And I took a chance applied to an internship at Qiming, which is a top venture capital firm in China. I did not know that at the time, but that's where I ended up meeting Hans Tung, and little did I know he was on Forbes Midas list, which is... And he's one of the top VCs in the entire world. And so I got really lucky after meeting Hans and then starting my internship, I was really fascinated with startups. I was based in Beijing for that summer and just really started studying the US market, the China market. And what's what's happening at that time and kind of my fascination continued to grow. And I ended up coming back to school, staying in venture, and I went out to Silicon Valley for the first time. I actually had never been to California, even though, you know, I kind of grew up in the US. And so I started to work in Silicon Valley. You know, at the heart of Silicon Valley up at Flextronics, which is the second largest contract manufacturer in the world behind Foxconn. And that's kind of where I worked a little bit after during my last quarter of business school. And then I came back to GGV and now it's been over five years.

Phillip: [00:03:55] And you're based in New York. We had had some conversation in this mini series about sort of the differences of approach to, you know, venture capital and approach to doing business. East Coast. West Coast. I'm curious what your mentality is of the relationship in venture between like New York and in the Valley and maybe between East Coast founders, West Coast founders. Give us a little bit of insight into that and maybe what makes you all different in the ecosystem.

Robin: [00:04:34] Yeah, I think we definitely started to prioritize New York a lot and which is why I'm based here now. So for the past, you know, four years before this... I moved to New York a year ago, but before that, I was always based in the Bay Area. And we started to invest in the New York ecosystem, starting many around like 2015, 2016. We only had maybe three portfolio companies that we invested in in New York. And now we have over thirty just a matter of a few years. And a lot of that has one, because New York as an ecosystem has started to blossom. It actually takes a lot of time. You need to have the right people. You need to have some startup exits. You need to have capital to attract a lot of people to change industries, which traditionally in New York has been always real estate, finance, kind of more legacy ecosystem.

Phillip: [00:05:35] Right.

Robin: [00:05:36] But entrepreneurship and tech is now starting to take off. And you have Google, Facebook, Amazon, etc., who have invested in many, many teams of people here, whether it's engineers, or supporting roles to build different types of product, and as people get comfortable over time, start to see exciting opportunities and we need people who have experience to kind of foster that ecosystem and not only just founders, but really growing the teams around them, and so I think timing had a lot to do with it. And we're super excited for all the consumer investments we have in New York.

Brian: [00:06:18] Yes. I was going to say New York has also traditionally been a bit of a retail hub.

Robin: [00:06:23] That is true.

Brian: [00:06:23] And you definitely, you particularly Robin, have made quite an impact in sort of the retail and branding manufacturers space. DNVB and marketplaces, sort of the new retail, if you will, as actually I think you guys call it. So, you know, New York definitely makes sense to me for that. Have you started focusing on that? How long is GGV been focused on retail and brands? Is that a part of the move to New York or is that, you know, the move to New York because you've always been investing in those types of companies?

Robin: [00:07:08] I think so for GGV as a firm, we've been around for 18 years, and we have global offices. We have Silicon Valley, which is Menlo Park in San Francisco. We have Beijing, Shanghai. I'm in New York. And we also have recently opened in Singapore as an office to cover Southeast Asia, this year, actually. And I think, for every VC who's been around for decades, you invest in many, many different cycles and different verticals. Back back in the day, it might have been semiconductors. It may have been it may have been something else.

Phillip: [00:07:44] Right.

Robin: [00:07:44] But retail and consumer Internet has something that we have actively been investing in as a category mainly after Hans joined GGV, maybe about six years ago. And so we've continued to kind of grow this portfolio, one, because of mobile and the penetration of mobile and smartphones around the world. Two, like globalization has made such a big impact on global trade and commerce, which for us as a global firm like we continue to evaluate these types of trends. Three, consumer and consumption upgrade as you have US being a much more developed country. You have China developing. And so what are the lessons and takeaways that we can learn from US over there or vice versa? And so, you know, the move to New York has really been because we start to see retail as a big category. And e-commerce is a big category for us, and New York is definitely by far ahead of leading the way now in many, many aspects in the US. And digital media and social media are huge in New York as legacy industries. You actually... One of the most important, I  guess, strengths that you have to have as a brand or as a consumer company is having the go to market strategy and having marketing as a strong arm. And you have all that talent in New York.

Phillip: [00:09:13] Wow. It seems like it's the perfect ecosystem to be growing this sort of focus, especially in such a storied brand in venture capital like GGV. So we heard in a previous episode in the series, again, about sort of the foundational elements of why someone might try to seek investment from venture capital. I'm curious what your take is in the ecosystem of the type of, you know, the money that goes into the fund. Who has money in GGV? Like what is a founder? Does a founder understand what it is that they're, you know, the ecosystem that's coming to validate them? Tell us a little bit about that sort of at that foundational portion of who GGV is and what a founder might expect from them.

Robin: [00:10:06] Yeah, sure. So for GGV, we are a multi stage venture capital firm. We manage about 6.2 billion dollars, and we invest in entrepreneurs across the world. We're in many ways the believers behind the believers. We want to look for a globally minded founders that want to change the world, and so for a founder who wants to work with us, it's a long term partnership. You know, we probably work with founders for five to 10 years at a time. And so, you know, that's very important to really get to know each other. In terms of the money that's behind GGV, we have you know, our LPs, our limited partners, who are investors of the fund. And these are primarily US and European pension funds, endowments and even, for example, LACERA, which is a long term, long time, limited partner of GGV there. The Los Angeles County Employees Retirement Association. We have university endowments like Northwestern University. We have CALSTRS, which is a California State Teachers Retirement System. And so you have a lot of these big giant funds who kind of are working on behalf of everybody in the US, and they are the people who who back us. We also have an entrepreneur fund, actually, which a lot of our portfolio entrepreneurs, or even ones that we are close to, also invest in GGV themselves. And that's actually really important because, one, they actually build some relationships with our portfolio and they actually serve a lot of times as advisors or helpers to the entrepreneurs. And so we're very, very grateful to have both our mega kind of investors behind the scene. But we also have operators and entrepreneurs who are in the ecosystem around the world that invest in GGV and our portfolio companies.

Brian: [00:12:15] That's super interesting. So would you say that, you know, when you come to, let's say, an early stage startup, what kind of value... It sounds like you can bring a whole host of people beyond just money to the table and help provide them with advisory and all kinds of other, you know, helpful software or other types of value add. What would you say that, you know, your value add is across the different stages of your investments?

Robin: [00:12:47] So, especially because we're stage agnostic, right? We can do anything from seed, which is very early stage to very late stage. We can write checks as small as 100k to even, you know, 50 million dollars at a time. And so for for GGV as a team, we have a lot of experienced investors both across the world and in China and in Southeast Asia and the US, like Hans and Jenny, who can really coach entrepreneurs on scaling. We have Jeff Richards, one of the GPs at GGV. He was a two time entrepreneur himself before he became a venture capitalist. And so he shares an incredible breadth of knowledge to our founders. In a very different perspective. And so we also have venture partners. Venture partners are they tend to have operating roles before they become a venture partner. So, for example, we have Chris Barbin, who was a multi time entrepreneur and founder. He was a portfolio CEO before. We have, you know, Denise Pang, who was the COO of To Nara, one of the largest travel companies in China. So she works a lot with our founders around team building, culture, and organizational design. And we also have an in-house talent team that developed a program called Founders and Leaders. And so because we recognize that founders can start from early stage to very early stage. But we've had we've had teams that grew from twelve people to eight hundred people in just a matter of two, three years. And how do you actually teach someone how to do that? And a VC's not there every day. Right? So programs that we put together to help coach them and guide them and help build out programming that not only helps the founders themselves, but actually help their executive teams and first time managers. And so we think that that's very, very important. And we've been a lot investing a lot in founders and leaders in the past few years. And lastly, we have Evolving E, which is something that we started to put together a few years ago.

Phillip: [00:15:04] Yeah. Tell us a little more about that. I found it to be very interesting. You know, in our space, there's a lot of conversation around sort of these masterminds or master class or, you know, access to this sort of really interesting types of information or one on one. That's my take of what Evolving E might be. Give us one more detail on exactly what it is.

Robin: [00:15:25] Sure. So Evolving E stands for evolving e-commerce. It's an e-commerce tech community that I started with with my good friend, Ryan Darnell, who is another managing partner at Max Ventures in 2016 in New York. At that time, you were like, hey, let's you know, let's put together a meetup or something  or happy hour or two to get all the retail e-commerce entrepreneurs in one place and just have them share knowledge with each other. We saw this lack of... At that time Shoptalk wasn't even really even big, yet. And there wasn't really a place for people to actually share tactics. And so that kind of like snowballed into an annual summit where we have top entrepreneurs and executives in e-commerce, retail, consumer goods or even logistics or supporting players in the ecosystem come together. And now, you know, we hosted a bunch of online offline dinner series and masterclasses and gathering for the community. And so, for example, you know, we talked about these masterclasses. They are really supposed to help the startups and the community because many of the mega brands or legacy retailers like they have a plethora of agencies that work on their behalf. They have teams of hundreds of people. And young brands or, you know, our portfolio. They do a lot of this marketing advertising work in-house. They don't have partners who can tell them, like, "Hey, what channel is working best for you? What rates are you getting?" How do you actually, like, share these synergies and knowledge to other people? And so, you know, what are the goals of the masterclasses has been this. And we recently did one with TikTok. And we did one with... Yeah, it was really exciting. And just how do you use an emerging platform like TikTok, who has over 500 million users around the world to share your brand or advertise your brand? We did one last week, actually, with Gladly, which is around customer service. And so how do you leverage your customer service to become your top marketing campaign? And so a lot of this is what we've been trying to do at Evolving E, and we have our fourth annual summit coming up actually end of next month in New York City, as well. So we'll have about 400 entrepreneurs and operators and ecosystem partners come together.

Brian: [00:18:03] I love this initiative. It feel like it's really unique. This is how I actually met you. You invited me to one of your dinners at Evolving E..

Robin: [00:18:11] Yeah.

Brian: [00:18:12] And I was like, "Oh, wow, this is amazing." And we've made a lot of really amazing connections as a result of that.

Phillip: [00:18:17] Yeah. It is a community, right?

Brian: [00:18:19] It is. Yeah, it's absolutely a community. I think this is the power of someone like a GGV that they can bring together different people and communities that wouldn't necessarily come together. I think that's ne of the many powers. Obviously, there's a lot of benefits we've been talking about here. You know, money, connections, advice, community... like it sounds so good.

Phillip: [00:18:43] Yes.

Brian: [00:18:43] There's so much awesome stuff.

Phillip: [00:18:45] Sign me up.

Brian: [00:18:48] Sign me up, right? But as we talk about all these benefits, you know, there's a lot that goes into making decisions to get funded. You know, there's also a lot of money out there right now. We were talking to Jamie and Jordan earlier in the series.

Robin: [00:19:01] Oh yeah.

Brian: [00:19:01] And it seems like right now, if you're a retailer, this is your best shot at having someone come along and provide you with...

Phillip: [00:19:11] Access to capital.

Brian: [00:19:12] ...money to accelerate your business. Yeah. But with that, I feel like there's a lot of potential challenges and pitfalls that could be a part of that. Obviously, when you have someone invest in your company as a merchant, you're going to, as a merchant founder, you're going to have a certain amount of dilution that happens. And so also, you're gonna have someone that is going to have a major influence on your company. And so as merchants go get funding, do you have any advice for them? Are there any pitfalls they can watch out for? How do they find a good match?

Robin: [00:19:52] I come across this a lot. I actually tell founders all the time... We meet so many founders every day, every week... You really need to know what you want and really what you want to build, right? And having venture capital investor on your cap table or give you funding is not for everyone. There's a lot of alternative sources of capital out there. So I think one, you really need to know, like if you should raise venture money and like why and what the expectations are of a VC who works with you. There're certain types of business that shouldn't even attempt to pursue VC investment. And it would be an amazing lifestyle business, for example. And you can make a million dollars a year, at least, running your own business. Do you want to take venture money or can you go a different route? And I think, you know, you need to ask yourself a couple questions. And sometimes I ask our founders that I meet, it's like, "Can your venture become one hundred million dollar business at a minimum? Do you want to run a business that has a high chance of being sold or going public within the next seven years?" I think, you know, raising venture money can be a very necessary step for companies who want to spend a huge or substantial amount of money to get off the ground. But it's not always necessary. A lot of merchants on Shopify have grown their businesses to 70 million dollars, hundred million dollars, at least. And have never taken a single dime from a venture capital firm. And so I think VCs always in the news. But it is not the only rule that there is that's right for you. And I think you have to be careful and be honest with yourself about what kind of company you want it to become one day. And, you know, finding the right venture partner, too, a venture firm, is really important.

Phillip: [00:21:55] Not for nothing, though, brands that are on the top of everyone's mind that I think a lot of people are interacting with these days like Peloton, and Poshmark, and StockX, I believe those are all companies in your portfolio, and they're the kind of companies that are sort of shaping the way that we interact in health and wellness and fitness, the way we acquire goods. It is changing things dramatically. So would you characterize the type of business or the type of founder and vision that you align with at GGV as being the ones that are more disruptive, that create and set trends? And if that's not part of the founders vision, that perhaps it's not a good fit?

Robin: [00:22:36] Yeah, there's actually...

Phillip: [00:22:39] Is there a better way to describe that?

Robin: [00:22:40] I think what's really interesting is we had this revelation not too long ago, and I was just reflecting a lot on companies that we invested in or haven't invested in. And one of the biggest things I learned personally was that we can't force our vision onto a founder. Like I might have... I'm looking at this one space, for example. I'm like, "Oh, my God, there's so much greenfield," right? "If only somebody can come in and just do that. If I meet a founder or maybe like I can persuade him or her to kind of continue down their path and expand here and take over all these other categories, as well." And that's something that like you can't change. You can't just like have a space you love and just find somebody who fits into that. And I think that founders have to have their own vision. And you are, as a venture capital firm and an advisor and a capital partner, you're there to help them execute and make things happen. Visions may... Certain things might change over time about it. Like Poshmark wasn't global from day one. Now they're in Canada, right? Peloton started in the US. Now they're in many countries around the world. But you have to have that type of alignment with the founder and say, "Hey, this is what I want to do, and I want this to be really big over time." And so for us, it's really important to have those discussions before we even invest. And it actually takes time. It's not like we just meet somebody, and we invest the next week. We have to build relationships with them. We've been talking to Poshmark for, you know, six months before we invested in them. With StockX, we've known them for over a year. And then we decided to become partners. And so I think getting to know each other in such a long term partnership is really, really key to having that type of alignment.

Phillip: [00:24:47] Just as a follow up there, too? Sorry, Brian. As a follow up. You mentioned Poshmark and StockX. I'm a consumer of both of those. I am your customer. I'm curious on your take as we see retail evolve, and we've seen a lot of this new retail type of investment. A lot of them happen to be in marketplaces. It used to be that we would pontificate on the show about sort of the dying of malls or what people might characterize as the boring middle. I happen to believe that it used to be you had to go to a physical place to engage in discovery and find things that you, like those moments of serendipity that wouldn't happen anywhere else other than a shopping mall. I get that from StockX today, and I get that from Poshmark today. Curious if you feel like what the types of investments that you are making are having an impact in the broader retail world. And if you're setting trends, or if you see that it's just a larger macro trend being enforced as customers have better experiences with your portfolio companies.

Robin: [00:26:10] Yeah, I think on the question about new retail or the new mall, that that's coming up a little through a marketplace. I think it's definitely there. You can go on your phone now or on your desktop and then you can window shop right in the comfort of any environment you want, any time you want. And it's all completely personalized to you. The feed. And so if you go to a mall, how many shops you actually enter when you go to a mall? Will you actually go to every single one of them? No.

Phillip: [00:26:48] Right.

Robin: [00:26:49] You tailor your own path even when you're there. And I think malls are still very important for especially the Gen Z. They go there, they socialize with their friends. You might go to the cinema, you might go to the food court, you might do some shopping. But they also do this at their own time, in their own homes, on the phone. And so a lot of these, whether it's Poshmark, for example, they're very social. Right? It's not only a feed of shops that's personalized to you. It's actually a place for people to hang out. There's actually digital shopping parties that you can participate in. You actually interact with a seller stylist who is somebody who is there to help curry and style you. Or Wish, which is one of our portfolio companies that have millions of SKUs, more than you can even find in a mall. It's a gamified and social experience. You're there. You're having fun. You're doing things that can reward you throughout the day and give you just like little shots of happiness. And I think that that's very addicting. And I also think that, you know, you start to see the shift in merchants, as well. So I think one of the things I'm so excited about with Shopify, and the likes, is that they're bringing your local shop, corner shop or small/medium sized business back. They're bringing these merchants back but in a different way, in a digital way, both online and offline. You will see DNVBs who are opening offline stores, too. And I think that, you know, now Shopify is America's third largest online retailer after Amazon and eBay. And what these merchants are doing is kind of like what they did in the past. They're sourcing goods from all around the world. They're curating them, and they're branding them. And they're actually bringing them on to these marketplaces, as well. On Poshmark you have people who create their own brands, who are influencers themselves, have a huge following of people that they style. And they curate goods, used and new goods. And so I think it's really exciting. We're in a very different place right now that's kind of in-between. But it's I've never seen it more be global than it is today. You can source and dropship from Europe into the US, from China, into the U.S. and discover things that you were not ever able to do so before when you just had a mall or main street.

Brian: [00:29:37] Wow. Wow. Actually what I think I hear you saying is Shopify is the new main street.

Phillip: [00:29:43] Brian's always looking for soundbites. I like it. {laughter} That was good.

Brian: [00:29:49] I believe Shopify just recently passed eBay and is now the second biggest.

Robin: [00:29:55] Yep.

Brian: [00:29:55] Yep. It's amazing where we're headed. I actually love that. I think this is cool, too, because I think that it's allowing merchants to get back to building relationships. Main Street of yesteryear was great at building relationships with customers because they were in their communities and they could take the time to spend building those relationships. What I love about Shopify, sort of versus Amazon in this case, is that Shopify enables one to one connection between the brand and the customers. Amazon is an amazing tool for shoppers, for sure, but those are Amazon's customers that go on there and shop. Shopify has allowed us to refocus our efforts as merchants and sellers on building relationships. How do you see the relationship between customer and brand evolving right now? And honestly, like those digital native vertical brands and marketplaces, like the ones we've mentioned, how do you see that shift happening right now in retail?

Robin: [00:31:01] I think there's actually a lot of generational differences, too, with that kind of factor into this. Before even smartphones... Gen Z and Millennials... we all tend to be a little bit different in certain areas. We as a demographic, Gen Z, Millennials are definitely less involved in religion nowadays. Right? They're having children a lot later in life. The community involvement that they have is not as strong as Gen X or Boomers. And a lot of it is due to the reason that like people move around a lot. Like, how many cities have you lived in versus how many cities have your parents or your grandparents lived in? And how many people have you touched in your life, especially digitally? I think people are more curious on discovering things around the world, discovering experiences or starting to travel more around the world. And so not only do you have higher tolerance of others, but you actually are more curious and want to explore, whether it's the type of goods in food, or apparel, or accessories from around the world. And so I think that these marketplaces are just kind of like the crux of that. There's marketplaces for goods. There's marketplaces for experiences. And I think it's such an interesting trend that we've been betting on in each of these silos and even John Foley of Peloton will say that a lot of the people who engage with these marketplaces, it's not just about the goods, right? It's not just about the content. It's that relationship and that social relationship you have with that Peloton instructor that you have an emotional tie to who broadcasts out reaching not just somebody in a SoulCycle class or touches 30 people at a time or for 30 to 50 people. But you actually touch hundreds of people at any point in time, any time of the day, whether it's livestream or recorded. And so I think people want to find ways to engage with each other, not just having a solo experience. And a lot of these marketplaces are not just about shopping. It's not just commerce. It's content. It's community and commerce all together in one.

Phillip: [00:33:35] So as you're looking at the trends that exist right now, I'm sure you're looking ahead to what's coming in the next few years and sort of you have to be ready. You said your relationships are 5 to 10 year timeline, so you're looking out at what might be viable in the future. So how do you evaluate that founder or the team that's in place at a potential new investment, that they're the right team to take it down the line four or five years? What are you looking for to make sure that they have what it takes to be successful?

Robin: [00:34:18] Well, before we invest in any company, you know, like I said before, we build relationships and get to know them over time. But we always interview the executive team. We always do reference checks before an investment. And I think the broader thing is, one, the founders are the key. They have to be the ones setting the vision. We don't come in, and our job is not to replace founders, replace CEOs. We're not a private equity firm that comes in and just takes everybody out and brings in all these new people. We're here to kind of support and also help the companies discuss the strategy, the trade offs, and help them grow. And we don't touch the average single day operation. And we shouldn't be. That's really something that should be left up to the founders and their team. But I think a lot of times, a couple of things that we assess is founder of Vision, but also found grit. Right now we're in a relatively good time. We haven't had a downturn for ten years now. Most of us have not been through that. A lot of founders haven't themselves. And so things might look rosy right now and sales are going up. But like, what happens if the economy changes? And how do you prepare for that? I think a lot of it is figuring out the backstory of the founder and why they really want to do what they do. And they're not just going to walk away right when something tough happens. And we'll have to be there to support, as well. And so we don't expect everybody to know how to grow a team from 0 to 100 and then 100 to 1,000, and then 1,000 to 40,000. I think we have to have alignment with the founder that, hey, we actually need to upgrade our team over time. Whether it's through coaching, whether it's through hiring people above, then letting people go who, you know, won't be there with you forever because their expertise might just be 0 to 10 or 0 to 100. And it's a very honest conversation we have, and we see our best companies being able to hire above them to help support them and execute the vision that they want to have. And that's okay.

Brian: [00:36:54] Do you have a process for evaluating whether you have the right executive team in place? How often you guys decide to replace a member of the team or even a founder?

Robin: [00:37:06] Founders maybe less rare. But, you know, we hire people all the time. When you're a seed stage company you most likely don't have a CFO around you. You might not have a chief product officer or CMO. And so at every stage of a company and every round of funding, actually when we discuss fund raising and why you need that money, it's actually a huge part of it is organizational design. We actually walk through with the founding team like, "Hey, who's on your team today? And with this funding and this strategic decision alignment that comes with this funding, who do we want to bring in?" And so we work a lot, and our talent team, works a lot with our founders on hiring the right people and finding the right people to whether it's an upgrade or actually bring into the team itself. And so I don't think there's a right formula of is this person the best person, I think to be about to be a great founder, a lot of time, you have to be a little bit crazy because you want to build something that has never been done before. Or you want to take over an incumbent or entire category. And so I think, you know, we try to help and augment as much as possible to bring support and also talent search. And even with our expert network that we have built within GGV, how to best help them design that organization.

Brian: [00:38:42] Yeah, I was just reading it a day that honestly, making good hiring decisions is actually one of the biggest factors as to whether or not a startup will succeed or fail, regardless of spend. Like it's the main job of the founder actually becomes chief hirer.

Phillip: [00:39:04] Culture. Culture officer.

Brian: [00:39:05] Yeah. Great culture officer over anything else. Like that's the number one thing is making sure you have the right people on the team. What do you think about that?

Robin: [00:39:14] Most of our founders spend over half of their time recruiting.

Phillip: [00:39:19] Wow.

Brian: [00:39:20] Wow.

Robin: [00:39:20] Constantly recruiting the best people to come into their company because they're the ones to sell the vision. And a lot of times, if it's a very early stage company, we look for, "Who did this founder actually surround themselves with? On the advisory side or even getting people to join them?" It's not easy to get somebody to want to join your company, which you're starting from scratch. You have nothing, or you're off a team of five. And how do you convince other people and tell your story to get them excited about your vision to surround you and follow you? I think, you know, that is so key for any early stage company that we look at. And then in the later stage, of course, you have to be able to do that, too. But obviously, money helps a lot, as well.

Phillip: [00:40:13] We talked a lot about early stage and sort of the early growth pains of, you know, sort of having to get organization. What is the role that GGV plays, or any firm or venture capital firm, might play in a later stage investment. And how does that differ to what we've talked about already?

Robin: [00:40:35] I think the needs of companies differ a lot from different stages, and so on a later stage, a lot of times this is about growth capital or expansion capital. It could be about, "Hey, I'm now ready to build out my supply chain in China and more sourcing," or "I want to go to market in Germany. And how do you do that?" And so I think when you're talking about later stage, it's a lot about strategizing which direction to go because time is limited and money is limited and people are limited. And so you can't just tackle everything. And so a lot of it is strategic direction and talking through that on a board level. GGV often takes board seats in the companies that we invest in. And so while we're not there to do the day to day, we're there to really talk through tradeoffs. "Hey, should I build a new manufacturing plant in Michigan, or should I do it in Texas, or should I do it in Pennsylvania?" And like, how do you walk through that with a founder and how does that impact you for two years from now? And so we tend to like walk through a lot of that with founders and because GGV is also cross-border and global it helps a lot that we have experts in in China, for example, to be able to help you with a lot of the sourcing and supply chain capabilities, for example, or partnerships.

Brian: [00:42:25] So you've built up relationships across sort of every level of the business. Is that what I'm hearing? From sourcing to manufacturing to marketing and all the way through to delivery. It sounds like you've got relationships up and down the whole supply chain.

Robin: [00:42:42] We try, and it still is something that is a work in progress. It changes all the time. And new providers come up, or new partners. Whether it's on the technology side or on the service side. So we try to maintain a lot of that, as well.

Brian: [00:43:02] So what about when you're making an exit at the end of your relationship? And actually, congratulations on the recent acquisition of Lively. That was very exciting to see.

Robin: [00:43:11] Thank you.

Brian: [00:43:12] We're big fans of Michelle Cordeiro Grant, the founder over there at Lively. We've had her on the show. And, you know, we're excited to have her back on again. And also Peloton... You've got a big IPO.

Robin: [00:43:27] Yes.

Brian: [00:43:27] A lot of exciting stuff happening at GGV right now. So but sort of in a more general sense, how involved are you in those exits and acquisitions and IPOs? Do you make the decision about when to sell? What are the indicators that you look for for when you go to IPO or when to make a sale or whatever that exit looks like?

Robin: [00:43:50] Yeah, we're definitely very involved. This is a sale of an investment impacts not only the founder and investors, but it impacts everybody in the company. And so this is a board decision. We work on the negotiations of it. We work on, "Is this the right timing for the company? Should we raise a new round, or do we want to exit now?" And a lot of it is also who is the exit partner? And so, you know, of course, on the investor side, you think about returns, you think financials. What does that look like? But more importantly, is taking care of the brand and the founder. When you exit you're kind of their long term, too. It's not like you just acquired business and the founding team and all the employees walk away. It becomes a another few years, at least, as a partnership. And so, you know, there's always tradeoffs between who to sell to, the timing of it, and like why to do it now or later. And so I think in Lively's case, it was amazing for the community. It was very well received by their customers, by the team, and obviously Michelle is super excited about it as we are, too. So I think, you know, there's not one right answer because the circumstances of every company is different. But Lively was definitely one that was doing really well. And so they had a lot of leverage, as well.

Phillip: [00:45:39] And that's really what you want, right? You're trying to scale businesses for successful exits, and doing well and having leverage in those opportunities I think is a marker of success, is it not?

Robin: [00:45:54] Yeah. For sure. And it's definitely such a great example that she was able to set for other founders and other merchants. They were a Shopify Plus partner that has been built on Shopify from day one. So, it was so exciting and encouraging for everybody else who not only Michelle built a relationship with, but everybody else who is on the platform. They're like, "Hey, you know what? That could be me one day if I wanted it to be."

Phillip: [00:46:27] Yeah. And so I guess we would close the show then, Robin. It's just been amazing. Thank you so much for your time. If there is somebody out there who says, "That could be me, I would like to do this." What is your advice for them of how to take steps to prepare themselves and their business? Is there any diligence on their side? What can they do to prepare themselves for the next steps to obtain capital for their company?

Robin: [00:46:55] I would say just make sure you do a lot of research. One thing is that all of us VCs are very accessible. Nowadays you can just find us on LinkedIn, you can find us on our website. You can message us. You can reach out to us. But I think it's really important to figure out who and why you want to reach out to them. For GGV that may be very different from another VC. How we view the world or kind of our mandate and the type of investments we do. So one of the biggest pitfalls I see is, founders reach out to us cold, maybe completely competitive to some of our portfolio companies. And we can't take that type of meeting because it's unfair to you and unfair to our portfolio. And so I think just continue to have your excitement and passion. I think it's so important because that comes across in any meeting that we have with you. And it may only be, you know, an hour to tell your story and so make that impact. And we try to do ours, as well, during that meeting.

Phillip: [00:48:05] Oh, this is great. Wow. I can't think of a better place to end it. This has been so valuable for us. And we'd love to have you come back on the show and tell us some more successful exit stories sometime, Robin.

Robin: [00:48:17] Thank you. Crossing fingers.

Phillip: [00:48:19] Yeah. Well, much appreciated.

Brian: [00:48:21] Thanks for listening to Step by Step, by Future Commerce. If you found Step by Step valuable, or if you're looking for more information about funding your retail venture, drop us a line at hello@FutureCommerce.fm. Remember, you can subscribe to Future Commerce wherever podcasts are found. And we'd like to extend a special thanks to Shopify Plus for making this series possible.

Phillip: [00:48:40] We also want you to be in the know for all the things that matter in your business. Future Commerce Insiders is our weekly deep dive into those issues and concerns that matter to you as a founder or as a digital commerce professional. This weekly newsletter touches on topics like deep fakes, the attention economy, woke washing, surveillance capitalism, and sustainability. And you can get that every Wednesday at 2:00 p.m. by subscribing at FutureCommerce.fm.

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