Lightspeed VC Michael Mignano on Why Apple’s Threats Influenced His Determination to Promote Anchor to Spotify, Why No FOMO in Enterprise is Good (AI Apart), & What NYC Founders Must Notice

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Investing in somebody is primarily a enterprise relationship. It doesn’t imply you don’t develop a private affinity – it’s greatest whenever you do! – however creating an everlasting bond transcends the query of founder:VC dynamics and is commonly not even straight correlated with financial consequence. Our participation in Anchor (later acquired by Spotify) generated each a return and a friendship between us and the founders. Particularly I’ve had the prospect to spend significant time over time with Michael Mignano as he went from startup CEO to Government/Angel Investor and now VC Associate at Lightspeed. Our conversations are at all times pleasant, spanning tech, parenting and tradition, so I made a decision to ask him 5 Questions right here.

I can vouch for his real optimism

Hunter Stroll: You started working with a lot of completely different VCs in your cap desk for Anchor. Who was one of the best one and why was it Homebrew? Critically although, have been there belongings you noticed as a founder – or an angel investor in different individuals’s corporations – that knowledgeable your individual method to enterprise now?

Michael Mignano: All through my time constructing Anchor, I met and pitched many, many VCs. And I feel in the event you have been to take a look at all of these interactions and rating them on high quality of the “person expertise”, the bulk (however not all) would in all probability qualify as poor UX. I don’t suppose this may shock anybody. On the flipside, there have been completely a lot of buyers I met with, together with those with whom we ended up working very intently, which have been phenomenal!

Paradoxically (or maybe not), I imagine the qualities of these buyers overlap fairly a bit with the qualities of nice founders: pace, conviction, authenticity, respect and directness in communication, readability of thought, human connection, empathy. And so these are the buyers I’ve tried to emulate. In fact, I don’t at all times get it proper, however I’m attempting. I’ve principally tried to take my “founder mind” and simply flip the purpose to investing and serving to, not constructing an organization. 

Once more, I get it improper typically and now, being on the opposite aspect, I see how excessive quantity this job could be at instances. And so I do have a little bit of empathy for the buyers whom I thought-about “unhealthy UX” again then. On the identical time, like most issues in life, in the event you put in a bit of effort and also you persist with your ideas, I feel it’s completely potential to make it possible for when founders stroll away from their interactions with you – whether or not you lean in or go – that they’ve feeling about how they have been handled. In order that’s what I’m attempting to do.

HW: As your begin date was approaching you requested me whether or not I assumed it was a optimistic or detrimental to start a enterprise profession throughout a downturn. Do you keep in mind what I instructed you? Was I proper? [note, for a variety of reasons I told Mike that I thought it was a positive for him]

MM: I used to be very excited by your recommendation on this subject. As a startup founder, you get into this default mode of shifting actually quick on a regular basis and making fast choices. And that was positively who I used to be through the Anchor days. However then, after spending a couple of years at Spotify, I grew to understand the extra considerate, strategic method embedded into the tradition of that firm. 

My boss, Gustav Soderstrom (Spotify’s President and CPO) at all times used to say, “speak is affordable, so we should always speak quite a bit.” What he meant was that it was far costlier to maneuver too quick, make a mistake, and spend months constructing the improper factor. So as an alternative, we should always spend the time to suppose, speak, and align as a staff earlier than kicking off one thing critically necessary for the corporate. I hoped your recommendation can be proper as a result of it will imply that my companions and I’d get to suppose strategically and never simply be in “react mode” always. 

To reply your query: you have been principally proper. I used to be angel investing quite a bit through the FOMO period and it was simply insane; it doesn’t really feel like that anymore. Nevertheless, I feel neither of us had any concept that a couple of months later, AI would explode in the way in which it has.

HW: So I’ve this concept about one contributing issue to why you bought Anchor to Spotify whenever you did. To be clear, I perceive and imagine it was an excellent determination – you bought to proceed the mission at an business chief with excellent deal phrases relative to what may have occurred given the market normally and podcasting economics particularly. On the identical time I do are likely to suppose individuals probably overestimate the challenges of issues they haven’t executed earlier than whereas feeling completely assured taking part in to their strengths.

Pre-revenue when Anchor was “simply” a product firm you have been all sensible iterators and relentless explorers. When Anchor wanted to change into a enterprise was whenever you bought. And my armchair psychology was since you and Nir had not beforehand constructed an advert/sponsorship/commerce enterprise at scale the danger in getting it proper appeared very excessive. Whereas if say certainly one of you got here from AdSense at Google, you might need been like, yeah that is powerful however I’ve executed it as soon as already, let’s position. Am I directionally proper or am I projecting my very own points?

MM: The danger of getting the advert platform proper was not our chief concern; we have been involved about different dangers, one particularly which I’ll contact on beneath. Nevertheless, along with the dangers, there have been additionally simply so many positives about teaming up with Spotify. That mixture made it a no brainer for us. Right here have been the primary contributing elements:

1. Nobody was poised to put money into (and win) podcasting like Spotify. Apple had made it clear to us by means of many prior conversations that they have been by no means going to take the medium that significantly (past yearly incremental updates to the Apple Podcasts app). And different platforms’ methods appeared directionally pointed at unique content material, not constructing platforms. Spotify’s plan was a lot larger than that. It was extra alongside the strains of “win podcasting by any means mandatory, together with each content material *and* platform methods.” Anchor’s mission was to democratize audio. We felt that to try this, we would have liked to each allow everybody on the planet to make a podcast whereas additionally innovating on the precise consumption format. There was no query that Spotify was our greatest probability to try this, much more than staying impartial. We had all of the creators, they’d all of the listeners. It was a match made in podcast heaven. 

2. Whereas there was a minor concern concerning the advertisements danger (per your query), we felt there was extra significant platform danger to the way forward for the Anchor product providing. Extra particularly: whereas we believed Spotify to have higher upside, Apple Podcasts was the clear dominant listening platform on the time, and we relied on distributing to each platforms to ship worth to our creators. Nevertheless, Apple had repeatedly threatened to chop off our distribution (regardless of our many makes an attempt to associate with them), and their threats had grown extra instant and credible. We felt that if Apple reduce off our distribution to Apple Podcasts, the worth of the Anchor providing can be enormously diminished. This was a a lot larger danger to the enterprise than touchdown the advert platform, and it was very a lot prime of thoughts for us once we bought.

3. Let’s face it: a chicken within the hand is value quite a bit. After we thought-about the supply by Spotify, it was clear that it will completely be a giant win for our customers, the whole Anchor staff, our buyers, my cofounder, and me.

Wanting again: whereas podcasts as a class continued to speed up after we bought (probably a results of Spotify and their aggressive investments) and at instances I questioned if we bought too early, I’m now assured that the choice to promote was the precise one. There have been few podcast acquisitions after that eclipsed the worth of ours, and people who did have been solely incrementally extra helpful. And it now appears the podcast startup market has peaked, with a really unsure future shifting ahead. On account of all of the acquisitions, corporations like Spotify achieved their purpose. May Anchor have surpassed the whole podcast business if we had stayed impartial? Who is aware of, however I’ve no regrets about the place issues landed.

HW: As a former CEO, whenever you again founders, how do you navigate an impulse to think about how *you* would construct the corporate versus understanding what and the way they need to construct? When the 2 don’t match up – completely different visions – is that one thing you simply maintain quiet on?

MM: Proper once I began at Lightspeed, a really good and well-known investor appropriately warned me of this impulse. I didn’t actually perceive it at first. However a short while later, I discovered myself engaged on a deal and rapidly speaking myself into why the corporate would make an excellent guess as a result of the trail ahead for the corporate was so apparent to me. However once I actually zoomed out and dug in with the corporate, I spotted they’d a totally completely different imaginative and prescient for the trail forward. The investor’s recommendation got here ringing again. Since then, I’ve labored very onerous to make it possible for once I’m chatting with potential corporations, the dialog (and determination) is concentrated on how they need to construct the corporate, not how I or anybody else thinks it may or must be executed. I’ve discovered that this each results in 1) higher choices and a pair of) higher working relationships with founders and groups.

HW: As one of many faces for the NYC tech scene – exited founder, then angel, now VC – the place do of us outdoors of the native community underestimate town’s startup potential and what’s one piece of ‘powerful love’ you’d give founders in NYC about how the neighborhood must proceed creating to make even larger impacts?

MM: After we have been constructing Anchor, we had a couple of VCs ask us if we’d transfer the corporate to Silicon Valley in reference to their dedication to speculate. Whereas we by no means truly thought-about doing it, I discovered to grasp why they have been asking, and believed that it truly had advantage: the focus of engineering expertise in SV is in contrast to wherever else on this planet, making it a lot, a lot simpler to rent for PDE roles, particularly engineering. It’s a real aggressive benefit, particularly in opposition to corporations elsewhere on this planet. However all through the Anchor journey, I got here to imagine that NYC is additionally a really particular place to construct an organization. 

What it lacks when it comes to quantity of prime tier engineers, it makes up for in range of considering, lived expertise, and focus of different professions. For those who’re constructing a fintech startup, you’re close to the monetary epicenter of the world. For those who’re constructing a media firm, you’re close to tv, information, music, and movie. There are such a lot of different examples. And likewise, there’s a fierce camaraderie baked into the DNA of town. NYC is an superior place to reside and work, however it’s additionally a troublesome place; in consequence, individuals band collectively and need to assist one another. I’ve observed this time and time once more and I imagine it to be a real benefit to constructing an organization in NYC.

As for powerful love: like different cities, these of us who’re in and round NYC have gotten very comfy with working remotely, myself included. And whereas I’m a giant fan of distributed work, I additionally suppose it’s time for startups to get again to working collectively IRL. There’s nothing just like the power you’re feeling when constructing a startup with everybody in the identical room. But in addition, there’s nothing like going by means of essentially the most adolescence of your profession within the metropolis that by no means sleeps. Past the tradition that will get constructed in your staff throughout lunches, pleased hours, and meetups, the individuals you may meet and bond with on this metropolis by no means ceases to amaze me. It really feels as if anybody can accomplish something in New York Metropolis. However in the event you’re not truly spending time with individuals nose to nose, you’re lacking out on arguably the largest profit town has to supply.

Thanks Mike! You possibly can comply with his writing and every thing else right here.

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