Investing in someone is primarily a merchantry relationship. It doesn’t midpoint you don’t develop a personal unification – it’s weightier when you do! – but creating an rememberable bond transcends the question of founder:VC dynamics and is often not plane directly correlated with economic outcome. Our participation in Anchor (later uninventive by Spotify) generated both a return and a friendship between us and the founders. Specifically I’ve had the endangerment to spend meaningful time over the years with Michael Mignano as he went from startup CEO to Executive/Angel Investor and now VC Partner at Lightspeed. Our conversations are unchangingly enjoyable, spanning tech, parenting and culture, so I decided to ask him Five Questions here.
Hunter Walk: You got to work with a number of variegated VCs on your cap table for Anchor. Who was the weightier one and why was it Homebrew? Seriously though, were there things you saw as a founder – or an sweetie-pie investor in other people’s companies – that informed your own tideway to venture now?
Michael Mignano: Throughout my time towers Anchor, I met and pitched many, many VCs. And I think if you were to squint at all of those interactions and score them on quality of the “user experience”, the majority (but not all) would probably qualify as poor UX. I don’t think this will surprise anyone. On the flipside, there were veritably a number of investors I met with, including the ones with whom we ended up working very closely, which were phenomenal!
Ironically (or perhaps not), I believe the qualities of those investors overlap quite a bit with the qualities of unconfined founders: speed, conviction, authenticity, respect and directness in communication, clarity of thought, human connection, empathy. And so those are the investors I’ve tried to emulate. Of course, I don’t unchangingly get it right, but I’m trying. I’ve basically tried to take my “founder brain” and just flip the goal to investing and helping, not towers a company.
Again, I get it wrong sometimes and now, stuff on the other side, I see how upper volume this job can be at times. And so I do have a bit of empathy for the investors whom I considered “bad UX” when then. At the same time, like most things in life, if you put in a little effort and you stick to your principles, I think it’s totally possible to make sure that when founders walk yonder from their interactions with you – whether you lean in or pass – that they have a good feeling well-nigh how they were treated. So that’s what I’m trying to do.
HW: As your start stage was unescapable you asked me whether I thought it was a positive or negative to uncork a venture career during a downturn. Do you remember what I told you? Was I right? [note, for a variety of reasons I told Mike that I thought it was a positive for him]
MM: I was very excited by your translating on this topic. As a startup founder, you get into this default mode of moving really fast all the time and making quick decisions. And that was definitely who I was during the Anchor days. But then, without spending a few years at Spotify, I grew to fathom the increasingly thoughtful, strategic tideway embedded into the culture of that company.
My boss, Gustav Soderstrom (Spotify’s President and CPO) unchangingly used to say, “talk is cheap, so we should talk a lot.” What he meant was that it was far increasingly expensive to move too fast, make a mistake, and spend months towers the wrong thing. So instead, we should spend the time to think, talk, and uncurl as a team surpassing kicking off something critically important for the company. I was hoping your translating would be right considering it would midpoint that my partners and I would get to think strategically and not just be in “react mode” at all times.
To wordplay your question: you were mostly right. I was sweetie-pie investing a lot during the FOMO era and it was just insane; it doesn’t finger like that anymore. However, I think neither of us had any idea that a few months later, AI would explode in the way it has.
HW: So I have this theory well-nigh one contributing factor to why you sold Anchor to Spotify when you did. To be clear, I understand and believe it was a unconfined visualization – you got to protract the mission at an industry leader with very good deal terms relative to what could have happened given the market in unstipulated and podcasting economics specifically. At the same time I do tend to think people potentially overestimate the challenges of things they haven’t washed-up surpassing while feeling perfectly confident playing to their strengths.
Pre-revenue when Anchor was “just” a product visitor you were all sunny iterators and relentless explorers. When Anchor needed to wilt a merchantry was when you sold. And my shay psychology was considering you and Nir had not previously built an ad/sponsorship/commerce merchantry at scale the risk in getting it right seemed very high. Whereas if say one of you came from AdSense at Google, you might have been like, yeah this is tough but I’ve washed-up it once already, let’s role. Am I directionally right or am I projecting my own issues?
MM: The risk of getting the ad platform right was not our senior concern; we were concerned well-nigh other risks, one in particular which I’ll touch on below. However, in wing to the risks, there were moreover just so many positives well-nigh teaming up with Spotify. That combination made it a no-brainer for us. Here were the main contributing factors:
1. No one was poised to invest in (and win) podcasting like Spotify. Apple had made it well-spoken to us through many prior conversations that they were never going to take the medium that seriously (beyond yearly incremental updates to the Apple Podcasts app). And other platforms’ strategies seemed directionally pointed at sectional content, not towers platforms. Spotify’s plan was much worthier than that. It was increasingly withal the lines of “win podcasting by any ways necessary, including both content *and* platform strategies.” Anchor’s mission was to democratize audio. We felt that to do that, we needed to both enable everyone on the planet to make a podcast while moreover innovating on the very consumption format. There was no question that Spotify was our weightier endangerment to do that, plane increasingly than staying independent. We had all the creators, they had all the listeners. It was a match made in podcast heaven.
2. While there was a minor snooping well-nigh the ads risk (per your question), we felt there was increasingly meaningful platform risk to the future of the Anchor product offering. Increasingly specifically: while we believed Spotify to have greater upside, Apple Podcasts was the well-spoken dominant listening platform at the time, and we relied on distributing to both platforms to unhook value to our creators. However, Apple had repeatedly threatened to cut off our distribution (despite our many attempts to partner with them), and their threats had grown increasingly firsthand and credible. We felt that if Apple cut off our distribution to Apple Podcasts, the value of the Anchor offering would be profoundly diminished. This was a much worthier risk to the merchantry than landing the ad platform, and it was very much top of mind for us when we sold.
3. Let’s squatter it: a bird in the hand is worth a lot. When we considered the offer by Spotify, it was well-spoken that it would veritably be a big win for our users, the unshortened Anchor team, our investors, my cofounder, and me.
Looking back: while podcasts as a category unfurled to slide without we sold (likely a result of Spotify and their warlike investments) and at times I questioned if we sold too early, I’m now confident that the visualization to sell was the right one. There were few podcast acquisitions without that eclipsed the value of ours, and those that did were only incrementally increasingly valuable. And it now seems the podcast startup market has peaked, with a very uncertain future moving forward. As a result of all the acquisitions, companies like Spotify workaday their goal. Could Anchor have surpassed the unshortened podcast industry if we had stayed independent? Who knows, but I have no regrets well-nigh where things landed.
HW: As a former CEO, when you when founders, how do you navigate an impulse to imagine how *you* would build the visitor versus understanding what and how they want to build? When the two don’t match up – variegated visions – is that something you just alimony quiet on?
MM: Right when I started at Lightspeed, a very smart and well known investor correctly warned me of this impulse. I didn’t really understand it at first. But a little while later, I found myself working on a deal and quickly talking myself into why the visitor would make a unconfined bet considering the path forward for the visitor was so obvious to me. But when I really zoomed out and dug in with the company, I realized they had a completely variegated vision for the path ahead. The investor’s translating came ringing back. Since then, I’ve worked very nonflexible to make sure that when I’m speaking to prospective companies, the conversation (and decision) is focused on how they want to build the company, not how I or anyone else thinks it could or should be done. I have found that this both leads to 1) largest decisions and 2) largest working relationships with founders and teams.
HW: As one of the faces for the NYC tech scene – exited founder, then angel, now VC – where do folks outside of the local network underestimate the city’s startup potential and what’s one piece of ‘tough love’ you’d requite founders in NYC well-nigh how the polity needs to protract developing to make plane worthier impacts?
MM: When we were towers Anchor, we had a few VCs ask us if we would move the visitor to Silicon Valley in connection with their transferral to invest. While we never unquestionably considered doing it, I learned to understand why they were asking, and believed that it unquestionably had merit: the concentration of engineering talent in SV is unlike anywhere else in the world, making it much, much easier to rent for PDE roles, expressly engineering. It’s a true competitive advantage, expressly versus companies elsewhere in the world. But throughout the Anchor journey, I came to believe that NYC is also a very special place to build a company.
What it lacks in terms of volume of top tier engineers, it makes up for in diversity of thinking, lived experience, and concentration of other professions. If you’re towers a fintech startup, you’re near the financial epicenter of the world. If you’re towers a media company, you’re near television, news, music, and film. There are so many other examples. And also, there’s a fierce esprit baked into the DNA of the city. NYC is an superstitious place to live and work, but it’s moreover a tough place; as a result, people wreath together and want to help each other. I’ve noticed this time and time then and I believe it to be a true wholesomeness to towers a visitor in NYC.
As for tough love: like other cities, those of us who are in and virtually NYC have gotten very well-appointed with working remotely, myself included. And while I’m a big fan of distributed work, I moreover think it’s time for startups to get when to working together IRL. There’s nothing like the energy you finger when towers a startup with everyone in the same room. But also, there’s nothing like going through the most formative years of your career in the municipality that never sleeps. Vastitude the culture that gets built on your team during lunches, happy hours, and meetups, the people you can meet and yoke with in this municipality never ceases to stun me. It truly feels as though anyone can succeed anything in New York City. But if you’re not unquestionably spending time with people squatter to face, you’re missing out on arguably the biggest goody the municipality has to offer.
Thanks Mike! You can follow his writing and everything else here.