E79: Mike Maples on How to Return 100X+ on Seed Investments
Jul 23, 2024
auto_awesome
Mike Maples of Floodgate discusses early-stage venture investing, highlighting investments in Lyft and Twitter. He emphasizes identifying non-consensus ideas and future-fit founders, along with the value of pursuing unique business models. The podcast covers insights on building relationships with LPs, advice for new VCs, and the importance of breakthroughs in startups.
Successful startups offer unique value propositions, transcending comparisons.
Founder future fit ensures authenticity and alignment with the envisioned future.
In fundraising, leverage personal advantages and pursue non-consensus ideas for differential returns.
Deep dives
Startup Success: Embracing the Power of Radical Ideas and Founders
A successful startup transcends the comparison game by offering a unique value proposition. Startup capitalists invest in radical futures, focusing on changing the rules rather than persistently compounding value like traditional companies. The key lies in insight, harnessing inflections to empower a niche audience uniquely. By forcing a choice, not a comparison, startups like Tesla's Cybertruck redefine innovation.
The Breakthrough Sequence: Insight, Product Fit, and Growth
The startup journey follows a breakthrough sequence: first, uncover a powerful insight about the future. Next, achieve product market fit by offering something exclusive and in demand based on that insight. Finally, drive growth by rapidly dominating the defined category. This process, akin to transferring energy from insight to product and growth, propels startups into company status.
Founder Future Fit: Crafting Movements and Building Authenticity
Founder future fit emphasizes that founders are authentically matched to the future they envision, fueling their ability to attract believers and create movements. By thinking differently and acting authentically, founders spark progress towards radically different futures. The balance between authenticity, insight, and creating movements defines startup success beyond mere financial motivations.
Approaching LPs with a Shared Vision of the Future
When interacting with LPs, the speaker emphasizes the importance of not treating fundraising as a typical sales cycle. Instead, he stresses the significance of fostering a shared belief in creating a new category of funds, such as institutional seed funds. By co-creating this vision with LPs who resonate with the speaker's beliefs, a partnership based on shared values and a commitment to shaping the future together is established. This approach focuses on finding like-minded individuals who share the speaker's vision, rather than trying to convince those who do not.
Recognizing and Leveraging Personal Advantages in Fundraising
In fundraising and investing, the speaker advocates for identifying and leveraging personal advantages to achieve differential returns. Emphasizing that success stems from departing from consensus views, the speaker highlights the importance of knowing where one possesses a genuine advantage compared to the market. By focusing on areas of expertise and avoiding investments outside one's circle of competence, individuals increase their chances of outperforming the market and achieving long-term success in their endeavors.
Mike Maples, Founding Partner at Floodgate, sits down with David Weisburd to discuss Mike’s new book “Pattern Breakers: Why Some Start-Ups Change the Future”. This is a masterclass on early-stage venture investing. Mike shares his views on identifying ideas and founders that led to his early investments in Lyft, Twitter, and Okta. They also cover how Mike thinks about fundraising from LPs, his learnings from legendary LP David Swensen, and the power and importance of pursuing non-consensus ideas.
(0:00) Episode preview
(1:23) Introduction to "Pattern Breakers"
(2:22) The role of startup capitalists
(5:01) The Twitter story and insights on early-stage investing
(7:24) The importance of founder future fit
(15:33) Product market fit: deciding when to pivot vs. stay the course
(21:54) Insights empowering new business models
(27:21) Creating movements and the role of passion
(32:02) Building relationships with LPs
(37:14) Advice for new VCs raising money
(39:10) The importance of pursuing non-consensus ideas
(43:18) 10X Capital Podcast Newsletter
(43:40) Lessons from David Swensen
(47:14) Benefits of a compatible partnership
(49:06) Circle of competence and competitive advantage in VC
(51:41) How to find Mike’s new book "Pattern Breakers"
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
