The Venture Capital Perspective with Kevin Spain, General Partner, Emergence Capital

About this episode

Today, Sam is talking to Kevin Spain, General Partner at Emergence Capital and they discuss Kevin's experiences as a founder and CEO during the .com crash, his time as an investor, healthy mechanisms for dealing with failure, the value of coaches, the launch of Xbox Live, and what venture capital firms look for in startups.

Kevin Spain is the founder of atMadison.com and a General Partner at Emergence Capital, a venture capital firm focused on early-stage enterprise software companies. Kevin was an early investor in some of the biggest tech companies today, including Salesforce, Box, Yammer and Zoom. He's also spent time as a corporate development executive at Microsoft and EA Games.

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Full transcript

Sam Kothari: Welcome back to the Launch Lessons Podcast, where we have honest conversations with founders and investors of successful global scale-ups to unpack key lessons along their growth journey. Today, I'm talking to Kevin Spain. Kevin is the founder of atMadison.com and a general partner at Emergence Capital. A venture capital firm focused on early-stage enterprise software companies. Kevin was an early investor in some of the biggest tech companies today, including Salesforce, Box, Yammer and Zoom. He's also spent time as a corporate development executive at Microsoft and EA games. Today, we'll be discussing Kevin's experience as a CEO and founder during the.com crash. His time as an investor, healthy mechanisms for dealing with failure, the value of coaches, the launch of Xbox live and what VC firms are looking for in a startup. All of this and more right now on the Launch Lessons Podcast.

Kevin Spain: So when I was a kid, both of my grandfathers were entrepreneurs, frankly. The two of them had a variety of businesses as they were trying to make their way. They both had come from families. One of them himself was an immigrant directly to the US. The other came from a family of immigrants. And I think back in the early part of the 20th century, and this is what a lot of immigrants and people from immigrant families did, they found their own way to start businesses to make a living. And both of my grandfathers did that, and they had a variety of different businesses over time, small businesses. Men's tailoring companies, little grocery stores, little real estate businesses, nothing that ever became anything huge, but they found a way to provide for their families.

Kevin Spain: And they did that by creating businesses themselves. And one of the things that I noticed about them was the amount of freedom that they had as a result of that. You know, by the time they were in their fifties and sixties, they had enough financial freedom to not really have to work anymore. They weren't wealthy by any means, but they had certainly made enough money to allow themselves to retire and have a comfortable retirement. And also, I just noticed that in the days when I knew that when they were working, it was just, I don't know, I felt like they were relaxed and they enjoyed what they were doing. They sort of had control of their own destiny. And I don't think I actively thought about these things at the time.

Kevin Spain: I mean, I was pretty young, but I think as I became older, there was something I came to appreciate about the path that they had taken, the freedom, and I sort of got a sense of some of the joy, the path they'd taken had given them. Even though, again, in the beginning, it was what they had to do to make a living. I think it ended up turning out really well for them. And so there was something about entrepreneurship I think that I was always fascinated by, I was sort of really attracted to in some ways. And so I had a small business when I didn't really know a whole lot when I was in college, but I sort of dabbled there. And then, when I actually got into the working world, I thought that eventually, I wanted to find my way into entrepreneurship, maybe into technology, because I'd also had a bit of an affinity for technology, but I wasn't really sure how to do it, right?

Kevin Spain: How to make that happen. And the opportunity really presented itself when I was in business school in the late '90s and had an opportunity to work out in San Francisco for the first time. And that's when my eyes really opened up to what was happening during this was during the.com boom. I worked in banking that summer like a lot of good business school students do, but then came out of that feeling like this is my chance to start a company. And so that's what I did after business school. That's what brought me back to the bay area. And ever since I have been in technology as initially a founder, co-founder, worked at larger tech companies like EA and Microsoft, and now have been at Emergence as a venture investor for almost 16 years. But I think a lot of it's to your original question, what makes me tick and what originally maybe I think got me excited about going on this path because maybe all the way back to my two grandfathers who had entrepreneurship as a core part of their career journey.

Sam Kothari: No, that's amazing. Thanks for sharing that. I think especially growing up, there's probably a lot of influence that was happening that often can be hard to recognise in that moment. It's a great story and thanks for sharing. I'm interested in atMadison.com, it's fascinating. I went on the 'Way Back Machine' and had a look at some of the old webpages and things.

Kevin Spain: I'm sorry.

Sam Kothari: No, no, it was a different world. I think UX and design was probably not a thing, but why did you feel confident to take that plunge? I think following business school, you'd been at Ford, spent a couple of years there, did well in the competition and the business school competition. I know a lot of folks coming out of business school will move into consulting or banking or take that route. What gave you the confidence to take that leap?

Kevin Spain: Well, I think at that time, and remember I graduated from business school in 1999. This was really in many ways the peak of the.com bubble. And when you're in an environment like that, even in business school, pretty much everybody wants to start a company. So those who would've otherwise maybe gone into bank or consulting, I think, we're increasingly thinking about doing something on the internet whether they were going to join a larger company in the internet space or maybe start something. So actually at the time, that wasn't super contrarian as much as it might have been in a different year. So I think part of it was maybe it was a false confidence. I'm not sure I had real confidence but false confidence that this was just the right thing to do. I think something that contributed to my belief that it was the right thing to do, instead of maybe doing something more traditional was the fact that we did win the warden business plan competition in 1999, which was as much a surprise to me as it was, I think, to anybody else.

Kevin Spain: But when you get a vote of confidence like that from people who you respect, it caused you to believe that there maybe is something there. And so, I think that was something else that contributed to it. I think it turned out interestingly that it really was a false vote of confidence. I think we did what I think a lot of business school students, at least at the time did, when they were mapping out well, how do you think about what a good idea is? You know, which you're going to start a company, how do you come up with the right idea? And we did, I think, a very business school studenty thing, right? We did a lot of book research without talking to a lot of prospective customers about what we were building.

Kevin Spain: Now, I think the ethos around this has completely shifted since then. You have a lot of writing out there that didn't exist at the time about the right way to do things like customer development out, what market it's for. We didn't do that. We used a lot of data to build a hypothesis around the company that we should build. And the original name of the company that we actually started was called was Radio Exchange. And we had this idea for creating an internet-based marketplace for the sale of remnant broadcast commercial time, initially on radio, eventually on television. And there was lots of data to support the idea. At least that was a good idea. However, once we had raised a little bit of money, and we went out there, and for the first time, we're actually talking to people about this in the industry.

Kevin Spain: We learned that it actually wasn't as good an idea as we originally thought. So that's when we pivoted to atMadison to, essentially a set of online tools that would allow small and mid-size companies to design and execute advertising campaigns. That's when we pivoted to that idea. And, unfortunately, by the time we got that up and going, the whole market was really crashing. And the customers we had, many of them started cutting marketing campaigns. And so there was less of a need for what we were building at that point and also much more challenging at that point to raise capital. So our business evaporated. The thing that got me very excited about coming out here and getting into this industry didn't work. And as it is a very common story, but I was so excited to stay in tech because of what I had experienced, less about the lows, more about the highs, that I really wanted to stay in the bay areas. So many people were leaving and found a way to continue. And here I am 20 years later.

Sam Kothari: That's incredible. And I think especially during that time, the lack of resources, the startup playbooks and guides and growth hacking and all those terminologies probably didn't exist. Right? So you're almost principle it to an extent as well. How did you get those customers? You were a financial analyst, right? Just done an MBA, like sales mapping, building a company, recruiting a team. How did you start figuring that stuff out? Probably podcasts, I'm not sure existed at the time either. Right? You're probably not jumping on and getting that input external input. So what was that process like?

Kevin Spain: You're exactly right, Sam. There was not a lot of resources available to help entrepreneurs figure out what to do in a situation like that. I am really jealous of entrepreneurs these days. There's such a wealth of knowledge of information available that wasn't available. We talked to a lot of people. I mean, that was the best that we could do. We did have some investors, some of whom I thought were knowledgeable and helpful and gave us some great advice. We ultimately did end up hiring a small team. Right? And I think we did hire some people who had know-how around sales marketing, obviously building the product. That was also a lot harder back then, right? I mean, just building a first version of a product and getting it online was not an easy task back then. It's so much easier today.

Kevin Spain: We hired people to help us do that. So we really relied on the expertise of others. Whether it was people we hired into the company, people who invested in the company, people who we had met and networked into to just ask questions. I actually think we did a pretty good job overall of finding and leveraging the insights and expertise of others. Now, we could not leverage as broad a set of expertise as you can leverage today literally in five minutes by searching Google. But that's how we went about it.

Sam Kothari: What were some of those highs? What got you hooked? You mentioned that some of those experiences, while they were obviously lows, that the highest kept you in the valley. What were those?

Kevin Spain: Yeah. I mean, look, I think a few things. There are inevitably wins along the way, right? If you get to a point where you've raised some money, you've hired some people and you've got some customers, you've got a product, right? There are wins, there are wins along the way that got you to achieve each of those milestones. And those are intoxicating, right? I mean, talking to an investor and convincing an investor that they should believe in you and your vision, and then and having them write you a check. I mean, that's exciting. Convincing other people that they should join your team, it's just me and my co-founder in the beginning and then convincing other people we were impressed by to join us and be on the journey with us.

Kevin Spain: That's always a ton of fun. Again, building the product, getting it out the door, landing customers, having them get excited and get value out of what you're building. All these things are amazing, right? Even at a small scale. Right? And we were small scale, but it speaks to something that I think is really energising for me, which is it is building things or helping to build things, right? Even today, when I'm working with founders and seeing them working alongside them, they're doing all the work, but I'm hopefully helping them a little bit on their journey, but seeing what they are able to build and being even a small part of that, that is exciting to me, even in my firm, right. We're still building a firm even though we've been around for 20 years, and it's fun for me to build a new process or figure out a new way of having us do something that actually allows us to do things better.

Kevin Spain: I get joy out of having an idea like that and then seeing that idea come to life. And so I think entrepreneurship, and when I co-founded this company, there's a lot of that every day, that's essentially what you're doing. And so that's something that I really have found that I love. And I think it was in those moments where something was being created, a new investor relationship, a new customer relationship, a new product, that I think gave me a lot of joy.

Sam Kothari: What about the flip side of that? Obviously, the company ended up shutting down, you'd hire a bunch of people, you had investor money. Talk me through that experience of the wind-up phase and what you were feeling, and how that experience maybe has influenced some of your thinking today as well.

Kevin Spain: It was a very hard experience. I think there were a lot of pieces of it that were hard. We had to let our employees go. We had to deliver bad news to our investors. Right? It's the flip side of what I was just describing. We had to tell some customers who were still using us that we were winding on the product, all those things that you so enjoyed when they were happening, when they go in the opposite direction, I think there's an equal and opposite effect on your psyche, and that's really hard. So I think that was a big piece of it. Those things were really challenging. I think another part of it, which I often think about when I'm working with founders is that a big part, I think, of a founder's identity is wrapped up in the company that they have created or that they have co-created.

Kevin Spain: And when that company does not succeed, there's a part of your identity that you're grappling with. What does that mean? Am I a failure, right? Where do I go from here? If this was a big part of my identity and that's gone, what replaces it? And in some ways that stuff was as hard as the other things'. Trying to figure out what was going to be next and what did it mean about me or for me, as I was trying to chart the course for whatever was going to be next. It was a particularly tough time also from a practical perspective because the market in tech was really starting to soften. And so, if you'd made the decision that you wanted to stay, the choices you had were going to be much more limited.

Kevin Spain: And so I had that overhang as well. What's my identity? What is it going to be? And, oh, by the way, is there anything that I'm going to be able to do, even if I decide I want to do it, given where the market is? But I persisted and found something very exciting to do next. But it was a tough time. It was a tough period to try to figure out where do you go from feeling like entrepreneurship and starting this company and helping to run this company is my life and who I am, to obviously something very different.

Sam Kothari: There are obviously some impacts at the moment in the venture space, fast to shut down. There's a few folks being laid off. Is there anything that you think that helps you get through that and transition through that narrative of really making sure that you were able to push through a very difficult time that you think could be helpful for founders or startups that are grappling with similar things?

Kevin Spain: Well, the first thing I would say is you are not the company that you created or co-created. I would say you are something different from that. And to keep that in mind, the other thing to remember, and this is almost universally true of everyone who's starting a company, there's so much of your life that is ahead of you. And so many more opportunities that will come your way that a failure does not. I'm not going to say it does matter, right? It does matter in the sense, I think you actually learn a lot from it, but it doesn't matter in the sense that it's not who you are. You are not a failure, right? There's so much in your future to be excited about. And I always encourage people to reflect on failure. What have they learned from it?

Kevin Spain: Not to have regrets about it, but to really try to capitalise on the learnings, but then very, very quickly try to toggle to, okay, where am I going? What's coming next? And I think one of the wonderful things about being in the technology industry, I used to say Silicon Valley, because so much of it was centred here, but obviously, it's really, truly global now. In the technology industry, there is just so much to be excited about, right? There's so much yet to be built. There's so many opportunities that if you're committed to being in this industry, futures is just so bright, right? Be excited about that.

Kevin Spain: And don't anchor so much on what's happened in the past, but when it's fresh, when that failure is fresh, it's very hard to think that way. And so even though a lot of the things I've shared here are obvious, I also know that in that very moment, it's hard to hear those things, and it's hard to remember them. So if I do catch someone who's in the throes of something like that, I like to offer them these things. Because again, even if they're obvious, I think it helps to hear them.

Sam Kothari: I had a restaurant business during the COVID space, and we had to let go a bunch of staff and figure out how to survive in that space. Obviously, very different to tech, but again, empathise a lot with what you're saying. It did take time, though. It was definitely a period of months before you felt like yourself again. Let's talk a little about Pogo because I think that you went from running your own startup and founding it to almost working another startup, but inside a bigger organisation with EA. So interested to understand what was that experience like working again, creating something from scratch, building again, but this time within the boundaries of a bigger organisation.

Kevin Spain: Sure. Well, I got very lucky. I got very, very lucky with this opportunity to join EA as part of the team that was building out their first foray into online gaming. When I say online gaming, I really mean casual gaming. The company had some hardcore online games like Altima online that had been around for a little while. So they've been doing some things in the online gaming space, but the vision here was very different. It was how do we build online games for ordinary people that aren't going to go invest the time and energy in playing something much more sophisticated? And obviously, that is everywhere now. At the time, it really only existed in a few places, and none of it was really very good. And the team that I joined at EA, by the way, they had been working on this before I joined and had invested a lot in it, they were way ahead of the curve.

Kevin Spain: They were way, way ahead of their time in terms of having a vision for where this would go. They were thinking about what are the game mechanics that will matter here? What kinds of game mechanics will actually get casual users excited about gaming if they've never been excited about it before? How do you monetise these things, right? Is it advertising? Is it subscriptions? Is it one-time payments? They were thinking about the social components of these games, like how do you actually make the game social and not just a single-player experience? So all of these ideas that we now sort of take for granted in many ways in gaming today in casual gaming today, many of them had not even really been invented or they hadn't really been fully pursued. And so here was a team of people in one of the largest game publishers in the world that was working on this.

Kevin Spain: It was incredibly well resourced. And actually, at the time I joined and you should check the internet 'Way Back Machine' on this one too. But at the time that I joined EA and was working on, it was literally called ea.com. That was the name of the business. They had turned the EA corporate website into a casual gaming portal. So literally when you went to ea.com, it was a casual gaming site. And if you wanted to access the corporate website, there was a little link at the bottom where you could access it. That's how serious they were about this. And so I was doing business development for them. We were signing distribution deals to take some of our games to other platforms like the AOL platform. We were signing advertising deals. We were signing content deals to in-licence intellectual property to put on some of our games.

Kevin Spain: It was a lot of fun. It was a lot of fun being part of that. And then Pogo, since you mentioned Pogo, the connection to that name was, Pogo was a business venture-backed business that we acquired when I was there to add some additional technical capability to the ea.com platform. And actually, that business that was previously called ea.com was then renamed Pogo at that point.

Sam Kothari: Were there any lessons you took away from your time at EA and doing business development on Pogo that you're finding that you're able to deploy now in your investing role? You mentioned, especially in online and casual gaming, a lot of great insights that were ahead of the curve, and you would've seen, I think, how early folks are thinking about new industries, new verticals. You're focused on B2B or on SaaS, I should say, then Emergence, if I'm not mistaken. So what are the insights from that experience that you've been able to deploy in your investing role?

Kevin Spain: Well, I think one observation I would make, this has changed a little bit over time, but largely has not changed is that large companies are sometimes often slow to really figure out something new. So even though EA was early on in looking at casual gaming when I was there, they ultimately didn't become one of the big winners there, right? Because too much of their energy was focused on their legacy businesses, by the way, doing great, right? Not to disparage them at all. But that new, new thing that was just different enough in some really critical ways was going to be harder for them to do, harder for them to make successful, than just getting better at the things that they had been doing for a long time. And I think that is still true for most large companies. I mean, often, it's sort of called the innovators' dilemma.

Kevin Spain: I think it is still often true. Now credit where credit is due. Right? When you look at some companies like I worked at Microsoft and you see where Microsoft has gone over the last five, 10 years, or you look at Google or even you look at Facebook, and you see how quickly some of the large tech companies in tech are now able to innovate, I think they've gotten better on average than they used to be. But that said, if something is really, really new is really cutting edge is going to be the next big wave, right? The likelihood is that those large companies are not going to be the first ones to catch it. And it just makes sense. They're just not thinking that way. And so I believe there will perpetually be opportunity for entrepreneurs in technology and probably other sectors too, to out innovate the really large players when it comes to things that are truly cutting-edge and truly new and innovative.

Kevin Spain: And it's something in textbooks. But I will say that I saw it firsthand. I saw it firsthand at EA and at Microsoft. And so that's something that I always keep in mind today. Anytime someone asks a question, well, will Microsoft do this or Google do this, or will some other big company do this? Maybe eventually. But I think that the entrepreneur has a much, much better chance of actually getting there if it's something brand new.

Sam Kothari: You mentioned Microsoft, you worked pretty closely with one of the great founders of tech companies in the past 50 years. Worked at Microsoft with Bill and Steve. And interested to know what did you observe and learn from that environment? What did you take away given they were running at that point in time? It was a behemoth already. What was that founder profile like? What did you learn from observing Bill and Steve and others at that level?

Kevin Spain: Oh, it was like drinking from a fire hose, I would say, working at Microsoft in the role I was in. So we were a team of, I think a dozen or so people, doing all of Microsoft's acquisitions and investments. We sat right down the hall from bill and Steve and the CFO of the company, we were right there, and we got to work with every single part of the business. I mean, this is the amazing thing. When you think about Microsoft, Microsoft has such an incredible span of products and businesses that they're in. And so why I say it was like drinking from a fire hose is because so many of these businesses are different for one another, right? They serve different markets and they've got different competitive sets, and they've got different trajectories that they're each on.

Kevin Spain: And it was just always so interesting to work on a project with one business unit one day. Maybe you're working with the server and tools business building picks and shovels for developers. And then the next day, you're working on something for Xbox or working on something for Microsoft office, and all of them were just so wildly different. And so one thing that I thought was just so fascinating was to see the incredible diversity of businesses under one umbrella. I thought that was super interesting. The other thing that I would say about Microsoft, and this was true of EA too. But the amazing quality of talent in that organisation, and I'm particularly thinking about at the senior levels of that organisation, right?

Kevin Spain: I mean, just incredibly bright, incredibly driven, even though when I was there. I mean, a number of the executives that we would work with are people who'd been there for quite a while and clearly did not need to work anymore, but the intensity that they brought to the work was just extraordinary. And so, in many ways, it's not surprising to see them sort of re-emerge as an incredible force in software. Because again, the people there are just so exceptional. So I don't know. I mean, I think I learned a lot from working with people of that calibre. Right? What does great look like in terms of talent? What does great look like in terms of product, right? How do you think about not just great product, but great distribution?

Kevin Spain: I actually think this is something that Microsoft has figured out in ways that a lot of companies have not. I mean, they've got one of the most powerful distribution strategies in software, right? They heavily leverage the channel, and that is just worked magic for them. And so I would say, just fundamentals of what makes a good software business I think I took away from my time at Microsoft.

Sam Kothari: One of the comments I've heard you make in the past is one difference between EA and Microsoft was 'focus'. You've described the number of different product lines and businesses that Microsoft was running. Why was that a challenge? I mean, obviously, the strategies work. You can see the stock price and see the success that Microsoft's having, but I'm interested to pick apart that comment a little bit of you knew online gaming or gaming really well. And then at Microsoft, obviously, you're working across units. So how do you think about focus in the context of startups now? And maybe a little bit more colour to the question. When I look at fintechs and others, everyone in other industries, everyone seems to be building all the products and trying to be everything for everyone.

Sam Kothari: And I think Jim Collins has this quote of great founders often get indigestion from trying to eat too many opportunities all at once. So how do you think about focus from your experience at EA and Microsoft, and then now that you've been investing for a long time, how do you advise founders and startups to think about focus in their strategic journey as well?

Kevin Spain: Well, I think focus is critical across so many things in life. I think if you can pick the things that really matter and devote most, if not all of your energy, to those things, you're probably going to have more success, you're probably going to be happier just because you can devote your time, your precious time, your precious energy, your precious resources, to the things that are going to move the needle more on the things that matter in your life. So that seems obvious, but I think that's what I come down to in focus. It's like if you can do that in more parts of your life, in your business, in your career, I think it will benefit you. I mean, the way that it really showed up for me when I compare and contrast my experience at Microsoft and my experience at EA.

Kevin Spain: Again, I was saying earlier at Microsoft, it was fun and it was challenging to work across all these different business units. I never really felt like I knew any one of them deeply. Right? I could get up to speed enough I think to be a good advisor to executives who were running those businesses when it came to something M&A or investment related, but only just enough. I could never know the entirety of the challenges they were facing or part of the industry they were going after in the way that I could at EA where all I spent my time on was the gaming industry. That's all I needed to know. And particularly, my last role there, I was doing corporate development. I felt like I knew the entire landscape.

Kevin Spain: By the time I left of game publishers, game developers, game platforms, you name it. Right? I knew it and I knew it really, really well. And I felt like that actually made me better at the job at EA, even though I was earlier in my career than my job at Microsoft, right? There were certain things I knew how to do better when I was at Microsoft. But when it came to knowledge of each part of the business, I could never get there at a place like Microsoft, not in the short time I was there. So how does that translate to founders, right? How does it translate to companies? I think if you're Microsoft and you've got all the resources in the world, to some degree you can afford to de-focus, I still think there's value in focus, and I actually think Satya has done a really nice job focusing the company more since he took over.

Kevin Spain: But you've got the luxury of de-focusing in a certain way if you choose to. When you are a fast-growing company, you're a small company, you just don't have the same resources. You just don't have that same luxury. You literally can't afford to spend any of your precious attention or time or capital on something that is not going to be as accretive as possible to growing revenue, servicing your customers, making your customers happy, making your employees happy. You just can't do it. Now, picking the things to focus on, that's the hard thing, right? And everyone will agree with you that focus makes sense until they have to make the hard choices. I'm the same way, by the way. So you have to pick, but I think there's power in that process of really forcing yourself to narrow down to a few things. And again, you're going to do really well. And I think if you look at, and frankly, many of the most successful startups, they do this really well, right? They're very good at picking, and then once they pick those spots, they execute like crazy.

Sam Kothari: Really good input. And I think it's even in my role as well, and I talked to plenty of founders. It feels like a constant battle of I don't want to miss that boat, and it would be really nice if we also had that feature or that widget. And it feels like a daily challenge of trying to make sure that we stay true to the mission.

Kevin Spain: There's a great framework. This is going to seem like a really simple framework. There's a framework that I love that I find at least helps me when I'm trying to decide what I'm going to focus my energy on. It's from a book called Rhythm. I think that's by Patrick Thean. And Rhythm is all about putting the business process in place as a company that helps you make better decisions and plan better. But there's a framework in there that he calls the winning moves' framework. And so if you imagine a classic two-by-two matrix, on one dimension, you've got how easy is something? Is it easy, or is it hard, right? And on the other dimension, you've got in this case, how much revenue is something going to generate in a short period of time?

Kevin Spain: Let's say in the next year, and a winning move is defined as something that is easy to do and is going to generate a lot of revenue in the short-term, right? And then from there, you can move to another quadrant, which is the things that generate a lot of revenue, but that are more costly, right? And then you move into the other two quadrants where you really shouldn't spend any time, right? Because they're just not going to move the needle. And I find that it's actually you're able to do this effort versus impact is how you can boil it down. Effort versus impact rating on each one of the ideas you're considering. It does focus the mind quite a bit on the things that have the greatest potential to make a difference.

Kevin Spain: And you can put in something else besides revenue, you can pick customer satisfaction, you can pick some other lever you're trying to move, but focus first on the things that you can do, and they're going to have the greatest impact. And then you have the luxury if you have anything left over to then spend time on other stuff. But I find that a lot of people don't even start there. Right? And so that's one fairly simple framework to help you decide at least where to start.

Sam Kothari: No, that makes sense. I think that there's a challenge though, with long-term bets, right? Like bets that as a founder you need to make. I need to hit my targets this quarter or this year and deliver a number to the board. But at the same time, I need to build a product or infrastructure that's going to allow me to lay that path to 5X that revenue in two, three, four, years time. Interested that like you're on a lot of boards, you've worked with a lot of founders. A lot of those discussions often tend to happen in the boardroom and in board meetings. For first time founders who are setting up a board for the first time, they might not know how to take full advantage of the horsepower and the energy that's in the room.

Sam Kothari: So interested to understand, like, can you give us examples of what does a good board meeting look like to you? What's success for a founder running a good session there? What board meetings have you attended that have felt like a waste of time? Obviously, not for the companies, what behaviours or inputs have you felt haven't been as valuable?

Kevin Spain: Sure. Well, I have a preference around what I love to see in terms of board meeting format and every board member and I think every founder has a different preference. So this is just my preference. And I find that it's done well. This is a very effective way to take advantage. As you said, I think this is the right... I like the way you think about this, because I agree. How do you take advantage of all of these great people you have in one place at the same time, right? Because that's really, really an amazing set of resources, and it's an expensive set of resources. So how do you get the most out of it? So what I love to recommend is the idea of not making the board meeting a reporting-oriented board meeting. So reporting-oriented board meetings are really what I find.

Kevin Spain: They're kind of the default way of doing board meetings, right? Here are the results from the quarter, here's what's happening in every single function, here's an update from each of them, here are the numbers, right? Here's what happened last quarter. And there has to be some of that. By the way, the board has a responsibility to keep track of how a company is doing. And so you need to have an element of that. But my preference is actually, where possible, to minimise that as much as you can minimise the reporting piece of it, as much as you can. And there are different strategies for doing that. You know, you can send a lot of that reporting type information ahead of time is a pre-read and sort of give people the opportunity to ask questions ahead of time, and then just deal with the questions in the meeting.

Kevin Spain: Or you can just do a much smaller reporting section. But what I prefer instead to spend most of the meeting on is discussion, right? And I love for founders or for executive teams to think about what are two or three areas that you are struggling with or that you think are really important for us to figure out, or maybe as you said, maybe there's some long-range planning questions that we're grappling with. Stuff where a real conversation with that group of people, the board plus the executive team is going to be super high impact where you're going to walk away, maybe having some new ideas, maybe answering some questions, getting some great new guidance. I've found when we can pull that off, those are the most powerful board meetings, right? And by the way, you accomplish both, right? You've still done your reporting, and everyone has a much better sense of where the business is, but at the same time, hopefully, you've actually given something to the company, right?

Kevin Spain: It's a value-add to the company. Unfortunately, when you do the pure reporting-related board meeting, I actually don't think it's that valuable to the company. It's a lot of work for the company, right? But I don't know that a lot of management teams walk away feeling like, wow, we know what we should do now even before we have some new ideas we didn't have before. So that's what I always recommend. It's a negotiation because, again, people come in with different preferences, and different board members want different things. But that is my own preference in terms of how I like to see those meetings handled.

Sam Kothari: No, I think that's clear, especially, I think if you're early on as a founder trying to figure out how do I take advantage of the advisors or the board that I have. I think it's important to have at least a guide or a framework in place to make the most of it. You've written an article Kevin around executive coaching and the value of coaches for founders, for investors. Do you have a coach, and what value have you seen yourself or others get from a coach? And also interested, I'm in a privileged position at Airwallex and leading a team. But also, I have a little bit of a reluctance to embrace that. And so I don't have a coach at the moment. So what would you say to someone like me or another founder that's maybe reluctant to take advantage of that resource?

Kevin Spain: Oh my goodness. First I would say I absolutely recommend that founders have coaches. I do have a coach, I've been lucky to have a coach now for a couple years who's fantastic. And I would say almost every founder that I've ever worked with has had a coach, maybe not consistently, but at least at some point during their journey as a founder. And I think every single one of them has really appreciated the value that coaching has brought to them. You know, look, I think board members can be coaches, right? And I think we do coach in certain ways. And I think if we're good, we can be very effective coaches in certain ways, but we also have a different dynamic I think with founders than an independent coach. We are part of the governance mechanism of a company, right?

Kevin Spain: There's a little bit of a, I don't think of it this way, but I think it's true, there's a little bit of a reporting relationship that exists between a founder and their board members. And it's hard to make that perception go away. And I think one of the really powerful things about an independent coach is that you don't have any of that dynamic that exists. It's someone that has a completely neutral stance. Right? And is there 100% just to help the founder, whoever they're working with, they don't have any other function they have to perform. We, as board members, we're fiduciaries to all the shareholders of the company, right? And so that's another responsibility we have to always think about, and coaches don't have that. The other thing is coaches are good coaches, they're pros at this, right? They do this.

Kevin Spain: They've been trained in doing this. They know how to do it exceptionally well. And there's value in hiring a professional anytime you want to have something done well. So I advise all founders to think about coaching and when they feel like they're ready to find a coach that's a really good fit for them. I think fit is critical. Someone who you can have a really good relationship with, right? Someone who you connect with, you are going to be spending time with them, they're going to be giving you advice. You can connect with them. You're going to be able to take that advice in a little bit more effectively. The other thing I would say on selecting a coach is there different kinds of coaches, different coaches sort of are better at helping you with different kinds of things. Some for example, are more of more experts on better execution, right?

Kevin Spain: How you become more effective as a CEO and the job of the CEO. Others are more focused on the softer qualities of leadership, right? And yet others are more focused on, I would say emotional intelligence, right? How to help you know yourself better. And as a result, be able to connect with those you work with more effectively. And I actually think I've seen some people, many CEOs, actually many founders transition over the course of their journey from one type of coach to another as their needs change. So I would just say explore it, think about it. If you think you're ready, find a coach that you connect with that meets your needs. And I think if you find the right one, you'll never go back.

Sam Kothari: I'd love to maybe spend the last few minutes talking about your role at Emergence. We've talked about your journey, your own founding journey. We've talked about some of the things that you've seen at EA, Microsoft, and others. Really interested to understand what are you looking for now when you are investing? What type of entrepreneurs are you looking for? What traits and habits have you seen have led to, I think, successful outcomes for that company and for Emergence as well? Is there something that you ask? Are there questions that you ask, ways that you probe to try and unpick some of those characteristics and traits as well?

Kevin Spain: Well, Sam, I think if we had a formula or a recipe where you could say this is exactly what great founders look like or this is exactly what a great business looks like or great market looks like, boy, I wish we had that. It'd be incredible. It's really hard I think to figure out for any given opportunity what makes it special, right? What component of it is the team? What component of it is the market opportunity? What component of it is what they've already built and the business that is operating? The reality is it's always some combination of those things in different waiting's. And then you apply some judgment based on your own experience to decide, okay, does this feel like it's got the right ingredients to become something that is special, that is iconic, that is a really incredible long-term business? And it's never yes or no.

Kevin Spain: We're dealing in a world of probabilities. And so we try our best to decide the likelihood of that happening. I think as it relates to founding teams specifically, I'll tell you, there are a few things that I always think about that I look for that means something to me. One is I think a team that is just obsessive, right? Absolutely obsessive about what they're building and what they want to build. It's almost all they can think about. Right? And I think that's important and I know this just from my own experience, it is an extraordinarily challenging act to start a company and to continue to build a company over the many, many, many years that is required to build something great. And it requires you to sort of be all in completely all in and literally almost obsessive about it.

Kevin Spain: And so I don't like it when that border's on healthy obsession, but people who live the company that they are building and care so deeply about it, that it's almost all they can think about, that matters. And some people would call that passion or drive, but I put that term obsession on it, because to me, that sort of implies something that's even a little bit beyond that. And the thing I would say that I've also noticed that I pay a lot of attention to is, well, what is the motivation behind that obsession? Right? Because there are healthy motivations, and then there are less healthy motivations. And I vastly prefer the healthy motivations, right? Things like there's something that a founding team from their own experience just believed needed to exist in the world.

Kevin Spain: They sought it out, and it didn't exist, and so they decided to create it, and they decided that they wanted to make it truly great and truly exquisite, right? Something like that I think really matters rather than the financial motivation. Really something that, to me at least, has a little more meaning and is probably a little more durable than just money. I pay a lot of attention to that. I also pay a lot of attention to the way in which founders interact with people and the way they think about the people they are going to work with both inside the company and outside the company. I mean, that includes their investors. It includes their customers, obviously hugely important. Definitely obviously includes their employees partners, if there's sort of a partner-based component to what, what a company is doing, but someone who cares about the quality of the relationship that they have with all those different constituencies, it matters to them.

Kevin Spain: It matters to them that their employees are happy and feel taken care of. It matters to them that their customers feel like they're getting something absolutely delightful. It matters that they're going to deliver great returns to their investors. And they obsess about that too. Right? So I think so much of what we are building in technology is people-based, right? We are building things for other people, and it's really people at the end of the day that are powering all of these businesses and funding all of these businesses and someone who takes that seriously and who truly cares about other people is, I think, really important to me. Certainly, it's the kind of person I want to work with.

Sam Kothari: It's really helpful. Obsessive about the idea with a healthy motivation, caring about people and the quality of the relationships. How do you test for that? Can you give us some examples of the questions you ask founders when you're meeting them and walking through your investment process?

Kevin Spain: Well, so this is the hard part. I don't think we have a set of questions really. And, truthfully, when it comes to really getting to know people, our preference, and this has been hard over the last couple of years, as rounds have been moving so quickly, but our preference is really to get to know people over a period of time. And by the way, in that process, allow them to get to know us too. Right? They're making a very important, they're the ones making the decision at the end of the day. If they've got something amazing happening, they will have lots of different people that they could choose to work with. And I think entrepreneurs deserve to make great decisions here too. So our preference is to spend time with them not over days or weeks, but really over months and quarters, right?

Kevin Spain: Getting to know them, obviously seeing how the business is tracking, but really in that process, getting to know the founding team really well, understanding them better. And look, I think it's just like anyone, you get to know people by spending time with people, right? And it's talking about the business and it's having dinner and lunch and it's really just trying to understand them on a human level. What makes them tick, what they're passionate about, how they're thinking about solving certain problems as those problems come up, how they solve those problems when those emerge, I think that's something that you need time. If you really want to assess it, you need time to assess it. And we figured out some ways that condense it as well. Right? But even in that condensed form, I think the way that we have found, best for us at least to do it is to, is to really spend that time. Right? And not just have a checklist and not just ask a certain set of questions, but try to explore it in a more organic way.

Sam Kothari: That's really helpful. I think really useful for founders as well, where I think when you're raising capital, you can often try and come up with that checklist of this is what the VC's going to ask me, this is all the questions I need to prepare, as opposed to really trying to get to know you and your team and building that relationship with you as well. Hey, last question from me, if you could give yourself one piece of advice going back to the start of your career with all the experiences you've had today, what would that be?

Kevin Spain: Relax, it'll be fine. I think that would be it. I mean, I think one of the reasons I like working with people who are a little obsessive is I'm a little obsessive myself. And I think at times in my career that has led me to not be quite so relaxed about things and be a little bit of a hurry and a little bit too serious, take a few things a little bit too seriously. And in the end I think it all worked out right. And did it work out because I was obsessive in some of those moments? Maybe, but I think there were also some other moments where I didn't have to be quite as much. And I've certainly discovered that to be true now at this point in my career now that I've given myself the permission to let go a little bit and relax a little bit more. Actually, things sometimes work a little bit better. So that would be the advice that I'd give myself.

Sam Kothari: That's great. That's a great answer. I think that founding journey could be lonely, and you feel a lot of that ownership and responsibility all the time to have a great outcome for investors and shareholders and employees. So I think that's really helpful. Kevin, is there anything that you want to share about Emergence and what you guys are up to and looking for, the types of startups that you guys are interested in, the founders that you're interested in talking to?

Kevin Spain: Sure. Well, so what we say about ourselves is we invest in people who change the way the world works. And what that means to us is people who are building amazing technology for businesses around the world that make them more productive, that make their employees happier, that allow them to achieve more success, and that's what we do. So that's led us over the last 20 years to partner with companies like Zoom, Salesforce, Gusto, bill.com, DOSim, Viva and others early stage, right? We tend to be early-stage investors, a lot of series investing. That's really our sweet spot.

Kevin Spain: We work really closely with founders after we partner with them to really help them accelerate everything they're doing. We really pride ourselves on that work. And we don't make very many new investments every year. That's part of how we make it possible to have the time to work with founders so closely. So if you are a founder or a founding team that aims to change the way the world works, we would love to talk to you. You can get in touch on our website, you can email me at [email protected], and you can also find me on Twitter at @kevinspain.

Sam Kothari: Thanks for listening to another episode of the Launch Lessons Podcast brought to you by the builders and makers of FinTech Unicorn Airwallex. Airwallex's global financial infrastructure empowers businesses of all sizes to grow beyond borders. If you found the lessons in this episode helpful, please share the link with a friend or a colleague, or subscribe to the podcast and leave us a rating. If you've got any questions you'd like to ask our guests or topics you'd like us to cover, please reach out to us via the details in the show notes below.