20VC: Craft Ventures’ David Sacks on How To Assess Founder Psychology, How To Accurately Evaluate CAC, Burn and Churn & What Makes The Very Best Startup Boards
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC
4.4 • 637 Ratings
🗓️ 15 June 2020
⏱️ 38 minutes
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Summary
David Sacks is the Co-Founder @ Craft Ventures, one of Silicon Valley's leading early-stage funds with David's portfolio including the likes of Facebook, Tesla, SpaceX, Palantir, Affirm, Airbnb, Slack and Bird to name a few. David started his career in tech as the first product leader and COO @ Paypal, growing payment volume from $0-$500M per month, leading to their $1.5Bn acquisition by eBay. David then founded Geni.com, creating a family tree for the whole world, the company was acquired 3 years later by MyHeritage. David then founded Yammer, the secure solution for internal corporate communication and collaboration, acquired by Microsoft for $1.2Bn. Finally, David then became COO and Interim CEO @ Zenefits before starting Craft.
In Today’s Episode You Will Learn:
1.) How David made his way from founding Yammer to creating one of the valley's newest and most prestigious firms in Craft Ventures? Given David's operating success he could have angel invested continuously, why decide to start a fund? What does he ultimately want to achieve with Craft?
2.) How did experiencing the Dot Com Bubble with Paypal and then 2008 impact David's investing and operating mindset? Does David believe VCs really are "open for business" today? How is VC behaviour shifting when comparing early to later stage? How is Craft responding?
3.) Unit Economics: How does David assess unit economics in early-stage opportunities he is looking to invest in? What does proper attribution look like? Where do many go wrong with unit economics? Is it too early to try and assess unit econ at seed? How does David think about having mental plasticity towards unit economics, recognising how they change over time?
4.) Customer Acquisition: Does David agree with Peter Fenton, "there is a complete lack of free and open distribution"? What are the rules of thumb on CAC that David does and then does not agree with? How does David feel about blended CAC? What separates good from great when it comes to CAC/LTV?
5.) Churn: How does assess net negative churn in the businesses he works with? What is great, good, decent and poor? How does avid think about logo vs dollar retention? How does David advise founders who feel COVID has not impacted churn for them? What should they expect?
6.) Burn + Capital Efficiency: How does David analyse burn and capital efficiency today? What does he mean when he discusses "the burn multiple"? How should the burn multiple change with the stage of the business? How does David advise founders on how aggressively to cut burn today?
Items Mentioned In Today’s Show:
David's Fave Book: Thucydides’ Trap
David's Most Recently Announced Investment: Sourcegraph
As always you can follow Harry and The Twenty Minute VC on Twitter here!
Transcript
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| 0:00.0 | Welcome back to the 20 minute VC with me, Harry Stebbings, and if you'd like to see more behind the scenes from me here as we get back into the studio post-quarantine, you can on Instagram at H. Stebbing's 1996 with two bees. |
| 0:11.0 | But to the show today, and I've wanted to have this guest on the show for such a long time. |
| 0:14.7 | He is one of Silicon Valley's leading operators turned investors, with Navaravacanted Angelist, calling him one of the world's best product |
| 0:21.6 | strategists. So I'm thrilled to welcome David Sacks, co-founded at Kraft Ventures to the Hot Seat. |
| 0:26.7 | Now, Kraft is one of Silicon Malley's leading early stage funds, with David's portfolio, |
| 0:30.9 | including the lights have checked this out. Facebook, Tesla, SpaceX, Palantir, a firm, Airbnb, |
| 0:37.1 | Slack, and Bird, to name a few. |
| 0:39.3 | David started his career in tech as the first product leader and C-O-O at PayPal, |
| 0:43.6 | growing payment volume from naught to $500 million per month, leading to their $1.5 billion |
| 0:48.8 | acquisition by eBay. |
| 0:50.4 | David then founded genie.com, creating a family tree for the whole world. |
| 0:55.0 | The company was acquired three years later by MyHeritage. David then founded Jeannie.com, creating a family tree for the whole world. The company was acquired three years later by My Heritage. David then founded Yama, the secure solution for internal |
| 1:00.0 | corporate communication and collaboration, which was acquired by Microsoft for $1.2 billion. |
| 1:05.0 | Finally, David then became C-O-O and interim CEO at Xenophates before starting craft. But before we move into the show today, I wanted to take a moment to mention HelloSign, |
| 1:14.4 | a great example of a company that found success in building a product focused on user experience. |
| 1:19.3 | HelloSign is an effortless e-signature solution used by millions to securely send and request |
| 1:24.5 | legally valid digital signatures and agreements, and they've raised a total of |
| 1:28.1 | $16 million in funding, and then recently got acquired by Dropbox for an impressive $230 million. |
| 1:34.3 | Check out hello sign.com forward slash 20VC to join the thousands of companies and founders |
| 1:39.9 | who value fast, secure and simple e-signatures. And speaking of signatures and getting deals done there, |
| 1:45.8 | you really need to build that relationship, |
| 1:47.7 | and there's nothing like meeting face-to-face, |
... |
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