This week, GV General Partner (and TechCrunch alum) MG Siegler joined us on Extra Crunch Live for a far-ranging chat about what it takes to foster a good relationship between investor and startup, how portfolio management and investing has changed as the COVID-19 crisis drags on, and what Siegler expects will and won’t stick around in terms of changes in behavior in investment and entrepreneurship once the pandemic passes.
We last caught up with Siegler on the heels of his investment in Universe, a mobile-focused, e-commerce business-building startup. The coronavirus pandemic was relatively new and no one was sure how long it would last or what measures to contain it would look like. Now, with a few months of experience under his belt, Siegler told me that things have relatively settled into a new normal from his perspective as an investor – sometimes for worse, sometimes for better, but mostly just resulting in differences that require adaptation.
This select transcript has been edited for length and clarity. Aside from section headers, all text below is taken from MG Siegler’s responses to my questions.
Business impacts of coping with the pandemic six months on
Just talking about the business side of the equation, I do think that things have sort of stabilized in the day-to-day world here. For us, certainly, I think it’s it’s just as much of a factor though, of just learning how to operate in this in this weird and surreal environment, and knowing how to do remote meetings better. Knowing how to hop on quick Zoom calls, Hangouts, and phone calls, with portfolio companies, to help put out fires, and doing all board meetings remotely, and all that sort of stuff.
That seems like it’s pretty straightforward on paper, but in day-to-day operations, these are all different little learning things that you have to do and come across. I do feel like things are operating in a pretty streamlined manner, or as much as they can be at this point. But, you know, there’s always going to be some more wildcards – like we’re a week away, today, from from the US election.
Does virtual interaction mean more time spent working with portfolio companies?
It sort of depends company to company, of course, but I would say as a whole, I do think it’s increased in interesting ways, because that’s now the norm of communicating – virtually, or over the phone. Obviously, we could do that before, but I think we used to have the forcing function of ‘Let’s talk about this when we meet in person next,’ and since we don’t have that anymore, I do think that there is more of a ‘Let’s just hop on the phone, or hop on a Zoom or Hangout, just to talk through this really quickly.’
In some ways that’s a silver lining – I think it’s opened a communication channel that that hasn’t existed before. I would also say I’m more involved in portfolio companies that we’re invested with, because I’m more ingrained in their Slack usage. Part of that is because they have shared channels thing now. Previously, you had to be a guest in someone’s Slack instance, to be able to do that, and I’ve done that in the past. But now, with the shared channels thing, it feels like I’m piped into a bunch of different portfolio companies in ways on the day-to-day level, which is interesting and nice.
Is Silicon Valley’s outward migration real, and will it persist?
I do think that there’s a pretty good case to be made, that this is a longer-term migration that was happening before COVID. You’ve heard the stories in particular with the Bay Area because of housing prices, and because of some of the other hardships, you know, that are going on here […] there has been a change in the mentality of people wanting to live here, and feeling like they need to live here.
A big part of it is the tools that have arisen, like we talked about Slack and Zoom and these things that obviously predated that pandemic, they were making it easier already for companies to to continue to go remotely. I think that that was a natural trend, it was never going to be the case that every single company was in the in the Bay Area, nor has that happened, obviously. But I do feel like the pandemic definitely accelerated the migration out, and now it’s a question of what does it look like if – and when – we ever get back to the ‘normal world?’
Do people come back in as offices reopen? Or do some people stay remote? I don’t think there’s a there’s a straight answer to that. I think it’s going to be a hybrid. I think that offices will reopen, and I think that a lot of people will want to even go back to the office because they’re burnt out from working from home, and doing Zoom calls, and they long for the in-person connection again.
But I do think others will have made determinations for themselves and their family that being in a different part of the country, or a different part of the world even is better for their living situation. Now that we know, as a society, that we can function this way, I think that there will be people who just are always remote or for the most part, and then in-office is not the norm.
What entrepreneurs should focus on when choosing investors
It’s going to vary, you know, depending on the company, depending on all different sorts of things. But if I could generalize it, in the best way that I can, I would say, to think about the relationship element of it, because it really […] is so critical to that dynamic, because you’re going to be working with each other in close day-to-day interactions, or sometimes weeks, or sometimes quarter-to-quarter, but whatever it is, you’re going to need to have a functional relationship between the two sides, and so that’s why I like to establish a relationship in person first, before making the investment.
It’s really all about trying to feel each other out – not just me feeling out entrepreneur necessarily, but vice versa, with the entrepreneur seeing if I would be a good fit, if we’re joining that company’s board and even if not. Am I good fit just to shoot ideas off of? To have a conversation with? To have a hard conversation with? I think all of those things are just crucial and critical.
The key to success for startups surviving and thriving during the pandemic
The obvious one is not running out of capital. That sounds a bit glib, but it is the conversation that happened, time and time and time again, in the early days of the of the pandemic and what we all had to figure out. Working with portfolio companies, talking to companies that were raising, the equation just changed overnight in terms of how much money you needed to be spending, and on what.
In both ways, too – obviously, you worried with certain types of businesses, that revenue will dry up that had been coming in, so you have to think about it from that regard. But also on the flip side, all of a sudden, you might have an influx of capital in some instances, because there’s no longer travel expenses. In some cases, you get rid of your office expenses, and those are real expenses. And so there’s been multiple conversations with many, many different companies about how to how to best balance that, and it just took time for everyone to sort of settle and figure out what companies will look like, and how to best operate going forward.
It’s also been fascinating in the past several weeks now, now that we do feel a little bit more stabilized, talking to companies about what their fundraise should look like now, given that we are in the COVID world, but presumably, we come out of it again.
So should you be raising for a COVID-like world? Or should you be raising for a world going back to normal? The boring answer is sort of a hybrid. You think that we will get out of this eventually, but you really have to prepare, just in case we don’t, or in case there are relapses and and things come back around again. What if this is a yearly occurrence, and not enough people get vaccinated, for instance?
So the money is obviously what it what it boils down to in terms of just making sure that the company can continue to operate, but there are other things as well the are equally as important. Certainly on the people side, learning how to make sure that your employees like don’t burn themselves out, because we’re all on Zoom constantly, because like what we talked about earlier, it’s so much easier to connect because we’re all just sitting at home and we can hop on a call or hop on a Zoom at any point.
But I think a lot of people are feeling the burnout from that, and seeing the downsides of when you’re always connected.You still need to think about your mental and your physical wellbeing. I’ve I’ve taken it upon myself to try to do more calls [vs video conferencing] just because I can walk and talk right, rather than sitting in a chair all day. Try to think about on a company perspective, how you best make sure that the employees and executives and everyone else is really taking care of themselves in this very surreal environment.
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