Investor Spotlight - Lisa Xu
All Things Venture #068
Hey Everyone - Dez here from All Things Venture. For those that don’t know, I’m a huge fan of music. When I was around 11 or 12 my mom got me a CD player and my first CDs. I spent hours in my room by myself, listening to the same 10 song track list of early 90s hip-hop, with songs like “Baby Got Back”, “Funky Cold Medina”, and the timeless “Ice Ice Baby.” We all know how formative that period of life is, and since then music has always been something that matters to me. One of the things that I’ve always appreciated about music, and specifically rap, is it’s an industry that’s always been about producing something new. Producing something fresh. Producing something that hasn’t been done. So, in that spirit of newness, we’re launching another column here at All Things Venture - Investor Spotlight. In Investor Spotlight, I’ll share the same candid, relatable stories but giving the stage to investors I respect and admire. Just like Startup Spotlight and just like Operator Spotlight it’ll be semi-random, and semi-regular when I do these, but nonetheless I hope you enjoy. To kick things off, the inagural Investor Spotlight is with my colleague Lisa Xu, a Principal here at FirstMark. But enough from me, let’s get right into it.
Lisa! Tell me a little bit about yourself, what you focus on at FirstMark, and how you got into venture?
Dez! Thanks so much for having me on All Things Venture. Big fan! As you know, I’m a Principal on the investment team at FirstMark (and your favorite colleague of course). I joined FirstMark in the fall of 2018 so I’ve been a VC for over 3 and a half years now. I’ve spent my entire career in the NYC ecosystem and absolutely love it here. My first job was at Bain & Company, a management consulting firm, in the NYC office. It was a wonderful experience culturally and professionally - a really great place to start a career. During my time at Bain, I did many, many rotations doing diligence for private equity and growth equity investments, mostly focused on consumer companies. Most of those were traditional companies, but I got a bit of exposure to startups in that context too. The first startup I joined was Peloton back in 2016. That was an amazing experience - not only a fun industry to work in, but an incredible team and culture to work with.
While I loved working at Peloton, I was in a business role there and I wanted to explore the technical side much more deeply and get a better understanding of how software is built. So I left Peloton for a Product Manager role at another NYC-based, VC-backed startup called Handy. I spent about a year building there alongside an incredible team until the company’s acquisition by Angi in 2018.
I spent some time really exploring different paths in tech - mostly by talking to people I knew across the industry. Through these series of conversations, I ended up getting introduced to a few VC firms, ended up in interview processes, and was fortunate enough to land some offers. FirstMark stood out and I’ve been here ever since!
Why did you decide to work in venture capital, and what would you be doing if you weren’t a VC?
I wouldn’t say I ended up in venture by accident, but I wasn’t necessarily planning to become a VC at any particular point. I ended up here somewhat serendipitously but it really couldn’t be a better fit for me personally. I love the intellectual rigor of the job, how dynamic the day to day role is, and above all else, I love meeting exceptional founders every day and learning from their journeys and visions.
It’s actually hard to imagine doing something else at this point, but if I had to, I would definitely be doing something else in the broader startup/tech world - probably not as a founder but maybe on the product or biz dev side of things. And would definitely be most excited to work at a web3 startup where I have a lot of conviction in the opportunity size and would be really privileged to work alongside the high caliber talent that has poured into that ecosystem.
You have previously done a lot of thesis work on communities, how has that influenced the areas you’re focusing on and investing in now?
Thanks for bringing that up! I won’t rehash all of the community work, but if you’re curious you can read some of it here, here, and here. Community is such a powerful force in real life, and that certainly translates to our lives on the internet. Brands and companies have been able to build incredibly strong communities in the past few years (I saw that firsthand at Peloton), and a lot of times community can be one of a company’s strongest assets and competitive advantages in their respective markets.
That has informed a lot of how I approach consumer investing today. Today it is harder than ever to get consumers’ attention, acquire them as customers, and engage and retain them throughout their lives. A company that starts with community first, or prioritizes community when it comes to fundamental strategy, will have an extraordinary advantage in this environment.
Community is also how I got pulled back into crypto. Like many people, I first got into crypto back in the 2017 bubble. I didn’t pay too much attention to it after the crash until around mid last year, which is when some of the founders in the (Web2) community space and community leaders I had met started leaving their companies for opportunities in Web3, or pivoting their companies to tackle opportunities in Web3. This was the first signal to me that I should pay attention.
Community is really the foundation of so much of Web3 and a core theme across many of the emerging companies in the space - from empowering creators to putting organizational governance in the hands of their communities. I’m so excited about all of the innovation in the space and about how communities will shape that.
What are some of the key attributes/skills that you look for when you are meeting with founders?
This is pretty hard to put into words but if I have to, it comes down to a few things - unfair advantage in their market (this could be industry expertise, customer network, technical advantage, etc.), deep understanding and passion for the customer, and ability to recognize what they don’t know or where they are less strong in order to hire the best talent around them.
There are other things but these are probably top for me. I won’t go into too much more detail because it really depends and evaluating founders is pretty tough to put in a framework. And there are so many types of founders who can be successful, especially if they are able to grow as rapidly as the company does.
What advice do you have for any potential founder thinking about raising money and going through that process?
I think talking to other founders is probably the most valuable thing to do. One thing to really consider is that not every business is a venture business – and that’s okay. Taking venture capital will put your business on a certain trajectory…which is exciting but not necessarily a fit for every business or every founder (in terms of market size, growth velocity, etc.). There are so many strong businesses that grew less rapidly, more profitably, etc. The stakes are a lot higher if you take VC funding - but as a founder you don’t necessarily have to follow that path.
The other thing I’ll say just from meeting so many founders and following their journeys - the founder job is one that evolves as rapidly as the business is expected to. What you have to do to be a successful founder at Seed vs. Series D is completely different. It’s kind of daunting to say “it doesn’t get easier over time” but it really doesn’t. All just things to consider and obviously so many different types of people have been successful as founders in different ways.
Lastly, if you do decide to raise money, make sure you feel really good about the people you’re taking that money from and consider them your long term partners from there on out. Obviously the speed of fundraising has really accelerated in the past few years, which is difficult from the VC side but equally challenging for founders. Make sure you really know who you’re getting involved with before you sign that term sheet. Whether that’s just spending more time with them, or talking to other founders who have worked with them, or something more creative
What advice do you have for anyone aspiring to break into VC?
My biggest advice is that you don’t need a specific background or skill set or even personality to be a successful VC. Different firms may look for and optimize for different things in candidates - but if you look at the industry as a whole, successful VCs are super diverse across pretty much every characteristic you can think of, at least background wise. I think that’s reflective of many things - the venture landscape has become more mature over the past few decades, so individual VC firms and investors have been forced to differentiate in order to win deals. Along with that, the founder community has grown dramatically and so there are a bunch more founders choosing their investors based on some sort of fit.
All that is to say - if you are at all interested in becoming a VC, there are more ways than ever to enter this ecosystem. The internet has made information a commodity - there are thousands of blogs to read online to get yourself up to speed on the industry dynamics, sector expertise, etc. and so many channels and ways of getting in touch with people. Never be afraid to start that journey and take your shot at getting meetings with people who might be able to help.
Last question, what’s your favorite NFT you own - and why?
This is a really tough question because I own way too many NFTs and love so many of them but I would have to say my Crypto Coven witch because she is a total badass…and because the Crypto Coven team is incredible and has really built a community that feels different (certainly more diverse) than the average NFT community. I was lucky to be an early supporter of the project and always enjoy the content they put out.
That’s it for today everyone. Hope this helps and that everyone has a great rest of their week!