you are listening to the 20 minute V C the pope cost. That brings you 20 minutes with some of the world's best venture capitalists with me, Harry stabbings, and you can find me and Ciel things behind the scenes on Instagram at eight stabbings 1996 with two B's would be great. See that where you can also submit questions to future guests on the show onto the Shows Day. And I'm thrilled to welcome Zalben Memoria, founding partner at, referred to Capsule, one of Silicon Valley's newest interests. The early stage scene with a $50 million fund looking to back founders solving fundamental human problems prior to co founding the fact It's Hours a partnered Andries and horrors where he, Colette investments in the lights of Omada Health Branch. Taco Old School Honor on MAWR, while also helping to launch the firm's bio fund on before becoming an investor, spent 10 years as a PM at Microsoft, Google, Netflix and Lincoln. He worked on emerging markets for Windows,

became one of the first monetization team members at YouTube and then became the first head of mobile Netflix and helped start the sales solutions business. Adlington, I do also want to say a big thank you to David leads aisles partner or factor for the interest South Day. I really do so appreciate that. But before we dive into the show's day on new sponsor Ring first made a splash when they're on shark tank a few years ago. The concept genius. If someone rings your doorbell and you aren't home or don't want to come to the door, you can respond to the person using just your smartphone, adding a level of both security and convenience. Today, over a 1,000,000 people are using the ring video doorbell to help protect their homes. And now Ring has a great new product. Could bring floodlight cam just like rings. Amazing doorbell front like cameras and motion activated camera and floodlight with HD video and two way audio that lets you know the moment anyone steps onto your property and you can see and speak to visitors even set off a built in alarm right from your phone. So for me, spending my life in the studio,

I have my ring at home and you can instruct deliveries, check security and just feel much more comfortable for me from the studio. Simply put, withering, You're always at home and now is a listener. You can save up to $150 off a ring security kit when you go to ring dot com slash 20 v c. That's ring dot com slash 20 v c. And speaking of providing security and comfort, that's what happens when you work with a firm like Cooley. Cooley is a global law, fun built around supporting start ups on the venture capital firms that fund them. Now we've spoken before about their forming the first venture fund in Silicon Valley and forming MAWR VC funds in any other law firm in the world but cool. He also represents more than 6000 high growth startups across the globe through the full company Lifecycle. They're the number one law firm for VC backed access. Both Emma and AIPO ranked by pitchbook, and since 2014 they've represented more companies in there I pose than any other law firm.

So to learn more about the number one most active law firm representing veces and VC backed companies simply had over two Cooley dot com, where you can check them out at Cooley go dot com, but enough of my dulcet tones. And I'm now thrilled to welcome Zalben Emori, a founding partner at Risk Factor Capital. You have now arrived at your destination. Zal. It's such a pleasure to have you on the show today, Hughes, thanks to a wonderful partner, David for the injury. But thank you so much for Joining

Me. Stays out, of course, humbled and honored to be on the show.

Harry Notre Tool. But I would love to start with a little on you and how he made your foray into what I always cool the wonderful world of vanishing capsule and then came to co founder

Factor. Yeah, sure. So let's see. My my dad had a computer business while I was growing up in the nineties in Indiana, just outside Chicago. So we built and sold computers to people's homes and offices. But it soon grow telling the schools and libraries and other large companies, and that's how I really got into the hardware software coding at a young age and those experiences, I think they really drove me to want to have a career in tech. So that's what got me into product management, where I was lucky enough to spend 10 years working at some of the most iconic consumer platform companies in the last decade, including YouTube. So where I was one of the first modernization folks on the team after the Google acquisition and then Netflix later on, where I was the first head of mobile on and then in between YouTube and Netflix, I co founded a consumer mobile startup that really didn't go anywhere but learned a lot, as you can imagine.

And absolutely. And what was the transition

to venture? Yeah, my last operator role was that linked in where I was helping start the sale solutions business, which is the premium product sales people. And so while I was working there, funnily enough, and recent Horowitz cold emailed me asking if I was interested in learning more about rules on the investment team. And I wasn't actively pursuing jobs in D. C. But at the time, they were specifically looking for PM's to come. Source. Evaluate and work with GPS on investments. What I love about a 16 Z is that everyone had operating experiences of different kinds, especially on the investment team, which is mostly made up of PM's at the time, So basically, they were just looking for junior versions of Ben Horowitz s. So I I jumped at the chance toe to join the team back in 2013.

And then I do have to ask, You mean subsequently from that Andries and incredible institution. What were the biggest learnings that you may be taken from that experience to now, with the experience with refractor?

Yeah. So a few things come to mind number one the way ABC should treat founders. I mean, we are only in the graces of this wonderful profession because of them, and one week measure that at a 16 z was and P s net promoter scores. So all founders that interacted with a 16 c in a pitch setting. So regardless of us investing or not, would receive a short survey with one important question. Would you recommend a 16 0 friends and colleagues based on the interactions you had with this particular partner? And so we'd all get scores. Mark Ben, the other g p's. And I thought that was a great tool to measure and improve ourselves in the short term. So we adopted it every factor and we actually use is really great, inexpensive tool called Delighted to do all that. So that's one. And then the second thing I learned at a 16 Z is how to be an insanely curious person and why that's the most important thing about investing.

So Mark Injuries and had this great philosophy. Strong Convictions Weekly held. And so he had to Senate Streeter bio for a while when he was tweeting but having strong opinions about how you see the world, it's pretty crucial in making investment decisions. But as investors get more data and learn from those around them, they should be constantly editing those positions, making them even stronger. So it's that constant learning cycle that makes insanely curious and humble individuals really successful. And the final thing I'll mention about what I learned from a 16 Z is the idea Maze You may have read about this. Biology actually came up with this politician of Boston, the CTO and co founder of Council the Genomic Startup. So literally imagine that you have entered this real maze, you know, 20 story hedges and all, and you're slowly learning, trying to decide which way to go making your way through it.

And then after that seemingly 50th turn, you see the exit and you begin to accelerated a velocity you've never been able to reach before. So those are the kind of journeys we want to hear about profound, gone through their own idea, maize

and starting their company. I mean, now I am so excited because you've given me so many subsequent questions. The first is you mention the MPs there. And I spoke to your wonderful partner, David before, and he said that when referencing you, you have the highest MPs had ever seen. So he wanted to know. How would you characterize your style in working with founders?

That's pretty kind of him. Dimension in these nearly five years as an investor have come to believe that there's probably three most important traits that BC's should have. You know, Number one would be. You need to have the highest degree of empathy, and it's essentially is just top notch listening skills and respect. Earlier, that crazy journey that founders air on when, when meeting you number two, you've got to be super responsive. Fast email responses, quick phone call returns. It just a must in the VC industry because they're nothing more anxious for founder that when they have to wait to hear from a B C on a decision or if they really need your help, I need to get a hold of you and then three, that insane level of curiosity that I mentioned around market research philosophy around strong convictions, weekly help. Those are the three things really, I think have guided me, and I'm still learning in this business here.

Well, I'm so easy then times don't finally, that the strong opinions weekly help because my nice big question she was, How do you balance when assessing startups that you've maybe invested in or analysed between vision and reality? And and how do you could have analyzed the balance between the two and maybe when something's

not working? Yeah, you know, I think that's the right question. I think if you're coming to us and raising a three or $4 million seed round, we're looking to not only understand, you know, do you have a strong grasp of the science and the technology, but do you also have a product that could be sold to a specific set of customers that leap from science to product. An actual product that can be sold is critical. So we ask questions like, Have you spent time with customers? Do you know what they are willing to pay for this? What are the sales cycles look like? Why are you better positioned than your competition, either? In the form of other startups are incumbents.

So these founders who are scientist especially that we spend time with in biology especially you need to have strong answers on these go to market questions, of course, help our founders in these areas as well. But we'd much rather see founders go from 1 to 100 on go to market rather than trying to struggle. Going from 0 to 1,

absolutely. I mean, stay. Hang on the founders that you mentioned that many of you me back. It's scientists. I'd love to hear your thoughts on the signs, maybe in characteristics of the scientists has the ability to also scale into a CEO in the leader there any kind of leading into

cases. Yeah, you know, I think the scientist founders we meet have to be incredible storytellers. They need to be able to tell amazing stories to investors, which reduces financing risks. But they also have to be able to tell amazing stories to customers to town that they want to hire the general public if they want to build a successful, enduring company. So being a fantastic storyteller is an amazing seal for just about everyone. And that's probably why my kids are going to do speech in debate in high school. Just like I did

one of the biggest challenges when assessing this course of maybe scientists found on their plasticity to move between science and business.

It's also another interesting question, because they need to be able to understand that what they're building actually has riel potential as a business. They often are in labs, in academia, thinking about ideas. Maybe they develop some I p or have filed some patents with help of their university, and they're thinking about starting a company, and it's never been easier to start a company. I mean, wonderful podcast like this one are really creating a lot of transparency around how you start a business, how you get funding and how you kind of take this and build a large, successful business out of it, and I think that's wonderful. But it's we're seeing so many more scientists that are eager to start companies in these industries that we're looking at its fundamental human problems. But it's important for us to be able to understand. Are they willing to build a company? Are they willing to recruit a team? Are they able to speak with customers? Are they able to engage with a large, diverse group of people to make their vision reality?

I mean, you just continue to set me up with bringing questions, Fundamental human problems. You mentioned that the thesis for a factor. So starting from the top, how would you define fundamental human problems?

Suri And it may sound a little altruistic, but these fundamental human problems are those that typically reside within traditionally regulated industry. So think about healthcare, biology, genomics, crypto agriculture, industrial applications, things like that. And I optimistically, these founders are building products that allow people to lead why I like to call healthier, happier and heroic lives, which means they themselves are healthy and happy enough to help others. So David and I were attracted in these areas do their our own interest but also because we saw that the very best founders are starting businesses in these areas. They're looking to make an impact on society, but they also have the requisite experiences in academia, or and are operating roles to do so.

I have to ask for me. I always get clean, nervous with some businesses in spaces that you mentioned just with V C fair find carry the company's maybe for longer than you normally would tell me. Why am I wrong? Then why should this not be a concern for

me? No, It's definitely a concern, Harry, especially with our companies that might have a longer path before they hit a true inflection point versus the hockey stick that we saw in very successful consumer startups in the last decade. But you know, we're lucky enough to have some very wonderful peas or open to different funding structures to finance these companies. So we're really hopeful on that front, but definitely agree. The typical 10 year fund life cycles are pretty hard, especially Christine investors that are writing the super early see checks and time to exit time. Typo is maybe sometimes greater than 10 or 11 years now,

on average. We've kind of the time, the likelihood of success of all start ups, but even more so when their fundamental human problems that they're solving, how does that effect loss ratio and thinking around loss ratio, and then the amount of lines in the portfolio to really kind of get that one pop?

So the idea here is you have to be able to believe that every single investment June make and return the fund. So she our core investments, where we're trying to strive for a meaningful ownership and be the largest checking around and be that investor that founders can rely on on that daily guidance that we spoke about earlier. The important thing to understand here is, if we're going to invest in 40 to 50 companies in this fund, one of them has to be the breakout winner, and a few of them have to be ableto cobble together. Another one X, Let's say and so you're trying to put together a fun that really kind of creates value with with a small set of companies, and you have to assume that more than half of your company they're going to go to zero and that's no different when it comes to biology and other harder science companies. A lot of these are going to be very tough to commercialize, very tough to scale. There'll be all kinds of risks in terms of building a really enduring, valuable entity. And so we have to be ready and willing to kind of take that risk in order to get that return in that small handset of a handful of companies down the

line in terms of that return and then the quality events. How does that for companies solving fundamental human problems? Is it the traditional seven to say, 12 year AIPO window that often veces look for kind of acquisition by the mag attack companies of today? Or is it a different kind of a pulse to liquid

ISI? So I think it varies depending on the types of companies that we're talking about, even within the sphere of biology. I think the therapeutics companies sometimes definitely do take a long time to get to market, to go through their clinical trials, to really establish great data to show a low levels of toxicity and safety among humans first, obviously animals and humans and so the idea there might be it might take a lot longer, and some of these start ups were not able to kind of take that all the way to market launch. And so in many ways, they're developing relationships with pharma companies earlier on, and with that, they're able to potentially have other acquisition opportunities. With that. And then there's all the types of companies that are in the biology sphere that are helping kind of re engineer all the things that around us, whether it's industrial materials, the plastics in your phone hydrant peroxide. We have another company that,

but I'll talk about later. But the idea of being able to actually create value in these companies can actually be much more rapid. They have the ability to launch products within the first few years after receiving seed funding. First of Therapeutics Company, which might take

much longer. Can I ask, with such a kind of diverse array of fundamentally challenging problems to solve and kind of deep domain knowledge required can ask, How do you like to scale that learning curve or new opportunities?

Yeah, I think there's a lot that we have to do in terms of getting smarter and using first principles toe become more aware of the opportunities in front of us. We have an incredible stable of advisers that we rely on to get feedback and really understand how to diligence some of these technologies some of this science at the core. We also recently hired it in house. Scientists helping us as well lead a lot of the evaluation of these technologies, but our founders themselves finally are the biggest way for us to be able to evaluate businesses. But they're also a great source of deal flow as well for

us and then final question kind of on the space itself. When we mentioned the dollar's going into it, I'm in treating lots years. We've seen an immense rise in the amount of BC dollars going into deep Taxila, Gill said on the show reminds him of 2007 with Clean Tech. Would you agree with this? And do you kind of share the concern about maybe more traditional veces diversifying into such kind of fundamentally challenging domain knowledge expertise areas? Yeah, there's

certainly a lot more capital on detect at the venture and the growth stages of investing so let's say Siri's A and beyond, which is really fantastic news for us at re factor. But we haven't seen many dedicated seed buns in these areas, especially those like us who want to be that largest check in a seed round and be that investor founders can rely on day to day. You know, a lot of folks are in See that air dabbling in these areas are spending maybe 20% of their time in it or they're writing smaller checks, and that's great. But I really do feel like it takes a community to create these companies, and so we're not gonna be the only investor in these rounds. But as far as the largest check and really had it taking the lead, we really feel like we're unique in that perspective.

Do you want to finish the upset with the theme of the future in mind? And I love one element of what you've said to me before, which was your desire to build a seed fund to lost among the hundreds of others? First I have to ask, What do you think it is that will allow you to achieve this kind of ultimate goal?

well, we want to be in the top five consideration set for any founder starting a company in these hard but not impossible areas, and we think we're getting there. But it might take a few more years to really establish that reputation. All the short term stuff we're doing, how we treat help. Founders, how we're measuring our NPS. How are improving our own reputations are all great things to track, But long term, you need successful outcomes for companies, and track records are really the best milestones in the industry. And that's what matters most LP's as it should be and should matter to Allah founders as well to see the seas that are actually backing successful companies.

You mentioned that again, the MPs and you mentioned the MPs with Andries and with founders that come in whether they back your don't in kind of their engagement with the investing team. Post investment. Where do you find founders? Most draw you in and most need your help in attention.

We spend the most time and go to market, so we realize that with just $2 million of seed capital, founders can actually take their product commercialize it gets, um, sales going and get to a point where some of these larger Siri's AIDS, as we've been seeing, really do require quite a bit of commercial traction nowadays versus maybe even five or seven years ago. And so our journey with the founders has to help them try to figure out what types of commercial partnerships what kind of sales opportunities, what types of enterprise sales cycles are going to allow them to move as quickly as possible to get to the fastest revenue opportunities in front of them. And so our job is to help them close those opportunities and get them there in terms of their series. A. And so we spend a lot of time thinking about go to market with these founders

and you said we there multiple times. How could we not finish on on David because we spoke before you've described him as your mentor in life. I'd love to hear what's been your biggest learnings from working with David first that start with

that, we have a very special partnership. To have David kind of choose me as his partner was a mind numbingly awesome experience. You know, I couldn't be more blessed. When I was leaving Address and Horowitz two years ago, we were thinking about healthcare biology, deal flow and decided to really dive in deep together. Both of us wanted to focus on seat stage, which was the origins of US co founding re factor together a couple of years ago. David has just an incredible reputation among founders, say it's primarily due to his ability toe really listen and empathize with people. He's authentically just a very relatable person, and it comes across every time he interacts with people as those listening here who've met him, probably could attest to. And, you know,

we're pretty different people, of course, and I think that's what makes our partnership so successful. But David loves this great quote from my Angela. Have to squeeze it. Immigrants often uses it. My Angela said at the end of the day, people won't remember what you said, or did they'll remember how you made them feel, and he actually has a slight alteration of the quote. People will forget what he said. Forget what you did, but they will never forget how you made them feel. So maybe that's a bit absolutist, but Usually if you keep those things in mind, you end up saying and doing the right

things. Anyway, she knows Al. I actually heard it the other day and I was certain to abide by it that I tweeted it so I couldn't agree more loving that quote. But I do want to move into a quick fire around with, you know, eyes, a short statement. And as you know, you give me your thoughts. In 60 seconds or less, you strapped in,

I'm strapped in. Let's do

this. So your favorite book and why? What must I be? Readings out.

Seven. Eves By Neal Stephenson Hands down! He's actually gonna go down as one of the best writers and its generation and if you haven't heard of it, Seventies is a fascinating side fi novel, which covers and blends so many cool subjects such as aerospace, physics, biology, epigenetic philosophy, ethics and even racism. So it's an amazing, amazing read.

This is one of my favorite quick fire questions. Wilson lose memorable LP

meeting and why I remember one meeting where, as soon as we sat down, LP just started hammering us with questions and pretty difficult ones. It was clear that he had done his homework on us and our strategy. And he admit, obviously dozens of other defunds and we walked out completely exhausted, feeling defeated. But really soon after, he called up and said he wanted to invest, and we were completely shocked on Stoke. And so, given the amount of diligence he did on us in a series of just really hard questions, we actually invited him to be on our advisory

board. Wow, that's a That's a great story that most around you disbelieve.

So everyone knows the mantra. Software is eating the world Mark came up with that years ago. We believe biology is eating the world literally every portion of it.

Okay, well, application of biology Applying to kind of real world you most excited for

again Think about all kinds of physical materials that are around you, the moisture wicking lululemon jackets you might be wearing the polyurethane, maybe in the furniture that you're sitting on all the plastics around you are food flavors in that food, fragrances, therapeutics. There's just so many different applications, and I'm most excited about some of these consumer applications like food and polyurethane and some of these things that we could do with outdoor recreational products. We're going to really be able to remove petroleum, which is the key, and put into a lot of these products and use engineered biology to create a much safer, healthier and really, really, really a long term

plan for us. Really exciting future. What about the favorite? Broke Rooney's out of What Your must reads

Fred Wilson's ABC Blawg. You know, I have been an email subscribers in 2009. Absolutely love. It really helped me get through my start up when I was doing it in 2010.

And then that's finished today on the most recent publicly announced investment. What did you say? Yes,

so this one, I would say Sol Yujun. We lead their seed round and really couldn't be more excited. There an example of one of these non human application that genomics that I get personally very excited about what salad is done that created ultra state, ultra pure version of hydrogen peroxide, which is one of the most commonly used compounds of all consumer products. It's literally in every cleaning product in your home or office, and it's even used in higher concentrations and purity levels for rocket fuel, for example, and so solid and figured out how to eliminate petroleum for the production of hydrogen peroxide using only air, water and planned starch. And they used CRISPR cast night processes and their optimized by a reactor to do so. And so this was actually a perfect example of scientists founders who knew exactly how they were going to commercialize their product, even at real sales before investment. And frankly, these were just fantastic storytellers.

Zal. As I said, I had so many great things from David and so many founders in the community, so I cannot thank you enough for joining me and such exciting times. Ad

for a factor. Wonderful. Thank you so much. Area.

Well, if you're as excited as I am for the future of our fighter, then you can Seymour from Sal on Twitter by following him on AP's Al Zari. That's at Zales. Ali likewise, would love to see you here behind the scenes of the 20 minute BC, You can find us on Instagram at eight stabbings 1996 with two B's would be great. See that, But before you leave you today on new sponsor ring first made a splash when they're on shark tank a few years ago. The concept. Genius. If someone rings your doorbell and you aren't home or don't want to come to the door, you can respond to the person using just your smartphone, adding a level of both security and convenience. Today, over a 1,000,000 people are using the ring video doorbell to help protect their homes. And now Ring has a great new product called Ring Floodlight cam,

Just like rings. Amazing Doorbell front like Camas, a motion activated camera and floodlight with HD video and two way audio. Unless you know the moment anyone steps onto your property and you can see and speak to visitors, even set off a built in along right from your phone. So for me, spending my life in the studio, I have my ring at home and you can instruct deliveries, check security and just feel much more comfortable for me from the studio. Simply put, withering, you're always at home and now is a listener. You can save up to $150 off a ring. Security kids when you go to ring dot com, slash 20 v C. That's ring dot com slash 20 v c.

And speaking of providing security and comfort, that's what happens when you work with a firm like Cooley. Cooley is a global law, fun built around supporting start ups on the venture capital firms that fund them. Now we've spoken before about their forming the first venture fund in Silicon Valley and forming MAWR VC funds in any other law firm in the world but cool. He also represents more than 6000 high growth startups across the globe through the full company Lifecycle. They're the number one law firm for VC backed access. Both Emma and AIPO rant by pitchbook, and since 2014 they've represented more companies in there I pose than any other law firm. So to learn more about the number one most active law firm representing veces and VC backed companies simply had over two Cooley dot com, where you can check them out at Cooley go dot com. As always, I so appreciate all your support, and I cannot wait to bring you our founders Friday absolute, with Marco Zap Acosta,