UVC: Melody Koh from NextView Ventures on navigating early stage venture investing, empowering exceptional founders, fostering trust with founders and investing in the everyday economy

Rahul: [00:00:00] Welcome back to Understanding VC. I'm your host Rahul. Today, my guest is Melody Ko. Melody is a partner at NextView Ventures, a seed stage VC fund investing in startups that are redesigning the everyday economy. Prior to NextView, Melody was a head of product at Blue Apron, where she helped scale the business through hyper growth and to its IPO, building and leading a 35% team across product management, product design, analytics, and data science.

Rahul: Now let's talk to her. Hi, Melody. Thank you so much for joining me today.

Melody: Hey, it's good to, good to be here. Thanks for, uh, thanks for having me.

Rahul: So, you grew up in Taipei, and then went to school in, US. why did you not, go back to Taipei and decide to stay back in the US?

Melody: kind of life just kept me here. That's kind of the short answer. but, you know, a couple other thoughts. It's funny you asked because the, the original, the original idea of coming to the States for, for school was really that, Oh, in a couple of years, build [00:01:00] experience and, kind of get the, get the U S street cred and, you know, go back to Asia, it was interesting and exciting market.

Melody: but you know, I think as I, as I moved further along my career, I was really interested in early stage, whether it was on the operating side or on the, on the, on the investing side. And I felt that my personality and my style of working. Probably was more suited for the US work culture, which is more, bottoms up if for lack of better description than, the, the working style in Asia, which from my understanding, still is pretty tough, top down and hierarchical.

Melody: so I feel that. The last thing is, you know, I think about like the big markets. unfortunately, Taiwan is not a big market. so you really have to go to China or Southeast Asia and. I feel like as someone who grew up in Taiwan, I didn't really have an advantage in either of these markets. So I had as much of an advantage as being in the U.

Melody: S. [00:02:00] as an immigrant, which everybody here is pretty much, versus being back to Asia, despite I speak Mandarin and, you know, was native to the, the, the, the culture. So, a variety of different reasons just kept me here and now it's been 20 years exactly. Yeah.

Melody: Yeah. so what were your, hobbies growing up? What were my hobbies growing up? playing video games. Legos, I was like quite a nerd. Um, I, so it's, you know, it's a little timely. So Diablo 4 came out. so I, my, it's funny, my husband actually bought it so that we can play together for, you know, like two hours a week for the, we have young children, so I really don't have time to do this, but We'll play like two hours a week after, you know, on Friday night, after kids go to bed.

Melody: so I, I played Diablo one when I was in, I don't, I can't remember like when it first came out 25 years ago. so I, you know, one, two, three, four, and then played a bunch of other games in, in a variety of genres. And I, you know, did like. [00:03:00] There's, there's a period of time in, in, in Asia where they're like, these like, racing cars are pretty popular, so you, you put them together and assemble them and go to races.

Melody: And I did that in middle school, very extremely nerdy. And in high school, I played Magic the Gathering. So, and then growing up, you know, Lego was like my favorite, but I also had this interest in like running a business, whatever that meant. I remember it, I don't think it was technically kosher, but I would like be like a sticker wholesaler, if that makes any sense, I would go buy stickers and I was like, Oh, let me like cut them up.

Melody: And. Little pieces and let me like make money selling to my classmates. I don't think this is actually allowed, but I just had these like random business ideas that, you know, which I think later pushed me into thinking like, Oh, I want to study business. You know, as a high schooler, whatever that meant.

Melody: Right. So that kind of led to choosing colleges that had an [00:04:00] undergrad business program for my kind of rudimentary understanding of business, but yeah, like playing games and things like that growing up.

Rahul: yeah, and the interesting, uh, business probably is also because your dad was an entrepreneur, you're telling me, right? I,

Melody: Right.

Rahul: I mean a lot of guests that I, talk to on, on this podcast, they, they somehow, you know, in back of their head, mind wants to be like their parents and what they did, probably.

Melody: Yeah. Well, you know, uh, I never really wanted to work for my father. We were too similar in personalities that I, we would just clash all day long, but he started a software business when I was. graduating from middle school, going to high school. So he basically was in the Navy for 20 years and got the Taiwanese Navy scholarship to study here for, for masters and PhD.

Melody: So he was, he was kind of like designing like missile defense system and, and information systems for the army. Not like actually on the ship. So he was kind of a technologist and then he started a software business. [00:05:00] And I just saw how hard it was. And then I also saw how, kind of interesting it was.

Melody: And, and, and over the years I got kind of indirect exposure of that, but that that's not like a family business. That's like a professionally run, you know, professional management team style thing. So that one of them would never make any sense to work with him. And two, I just really did. I would have not enjoyed working with him, but I got a glimpse of like.

Melody: Even for a startup, so to speak, how that looked like starting out in Taiwan. I mean, they had to sell to, you know, customer base all over the world because the Taiwanese market is too small to support a venture scale, software business.

Rahul: Yeah. So, you're a VC now, um, a couple of things I would like to know, as, as a VC, what are your core values?

Melody: What are my core values? I think one is really like honesty and transparency. I think that, you know, [00:06:00] this is more relates to how, how I like to have the relationship with the founder. Founders that we work with and, you know, we're, we're pretty hands on as investor in terms of how we operate, meaning like we spend a lot of time with founders, post investment to the extent that we can really be a kind of a strategic sounding board and be helpful.

Melody: And in order to do that, I really do have to know what's going on with the business. And, you know, we're also seed investors, but we're strictly focused on seed and pre seed. So you don't really have to hide from me, like what's, what's going well, what's not going well, because I'm not going to lead your next round.

Melody: So hopefully like at the beginning of the relationship, we can really establish like a highly transparent and honest relationship, because I feel like that, then you can put all the BS behind and really just focus on what collectively we can put our heads together to really advance the business. And I think the, you know, so I think that's, that's one that's very important.

Melody: And then I think the, the, the other ones are really just [00:07:00] about, you know, we have some core ethos here at next view that are really around the concept that, you know, we're, you know, investors are invited guests to the founder's journey. so there are a lot of things that we try to keep in mind when it comes to that, like, you know, we're invited guests, right?

Melody: So we're not, we're not really running the show and we're not, we got to be respectful in terms of. Helping clean up and show up on time and be prepared, um, be prepared to, you know, read the, read the updates and read the board decks before board meeting, which sounds really basic, but it's actually kind of a low bar and like read the deck before founders come into pitch.

Melody: Right. So they don't, you can go straight into these deeper conversations. I just really, it's such a basic. Because founders job is like 10 times harder than ours is, you know, L and the other thing really realize I like, you know, send past emails in time, right? Tell people like [00:08:00] what your process is. I mean, we can't maintain 100% SLA, but we try to do is, you know, closest we possibly can to that.

Melody: I usually say, Hey, give me a week. And then I'll get your answer, whether it's no, in which way we get out of way really quickly, don't drag it along. We're not going to try to hang around the hoop and wait for other people to decide what they want to do because we make our own decisions. And, or if you, we want to do more work, here's like the roadmap of work that we want to do, which is the level of transparency and timeliness because founders are talking to tens, if not hundreds of investors.

Melody: So the least you can do, if you're not going to invest, it's just like let them know in a timely fashion, as opposed to. which a lot, surprisingly, a lot of investors do, which, you know, they spend a half an hour pitching you the most you can do is spend five minutes and write a reasonably thoughtful email about why you're not going to invest.

Melody: That's my opinion.

Rahul: Yeah. So, you know, you talked about transparency, um, so for a founder to be transparent and open with you, [00:09:00] probably he to trust you, right? So is there anything that you do, to build that trust? Is it just about spending time?

Melody: yeah, I think that honestly, spending time in person, you know, during the, during the, the diligence process and getting to know, like, I think, of course, during the peak COVID, people weren't able to meet in person. And I think that was. That was doable, but that was not ideal. And I think spending time in person, sharing a physical space and really get to know who the other person is as an individual, not just as an investor or as a founder is helpful, at least to me.

Melody: And I think for all the founders helpful to them to really know, like, because you can be like, Oh, I'm going to take, you know, I'm going to take term chief on Firmex because Firmex has. Whatever XYZ on their website, but I think a lot of it, especially at the early stage comes down to who's the person I'm going to be working with. Do I [00:10:00] enjoy this person's presence? Do I respect this person's opinion? And this is mutually, this is not just like founder to investor. I think investors are founders as well. And do I trust this person? And, you don't have to be best friends. Like you don't have to be like, oh, I have to, I wanted, the criteria is not like, oh, I want to grab a beer with this person.

Melody: Would I have a moment of free time? Um, because then you just end up investing in people who looks like you, but it's really about, is there, is there like some kind of foundation to, to build mutual respect and trust? And I think there's no shortcut. I think a lot of it's just, we spend, we spend time. One thing I've started doing recently as of like last quarter, is when we, when I commit to a new investment, like after the money is wired, the deal is closed.

Melody: I do a, you know, I do like a kickoff dinner. and I tried to get together with the founder of No Agenda. This is not even like a kickoff board meeting. It's just like a kickoff dinner to really like formally kick off our working relationship and then during that kickoff dinner, we [00:11:00] get to talk about family and kids and whatever else that is not just like, Oh, what are the milestones you're trying to hit next quarter?

Melody: and I think little things like that can really help. But I think, I think the last thing I would say is that when you want other people to open up to you, you have to open up to them. So I think it's just a showing a level of vulnerability as well. and that, that really helps us. Kind of a foundation of trust.

Rahul: Cool. So, you've been doing, investing for a while. what is the most important lesson that you've learned, so far as an investor?

Melody: what are the most important lessons? I think, you know, this job early stage venture is a very hard job. And if you look at our portfolio and kind of historical patterns of Our earlier funds, which I was not part of that had been, you know, vintage 10, 10 years or seven year funds. [00:12:00] You know, what we learned is that we don't really know which of these companies are going to really become meaningful value drivers of the fund. Not most of the time, not a series A, not even a series B sometimes there's a lot of level of randomness. And I think that's why I feel like the longer you're in this job, the more humble you become, because you really have no idea. Like as an investor, I mean, this sounds kind of crazy. I'm like, wait, aren't you guys supposed to know what you're doing?

Melody: I think at the early stage investor, because it's such a parallel distribution and we have very little data, I think then it's kind of, that leads to my another realization, which is. You know, I think people talk about like, Oh, founder market product, like what aspects you're trying to weigh to what scale I would say up until very recently.[00:13:00]

Melody: I was like, well, you know, team is very important and mark is equally important. but my, my, you know, latest thinking is really that if they're a founder that are truly exceptional, and this is, this is where it gets tricky because the definition of exceptional is very ambiguous. if the found, if the team is truly exceptional, ability to reach to the scale of upside is potentially, five X to the next average top quartile founder, then that's worth being in business with because the downside is exactly the same downside is capped downside for every single investment.

Melody: The downside is to go to zero, which it's not like you take more upside risk, you have more downside risk. The downside risk is exactly the same.

Melody: So I think there's some founders that are truly crossing the threshold of they, you feel like you have conviction that they have ability to really maneuver into whatever [00:14:00] idea space industry that they're in, that the, the opportunity for expense, exceptional exceptionalness is, is higher than the average.

Melody: Then I think that's really what we're, what we're in the business. To find those teams and really try to be partners with them. because that really is the driver for our industry and our sector specifically. But other than that, I think like it's just a level of humbleness. And, and then that, you know, I think the only other lesson I'll call out is. As someone who came from a building and operating background, it is easy to fall into the trap of, you know, you pitch something and I'm like, yeah, that sounds good. If you execute XYZ way and you, the investor come up with the XYZ and then you talk yourself into like, yes, this is a good idea. XYZ is done.

Melody: And it may be like subconsciously or consciously, you're like, okay, let [00:15:00] me work, you know, I'm a hands on investor. Let me work with a team to make sure they do XYZ. I guarantee you that is not going to happen because what founders, what came out of the founder's mouth is what they're going to do. If something did not come out of their mouth, that's not what they're going to do. I think there's very little chance that the amount of influencing. You can do it as investors really going to change the, the way the team executes. So you kind of just have to vet thing as, as if heard, not adding your own interpretation. And I think that's a tendency that early on it's like operator turned investor, like that, those are the types of mistakes that you make.

Melody: And then you realize like, Oh, that's, they're not going to execute that way. So you have to prosecute opportunity and the team just as is without adding your own ingredients.

Rahul: So as a fund, you believe in a very hands on approach, right? but there are also funds, uh, on [00:16:00] the opposite end of the spectrum where, where the belief is that, you know, great founders do not actually need any support. Founders fund, for example, so, and you also mentioned the really, really great founding team.

Rahul: They don't need much of a support. And also, plus the fact that, you know, founders are not going to really, go with whatever thing. So then, whatever that you suggest then,

Melody: what is our job? What do we do?

Rahul: yeah, exactly.

Melody: so here's what I would say. we're not, we're not here to build their business. And so if that's the kind of what you pitch, the pitch is wrong, but I do think there's, there are a couple of things that great founders, we have a lot of example in our portfolio. Second time founders know what they're doing. Founders have built unicorns and IPO and things like that. You're gonna be like, Oh, they know exactly what to do. They've done it before. They've hired huge teams and scaled and da da da. Um, [00:17:00] so for those examples, look when you're, you know, we're in venture capital is a staged financing mechanism.

Melody: Meaning we don't just give a company a hundred million dollars, right? If a company needs a hundred million dollars. We don't just give the company a hundred million dollars because that's going to screw up the company. They're going to spend it. If they have a hundred million dollars, not three plus five plus 50 plus.

Rahul: Whatever, right? So at the basic level, there's always like who on my investor side is going to take the moral ownership of the investor syndicate and work with me as the founder and management team to strategize on the next round of financing. That's a very basic job of investor. Yeah.

Melody: and you know, I think if you survey founders who have been at it for a while, who raised what people call power party rounds, meaning a bunch of small checks, Without a moral owner or elite investor to really have [00:18:00] enough skin in the game to really give a damn about what the outcome, the business, because everybody chipped in a little bit, it's like not impactful for the fun,

Rahul: Yeah.

Melody: you know, those founders were more likely to not tell you that. Yeah, that was not great because almost no early stage companies trajectory go like this. Every company I'm waving my hand, but like every company goes through ups and downs in a very, very early days concept stage before they get a product market fit. There's almost no iconic companies out there. You can go back to the founder story.

Melody: It's like, Oh yeah, we just launched the first thing we launched, just took off like very, very few cases of that. So, so I think that's like job number one is really be the steady presence. To support when it comes to not just like funding next round of financing and help be like the moral anchor and the psychological anchor of that, and really be there to work with the founders on that.

Melody: And, you know, other strategic directions, like strategic [00:19:00] decisions as well, because I've seen examples where they're firms that models are not like us. There's just not, there's not available or present, at times of need. and I think especially in 2023 and beyond, you know, the, the past two years, you just gotta like wipe it out of your brain.

Melody: Like that's not the door. This is the normal now that was anomaly over the past decade. There's going to be more and more of these uncertain moments. And I think we, at the minimum needs to be really like a steady presence. I would say the other, you know, going back to the, kind of the operating, like, Oh, so what does like hands on actually mean?

Melody: I think beyond the being a steady support, like we also, as a firm have a pretty unique model where. You know, we're an equal partnership, so working with each, any one of us is working with a part owner of the firm. And that is actually very helpful and powerful because, again, at the moment of key decisions, [00:20:00] we can make a call and get the team, get the firm support behind it.

Melody: And that's not available at, you know, every single, firm or every single partner you work with. On the tactical stuff, I tend to describe it in a way like as a company, you make probably a thousand, a thousand decisions a year or whatever amount of that direction. And our job is to invest in teams that know how to bring the 10 most important decisions to the discussion table. And that could be informal check ins or formal board meetings. And then we're there to hopefully. You know, it's not like changing the complete trajectory of the business. If the business is going to go like this way, we're not lifting the curve up 50 or 90 degree. I kind of think about, we marginally like lift a curve up five to 10 degrees.

Melody: By saving time, like there's, there are a lot of times where first time founders or even [00:21:00] experienced founders can save three months of mistakes just by like short cutting on decisions that are hiring or that's on the product side. And hopefully we can be there to marginally impact that. But I don't believe that I don't believe that you're changing the trajectory of the business.

Melody: By like that much more. and, and our job is really to, you know, it being a founder is really hard because you're just thinking in your own head, even if you have a co founder, you're just talking amongst yourself all the time. You can't really talk to your employees. Your friends don't really understand what you're doing.

Melody: Your parents don't understand. And your advisors are not deep enough and then talk to you frequently enough to have the context. So, we're finding the next best in terms of showing up and have the context and at least can provide more zoomed out and macro perspective. But end of the day, the founders still got to, you know, they, they decide what they do, but [00:22:00] hopefully we have a slightly, nuanced take on a particular decision.

Melody: That is something that helps with their decision making process. Does that make sense? Yeah.

Rahul: Yeah. and also, I mean, the fact that you guys take very few number of concentrated bets every year, you're incentivized to make sure that the team raises the next round of funding. Right.

Melody: yeah, no, I don't think that is different, you know, that it's not to say that, like, if we make more investments, we don't care. I think it's the nuance there, at least the way we think about how we, how we operate is that we can really spend the energy and bandwidth. a lot of times this is like a bandwidth issue.

Melody: if, you know, one GP is mapped to, you know, done like 20 investments in the last 12 months. Just by definition, you have to like choose where you're spending your time because you have legacy board [00:23:00] meetings. You have companies that are running through all sorts of issues. And we, we like, because we like to make sure that we have the mental bandwidth as well as the actual calendar bandwidth to work with founders as needed.

Melody: We try to really, you know, only take on two to four new opportunities and relationships per year on a per partner basis.

Rahul: yeah, even then it's difficult not to, to keep track of so many things.

Melody: Right. Well, that's, that's, that's our job, I suppose. But, you know, I think, you know, companies graduated from the C stage, right? So, like, at any given point in time, I have five or six things that are truly, like, pre primary market fit C stage. That needs kind of more of active support, if that makes sense.

Melody: And then company either stabilizes, they figure out their business model, or they raise an extra round of financing, in which case I said, Oh, you got new parents. And then, you know, we, we, we step back a little bit in terms [00:24:00] of. Being the active one in the driver's seat, not to say we disappear and turn it to pumpkins, but, in fact, it's quite the opposite because we're usually the first institutional investor to have said yes to the company.

Melody: There's the level of trust that, you know, when founders needs to navigate later stage investors and board dynamics. we can be there to support that because we're, we don't have a dog in a fight, so to speak.

Rahul: Yeah. And, you know, could you share with me, so let's imagine,this is 2020 March or something, you know, beginning of COVID,one of your portfolio company was trying to raise the next round of funding, then COVID happens, then a lot of, investor were already committed to the round, maybe pull back, how do you help this company?

Melody: we had a, we had an example. That's not exactly that, but kind of similar. We, we had a, we committed to a new investment. I think literally like the term sheet was issued the week before COVID. [00:25:00] And then it was signed the week of COVID, something like that. We're leaving a seed round of this company. And, and then the world shut down.

Melody: So that's not the worst. The worst is that this company at the time. Was targeting restaurants and hospitalities. And of course they had like 20 K MRR by the time we, we, we signed a deal to lead the round and then like basically MRR just disappeared overnight. I would say in the history of next view, a hundred percent of the time when we lead a deal, a syndicate gets done, like we would socialize, introduced to co investors and a hundred percent of the time that has always happened.

Melody: This one. Was probably like one of the most difficult ones because, you know, everybody was like hiding their shelves investors and on top of like what the business looked like targeting the sector that was completely shut.[00:26:00] I think, you know, we, we stood by the term sheet and we just work through the, you know, introducing to, to our friends and colleagues.

Melody: you know, collaborators in the, who will, who invest at this stage. And I think it took like three months. She probably took, the founder probably took another 50 to a hundred meetings, if I, if I remember correctly. but it got done. And I think that, I think that, you know, our, our steady presence hopefully helped both the founder psyche and as well as like.

Melody: The co investor who eventually came in, but that was, that was a very difficult situation. And that was something that, I'm sure the founder did not want to live through that again. Uh, but I'm glad that, you know, the business is now post Series A and thriving. but that business could have died had we, you [00:27:00] know, had, had that round that come together at that time.

Melody: So,

Rahul: Yeah. And also see, at that point, I clearly remember nobody had any idea how long this is going to last. Right. So then how did you have the conviction to help?

Melody: you know, kudos to the team. Like they were, they were like really like, I don't, I don't want to call it pivot. Like they really quickly evolved their product offering. And I actually think COVID in hindsight was a positive force in the. Kind of accelerating that expansion of the product offering, because they were forced to do it and then they like got a team together and then launched a new product and then showcase how it went from like a pretty narrow slice of what they were doing to like, Oh, we're actually building a platform and this is what we could do.

Melody: Look, we're already launched. You know, offering number two, and I think that was very helpful in that particular situation. [00:28:00] But I think that was just taught you that when founders backs are against the wall, they, you know, pretty magical things happen. and, you know, and I think we were, this founder also was, you know, I would call that her background was not your kind of Silicon Valley, connected Silicon Valley type.

Melody: Like did not work out of Fang, did not have like 30 Android investors as friends, but she was very good at. The space that she was going after because she, she came, she was, she came from the industry of What she was trying to tackle. And I think that a lot of what we were doing at that point, really like coaching her to talk to this class of people who are VCs and trying to prepare her for what are the questions that are going to come and how they're going to look at the data and, you know, this is how you do cohort analysis and this is how you do layer cohort cake and then like, [00:29:00] and then to your point, like.

Melody: Yeah, she didn't know that before, but like she quickly picked it up. And

Rahul: you know, when, when you're backing people who are more first time, you're looking for their ability to their ability to really learn at a very accelerated pace, because that's what founders have to do. Like every six months, your job is different.

Melody: Your company grew, you have new challenges. You got to like figure out how to do X, Y, Z, that despite, even if you like work at a fame and was like, I don't know, VP of product, you still have not seeing it because you worked at fame. You did not work at a two person company who had to deal with X, Y, Z. So I think that the capacity to learn is another very important trait for early stage founders to succeed and continue to like evolve themselves because the job is different.

Rahul: Yeah. I feel it's unreasonable. You need to be good at a lot of things.

Melody: That's why it's not, it's not a job. You're like, Oh, [00:30:00] let me just be a founder. It's like. I mean, I've done an amateur version of this, but, it, it's just psychologically draining. and you know, you, you kind of have to be crazy. I don't mean like mentally crazy, but you mean like, you have to like, see the world differently.

Melody: And just have the will to run through walls at a sustained for a sustained period of time. And that usually requires a different way of like how you process the outside world and how that how you internalize that energy to. Really like accomplish the mission, so to speak, that you believe in.

Rahul: Yeah. I came across this tweet of yours. So much talent is wasted by founders applying themselves to markets too small. Could you explain?

Melody: Yes. so it's kind of, it's kind of, there's a literal statement that I think, you know, a lot of times I meet, [00:31:00] I meet founders and I keep a log of like all the companies I talked to and brief reason why I passed. And if you go into our log, you'll see quite a few of these comments like founders seem really strong, but the market is too small or the market market is unattractive.

Melody: the, the counter argument is kind of what we just talked about in the beginning of the episode, which is. There is a level of exceptionalness where you can just ignore the market. but I think that bar is very, very high because most of the time people start, let's say, Oh, you know, I am starting in, uh, e commerce space. And then like the current description of my company and product is this, it is very unlikely someone goes from like, I'm working on something in e commerce to. Building LLM ops during prompt engineering tomorrow, right?

Rahul: Yeah.

Melody: However, if you start something in the data space. [00:32:00] Like, Oh, we're doing this part, solving this part of the problem in the modern data stack, I can see that they're like, Oh, actually this is not the right part, but this is the right part.

Melody: This, this part of the data stack is the problem like that. I can see, like, so these two examples are, I think it's just what I said. Mark is too small. Like the overall, like the broadest definition of the space that you're in, given the founder's expertise and like how they arrived at that initial concept. You want to like figure out like if there's a broad enough of a pond to be swimming, swimming in, because yes, you're going to like change directions five times guaranteed from like what people define as pivots to very small change of like, here's our product, product wedge to go into market instead of that.

Melody: So that I completely buy, but I think it's really tough. You know, small market is, is one problem. The other one is like market is not attractive. Like what that means is. [00:33:00] There is no reason that this problem has not been solved so that you're, you're, you're in there probably by mistake that does not have a why now catalyst to really make it an interesting opportunity in 2023. And, or that if you solved it, what you will have to realize five years later is that, Oh, it's not that great of a business. That's why nobody has done it. Or nobody has succeeded at scale, like no meaningful companies come out of solving that problem, even though the problem exists for a long time. So I think I also really try to pay attention to the, you know, whether this is an interesting problem to solve at this time, but I think a lot of times, like. I just feel like people get founders go through the idea maze and then at some point they like cross the chasm of commit committing. And then once they like commit, they ignore the signals that are telling [00:34:00] them no, and only like partially accept the signals that are telling them yes. And I've made that mistake myself before, like I was working on something that was like the market was really sucked.

Melody: when I was a founder and at some point you just try to ignore it and you like partially accept. The signals that are, um, that are, that are additive to your case. And, and then like, you know, then this talent, hopefully, like, I wish this talent was working on something that can give them more of an upside and a tackable tan, right.

Melody: As opposed to what they ended up working on. but I feel like, you know, not just us, I feel like many investors. Meet folks that really liked the team, could not get behind the market. I think that's a pretty common reason for passing.

Melody: Yeah. So, your thesis at next few, um, everyday economy, could you walk me through it and, and the kind of things that you look at, [00:35:00] Yeah. it essentially really just means that we've, we're more problem space first investors, as opposed to technology or business model we're problem space first investors and the problem space we care about are really these habitual and pervasive moments. In everyday workers lives, how you work, how you get worked on different types of workers, data engineers, product people, marketers, sales folks, frontline workers, doctors.

Melody: They're all very different in terms of how they get worked up. And then when we're not at work, we're the everyday consumer. So we think about everyday consumer concerns. We think about sleep, health, caregiving. We think about home buying. We think about home maintenance, transportation. food, shopping, how we make shopping decisions.

Melody: How do we stay, you know, not lonely [00:36:00] and, you know, mental health. How do we save and invest money management? These all very important, moments in our everyday lives. So we invest both at application layer that directly tackle those. What we call broken user experience in these habitual moments. And we also do things that are a layer below. So think enabling technology. So that could mean API layers that can mean B2B2B that are indirectly powering those, but behind the scenes that the end user, whether it's an end worker or an end consumer might not. No, so that's kind of it. That's kind of it.

Melody: There's a pretty broad lens that we look through and, you know, as a result, there are a few things that we tend not to do either is like two layers deep in the infra layer that is too remote from the, the problem statement, or things that are, you know, too [00:37:00] enterprising like cyber, or things are not very pervasive, so it was a very small size of the population.

Melody: So things are like luxury nature. Frequent or not very pervasive. and then the only other thing we care about is like, what is the application of technology? And then we, we hope that there is technology leverage, um, that is part of the solution to the, to the problem.

Rahul: yeah, so, in short, it's something like, products and services that you use routinely, but for the masses for the mass market, is that the

Melody: Sure. Yeah. I mean, I think it's large enough of a slice of the population, right? So again, it could be a slice of the worker population. It could be a slice of the. The consumer population. So we're just thinking about problems that are at work and problems at home and what I, what can still be. 10X better through leveraging technology to solve that.

Melody: And that can mean [00:38:00] boring B2B SaaS companies that can mean marketplaces that can mean FinTech APIs that can mean, hardware company with a software business model, like whoop, that can mean, digital health, like devoted health, which is a, uh, Medicare advantage program. that can mean really deep tech stuff.

Melody: Like we have a company that is building a software layer to manage. battery fleet out there for performance and safety. we have a company that's building software driven LIDAR technology on chip. So precision on chip for autonomous driving as well as autonomous robotics. that's very embed, embed, enabling technology layer, right?

Melody: But then like, for example, the framing of that company is really, If there's going to be an autonomous future in terms of productivity enhancement in terms of having ADAS in passenger cars, that is economical, then this is the type of technology that can unlock that. so that's [00:39:00] kind of how we think about the world.

Melody: So I think it's more of like how we approach the framing as opposed to like. The end product of the types of company we invest is not super dissimilar to most of our peers, probably, but I think the way we prosecute and the way we think about important problem spaces is that we come in with more of a prepared mind and we try to surround those problem spaces with different types of companies and business models and applications of technology

Rahul: Yeah. And you also mentioned, you know, you don't invest in infrastructure layer that are removed from the users. What are those infrastructure layer? Okay.

Melody: like a database company, right? You know, like, Oh, there, you know, with LMS vector databases are invoke. Okay. Thank you. And there are probably great businesses, you know, MongoDB, great business, but we're just not the natural investors for, for stuff like that. But we do invest in the API layer. so a layer above, so like think of a layer right below the application layer.

Rahul: uh, you also have an invest, uh, [00:40:00] accelerator, why, why do the accelerator, why run

Rahul: an accelerator program?

Melody: we've always done things at a concept stage. So we were, you know, despite the growth and fund size and, and, you know, having been an institutional seed investor for a dozen years, I did a lot of our peers have moved up. The stack, so to speak, they kind of wait for post launch and more traction.

Melody: And then they, you know, given the fund model, they don't really want to cut really small checks to invest in true pre season, take on additional risk and work, and, but we've always really enjoyed the concept stage and prelaunch style companies. And the idea for accelerator is really the, I, I call it like a very structured pre seed investing program, meaning it's not like the actual deal itself is not dissimilar to some of our pre seeds that we do, you know, lead a 500k round with 300k check or lead a million dollar round with 750k, [00:41:00] but it has two distinct aspects to it.

Melody: One is. As you know, in venture is very, it's very referral and network driven. And there is a reason for that because the inbox is too crowded. Investors don't have the bandwidth to process every single theoretical opportunity comes at you. So we have to rely on some kind of filtering mechanism to prioritize.

Melody: Now, I also recognize that extremely annoying. Because that really kind of, further concentrate the access in dollars in the hands of people already have access in dollars. So

Melody: accelerator, the accelerator program that we do is really the only opportunity for next view to have an open casting call that we review every single application that comes in. Regardless, whether it's people we know or not, and we feel like that is a necessary thing for us to do, have a [00:42:00] mechanism that is manageable for us. We don't do all the time. We do it once a year that we can really engage the broader community beyond just our immediate network. And the other distinct aspect is that it is slightly more structured compared to our average precede.

Melody: And, you know, they do have this cohort that just graduated a couple of weeks ago is a cohort of seven companies. So it is kind of like a boutique anti YC style. I don't mean by like, Oh, we're going to do everything opposite of YC, like tremendous respect for them, but we try to make it really small. And each of the GPs on the team takes on one or two companies.

Melody: So we'll have five partners. So each partner's point on one or two companies. And I think there's, and then we have some programming around that, our, mentors and talks and conversations that are hopefully directly helpful to companies at this stage. And then they also get a peer group, [00:43:00] which, you know, being a founder is a very lonely journey.

Melody: And then we, earlier we talked about how we strive to be a source of stability and trust as an investor, but end of the day, we are investors. We're not founders, right? So there are certain things that you don't really want to talk to your investors about, and you want to have outlet that is more of a peer support.

Melody: And in this format, they get that and, and they can really amplify the support with each other. And we're doing that by the way, outside of our Accelerator program, increasingly as a broader NextView portfolio, we try to really figure out a systematic and structured way to help our founders, support each other and build really genuine trusted relationships.

Melody: But that's the reason why we do Accelerate program and it's a standard deal. you know, the current, the, the, the one that we just, the, the past two cohorts were 400k at a four cap. And you know, a lot of times we're the only lead [00:44:00] investor in the effective round. And we do a lot of like, we do a ton of legwork in terms of preparing the company when, and if they want to fundraise.

Melody: And then we introduce them to all of our peer funds. And then we said, Hey, you know, we, we, we tell everybody externally that we're not going to lead anybody's next round, but we were usually that we are usually the receiving end of this kind of pitch at this stage. So we, we feel like we can really prepare them to talk to the investors that are just like us when they need to.

Melody: But then we said, we're not going to be any of their next rounds because we don't want to bias. The market and cherry pick the favorites, but we will do our parata when the outside lead round comes together. So I think of it as a really 12 weeks of like very structured and, and, and, and frequent, and we talked to the point partner talks to the companies every week.

Melody: So in fact, it's like more work during an accelerated time than like our average [00:45:00] seed or pre seed investment. and then after that, we graduate to more of a, more of a regular cadence that's more similar to like a true pre seed investment for us.

Rahul: Yeah. And you also specifically go out looking for, the alumni pod track, that I thought was really interesting looking for founders who have studied together, work together. I, I guess the thought is, you know, there is a lot more trust and a lesser chance of a breakup if you've already studied together, work together.

Rahul: Yeah.

Melody: Yeah, the idea is that, You really de risk the team building and, you know, you're kind of like bringing your mini Avengers together of your past lives, right? So hopefully that de risk a lot of the, the, the, the friction around working together and. You can just get right to it. And I think one of the key risks for early search company is the co founder risk and the drama associated with that.

Melody: I think there's probably [00:46:00] some stats that, you know, 30% or something, of early search teams and a breaking up or having some kind of boundary issue of some sort. so that was, that was kind of the idea. And I think the other really, the other idea that came out that, that really, propelled that concept was really that, Hey, there might be people that have been on the sidelines.

Melody: And they just needed a, a catalyst and a push to give them a structure to jump in together. so that's kind of the idea is that, and then the team that we, we have one alumni team out of the seven of this very, this, this cohort that just graduated and we had no one, one of the two, um, through our network and we've, you know, we're like, Oh yeah, there's, he reached out.

Melody: I was like, Hey, yeah, so I was accelerated, you know, there's an alumni pot thing. I have this tech lead that I worked with two jobs ago that I've always wanted to start something together. And maybe this is an [00:47:00] opportunity for me to go talk to him, even though we don't have an idea yet. So that was a, that's kind of the intended consequences of the program, which served as a catalyst.

Melody: For them to be in an environment to start ideating. And then, you know, I say the middle of the program, they came up with a direction to go after. so that's a pretty, that was a pretty interesting experiment for us. I think we'll continue to do that.

Rahul: Yeah. And also you mentioned about a true pre-seed . So there are, there are pre-seed, then there is this post pre-seed seed, seed plus seed, two seed extension, pre-seed, . Pree say, what does all this mean? Briefly,

Melody: Well, I don't, this, this is all founders, founder made up these names. I did not, but I would say at a very high level, we think about it. You know, if it's a pre seed, it's your expectation that in the [00:48:00] next round. Is a seed round. Okay. So what does that mean? That means that like given the business Given the amount of fight the amount of dollars are going into that very first round.

Melody: Do we think that there is? A high probability that you're going to hit a C stage milestone or a series A milestone. So I'll give you an example. Like if a, if it's enterprise company need to sell into true enterprise and raise 2 million, their first round is ready to 2 million given the environment today, and then let's say that you back this team concept state 2 million, given the complexity of the product they need to build the enterprise customer sales cycle, the ACV, the Indian land, the AR metrics, dah, dah, dah. It is probably without knowing the next level details is exactly what this company does just on the surface level that that probably effectively is a pre seed. But and again, it [00:49:00] doesn't really matter. It doesn't matter what you call it like it just so that there's a mutual understanding that the next round is probably a 3, 4, 5 million dollars seed. Because it's unlikely that 2 million concept stage for a very enterprise product can get to the series. They might as well, maybe they could, then they skip it. Then it goes straight to eight. That's totally fine. But I think if you're raising anything below a million and a half, I think that's, you can clearly call out a pre C with a straight face and that people will not look at you funny.

Melody: If you're raising a 3, 000, 000 round and you call it a pre seed, people might look at you funny. And that is where it gets in the gray area because 3, in theory, is enough to do a lot. So if you call it a pre seed, then there's implied expectation that you're not going to use the 3, 000, 000 to get to your Series A milestone. So that might become problematic. And some investors might, again, business models [00:50:00] dependent what ended up happening in reality, right? Especially the past couple of years is that people raised whatever amount, and then they thought, Oh, we're going to. Be able to just raise an A without much of a traction or just based on hype, but depending on what space they're in, and then the market turn and suddenly the, the standard change, which is not very fair.

Melody: So a lot of companies are probably in a situation where they thought they could get to a. But the a milestone is being pushed out because the investors are skittish and waiting for the perfect pitch at the moment so that these companies thought they were going to do it. And then they ended up raising a second seat.

Melody: That's all these funny names that are out in the market. you know, another extreme is like, if you, if you're like a more, if you're founded with some kind of track record and you came out a gay race, a 5 million round, which we've, we've, we've been part of it for a couple of times in the past, [00:51:00] you know, 12 months. Then your next step has to be A, like you raised 5, 000, 000. People judge you based on capital in, total capital in, in time, right? It's, it's like, here are the ingredients that came in and here's the output. I'm going to judge based on like how long that took, how much resource it took and what did you produce with that?

Melody: So whether it's one round or two rounds, it kind of is just that, right? Like, so people judge you on a collection of that. And then the time that's lapsed, because that shows like how fast you execute. And whether how much water in the woods you did, which is kind of a waste of time, but sometimes it's necessary to wander in the woods before you come out and like, get to something.

Melody: Um, so, so I think that's kind of how I think about it. End of the day, it kind of doesn't matter in terms of what you call it. It's just dollars in, and then people are going to judge you based on the output, but it is problematic if you're like a tired, quote, unquote, tired company that you've been around for a while, and then you keep raising these like incremental.[00:52:00]

Melody: And people are still going to look at you funny. It was like, like what happened there?

Rahul: yeah, yeah, yeah. so one last thing. So I know you're a recovering founder, so, but if you were to start a company tomorrow, which three VCs would you call and why?

Melody: Yeah. if I can't call next view, that is, you know, I would say that, a couple of people came to mind. one is a hunter at homebrew. you know, homebrew, the reason is. I really enjoy him as a human being and I think that's kind of the one of the most important things. Like I feel like it's someone that who is genuine, who I feel like I can trust, that we're going to have a good work and working relationship with.

Melody: I've actually never invested with him on a deal, but, but I, I know him, over the years as investors and. And I just feel like we, we're all the same [00:53:00] wavelength and, you know, homebrew changed their model. So they just invest in their own capital. So there's a little bit like family office, which also gives them a lot of flexibility.

Melody: You know, I know because I, I, I'm at a institutional LP back fund and we have certain like fund deploy model, ownership targets and things like that. And I know that they can be pretty flexible because it's their own capital. I mean, they still want like venture return. They're not running a finite size fund.

Melody: So that gives them interesting flexibility. and he's a true seed investor. There's no, I think, but given my role, I have a strong bias against talking to Siri, true series a or multi stage firms. at C. the second name, this is a little recency bias. I was just, I just saw him. So, I just thought of him.

Melody: Gotham Gupta at, TCV. So TCV has a late stage fund, but Gotham is at an early stage version of that. I forgot his exact name, but this is like a separate vehicle that, [00:54:00] he was also a founder. And same, similar reasons that we're off the same wavelength. I like him as a human being. He is more, his fund is more of a series A investor, investment.

Melody: So it might not be good at like concept stage, but I feel like he can give me pretty genuine and open advice. and And, be able to kind of be a support and probably even like do an angel size check, which is, is interesting. And then the third slide, I think I reserved to like, depending on what, what I'm doing, because I think there are people that I can think of.

Melody: It's like, Oh, if I'm building a marketplace and I'll have these people I want to talk to, if I'm building a digital health company, if I'm building a FinTech for company concept. So I think that I'm usually, you know, because we're a generalist against here's my personal bias. Like I actually think the best investors are multidisciplinary, but I think depends on [00:55:00] the problem space I'm tackling, there might be some.

Melody: Folks that have a very, specific set of network and know how, especially more highly regulated industries like healthcare and fintech that can supplement, my existing network and know how. So I think the third slide, this is a little bit of copped out, cop out, but the third slide is probably reserved for, You know, depending on like the business model, because there are, there are folks that are, that are going to be, very specifically helpful and valuable given whatever I might be doing. But to be clear, I'm pretty happy as an investor. so, you know, hopefully being at an early stage investor side is my, as my last job, but you know, this is a fun question.

Melody: Nonetheless.

Rahul: Yeah, this is fun, thank you so much for taking the time again to do this.

Melody: Yeah, no, thank you for, thank you for having me. Glad to, glad to be on, on the show.