EP004: Developing Remote Muscles is Critical, A Venture Capital Perspective

Stephen Marcus from Riot VC is the founder of six hardware + software companies and an investor in dozens of others. He manages a pre-seed and seed portfolio of companies that have a combined enterprise value of $15 billion and generated revenue of more than $600 million in 2018.

 

He joins Tony and Ron to share his insight on how startups are dealing with the COVID-19 crisis and what issues they face. How do you onboard strangers? What about managing a workforce reduction? What do you do with employee stress remotely?

 

Tune in for an in-depth chat about the realities of adopting a remote workforce as well as the implications of an off-site future in terms of building company culture as well as mental and emotional health.

 

Key Takeaways

 

[1:35] Tony welcomes listeners and introduces today’s guest. Stephen Marcus has been an entrepreneur for 20 years and a VC investor for a few years now. Having gone through three crises (2001 bubble burst, 2008 recession, and now this), both as an investor and business operator, gives him an interesting perspective on what the future may hold from an investment standpoint.

 

Nuclear winter incubator [7:20] In March of this year, investors pulled back, however, venture capital invests for longer periods; history, and experience, have shown Stephen that the best time to invest for the long term is during nuclear winter.

 

Stephen shares some practical advice in the face of this pandemic lockdown: Triage your portfolio and see who has enough cash to make it through the turbulence.

 

This kind of setting is particular in terms of business; it gives people time to work on new products and reduces team size, talent is abundant, and costs of business go down.

 

Liability [12:50] Requesting that employees come back to the office may in and of itself be a liability when there is a risk for them to contract a virus. So it is likely that they will choose remote work long term but if you’re not used to it, it’s hard. How do you set up your environment to be effective?

 

Developing remote muscles [14:27] Nothing beats the high bandwidth of face-to-face interaction. When it comes to building culture, Stephen has found that you have to have opportunities to socialize in different settings; find a way to let down your hair.

 

Onboarding virtuals [20:55] How do you hire people you’ve never met in person? How do you onboard them and efficiently blend into the team? Those are some of the issues raised by Stephen’s portfolio.

 

Band-aids [22:06] How do you manage employee stress and the bad news cycle that comes with reducing your workforce? Companies have had to take stock and, in certain cases, cull. Stephen speaks to what he’s seen in his portfolio when it comes to reducing workforce.

 

He offers that the answer to a lot of the issues is communication, keeping people abreast of the why — Tony proposes an interesting caveat.

 

Dropping shoes and sleepless nights [26:46] Ron talks about his own startup and what decisions he has had to take in this highly unpredictable situation. He touches on his worry of the austerity trigger being pulled, effectively tipping us into a Great-Depression-level event.

 

The professional/personal meld [31:30] Startups are a unique beast that requires you to be on all the time; if you sprinkle in family life and the grind of remote work, you end up with a steep mental and emotional tax. Ron offers that creating white space for yourself — and your employees — may be a good practice to implement.

 

Steve points out that it’s one thing to be efficient but we have to take time to shoot the proverbial sh*t.

 

The big Kahuna [37:50] Working from home is a hot topic right now, and there are no definitive answers; we’re all flying almost blind.

 

Welcome to the expensive zoo [38:05] Although some states are opening schools, Ron believes that no rational parent who can avoid it will be sending their kids back. Schools serve a daycare function that not everyone can afford to mitigate and this will, without a doubt, raise economic divide issues.

 

Competition and herd discrimination [42:30] Stephen proposes that this situation is accelerating a trend to move away from expensive cities, as well as an exodus towards states quicker to open and provide a nurturing context for business. Not only this, but he also sees it as an opportunity for the twenty-somethings — with their invincibility — to fuel this growth.

 

Ron offers that this may give rise to a new form of discrimination, from testing before re-entering office life, to ageism.

 

A pressure cooker inside a pressure cooker [45:25] Startups were high-pressure disruption, leading change, and fast lifestyles before coronavirus. With the remote grind being the new prolonged norm, what will this mental and emotional tax become?

 

Hawai’i on Silicon Valley salaries [49:50] Twitter going remote — despite Ron’s passing cynicism — means more Silicon Valley salaries with more cool places to live, at least for a while.

 

Remember that time Yahoo failed? The guys share a laugh at when Yahoo went remote and nothing got done!

 

Optimism, dry powder, and phoenixes [52:23] Where businesses die, new ones arise. Big companies will get stronger and consolidate and there will be room for innovation.

 

Stephen strongly believes that this is the best time, ever, to start a company. The cost of opportunity is low, all the component costs of business are low and VC is abundant. There is plenty of dry powder.

 

[56:05] Tony closes out the podcast on this resolutely optimistic note: it will undoubtedly be an interesting 6, 12, 18 months as we continue to grow through this.

 

Thanks for tuning in.

 

Mentioned in this episode

Riot VC

 

More about our guest

Stephen Marcus is a futurist and believes our world will continue to bind together with machines. He invests in technology companies attacking massive markets with full-stack hardware plus software solutions. He’s especially excited about building the future of transportation (air, land, and sea), global real-time data feeds, smart infrastructure and cities, fully automated manufacturing and production systems, and the connected human body.

 

Learn more here

 

More about your hosts

Podcast: tonywongpodcast.com

Agile Coaching: Agiletony.com

Executive Coaching: Agiletony.com/mental-and-emotional-agility

Twitter: Twitter.com/agile_tony

LinkedIn: Linkedin.com/in/tonywongdigitalonion

Youtube: Youtube.com/channel/UCJyT0C_nrzAZ9GhmOXaSRRw

 

Co-host Ron Williams on LinkedIn: Linkedin.com/in/ronwilliams