Stay Focused. Stay Engaged. An interview with Venture Capitalist Greg Sands

Greg Sands

19 Feb Stay Focused. Stay Engaged. An interview with Venture Capitalist Greg Sands

My guest is venture capitalist Greg Sands. Greg is the founder and managing partner for Costanoa Ventures, an early stage VC firm based in Palo Alto, California. I can tell you I’ve met Greg and he’s got passion. Passion for life and passion for entrepreneurship.

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Resources:

Twitter: @gsands, @costanoavc

Website: costanoavc.com

Interview:

Mitch Matthews: He worked, even as he was growing up, worked in a community bank, so he started to get to know the ins and outs of entrepreneurship early and up close. In college, he even co-founded a micro enterprise incubator in East Palo Alto. Before founding Costanoa, Greg was a managing director at Sutter Hill where he had a number of huge successes. Plus he was the first product manager at Netscape Communications where he helped to write the business plans. He even coined the name Netscape and built SuiteSpot a business unit. That unit went from zero to $140 million annually. Amazing. No schlep either. He went to Harvard for his undergrad, Stanford for his MBA. But most importantly, he’s the proud father of four, and apparently around Palo Alto, he simply known as Sara Sands’ husband. I know what that’s like. I love it. Hey Greg, welcome to Dream, Think, Do, buddy.

Greg Sands: Thanks. It’s great to be here with you.

Mitch Matthews: I love it. So, okay. Many, many facets to venture capital. How do you describe specifically what you do?

Greg Sands: Well, our job is fundamentally to find extraordinary entrepreneurs working on important problems and then make an investment and support them through the entrepreneurial life cycle and journey.

It’s extraordinary work. I honestly feel grateful to do it everyday.

Mitch Matthews: I bet. And I’m sure peaks and valleys, adventures and horror stories all go along in that. Again, as we got to interact even in Jefferson, it was just obvious you are in a sweet spot where you’re really truly getting to do something you love. Now we’ve got a lot of different people, as you and I have talked about, we got a lot of different listeners to Dream, Think, Do, but a lot of younger listeners also just anybody that’s kind of also trying to find that sweet spot in life. So I love to ask some questions about that a little bit as well. When did it start to sink in that maybe this was your gig? This was your jam? Was that at an early age as well? Or was that something you uncovered over time?

Greg Sands: No, uncovered over time. I mean it’s interesting. I would say my career has not been one that’s been planned very top down. I tend to be bottoms up and kind of sense of direction and push towards it. So I was working at a consulting firm out of college. I was working with pharmaceutical R&D and environmental technology and I basically decided to go to business school at Stanford because I wanted to put myself in the middle of Silicon Valley. And I didn’t know that much about it, but it felt like the right direction for me to focus on smaller organizations and entrepreneurial organizations and technology driven organizations.

Greg Sands: And so I just throw myself into the middle of it. And then within that ecosystem just started exploring. And so I happened to be introduced to Jim Clark as he and Mark Andreessen were founding Netscape. So some of that is right place, right time, as you mentioned. Got to write the first business plan and shipped the first products and build the suite of Internet server software. And in the end, by virtue of being in and around that ecosystem, playing a hands on role first as a product manager and software business and in and around the emergence of the Internet, actually got a call about the venture capital business. And I hadn’t really been thinking about it. But as I spent six months talking to people, exploring, getting to know the team at Sutter Hill, I came to to think that it was a place that would use a lot of my skills that would move some of my passions and the things that I care about and am excited about. And I found it to be really rewarding.

Mitch Matthews: That’s awesome. I love that. It’s so amazing the number of successful people that I talk with, you know, when we start to dive into their history from the outside perspective or the from the 30,000 foot view, it definitely looks like a straight line. Right? But you dive in and you’re like there’s a lot of squiggles, right? And a lot of curly Q’s and not necessarily straight lines. But man, there’s some richness that is all … It kind of in the name of experimenting, trying to find those things that you’re really good at, that you’re passionate about. And it’s good to hear that that’s definitely your story as well.

Greg Sands: Yeah, I think it is the case that these navigations of what kind of people you put yourself around, what kind of environment you put yourself in really matter. And that I think working hard and trying to do a great job at whatever it is you’re doing because it’ll open additional doors and leaving yourself open to serendipity is a is important. And to me it’s this really interesting balance of, okay, I got to be curious, I got to be willing to grind. I got to be tenacious and resilient. And I’m willing to let life unfold. And often what unfolds before me is even better than what I would have planned for myself.

Mitch Matthews: Yeah, I love that. But I do think there is something to proxemics, right? Putting yourself in situations where you increase that chance. There’s different reasons for everybody choosing different positions, different jobs and especially different schools. But for you to be able to say “Alright, I want to go to Stanford because of where that puts me as far as …” You know, obviously a well respected school, but more so to be able to say all right, that gets me in this metron of Silicone Valley and allows you to start to get into the laboratory. You know, get you access to the laboratory early on, which I think there is a lot to say for that. I mean, it’s that combination of working hard but then open yourself up to those opportunities. So I love it. [crosstalk 00:07:53]-

Greg Sands: And I showed up here. I really didn’t know anybody in northern California. I didn’t know Silicon Valley at all. Now obviously that’s a great platform to throw oneself into, but there are a lot of those in the world. I think this question of who do I spend my time with? Who am I going to learn from? Who is going to help show me who’s going to be my river guide? Right? Who’s going to help show me [inaudible 00:08:19] ? And you know, those are actually quite central decisions in life.

Mitch Matthews: I love it. I’m guessing that’s something you’ve continued to ask yourself.

Greg Sands: Absolutely, and that goes into, for example, starting Costanoa six years ago. So it was just about this time six years ago where I launched off into, do an essence, some of that. I was in a wonderful job and a wonderful firm. People I still like and in touch with. But I did sense that one, there was an opportunity ahead, right? That this idea of a new modern style firm but dedicated to craft of venture capital, focused on enterprise technology and companies that change the way the world does business. It just hadn’t been done yet.

Greg Sands: And so there’s part of me … And then the question is well, why not me? Why not now? And in the end it always is a little bit like jumping off a cliff, but I spent a little time looking around and finally said, “You know, I think this is it and I think I can pull it off.” And there were a bunch of things that were really scary about it. Some of which is pride. Some of which is ability to take care of the family and financial [inaudible 00:09:39] and the like. But in the end, honestly the biggest impediments were ego and what if I fail.

Mitch Matthews: And how’d you push through that? I mean, I couldn’t agree with you more, but it’s one of those that I think those is silent killers of so many dreams, right? Things that we never have heard about. Like I think some of the best written books, some of the best companies never come to be because of those questions. What were some of the things you did to push through those specific fears?

Greg Sands: So one thing is just start taking action. And a bunch of those actions are small and early. Just in my case, it’s start writing a Powerpoint slide. Start writing the presentation. And the first versions of it were terrible, but I had to start. The second is figure out who your board of advisors is. So in the end, really there were four or five people in the very beginning when it was still an idea and I hadn’t yet left my job and I was thinking about it. Who are those people where you can have the unguarded conversation with when you don’t know all the answers? That requires a degree of trust and it requires people who know some things that you don’t know. But to me that’s the critical next step. And you put those two together and then that kinda gets you onto first base. And once you’re on first base, it’s pretty hard to look back and say “No, I should really go backwards.”

Mitch Matthews: Right. Absolutely. It’s kinda got that built in momentum and built in accountability.

Greg Sands: That’s right. And so that doesn’t mean that the … So I’ve said this publicly before, there were days where I came home and thought to myself, I don’t know if this is going to work. I don’t know if I can do this. Raising a venture capital fund is a sales job. Excellent salespeople are used to getting turned down and I really had never had a sales job. I hadn’t been turned down that much in my life. I took it very personally. It was very painful. And on the other hand, so one, I’m married, right? That helps a lot, right? So I have a great supporter in my wife, Sarah, where I could come home and say “I’m scared. I don’t know if it’s going to work.” And she’d say “I love you no matter what and you do whatever you think is best.” And then tap me on the back as I head out the next morning to keep going.

Mitch Matthews: Yeah. Wow. I love it. I appreciate you shooting straight with this too because I’m sure. And I would also think that venture capital, with enterprise tech especially, that’s a long cycle. That’s not we start this thing and we’re going to start making money in a month. Right? That’s you gotta have the long game perspective. So I would imagine getting to first base, it’s getting around the horn but also staying with it. And what would you say, what are some of the things that you do to stay … I mean obviously I know you guys have had some breakout successes and things are going great, but what are some of those things that you do to stay with it? To stay focused, to stay engaged?

Greg Sands: So there are really two branches on that and I’d say one and I’ll keep coming back to this is one of the ways to have the energy to keep going is to focus on stuff that you care about. And I think actually the human spirit has basically boundless energy if you’re working on stuff that you care about with people that you value and like. And so literally number one has been to try to, I mean, again, this is the luxury that comes with having founded the firm, but you know, trying to shape it so that we’re working on stuff I care about and the team is extraordinary and holds each other up rather than tearing each other down. That’s a big part of it. And it doesn’t mean there aren’t parts of the job that you don’t love or parts of the job that aren’t as emotionally rewarding that you still have to do because you have a responsibility to the organization.

Greg Sands: But there’s this ability to craft it in a way that actually frees your own energy for it. So that’s one. The second is, for me, there are really two critical things. One of which is I have found for that exercise is a great stress reliever for me and just lets me calm down and sweat out some of his stress and the like. Obviously for other people it’s meditation or walks in the woods. My staple exercise is the Saturday morning bike ride through the redwood trees and the nearby mountains and it’s really quite exceptional. But people find that in different ways. And then the second is, as you noted, I’ve got four kids and just being able to focus on the family and recognize what’s important. And so in my life, of course, the kids and a family being healthy, happy and productive, are what’s important. That’s the big stuff. All of the work stuff, relatively speaking, is little stuff.

Greg Sands: And if I can add one more nuance to it, I’ll say the combination of really trying to recognize the great luxury that we have, even just to work on stuff that I like and that I care about. Have a sense of gratitude. And some of that is building context for the rest of the world by travel, by reading, by other things to realize, oh man, I got it awfully good. And therefore I should honor that by working hard at it and trying to be really good at it.

Mitch Matthews: That’s awesome. I love it because it’s, you know, just even to reflect back. I think that focusing on stuff you care about, I mean it is … In some ways it’s maybe easier and I just did air quotes right? “Easier” when it’s your own organization, but I’ve talked with plenty of entrepreneurs who started a business based on the goal of doing something they were passionate about, but they let it evolve to things they weren’t passionate about. Right? It’s almost worse than just having a job, right? But to stay focused and to really, again, direct things to things that your passionate about, things that you care about, that matters and is powerful when you own or direct or manage the organization. But I think that’s important for all of us. Right? Whether you’re dream, think, do or whether you’re in the role of ownership and a founder. If you are fantastic.

Mitch Matthews: If you’re a manager, if you’re on the line, right? It’s that whole thing of figuring out how can you focus on some things that you’re passionate about and they may just even be side projects. They may even be hobbies outside of work, but to be able to say, all right, how can you keep focus? How can you stay on fire by focusing on some things that you care about?

Mitch Matthews: But I think the exercise aspect … Now you do have the trump card of riding a bike through redwoods. Yeah. I mean, come on. It doesn’t get much prettier than that. But at the same time, it’s that whole thing of finding your thing, right? Whether that is hiking, whether that’s swimming, whether that’s whatever it is, but it’s that release is huge. But I can say that gratitude piece, I could see that in you when we were meeting. It’s like while we were going around, like you were curious, you were grateful to be there. You were grateful to interact with people. Like that gratitude is just a part of who you are, which is amazing because I would imagine, especially in the venture capital world, and I’ve met a number of people in the venture capital world as well. It’s interesting how gratitude … I wouldn’t say that’s the most seen an attribute of lot of the folks [crosstalk 00:17:50] think of a nice way to say that, right? So that’s something I’m guessing you had to cultivate yourself.

Greg Sands: Yeah, I mean, so venture capital in particular and Silicon Valley in general, I think a lot of what gets projected out is arrogance and swagger, and there is some of that here. But as I’ve written in some of my posts, one of which was the real Silicon Valley a couple of years ago, there are a bunch of hard work and people who care what they work on and are trying to do things that they think are positive and impact the world in positive ways.

Greg Sands: Honestly, I get to spend most of my time with those kind of people. And I’ve found that for me … I grew up in Minneapolis, although the bank was in St Paul. So same metro area. There is a little bit of the Midwestern values that I think flow through and I feel like I frankly I like who I am better if my feet are on the ground, if I’ve got some sense of humility and gratitude. We’re operating in a world in these early stage businesses where there’s way more that’s unknown than is known. So marching around making declarative statements that this is for sure going to take over the world or this is the best entrepreneur or we’re the best venture capital firm, frankly, I don’t … You know, when people say it and I’ll believe it when …

Greg Sands: And so I found that there are plenty of people that I can build a relationship of trust with where we can really partner well together that haven’t … The guard down a little bit lets you collaborate in a really unique way. And it’s Long Ben said “You want to go fast, go alone. You want to go long, work together.” Right? And I think that’s true in our firm. We’ve got a real sense of teamwork and collaboration. And it’s true in how we try to work with the portfolio companies in which we invest and be a critical supporting element on their entrepreneurial journey. And we may not be the right partner for everybody. We don’t need to be the right partner for everybody. We’ve been able to do it in a way that’s authentic to our values and to who we are.

Mitch Matthews: I love it. I think there’s so much power in kind of knowing who you are and as you do that … And like how your approach and like attracts like, right? It’s just that. I love that. I think that’s awesome. Which is a great segue into one of the other areas that I want to talk with you about is, you know, here you are interacting with people that are pursuing, pitching big ideas, right? They’re passionate, hopefully. They’re excited, all of that. I wanted to talk with you about what are some of those things that you look for to be able to say “All right, that’s an idea. That’s a person that I want to invest in. That we should invest in”, because I wanna talk about it from the standpoint of venture capital, but I know you’ve cultivated a lot of this in life as well. So when you’re looking at a person, an organization, a technology, whatever it is, what are some of those signals where you’re like okay, this is right?

Greg Sands: Yeah. So I often say that the luxury of being an early stage investor is that we get to focus on people and products. And I think what I call the bulge bracket firms and the bigger funds and the like really have to focus on analyzing market size. And we ge to focus on people and products. And frankly those are the things that I care about. And so let me start with the products. Really, we try to think like that early product manager. Like my job coming out of graduate school, which is how important is this problem to people? How do they do it today? How many people are involved in doing it today? How quickly do they make decisions? How often do they make the right decisions? When do they take data out of one system and put it into another system? How frequently are there errors? How expensive are those errors?

Greg Sands: So, if there were some product that we’re going to substitute for the way they do it today, what would it absolutely have to do? Right? What would be nice to have features, but what would it absolutely have to do? And if you did that, how much would it be? How much would it be worth to them? How much would they be willing to pay? And so to me that kind of early work on products that’s how we get to the initial understanding of oh, is this something that we might want to do at this very early stage where there might not be a customer, the product might not have been built, it might be two people and 20 PowerPoint slides. And we do that sometimes, right?

Greg Sands: So we’ve got right now between our two offices, Palo Alto and San Francisco, we’ve got four companies incubating in which we invested at that stage of development. So that’s one. On the people side, to me, I’d say the key traits that we’re looking for are I’ll call it drive rather than passion. I just want to know that it’s someone who gets out of bed in the morning, lands both feet on the ground and just can’t wait to keep going. And with that, a sense of tenacity and willing to fight through challenging periods and walls that come up and the like. The second is I’ll call it curiosity. And I think this translates into what I recommend for people early in their careers, but for sure it’s true with founders where they just have to want to learn more because the day that we write a check, they don’t know all the answers.

Greg Sands: So they’ve got to know more about the market and be curious enough to learn about different segments and different potential types of partners and new technologies that might influence. And just have this quest for knowledge that they’re going to synthesize into action. And then the thing that ties the two together, the question of oh, is this … People sometimes talk about the idea of founder market fit, right? Is this the right person to take on this project? And ultimately they’ve got to come in with a unique insight into the market. So most often in this very early stage, it’s hey, I’ve seen this gap in the market and I’ve seen it in a way that nobody else has seen it.

Greg Sands: So it’s not even I’ve taken a known problem and solved it in a way that nobody else could solve it. Often it’s I’ve framed a problem or I framed the question and identified a problem that other people aren’t working on yet. You have taken this curiosity and drive to go figure it out and put together a solution or a proposed solution and taken some of those early steps to show what might be possible. And so sometimes people come from a domain. Right? There’s an origin story that says, oh, I can see why this is the person to go do it. So when I was in business school, Jim Collins, the famous author was teaching the small business class, he used to talk about the origin story of LL Bean where it literally was wet feet, make boots. You know, he was a hunter and a fisherman and he would tromp through in leather boots and his speed always got wet. And finally he was like, why is nobody making boots that’ll keep my feet wet. How about if I rubberized them? Right?

Greg Sands: Other times there are people who are looking for a problem. And I’ll give a great example. A young man named Brighton Shang, he’s the founder and CEO of Aquabyte, which is a portfolio company we invested in and then incubated here. And it is taking computer vision and machine learning, what often gets lumped into the modern artificial intelligence stack, and applying it to fish farming. And he had no prior experience with agriculture. And to his credit he had skills with these technologies and he was looking for a place to apply them. And he didn’t just sit in his room. He had talked to a family friend who was a professor of aquaculture and said “Hey, this might actually work.”

Greg Sands: So you talk about what are those first steps? What the action? Well, he started going to fish farming conferences and he made himself a fish farming native. And a lot of that industry is in Norway. You know, he ended up flying to Norway and meeting people in Norway and he is now an expert. And this is 18 months later, right?

Mitch Matthews: Wow, yeah.

Greg Sands: It is possible to make yourself an expert on a new thing. But it takes that drive to go say I’m curious, I’m going to go figure it out, I’m going to keep going, I’m going to take step one and then step two and step three. And so when you come back for us to people and product, it’s that intersection that we’re looking for the early stage.

Mitch Matthews: I love that. I love the drive and curiosity because I think you’re exactly right. I think so often somebody might have an idea, right? And inkling, oh, this could be big. I think I could be excited about that. But then what happens? They tend to run into all the things they don’t know. Right? And it’s that whole thing of being able to stay curious and drive and be able to say okay, I don’t know them, but that doesn’t have any indicator on whether I could be successful or not. It just means I need to learn them or surround myself with people that know. That kind of thing. So I love that combination. And again, it might sound so simple, but yet it’s key and-

Greg Sands: Well, I think it’s absolutely critical and if I think about the future potential founders out there listening, so one, you can learn anything, right? There’s infinite information available on the Internet and in libraries and in books and then the second, many people including myself learn even more by talking to people and talking to experts. And one of the things I learned early in my career and I learned it as a consultant, but I’ve got other people who learned it by selling Cutco knives as college students, is just reach out to people, just pick up the phone and call, send an email, people will talk to you. So you want to go make yourself an expert and throw yourself into some community to go be part of it and know enough to start a company. Just start calling people.

Mitch Matthews: Yeah. I mean it’s truly, if you show genuine curiosity and honor them as well, people generally love to talk about themselves, right? Love to share their stories and share insights. And that’s a true compliment. But like you said, you have to push through what might even feel like fear to reach out because yeah, somebody might say no or they may not respond at all, but some will and that makes all the difference.

Greg Sands: Absolutely. Look, a bunch won’t respond and they’re busy and it’s okay. But a bunch of people will and frankly it’ll be more rewarding the more you know. Right? So you read and you watch videos and you read everything that’s online and then you come in, you’ve got good questions and good ideas and someone will be impressed by that and say oh, why don’t you talk to so and so. Let me introduce you. And just keep going. And so even if you think about my fundraising process, I’d never raised a dollar in my life and I had to go meet new institutional investors.

Greg Sands: Honestly, what did I do? I went to my friends. I went to the people that I’d been investors with before and I called them and I followed introductions. And if they weren’t the right people, they introduced me to other people. And so I didn’t have any great top down plan. But in the end, you earn your way into those relationships. And by virtue of having been a good co-investor and partner for years, many people honored me by making introductions to potential investors and I just kept following leads. And that I think is … It takes a little bit of hubris and it takes being able to show up as knowledgeable and driven enough that you earn it. But anyone can do it.

Mitch Matthews: I love it. I love it. That’s fantastic. And I’m guessing the Dream, Think, Doers are charged up right now. So let’s offer one last word of wisdom because so much of this has been so great. But let’s, let’s talk to that specific person who’s got the idea. Maybe they’re like okay, I’m going to take Greg’s advice. I’m going to reach out, I’m going to start. But what’s that last piece of advice? Maybe something that’s helped you either stay with it or to start. What’s that one thing we can send people out with?

Greg Sands: Find the person who believes in you. And by the way, it may be your spouse or significant other, which has certainly been a significant part of my story and it may be one or two other people out in the work environment. But finding the person who believes in you, that’s going to keep you going, it’s going to sustain you during the difficult periods. And those advocates from the domain are the ones who are going to help you navigate your way to other people who will make a difference. They’re going to be your fixed reference points for frankly references, judging other people who might be a part of your team, part of your journey. They’re going to be the references when you’re out trying to raise money or fight your way into other things. So you find those people who believe in you and just keep finding them. Build your tribe. People talk about finding your tribe. Build your tribe.

Mitch Matthews: Yep. I love it. Well, I think also it’s that finding that person who believes in you. If you think as you hear Greg say that if somebody comes to mind, you’re like that’s my person. I’m so grateful for that person. Tell them thank you today. Right? But if you can’t think of someone like oh gosh, no one comes to mind. Like who believes in me? Well, I think one of the best ways to find that person is to believe in someone else, too, right? Like support someone, encourage someone, be that person for somebody else. And my guess is you’re going to start finding a whole lot more of those people for yourself, too. So-

Greg Sands: That’s right. And by the way, the one thing I’ll add to that is you know you think about so if you’re in college and you’re taking your first job or you’re moving jobs. That question of who am I going to learn from here? Right? Pick people as much as other things and say “Who am I gonna learn from here?” And then, by the way, go in and do a great job because that person might be one of your true believers. You might have to earn it, but getting one of those true believers is you partly do it by nailing this stuff right in front of you.

Mitch Matthews: That’s exactly right. I love it, Greg. Man, this has been action packed and wisdom full. How can people find out more about your work? Where can they find you on the worldwide webs?

Greg Sands: Yes, absolutely. So, we are at costanoavc.com. So C-O-S-T-A-N-O-A-V-C, as in venture capital.com. And we write a lot there. So we’ve got an active blog both myself and some of my colleagues and partners write a fair amount about entrepreneurship. We also do that on Medium and on Linkedin. Those are the best places to find us. We love seeing entrepreneurs with bright eyes and bushy tails hammering after the stuff that’s important to them. And so, wish you all great success and boundless energy as you take on the challenges of today.

Mitch Matthews: I love it. Thanks Greg. Appreciate it. Keep up the great work.

Greg Sands: Thank you so much, Mitch. Great talking to you and to your listeners.

Mitch Matthews: Alright Dream, Think, Doer. What stood out to you? I’d love to hear from you. Leave a comment and let me know what stood out to you!

Talk soon!

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