Hey Lucas, thanks for agreeing to chat with me.
Before I pick you brain on any one topic, I'm curious about your path from programmer to VC. I know a bunch of VC's, but I don't know as many who come from a technical background. How does your background as a hacker influence how you evaluate companies?
Thanks for inviting me.
I guess my background influences a lot of how I look at companies and what I find interesting. Because of my time working as a penetration tester (breaking into networks and applications) I tend to be interested in cyber security companies. And given my programming background, I like companies with deep tech that I feel I can understand a bit better than those with no programming experience.
I think, as an investor, understanding your biasses is something one has to do. Everyone is biased, but knowing how and why that affects your decision making is critical for good investing.
Penetration tester is an awesome job title (is this different from hacker?)
What's your craziest hacking story (one that you're allowed to tell us about)?
The term hacker has a long history; one usage of hacker is a clever way to do something. "Thats a great hack" could refer to a lot of things.
This for instance:
http://gph.is/1muujHE (I tried to upload this as a picture or video, but couldn't)
A penetration tester is another way of saying ethical hacker.
Early on I was testing the website of a major electronic retailer. It turns out that they stored the price as variable that was loaded in the page. If one changed the HTML of the webpage it would actually change the underlying price. We had a large screen TV shipped to the office for $1 plus the cost of shipping. Obviously we sent it back, but it was a pretty graphic example of what could go wrong.
I also got to test a lot of the early electronic voting systems. Can't say whose, but it wasn't pretty.
Yeah, it pays well. I don't know about going rates today, but I think you make a premium to a developer, and they get paid pretty well.
A lot of people end up doing independent or boutique consulting, and that is a lucrative gig. Of course it comes with the stress of having to sell your services.
There's a couple things I like about this stage.
First, it is may be the most exciting time; the company has its whole life ahead of it.
Second, decisions made at this time can have a huge effect on the trajectory so I feel like I can have more impact.
If you want your investments to feel like family, this is the best time to get involved.
One thing that you did not say (and I'm glad you didn't) is that getting in early allows you to exploit economic efficiency in your favor. I hear this from a lot of VCs and it drives me crazy. It seems so adversarial for what should be a real partnership.
Am I out of line here?
I wouldn't say you're out of line, but I wouldn't let it drive you crazy either. The reality of the situation is that early stage investing is risky and that investors need to be compensated for that. Is talking about that in strictly economic terms a bit crass? Probably. But it doesn't change the fact that investing pre product / market fit is really risky.
If you have traction and metrics, any good investor can see that and will invest. But without traction, that obvious ramp, the investor has to take a leap of faith. It might be in their knowledge of the market or in the management team, but either way they are making a decision with very little data. While we as an ecosystem like to lionize this type of risk taking, the VCs doing it still need to produce good returns for their investors.