🎧🍌 Illegal Immigrant to $160m Fund 1: Inside Villi Iltchev’s Journey Building Category Ventures
The evolution of Silicon Valley, his biggest career mistake, why profitability always matters, advice for founders selling their company, and why you should raise your Seed round from Seed investors
Villi Iltchev is the founder of Category Ventures, where he invests early in enterprise software startups.
We go inside his journey immigrating illegally from Bulgaria to Greece, and then to the US, and lessons building Salesforce’s venture arm, where he invested early in companies like Airtable, Zapier, GitLab, Remote, Hubspot, Gusto, and Box.
Fresh off raising his $160m Fund 1, we get into how San Francisco and Silicon Valley have changed over the past 30 years, and the opportunity he saw to start Category.
He also shares biggest mistake of his career, advice for founders selling their company, why unit economics and profitability always matters, how developer tools went from terrible to amazing businesses, the mistake that almost killed GitLab after he invested, and why you should raise your seed round from a seed fund.
Timestamps to jump in:
3:22 Illegally immigrating from Bulgaria to Greece
5:14 Moving to the US by himself in high school
13:15 Moving to SF in the Dot Com Bubble
15:49 How SF changed over the last 25 years
22:27 Why HP fell from the top of Silicon Valley
25:36 Building Salesforce’s corporate VC arm
30:29 Why SaaS was so transformative
34:35 Angel investing in Airtable
39:52 The biggest mistake of his career
42:13 Why unit economics always matter
47:20 Biggest mistake when selling a tech company
49:00 Almost starting a software PE firm and landing in VC
55:45 Lessons from August Capital + Evolution of venture
59:22 Early days of dev tools + Investing in GitLab
1:09:50 Why being contrarian is dumb
1:11:45 How GitLab almost died and emerged stronger
1:16:48 Villi’s journey to starting Category
1:25:22 Category’s thesis
1:30:48 Why startups always come in batches
1:31:57 The importance of track record in venture
1:35:32 Deciding a $160m fund size
1:39:26 Why you should raise seed rounds from seed firms
1:43:40 What Villi looks for in a startup
Referenced:
Category’s $160m Fund 1
Gitlab’s Recovery Stream
Why SaaS won’t consolidate like traditional enterprise software
Find Villi on X / Twitter and LinkedIn
👉 Find on Apple, Spotify, and YouTube
Transcript - (read on Rev)
Find transcripts of all prior episodes here.
Turner Novak:
Villi, welcome to the show.
Villi Iltchev:
Thanks for having me.
Turner Novak:
So I thought a really interesting place to start, I usually don't get into people's stories to begin the podcast, but I think you have an awesome one. I saw you tweet before about, you were once an illegal immigrant. Can you just tell us the story?
Villi Iltchev:
Yeah. That was a long time ago and not in the United States. When the communist war in Bulgaria collapsed, so did the economy and things got really bad. That's 89, 1990, 91. Things were really rough in Bulgaria. There was lack of the basics. When the state collapsed, everything else collapsed, and I had a pretty good childhood in Bulgaria. My parents were engineers. My dad worked at the Academy of Science, but when the war collapsed, they lost their jobs, everybody lost their jobs. And so, and crime was off the charts. It was a tough time in Bulgaria. And so, in the spring of 91, my parents decided to immigrate to Greece and we had a three-day visa to go there. We actually separated into separate cars, my mom and my sister, my dad and I, so that people wouldn't suspect we're immigrating, if we were all together. And so, we crossed the border, went to Greece.
I have some Greek heritage too, so we have some family in Greece, and so we just never went back home and we stayed there illegally. I was there illegally before I came to the U.S for 18 months. My parents stayed there for six years afterwards, supporting me. But yeah, I was illegal there, which is part of the reason I came to the United States. I was going to a Greek high school, I learned Greek, but there was just no future for me there. I couldn't go to college there. I couldn't do anything. I was in 10th grade, I was 15. And so, my way out of that situation was to apply to a bunch of boarding schools in the U.S and the U.K and see if I can get a scholarship somewhere. And so, I went to the U.S consulate, made copies of random boarding schools in the States and sent a bunch of applications. And sure enough, a month and a half later I got a letter from some random boarding high school in Georgia. And then-
Turner Novak:
Did you remember applying to that one? Or just a-
Villi Iltchev:
Not really, I wrote random letters. And so, they offered me a large financial aid package and I went to my parents and I asked them if they would be willing to send me, which was a big ask. My dad was digging ditches, working in construction. My mom was working as a maid. Both of them are highly educated engineers. I really wanted to come to the States and get out of that tough situation we were in. And so my parents agreed. And so I came here when I was 16 and never went back home.
Turner Novak:
How did you do college?
Villi Iltchev:
I was completely ignorant at the time. I finished my junior and senior year in high school here. When it came time for college, my college counselor said, "Hey, you're a good tennis player." So I missed that part of the story. When I was a kid, I played a lot of tennis. I was a good tennis player, and he said, "Would you like to try to play tennis in college?" And I said, "Sure. I need the scholarship. I can't afford to go to college otherwise, so I need all the help I can get." And so my college counselor basically applied to a bunch of random, small private colleges in the Southeast, on my behalf. And so, this small college in the middle of nowhere in South Carolina accepted me, gave me a tennis scholarship. I never visited the college before I decided to go.
Turner Novak:
Really? Okay.
Villi Iltchev:
I mean, I didn't have a car, I didn't have anything. I was at a boarding high school. So-
Turner Novak:
In Georgia, and this was in, you said South Carolina?
Villi Iltchev:
That was in South Carolina. So my college was literally in the mountains of North Georgia, 20 minutes away from my high school. From Tennessee, North Carolina and South Carolina, right where they all meet in the corner, in middle of nowhere. So yeah, so that's how I went to college and I think the first 10 years of my life in the States, that was before I even had access to a computer, were just me in complete ignorance, stumbling around and getting by and getting through whatever the next milestone was.
Turner Novak:
Yeah, it seems like falling forward though. You were always moving ahead and you were at least not getting trapped anywhere.
Villi Iltchev:
I was, I wouldn't describe that period as a purposeful period in my life. I was a kid with nobody here and nobody to guide me, just getting through whatever the next... College was the next milestone. So, I went to college. When I was graduating from college, same thing, complete ignorance. What am I going to do now? I need to find a job. And I ended up going to grad school by accident. I majored in philosophy, took a bunch of accounting classes too, and my accounting professor said, asked me one day, "What are you going to do when you graduate?" And I said, "I don't know. I need to go find a job." And she said, "You should go to grad school." And I said, "Well, I can't afford grad school. I'm here on a scholarship. My parents don't have money to send me to grad school." She said, "Oh, you're a good student. You don't need money to go to grad school. They'll pay for it."
And so, she literally drove me to Clemson University the following week. I met the faculty. I applied and sure enough got a fellowship that fully paid for grad school and off I went, not because I wanted to get a degree in accounting, not because I wanted to be an accountant, it was the next thing I could do, short of getting a job and it would've been hard for me to get a job because not a good school, just graduating. I was on a student visa, so it would've required somebody to sponsor me. I didn't have anything unique about me or unique skills to want somebody to sponsor me. And so, off I went to get a graduate degree in accounting. And I would say it was around that time, I started to figure things out. I was graduated top of my class. I had job opportunities now with people willing to hire me and sponsor me on an H-1B visa, which is actually quite topical these days.
And the rest is history. I stumbled my way through my childhood here in the States, and then I was a bit more purposeful after that point. Prior to that, I just didn't know what I was doing. I was completely ignorant.
Turner Novak:
Well, I mean, you're kind of growing up in, I don't know if chaos is the right word, but it's not a very structured, simple, easy environment. There's a lot of challenge as it sounds like. So it's probably hard to be purposeful when you're just trying to survive.
Villi Iltchev:
I was just on my own. I just was on my own, didn't have any parental figures or mentors to guide me through this. It's one of the bigger regrets I have because I was a good enough student and a good enough tennis player to go to a really good college, for example. I could have played at a good university and had a better-
Turner Novak:
You just didn't know.
Villi Iltchev:
I just didn't know. I had no idea what I was doing. Funny enough, my wife has the same story. She grew up in Florida, played tennis, first kid in her family to go to college. She's smarter than me, more talented and all that. She could have gone to play tennis and go to a great university somewhere, and she didn't have anybody to guide her because her father was a fireman. Her mother was a hairstylist, and so she just didn't have guidance either. And we both ended up at this tiny little college.
Turner Novak:
Oh, really? Was it Erskine?
Villi Iltchev:
It's called Erskine College in the middle of nowhere in South Carolina.
Turner Novak:
I think I saw a student body was 900 people or something like that.
Villi Iltchev:
Oh, it's tiny. It's tiny. As I said, it's a regret I have. I had a good education, I had a good experience overall, but if I could do it over again, I certainly wouldn't choose that path.
Turner Novak:
And then, right out of school, did you figure, "Okay, I'm doing accounting. I've got this master's degree in accounting," I think you did a little bit of public accounting, it seems like, and then you got a MBA.
Villi Iltchev:
Very little. I actually, after I finished the graduate degree at Clemson, I had an opportunity to join the broker dealer inside PWC. So PWC at the time thought they can have any investment banking practice, and we did a lot of infrastructure investment banking work, so a lot of project finance and infrastructure investment banking. So think, toll roads, power plants, bridges, or even prisons. All of these large massive infrastructure projects that could be financed on a project basis.
Turner Novak:
These are cash flow positive infrastructure projects though.
Villi Iltchev:
Yeah, for sure.
Turner Novak:
That's a good thing for cities to be thinking about.
Villi Iltchev:
And we did a lot of work with multilateral agencies in DC, basically building infrastructure and developing economies or doing privatization work. So for example, the government of the Czech Republic would want to privatize their electric utility distribution assets. And so, we would help them and structure that process to make sure that privatization is successful. That was year 2000, and so the California Power Crisis was going on at that time, and so there was a lot of actually investment in energy technology as well. And so because we knew energy and power, we also ended up doing a lot of advisory work and working with startups at the time, building sterling engines or what is now standard remote monitoring electric meters and stuff like that.
Turner Novak:
And this was also in the dot-com bubble?
Villi Iltchev:
Dot-com bubble, yeah.
Turner Novak:
Kind of happening that are building and then falling.
Villi Iltchev:
Yeah, and funny enough, I was really into it at the time. I was reading all of the tech blogs at the time and super fascinated with what was happening in the world of software, even though that wasn't what I was working in or focused on at the time, I was really into it. And yeah, I spent three years doing investment banking work, and then my wife had graduated from Darden University of Virginia, the business school. She went before I did, and we wanted to stay together. We were living in D.C at the time, and the best business school nearby, driving distance, was University of Virginia.
Turner Novak:
Oh, really? How close is it to D.C?
Villi Iltchev:
It's like two hours.
Turner Novak:
Okay.
Villi Iltchev:
It's in Charlottesville. And so, that's how I ended up at University of Virginia, getting my MBA.
Turner Novak:
Okay. And then, after that, you worked at Merrill Lynch for, I think it was four years or something?
Villi Iltchev:
Yeah. So, still an international student. And so when I was graduating from Darden, the only career paths for me, basically companies willing to sponsor international students on an H-1B, were the consulting firms and the investment banks. So, in a weird way, my career path was chosen for me. I couldn't go take any job. I didn't want to be a consultant or an investment banker, but-
Turner Novak:
But you had to.
Villi Iltchev:
But those were the only two jobs I could get where an employer was going to sponsor me. And so, I ended up having an opportunity to join Merrill Lynch here in San Francisco, doing technology investment banking, and that's what brought me to San Francisco and California in 2004. It was a better place for me. It was more aligned with my interest in tech and software, specifically. It was a better place for my wife, who was a product manager. And so, that's how we came to San Francisco 20 years ago.
Turner Novak:
How has San Francisco changed since then?
Villi Iltchev:
It has become certainly more tech-focused and dominant. At the time we came here, the technology ecosystem was mostly in the valley and San Francisco was a much more diverse town from a industry perspective. I'm not saying better or worse, it just was. A lot of the McKesson was still based here. I think McKesson ended up moving out of town, and so it was just more... Bechtel large construction company was based and founded in San Francisco. There was the retail and brands and furniture. It was just more of a-
Turner Novak:
I think the Gap was here.
Villi Iltchev:
The Gap was here.
Turner Novak:
Some other retail industry.
Villi Iltchev:
And so, I think the big change over the last 20 years was just the emergence and dominance of technology in San Francisco. A lot of tech ended up moving from, when creativity, we were building a lot of infrastructure, semiconductors, optical equipment and stuff like that in the 90s here, when software emerged and creativity and design and user experience started to drive a lot of the value. Turns out a lot of those people actually wanted to live in San Francisco. And so, I think a lot of tech moved to San Francisco over the last 20 years. So it's changed in that sense. In many other ways, it hasn't really changed much. I don't know that it feels much different than when I arrived 20 years ago. The homelessness and drug addiction that we see is more of a recent phenomenon over the last five or 10 years. Certainly with Fentanyl arriving to the States, that is certainly a change for the worse, and I hope we can address it because it's just-
Turner Novak:
It's really sad.
Villi Iltchev:
It's really sad.
Turner Novak:
I walk through, I mean, I live in Ann Arbor, there's a little but it's not the same.
Villi Iltchev:
Yeah.
Turner Novak:
Walk through downtown San Francisco and I feel like the things that you walk past, you wish that that was not happening.
Villi Iltchev:
It's very depressing. These people are really sick. It requires a massive endeavor in policy to address the problem. It is certainly a local problem. A lot of it is also a national problem. Drug addiction is in Ohio and in Michigan and everywhere. Here it's in your face, you see it, you can't escape it because of the policies we have here are tolerating a lot of the open market drug dealing, et cetera. It attracts a lot of these people, who are sick, by the way. But we certainly need a more focused and policy and driven approach to clean this up and help these people. It's really sad because these people are dying on the streets and we are kind of numb to it. But I think that's been a change that has made the city less livable, it's really sad what's happening. But again, I'm optimistic. I've always been optimistic. A lot of people during the pandemic went to different places and would debate what's the best place to live.
And I still find San Francisco to be the best place in the world for me to live. I love it here. I love the ecosystem. I love what we're building, the impact we're having. And so, I'm really happy here, but I do want San Francisco be a functional town. We have an enormous budget. I was reading a stat yesterday that we have a $12 billion budget for a town that is 800,000 people.
Turner Novak:
Yeah, I was going to say, the budget to population ratio, is very favorable.
Villi Iltchev:
Oh, it's off the charts. You have all the money, but government is not working for the people. It's dysfunctional, it's corrupt. We're not addressing our challenges, whether it's housing or drug addiction, et cetera. So, I'm really hopeful that we have made a turn here and San Francisco will achieve its potential of being this amazing liberal city, but a functional city that allows lower income and successful high income people to live and raise their families here.
Turner Novak:
Yeah. Speaking about reaching their potential, you mentioned something earlier about the rise of software creativity in San Francisco. The company you joined was Salesforce. They were at the front of SaaS and software. How did that come about, getting that job from investment banking?
Villi Iltchev:
After spending about four years in investment banking, I had gotten married. So now I had a green card...
Turner Novak:
All right, okay.
Villi Iltchev:
... and I actually could be more, explore and actually go get the job I wanted. So I decided to leave banking in 2008, a few months before the financial crisis, which was great timing. And I called my two best clients. I had done a lot of work for HP, and I had done a lot of work for Salesforce. And-
Turner Novak:
So I guess I'm curious, what kind of work were you doing? Because when most people think of investment banking, they think you take them public. Those are both public companies. What were you doing with them?
Villi Iltchev:
Well, so a lot of advisory work for Salesforce, both on things they were considering acquiring, though they hadn't really acquired anything at the time, but you can bet a lot of people wanted to acquire Salesforce. And so, I'm not going to talk about anything that's not in the public domain, but people wanted to buy Salesforce, have always wanted to buy Salesforce. And funny enough, there was always a price. [inaudible 00:21:40] was a very commercial and rational person. At the right price, he would've sold the company, but it was always next year's price, and people were always kind of missing the forest for the trees and penny-wise and would walk away over pennies.
Turner Novak:
So, he just wanted the extra 30% price appreciation that he'd get if he sold next year, and no one wanted to pay that today?
Villi Iltchev:
Yeah, basically.
Turner Novak:
Interesting.
Villi Iltchev:
And so, we had done a lot of work with Salesforce over the years, advisory work. Same thing with HP, both on acquisitions. We had advised them on the acquisition of Mercury Interactive and other things, any equity offerings or debt offerings they wanted to do, we had done all that work for them. So anyway, I called my two best clients. Salesforce, this is 2009. They're like, "Villi, we're a tiny company. We don't do anything interesting. We don't really need somebody with your skillset. Let's stay close." And HP said, "We would love to have you join us." And so, I joined the strategy team at HP. My role was basically to help their enterprise hardware business or servers, storage and networking equipment.
Turner Novak:
Did they still have printers or was it [inaudible 00:23:02]?
Villi Iltchev:
They had the printing business as well. That was a $30 billion business at the time. They had four businesses. They had the consumer business, the printing business, their software business, and their hardware business.
Turner Novak:
What was their hardware?
Villi Iltchev:
Hardware was server storage and networking equipment. So, they competed with Cisco on edge routers and they had their server business and they had their storage infrastructure business.
Turner Novak:
How big was HP at the time?
Villi Iltchev:
So that was an amazing opportunity because HP was on top of the world at the time. That was one of the largest companies in the world, like a $100 billion in revenue.
Turner Novak:
Oh, wow.
Villi Iltchev:
Massive.
Turner Novak:
I don't even hear about HP anymore.
Villi Iltchev:
Yeah, massive business. They came out of financial crisis in unscathed. They were just in such a great spot, but really poor leadership. You could see at the time I was there, the short mindedness of the leadership team at the time, Mark Hurd was the CEO who passed.
Turner Novak:
What mistakes?
Villi Iltchev:
Cost cutting, not investing in R&D. He completely gutted the R&D organization and basically HP, which was what you thought about Silicon Valley in terms of innovation and engineering and they had their labs, completely gutted it. And at the time, as U.S was rising, we had a $30 billion servers and storage business.
Turner Novak:
Oh, wow.
Villi Iltchev:
And I would ask basic questions like, "If customer wants to buy computer storage infrastructure, maybe they want to buy a box, but maybe they want to buy a service. Why can't we do both? Why do we need to sell them a box? Let's rethink this business."
Turner Novak:
So, what was the answer or the rationale?
Villi Iltchev:
It's just not what we do. It was just-
Turner Novak:
Was it too small of a market at the time?
Villi Iltchev:
Small market, cannibalizing our existing hardware business.
Turner Novak:
Did it have lower margins?
Villi Iltchev:
I mean, the irony was, and I remember seeing the data back then, because scale was so important to HP, they were selling hardware, servers and storage, at zero or negative margin to their top 30 customers, so they can make money on the long tail. But-
Turner Novak:
Just because you have so much economies of scale that the [inaudible 00:25:30].
Villi Iltchev:
The economies of scale was so important that they were willing to take a loss on their largest customers. Anyway, so how I got to Salesforce, I got a call about 15 months later from Salesforce, and the guy that used to run the corporate dev team there, John Somorjai, an amazing boss, amazing guy, he basically said, "Hey, Villi, we actually want to get more active on the strategic side. We want to build a proper corp dev function, start to take advantage of the opportunities we have in our ecosystem to start flexing our muscles and be more strategic."
Turner Novak:
This was emerging out of the financial crisis, probably-
Villi Iltchev:
Yeah, 2009.
Turner Novak:
2009, okay.
Villi Iltchev:
"And we want to build an investment arm. We want to start being more strategic with how we deploy capital and building relationships with the startup ecosystem, et cetera. Would you consider joining us?" And in a weird way, that was probably the best thing that happened to me career-wise, because Salesforce was such an impactful, relevant company at the time. Salesforce at the time, 2009, was bigger than the entire SaaS ecosystem combined. It had about a billion dollars in revenue. You add all the SaaS companies at the time, you couldn't add up to a billion dollars in revenue.
Turner Novak:
Oh, really? And Salesforce was public.
Villi Iltchev:
And Salesforce had gone public. And so, they were just an extremely relevant forward-thinking company. So right leader, right space, right time, and back to my interest and passion in software, I could see the writing on the wall that SaaS, as an industry, as a way of delivering software and consuming software, was extremely disruptive to the software industry. And that's where the puck was going. So it was just a great opportunity for me to join Salesforce. Public company, but very early in the emergence of software as a service and ride that wave. And that was just an amazing experience. We had a front row seat and everything that was going on in the software ecosystem at the time.
Turner Novak:
Yeah, so you mentioned to me before, it was like shooting fish in a barrel. Just the experience [inaudible 00:27:44].
Villi Iltchev:
Yeah. I mean, we started slow. We didn't have the muscle yet, and so we were building it both on the investing side and the corp dev side. But you were sitting at the top of the hill looking around and thinking like, "What are the relevant spaces around us? Where's the puck going? What are the emerging markets in the software ecosystem?"
You look at Dropbox and content management and Box. That market didn't exist, right? Dropbox started with a file sync tool that nobody even knew what that was, or even could imagine that would become a real enterprise software company-
Turner Novak:
Yeah.
Villi Iltchev:
and-
Turner Novak:
... I had Aaron at Box on the podcast couple of months ago, and he's like, "The category didn't exist." It's [inaudible 00:28:34].
Villi Iltchev:
Yeah. It didn't exist. And so, I would meet with Aaron and these amazing founders at the time, and because we were such a relevant company in the space. Most of them, if not all of them, there are only two founders I can think of that didn't want to actually take capital from us. Tobi at Shopify was one of them.
Turner Novak:
Oh, man.
Villi Iltchev:
And he-
Turner Novak:
Why did he not take money?
Villi Iltchev:
And the other one was ... Who wouldn't return my calls? I think... 1Password, I think, wouldn't return my calls... So, I forget. But basically, we had the ability to invest in anything we wanted to, and we took full advantage of it. Invested in HubSpot and MuleSoft, and Anaplan and Adaptive, and-
Turner Novak:
Zapier Box also. Yeah.
Villi Iltchev:
... Zapier Box, Dropbox. After I left Twilio, they did an amazing job, and founders wanted to engage with us. We were a good partner, we were a good player in the ecosystem, and it was just an amazing program we built, and they scaled it to the next level after I left. But it was just an amazing time to be at Salesforce.
Turner Novak:
So, what did you learn from Salesforce? It sounds like you got to see a lot, you had good access? Any big lessons?
Villi Iltchev:
Yeah. I mean, I learned a lot. I mean, as I said, I had a front-row seat at everything that was going on around us. And whether that is all of the planning tools or content management, or all the ETL tools that were happening, the platforms. I ended up leading the acquisition of Heroku, which actually ended up leading me to GitLab many years later. But we had a front-row seat, and I learned so much about the industry and software, and the business models, and what worked and what didn't work.
And so, it was just a really amazing experience. Software as a service, at the time, was such a nascent business model. Nobody knew how to value these things, how to think about the business, the unit economics. What's the role of services in a company like that? If you look at traditional enterprise software you got all of the value in a sale, up front. And then you would sell the customer a maintenance contract. That was approximately for 20% of the value of the initial sale, and that was your recurring stream.
Turner Novak:
Would you resell more licenses later when they [inaudible 00:31:06].
Villi Iltchev:
You could sell more licenses, but most of the value was sold up upfront. The reason SaaS was so impactful, and took over traditional enterprise software was, it was a much friendlier delivery model for the customer. It lowered the cost of the upfront cost of buying software. It kind of democratized software, so that now small businesses had access to software that was previously only available to the largest companies, now you-
Turner Novak:
Because the cost came down?
Villi Iltchev:
Because the cost came down of adopting software. You don't need to buy a server, or I can put it somewhere in a closet, and then spend a year customizing or implementing it, and hiring an army of service providers and consultants-
Turner Novak:
Who would resolve to pay for all that, right?
Villi Iltchev:
... you had to pay for all that upfront, versus now, for 20 or 50 or a $100 per employee per seat, you can get access to world-class software that was previously only available. And so it's significantly lowered the cost of software adoption and deployment for the customer, it significantly lowered the switching cost for the customer. And so now the vendor is incentivized to continue to add value over time, or you will turn. You will turn. Versus previously, all the investment is upfront, and the customer was incentivized to stick with it for as long as they possibly could.
Now, unless the vendor is continuing to innovate and add value, and make the software better, customers, were going to turn. So it was just... I don't know that SaaS is actually a better business model for the vendor. Again, you have to spend the same amount of time selling it, and you recoup that value over time-
Turner Novak:
You have to continue supporting that?
Villi Iltchev:
... and supporting it. So the unit economics in SaaS are not necessarily better. It's not necessarily a better business model for the vendor, but it is certainly a better business model for the customer. And because it was a better business model for the customer, that's what really allowed SaaS to take over and scale.
Turner Novak:
To just increase the market size?
Villi Iltchev:
And that's the other thing is, I remember reading when I was at Salesforce in 2009, '10, '11, '12. I remember reading research reports from Gartner, whatever. And they would say that the size of the CRM market, which includes support, sales, and marketing, would be like seven, $8 billion. I was like, "How does this even make sense?"
Turner Novak:
How much revenue does Salesforce have today?
Villi Iltchev:
I mean, when I joined... Today, it's like 30, 40 billion in revenue run rate business.
Turner Novak:
Yeah.
Villi Iltchev:
So yeah, it expanded the market enormously, enormously. And that was the impact. Previously, software was a small nichey market available that sold to the largest companies. And now a business the size of one, probably uses 20, 50 applications in business.
Turner Novak:
And that might be the one server purchase, is now 20 different products?
Villi Iltchev:
Yeah, yeah. So lots of lessons there both industry and markets, business model.... It was just a great place to get educated and smart, on enterprise software.
Turner Novak:
You mentioned specifically Angel invested in Airtable. Is there a story there?
Villi Iltchev:
I had met Howie Liu, the founder of Airtable, I want to say in 2010, maybe '11 timeframe. He had started a company called eTax that was basically creating a social profile for an individual. So how do I take everything that we know about Turner, his LinkedIn, his Facebook, his Twitter profile, his any other... And enrich it into one profile of who Turner is-
Turner Novak:
Automatically?
Villi Iltchev:
... automatically, so that if I want to sell something to you, kind of look you up, I have a better sense for who you are, the things you care about, so I can do a better job selling. So he had started a company early on, and we acquired his company, because we wanted Salesforce to be that place where a contact is enriched, and you can see the full profile.
Turner Novak:
Yeah. It sounds like a pretty good feature, in the Salesforce-
Villi Iltchev:
In... Exactly.
Turner Novak:
... what the [inaudible 00:35:54] of the profile?
Villi Iltchev:
And so Howie ended up joining us and building that inside Salesforce, and he ended up leaving about maybe a year or 18 months later. And he knew he wanted to start another company, he didn't know what that was going to be. We were very close, we were friends. He became a bit of a Renaissance man. He went to a design school, he traveled really trying to explore and think about, "What do I want to do next?"
He had a lot of ideas, I remember meeting him at a bar, we would catch up once a quarter. Meeting him at a bar and he was going to start a photo sharing app, and he was showing me this amazing demo he had built, and I'm like, "I'll invest. I'll fund it." He's the type of person that is an amazing engineer, designer and business person in one package, it was just-
Turner Novak:
That's a killer combination. Yeah.
Villi Iltchev:
... extremely rare to see. He was just a special, special person. And I didn't care what he was going to do next, I wanted to be an investor in whatever he was going to do next, because he was really special. I even tried to convince him to start a company with a friend of mine. I remember being in my kitchen trying to talk him into building a dating app for friends, and friends dating on Facebook.
Turner Novak:
Okay.
Villi Iltchev:
And he was kind of intrigued and liked the idea, but that's not really what he wanted to do. And so maybe at some point in the future, like six months later, he ended up calling me. He said, "You know, Force.com is such a massive market, the ability to build your own application, such a massive market. But Force.com is just not the right product for it, it's really hard to use. You need to know how to code, you need to know all that."
Turner Novak:
Never heard of this before?
Villi Iltchev:
Force.com is like the Salesforce app building platform.
Turner Novak:
Oh, it was a Salesforce product?
Villi Iltchev:
Yeah, yeah. It still is-
Turner Novak:
Oh, interesting.
Villi Iltchev:
... it's a massive business. It's what made Salesforce successful, it's basically the ability to build custom objects and create your own application, build your own workflow. So Salesforce very early on, what made them successful, really is the ability to create custom objects, to build your own workflow and application inside Salesforce. And so people use it in a very CRM-ish ways, but people do all kinds of things with Salesforce. Customers extend it into their entire business process.
And so he thought that robust database in the cloud, which was Force.com with a much friendlier user experience on the front-end, Airtable, a spreadsheet, a grid, that everybody knows how to use, is the right way for him to disrupt that market. And his insight was, that if you look at 90% or more of what spreadsheets are used for, are to create lists. Basically people use spreadsheets as a database, oftentimes most of the time, the majority of the time. And so he said, "I'm going to build a app building platform, but in a way that is accessible for any user with a very familiar user experience." And so as I said previously, I didn't care what he was going to build. I wanted to be an investor in his company.
Turner Novak:
Yeah.
Villi Iltchev:
... and so I said, "This sounds great, I want to invest." And so ended up being an Angel through that relationship and friendship I had with Howie very early on. And yeah, he's just an extraordinary founder and individual.
Turner Novak:
And so this was like 2013 maybe, was when this all happened?
Villi Iltchev:
Yeah. I think 2013 is when he started Airtable.
Turner Novak:
It seems like you did two other really shorter kind of core dev stints? Were those interesting?
Villi Iltchev:
After Salesforce, I had an opportunity to kind of take the next step as I thought, in my career. Which is, I wanted to be an executive at a public company, become a Section 16 officer, which is the three people that kind of run the company.
Turner Novak:
Sounds fancy?
Villi Iltchev:
Sounds fancy.
Turner Novak:
Yeah.
Villi Iltchev:
And so I was recruited to be one of those three people that ran the company at LifeLock, which is an extraordinary business by the way. Just an amazing company, an awesome business. I kind of consider that a mistake in my career to be honest with you. Largely because, "Wow, it was an amazing business, an amazing career opportunity for me," all of that. LifeLock wasn't a relevant company in tech ecosystem. What I-
Turner Novak:
I think of my grandparents or something?
Villi Iltchev:
Exactly. And what I quickly realized is, that I may be very successful and all well-paid and all of that. It was in many ways a career dead end, because I was becoming less relevant to the ecosystem the longer I stayed at LifeLock. And so very quickly I had this thought that I need to... If I want to have a career in tech, the thing that matters the most is relevance. And I give this advice to young people that come into the tech ecosystem. And my advice is, "Don't worry about title, don't worry about money. Worry about working at a company that matters, that people care about, that is pushing the envelope or innovating in different ways. That is the best place to be in the tech ecosystem, And that's what you should optimize for."
And so, long story short, I had invested in a Box when I was at Salesforce, I knew Aaron really well, I admired him. And so I reached out to Aaron and I said, "I think I'm going to leave LifeLock. If there's an opportunity, I would love to talk to you about it." And so Aaron very quickly kind of jumped on it. We met up for coffee. It was the year before they went public, and so-
Turner Novak:
Was this the first kind of attempt? Or was it when they actually did... Because I remember they kind of-
Villi Iltchev:
Yeah. Yeah, yeah.
Turner Novak:
... it was like a failed IPO, but they waited a while?
Villi Iltchev:
They waited a while, because I think at the time there was this switch of growth at all costs, to we actually care about unit economics.
Turner Novak:
Yeah. I'll throw the link to that episode in the show notes, if people want to listen. But it was kind of like they had got the company set, he thought they were in a great spot, and then when they posted the S1, people were like, "What's going on?"
Villi Iltchev:
Yeah. You're burning too much capital or unit economics upside down. So they had to spend 12 months or 10 months, whatever it was, to improve the unit economics and basically show people that this is not just a fast-growing company. It's actually a good business too.
Turner Novak:
It's a profitable business.
Villi Iltchev:
It's a profitable business, the unit economics makes sense. And actually a lot of founders make mistake. A founder I worked with, I remember making the comment to me that, "Well, last year everybody cared about growth at all costs. Now people care about unit economics." And I'm like, "Hello? People always care about unit economics. That never changed. You should never lose sight of the fact that you're building a real business, a company that eventually needs to be profitable, and successful and thriving."
And so I think when capital gets loose and things are hot, people lose sight of that, and then bites them. That's never a good thing. It's never a good thing for you to really get the unit economics so far away from you, that it's going to take you a year, or two or three to recover. And actually that recovery process is really challenging. It's never pretty, it rarely works out well, actually. In the case of Box, yeah, it's really hard. You know, it's-
Turner Novak:
What makes it so hard?
Villi Iltchev:
Well, it's easy to put fuel in the fire behind positive unit economics, right? It's very easy to invest behind what is already working. When you have poor unit economics by definition, now things are not working very well. Your CAC to payback is like north of two years. You are very inefficient at acquiring customers and growing. And so trying to get back is actually really hard. It's really hard to go back from two, three years, CAC payback, back to a healthy place.
It takes years, and it's not pretty, right? It is just a very challenging things. Once companies get into this mode of spending money, and solving problems with money, as opposed to creativity, nimbleness, be efficient, solve problems with better product or whatever... You can always throw money at the problem. And I think when money is loose, people end up throwing money at the problem. Every problem they have, they hire more people. So it's really hard to get back to being a nimble, efficient, good business.
Turner Novak:
How does it get to that point though, where your CAC payback is two years or three years? While you're people are giving you more cash, and you keep investing in something that might not be working? How do you usually see that play out where you get to that point, even to begin with?
Villi Iltchev:
I mean, we saw it over the last four years, right? And we kind of go in these cycles where, when cost of capital is really low, your willingness to extend your CAC payback grows. So when capital is loose, well, interest rate environments, people are willing to... Because capital is cheap, to basically lend money to their customers in some ways, and build a less efficient company over time. So anyway, yeah, I think Box, when I joined, they were on file, and they hadn't gone public yet, so I joined after they had filed. And my role there was to basically sit between the product team, the customer and the sales team, kind of figure out really what business are we in? What are we building here? Are we building a content management company? Are we building a collaboration company? Are we building a security company?
And so depending on how you define what you're building in the long-term, you're going to be able to make much better decisions in the short-term, around what contributes to that long-term goal, and what doesn't? Without having that long-term horizon, it's really easy to justify distractions in the short-term, because some customer wants this feature or that feature? But if you say, "No, we're building a content management company, and this collaboration or this thing," is just not in scope, it doesn't contribute to that long-term goal. And so my role at Box was less traditional core dev, like investing or buying companies. It was much more working with Aaron and the team there, to help set long-term strategy.
Turner Novak:
That makes sense. I know you said earlier you had acquired a couple of companies. Are there any things that founders should think about when they want to sell, or it's a time to sell? Realistic expectations on getting bought, or selling my company?
Villi Iltchev:
There's a lot we can talk about this, and that's probably an hour-long conversation in and of itself. I would say the biggest mistake founders make, is to assume that somebody would want to buy their company. In most other industries, for an asset, there's a price. You may not like the price, but because most other industries are kind of cashflow based, there's a price for just about any asset, real estate and whatever. There's a price.
Turner Novak:
Yeah. It generates a billion dollars or a million dollars in cash. Is that worth paying-
Villi Iltchev:
In-
Turner Novak:
... two times that?
Villi Iltchev:
Exactly.
Turner Novak:
10 times that? 20 times that?
Villi Iltchev:
And you can debate about price, but usually there's a price for assets.
Turner Novak:
Yep.
Villi Iltchev:
In tech that is just not true. Nobody gives a shit about your product, or what you've built. There is not necessarily interest in your product. It's hard to acquire, it's hard to integrate it, it's hard to extract value. So it's just a much less efficient or transparent market, when you try to sell your company. It requires that somebody actually cares about what you've built, and actually wants to buy it, and can see how they can integrate it, and build something around it or with it. And so generally speaking, what I tell founders is, that there is no buyer for your company, and you should assume there is no buyer for your company, and you'll never get acquired.
And actually that's a separate... We can talk about that a little bit, that's in a way, how I got into Venture. I had this thesis that there are no buyers for these assets, nobody cares to buy this or that company. And so it's actually really hard to sell your company in the software space. And so kind of that mindset of building something useful, building a good business. In some ways you can say I'm a bit old school, but I think that that matters, it helps founders be in control. It helps them control their destiny, it helps them decide when and how they want to sell their company, and to whom. And so I try to preach that very early on, try to build a good business, try to be in control. And so what can founders do? Well, the first thing is, don't assume anybody cares, and don't assume anybody wants to buy your company. And you should assume if your business fails, that nobody's going to buy your company. It's a zero. Now-
Turner Novak:
So what should happen to change that assumption, to where it looks like now somebody does? Where's usually a case?
Villi Iltchev:
Well, so again, companies are bought, they're not sold, right? To the extent we see M&A happening in software, it's like people have built something useful, they find somebody who values it, and they're willing to pay money for it. But again, companies are bought, they're not sold. If you have to sell your company by default, you're in a very disadvantaged position, you're basically looking around for somebody that cares. And that's not a good place to be. And so yeah, I think software tech in general, is really opaque when it comes to acquisitions.
Turner Novak:
You actually made a transition from corporate side to Venture. I think before you did that, you actually thought about maybe starting more of a PE-style software fund?
Villi Iltchev:
Yeah. So-
Turner Novak:
Can you just talk about that arc of making that decision?
Villi Iltchev:
So at the time, I was probably kind of the most experienced SaaS buyer. I would say investor, but say buyer at the time. And I had this thesis, I wrote a blog post, you can read it on my blog, why SaaS is not going to consolidate in the same way that traditional enterprise software did, for a variety of reasons. It's much easier to integrate traditional enterprise software. Again, you were selling CDs that a customer would deploy into their data center, and then hire an army of consultants to deploy it. You could buy this, it becomes a go-to-market game. You could cut the R&D function to zero, and save a ton of money, because again, you're selling CDs. The customer is not going to know for five or six or seven years that you haven't invested a dollar in your software, in your-
Turner Novak:
Yeah.
Villi Iltchev:
... application, and channel mattered a lot. In SaaS, that was not the case. The minute you stopped investing in your product, the customer sees it. The minute an acquisition happens, the customer asks you to sit down with them, and talk about the roadmap. "What are you going to do with this asset? How are you going to continue to invest in it? Switching costs to lower?" And so much harder to integrate, much harder to integrate these companies too, right?
You end up supporting completely separate technology stacks top to bottom, that are never going to converge with your current application. So very hard to cut costs, very hard to impact the top-line. And so I had this thesis that software is not going to consolidate, SaaS is not going to consolidate, and therefore, these companies will need to exit at some point. And therefore, I think there's going to be a role for private equity to play here. That's before Vista and Thoma Bravo and any of those.
Turner Novak:
Were they around then? Or were they just-
Villi Iltchev:
They were around, they were doing smaller nichey, mostly traditional enterprise software deals. Vista started buying random stuff. They were buying software for nuclear power plants, that type of stuff. Nichey stuff. That's how Vista started, nobody was doing large SaaS deals on the private equity side at the time. And I had this thesis, somebody needs to figure out how to make money off of these assets?
I didn't know how, but somebody had to figure it out, because it was clearly going to be an opportunity. And certainly Vista and Thoma and all of the private equity firms have become large SaaS buyers since then, in the last 10 years. But I was kind of going around talking to different private equity firms, some of the large Venture firms about this thesis, and how do they think about it?
Turner Novak:
Because you were kind of looking... You might be their exit liquidity in some cases?
Villi Iltchev:
Yeah. That's my point is, I would look to buy these 20 to $80 million in ARR software companies, there's long list of them. The VCs are tired, they've been in it for 10 years, they're never going public, they're never getting acquired. So what happens to that asset? And at some point I thought there's going to be an opportunity for somebody to buy them, figure out how to make money off of them. Roll them up into or about the .NET companies into one, like, "Whatever?" Whatever the thesis was, I thought there was going to be an opportunity.
So I was going around talking to the different Venture firms, the large ones. Some of them had buyout practices, sharing my thesis. And out of those conversations, one firm said, "Villi, we share your thesis, but have you considered Venture?" Or, "We think you're going to be a good venture investor, of the ecosystem. You've done a ton of investing work in the past, we think you'll do good as a VC." I was like, "Huh, I haven't thought about it. I've done a ton of investing, but never thought about it as a Venture as a career." And so the first thing I did was call a bunch of VCs I knew, friends, people that had sat on boards of companies I had been part of, and just asked for advice.
And a lot of the people I talked to said, "I think you should do this. I think you'd be great." And in some cases, "by the way, you should join us, you should talk to us." And so out of nowhere ended up talking to half a dozen of Venture firms. One of those firms was August Capital, which led me to August Capital in 2016. And at the time, I couldn't have asked for a better opportunity to start my career in Venture. August was such a storied amazing firm, a great legacy, great history, people, all of that.
Turner Novak:
What's the real quick story, just for people who are not familiar with August at all?
Villi Iltchev:
Well, August was one of their great venture firms, a historic firm. I think it was started in the mid-80s or something when there were only a handful of firms. It used to be called TVI, Technology Venture Investors, and TVI crushed it. They were the first and only private money in Microsoft. Dave Marquardt, the founder of August, was on the Microsoft Board for 34 years. They invested in Compaq and Intuit and Atheros Communications and Symantec. They just crushed it.
And then I think in '95, one of the partners, a guy by the name of Bob Cagle, and this is secondhand for me, I wasn't there at the time, but I think Bob Cagle was one of the partners and he wanted to start a firm and invest with some of his friends, do some consumer investments. The internet was rising at the time, and so he left and literally went upstairs on Sand Hill Road and started a firm that is called Benchmark. TVI renamed to August Capital after his departure. And yeah, it was just a great firm, great legacy.
Turner Novak:
What did you learn there?
Villi Iltchev:
Yeah, I mean, I think one thing I learned is venture like any other industry goes through changes. Industry's changing. Venture firms are innovating themselves. Back in the '90s, early 2000s, there were half a dozen or a dozen venture firms and founders used to go up and down Sand Hill Road and ask for money. It was very clubby at the time, much more collaborative. And then the industry changed and Marc Andreessen started and Ben Horowitz started, just Horowitz. They had a very different model and they were trying to innovate.
Turner Novak:
Do you consider that as a second stage, like an entirely different era?
Villi Iltchev:
Yeah, I mean, around that time, like early 2010, you could start to see the venture ecosystem changing and innovating. Founders became much more powerful.
Turner Novak:
Power shifted.
Villi Iltchev:
The balance of power definitely shifted in favor of founders during that time period and a lot of VCs didn't realize that. They thought that they still held the keys to the kingdom. And in reality, founders started to have a lot more options in deciding what type of capital to take, what type of people or firms they wanted to work with. And as I said, I think a lot of venture investors were innovating. And one of the things I learned from that experience is you need to change and you need to innovate yourself, and what worked 10 years ago may not work today. And unless you have that open mind and willingness to evolve and change your business with the industry, you're going to find yourself becoming less and less relevant all the time.
Turner Novak:
I think one of the big investments you did at August was GitLab. How did that come about?
Villi Iltchev:
Yeah. So I alluded to having acquired Kuroko when I was at Salesforce. That was my first foray into the dev tools ecosystem. And Kuroko was, for the most part, an application hosting platform built on top of AWS that made it easier for founders to build and deploy their software, a better UI.
Turner Novak:
[inaudible 00:59:52] as a service almost?
Villi Iltchev:
Yeah, easier than go natively building on AWS. And it seemed to me at the time, after we made the acquisition, that owning the workflow, the developer workflow and combining that with the application deployment and the hosting was a really good combination. And so at the time when I was at Salesforce, I was going around talking to the leadership team and the Kuroko team that maybe we should consider acquiring GitHub as well and combining GitHub and Kuroko into one developer platform that holds the workflow and the full application lifecycle. And that didn't go anywhere. I was still excited about it, but didn't really go anywhere.
Turner Novak:
Was there a pushback to it?
Villi Iltchev:
Yeah, there was pushback. There was just no interest. I couldn't get any traction with that strategy or idea.
Turner Novak:
GitHub had no revenue at the time or something?
Villi Iltchev:
Tiny. They were maybe a $3, $4, $5 million revenue company. This is 2011, '12 timeframe. And we didn't even have real conversations. I don't think I ever met the GitHub team.
Turner Novak:
So this didn't even get that far? We're not interested.
Villi Iltchev:
It didn't even get that far. They were just not interested. And so when I joined August, we had actually met the GitLab team about a year prior when they were doing the series A. And we had passed on it for a wide variety of reasons, like open source, distributed team, a developer tools company. Developer tools used to be a shitty business.
Turner Novak:
Because they used to not make money, right?
Villi Iltchev:
I mean, it was a tiny team. The reason developer tools were a shitty business is your customers were basically just tech companies, which is not that big of a market, or it used to not be a very big market. And then with the cliché "software is eating the world" that Marc Andreessen coined, which actually is quite profound when you think it. But you realize that the vector of competition where all industry was going to compete going forward, regardless of what industry they were in, was going to be at the software layer. If you're an insurance company, you're going to compete. You're not going to build a better underwriting whatever model, better actuarial model. That's not with a vector of competition.
Turner Novak:
But you might make a better consumer product that captures new customers.
Villi Iltchev:
For sure, better analytics. Whatever drives your business better, insight into your customer, better opportunity to upsell, whatever.
Turner Novak:
That was all software.
Villi Iltchev:
If you're like Caterpillar and you're building industrial equipment, you're not going to compete on better quality of steel or shovels or engines or whatever. That's all commodity at this point. The vector of competition was going to become what software and services you can wrap that equipment with. And so all industry, my thesis was, that the market for dev tools is going to expand 10X, 20X, 50X over the next decade, and therefore developer tools are actually going to move from being a niche-y business, small TAM that was selling most of your tech companies, to really having the keys to the kingdom and being able to penetrate and monetize selling software dev tools to all industry. And so with that backdrop and thesis I had, when GitLab came about for the series B, one of my partners, Tripp Jones, pinged me and said, "Hey, Villi, GitLab is coming for series B. We looked at it last year. We didn't know what to make out of it. Would you want to take a look?"
And so I was like, "Yeah, sure." I like that space actually a lot. I have some background here. I want to meet the founder." And so I remember having the first meeting with Sid at GitLab. And after the meeting I turned around to Tripp and I was like, "This is actually really interesting. There's a lot to here." GitHub had weaknesses, had a lot of weaknesses at the time. After the acquisition of Microsoft, I think they put it in another gear and Microsoft cleaned up a lot of their problems. But GitHub was a really mismanaged company. They had all kinds of cultural problems or employee churn problems. They basically stopped shipping software. I don't think they shipped any software for two years. I mean, just shocking.
They'd become so dominant, but so complacent, such a mismanaged company in one of the best neighborhoods in the ecosystem. They were arrogant. They were very slow to build an enterprise product, and it turns out the enterprise customers really cared about being able manage their software application stack in their own environments. Now, we're not talking about on-prem anymore. The question is, do you want to buy this application and run it in your cloud or do you want to buy it and I'll run it in my cloud? So it's all cloud? The question was, what cloud do you want to run it in? And it turns out a lot of these enterprise customers wanted to run this dev tools stack, their version control and all the other tooling they had in their own environments. And by the way, software was their core IP so the last thing to move to the cloud was going to be their IP.
People may have been willing to move their customer contacts and other things in the cloud, but the IP, their software was still very important to them. And in their own cloud they can now decide policy, security, et cetera. There were a lot of benefits. And so GitHub was very slow to roll out their enterprise offering and it wasn't that good at the time. The feedback was actually really poor. And so when GitLab came about, they started as an open source company, which by definition the customers were downloading the application and wanted it in their own environment. So from day one, because they were open source, they were being adopted actually in enterprises. And because it was open source too, they can leverage the community to build a much more horizontal developer tools and application that spanned across the entire stack. They have the security, the CICD tooling, all of that, not just the version control.
And so that also appealed to all of these companies coming out of industry. In tech, if you're a tech company, you've spent the last 20 years building your own best of breed tooling. If you are some bank or insurance company, industrial company out of the Midwest, software is new to you and you're looking not for best of breed, you're looking for something that works end to end and can get you there 90% of the time. Maybe one day you're going to focus on best of breed tooling. And GitLab may have not been the best product for any individual component or tool inside the large stack they built, but it was an end-to-end CICD platform from the issue tracking tooling all the way to the deployment features they had.
Turner Novak:
So there's a lot of different disparate dev tools?
Villi Iltchev:
But all integrated into one platform. One of the things I got really excited about is seeing the traction they had outside of tech companies. Customers used to be like ING Bank and agencies. National security agencies were using it in their own environment. Nobody knew how they were using it, but that's part of what excited me. So you look at GitLab, you have you a fairly narrow competitive set. You had Bitbucket owned by Atlassian and GitHub. Bitbucket wasn't doing well. GitHub was not a well-managed company. And I thought GitLab actually had a really good opportunity in that competitive landscape, but also a great neighborhood, back to my thesis. I thought the demand for dev tools is going to expand exponentially over the next few years. And to me that was just a really obvious bet to make and I was very fortunate to build a relationship with Sid and be able to lead that series B round.
Turner Novak:
How'd the investment go? Was it a good one?
Villi Iltchev:
Oh, I mean, it was one of the best software investments ever. It's just the type of thing that you're lucky if you have once in your career. I remember joking with my partners, and it was so obvious to me. We can talk about that. Sometimes things are just so obvious to you, but maybe not to others. And sometimes a great opportunity can hit you over the head and you still don't recognize it. It's really funny how venture works. In this case, it was so obvious to me that I remember telling my partners a month after I made the investment. I'm like, "Guys, you should go ahead and fire me now because I don't think I'll ever be able to do a better investment than this. And that's done. So I don't know where I go with my career from here because I think I just made the best investment in my career." It was just so obvious to me.
And it's not always the case. I'm not trying to pretend to be smart. There are things that, literally, I remember seeing Sneak for example, just a year later. And I saw it at Seed, I saw it at the Bee. [inaudible 01:10:02] introduced me to the company. He was a seed investor there for Boldstart, and that thing could have hit me over the head six times and I still didn't quite get it and see it. And so sometimes things are just so obvious to you and sometimes great opportunities are so hard to grasp. It requires a unique prepared mindset. People talk about being contrarian. I don't like that concept of being contrarian.
Turner Novak:
It's like the most consensus thing now is that you have to be contrarian.
Villi Iltchev:
I find that to not be a particularly helpful mindset. Most of the time when you're contrarian, you're actually dumb. There's wisdom in...
Turner Novak:
Not making dumb decisions,
Villi Iltchev:
... the wisdom of people. There's value to that. So just being contrarian to be contrarian to me is not particularly helpful. But I do think having a unique perspective, a unique mindset, a prepared mind, a point of view on where the puck is going or the future, and when you see the opportunity, putting that together. To me that is really what people describe as contrarian, not just going the opposite direction of where the crowd is going. I try to look at places that are not where the crowd is going, but not to be contrarian, mostly because I think people overlook opportunities there. And I probably will find good investments.
Turner Novak:
You want to find the things that are going to be consensus in a year or two. That's probably the ideal, as another stage investor.
Villi Iltchev:
Sure. Sure. So that's how I ended up getting involved with GitLab and it was just an amazing, amazing company.
Turner Novak:
You mentioned though, the company, it almost didn't work. It almost collapsed at some point. What was the extent of that?
Villi Iltchev:
I mean, there were many moments where things could have gone in a different direction in the life of the company. I remember about four or five months after I invested in GitLab, they inadvertently deleted customer data. Think about your software code, your IP of customers.
Turner Novak:
[inaudible 01:12:10].
Villi Iltchev:
They deleted and lost some when the databases failed. And that's the type of thing that your company, if customers cannot trust you with their IP, what business [inaudible 01:12:22].
Turner Novak:
No trust job, they were billing, right?
Villi Iltchev:
Trust is your number one objective and priority when you're building many of those enterprise customers. Once you lose customer trust, you're done. And they had this database failure and what Sid did that was absolutely brilliant at the time. In the spirit, they've always been a very public company. They published their roadmap, they published the employee handbook, they published everything. Everything was public. Everything they did was in the public domain.
Turner Novak:
And this was as an early stage startup or mid-growth stage startup too, yeah.
Villi Iltchev:
But they were an open source company and they believed in transparency and everything was public. Their roadmap was public. A non-employee could contribute to the roadmap of the company and they can choose to accept or decline that feature, but everything was public. And so Sid decided to broadcast on YouTube how they were dealing with the recovery. And so in real time, as they had this massive database failure, they put a YouTube stream for how they were troubleshooting and resolving the issue. And it became a massive thing. I remember a manager from Google basically tell their employees, "Shut down whatever you're doing. The best education you can have on disaster recovery right now and what to do when shit hits the fan is to watch this YouTube stream." And so people from the entire industry actually ended up watching how GitLab was dealing in a very public way with this database failure.
Turner Novak:
Wouldn;t it be embarrassing though? You're going out there admitting and talking to people. How do you get over that?
Villi Iltchev:
But that's the point, that there's nothing embarrassing about it. Software is fragile. Everybody makes mistakes. What sets people apart is how they deal with those, how they recover. That, again, back to building trust with your customers, is why that's so important. And so the company, not only did they recover from it, the way they handled it allowed them to build a ton of trust with their customers.
Turner Novak:
Do you think they emerged with even more trust than when they went in?
Villi Iltchev:
That's exactly right. That's exactly right. And even though competitors would market against it and throw [inaudible 01:14:58], I think the way they handled it allowed them to emerge stronger as a company. So yeah, I mean, there were always bumps in retrospect. Look at the trajectory of GitLab. You would think that everything was linear and up into the right, but if you talk to Sid, you know it's never easy. It's never up into the right. There's always moments in the company's life that are transformative and have the opportunity to take you on a very different path. And yeah, they built a great company, but it may seem like it was an easy journey or a quick journey from the outside. It was actually a lot of hard work in navigating challenges like that, that came about very well.
Turner Novak:
Yeah, you mentioned Guy and Sneak too. I had him on the show a couple of months ago. We'll link that one in the show notes if people want to tune into that one. But they had a similar. I think today I think they announced publicly, I think I saw, the number was 300 million [inaudible 01:16:02].
Villi Iltchev:
Something like that. That sounds right.
Turner Novak:
Significantly large.
Villi Iltchev:
Yeah.
Turner Novak:
He was telling me stories like, "We had to do multiple bridge rounds, meaning it wasn't clear that this was working."
Villi Iltchev:
Yeah. As I said, I saw it. It could have hit me over the head six different ways and I still didn't quite grasp the opportunity. There's a little overlap with GitLab, so there was a little bit of a conflict too. So I wasn't sure. I didn't want to put myself in a position of conflict, so I had to be a little careful, but I won't pretend...
Turner Novak:
It's easy to say I would've done it.
Villi Iltchev:
.. that I fully grasped how great of a product they were building.
Turner Novak:
So you were at August. You spent some time at a firm called Two Sigma. Maybe touch really quickly, how did that transition happen and then obviously started your own fund recently?
Villi Iltchev:
Yeah. So when I left August Capital in 2019, in the spring, I was a bit lost, I guess. The first question I asked myself was, do you want to stay in venture? And that was a pretty quick answer in that I was happy, I was enjoying what I was doing.
Turner Novak:
It seemed like it was pretty good.
Villi Iltchev:
I felt like I was doing a pretty good job. So I finally found this career that my skill set, my interests, what I was good at were coming together for the first time and I wanted to stay in venture. And then the next question is, what's the right thing? Now you're a little wiser. You're a little smarter. What's the right opportunity where you can join a firm and thrive for the rest of your career? Because every opportunity in venture you should think about as your last job.
If you have to change jobs, you have probably failed in venture because the payoff on anything you do takes at least a decade. In some cases, two decades. It's not like anything I do today leads to success within a year. The way these funds work is maybe you make money after 10 years or 15 years. It just takes a long time.
Turner Novak:
You just basically teed it up as you failed, because teach [inaudible 01:18:28] you're leaving.
Villi Iltchev:
Well, kind of. I mean, I think August stumbled and had some challenges in the time. People have written about that, I don't need to regurgitate that, but we had a hard time raising our next fund. There was not full-alignment on where the firm was going or how we were going to be successful going forward. So yeah, I had to leave.
Turner Novak:
Was there anything you did that was strategic or very smart decisions you made in terms of setting yourself up to join Two Sigma and then start Category?
Villi Iltchev:
I realized that there's really nothing clean in venture, short of joining Benchmark. Regardless of which firm you join, you're going to make some sort of a compromise. You're going to compromise on brand, on reputation, on access to capital, on culture, on values, on stage, on economics, on title. You're going to compromise on something. There's really nothing clean.
Turner Novak:
There's never a perfect fit.
Villi Iltchev:
There's never a perfect fit. And so the question I faced was, what do you want to compromise on? What are your values? What do you really care about? And I was fortunate to have the opportunity to join different firms at the time. I had done a few good investments. People thought I was capable, but I had to decide, where do you want to go with this? And in joining Two Sigma, I bet on myself. The compromise I made was brand. Two Sigma Ventures was not.
Turner Novak:
Was a hedge fund.
Villi Iltchev:
Well, Two Sigma is known to be a very successful hedge fund, and it's known in the financial industry circles, but Two Sigma Ventures in the tech ecosystem at the time was not a well-known brand. It's not like if you ask a founder, give me the top 10 venture firms, it's not like Two Sigma Ventures will come up as one of the top 10. But I was confident, I was thinking, I don't need the August Capital brand behind me. I can join Two Sigma Ventures and still be successful and bet on myself. It was set up the right way, good people, good team, the right alignment. Everything else was set up the right way and it felt like a really good fit where I could have an impact and actually put Two Sigma Ventures on the map and make it a firm that people know about.
And I would argue you, six years later or five and a half years later, I would say Two Sigma Ventures today is a much better well-known firm as an early stage investor than they were when I joined. And so that's what led me to Two Sigma Ventures. I had an amazing experience there. Great team, really good team. One part I admitted in that process of thinking what I wanted to do next, I actually thought about starting my own firm. I didn't have the confidence or the courage to do it. I was in a different place.
Turner Novak:
Really?
Villi Iltchev:
Financially, with life, I was still a relatively nascent investor. My track record was not mature. I didn't have the confidence. I didn't know if I can go on my own and start a new firm. I had a couple of conversations. I couldn't afford not to work for a year or two getting this thing off the ground. And so I decided to join another firm and not start my own. That I idea of starting my own firm didn't go away. It was always in the back of my mind. And then I would say, earlier this year, that voice in my head started to get louder and louder to start my own firm. The opportunity I was seeing became more and more clear and compelling. I had matured as an investor.
My track record had matured and I thought, I don't know that I can pull it off. I don't know if people will believe in the strategy or the firm I want to build or be willing to back me. But I knew that if I didn't try, I would regret it. I knew that, if I didn't go for it... if I failed, I would've been fine.
Turner Novak:
Just because you took a shot?
Villi Iltchev:
I could join another firm. I would be fine. I could go do other things. But I knew I would regret it if I didn't explore it. And my kids had grown up and so I talked to my family. I was like, "I think I'm going to quit and turn things upside down here for a few years."
Turner Novak:
[inaudible 01:23:23], how tough was buy-in just from your family?
Villi Iltchev:
They were very supportive, my wife especially. She's like, "Villi, we'll be fine. Succeed or fail, we'll be okay. We'll be fine. So if you're excited about it, go for it. Don't worry about it. The family will be fine." Yeah, so they were very supportive and nudged me. And my kids too, raising kids and teaching them values and stuff like that, as we talked about it, it occurred to me in the middle of it that they're the age now where if I fail, they will really see it. They're going to see the whole process and everything I went through, and that will actually be a really good lesson for them.
Turner Novak:
They understand what's going on.
Villi Iltchev:
They will understand how I tried and how I failed. And to the contrary, the opposite outcome, if I tried and made that leap ... and after these conversations, they saw me working on it and thinking through it, and I did end up being successful. By the way, raising a fund is not success. Success is-
Turner Novak:
You've got the first step of many steps done.
Villi Iltchev:
Right, I just got started. But I want them to see that too, the process, the preparation, how you spend years putting the pieces in place so that one day when the opportunity presents itself, you can take advantage of it. I wanted them to see that too. In a weird way, there are a lot of things going on in my life where I'm like, now is the right time. I see the opportunity to take advantage of it. So I resigned from Two Sigma Ventures in April and started working on this new idea I had for a new firm called Category.
Turner Novak:
Yes. You said you saw an opportunity, what was the opportunity you saw?
Villi Iltchev:
The opportunity I saw was, as I had looked at the early stage ecosystem, my impression of it ... and certainly people debate this, I don't pretend to be right on this. But that was my impression, that's my thesis, that's my view of the world was, early stages is incredibly fragmented, incredibly competitive too. There are lots of players that dabble into the seed stage ecosystem, but also there are very few brand named firms that people think about when they think about seed stage investing. There are lots of really good investor and firms that have assets, fund sizes that are 30, 50 [E 01:26:10] million dollar size that can't really lead a round. They're in the business of writing two 50K checks up to a million and a half, and leveraging their expertise, their network, their insights, trying to get themselves in the middle of something interesting. There are actually very few seed stage firms that can write a check that's like two and a half or $3 million. So what struck me is that the industry operates in a subscale way.
Even the more established seed funds are still operating with the mindset of, we're going to write two and a half, maybe a $3 million check into three to $4 million seed rounds and get like 12% ownership. Some of the market is that, but some of the market is second time founders, experienced operators, scientists, researchers, engineers, looking to raise seed rounds that are 4, 5, 6, 7, $8 million seed rounds. I'm not going to talk about the other crazy rounds that are getting done now. They're raising these rounds oftentimes for the right reasons. Especially in infrastructure and AI, it takes a little bit of a bigger team. You just need more time to build something useful. For those types of rounds, founders have two options. They can go to the seed stage ecosystem and cobble together a syndicate of these firms, which takes a lot of time. You need to align all of these firms, give them the right amount of ownership, a piece of the pie. It's just not as an easy process because you're dealing with multiple investors. The alternative is, you can go to the multi-stage firms and that's an easier path you get your round on.
But I fundamentally think they are the wrong investor for a startup at that stage. They can write you a $4 million check or $5 million check, but you're probably dealing with a junior partner who has very little experience investing or otherwise, who may or may not be there in a couple of years to support you. If you're dealing with ... churn is very high in the industry. If you're dealing with a senior partner, let's be honest, they're on 15 boards, they're busy people. That seed check they just wrote is the last thing they want to spend their time and mind share on.
Turner Novak:
Well, I mean, why not? It's the sexy new thing, don't they want to spend time on it?
Villi Iltchev:
As I said, they're busy. They're buying an option on your company. That's the whole point these larger firms are in the seed business. They're buying a bunch of options and the ability through that option to deploy capital-
Turner Novak:
That's because-
Villi Iltchev:
... over time.
Turner Novak:
... they think, all right, we'll give this person three, four or five million bucks and if it works, we get to do 100, 200-
Villi Iltchev:
We get to deploy-
Turner Novak:
... 300 million.
Villi Iltchev:
... 50 or 200, if it doesn't move the needle on the fund. So they're just not the right partner for founders at that stage, but founders go there because it's a lot easier. The brand matters. A lot of younger, less sophisticated founders will gravitate to larger brands, but it's just not the right product. So what occurred to me is, there are actually very few options for these founders. There's really no brand that exists out there that is enterprise software focused. They have tools, infra AI apps, enterprise software focused, and has significant flexibility around the type of rounds they can do, the types of checks they can write. You can lead a seed round with a $1.5 million check, you can lead a seed round with a $5 million check. This is the firm that leads seed rounds. Regardless of what type of round you're looking to raise, you're the right partner and have the enterprise software expertise to support them at that early stage. There are a few firms, like Amplify has done an amazing job. I was largely inspired by what Ed Sim and Elliot have done at Boldstart. They've built an amazing brand in New York that is serving those types of founders.
But I think there's definitely an opportunity for another half a dozen firms to emerge in this space, and serve founders better than the way the industry serves them today.
Turner Novak:
So you think there will be more?
Villi Iltchev:
I definitely think so. I think in five years there are going to be seven, eight of these seed funds focused on enterprise software, with fund sizes that can support and lead just about any seed round.
Turner Novak:
That's bad for you, isn't it, because there's more competition for you? Is it just an inevitability, that it should exist?
Villi Iltchev:
That's just competition. I think how we as VCs say that they always come in batches, when we see startups that are more or less doing the same thing around the same time. My response to that and insight is, that's not an accident. That is just the efficiency with which founders spot opportunities in the market and take advantage of them. So yeah, it's not an accident that we constantly see batches of startup in and around the same idea or space. That is just the efficiency with which opportunities are spotted by the ecosystem and founders, so that's life.
Turner Novak:
One interesting thing you mentioned was ... you mentioned it to me in the past. You've said that being able to use your track record in raising this very first fund, can you explain just the importance of that and how that played into raising the first Category fund?
Villi Iltchev:
Yeah. Track record turns out is a really important thing in broader venture. A lot of younger investors that get into the business don't quite have the understanding of why or how it is important for their career going forward, especially if one day they want to start their own firm. The issue here is, it's complicated. Let me start with, success has many parents, right? When a startup becomes very successful, it's really hard to discern who should get credit for an investment. Everybody will take credit for an investment. Of course with failure, everybody runs away from failure so nobody wants to take credit for that. So firms tend to be fairly guarded and opaque about, who should take credit for investments? A lot of that information is proprietary. So a lot of challenges that VCs leaving their firms' face, especially if they don't want to raise external capital, is showing to their prospective investors, to LPs that they're actually good investors. So both the attribution, like who did this deal, but also was that a good deal? The data behind it, that is proprietary information and you cannot share that type of information, unless you have explicit permission from the firm to share that type of information. So being able to have the right to your track record, to be able to use it going forward, is really important.
Then the August Capital team was very kind to me, and I wasn't entitled to it. They didn't have to be nice to me, but they were very kind and supportive of me. They were willing to share and give me the ability to share my track record with prospective investors. But actually, because I had gone through that experience and I had realized how important it was, prior to joining Two Sigma I had also explicitly asked that I have that right going forward. For example, if I'm fired ... maybe I don't do a good job, I get fired, that's fine, but I do need to get another job after that. And being able to tell people what I did and what I accomplished when I was at my prior firm, is really important, or start my own firm. So I had the insight at the time to know to ask and negotiate upfront to have the right to my track record. For the VCs or aspiring VCs that are listening to this, I can't emphasize how important this is going forward, for you to ask upfront to have the right to your track record going forward.
Because some firms are not very nice on the way out, and that may make it very challenging for you to move on with your career and start your own firm.
Turner Novak:
I have two questions left before we break. One of them is from a mutual friend, Nakul Mandan. One of his questions was, how did you decide on the fund size? You've hit on this a little bit, but I think I saw there was a Wall Street Journal headline that was $156 million or something. I think that's a pretty specific number, so it sounds like ... How did you plan this all out?
Villi Iltchev:
The Wall Street Journal basically picked up on a filing that I had made. I didn't announce the fund. At the time, I didn't comment, they just picked up on a filing that I was legally required to make. The filing basically said that I'm raising 156. I wasn't raising, I had closed on 156, but I wasn't ready to announce that yet. There was additional capital, but that was the number that I was legally obligated to put in the filing. So actually the fund ended up being a little bigger than what I was targeting or hoping to raise, still within line of what I wanted to do. But the way I thought about it was ... it's basic fund math, right? You want to have a sufficiently diversified portfolio, which basically means, call it 25 investments in a fund. I alluded to the fact that I wanted to be in a position to be flexible with check size and have a more higher ownership strategy, be more involved, really engaged with my founders, not spray and pray. But I don't get excited that often and when I get excited, I want to invest as much as I can. I'm not looking to buy options. I'm not like, I like this space so I'll make five bets in a space. I want to bet on the one company I'm most excited in a space. When I find that, I want to own as much as I can.
I wanted the firm to be able to write one, $1.5 million checks. I wanted the firm to be able to write $5 million checks. So I was like, I don't know what I'll average, but let's say I average $3 million per investment on average, and I want to have 25 investments in a fund, you do the math and you're like-
Turner Novak:
And you follow on.
Villi Iltchev:
... and you want to be able to reserve enough capital to support that portfolio. So I thought, that's a $150 million fund approximately, so that's how I set it up. It was the strategy ... and this is what I tell also people that are looking to start funds, don't set a target for your fund based on what you think you can raise or some other factor that leads you to that number. Let the strategy dictate the fund size you need, and that's how you pick the fund size. If you want to lead, you don't want to be a lead investor and you want to write, your strategy is thematic. So I'm going to be thematic, I care about these five spaces. I'm going to invest in a bunch of startups in that space, but I'm not going to try to pick the winner. I'm just going to invest thematically in areas that are of interest to me, and I'm going to write 500K checks and I'm going to make 40 investments. Do the math on what fund size is required to support that strategy and when you raise, tie it to your strategy. So the fund size that I came up with was not, pick a number, here's what I think I can raise.
It is, what am I trying to do, what's my strategy? What kind of fund size do I need to execute on that strategy? That's how I came up with that fund, so the fund is $160 million at the end of the day.
Turner Novak:
You mentioned something interesting with being able to follow on, whether these are exciting follow-ons or bridge follow-ons. You have $160 million, there might be another fund that has $3 billion and they could easily bridge some of these rounds, follow on more over time. Is it more likely that I'm going to get a bridge round from someone like Category and you, or from a bigger fund? How should I compare that?
Villi Iltchev:
This is a great question. This is a great question because I think founders don't realize the impact of this, and what it means to raise capital from large multi-stage firms at seed, versus a seed-focused fund. The assumption is what you articulated, well, they have a lot of money, therefore if I hit a bump and I need another one, two, $5 million-
Turner Novak:
It's just a small check.
Villi Iltchev:
... it's a small check, no big deal, they're going to support me. It's actually exactly the opposite. It is exactly the opposite. The large firms, more or less, as I said earlier, they're buying an option on your company. If it works and it works quickly, they can deploy more capital behind it. If it's hard, then it takes a long time, they want to move on to the next thing. They don't have the time to bandwidth, to mess around, spend a lot of cycles, work with a founder who's had to pivot or had to do some other things, and it's kind of working but not really. It's not ready for an A, they move on, they are moving on. I see it all the time consistently, those firms are gone. And now you have taken capital from a very large fund, and you need a bridge and there is no place to get it. There is no place to get it. A seed investing is not going to be like, oh, I'm going to come behind this multi-stage fund. If they're not willing to bridge you, why should I? So I actually think seed-dedicated funds are 10 times, 100 times more likely to continue to work with you and support you ... and try to find a way for you to achieve that next milestone, product market fit, next round, whatever it is, than large multi-stage firms.
Those firms are just not a good product at seed. They are more or less buying options, and really that is a core thesis, one of the core thesis that is part of my thesis, are that smart founders who realize that trying to raise these rounds from the large funds, is not the right place for them to be raising capital with seed. Those firms are great, but they're great for, they can do the [CSA 01:42:21], B, C, D, they're in the business-
Turner Novak:
Some of them invest after you're public too.
Villi Iltchev:
... they're in the business of deploying capital. They're in the business of managing funds.
Turner Novak:
So really a good way to think about it is, the smartest founders want investors where their business is also a material percentage of that investor's business as well.
Villi Iltchev:
For sure. Even when I was raising my fund, I went to ask some of the thoughtful OGs, early stage investors, I had no idea, should I have 10 investors? Should I have 40 investors? How should I think about it? Their answer was the same. It's like, "Villi, you want to surround yourself with people that care, just like you think about ownership, they care about ownership. You don't want to spray it across 40 investors. You want to work with a few investors where this is a meaningful investment for them, that they care, they follow you, they track you, they help you, they support you." I think the same thing applies to founders. You want to work with people where the check you're taking is important to them. They care. They're not going to be loose with their decision-making and let it go prematurely because it's a rounding error in their fund.
Turner Novak:
Well, speaking about people, I think you've mentioned you've changed the way you maybe think about things where ... there are a lot of investors that are market first. There's other investors that are maybe, people or founder first. How do you think about that, or how has it changed for you over time?
Villi Iltchev:
I don't think that way. I don't think that way. Things come together for me, but I look for all things to come together. I don't like the idea ... though having said that, I did it with Howie, obviously, with Airtable. But yeah, if it's an amazing founder like Howie, I'm happy to back them regardless of what they're doing. But that's rarely the case actually. It requires for you to know this person really, really well to have that type of confidence. They are great markets but there are a lot of great opportunities and markets out there, that doesn't mean this team is going to be able to take advantage of it. So markets matter. Yes, as Elad Gil says, "I would rather be an investor in an average team in a great market, than in an exceptional team in a crappy market."
Turner Novak:
You want a great team, great market.
Villi Iltchev:
Exactly. So where I'm going with that is, I need all these things to come together for me. I'm not just looking for just founders. I'm not just looking for founders or products. Things are hard, things need to go your way. For me looking at, is this the person to take advantage of this opportunity ... is this opportunity the right opportunity I want to be an investor in? Things need to come together and it's not formulaic. People like to make it some sort of a formula where if you score four on these four dimensions, it's an investment and if you are 12 out of 15 points, it's below. I don't think that way. So I try to judge every opportunity on its own merits, every founder on their experience and their merits and their ideas and strategy and personality. So yeah, I don't have a formulaic answer. I don't like investing in a formulaic way. I try to make up my own mind and look at everything in isolation. Obviously, trying to draw from my experience but also trying to see if things come together for this one.
Turner Novak:
Yeah, well, this was an awesome conversation. I had a lot of fun. Just really quick, where can people find you if they like this, they want to look you up?
Villi Iltchev:
Oh, they can find me anywhere on Twitter @Villi. My name fortunately is not common, so it's easy to find me on LinkedIn. Though I'm still recovering from, literally, I think I have 1,000 unresponded LinkedIn messages.
Turner Novak:
Because you announced your [inaudible 01:46:38].
Villi Iltchev:
Announced it, and it's just ... so LinkedIn is probably the last place you want to look me up. But Villi@categoryvc on Twitter.
Turner Novak:
It's Categoryvc.com?
Villi Iltchev:
Categoryvc.com, Villi at categoryvc.com.
Turner Novak:
We were just talking about the website that you worked on, that took forever.
Villi Iltchev:
Yeah, that's V1.
Turner Novak:
Are you going fancy website or plain website?
Villi Iltchev:
A pretty plain website, pretty plain. I don't think I'm in a business where the website is going to meaningfully change how founders perceive me. But you want to launch something informative and useful that basically articulates to founders who I am and what we're working on. Actually, one thing I want to end on is, I started this firm by myself and actually a lot of the advice I got from friends and investors was to do it on my own. But I don't want to do it alone. I don't want to be alone. I think venture is a very lonely business in many ways. It's a social business, you talk to a lot of people, but it's lonely. So I do want to build a team. I want to build a great team. I want to surround myself, and hopefully for Category ventures to continue on after I'm done. So over the next few months, I'm hoping to add to the team and surround myself with people better, smarter than me every way.
Turner Novak:
What are you looking for? What would be the ideal?
Villi Iltchev:
I'm looking for highly technical investors that are passionate about working with and supporting founders, but I want the firm to differentiate around being highly technical.
Turner Novak:
Okay. I think you mentioned all the places people can find you at. So if, somebody, that sounds interesting to you and you're listening, definitely reach out.
Villi Iltchev:
Yeah, ping me.
Turner Novak:
Cool. Well, this was a lot of fun. Thanks for doing it.
Villi Iltchev:
Thank you, appreciate it.
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