Chris Yeh is the General Partner of Blitzscaling Ventures and author of the book Blitzscaling.
Chris co-wrote the book with his good friend Reid Hoffman (who - as many of you probably know - is the founder of LinkedIn). The book explains when and how to focus on scaling rapidly to beat the competition in a winner-take-all market. The nuance is the concept of prioritizing speed over efficiency in an environment of uncertainty.
Blitzscaling is certainly a popular strategy in today’s startup world where everything is moving a million miles a minute, but - as you’ll hear us discuss - it’s not necessarily the right move for everyone. Chris and I talked about some exceptions, including a few companies I’ve personally seen play the long game of organic growth and outlast their competition.
In addition to the book, we chatted about the VC fund Chris started called Blizcaling Ventures - where he leverages the blitzscaling concept to inform his investment strategy.
Chris also shared some awesome life hacks, a hilarious story from the early days of the internet and a pretty awesome personal story about the time he competed on - and won - a game show. Enjoy and thanks for listening.
Transcript (this is an automated transcript):
MPD: Chris, welcome! How are you?
Chris Yeh: I'm well. How are you?
Happy new year, by the way.
MPD: Thank you. You're actually our first recording in the new year. I don't know when this will be released, but it's early January right now. I want to start off, you, you've got a lot of things you're known for one of your, your big catches is your book. Could you give us an overview.
We just start with led scaling. You explain that concept to everybody and what the book is about.
Chris Yeh: Absolutely. So blitz scaling is my most recent book. I wrote it like I did my other book with my old friend Reed Hoffman. Who's a pretty famous guy and blitz scaling is all about the phenomenon that allows companies to grow so much more quickly than.
And we started writing the book because we're looking around, we were seeing companies that were just growing so incredibly fast and we're like what's behind this and why are there so many unicorns, what exactly is going on? And after really looking through it and looking at here in Silicon valley, looking at China, looking at these different ecosystems around the world, we said, okay, I think we know what it is and what we define blitz scaling as.
The pursuit of rapid growth by prioritizing speed over efficiency in the face of uncertainty. So it's an all out growth strategy and the reason you undertake it is because you're trying to win a valuable winner, take most market.
MPD: I think there's a lot of emphasis on that last bit. When people think strategically about a lot of these markets, they're not all network effect games, right?
We've got markets where there's a lot of big companies that are winners, right? You've got constant contact and MailChimp and many others in the newsletters. It's not a winner take all, but it's a big market. So this specifically focuses on spaces where there's a network effect. Is that right?
Chris Yeh: So there are other ways you could have a winner take most market, but network effects are certainly the primary way that happens. And you know, if you think about blitz scaling, the classic kinds of business models that really lend themselves to blitz scaling are things with strong network effects.
So a social network, for example, has a strong network effect because everyone wants to go where everyone else is going. A two sided marketplace has a strong network effect because the buyers want to go where the sellers are and the sellers want to go where the buyers are. So these are the kinds of companies where if you find yourself in that industry and you're going after.
You got to beat your competition to critical scale because once someone gets to critical scale how many of the auction sites other than eBay, do you remember how many of the social networks from the early two thousands beyond Facebook, do you remember how many travel sites beyond Airbnb? Do you remember?
It's really difficult to succeed. If somebody else has already achieved critical scale. And conversely, if you yourself are the one who's achieved critical scale. The ability to have an impact and the financial rewards are incredible. So who should be reading this book? So obviously the people that we most want to read the book are entrepreneurs, and we want them to read it because now one of the funny things about entrepreneurship and especially about the blitz scaling spread.
Is that historically the only people who employed this strategy were the people who were essentially megalomaniacs, right? Because you had to have this incredible confidence in what you were doing, and you can look at somebody like an Elon Musk is a great example of somebody who's enormously talented, but also has that drive and that utter confidence in himself.
And that's great. And folks like Ilan have done a lot of good for the. But I also believe that there are many more people out there who could be entrepreneur. Who may not necessarily have that set of personality, characteristics who may have no greater sense of social responsibility or a sense of mission that they're trying to go after or something like that who maybe wouldn't have employed a strategy like blitz scaling instinctively.
But if they understand the reasons why it works and why it can apply to their company could actually employ it and build some of these big winners and hopefully build some great cultures as well.
MPD: So look, this is an obvious. For the venture capital world, right? Where there's companies raising tons of dough deploying against growth, it makes total sense.
It's culturally aligned everything about that. Squares. Does this apply to any businesses outside of the traditional venture backed
Chris Yeh: companies? Absolutely. Now it applies in slightly different ways. One of the things that we like to tell people is that blitz scaling is really about relative. And so it's going to vary, depending on the context, obviously in the world of venture growth rates are incredible.
I was just talking to the CEO of a company this morning. They grew 40 times 40 X in 2021 that's venture backed growth, and they have a great investor and hopefully we're going to invest in them. But then there's plenty of other industries where growing 40 X is not required in order to be a blitz scale, or you might be able to grow, 50% a year, but where the rest of the industry is growing 10% a year.
So you can absolutely look outside the traditional tech world. And it's also possible to blitz scale, even things in the social enterprise side. I'm a big fan of social enterprise, big fan of having impact on. And it is absolutely the case that I've gone in and taught. How do you blitz scale social movements?
Because they too can benefit from getting to critical mass.
MPD: Okay. So I get this model in early stage venture, but I think to a lot of folks who are hearing the idea that you're ruthlessly prioritizing speed over efficiency, as you're growing might sound a little reckless. How do you do this without driving off the.
Chris Yeh: And it certainly happens that some companies do drive off the cliff or at least come very close. And there are a couple of different elements to this. The first is we want people to have a deep understanding of blitz scaling itself and why they're doing it. The reason they're doing it is because that speed, that growth confers strategic value.
Now that strategic value may not translate into revenues and. But it is value that you should be able to measure and actually check whether or not your growth is delivering value. If your growth is not creating more value than it costs, then you're destroying value. And that's obviously not a good thing.
The other element of it goes beyond just, okay. Is it a good idea for us to blitz scaling out like the old saying your scientists were so concerned about whether they could do to think about whether they should do it? That's the other thing you have to think about, which is what are the consequences of.
It's one thing to say, Hey, you know what all I'm doing is I'm just building this little business. It's no big deal. I don't really do think about the bigger picture. When it comes to blitz, scaling companies can grow so fast. They got to think about the big picture much sooner than before. And one of the things that we did in the book is talk extensively about the importance of responsible blitz scaling of anticipating.
Hey, what happens if the things that we do now are blown up. To the scale of a global giant is that actually the kind of world we want to live in. And how can we do this in a responsible way? And it really boils down to understanding and assessing the risks, determining to what extent did the risks exist?
How dangerous are those risks? How severe are the consequences, how much uncertainty is there. And you're never going to be able to get rid of all the risks, but if you actually ascertain what risk you think exists, then you can take steps to ameliorated.
MPD: There is a, there are a lot of times where going for speed is certainly appealing and makes sense.
Are there times even within the venture world where the opposite strategy is the right one, even though in venture, going for efficiency over speed is generally counterintuitive. Have you
Chris Yeh: seen that work? Absolutely. There's two different scenarios under which you would probably want to do. The first scenario is the one that applies when a lot of companies are starting out, which is to say, you are trying to figure a bunch of things out.
This is the land of the lean startup. And in that period of time, as you're trying to figure things out, you probably don't want to be burning a huge amount of cash. You want to extend your runway up because you don't know how many turns of the screw it's going to take for you to actually figure out the product market fit and your approach.
So we definitely believe that early on, especially if people are bootstrapping, they're going to try to pursue efficiency because they need just need a certain amount of time and a certain amount of iteration. And there's a limit to what you can accelerate that with money. Now, the other side of it is after a company grows because we don't believe that blitz scaling is a state that a company necessarily remains in forever.
Right? There'll be a time when a business reaches a certain level. It no longer makes sense to blitz. And what we advise entrepreneurs to do is to actually look at leading metrics. And before the trailing metrics actually get to the point where it tells you a, you should slow down, actually look at those leading metrics.
So the example that I often give is Twitter. Twitter is a company which obviously grew very fast for a period of time, but has largely plateaued. And the interesting thing is that Twitter's user count essentially started plateauing in the mid two thousands. And you could see the user growth just level out, but the company kept hiring more people and growing, and the reason was their revenues were continuing to grow.
The company was getting better at monetizing, more and more people were comfortable with advertising on Twitter. So the revenues were still growing. So they kept growing. They're still. But very soon the revenues also plateaued, because guess what if your users plateau, your revenues are eventually going to plateau as well.
They ended up having to lay off a lot of the people they hired. Now, if they were looking at the leading indicator of the number of users and being honest with themselves and saying, oh, if we aren't getting more people in, that probably means we're not going to keep growing. Then they could appropriately say, okay, now we need to manage a bit more for efficiency, which would then give us resources that we could use to try to get.
New avenues. Imagine if Twitter had created the equivalent of Tik TOK, right? That would have been a way for them to continue their growth, try something different. Instead they just kept hiring more and more people to keep selling to the advertisers, the same audience they already had. And guess what there was limits to where that would go.
MPD: It's fantastic. There's there's a business case study that comes to mind when I think about this early phase. The focus really is on efficiency. So a company we invested in called course hero companies perform phenomenally well. It's based out in the valley. It's a unicorn at this point, but the story's really novel.
The founders started the company around 2008 out of college. And at the time he started, there were three or four other competitors. All of his competitors got funded. He didn't couldn't raise. One by one, they paved over the cracks with capital and those companies fell apart and he picked up their assets in some cases, but he methodically built the engine, the machine, the marketplace, and he is the one company's still standing today.
And he's now sitting on a very large success. I'm sure he turned over to blitz scaling at the right point, but his focus on not scaling in the beginning actually ended up being the make or break decision for. What's the right KPI or set of heuristics to think about, to know when to switch from focusing on efficiency to
Chris Yeh: blitz scaling.
So I think the number one thing I will stop and look at just one thing and one thing alone, which is the engagement and it all boils down to this value is created when users engage with the. The only product I could think of where that's not true is insurance, right? Because it is a user of insurance.
You don't want to engage with the product. You want to just buy it and hope you never have to use it. And everywhere else, how much you use the product really has huge bearing on the value of it. Think about the things that are most valuable in our lives today, whether it's apple or Google, or what have you.
These are things we use every single day. Sometimes every single. And so what I'm really looking for is what I call the frequency intensity of usage. And the frequency of usage tells me, okay, this is something that people are actually habitually going to use. The famous example is the toothbrush test that Larry Page describes know the best products pass the toothbrush test.
There's something that you use at least once a day, which means it's very easy to actually develop the habit and always use. And Google is a great example of a product that's like that. But if you just use something once a day for 30 seconds, that's not actually great. I actually want something that you're using all the time, like your smartphone, for example.
And so the intensity of usage is also a big factor. So if you've got something which people use all the time, And they use extensively. That means they value it. That means that you've got something on your hands that could potentially be really valuable. And that's the point at which it really makes sense to blitz scale.
Now, there are times when you might have to start the growth period before you have definitively achieved that kind of product market fit. And then when you do that, But the reason you take that gamble is because you're worried that the other competitors in the space are going to take the same gamble.
And if they happen to be right and they claim the market and they find the fit as they're scaling up, then you're going to be locked out. In the example, of course, hero. What made that strategy work is the fact that there was just so much. To be figured out and notoriously. If we think about the MOOCs and all these other things, people were not finishing them.
People were not getting value out of, they were failing the engagement test. And so they gambled that they would figure it out. They didn't, he made the right bet or she,
MPD: Hey Andrew. Yeah, absolutely. So now this is the second book you've co-authored with Reed Hoffman. Can you tell us about the. Yeah.
Chris Yeh: our first book together was the Alliance, which is actually read second book. He wrote a previous book called the startup view with my friend Ben Casnocha. And then the three of us wrote the Alliance together. It came out in 2014. Now the story behind the Alliance is we were trying to write about the changing world of work.
The startup view is all about the fact that as an individual, you have to think of yourself as the CEO of a company. Everyone has to think like a nudge. But the logical corollary to that is okay in a world where everyone thinks like an entrepreneur, how do you manage those people? And so that's where the book, the Alliance was born.
And we originally wrote an article for Harvard business review and Harvard business review liked it so much. Can you expand it into a book? And that's where the Alliance came from. And the basic principle behind the Alliance is that in a world where everyone should think like an entrepreneur, the old models of how employment works are.
There is a model in people's minds. A mental model of a company is like a family that doesn't really work because it's so rare these days for someone to be with the same company, their entire career, you and I are pretty loyal individuals. It's not like we've spent our entire career working for a single large company.
And as a result, When you have this family metaphor, it means that when somebody leaves, you pretend they didn't leave or you pretend they never existed. So the Chuck Cunningham syndrome from happy days where the guy Ritchie's brother disappears up the stairs and just never comes out again, and that is messed up and it doesn't reflect the.
But then the other thing that people do is they go too far the other way. They say, you know what? Okay. Business is just business. There's the famous saying from the godfather it's just business, which basically says, oh, it's okay to act like a psychopath or sociopath when money's involved with that doesn't seem like a good lesson either.
And people think of themselves as mercenaries. As you and I know how many great companies are built by mercenaries, especially mercenaries who are always on the lookout for a client, who's willing to pay them. And so the Alliance is that middle ground, which says, Hey, you know what, employees and employers, employees, and managers, it's not like a parent child relationship.
It's not like a mercenary client relationship. It's like an Alliance or relationship between two independent parties who are voluntarily coming together for some reason. And the idea behind the Alliance is that let's just make it really explicit. What those reasons are. If I'm an employee, I want to know what's my name.
What constitutes success and what's that mission going to do for me and do for the company and same thing for the company wants to achieve certain goals, launch a new product, open a new office. Let's find the person who can make that mission happen successfully. And if everyone knows what mission they're on, and everyone knows the success conditions of what they get out of it, it also means that as they come closer towards the end of that mission, you can figure out another.
And it could be within the same company. We definitely encourage people to have people have longer job tenures, or it could be at a different company, but then you could maintain an Alliance that's independent of the employment relationship. You can still have great relationships with your alumni and be able to work together with them in the future.
MPD: So there's probably a lot of folks who think about this framework at some level. And there's a lot of managers out there who probably haven't given it any thought. But there are habitual things. People do that they've either learned from other people who had mentored them, or they saw people doing who had managed them.
What are some of the pitfalls that people do in the kind of the new state of employment that you think are commonplace and are easily avoidable?
Chris Yeh: There's a bunch of things that just drive me up the wall. So one of them is the notion of internal mobility. So almost every company I've ever talked with, I've worked with a lot of large companies, as well as startups will say, we really want to develop our people.
We really want our managers to develop the people that work for them. I said, that sounds interesting. What is the specific bonus or benefit that those managers get when they enrich their people and send them to work for other people in the company? And the answer is all as well. None I'm like, okay, so let me get this.
You want to encourage your managers to develop their people and then take their best people whom they rely on to make their numbers and get their bonuses and let other people have them and then get no reward for that. They're like when you put it that way, it doesn't seem like it makes much sense.
I'm like, yeah, it does. And so that's what it really boils down to. There's so much of this fear of development because of the improper incentives that are there, managers will sometimes say crazy things like, oh, I don't want to pay for this training or send to these classes because if I do what, if they leave, I'm like, yeah, that's true.
They might leave if there's a better opportunity somewhere else. And if you had a better opportunity somewhere else, you'd leave. Your question you should be asking is not, can I starve my people of development so they never leave the question you should be asking yourself is how can I make this, the kind of place where people will continually volunteer to be a part of it so they can accomplish great things.
I love that.
MPD: Okay. So you've been writing books at Reed Hoffman. He's obviously a big name. Is there a backstory on how you guys became co-ed there's
Chris Yeh: absolutely. And it actually goes back a long way. And even before reading and I knew each other, ironically enough. So we finally met for the first time when Reed was starting LinkedIn.
And I was interested in LinkedIn because LinkedIn was part of this first crop of social networks, essentially Friendster, tribe, and LinkedIn all came out at the same time. I became aware of them because I met Jonathan Abrams, who is a, now a venture capitalist with a capital, but he was the founder of friends.
And he told me about Friendster before it came out. I said, wow, that's a fascinating idea. And so I was following the concept of social networking very closely because oddly enough, before a couple of years earlier, when I was still in business school, one of the things I was thinking about, I didn't know the term social network at the time, but one of the ideas I was looking at is can I do.
What is essentially a social network of people in the south, in the startup space. I never ended up doing that. Perhaps we wouldn't have been a good idea or perhaps it would have been too early. It's almost hard to say, because if you may remember you and I are old enough to remember this, there were things back then that were a big deal, like round zero, which ultimately never went anywhere.
Although I do think that the connection has benefited the founders. Anyways, when the social networks came out, I looked at him. I said Friendster, that's good for getting dates, but I'm married. So that's useless to me and tribe. That's good for people who are like in a motorcycle gang or into polyamory.
And that's not me either. So that's useless. And then there's LinkedIn, which is for people who want to stay in touch with their business contacts. I'm like, that is something that fits me like a glove. I'm actually one of those people who back in those days, Had their Microsoft outlook folders and their contact list.
And I would actually type into the contact list. Here's how I know this person. Here's the name of their kid. And here's something that we talked about just so I would have all that context and what do they do? And so on and so forth. And then here it was, LinkedIn was automating that for me. So I was like, wow, that's fantastic.
I'm going to sign up. It turns out I'm roughly user number 3000 globally overall in terms of chronologically. So I came in really early. And I saw that the founders were all fellow Stanford alums. That's where I went for my undergraduate work and I just reached out to them. And that's how I got to know Reed and the other founders of LinkedIn.
And I actually had read, come and speak at events for Harvard business school to tell them why they should as Harvard business school, alumni joined this new thing called LinkedIn. It's pretty obvious now, but it wasn't then. And we developed a relationship and had co-invested in a dealer too. And so that's how we knew.
But it actually goes further back than that, because the interesting thing is that Reed and I actually had similar experiences in thinking even before then. So Reed also went to Stanford, as I mentioned, he went five years before me, so we were never overlapped on. But we did many of the same programs and it was that balance of the humanities and technology.
That's pretty rare. So Reed was a part of something called structured liberal education, which I am as well, where you spend your freshman year at Stanford, reading philosophy, history, art, and literature, and basically having these two to three hour discussion groups every day. About these great books and works.
And so we had gone through that similar experience. And then I had also again, had that humanity scientist split read, studied symbolic systems, which was very new when he studied it. It's essentially a combination of computer science and philosophy. And then I have a degree in product design engineering, which is a combination of mechanical engineering and studio art.
And then I also have a degree in creative. So we had a lot of these things in common and the final sort of odd coincidence is that Reed's first startup was a failed social network called SocialNet. He started it up during the.com boom. It didn't work out. And one of the few people to sign up for social net was one Chris gay, who signed up for social net with the handle net revolution.
MPD: Great handle. Okay. So here's a question. A lot of people wonder when they see books written by known names. Did you guys actually write it? We actually
Chris Yeh: do. And ghost writer in there. You know, this is one of those interesting things you can absolutely get a ghost writer in. And there are a Mo I had a friend who was a very prominent ghost writer, had worked with a lot of big names, including one that you and I may remember, but most people don't know Kevin Mitnick who at one point was the most famous hacker in the world.
And it is a very lucrative. But in the case of Reed and myself, our interest actually is in the process of writing the book, as well as having written the book. A lot of people, they just want to have the book written and I get it because writing a book is really hard work, but both Reed and I, we think of ourselves as intellectuals.
And part of the fun is working through the idea. Although, I will say that we have a division of labor. I will tell people say what does that mean? That you write all the books and no, no, we write it together. But I do the majority of the typing. So I will definitely admit to that. I do the majority of the typing, but the way it works is a lot like we're doing now with this podcast, we'll start just by having a conversation.
And sometimes we'll record it and turn it into podcasts. And sometimes we write. And then we'll build it, those ideas. And after we've talked through the ideas enough where especially this is what Reed excels at, he's put it into a framework like these three elements go together. These four elements go together, then I'll say, okay, I've got all these notes.
I've got all these transcripts. I'm going to go off and write like a chapter. And then we'll come back. We'll work through the chapter together. So that's how we do it. That being said, there are a lot of people who help us along the way. We've had researchers come in and help pull that information.
It's not just him and I Googling and looking for these things. We've had friends of ours who've contributed. I know when we were working on the Alliance, for example Adam Grant that we had written Adam Grant saying, Hey, here's what we're working on. And he wrote back to wow, that sounds great.
And here's six scholarly articles. You should check out. I'm like, whoa, thank you, Adam. Again, I have no idea how a guy that important and that prolific has to have time to help everyone, but he helped us. So we certainly didn't do it by ourselves. We had tons of support, but we do believe that there's value in actually writing the books.
MPD: Yeah. I feel the same way. I wrote a book. I'm the worst book promoter on her. I make zero effort to tell anyone about it. It's out there in the ether on Amazon. But I wrote it to learn the content, heard a book on how to raise venture capital as an entrepreneur kind of sheep in Wolf's clothing within the VC game.
And by writing it, I just learned so much about how to think about doing the job as a VC and how to coach entrepreneurs. Speaking of VC, let's switch over. So you've parlayed your book into a fund. Do you want to give us the overview of what you do?
Chris Yeh: Absolutely. So I have a fund called blitz scaling ventures, truly original name, as and what we do is very straightforward.
We follow the activity of the top 30 or so venture capital firms. We look at all the deals that they do. Grade them on blitz scalability. That is, to what extent are they tackling a winner take most market that's highly valuable. To what extent do they have the kind of virality or other distribution that will allow them to grow quickly?
Are they going to be profitable? Are they going to be able to scale? Have they achieved that product market fit and engagement I was talking about. And based on that, we take the deals that those companies do which is probably about 1500 deals a year. We narrow it down, get it down to something like a five to 10 companies a month.
Then we dig into them, research them, try out their products and ultimately out of that 70 or so companies per year, we'll pick for a year to invest in. And obviously, there's a lot of value to being able to pick these great companies. We feel like we're almost cheating because we're picking from the companies that have already attracted investment from the best VCs in the war.
But then the big trick is how do you get into the deals? Because these companies are doing really well. Everyone wants to give them money. And so what our other secret sauce is that I reach out to the CEOs and I say, listen, if you'd like help from the guy who wrote the book on, hyper-growth what you're going through right now, I'm happy to help.
And you know what? You don't have to pay me any money. You don't have to give me any shares. You just have to let us invest in one to $2 million. And that's been pretty compelling. We've been able to raise something like $25 million. Still got a little room left, so we're still raising and we've got four great investments already and more on the way.
So we're just.
MPD: That's great. Is there a typical round you're entering into or these are the investors you're following seed investors, lifestyle, life stage investors. Yeah.
Chris Yeh: So we're typically going to enter into companies in the B or C round. We may sometimes go into the a or D as well. There was a entrepreneur I spoke with this morning and we identified this company because of their seed round investor, which is a very well-known VC that we've worked with before.
And that we're, we're friends, I'm friends with the partner involved, and that would be a series a that we'd be getting involved with. But we are willing to do that because we think that the company has already demonstrated the kind of traction and market leadership that we look for.
MPD: I got it.
Okay. So when you call and say, Hey, we're going to help you out. What does that help? Yes, it's around growing and scaling like tactically. When you get your sleeves rolled up and you're sitting in the room with the founder or the team, what do you feel?
Chris Yeh: So we give them basically three different things that are going to be our primary area.
And then one or two secondary ones. The primary thing is I'm going to be a thought partner for the CEO, help them think through the different issues that they're facing, help them think through the strategy for growth as a kind of super. And because even though we're an investor, we put money in, we're not a lead investor, we're not taking a board seat.
We can essentially be on their side of the table as much as possible for an investor to be on their side of the table. The second thing is working, not just with the CEO, but with the entire executive team around those specific factors of blitz scalability. Hey, have you got your network effects tuned to maximum possible?
Have you developed virality, either organic or incentivized, that's going to drive distribution. Have you been able to connect with the ideal partners that will allow you to achieve market leadership? So that's something that I'll probably work with the executive team generally on a quarterly basis, thinking through their big strategic initiatives and helping them achieve some of them.
And then finally, the third primary thing we do is to actually educate the entire. So when you're the CEO or even the executive team, you've got a big team, they may be wondering why are we working so hard? Everyone tells us that we're doing great and that we're going to be a unicorn. And everyone says, we're going to be rich.
Why are we pushing so hard? And I come in to their all hands meeting and I explained the blitz scaling strategy, explain why it's so important to be the market leader and what you need to do to hang on to it, why it's relevant to this particular company and what they is individually. Can do to help make it happen and what is going to mean for their careers.
So those are the primary things that we do. And then there are a couple of secondary things. We have an incredible group of limited partners, which include, billionaire exited entrepreneurs, various prominent executives, best-selling authors and folks like that. And we bring our LPs in, on an as needed basis.
Many of them are world-class experts on the things they're looking for. So for example one of our limited partners is Ellie Schwartz, who is one of the world's thought leaders in search engine optimization. He led SEO and inbound marketing for survey monkey. He wrote a book called product led SEO.
He's done consulting work for pretty much all of the top companies. And he also happens to be an old friend and an investor in our fund. So when the CEO this morning was saying, SEO is one of our most important areas. I'm like you know, our LP Ellie Schwartz would be happy to speak with you and to work with you on adding value.
And he's wow, that would be fantastic.
MPD: That's awesome. I love that. Very clear. Can you explain your venture fellows program? I saw you have that on the website. It's a little unique.
Chris Yeh: Absolutely. So what we're doing with the venture fellows program is we are acknowledging the fact that, my partners and I are all based in the United States, but we are living increasingly in the world where there is blitz scaling happening all around the globe.
And there are incredible opportunities in other markets that we just don't necessarily understand or know as well. And so we've built up our blitz scaling venture fellows. And it is smart young people in geographies, all around the world who are in their geographies, looking for the hottest companies and friends, the companies they think are going to be blitz scalable.
And what they get out of the program is the opportunity to look at their ecosystem and connect with people and develop the reputation and connections. And then they come to us and every week we have our fellows meeting where fellows from around the world present their best investment. And we'll go through and using the blitz scaling framework, Blackfeet, analyze them.
We'll grade them for blitz scalability. And if they come up high enough on the scale, then what we'll actually do is we'll reach out to those companies and see, okay, we're interested in talking more. Now, a lot of times these are companies that have not yet received investment from one of the top 30 primarily US-based VCs.
In which case, our objective is help them get an investment from one of those companies. And then we'll come in alongside. But there are other times we'll discover a company that maybe we've overlooked. For some reason, one of our portfolio companies is a company in Brazil called . It's essentially the pin duo of Brazil growing at this incredible rate.
And we found them because one of our fellows brought them to our attention. And when we look deeper, we're like, wait a minute. This is D this company also has founders fund and Reed Hoffman as an investor. Holy smokes. We got to look into this more carefully. And so we ended up investing in that county.
And that was something we found because of the fellows program. So it's part of our way of really acknowledging that this is a global world out there, and that it's great to develop relationships with people in ecosystems around the world because us parachuting in URI parachuting into. I dunno Indonesia and saying I understand the Indonesian market, this is laughable, right.
We want people who are actually able to on the ground, understand what's going on, know what people are saying. And in the case of something like fossils, one of our fellows actually went ahead and signed up for the service, ordered it and try it out the product on the ground in a way that I never could.
MPD: Okay. So web three is the flavor do shore of the startup and venture community right now. You're talking about what you invest in. I know you wrote recently wrote a post called about what three saying be skeptical, not dismissive. How does web three fit into your landscape? What do you make of the overall trend?
Chris Yeh: What's your take? So our take on web three is we are skeptical, but not dismissive as you heard. And we are very interested in understanding and potentially investing in the. So the thing about web three is you can look at the parallels between web three and previous weights, whether it was web 2.0 or the.com era and throughout, whenever something new has.
People have come out of the woodwork as skeptics to dismiss things during the.com boom. It's wow. People will never put their credit card information online. That's so insecure. How will anyone ever possibly be able to sell things online fast forward to today? And essentially our entire lives are online in terms of what we buy or sell or in web 2.0, people saying, wow, This user generated content it's worthless, who's ever going to watch it.
Why would anyone ever bother? And all of a sudden, of course, YouTube, and tick-tock have more hours of video consumption than television itself in the United States. And so what I've seen over and over again is that, which is new, is often difficult for people to understand. Now, I understand that there are elements of web three that are going to turn people off because there's a lot of fools and charlatans.
There's no question. Every day you can read about rug poles, where somebody set up a cryptocurrency and then absconded with all the funds. This stuff just happens all the time, but that doesn't mean all cryptocurrencies bad just means that those particular founders were a bunch of scam artists.
And guess what? There were scam artists and web 1.0, they were scam artists and web 2.0 and there'll be scam artists in web for whatever the heck that is. So from our perspective, we focus on the following. We're like, okay, this is a new technology. This is a new way of thinking. It may produce incredible results.
This is where we have to come back around to the notion of engagement. And is this something that people are actually using frequently and intensively in order to generate some actual.
MPD: I don't think there's a lot of voices in the venture community right now who are pooling web three. It's a hot topic.
LPs want to hear about it? Entrepreneurs want to talk about it. Tim O'Reilly wrote a nice piece for those who are open to taking different perspectives on it. I believe it was titled we'll link to it in the show notes why it's too early to get excited about web three. What I thought was interesting about that while I do think there's, there is real opportunity went through.
Is, he talks about these macro trends of hype cycles and these booms, which lead to over-funding and they lay the emphasis. They're actually socially important because they lay the infrastructure for future real value creation. Where do you think there's value now in this market? So maybe some of it's hype and maybe some of it's charlatans, but there's real things happening.
We're looking at it. Where do you see.
Chris Yeh: I think the primary value right now lies on the collectible side. And that's primarily just because the way I describe it is if the non-web three equivalent is already irrational than the web three equivalent is not any more irrational. It's where people say, oh, this is going to replace all of banking.
I'm like let's wait until we actually get the transaction costs down a bit. That being said, I think that part of the issue. Everyone's talking their own book. This has happened before with other friends as well. You and I probably remember the days of optical networking or the huge push for clean tech in the early two thousands.
Our industry likes having something shiny and new, which allows them to raise a pile of money from LPs, deploy money into startups and potentially take them public because that's what the industry feeds. So I think that it is probably true that some of these things are, are out in front of their skis as the expression would go.
And those are the ones where we, again, boil down to all right. How many people are actually using this. So those people will say, oh my God, this thing is worth a billion dollars or $10 billion. I'm like, how many customers do they have? How many people have actually participated? 10,000. I'm like, okay, so that's.
Roughly 1 million per individual user. And how much of those customers spent oh, $20 each I'm like, I'm not sure the math works out on that one. Okay.
MPD: So you've got a bunch of stuff outside of your venture life. And this one probably is a little bit of the bridge. And I, I want to take the moment to get to know you better and everyone else here.
Do you want to tell me about the unreasonable group something
Chris Yeh: you're involved with? Absolutely. So the unreasonable group is a fascinating example of the power of entrepreneurship many years ago, probably closing in on 13 or 14 years ago. Now a group of undergraduates at the university of Colorado in Boulder, Colorado said, there are all these incredible accelerators for startups and that's.
Can we create an accelerator for social enterprises, for startups that are having a positive impact on the world. Now there's no reason they should have been able to succeed. There's some undergrads at the university of Colorado in the middle of this country. And they decided uh, the old Judy Garland and Mickey Rooney, we're going to put on a show.
And so they created the first accelerator for social enterprise and they based in Boulder, Colorado, and they asked entrepreneurs to pay their own way and actually pay money to participate because they had no money and come and spend a couple of months in Boulder, Colorado in the middle in, in the summer in order to participate in this program.
It's almost absurd. Imagine getting entrepreneurs from all around the world to get the Boulder, to go to Boulder, Colorado for three months to go through an accelerator program, run by college students. It seems absurd. The audacity is, is insane, but they just built it bit by bit. So they had the first class and that proved that they could actually do.
There were a lot of complications. The way it worked was they actually rented out as it turns out in a sorority house over the summer, it's very cheap. No, one's actually there. So they rented out a sorority house and all the entrepreneurs lived in the sorority house and they had a bunch of mentors from the local Boulder community.
Fortunately, Boulder is a good startup cluster. It's small, but it's got a lot of great people and they were able to do that. And by the time I got involved, they were two or three years in. And had gotten to the point where they can actually afford to pay for a Southwest airlines ticket for somebody like me to fly to Denver.
And then one of their people would drive to the airport and pick me up because they couldn't afford a taxi. And then I would go and live in a sorority house for a couple of days working with entrepreneurs. That's great. And I just loved it when I did that first. And I had no idea what it was going to be like a friend of mine said, Hey, I think you would like it.
And I said, Boulder, Colorado. I've never been there before. Never heard of this organization before, but they're doing something that I think is important, which is helping entrepreneurs who are changing the world. Be successful.
MPD: And any Marquis social projects come out of that, that folks would know no of,
Chris Yeh: well, let's see there, there's a number of them just from that very first time that I was involved.
So there is a company called in Uganda. That is an early microfinance play. What they do is they micro finance. What are called bodas. These are these motor skills. That are one of the main forms of transportation and courier activity in Uganda. And my my now friend Michael Wilkerson, who was there as a part of that cohort had created own your own boat, which is a micro-financing system for helping people who wanted to become boater drivers to actually finance, getting one of these boats, getting one of these scooters so that he could drive it around.
Now, fast forward, it has been. 11 or 12 years since then, he's been able to grow the company, move it into multiple countries. Raise I think 20 or $30 million from investors all around the world. They're now serving, I think Millie maybe closing in on a million people. Who've been able to become entrepreneurs because of this.
That's just incredible. It's a great feeling for me to have played at least a small. There's another company also again, from that first from the first cohort called aunt Bertha. And what aunt Bertha does is it helps people here in the United States figure out what programs they qualify for. It turns out there's all these programs that the government pays for to try to help people.
But most of the time, people don't know which programs they qualify for and what they can do. And on Bertha is a place where you can go and you could see everything that you qualify for. And especially.
MPD: This is for social programs or helping entrepreneurs
Chris Yeh: or social programs, and food stamps, grants relief, all these different things.
And it became especially important during the pandemic because all of a sudden people were out of jobs. They needed to find retraining programs and all these different. And these are things that exist because entrepreneur said, you know what, there's this problem. I'm going to do something about it.
And the list goes on and on they're all these incredible companies. I think that it's probably over a thousand companies now that have gone through the program. And many of them are among some of the most famous social enterprises on the planet.
MPD: All right. So we've done some digging on you. I'm going to put you on the spot here.
You've got some quirky parts to your story. All
MPD: And when I ask you about a couple of, if you don't mind, by all means, tell us about the free air club,
Chris Yeh: The free air club. This is a blast from the past. So back in the first.com boom I started a company that did not succeed. That is true for a lot of us in that first.com boom.
And after the crash came and we were trying to find various things to do. One of the things we actually did was, we had a user base. And what's the craziest thing we could do. What's the, what would be an April fool's joke kind of thing that we could do. And so we created something called the free air club, and the idea was we would send you air for free.
You just pay shipping and handling. And so we advertise this free air club. And a number of people actually signed up for it. And I think part of it is a Testament to my copywriting because I wrote about this month selection comes from the city of Cairo, the seat of the ancient Egyptian civilization.
You can smell the centuries of history in the year. And what we'd said was we sent them empty envelope. And the amazing thing was they did not cancel the subscription after the first month, it usually took three or four months in. And then at that point we're like, we can't keep doing this. This is just not right.
And so we closed down the free air club, but not before I became notorious for it. Like my wife's boss at one. Wait a minute. So you were the gentlemen who sells free air to people and yes. Among other things.
MPD: Yeah. People figure this out though. They were buying it as a joke. It was an internet prank.
Chris Yeh: Now. I'm not sure. We eventually decided we had to shut it down.
MPD: All right. Here's the question for you? How much money do you make on that?
Chris Yeh: So we probably made a couple hundred dollars. It was not worth the amount of time we put in, but it was a lot of fun. Got it.
MPD: But you still talking about it? So you've got some mileage out of it.
Okay. Tell me about your experience with game
Chris Yeh: shows. Ah, yes. So this is another fun one. You know, like many BAS I grew up really being a big fan of jeopardy, play along at home. What is peanut butter? You can give these answers to Alex for back and everything, but I never got a chance to go on jeopardy.
But I was always curious what was going to be. And my sister who graduated from UCLA actually worked in the entertainment industry for a while. So he was involved with shows like Baywatch and ER you know, I got a fun time, got to meet George Clooney and stuff like that. But one day she sent me an email saying, Hey, there's a casting call for smart people.
Maybe you'd be interested. And so I filled it out and did a bunch of these sort of zoom casting calls. And nothing eventually came up. They were like, all the network loves you. This is great. We love you. Everyone loves you. I'm like, okay. You know what? I grew up in LA. So it's not like I'm from Kansas. Like I know this means nothing and eventually nothing ever came of it.
And it turns out what happened was the show never got greenlit to actually go to pilot. So they may very well have liked me, but they never actually shot it. But the person who was my casting director for that show, which was called America's brightest and never made it to the air, ended up being the niece of the executive producer of a new show called mental samurai, which is a show that is on Fox.
That's hosted by Rob Lowe's. Rob Lowe has an extensive relationship with. And they ended up reaching out to me and saying, Hey, we've got this thing, mental samurai, we think you would be a good fit. Would you be interested in auditioning? So I did. And I did again, the zoom auditions and things like that.
And I actually got the news that I had been cast for the show when Reid and I were in New York city for the launch of blitz. So there I am in New York city and we're going from place to place. You're doing all these interviews and I get this email saying, Hey, can you come to Burbank at the end of October to shoot?
And I said, absolutely no problem. It happened to be, I had a conference the week before at a conference the week right afterwards, but I could make it work and great way to promote the book and a great way to pro though could, by the way, this is my friends. If you ever see the episode, people laugh because I there's what they call B roll, which is the contestants and their various environments.
One almost all the shots I'm holding a copy of the book in a very unnatural way. Nobody would hold a copy of a book like that. Bless it's to get the cover on television. So it worked it's good work. So work. And, and I got to go on this show. It's a quiz show. It's like jeopardy, except in between questions.
You're strapped into one of those astronaut training type things at worlds. So a crazy situation there. And I got to go on the show and I won a hundred thousand dollars in the official title of a mental samurai. Uh, according to the Fox network, I can officially call myself a mental Samara.
MPD: Oh no, that's great.
Good story. Most people have not had that type of experience. Okay. We're gonna wrap up here, but before we go, any life hacks that you've picked up. It seems like you're thinking differently about a lot of different dimensions, anything you've picked up through COVID or otherwise about things you do differently now that other people could learn from
Chris Yeh: got a tried and true one.
And then I've got a new one I've just started doing in the past month or two, and they share both of them with you. The tried and true one is that napping is. And historically it's hard to take a nap. Like I, I remember once I wrote a blog post saying, what would I do if our billionaire I would take more naps?
And then I said wait a minute, hold on. If I'm just willing to be seen as eccentric, I could probably start taking naps now. So about 15 years ago, I started taking. And the office, there was a cot or a mattress. And this actually got me in trouble because I would do these job interviews, candidates would come in and they would see this cot and they would just have this look of horror on their face.
Oh my God, what am I getting into here? This is a place where the executives sleep in their offices. And I said no, no, don't worry. I only sleep during business hours. Amazing.
MPD: And how long did you nap?
Chris Yeh: So this is the key you nap for 20 minutes or less. If you nap for longer than 20 minutes, then you fall into deeper sleep and you get great.
And so you have to sleep for 20 minutes or less. So I, what I do is I will turn on a boring podcast. I will set the timer on my phone for 20 minutes and I will lie down and take a nap unusually I can be done with my nap and, 10 minutes or so once in a while a go all the way through the 20 minutes, I took a nap before this, I took a nap right after I did a couple of hours.
And then I slept for 10 minutes and I got up and had some lunch. And then I came to the office for some more meetings and then did this podcast recording. So I tell everyone if you're tired, just take a nap. And because of this pandemic and all the work from home, it's the perfect time to learn how to take a nap.
You don't even have to be a weirdo with a cot in your office. You can just go to your actual bedroom and take a nap. So definitely do that. The second thing I've done, which is relatively. Is I don't know if I can, I don't know if listeners will be able to see us, but you're a trim fit guy. Mark. I used to be a trim that God, but during this pandemic I gained 25 pounds.
And so I'm like, I gotta do something about this. And so I actually now have a walking treadmill desk. I have a standing desk. Just from Ikea, very simple, very straightforward. I bought an under desk treadmill for about 300 bucks that goes underneath the desk and I will do a lot of my meetings and work while I'm walking.
It's just a slow walk, two miles a day. But I think it helps. And it certainly beats sitting in my butt for yet another 10 hours a day. Has I worked for you? I have not weighed myself extensively, but people have told me that I looked thinner, which I'm going to take. That's probably a
MPD: good sign. I actually use something similar.
So same thing. I started to gain a little weight with COVID. I think what I had lost wasn't really a change. It wasn't really a change in eating habits. For me, it was you know, two, three miles. A day walking between meetings, just commuting to the office, this stuff I never thought about when I was actually moving just part of the day.
And so I had a little period where I was trying to be creative about how to fit exercise into the work from home model. But I came up with was a little different. One day a week. I do pushups every 30 minutes during the entire day I put zoom video off. I might be in the middle of a call. I just turn the video off.
I do some pushups takes about 10 seconds, 26. I do the pushups. I don't break a sweat. I might be a little bit of a Huff when I get back on the call, but that adds up because I do that from 10:00 AM, till 6:00 PM, every 30 minutes. So when I started about nine months ago, I was doing five pushups, a set. Now I'm doing about 35 pushups, a set, which is when a days I do it.
I feel it's over 500 pushups throughout the course of a day, but it's that level of exercise without having to break a sweat or really invest time or change or shift. And so that that has been a boon for me, for the work
Chris Yeh: from home. That is incredible. And it reminds me of something that I used to do that maybe I should find a way to do it again.
I used to have this this thing where I'd set up a poll, a set of pull up. And in, in one of my offices and what I did was every time I left the office, every time I was going to the restroom or every time I was going to go out to lunch or something like that, I would make myself do a set of pull-ups so very similar, right.
It doesn't take long and it has a big impact. So I'm inspired. I think when I tried to add something like that to my routine, I think these micro
MPD: workouts, like a great concept, especially for busy folks, I get up, I do my normal workout. But that little addition, one day a week, replaced three miles a day of walking around, New York city.
Chris Yeh: Yeah. And again, if you remember, I think that there have been, a number of NFL greats, who just said all they did was pushup, but no weightlifting, no anything, just lots and lots of pushups. One of the perfect exercise.
MPD: It's fantastic. I'm a big fan. Yeah. Chris. Awesome. Having you on.
Thanks for making time.
Chris Yeh: Now. My pleasure. Hopefully this gets the you're off to a great start. I got to tell you, it is always such a pleasure to see you. And I'm glad to hear, I'm not the only one who's struggled with this pandemic. Sometimes it feels like everyone's got it figured out, but you know what?
We're all trying to figure.
MPD: Thank you buddy. That was awesome.
Chris Yeh: My pleasure,
MPD: Chris is a really sharp strategist. I hope everyone learned a little bit and how to think about building a venture scale business is where I ask you to hook up the podcast. If you like the story you're hearing and you want to help us out, share with friends, do the light buttons, the five star. Do you want to find moral I'm producing?
You can find me on Twitter at MPD. And to hear more of my conversations with innovators, you can subscribe on YouTube, Facebook, or any of the major platforms. Just search for innovation with Mark Peter Davis.